Classifieds revenues increased 13% in Q4 2020 compared with Q4 2019, primarily driven by growth of auto vehicle reports and listing fees revenues. Classifieds revenue growth decelerated slightly compared to Q3 2020, as COVID-related supply chain disruptions continued to put pressure on demand-supply balance (though the situation began to improve in December).

Media Services

The Media Services segment includes KinoPoisk, Yandex.Music, Yandex.Afisha, our production center Yandex.Studio and our subscription service Yandex.Plus. 


 
In RUB millions         Three months ended December 31,  Twelve months ended December 31, 
                        2019      2020         Change    2019        2020        Change 
Revenues                1,333     2,901        118%      3,867       7,807       102% 
Adjusted EBITDA:        (688)     (1,141)      66%       (2,202)     (3,735)     70% 
Adjusted EBITDA margin: -51.6%    -39.3%       12.3%     -56.9%      -47.8%      9.1%

Media Services revenues grew 118% in Q4 2020 compared with Q4 2019. The increase was primarily driven by the growth of Yandex.Plus subscription revenues partially offset by decline in advertising and ticketing revenues. Increasing adjusted EBITDA losses reflect our investments in content and marketing on the back of increased demand for our services.

Other Bets and Experiments

The Other Bets and Experiments category includes our self-driving vehicles business ("Yandex SDG"), Zen, Geolocation Services ("Geo"), Edadeal, Investments, Yandex.Cloud and Yandex.Education. 


 
In RUB millions         Three months ended December 31, Twelve months ended December 31, 
 
                        2019       2020       Change    2019        2020        Change 
Revenues                2,659      4,138      56%       7,877       11,851      50% 
Adjusted EBITDA:        (1,542)    (1,475)    -4%       (5,022)     (7,259)     45% 
Adjusted EBITDA margin: -58.0%     -35.6%     22.4%     -63.8%      -61.3%      2.5%

Other Bets and Experiments revenues increased 56% in Q4 2020 compared with Q4 2019. The increase was primarily driven by the fast growth in Zen and Geo, as well as our Cloud business (Cloud revenues increased 4.3x compared with Q4 2019).

The adjusted EBITDA loss amounted to RUB 1.5 billion, down from a loss of RUB 1.9 billion in Q3 2020, primarily driven by the improved performance in Geo, Cloud and Zen businesses, partially offset by somewhat higher investments in Yandex SDG (where adjusted EBITDA loss was RUB 920 million in Q4 2020) and our Education initiatives.

Eliminations

Eliminations related to our revenues represent the elimination of transactions between the reportable segments, primarily related to advertising. Eliminations related to our adjusted EBITDA mainly reflect reallocation of a portion of Search and Portal D&A expenses related to leasehold improvements to office rent expenses of our business units. 


 
In RUB millions         Three months ended December 31, Twelve months ended December 31, 
 
                        2019       2020       Change    2019        2020 *       Change 
Revenues: 
Segment revenues        54,461     76,852     41%       184,268     231,579      26% 
Eliminations            (2,765)    (5,253)    90%       (8,877)     (13,235)     49% 
Total revenues          51,696     71,599     39%       175,391     218,344      24% 
Adjusted EBITDA: 
Segment adjusted EBITDA 13,176     13,995     6%        50,813      49,420       -3% 
Eliminations            54         45         -17%      201         342          70% 
Total adjusted EBITDA   13,230     14,040     6%        51,014      49,762       -2%

* Including RUB 13,867 million of revenues and RUB 4,113 million of adjusted EBITDA loss of Yandex.Market since July 24, 2020.

Eliminations related to our revenues increased 90% in Q4 2020 compared with Q4 2019. Excluding Yandex.Market, eliminations related to our revenues increased 60% in Q4 2020. The increase was mainly attributed to higher intercompany TAC related to fast growing Zen business, the intercompany eliminations related to Yandex.Plus program as well as intercompany revenue in Search & Portal.

Adjusted EBITDA increased 6% in Q4 2020 compared with Q4 2019. Excluding Yandex.Market, adjusted EBITDA increased 29%. The growth was mainly driven by the solid performance of the Search and Portal and Taxi segments and year-on-year improvement in the profitability of Classifieds segment, which were slightly offset by our investments in Media Services.

Interest income in Q4 2020 was RUB 1,161 million, compared with RUB 807 million in Q4 2019.

Interest expense in Q4 2020 was RUB 747 million, up from RUB 31 million in Q4 2019, reflecting interest on the convertible bonds issued in February 2020.

Foreign exchange loss in Q4 2020 was RUB 831 million, compared with a foreign exchange loss of RUB 999 million in Q4 2019. This loss reflects the appreciation of the Russian ruble during Q4 2020 from RUB 79.6845 to USD1.00 on September 30, 2020, to RUB 73.8757 to USD1.00 on December 31, 2020. Our Russian operating subsidiaries' functional currency is the Russian ruble, and therefore changes due to exchange rate fluctuations in the ruble value of these subsidiaries' monetary assets and liabilities that are denominated in other currencies are recognized as foreign exchange gains or losses within the other income/(loss), net line in the unaudited condensed consolidated statements of income. Although the U.S. dollar value of our U.S. dollar-denominated assets and liabilities was not impacted by these currency fluctuations, they resulted in a downward revaluation of the ruble equivalent of these U.S. dollar-denominated monetary assets and liabilities in Q4 2020.

Income tax expense for Q4 2020 was RUB 3,788 million, up from RUB 3,068 million in Q4 2019. Our effective tax rate of 90.4% in Q4 2020 was lower than 91.6% in Q4 2019. If we remove the effects of SBC expense, deferred tax asset valuation allowances, tax provisions recognized, goodwill impairment and certain losses from equity-method investments which are non-deductible, our effective tax rate for Q4 2020 was 19.4%, compared with 23.1% for Q4 2019 as corrected for similar effects in that year. The decrease in the tax rate without above-mentioned effects was primarily driven by the permanent difference between US GAAP and tax accounting in the books of our certain foreign subsidiaries.

Net income was RUB 0.4 billion (USD5.4 million) in Q4 2020, up 43% compared with the net income of RUB 0.3 billion in Q4 2019.

Adjusted net income in Q4 2020 was RUB 6.3 billion (USD85.4 million), a 17% increase from Q4 2019.

Adjusted net income margin was 8.8% in Q4 2020, compared with 10.4% in Q4 2019.

As of December 31, 2020, Yandex had cash, cash equivalents and term deposits of RUB 238.2 billion (USD3,224.2 million), including cash, cash equivalents and term deposits of Yandex.Taxi in total amount of RUB 27.3 billion (USD370.1 million).

Net cash flow provided by operating activities for Q4 2020 was RUB 6.1 billion (USD83.1 million) and capital expenditures were RUB 7.2 billion (USD97.1 million).

Redeemable noncontrolling interests presented in our unaudited condensed consolidated balance sheets relate to the equity incentive arrangements we have made available to the senior employees of the Taxi, Classifieds and Yandex.Market segments, pursuant to which such persons are eligible to acquire depositary receipts, or receive options to acquire depositary receipts, which entitles them to economic interests in the respective business unit subsidiaries.

The total number of shares issued and outstanding as of December 31, 2020 was 354,210,533, including 318,501,858 Class A shares, 35,708,674 Class B shares, and one Priority share and excluding 1,928,621 Class A shares held in treasury and all Class C shares outstanding solely as a result of the conversion of Class B shares into Class A shares. Any such Class C shares will be cancelled.

There were also employee share options outstanding to purchase up to an additional 2.8 million shares, at a weighted average exercise price of USD38.70 per share, 1.7 million of which were fully vested; equity-settled share appreciation rights (SARs) for 0.1 million shares, at a weighted average measurement price of USD32.72, all of which were fully vested; restricted share units (RSUs) covering 15.9 million shares, of which RSUs to acquire 5.4 million shares were fully vested and performance share units (PSUs) for 0.2 million shares. Equity awards in respect of business unit subsidiaries are described under Redeemable noncontrolling interests above.

Financial outlook

Assuming no further escalation of the coronavirus pandemic and gradual improvement of the situation from the second quarter of the year, we expect our total group revenues to be between 305 and 320 billion rubles for the full year 2021. The growth will be primarily driven by an acceleration of revenue dynamic across our E-commerce businesses (Yandex.Market, Lavka and grocery part of Yandex.Eats), as well as recovery in Search & Portal and Ride-hailing segments.

Our outlook reflects our current view, based on the trends that we see in the beginning of the year, and may change subject to the economic impact of the coronavirus pandemic and potential further disruptions caused by the health crisis.

Conference Call Information

Yandex's management will hold an earnings conference call on February 16, 2021 at 8:00 AM U.S. Eastern Time (4:00 PM Moscow time; 1:00 PM London time).

We recommend using the dial-in option if you plan to ask questions. In this case please dial-in at least 10 minutes prior to the call start time (using dial-in number and confirmation code stated below).

To access the conference call live, please dial:

US: +1 646 828 8193

UK/International: +44 (0) 330 336 9411

Russia: 8 10 800 2867 5011

Passcode: 8261645

A live and archived webcast of this conference call will be available at

https://www.webcast-eqs.com/yandex20210216

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February 16, 2021 06:02 ET (11:02 GMT)