A month has gone by since the last earnings report for Yandex (
YNDX Quick Quote YNDX - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Yandex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Yandex's Q4 Earnings Beat, Revenues Miss Estimates
Yandex reported fourth-quarter 2020 adjusted earnings of 23 cents per share, whereas the Zacks Consensus Estimate was pegged at a loss of 4 cents per share.
However, the figure declined 14.8% sequentially and 8% year over year. Revenues of $969.2 million (RUB 71.6 billion) lagged the Zacks Consensus Estimate of $1.02 billion. In ruble terms, the figure rose 39% on a year-over-year basis and 22.8% from the previous quarter. The reported revenue figure includes the consolidated financial results of Yandex.Market. Notably, Yandex became the controlling shareholder of Yandex.Market in July 2020 after which it got reorganized into the business. Further, the company reformed its e-commerce segment, following the reorganization. Improving momentum across the company’s online advertising remained a major positive. Further, strong growth across Search, Classifieds, Taxi, Media Services, and Other Bets and Experiments segments drove top-line growth. Further, the reorganization of Yandex.Market was a tailwind. Excluding the impacts of Yandex.Market, the top-line figure stands at $864.6 million or RUB 63.9 billion, reflecting a rise of 24% and 9.6% from the year-ago quarter and the prior quarter, respectively. However, coronavirus-induced supply-chain disruptions were concerns. Top-Line Details
Total online advertising revenues were RUB 38.4 billion (54% of total revenues), reflecting growth of 12% on a year-over-year basis.
This was driven by the strong performance of Yandex properties that generated RUB 32.4 billion (84.3% of total advertising revenues), increasing 17% year over year. However, softness in the advertising network, which generated RUB 6.05 billion (15.7% of the total advertising revenues), was a negative. The figure slumped 9% from the year-ago quarter. Taxi revenues of RUB 21.6 billion (30% of total revenues) grew 50% on a year-over-year basis, driven by strength in the FoodTech, ride-hailing and logistics businesses. Other revenues of RUB 11.6 billion (16% of total revenues) surged 293% from the prior-year quarter. This was primarily driven by well-performingMedia Services, expanding cloud business, and strong IoT initiatives. Segments in Detail
Search and Portal: The segment generated RUB 37.1 billion revenues (51.8% of total revenues), up 8% year over year. The company’s strong position in the Russian search market remains a key catalyst.Notably, its market share was 59.7%inthe reported quarter, up 220 basis points (bps) year over year. This can be attributed to expanding Yandex’s mobile search share.
Notably, mobile revenues accounted for 53.3% of the company's search revenues. Further, mobile search traffic accounted for 60.5% of total search traffic. This was driven by Yandex’s search share on Android, which was58.6%, expanding 430 bps from the year-ago quarter. Taxi: The segment generated RUB 22.3billion revenues (31.1% of revenues), rising 54% 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 during the quarter under review. Further, improvement inthe ride-hailing business remained a major positive. The number of rides increased 17% from the prior-year quarter. Additionally, Yandex witnessed a strong performance by its corporate Taxi business. Classifieds: The segment generated revenues of RUB 1.8 billion (2.5% of revenues), reflecting year-over-year growth of 13%. This was attributed to growth of auto vehicle reports and rising license fee revenues. Media Services: The segment generated revenues of RUB 2.9 billion (4.1% of revenues), soaring 118% from the year-ago quarter. This can primarily be attributed to solid momentum across Yandex.Plus subscription. Notably, the total number of subscribers for Yandex.Plus stood at 6.8 million, up 152% year over year. Other Bets and Experiments: The segment accounted for revenues of RUB 4.1 billion (5.8% of total revenues), up 56% from the prior-year quarter. This was driven by the robust performance of Yandex’s Zen and Geo services. Further, the growing cloud business contributed well. E-Commerce: The segment accounted for revenues of RUB 8.7billion (12.1% of total revenues) in the reported quarter. Strong marketplace business, owing to growing momentum across third-party sellers, remained noteworthy. Operating Details
In fourth-quarter 2020, adjusted net income margin was 8.8%, contracting 160 bps from the year-ago quarter.
Its operating margin came in at 6.1% in the reported quarter, contracting 340 bps year over year. Further, adjusted EBITDA margin was 19.6%, which contracted 600 bps from the prior-year quarter. Operating expenses — as a percentage of revenues — was 93.9%, expanding 340 bps from the year-ago quarter. The company’s total traffic acquisition costs amounted to RUB 5.9 billion, declining 9% on a year-over-year basis. As a percentage of revenues, the figure contracted 430 bps year over year to 8.3% in the reported quarter. Balance Sheet & Cash Flows
As of Dec 31, 2020, cash and cash equivalents were $1.8 billion, up from $1.2 billion on Sep 30, 2020.
Accounts Receivables totaled $344.4 million, increasing from $245.2 million in the previous quarter. In the fourth quarter, cash generated from operations was $83.1 million compared with $237.2 million of cash used in operations in the third quarter. 2021 Guidance
For 2021, the company projects total revenues between RUB 305 billion and RUB 320 billion by expecting an improvement in the COVID-19 situation from second-quarter 2021 onwards.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -15.39% due to these changes.
Currently, Yandex has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Yandex has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.