UBS Russia & CIS One-on-One Conference

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Transcription:

UBS Russia & CIS One-on-One Conference Search February 2012

Forward Looking Statement Disclaimer This presentation contains forward-looking statements that involve risks and uncertainties. These include statements regarding the anticipated development of the internet search market, the planned growth of our business and our anticipated revenues and capital expenditures. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, competitive pressures, our ability to attract and retain users, advertisers and partners, changes in advertising patterns, changes in internet usage patterns, changes in the legal and regulatory environment, technological developments, unforeseen changes in our hiring patterns, and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in our Prospectus dated May 24, 2011, which is on file with the Securities and Exchange Commission and is available on our investor relations website. All information provided in this presentation is as of February 22, 2012, and Yandex expressly disclaims any duty to update this information unless required by law. 2

Introduction We Are the Market Leader Search Leader 59.6% search market share in Russia 1 #1 Internet Destination 45 million unique visitors per month 2 44% of Russian users homepages 3 Leading Online Advertising Platform 270,000+ advertisers in 2011 4 51% online ad market share 5 Largest Russian Internet Business FY 2011 $622m Revenues 6 (60% yoy growth) $287m Adj. EBITDA 7 (50% yoy growth) 1 Source: Liveinternet, January 2012 2 Source: comscore (December 2011) 3 Source: TNS, January 2011 4 Source: Company Information, FY 2011 5 Source: AKAR 2011, as of Feb 21, 2012, adjusted for commissions 6 Source: Company Information for the FY period 2011, using an exchange rate of RUR 32.1961 to $1.00 as of Dec 31, 2011 7 Source: Company Information for the FY period 2011, using an exchange rate of RUR 32.1961 to $1.00 as of Dec 31, 2011 Adjusted EBITDA is EBITDA before share-based compensation. See slide 22 for reconciliation to US GAAP Net income 3

India China Russia Brazil EU USA Brazil India China Russia USA EU Introduction Russia: One of the Few Bright Lights Favorable Macroeconomic Backdrop Online Advertising has Consistently Outperformed Even in Softer Macro Periods Nominal GDP Growth 2012e 2011 Public Debt / GDP Russian Advertising Market Growth 1 13.7% 12.4% 100% 82% 40% 56% 11.4% 8.7% 65% 62% 17% 9% 15% 16% 5% 27% 3.2% 2.9% 12% -27% 2008 2009 2010 2011 Total (ex-online) Online Source: IMF, Feb-2012 Source: ZenithOptimedia, AKAR as of Feb 22, 2012 1. RUR, current prices 4

2011-13e Online Ad spend CAGR (current prices) Introduction The Russian Online Advertising Market is Booming Russian Online Ad Market (RUR BN) (1) Online Ad Growth Has Accelerated and Contextual Continues to Grow Faster Than Display Russian Advertising Market Growth 2011 +45% +63% 41.8 2010 +28% +47% Contextual Display Source: AKAR as of Feb 22, 2012 26.8 Structural Under-Development Supports Upside 40% 30% BRIC 20% Key developed markets Online Ad Penetration 2010 2011 2012E 12% Source: AKAR, as of Feb 22, 2012 16% Apr-11 forecast growth (2) 1. AKAR as of Feb 22, 2012. Figures exclude VAT 2. ZenithOptimedia as of Apr-11 3. ZenithOptimedia as of Dec-11 10% 0% 5% 10% 15% 20% 25% 30% Online as % of Total Ad Spend (2011e) Source: ZenithOptimedia, AKAR as of Feb 22, 2012 5

Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Consistent Market Leadership 65% 58% 59.6% 54% 26% 26% 26% 17% 5% 5% 9% 2% Source: LiveInternet.ru (Jan 2012) Search traffic reflects Russian users to Russian websites 6

Introduction Business Continues to Deliver Strong Growth Advertisers ( 000) Paid Click Growth (Y/Y) Revenues (RUR) 56% 159 174 +68% +65% 65% 6,439 144 57% 5,159 +47% 4,541 Q2'11 Q3'11 Q4'11 Q2'11 Q3'11 Q4'11 Q2'11 Q3'11 Q4'11 Y/Y Growth 7

Yandex is Search and Much More Machine learning in ad network Social demographic targeting New multimedia formats Ad network Search app for iphone Yandex.Taxi App Search Apps Mobile websites Partnerships with MS, Samsung, Nokia, HTC Default search on WindowsPhone 7 & bada in Russia Acquisition of SPB Software Auto & realty Search Mobile Online payments Verticals Market Jobs 3D images User credentials Reykjavik, Localized search autocomplete People search Twitter partnership Maps Country-wide route planner Public transport Personal services Mail Mobile wallet & apps Integration with social networks Integration with bank cards Expansion into CIS Social authorization E-mail translation 8

Introduction At the Forefront of Mobile Innovation Smartphone Penetration Has Room to Increase Focusing on major platforms Smartphone Units Sales as % Total Mobile Units Sales (2011e) 1 96% 55% 51% 42% 40% 38% 33% 19% 9% 7% 2% Japan US UK France Germany Spain Italy Russia Brazil China India Source: Gartner, Q4 2011, MTS for Russia, 2011 Russian Mobile Browser Market Share Others 12.0% Safari 10.9% 10.8% 66.3% Source: StatCounter 2, January 2012 1. For Russia, MTS smartphone units sales as % of total mobile units sales in 2011 in retail network 2. StatCounter statistics are collected on a sample of 15 billion + page views per month collected on the StatCounter network of 3 million + websites 9

Working with Partners To Become The Leader in Mobile Search Yandex is default service provider for Samsung bada platform in Russia & CIS Yandex search is default on newly shipped Samsung WP7 handsets in Russia Yandex homepage in Android-handsets Yandex as default search in WP7 FW-update Yandex Search in Nokia browsers (since summer 2010) Yandex as default search in WP7 smartphones in Russia Preinstallation of Maps app, Search widget in Android handsets Yandex services freely available in iphone app store 10

Introduction Providing Must-Have Applications for All Mobile Platforms Money Search Mail Search Verticals Solutions for Turkey and Many Other Map Based Services 11

Introduction Innovating with New Advertising Formats Improving Services and Monetization Local-Based Ads Focused on small businesses: allows to promote a business into priority placement Yandex Ad Network Enhancing click prediction through MatrixNet machine learning technology Average click-through rate has grown by c. 20% in the first month since launch Yandex Crypta Demographic targeting for display ads Social profile prediction 12

Turkey Our First International Market Expected to be among leading EMEA markets in terms of Ad Expenditure growth in 2011-2014 Turkey at a Glance 1 Yandex in Turkey Population of 76MM Internet users ( 11): 35MM (46%) 2B local webpages Online ad market ( 13E): $300MM - Online ad penetration: 8% No established #2 player in search 2.0MM users in January 2012 2 >200K daily users of the portal 2 Exclusive content on Yandex.Maps Turkish Market: Fast Growing and Sizeable Maps and Map Based Services News Mail Weather Search for goods Image search Video search Widgets 130K downloads of Yandex Mobile Maps 1 Euromonitor; FOM; Global Insight; InternetWorldStats.com; ZenithOptimedia; Advertising Expenditure Forecasts, December 2011; Internet user penetration based on total population (source: Global Insight) 2 comscore, January 2012 13

Financials 14

Financial Review Financial Summary Revenues 1 (RUR MM) Adjusted EBITDA 2 (RUR MM) 20,033 9,237 12,500 $622 3 $287 6,164 3 4,249 7,649 8,729 4,125 6,439 2,384 3,825 3,759 2,206 3,269 2007 2008 2009 2010 2011 Q4 2010 Q4 2011 2007 2008 2009 2010 2011 Q4 2010 Q4 2011 Adjusted Net Income 2 (RUR MM) Capex (RUR MM) 20% 17% 11% 18% 28% 17% 27% 6,003 5,562 1,561 2,523 2,270 3,968 $187 3 1,470 2,198 832 1,337 987 2,199 $173 3 712 1,749 2007 2008 2009 2010 2011 Q4 2010 Q4 2011 2007 2008 2009 2010 2011 Q4 2010 x% Capex/Gross Revenue Q4 2011 1. Revenues are recognized net of VAT, discounts and commissions, but gross of TAC 2. Adjusted EBITDA is before share-based compensation and Adjusted Net Income is before share-based compensation and tax-adjusted foreign exchange (gains)/losses at the relevant Russian statutory rate. See slide 22 for reconciliation to US GAAP net income. 3. Translated using an exchange rate of RUR32.1961 to $1.00. $ figures shown in charts expressed in millions 15

Financial Review Revenues Revenues 1 (RUR MM) and Contribution by Source (%) 20,033 10% 2% 13% 12% 12,500 10% 2% 4,249 16% 16% 65% 2% 7,649 12% 24% 62% 2% 8,729 11% 20% 66% 3% 12% 76% 76% 4,125 12% 75% 2% 11% 6,439 13% 16% 68% 2% 2007 2008 2009 2010 2011 Q4 2010 Q4 2011 Text-based O&O Text-based Yandex Ad Network Display Yandex.Money and Other Items may not total 100% due to rounding 1. Revenues are recognized net of VAT, discounts and commissions, but gross of TAC 16

Key Investment Highlights Operational Metrics Growth in Paid Clicks and CPC 92% 76% 69% 60% 39% 51% 47% 68% 65% 18% 17% 16% 28% 29% 34% 22% 20% 24% 26% -3% -7% 13% 19% 17% 21% 7% 8% -1% -7% -15% -13% -18% Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Clicks Y/Y Growth CPC Y/Y Growth CTR Improvements Resulted in Greater Affordability of Contextual Advertising 17

Key Investment Highlights Traffic Acquisition Costs TAC Breakdown as % of Revenue 1 (RUR MM) 14% 12% 15% 15% 12% 12% 13% 12% 13% 12% 14% 14% 16% 16% 10% 10% 9% 5% 7% 5% 7% 5% 7% 6% 8% 6% 8% 6% 6% 5% 2% 3% 3% Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 TAC Distribution TAC Partner TAC 1. Breakdown of TAC items may differ from total TAC as % sales due to rounding 18

Financial Review Adjusted EBITDA seasonally higher in Q4 Adjusted EBITDA 1 (RUR MM) and Margin (%) 1 1 1 Items may not total 100% due to rounding 1. Adjusted EBITDA is EBITDA before share-based compensation. Adjusted EBITDA Margin means adjusted EBITDA divided by US GAAP revenues. Adjusted ex-tac EBITDA margin means adjusted EBITDA divided by ex-tac revenues. For a reconciliation of these non-gaap financial measures to their most directly comparable US GAAP measures, see slide 22. 19

Financial Review Adjusted Net Income Adjusted Net Income 1 (RUR MM) and Margin (%) 29% 25% 37% 36% 32% 31% 41% 36% 36% 32% 32% 32% 34% 28% 28% 28% 40% 34% 35% 30% 6,003 3,968 586 935 978 1,469 1,088 1,258 1,459 2,198 Q1 2010 Q2 2010 Q3 2010 Q4 2010 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 1 1 1 Adjusted Net Income Adjusted Net Income Margin Gross Adjusted ex-tac Net Income Margin 1. Adjusted net income is net income before share-based compensation and foreign exchange (gains)/losses in both cases tax-adjusted. Adjusted net income margin is adjusted net income divided by US GAAP revenues. Adjusted ex-tac net income margin is adjusted net income divided by ex-tac revenues. For a reconciliation of these non-gaap measures to their most directly comparable US GAAP measures see slide 22. 20

Financial Review Company Outlook for 2012* Revenue To increase 40-45% in RUR y-o-y Capex Approximately 20% of Revenue * As of February 22, 2012 21

Reconciliation of non-gaap financial measures Reconciliation of Ex-TAC Revenues to US GAAP Revenues Reconciliation of Adjusted EBITDA to US GAAP Net Income Reconciliation of Adjusted Net Income to US GAAP Net Income 22

Appendix Ownership structure 1 Shareholders Economic Ownership 2 Principal Shareholders 35.4% Baring Vostok 19.0% Tiger Global 3 16.3% Directors, Officers & Employees 25.7% Arkady Volozh (CEO) 12.4% Ilya Segalovich (CTO) 2.6% Other Directors 4 3.9% Other Officers & Employees 6.9% Other Pre-IPO Shareholders 11.4% Public Investors 27.5% Total 100% Excludes options outstanding Items may not total due to rounding 1. As of February 15, 2012 2. Shares held by number 3. Based solely on the information as at December 31, 2011 contained in Schedule 13-G filed by Tiger Global 4. 3,926,000 Class B shares held by Cole Management Inc. are now allocated to other pre-ipo shareholders since Ben Cole s death 23