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Yandex (YNDX) Earnings Miss, Revenues Beat Estimates in Q3
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Yandex N.V. (YNDX - Free Report) reported third-quarter 2018 adjusted earnings of 28 cents (RUB 15.25) per share missing the Zacks Consensus Estimate by 2 cents. However, it surged significantly from the year-ago quarter’s figure of RUB 2.72 per share.
Revenues came in $496.6 million (RUB 32.6 billion), beating the Zacks Consensus Estimate of $468 million. The figure exhibited year-over-year growth of 39% in ruble terms.
The top line was driven by strong segmental performance of especially Taxi, Classifieds, Media Services and Experiments. Further, the company’s strengthening position in the search market and rising online advertisement revenues remained positive throughout the quarter under review.
Additionally, the company witnessed growth of 13% in its paid clicks during the reported quarter.
However, the deconsolidation effect of Yandex.Market remained an overhang throughout the third quarter. Excluding this impact, the revenues would have reflected growth of 44% on a year-over-year basis.
Notably, shares of Yandex have lost 15.6% on a year-to-date basis compared with the industry’s decline of 30.3%.
Top-Line Details
Total revenues of Yandex can be categorized into two groups: online advertising revenues and other revenues.
The total online advertising revenues came in RUB 25.9 billion (79.6% of total revenues), exhibiting growth of 18.3% on a year-over-year basis.
This was primarily driven by robust performance of Yandex properties which accounted for 77% of the total advertising revenues and exhibited year-over-year growth of 22.1%. Further, Advertising network revenues contributed 23% to the advertising revenues and grew 7%.
Excluding deconsolidation effect of Yandex.Market, the online advertising revenues would have grown 24%.
Other revenues came in RUB 6.6 billion (20.4% of total revenues), soaring 327% from the prior-year quarter. This can be attributed to the strong performance of Yandex.Taxi and Yandex.Drive.
Segments in Detail
Search and Portal: This segment remains the company’s key growth driver. Yandex generated RUB 26.7 billion revenues (81.9% of total revenues), up 26% year over year. This can primarily be attributed to the company’s increasing share in the Russian search market which reached 55.9% in the reported quarter and expanded 100 basis points (bps) from the year-ago quarter. Both the desktop and mobile search reached 66.9% and 27.5%, expanding 50 bps and 490 bps year over year, respectively. Notably, mobile search played a significant role in driving the top line within this segment. The company’s search share on Android and iOS came in 49.1% and 40.7%, respectively. Mobile traffic accounted for 48.7% of the total search traffic in this quarter.
Taxi: Yandex generated RUB 5.1 billion revenues (15.7% of revenues), increasing from $1.2 billion in the year-ago quarter. Impressive year-over-year growth was driven by increasing number of rides which soared 131% from the prior-year quarter.
Classifieds: Yandex generated revenues of RUB 988 million (3% of revenues) from this segment, advancing 80.3% year over year. This was driven by improving dealership business under auto.ru division of the company. Moreover, listing fees and VAS contributed well to top-line growth within this segment.
Media Services: This segment generated revenues of RUB 414 million (1.3% of revenues), up 43% from the year-ago quarter. This came on the back of expanding global footprint of Yandex.Music content library of KinoPoisk.
Experiments: This segment yielded RUB 706 million revenues (2.2% of total revenues), up from $92 billion in the prior-year quarter. This was driven by improved performance of the company’s Cloud and Zen units. Further, Yandex.Drive contributed well in the reported quarter.
In third-quarter 2018, adjusted net income margin was 18.7%, expanding 860 bps from the year-ago quarter.
Per the company, its operating margin came in 18.1% in the third quarter, up from 7.9% in the year-ago quarter. Further, Adjusted EBITDA margin was 32.9%, expanding 860 bps year over year. This can primarily be attributed to favorable currency change.
Operating expenses as a percentage of revenue was 81.9%, declining from 92.1% in the year-ago quarter.
The company’s total traffic acquisition cost (TAC) came in RUB 5.3 billion, surging 20% on a year-over-year basis. This was due to increase in TAC related to distribution partners and partner advertising network.
Balance Sheet & Cash Flows
As of Sep 30, 2018, cash and cash equivalents were $753 million, up from $572.5 million as of Jun 30, 2018.
Term deposits were $672 million, up from $958 million in the previous quarter.
For the third quarter, cash flow from operations was $115.8 million which declined from the previous-quarter figure of $191.4 million.
Additionally, Yandex repurchased 4.5 million shares worth $141 million during the reported quarter.
Guidance
For 2018, Yandex improved its outlook for total revenues. The ruble-based total revenues are expected to grow in the range of 35-38% from 2017, which was previously in the band of 30-35%.
The company anticipates ruble-based revenue from Search and Portal segment to grow in the range of 21-23% from 2017.
Long-term earnings growth rate for Upland Software, Ringcentral and AMETEK is currently pegged at 20%, 28.83% and 10.97%, respectively.
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Yandex (YNDX) Earnings Miss, Revenues Beat Estimates in Q3
Yandex N.V. (YNDX - Free Report) reported third-quarter 2018 adjusted earnings of 28 cents (RUB 15.25) per share missing the Zacks Consensus Estimate by 2 cents. However, it surged significantly from the year-ago quarter’s figure of RUB 2.72 per share.
Revenues came in $496.6 million (RUB 32.6 billion), beating the Zacks Consensus Estimate of $468 million. The figure exhibited year-over-year growth of 39% in ruble terms.
The top line was driven by strong segmental performance of especially Taxi, Classifieds, Media Services and Experiments. Further, the company’s strengthening position in the search market and rising online advertisement revenues remained positive throughout the quarter under review.
Additionally, the company witnessed growth of 13% in its paid clicks during the reported quarter.
However, the deconsolidation effect of Yandex.Market remained an overhang throughout the third quarter. Excluding this impact, the revenues would have reflected growth of 44% on a year-over-year basis.
Notably, shares of Yandex have lost 15.6% on a year-to-date basis compared with the industry’s decline of 30.3%.
Top-Line Details
Total revenues of Yandex can be categorized into two groups: online advertising revenues and other revenues.
The total online advertising revenues came in RUB 25.9 billion (79.6% of total revenues), exhibiting growth of 18.3% on a year-over-year basis.
This was primarily driven by robust performance of Yandex properties which accounted for 77% of the total advertising revenues and exhibited year-over-year growth of 22.1%. Further, Advertising network revenues contributed 23% to the advertising revenues and grew 7%.
Excluding deconsolidation effect of Yandex.Market, the online advertising revenues would have grown 24%.
Other revenues came in RUB 6.6 billion (20.4% of total revenues), soaring 327% from the prior-year quarter. This can be attributed to the strong performance of Yandex.Taxi and Yandex.Drive.
Segments in Detail
Search and Portal: This segment remains the company’s key growth driver. Yandex generated RUB 26.7 billion revenues (81.9% of total revenues), up 26% year over year. This can primarily be attributed to the company’s increasing share in the Russian search market which reached 55.9% in the reported quarter and expanded 100 basis points (bps) from the year-ago quarter. Both the desktop and mobile search reached 66.9% and 27.5%, expanding 50 bps and 490 bps year over year, respectively. Notably, mobile search played a significant role in driving the top line within this segment. The company’s search share on Android and iOS came in 49.1% and 40.7%, respectively. Mobile traffic accounted for 48.7% of the total search traffic in this quarter.
Taxi: Yandex generated RUB 5.1 billion revenues (15.7% of revenues), increasing from $1.2 billion in the year-ago quarter. Impressive year-over-year growth was driven by increasing number of rides which soared 131% from the prior-year quarter.
Classifieds: Yandex generated revenues of RUB 988 million (3% of revenues) from this segment, advancing 80.3% year over year. This was driven by improving dealership business under auto.ru division of the company. Moreover, listing fees and VAS contributed well to top-line growth within this segment.
Media Services: This segment generated revenues of RUB 414 million (1.3% of revenues), up 43% from the year-ago quarter. This came on the back of expanding global footprint of Yandex.Music content library of KinoPoisk.
Experiments: This segment yielded RUB 706 million revenues (2.2% of total revenues), up from $92 billion in the prior-year quarter. This was driven by improved performance of the company’s Cloud and Zen units. Further, Yandex.Drive contributed well in the reported quarter.
Yandex N.V. Price, Consensus and EPS Surprise
Yandex N.V. Price, Consensus and EPS Surprise | Yandex N.V. Quote
Operating Details
In third-quarter 2018, adjusted net income margin was 18.7%, expanding 860 bps from the year-ago quarter.
Per the company, its operating margin came in 18.1% in the third quarter, up from 7.9% in the year-ago quarter. Further, Adjusted EBITDA margin was 32.9%, expanding 860 bps year over year. This can primarily be attributed to favorable currency change.
Operating expenses as a percentage of revenue was 81.9%, declining from 92.1% in the year-ago quarter.
The company’s total traffic acquisition cost (TAC) came in RUB 5.3 billion, surging 20% on a year-over-year basis. This was due to increase in TAC related to distribution partners and partner advertising network.
Balance Sheet & Cash Flows
As of Sep 30, 2018, cash and cash equivalents were $753 million, up from $572.5 million as of Jun 30, 2018.
Term deposits were $672 million, up from $958 million in the previous quarter.
For the third quarter, cash flow from operations was $115.8 million which declined from the previous-quarter figure of $191.4 million.
Additionally, Yandex repurchased 4.5 million shares worth $141 million during the reported quarter.
Guidance
For 2018, Yandex improved its outlook for total revenues. The ruble-based total revenues are expected to grow in the range of 35-38% from 2017, which was previously in the band of 30-35%.
The company anticipates ruble-based revenue from Search and Portal segment to grow in the range of 21-23% from 2017.
Zacks Rank and Stocks to Consider
Yandex carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology sector are Upland Software (UPLD - Free Report) , Ringcentral (RNG - Free Report) and AMETEK (AME - Free Report) . While Upland Software and Ringcentral sport a Zacks Rank #1 (Strong Buy), AMETEK carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Upland Software, Ringcentral and AMETEK is currently pegged at 20%, 28.83% and 10.97%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>