Yandex (YNDX) Misses Q2 EPS by 20c, Revenues Beat

Yandex (NASDAQ: YNDX) reported Q2 EPS of ($0.14), $0.20 worse than the analyst estimate of $0.06. Revenue for the quarter came in at $597.9 million versus the consensus estimate of $579.04 million.

Q2 2020 Financial Highlights (1)

Q2 2020 consolidated financial results

• Revenues of RUB 41.4 billion ($591.9 million), in line with Q2 2019
• Net loss of RUB 3.7 billion ($52.3 million), down 203% compared with net income of RUB 3.6 billion in Q2 2019; net loss margin of -8.8%
• Adjusted net income of RUB 1.9 billion ($27.3 million), down 67% compared with Q2 2019; adjusted net income margin of 4.6%
• Adjusted EBITDA of RUB 8.5 billion ($121.3 million), down 35% compared with Q2 2019; adjusted EBITDA margin of 20.5%

“It has been both a challenging as well as eventful quarter for us,” said Arkady Volozh, Chief Executive Officer of Yandex. “Our top priority has been to ensure the well-being of our staff, our partners and our users, as we dedicated significant resources to support them through a variety of targeted social initiatives. The COVID-19 pandemic has put pressure on our core advertising and ride-hailing businesses, while at the same time creating a number of new opportunities that we believe further strengthen the company’s long-term potential. We are also excited to regain full operating control over Yandex.Market, which we believe will unlock significant synergies from the deeper integration of the e-commerce business with other parts of the Yandex ecosystem and accelerate its path to profitability.”

“We are pleased with the results we achieved during this very challenging quarter,” said Greg Abovsky, Chief Operating Officer and Chief Financial Officer of Yandex. “Our immediate focus on cost optimization and improving operational efficiency after the start of the lockdown has definitely paid off and enabled us to mitigate the negative impact of the pandemic on our financial performance. While we have limited visibility in terms of the pace of further recovery, we have been encouraged by the trends that we have seen in July. In addition, we believe that the recent capital raise provides us with ample financial flexibility to continue investing into existing strategic projects and to pursue new exciting opportunities.”

Impact of COVID-19 PandemicThe COVID-19 pandemic and the resulting strict lockdown measures had a material impact on our financial results and operations in Q2 2020, particularly on our advertising and ride-hailing businesses, as well as classifieds and car-sharing services. The adverse impact was partially offset by the acceleration in FoodTech businesses (both Yandex.Eats and Lavka) and Media Services. During the second quarter Yandex incurred COVID-19 related expenses of RUB 408 million consisting of the costs of personal protective equipment (masks, sanitizers etc.), our Helping Hand project and our driver and courier support fund. In addition, we have invested in various social initiatives to support small and medium sized businesses, restaurants and taxi fleet companies during the challenging pandemic period, as well as in distance education initiatives.

The trends in April were particularly challenging, but we began to see a moderate recovery in advertising and ride-hailing from the end of the month, which continued in May and June (in classifieds and car-sharing the recovery began in June). In July we see a continuing improvement of revenue growth across all the businesses affected by COVID-19.

With regards to our financial position as of the end of June 30, 2020, our analysis of the effect of COVID-19 on goodwill, non-current assets and redeemable non-controlling interests shows no measurable impact. At the same time, the full impact of COVID-19 is still unknown and there is a limited visibility on the sustainability and the further dynamic of the performance recovery across Yandex businesses.

The extent to which the COVID-19 crisis impacts the Company’s results will depend on future developments, which are still highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain the virus or treat its impact, among others. The development of the situation with respect to COVID-19 may also lead to changes in estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

For earnings history and earnings-related data on Yandex (YNDX) click here.

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