Boston, MA 05/01/2014 (wallstreetpr) – Yandex NV (NASDAQ:YNDX) operates as the most popular search engine in Russia and has a dominant position with 62% of the overall market. It also provides search engine services in Belarus, Kazakhstan and Turkey. Political instability in the regions affects operation across industry. But, Yandex continues to generate growth due to the presence and popularity as one of leading online platform for advertising in Russia.
Steady over the performance
Total revenues increased by 36% compared to Q1 2013 (+39%, excluding Yandex Money’s operation). But, traffic acquisition costs (TAC) adjustment provides core growth for the internet service provider. During first quarter 2014, traffic acquisition costs adjusted revenue (Ex-TAC) was up by only 24% compared to 1Q2013 (+28%, excluding Yandex Money).
Yandex NV (NASDAQ:YNDX) generates revenue majorly from advertising including text-based and display. During first quarter 2014, text-based advertising (92% of total revenue) was a major driver and grew by 41%, but, display revenues were up by 16% that accounts only 7% of total revenue.
Yandex NV (NASDAQ:YNDX) provides text-based advertising either through its own website or ad network. In 1Q2014, Yandex’s website generated 68% and was up by 26% compared to same period 2013. However, its ad network, accounts only 24% of total text–based advertising, showed a significant increase (104%) in 1Q2014, primarily due to solid results from its partner Mail.ru and increase in growth rate of ad network. Paid clicks revenues were up by 49% from Yandex NV (NASDAQ:YNDX)’s and its partner’s website despite a lower average paid per click.
Solid advertising growth and cost reduction improved its earnings, with adjusted EBITDA RUR 4.0 billion ($113.3 million), up by 15% in Q1 2014. As a result, adjusted EBITDA improved to 37.1% and adjusted Ex-TAC EBITDA margin to 48.6%.
Going ahead
Russia is very attractive market for advertising and online advertising continues to outperform and expects to grow at a CAGR of 23% during the period of 2013 to 2016. Solid year over year increase in advertising will further drive the overall performance of Yandex NV (NASDAQ:YNDX) in 2014.
