Yandex (YNDX) Q1 Earnings Miss Estimates, Revenues Rise Y/Y

Yandex N.V. YNDX reported first-quarter 2021 adjusted earnings of 8 centsper share, missing the Zacks Consensus Estimate by 75.7%.

Further, the figure declined 65.2% sequentially and 57.9% year over year.

Revenues were $966.1 million. In ruble terms, the figure stands at RUB 73.1 billion,whichrose 56% on a year-over-year basisand 2.1% from the previous quarter.

The reported revenue figure includes the consolidated financial results of Yandex.Market.

Improving momentum across the company’s online advertising drove top-line growth. Further, strong growth across Search, Classifieds, Taxi and Media Services segments contributed well.

However, the pandemic-induced supply-chain disruptions were concerning.

Notably, the company made some alterations in its segments in the reported quarter. It has changed the name of the Other Bets and Experiments segment to Other Business Units and Initiatives. Further, the IoT business got renamed as Devices.

Furthermore, Devices was shifted to the Other Business Units and Initiatives segment from Search & Portal. Also, Yandex moved Geo from the Other Business Units and Initiatives segment to Search & Portal

Top-Line Details

Total online advertising revenues were RUB 35.9 billion (49% of total revenues), reflecting growth of 20% on a year-over-year basis, driven by well-performing Search and Zen.

Taxi revenues,excluding sales of goods, wereRUB 20.7 billion (28% of total revenues),up 57% on a year-over-year basis, driven by strength in the Yandex.Eats, ride-hailing and logistics businesses.

Other revenues of RUB 5.5 billion (8% of total revenues) surged 125% from the prior-year quarter. This was primarily driven by well-performing Media Services, expanding cloud business and Yandex.Market.

Revenues from sales of goods were $10.9 billion (15% of revenues), which jumped from $1.2 billion in the year-ago quarter.

Segments in Detail

Search and Portal: The segment generated RUB 35.1 billion revenues (48.1% of total revenues), up 15% year over year.The company’s strong position in the Russian search market remains a key catalyst.Notably, its market share was 60%inthe reported quarter, up 190 basis points (bps) year over year. This can be attributed to expanding Yandex’s mobile search share.

Notably, mobile revenues accounted for 54.8% of the company's search revenues. Further, mobile search traffic accounted for 62.4% of total search traffic. This was driven by Yandex’s search share on Android, which was 59.3%, expanding 380 bps from the year-ago quarter.

Taxi: The segment generated RUB 26.6 billion revenues (36.3% of revenues), rising 89% from the year-ago quarter. The impressive year-over-year rise was driven by positive contributions from Yandex.Lavka and Yandex.Eats, which benefited its FoodTech services in the quarter under review. Further, improvement in the ride-hailing business remained a major positive. The number of rides increased 24% from the prior-year quarter.

Classifieds: The segment generated revenues of RUB 1.8 billion (2.4% of revenues), reflecting year-over-yeargrowth of 20%. This was attributed to growth of auto vehicle reports.

Media Services: The segment generated revenues of RUB 3.5 billion (4.8% of revenues), soaring 143% from the year-ago quarter. This can primarily be attributed to solid momentum across Yandex.Plus subscription.

Other Business Units and Initiatives: The segment accounted for revenues of RUB 4.7billion (6.5% of total revenues), up 171% from the prior-year quarter. This was driven by the robust performance of Yandex’s Zen and Devices businesses. Further, the growing cloud business contributed well.

E-Commerce: The segment accounted for revenues of RUB 7.3 billion (10% of total revenues) in the reported quarter. Strong marketplace business, owing to growing momentum across third-party sellers, remained noteworthy

Operating Details

In first-quarter 2020, adjusted net income margin was 3%, contracting 800 bps from the year-ago quarter.

Operating expenses were RUB 74.2 billion, which was up from RUB 41.7 billion in the prior-year quarter.

The company incurred a loss of RUB 1.1 billion from operations compared with RUB 5.3 billion of operating income.

The company’s total traffic acquisition costs amounted to RUB 5.4 billion, up 1% on a year-over-year basis. As a percentage of revenues, the figure contracted 400 bps year over year to 7.4% in the reported quarter.

Balance Sheet & Cash Flows

As of Mar 31, 2021, cash and cash equivalents were $1.2 billion, down from $1.8 billion as of Dec 31, 2020.

Accounts receivables totaled $359.7million, increasing from $344.4 million in the previous quarter.

In thefirst quarter, cash generated from operations was $113.1 million, up from $83.1 million compared in thefourth quarter.

2021 Guidance

For 2021, the company projects total revenues between RUB 315 billion and RUB 320 billion.

Zacks Rank & Stocks to Consider

Currently, Yandex carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector are KLA Corporation KLAC, AMETEK, Inc. AME and Waters Corporation WAT. All three companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates of KLA, AMETEK and Waters are pegged at 14.03%, 8.78% and 8.85%, respectively.

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