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Yandex (YNDX) Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Yandex's (YNDX) third-quarter results benefit from improving online advertising revenues, and strength across Search, Taxi, Classifieds and Media Services segments.

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Yandex N.V. YNDX reported third-quarter 2021 adjusted earnings of 5 cents per share, beating the Zacks Consensus Estimate by 25%.

However, the bottom line declined 81.5% year over year.

Revenues were $1.25 billion. In ruble terms, the figure stands at RUB 91.3 billion, which rose 57% on a year-over-year basis.

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

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

- Zacks

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

Yandex N.V. Price, Consensus and EPS Surprise

Yandex N.V. Price, Consensus and EPS Surprise

Yandex N.V. price-consensus-eps-surprise-chart | Yandex N.V. Quote


Top-Line Details

Total online advertising revenues were RUB 42.6 billion (46.7% of total revenues), reflecting year-over-year growth of 28%.

Taxi revenues, excluding sales of goods, were RUB 26.3 billion (28.8% of total revenues), up 66% on a year-over-year basis, driven by strength in the Yandex.Eats, ride-hailing and logistics businesses.

Other revenues of RUB 8.5 billion (9.2% of total revenues) surged 146% from the prior-year quarter. This was primarily driven by well-performing Media Services, the expanding cloud business and Yandex.Market.

Revenues from sales of goods were $13.9 billion (15.3% of revenues), which grew 136% from the year-ago quarter.

Segments in Detail

Search and Portal: The segment generated RUB 42.7 billion revenues (46.8% of total revenues), up 33% year over year. Notably, its share in the Russian search market was 59.3%in the reported quarter, which remained flat year over year.

Notably, mobile revenues accounted for 57.5% of the company's search revenues. Further, mobile search traffic accounted for 66.2% of total search traffic. This was driven by Yandex’s search share on Android, which was 58.9%, expanding 20 bps from the year-ago quarter.

Taxi: The segment generated RUB 34.01 billion revenues (37.2% of revenues), rising 83% 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, an improvement in the ride-hailing business remained a major positive. The number of rides increased 44% from the prior-year quarter.

Classifieds: The segment generated revenues of RUB 2.1 billion (2.3% of revenues), reflecting year-over-year growth of 31%. This was attributed to the launch of the auction model and growing revenues from auto dealers’ listings.

Media Services: The segment generated revenues of RUB 4.3 billion (4.7% of revenues), soaring 143% from the year-ago quarter. This can primarily be attributed to the solid momentum across Yandex.Plus subscription.

Other Business Units and Initiatives: The segment accounted for revenues of RUB 5.8 billion (6.4% of total revenues), up 115% 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.

Yandex.Market: The segment accounted for revenues of RUB 8.7 billion (9.5% of total revenues) in the reported quarter. The strong marketplace business, owing to the growing momentum across third-party sellers, remained noteworthy. Notably, the active buyer number grew 95% year over year to 8.4 million. Further, the active seller number increased 178% year over year to 17.7 thousand.

Operating Details

In third-quarter 2021, the adjusted net income margin was 1.5%, contracting from 12.9% in the year-ago quarter.

Operating expenses were RUB 51.3 billion, which was up 71% from the prior-year quarter.

The company incurred a loss of RUB 5.7 billion from operations compared with RUB 6.3 billion of operating income.

The company’s total traffic acquisition costs amounted to RUB 6.9 billion, up 52% on a year-over-year basis. As a percentage of revenues, the figure contracted 20 bps year over year to 7.5% in the reported quarter.

Balance Sheet & Cash Flows

As of Sep 30, 2021, cash and cash equivalents were $1.12 billion, down from $1.21 billion as of Jun 30, 2021.

Accounts receivable totaled $441.3 million, increasing from $387.1 million in the previous quarter.

In the third quarter, the company generated $30.3 million of cash from operations compared with $67.3 of cash used in operations in the prior quarter.

2021 Guidance

For 2021, the company has revised the total revenues guidance from RUB 330-RUB 340 billion to RUB 340-RUB 350 billion.

Zacks Rank & Stocks to Consider

Currently, Yandex has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Trimble TRMB, Semtech Corp. SMTC and Applied Materials AMAT, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for Trimble, Semtech and Applied Materials are currently projected at 10%, 12.5% and 19.35%, respectively.

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