UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

April 27, 2023

 

YANDEX N.V.

 

Schiphol Boulevard 165

1118 BG, Schiphol, the Netherlands.

Tel: +31 202 066 970

(Address, Including ZIP Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F     Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

 

 


Furnished as Exhibit 99.1 to this Report on Form 6-K is a press release of Yandex N.V. (the “Company”) dated April 27, 2023, announcing the Company’s results for the first quarter ended March 31, 2023.

Furnished as Exhibit 99.2 to this Report on Form 6-K is a letter to the shareholders of the Company dated April 27, 2023, to accompany the Company’s press release announcing the results for the first quarter ended March 31, 2023.

 


  SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

YANDEX N.V.

 

 

 

 

 

 

Date: April 27, 2023

By:

/s/ Svetlana Demyashkevich

 

 

Svetlana Demyashkevich

 

 

Chief Financial Officer

 


INDEX TO EXHIBITS

Exhibit No.

Description

99.1

Press release of Yandex N.V. dated April 27, 2023, announcing results for the first quarter ended March 31, 2023.

99.2

Letter to the shareholders of the Company dated April 27, 2023, to accompany the Company’s press release announcing the results for the first quarter ended March 31, 2023.


Exhibit 99.1

Yandex Announces First Quarter 2023 Financial Results

AMSTERDAM, the Netherlands, April 27, 2023 -- Yandex (NASDAQ and MOEX: YNDX), a Dutch public limited company and one of Europe's largest internet businesses, today announced its unaudited financial results for the first quarter ended March 31, 2023.

Q1 2023 Financial and Operational Highlights1,2

In RUB millions

Three months ended March 31

2022

2023

Change

Total Revenues

106,010

163,275

54%

Total Adjusted EBITDA3

1,271

12,794

n/m

Total Group

Total Adjusted EBITDA margin, %

1.2%

7.8%

6.6 pp

Net income/(loss)

(13,037)

5,785

n/m

Adjusted Net Income/(loss)

(8,124)

2,571

n/m

Share of Russian search market, %

61.0%

63.3%

2.3 pp

Search share on Android, %

59.9%

62.6%

2.7 pp

Search share on iOS, %

46.1%

49.1%

3.0 pp

Search and

Revenues

43,803

67,545

54%

Portal

Ex-TAC revenues

36,763

55,257

50%

Adjusted EBITDA

19,561

34,713

77%

Adjusted EBITDA margin, %

44.7%

51.4%

6.7 pp

Revenues

55,194

88,475

60%

E-Commerce, Mobility

GMV of Mobility4

167,418

224,734

34%

and Delivery

GMV of E-commerce5

64,580

107,836

67%

GMV of other O2O services6

40,105

68,515

71%

Total Adjusted EBITDA loss

(8,445)

(10,799)

n/m

Plus and Entertainment Services

Yandex Plus subscribers7, MM

12.5

22.1

77%

(1) Pursuant to SEC rules regarding convenience translations, Russian ruble (RUB) amounts have been translated into U.S. dollars in this release at a rate of RUB 77.0863 to $1.00, the official exchange rate quoted as of March 31, 2023 by the Central Bank of the Russian Federation.

(2) The following measures presented in this release are “non-GAAP financial measures”: ex-TAC revenues, adjusted EBITDA, adjusted EBITDA margin and adjusted net income/(loss). Please see the section “Use of Non-GAAP Financial Measures” below for a discussion of how we define these measures, as well as reconciliations at the end of this release of each of these measures to the most directly comparable U.S. GAAP measures.

(3) In March 2022, Yandex incurred one-off personnel expenses due to an additional (13th) month’s salary paid to employees in the aggregate amount of RUB 5,890 million in order to support them in the face of macroeconomic instability, including accelerated inflation and currency volatility. Excluding this one-off payment, total adjusted EBITDA was RUB 7.2 billion in Q1 2022.

(4) GMV (or gross merchandise value) of Mobility is defined as the total amount paid by customers for ride-hailing, car-sharing and scooters rent services booked through our platform, including VAT.

(5) GMV of E-commerce is defined as the value of all merchandise sold through our Yandex Market marketplace and Yandex Lavka as well as the value of products sold through Yandex Eats and Delivery Club grocery service (delivered and paid for), including VAT.

(6) GMV of other O2O (online-to-offline) services includes the total amount paid by customers and partner businesses for Yandex Delivery and Yandex Fuel services, the value of orders delivered through the Yandex Eats and Delivery Club Food Delivery services, Lavka Israel, and several other smaller O2O experiments, including VAT.

(7) Starting from June 2022, we made several adjustments to our methodology for calculating the number of subscribers, in particular: including mobile operators’ subscribers who do not have Yandex account, and improving the quality of counting unique users who have multiple Plus subscriptions. As a result, the previously disclosed numbers for Q1 2022 were restated.

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Financial outlook

Given that uncertainty concerning future geopolitical developments and the macro environment remains high, our visibility over the short- and medium-term is limited and we remain unable to provide any forward-looking expectations at this stage. We aim to remain transparent about the current performance and key trends across our businesses.

Corporate and Subsequent Events

On April 21, 2023, Yandex entered into an agreement with Uber NL Holdings 1 B.V., a subsidiary of Uber Technologies Inc., and on the same day Yandex acquired Uber’s entire remaining 28.98% interest in the MLU B.V. mobility joint venture, for total consideration in cash of $702.5 million. The boards of directors of both Uber and Yandex approved this transaction and it was not subject to the approval of the shareholders of either party. The parties received all required regulatory approvals.
On March 15, 2023, as a result of the continued geopolitical circumstances affecting Russia and their potential impact on the company, we received a notice from the Listing Qualifications Staff of Nasdaq which determined to delist the company’s securities from the Nasdaq Global Select Market as of March 24, 2023, exercising its broad discretionary authority under Nasdaq Listing Rule 5101 to delist securities. On March 21, 2023, we submitted a request for a hearing to appeal such determination. A hearing will be held in late April 2023, and the delisting of our Class A shares will be stayed pending the issuance of a written decision of the hearings panel. Until then, the trading halt that was implemented on February 28, 2022, remains in effect. As of the date of this press release, the trading of our shares on the Moscow Exchange remains intact, however the liquidity of our shares on that exchange remains limited to the number of shares held in the Russian National Stock Depository (NSD) system.
The Board is progressing the proposed restructuring of the Yandex group’s overall ownership and governance with a view to ensuring the group’s sustainable development and success of all of our businesses over the longer term (as previously announced in November 2022). The Board is working in particular on the potential divestment by our Dutch parent company of ownership and control of a number of our core businesses, including all Russia-based businesses. The Board also aims to enable the international divisions of certain services (self-driving, cloud computing, data labeling / AI training and EdTech) to develop independently from the Russia-based businesses. Our goal is to come to our shareholders for approval of a restructuring proposal later this year.
Neither Yandex N.V. nor any of its group companies is a target of sanctions in the United States, European Union, Switzerland or United Kingdom, and the Yandex group is not owned or controlled by any persons who have been designated under such sanctions. Yandex continues to closely monitor developments in this regard.

Impact of the current geopolitical crisis

Current geopolitical tensions and their impact on the Russian and global economy have created an exceptionally challenging environment for our business, team and shareholders.

These developments have adversely impacted (and may in the future materially adversely impact) the macroeconomic climate in Russia, resulting in volatility of the ruble, currency controls, materially increased interest rates and inflation and a potential contraction in consumer spending, as well as the withdrawal of foreign businesses and suppliers from the Russian market. In addition, laws or regulations may be adopted that may adversely affect our non-Russian shareholders and the value of the shares they hold in our company. We provided detailed information on our risk exposure and possible adverse impacts on our businesses in our Annual Report on Form 20-F for the year ended December 31, 2022, which was filed on April 20, 2023.

We continue to provide services to our users and partners with no interruptions. We are taking appropriate measures to conserve cash and to consider our capital allocation and budget appropriately during this period of uncertainty, while remaining committed to continue investing in the development of our key businesses and services. We are closely monitoring sanctions and export control developments as well as the macroeconomic climate and consumer sentiment in Russia and we are assessing contingency plans to address potential developments. Our Board and management are focused on the

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wellbeing of our approximately 23,000 employees in Russia and abroad, while doing everything we can to safeguard the interests of our shareholders and other stakeholders.

Consolidated Results

The following table provides a summary of our key consolidated financial results for the three months ended March 31, 2022 and 2023:

In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues

106,010

163,275

54%

Ex-TAC revenues

99,864

152,172

52%

Income/(loss) from operations

(12,434)

1,970

n/m

Adjusted EBITDA

1,271

12,794

n/m

Net income/(loss)

(13,037)

5,785

n/m

Adjusted net income/(loss)

(8,124)

2,571

n/m

Our segment disclosure is provided in the Segment financial results section below.

Cash, cash equivalents and term deposits as of March 31, 2023:

RUB 119.4 billion ($1,548.9 million) on a consolidated basis.

Segment financial results

Starting in Q1 2023, we introduced the following changes to our segments under which we reported our quarterly financial results previously, in order to better reflect the operational structure of our businesses:

we renamed the Devices business within our Other Business Units and Initiatives category to Devices and Alice, which better reflects the nature of that business;
we transferred the following businesses from the Search and Portal segment to the businesses included in the Other Business Units and Initiatives category: Yandex 360 to Yandex Cloud, Alice voice assistance to Devices and Alice, and Yandex Pay and Yandex ID to FinTech; and
we transferred RouteQ from the Other Business Units and Initiatives category to the Delivery business within the E-Commerce, Mobility and Delivery segment.

These changes have been applied retroactively to all periods presented.

Search & Portal

Our Search and Portal segment includes Search, Geo, Weather and a number of other services offered in Russia, Belarus and Kazakhstan.

Key operational trends:

Share of Russian search market, including mobile, averaged 63.3% in Q1 2023, up 2.3 pp from 61.0% in Q1 2022 and an improvement from 62.6% in Q4 2022, according to Yandex Radar
Search share on Android in Russia was 62.6% in Q1 2023, up 2.7 pp from 59.9% in Q1 2022 and an improvement from 62.0% in Q4 2022, according to Yandex Radar
Search share on iOS in Russia was 49.1% in Q1 2023, up 3.0 pp from 46.1% in Q1 2022 and an improvement from 48.0% in Q4 2022, according to Yandex Radar
Mobile search traffic was 67.9% of our total search traffic in Q1 2023. Mobile revenues represented 60.7% of our search revenues in Q1 2023

3


In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues

43,803

67,545

54%

Ex-TAC revenues

36,763

55,257

50%

Adjusted EBITDA

19,561

34,713

77%

Adjusted EBITDA margin

44.7%

51.4%

6.7 pp

Revenues increased by 54% and Ex-TAC revenues grew by 50% year-on-year in Q1 2023 driven by solid performance in the Yandex Advertising Network and Search on the back of our ongoing investments in advertising technologies and products (especially in SMB and e-commerce segments) as well as the expansion of the advertising inventory. In Q1 2023, SMB clients remained the key driver of the revenue growth although large clients demonstrated further recovery compared to the end of the previous year.

Adjusted EBITDA margin came to 51.4% in Q1 2023 compared with 44.7% in Q1 2022. The year-on-year margin expansion mainly reflected positive effects from the operating leverage on the back of the solid revenue growth, the low base effect of last year (related to the one-off personnel payment of an additional, 13th month’s salary to our employees in March 2022), the cost optimization on the back the postponement of certain activities (primarily advertising and marketing), as well as the segregation of corporate overheads to our Other Business Units and Initiatives segment. These factors helped to offset an adverse impact from the increase in personnel costs, which resulted mainly from the changes in our compensation scheme, and the resulting inclusion in adjusted EBITDA of stock-based compensation expenses related to RSU equity awards of our employees settled in cash.

E-commerce, Mobility and Delivery

The E-commerce, Mobility and Delivery segment includes our transactional online-to-offline (O2O) businesses, which consist of (i) the mobility businesses, including ride-hailing in Russia and other countries across CIS and EMEA, Yandex Drive, our car-sharing business for both B2C and B2B, and scooters; (ii) the E-commerce businesses in Russia and CIS, including Yandex Market, our multi-category e-commerce marketplace, Yandex Lavka Russia, our hyperlocal convenience store delivery service, and the grocery delivery services of Yandex Eats and Delivery Club (since September 8, 2022, when the acquisition was completed); and (iii) our other O2O businesses, including Yandex Delivery, our last- and middle-mile logistics solution for individuals, enterprises and SMB (small and medium business); Yandex Eats and Delivery Club Food Delivery, our ready-to-eat delivery services from restaurants; Lavka Israel, our hyperlocal convenience store delivery service; and Yandex Fuel, our contactless payment service at gas stations, and several smaller experiments.

Key operational trends:

Total E-Commerce GMV increased by 67% year-on-year in Q1 2023

Yandex Market

The share of GMV sold by third-party sellers on our Yandex Market marketplace was 75% in Q1 2023 compared to 80% in Q1 2022
Marketplace’s assortment was 75.3 million SKUs as of the end of Q1 2023, up from 26.1 million SKUs as of the end of Q1 2022 and 41.7 million SKUs as of the end of Q4 2022
The number of active buyers8 on the Yandex Market marketplace increased by 42% year-on-year and reached 15.3 million as of the end of Q1 2023
The number of active sellers9 on Yandex Market marketplace increased by 86% year-on-year and reached 52.9 thousand as of the end of Q1 2023

Mobility

The number of rides in the Mobility services increased by 22% compared to Q1 2022
GMV of the Mobility services grew 34% compared to Q1 2022

(8) An active buyer is a buyer who made at least 1 purchase in the last 12 months prior to the reporting date.

(9) An active seller is a seller who made at least 1 sale in the last 1 month prior to the reporting date.

4


In RUB millions

Three months ended March 31, 

2022

2023

Change

GMV:

Mobility

167,418

224,734

34%

E-Commerce

64,580

107,836

67%

First party (1P) business model

19,177

33,835

76%

Third party (3P) commission business model

45,403

74,001

63%

Other O2O services

40,105

68,515

71%

Revenues:

Mobility

26,561

32,542

23%

E-Commerce

20,745

40,837

97%

Revenues from sale of goods (1P)10

15,560

27,044

74%

Commission and other e-commerce revenues11

5,185

13,793

166%

Other O2O services12

9,170

17,178

87%

Eliminations

(1,282)

(2,082)

n/m

Total revenues

55,194

88,475

60%

Adjusted EBITDA loss E-commerce, Mobility and Delivery:

(8,445)

(10,799)

n/m

(10) Revenues related to sales of goods include revenues from Yandex Market 1P sales, revenues from Yandex Lavka 1P sales in Russia, where we use a first-party (1P) business model and act as a direct retailer, and exclude delivery fee revenues related to these businesses.

(11) Commission and other e-commerce revenues include Yandex Market marketplace (3P) commission, delivery, service fee and advertising revenues of grocery delivery services of Yandex Eats and Delivery Club, as well as delivery fee and advertising revenue of Yandex Lavka in Russia and other revenues.

(12) Other O2O Revenues include revenues from RouteQ in Q1 2023 and was presented retroactively in all previous periods.

The growth in GMV of Mobility reached 34% year-on-year in Q1 2023, driven by an increase in the number of rides on the back of rider base and growth of order frequency across all our regions of presence, as well as by a solid increase of share of non-economy tariffs. The growth in GMV of E-commerce was 67% year-on-year in Q1 2023 supported by a diversification of assortment and an expansion of pickup points network, organic growth in the user base, as well as acquisition of Delivery Club in September 2022, while constrained by an abnormally high base of last year (GMV growth in February and March 2022). GMV of other O2O services grew by 71% year-on-year in Q1 2023, with Yandex Delivery and Yandex Food Delivery services including Delivery Club acquisition, being the largest contributors, with the growth exceeding 120% year-on-year.

E-commerce, Mobility and Delivery segment revenues increased by 60% year-on-year in Q1 2023, mainly driven by E-commerce services (where Yandex Market was the largest contributor to growth in absolute terms, followed by Yandex Lavka) and Other O2O services (driven by Food Delivery and Delivery). Mobility revenues increased by 23%, while E-commerce revenues increased by 97%. E-commerce revenue growth was fueled by an increase in 1P share in Yandex Market GMV, improvement of 3P take rates and accelerated growth of advertising revenue. Other O2O services revenues delivered 87% year-on-year growth where Delivery was the key contributor to growth, followed by the effect of the acquisition of Delivery Club, which has been integrated into the Food Delivery services business.

Eliminations related to the E-commerce, Mobility and Delivery segment represent the eliminations of intercompany revenues between different businesses within the segment. The year-on-year dynamic was mainly attributed to expansion of intercompany synergies with a higher volume of E-commerce and Food Delivery orders fulfilled by our Yandex Delivery business compared to a year ago.

Adjusted EBITDA loss of E-commerce, Mobility and Delivery was RUB 10,799 million in Q1 2023 compared to an adjusted EBITDA loss of RUB 8,445 million in Q1 2022, primarily driven by the growth of the scale of E-commerce and Delivery businesses as well as consolidation of Delivery Club, while Adjusted EBITDA margin further improved as percentage of revenue.

5


Plus and Entertainment Services

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

Key operational trends:

Number of Yandex Plus subscribers reached 22.1 million as of the end of Q1 2023, up 77% from the end of Q1 2022

In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues

5,831

13,356

129%

Adjusted EBITDA loss

(3,171)

(226)

n/m

Adjusted EBITDA loss margin

-54.4%

-1.7%

52.7 pp

Plus and Entertainment Services revenues grew 129% in Q1 2023 compared with Q1 2022. The increase was primarily driven by the growth of subscription revenue on the back of the expanding base of paid subscribers and changes in tariff mix, as well as solid trends in other revenue streams, including licensing, advertising and Afisha. Adjusted EBITDA improved significantly, to a loss of only RUB 0.2 billion from a loss of RUB 3.2 billion in Q1 2022 driven by a positive operating leverage effect on the back of the subscription revenue growth (which grew 102% year-on-year).

Classifieds

The Classifieds segment includes Auto.ru, Yandex Realty, Yandex Rent and Yandex Travel.

In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues

2,411

4,438

84%

Adjusted EBITDA

173

(117)

n/m

Adjusted EBITDA margin

7.2%

-2.6%

-9.8 pp

Classifieds revenues increased by 84% in Q1 2023 compared with Q1 2022. The revenue growth was supported by the solid performance of Yandex Travel and Yandex Rent as a result of increased demand for our services and market share gains in the respective verticals. However, solid growth was offset by an adverse impact in service revenue in our auto classifieds business due to squeezed supply of new cars in the market. Adjusted EBITDA amounted to a loss of RUB 0.1 billion in Q1 2023 compared with a positive adjusted EBITDA of RUB 0.2 billion in Q1 2022 as a result of the growth of continuing investments in the long-term growth of our businesses such as Yandex Travel and Yandex Rent as well as higher personnel expenses following the changes to our compensation schemes.

Other Business Units and Initiatives

The Other Business Units and Initiatives category includes our self-driving vehicles business (Yandex SDG), Yandex Cloud (including Yandex 360), Yandex Education (Practicum and other education initiatives), Devices and Alice, FinTech (including Yandex Pay and Yandex ID) and a number of other experiments as well as unallocated corporate expenses.

In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues

7,805

14,186

82%

Adjusted EBITDA loss

(6,947)

(11,055)

59%

Adjusted EBITDA loss margin

-89.0%

-77.9%

11.1 pp

Other Business Units and Initiatives revenues increased 82% year-on-year in Q1 2023, driven mainly by Devices and Alice, Yandex Cloud and Yandex Practicum. The Devices and Alice revenue increased 172% year-on-year to RUB 6.1 billion in Q1

6


2023: the business benefited from a solid demand for our smart devices and own-branded smart TVs supported by effective promotional activities. Yandex Cloud revenue grew 127% year-on-year, supported by product portfolio expansion as well as improvement in our market share on the back of increasing demand for our services.

The adjusted EBITDA loss amounted to RUB 11.1 billion compared to RUB 6.9 billion in Q1 2022 implying a 59% year-on-year increase amid much faster growth of the segment’s revenue. The loss increase was mainly attributed to segregation of unallocated corporate expenses from reportable segments’ adjusted EBITDA and their inclusion in the Other Business Units and Initiatives category (since Q3 2022), development of our FinTech vertical and investments in Yandex SDG (where adjusted EBITDA loss came to RUB 2.2 billion in Q1 2023), which was offset by a solid performance in Devices and Alice and Cloud business in Russia & CIS.

Eliminations

Eliminations related to our revenues represent the elimination of transactions between the reportable segments, including advertising revenues, intercompany revenues related to brand royalties, data centers, devices sales and others.

In RUB millions

Three months ended March 31, 

2022

2023

Change

Revenues:

Segment revenues

115,044

188,000

63%

Eliminations

(9,034)

(24,725)

174%

Total revenues

106,010

163,275

54%

Adjusted EBITDA:

Segment adjusted EBITDA

1,171

12,516

n/m

Eliminations

100

278

178%

Total adjusted EBITDA

1,271

12,794

n/m

Eliminations related to our revenues increased 174% in Q1 2023 compared with Q1 2022. The increase was mainly attributed to the increased intercompany revenue between our businesses (related to cross service advertising and marketing activities, device sales, the usage of data centers, other IT infrastructure and other centralized services by all business units), as a result of expanding integration between services in the face of the Group growth.

Consolidated Operating Costs and Expenses

Our operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A), and depreciation and amortization expenses (D&A). Apart from D&A, each of the above expense categories include personnel-related costs and expenses, relevant office space rental, and related share-based compensation expenses. Increases across all cost categories reflect investments in overall growth. In Q1 2023, our headcount increased by 1,871 full-time employees. The total number of full-time employees was 22,721 as of March 31, 2023, up by 9% compared with December 31, 2022, and up 19% from March 31, 2022, which was primarily driven by the accelerated pace of hiring in Yandex Market, Mobility, Search and Portal, as well as by the fast growth of Cloud, Plus and Entertainment Services among others.

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Operating Expenses

In RUB millions

Three months ended March 31, 

2022

2023

Change

Cost of revenues

51,011

77,539

52%

Cost of revenues as a % of revenues

48.1%

47.5%

-0.6 pp

including TAC

6,146

11,103

81%

TAC as a % of revenues

5.8%

6.8%

1 pp

Product development

19,161

22,304

16%

As a % of revenues

18.1%

13.7%

-4.4 pp

Sales, general and administrative

40,805

53,175

30%

As a % of revenues

38.5%

32.6%

-5.9 pp

Depreciation and amortization

7,467

8,287

11%

As a % of revenues

7.0%

5.1%

-1.9 pp

Total operating expenses

118,444

161,305

36%

As a % of revenues

111.7%

98.8%

-12.9 pp

Total operating expenses increased by 36% in Q1 2023 compared with Q1 2022. The increase was mainly due to the сost of revenues related to E-commerce, Mobility and Delivery businesses, Plus and Entertainment services, Devices and Alice, and growth of headcount and related personnel expenses across most of our business units due to the overall expansion of the businesses.

TAC grew 81% in Q1 2023 compared with Q1 2022 and represented 6.8% of total revenues, 100 basis points higher than in Q1 2022. The year-on-year growth of TAC as a share of revenue was primarily driven by TAC related to our distribution partners and the growing contribution of ad revenues related to the Yandex Advertising Network.

In RUB millions

Three months ended March 31, 

2022

2023

Change

SBC expense included in cost of revenues

151

164

9%

SBC expense included in product development

3,540

3,281

-7%

SBC expense included in SG&A

2,574

2,355

-9%

Total SBC expense

6,265

5,800

-7%

As a % of revenues

5.9%

3.6%

-2.3 pp

Total SBC expenses decreased by 7% in Q1 2023 compared with Q1 2022. The decrease was primarily related to the replacement of new RSU grants during 2022 by an increase in salaries and bonuses as well as material depreciation of the U.S. dollar against the Russian ruble in Q1 2023 compared to Q1 2022. In light of the ongoing halt of trading in our Class A shares on Nasdaq, during 2022 and 2023, participants have received and will receive cash compensation on the vesting dates of the relevant RSU equity awards, in an amount equal to the target value of each tranche of such awards. In Q1 2023, RUB 3.3 billion of the total RUB 5.8 billion in SBC expenses related to RSU equity awards settled in cash were recorded as part of personnel expenses, which reduced consolidated adjusted EBITDA.

Income/(loss) from operations

In RUB millions

Three months ended March 31, 

2022

2023

Change

Income/(loss) from operations

(12,434)

1,970

n/m

Income from operations amounted to RUB 2.0 billion in Q1 2023 compared to a loss from operations of RUB 12.4 billion in Q1 2022. This dynamic was mainly driven by the improved profitability of our Search and Portal, Plus and Entertainment segments, as well as Devices and Alice.

Other income, net for Q1 2023 was of RUB 5,857 million, up from RUB 1,538 million in Q1 2022. Other income, net includes foreign exchange gains in the amount of RUB 5,924 million and RUB 1,672 million in Q1 2023 and Q1 2022 respectively. The increase of foreign exchange gains reflects changes of USD denominated monetary assets in our Russian subsidiaries on the

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back of the depreciation of the Russian ruble against the US dollar by 9% and 12% during Q1 2023 and Q1 2022, respectively.

Income tax expense for Q1 2023 was RUB 1,952 million, down from RUB 2,518 million in Q1 2022. If we remove the effects of deferred tax asset valuation allowances, SBC expense, tax on dividends, tax provision recognized, other expenses not deductible for tax purposes and the effect of reduced tax rates in certain Russian subsidiaries, our effective tax rate for Q1 2023 was 20.2%, compared to 22.4% for Q1 2022.

Net income was RUB 5.8 billion in Q1 2023, compared with net loss of RUB 13.0 billion in Q1 2022. The changes were mainly attributable to growth of operational profitability described above, as well as increase of foreign exchange gains in Q1 2023.

Cash provided by operating activities was RUB 22.5 billion and cash paid for property and equipment, intangible assets and assets to be leased was RUB 9.6 billion for Q1 2023.

The total number of shares issued and outstanding as of March 31, 2023 was 361,482,282, including 325,783,607 Class A shares, 35,698,674 Class B shares, and one Priority share and excluding 558,663 Class A shares held in treasury.

There were also employee share options outstanding to purchase up to an additional 2.9 million shares, at a weighted average exercise price of $44.32 per share, 2.2 million of which were fully vested; equity-settled share appreciation rights (SARs) for 0.1 million shares, at a weighted average measurement price of $32.85, all of which were fully vested; restricted share units (RSUs) covering 9.1 million shares, of which RSUs to acquire 6.2 million shares were fully vested; and performance share units (PSUs) for 0.2 million shares. In addition, we have outstanding equity-linked awards in respect of our various Business Units, including options and synthetic options, for 4.5 million shares, 2.4 million of which were fully vested and may be settled in equity of our Business Units, cash or Yandex Class A shares.

ABOUT YANDEX

Yandex (NASDAQ and MOEX: YNDX) is a technology company registered in the Netherlands that builds intelligent products and services powered by machine learning. Our goal is to help consumers and businesses better navigate the online and offline world. Since 1997, we have delivered world-class, locally relevant search and navigation products, while also expanding into mobility, e-commerce, online entertainment, cloud computing and other markets to assist millions of consumers in Russia and a number of international markets. More information on Yandex can be found at https://ir.yandex/.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements that involve risks and uncertainties. All statements contained in this press release other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance, our business and strategy and the impact of the current geopolitical and macroeconomic developments on our industry, business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. 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, macroeconomic and geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment and regulatory and business responses to that crisis, including international economic sanctions and export controls, competitive pressures, changes in advertising patterns, changes in user preferences, technological developments, 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 “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2022 and “Risk Factors” in the Shareholder Circular filed as Exhibit 99.2 to our Current Report on Form 6-K, which were filed with the U.S. Securities and Exchange Commission (SEC) on April 20, 2023 and November 18, 2019, respectively, and are available on our investor relations website at

9


https://ir.yandex/sec-filings and on the SEC website at https://www.sec.gov/. All information in this release and in the attachments is as of April 27, 2023, and Yandex undertakes no duty to update this information unless required by law.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement the financial information prepared and presented in accordance with U.S. GAAP, we present the following non-GAAP financial measures: ex-TAC revenues, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income/(loss). The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable U.S. GAAP measures”, included following the accompanying financial tables. We define the various non-GAAP financial measures we use as follows:

Ex-TAC revenues means U.S. GAAP revenues less total traffic acquisition costs (TAC).
Adjusted EBITDA means U.S. GAAP net income/(loss) plus (1) depreciation and amortization, (2) certain SBC expense, (3) interest expense, (4) income tax expense, (5) expenses (reversal of expenses) related to the contingent compensation payable to employees in connection with certain business combinations, and (6) loss from equity method investments, less (1) interest income and (2) other income, net.
Adjusted EBITDA margin means adjusted EBITDA divided by U.S. GAAP revenues.
Adjusted net income/(loss) means U.S. GAAP net income/(loss) plus (1) certain SBC expense, (2) expenses (reversal of expenses) related to the contingent compensation payable to certain employees in connection with certain business combinations and (3) amortization of debt discount and issuance costs related to our convertible debt adjusted for the related income tax effect, less foreign exchange gains adjusted for the related income tax effect.

These non-GAAP financial measures are used by management for evaluating financial performance as well as decision-making. Management believes that these metrics reflect the organic, core operating performance of the company, and therefore are useful to analysts and investors in providing supplemental information that helps them understand, model and forecast the evolution of our operating business.

Although our management uses these non-GAAP financial measures for operational decision-making and considers these financial measures to be useful for analysts and investors, we recognize that there are a number of limitations related to such measures. In particular, it should be noted that several of these measures exclude some recurring costs, particularly share-based compensation. In addition, the components of the costs that we exclude in our calculation of the measures described above may differ from the components that our peer companies exclude when they report their results of operations.

Below we describe why we make particular adjustments to certain U.S. GAAP financial measures:

TAC

We believe that it may be useful for investors and analysts to review certain measures both in accordance with U.S. GAAP and net of the effect of TAC, which we view as comparable to sales bonuses but, unlike sales bonuses, are not deducted from U.S. GAAP revenues. By presenting revenue, net of TAC, we believe that investors and analysts are able to obtain a clearer picture of our business without the impact of the revenues we share with our partners.

SBC

SBC is a significant expense item, and an important part of our compensation and incentive programs. As it is highly dependent on our share price at the time of equity award grants, we believe that it is useful for investors and analysts to see certain financial measures excluding the impact of these charges in order to obtain a clearer picture of our operating performance. However, because we settled the RSU equity awards of our employees in cash during 2022 and Q1 2023, starting from Q3 2022 we no longer eliminate the relevant SBC expense corresponding to the cash payment from adjusted EBITDA and adjusted net income.

10


Foreign exchange gains

Because we hold significant assets and liabilities in currencies other than our Russian ruble operating currency, and because foreign exchange fluctuations are outside of our operational control, we believe that it is useful to present adjusted EBITDA, adjusted net income and related margin measures excluding these effects, in order to provide greater clarity regarding our operating performance.

Amortization of debt discount and issuance costs

We also adjust net income/(loss) for interest expense representing amortization of the debt discount related to our convertible senior notes due 2025 issued in Q1 2020. We have eliminated this expense from adjusted net income as it is non-cash in nature and is not indicative of our ongoing operating performance. We have repurchased substantially all of the outstanding notes to date.

Expenses related to contingent consideration

We may incur expenses in connection with acquisitions that are not indicative of our recurring core operating performance. In particular, we are required under U.S. GAAP to accrue as an expense the contingent compensation that is payable to certain employees in connection with certain business combinations. We eliminate these acquisition-related expenses from adjusted EBITDA and adjusted net income to provide management and investors a tool for comparing on a period-to-period basis our operating performance in the ordinary course of operations.

The tables at the end of this release provide detailed reconciliations of each non-GAAP financial measure we use from the most directly comparable U.S. GAAP financial measure.

11


YANDEX N.V.

Unaudited Condensed Consolidated Balance Sheets

(in millions of Russian rubles and U.S. dollars, except share and per share data)

As of

December 31,

March 31, 

March 31, 

2022*

2023

2023

RUB

RUB

$

ASSETS

Cash and cash equivalents

83,131

119,398

1,548.9

Term deposits

154

-

-

Accounts receivable

58,014

60,302

782.3

Sales financing receivable

5,738

4,359

56.5

Prepaid expenses

16,968

17,565

227.9

Inventory

28,220

27,907

362.0

Funds receivable

8,290

5,962

77.3

VAT reclaimable

22,602

21,917

284.3

Other current assets

16,817

17,991

233.4

Total current assets

239,934

275,401

3,572.6

Property and equipment

127,706

133,643

1,733.7

Operating lease right-of-use assets

28,646

28,666

371.9

Intangible assets

31,766

30,678

398.0

Content assets

16,844

17,516

227.2

Goodwill

143,778

143,845

1,866.0

Long-term prepaid expenses

3,998

4,088

53.0

Equity method investments

2,118

2,349

30.5

Investments in non-marketable equity securities

6,746

7,402

96.0

Deferred tax assets

3,904

5,966

77.4

Other non-current assets

11,279

13,584

176.2

Total non-current assets

376,785

387,737

5,029.9

TOTAL ASSETS

616,719

663,138

8,602.5

LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts payable, accrued and other liabilities

122,816

137,569

1,784.6

Debt, current portion

21,306

41,681

540.7

Income and non-income taxes payable

28,137

28,615

371.2

Deferred revenue

15,585

16,372

212.4

Total current liabilities

187,844

224,237

2,908.9

Debt, non-current portion

29,885

29,883

387.7

Deferred tax liabilities

5,473

6,016

78.0

Operating lease liabilities

17,609

16,821

218.2

Finance lease liabilities

21,185

24,066

312.2

Other accrued liabilities

16,545

18,587

241

Total non-current liabilities

90,697

95,373

1,237.2

Total liabilities

278,541

319,610

4,146.1

Commitments and contingencies

Shareholders’ equity:

Ordinary shares: par value (Class A €0.01, Class B €0.10 and Class C €0.09); shares authorized (Class A: 500,000,000, Class B: 37,138,658 and Class C: 37,748,658); shares issued (Class A: 326,342,270, Class B: 35,698,674, and Class C: 10,000 and nil, respectively); shares outstanding (Class A: 325,783,607, Class B: 35,698,674 and Class C: nil)

282

282

3.7

Treasury shares at cost (Class A: 558,663)

(1,393)

(1,393)

(18.1)

Additional paid-in capital

119,464

120,171

1,558.9

Accumulated other comprehensive income

24,258

23,107

299.8

Retained earnings

173,697

177,977

2,308.8

Total equity attributable to Yandex N.V.

316,308

320,144

4,153.1

Noncontrolling interests

21,870

23,384

303.3

Total shareholders’ equity

338,178

343,528

4,456.4

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

616,719

663,138

8,602.5

*  Derived from audited consolidated financial statements

12


YANDEX N.V.

Unaudited Condensed Consolidated Statements of Operations

(in millions of Russian rubles and U.S. dollars, except share and per share data)

Three months ended March 31, 

2022

2023

2023

RUB

RUB

$

Revenues

106,010

163,275

2,118.1

Operating costs and expenses:

Cost of revenues(1)

51,011

77,539

1,005.9

Product development(1)

19,161

22,304

289.3

Sales, general and administrative(1)

40,805

53,175

689.8

Depreciation and amortization

7,467

8,287

107.5

Total operating costs and expenses

118,444

161,305

2,092.5

Income/(loss) from operations

(12,434)

1,970

25.6

Interest income

1,362

1,215

15.8

Interest expense

(620)

(1,173)

(15.2)

Loss from equity method investments

(365)

(132)

(1.7)

Other income, net

1,538

5,857

75.9

Net income/(loss) before income taxes

(10,519)

7,737

100.4

Income tax expense

2,518

1,952

25.4

Net income/(loss)

(13,037)

5,785

75.0

Net income attributable to noncontrolling interests

(1,386)

(1,503)

(19.5)

Net income/(loss) attributable to Yandex N.V.

(14,423)

4,282

55.5

Net income/(loss) per Class A and Class B share:

Basic

(39.56)

11.55

0.15

Diluted

(39.56)

11.50

0.15

Weighted average number of Class A and Class B shares used in per share computation

Basic

364,570,692

370,855,749

370,855,749

Diluted

364,570,692

372,239,857

372,239,857

(1) These balances exclude depreciation and amortization expenses, which are presented separately, and include share-based compensation expenses of:

Cost of revenues

151

164

2.1

Product development

3,540

3,281

42.6

Sales, general and administrative

2,574

2,355

30.5

13


YANDEX N.V.

Unaudited Condensed Consolidated Statements of Cash Flows

(in millions of Russian rubles and U.S. dollars)

Three months ended March 31, 

2022

2023

2023

RUB

RUB

$

CASH FLOWS PROVIDED BY/(USED IN) OPERATING ACTIVITIES:

Net income/(loss)

(13,037)

5,785

75.0

Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:

Depreciation of property and equipment

5,791

6,181

80.2

Amortization of intangible assets

1,676

2,106

27.3

Amortization of content assets

2,302

2,380

30.9

Operating lease right-of-use assets amortization and the lease liability accretion

4,226

3,300

42.8

Share-based compensation expense (excluding cash settled awards of nil and

6,265

707

9.2

RUB 5,093, respectively)

Deferred income tax benefit

(38)

(855)

(11.1)

Foreign exchange gains

(1,672)

(5,924)

(76.8)

Loss from equity method investments

365

132

1.7

Impairment of long-lived assets

904

-

-

Provision for expected credit losses

637

1,731

22.5

Other

294

(293)

(3.8)

Changes in operating assets and liabilities excluding the effect of acquisitions:

Accounts receivable

4,257

(2,579)

(33.5)

Prepaid expenses

(681)

(965)

(12.5)

Inventory

(3,664)

569

7.4

Accounts payable, accrued and other liabilities and non-income taxes payable

(10,462)

8,978

116.5

Deferred revenue

(216)

663

8.6

Other assets

(711)

(519)

(6.8)

VAT reclaimable

(122)

1,027

13.3

Funds receivable

2,948

2,472

32.1

Sales financing receivable

(100)

433

5.6

Content assets

(3,182)

(3,016)

(39.1)

Content liabilities

171

206

2.7

Net cash provided by/(used in) operating activities

(4,049)

22,519

292.2

CASH FLOWS PROVIDED BY/(USED IN) INVESTING ACTIVITIES:

Purchases of property and equipment and intangible assets

(17,983)

(6,748)

(87.5)

Purchase of assets to be leased

-

(2,806)

(36.5)

Proceeds from sale of marketable equity securities

5,859

-

-

Investments in non-marketable equity securities

(251)

(171)

(2.2)

Acquisitions of businesses, net of cash acquired

(820)

-

-

Investments in term deposits

(2,000)

(6)

(0.1)

Maturities of term deposits

23,769

160

2.1

Loans granted

(12)

(369)

(4.8)

Proceeds from repayments of loans

439

722

9.4

Other investing activities

113

120

1.6

Net cash provided by/(used in) investing activities

9,114

(9,098)

(118.0)

CASH FLOWS PROVIDED BY/(USED IN) FINANCING ACTIVITIES:

Proceeds from issuance of debt

335

20,671

268.1

Repayment of debt

-

(335)

(4.3)

Payment for finance leases

(347)

(689)

(8.9)

Repayments of overdraft borrowings

(2,940)

-

-

Other financing activities

(580)

(77)

(1.0)

Net cash provided by/(used in) financing activities

(3,532)

19,570

253.9

Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents

5,381

2,707

35.0

Net change in cash and cash equivalents, and restricted cash and cash equivalents

6,914

35,698

463.1

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period

79,398

84,440

1,095.4

Cash and cash equivalents, and restricted cash and cash equivalents, end of period

86,312

120,138

1,558.5

Reconciliation of cash and cash equivalents, and restricted cash and cash equivalents:

Cash and cash equivalents, beginning of period

79,274

83,131

1,078.4

Restricted cash and cash equivalents, beginning of period

124

1,309

17.0

Cash and cash equivalents, and restricted cash and cash equivalents, beginning of period

79,398

84,440

1,095.4

Cash and cash equivalents, end of period

86,047

119,398

1,548.9

Restricted cash and cash equivalents, end of period

265

740

9.6

Cash and cash equivalents, and restricted cash and cash equivalents, end of period

86,312

120,138

1,558.5

14


YANDEX N.V.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

TO THE NEAREST COMPARABLE U.S. GAAP MEASURES

Reconciliation of Ex-TAC Revenues to U.S. GAAP Revenues

In RUB millions

Three months ended March 31, 

2022

2023

Change

Total revenues

106,010

163,275

54%

Less: traffic acquisition costs (TAC)

6,146

11,103

81%

Ex-TAC revenues

99,864

152,172

52%

Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income/(loss)

In RUB millions

Three months ended March 31, 

2022

2023

Change

Net income/(loss)

(13,037)

5,785

n/m

Add: depreciation and amortization

7,467

8,287

11%

Add: certain SBC expense

6,265

2,537

-60%

Add: compensation expense (reversal of expense) related to contingent consideration

(27)

-

n/m

Less: interest income

(1,362)

(1,215)

-11%

Add: interest expense

620

1,173

89%

Add: loss from equity method investments

365

132

-64%

Less: other income, net

(1,538)

(5,857)

281%

Add: income tax expense

2,518

1,952

-22%

Adjusted EBITDA

1,271

12,794

n/m

15


Reconciliation of Adjusted Net Income/(loss) to U.S. GAAP Net Income/(loss)

In RUB millions

Three months ended March 31, 

2022

2023

Change

Net income/(loss)

(13,037)

5,785

n/m

Add: certain SBC expense

6,265

2,537

-60%

Add: compensation expense (reversal of expense) related to contingent consideration

(27)

-

n/m

Less: foreign exchange gains

(1,672)

(5,924)

254%

Add: income tax attributable to foreign exchange gains

308

173

-44%

Add: amortization of debt discount and issuance costs

53

-

n/m

Less: income tax attributable to amortization of debt discount and issuance costs

(14)

-

n/m

Adjusted net income/(loss)

(8,124)

2,571

n/m

Contacts:

Investor Relations

Yulia Gerasimova

Phone: +7 495 974-35-38

E-mail: askIR@yandex-team.ru

Media Relations

Ilya Grabovskiy

Phone: +7 495 739-70-00

E-mail: pr@yandex-team.ru

16


Exhibit 99.2

April 27, 2023

Yandex Q1 2023 Earnings: Letter to Shareholders

1. Introduction and Overview

Current geopolitical tensions, their impact on the Russian and global economy, and the related stresses in the broader social and business environment, continue to create exceptional challenges for our business and our team. Thus in 2023, we continue to focus on stricter capital allocation, cost optimization and efficiency improvements, while remaining committed to investing in the development of our core verticals and selective high growth potential businesses, as well as in further advancing our strong technological expertise.
In Q1 2023, we were able to increase our headcount by 19% year-on-year to 22.7 thousand full-time employees as of the end of March of 2023 (up 9% compared to December 2022).
On March 15, 2023, as a result of the continued geopolitical circumstances affecting Russia and their potential impact on the company, we received a notice from the Listing Qualifications Staff of Nasdaq which determined to delist the company’s securities from the Nasdaq Global Select Market as of March 24, 2023, exercising its broad discretionary authority under Nasdaq Listing Rule 5101 to delist securities. On March 21, 2023, we submitted a request for a hearing to appeal such determination. A hearing will be held by the end of April 2023, and the delisting of our Class A shares will be stayed pending the issuance of a written decision of the hearings panel. Until then the trading halt that was implemented on February 28, 2022, remains in effect. As of the date of this Letter to shareholders, our shares continue to trade on the Moscow Exchange, however the liquidity of our shares on that exchange remains limited to the number of shares held in the Russian National Stock Depository (NSD) system.
The Board is progressing the proposed restructuring of the Yandex group’s overall ownership and governance with a view to ensuring the group’s sustainable development and success of all of our businesses over the longer term (as previously announced in November 2022). The Board is working in particular on the potential divestment by our Dutch parent company of ownership and control of a number of our core businesses, including all Russia-based businesses. The Board also aims to enable the international divisions of certain services (self-driving, cloud computing, data labeling/AI training and EdTech) to develop independently from the Russia-based businesses. Our goal is to come to our shareholders for approval of a restructuring proposal later this year.
On April 21, 2023, Yandex entered into an agreement with Uber NL Holdings 1 B.V., a subsidiary of Uber Technologies Inc., and on the same day Yandex acquired Uber’s entire remaining 28.98% interest in the MLU B.V. mobility joint venture, for total consideration in cash of USD 702.5 million. The boards of directors of both Uber and Yandex approved this transaction and it was not subject to the approval of the shareholders of either party. The parties received all required regulatory approvals.
Below are our comments on our Q1 2023 results across the key businesses. Overall, our total group revenue increased by 54.0% year-on-year and reached RUB 163.3 billion. The company’s adjusted EBITDA reached RUB 12.8 billion, delivering a 7.8% margin. The year-on-year dynamic of our adjusted EBITDA is primarily explained by the one-off personnel expenses incurred in Q1 2022 (an additional (13th) month’s salary in the amount of RUB 5.9 billion paid to employees in March 2022), as well as the timing of certain operational expenses in Q1 2023 (primarily advertising and marketing shifted to the following quarters). Our adjusted Net Income amounted to RUB 2.6 billion.

2. Search & Portal and Advertising

Search & Portal revenues increased by 54.2% year-on-year in Q1 2023 driven by solid performance in the Yandex Advertising Network and Search. In Q1 2023, SMB clients remained the key driver of the revenue growth.
In line with our expectations (communicated previously), we began to see a normalization of year-on-year growth in April as we now compete against a high base of last year (i.e., the effects of last year’s changes in the competitive landscape have annualized).
All advertising categories demonstrated a positive year-on-year dynamic in Q1 2023 with Finance & Insurance, Real Estate, Education & Employment, IT & Telecom and Healthcare leading the growth.

Search remains the key contributor to our advertising revenue and the key source of ad inventory. In Q1 2023, our total search share reached 63.3%, up 2.3 pp on a year-on-year basis mainly driven by our distribution activities and product improvements (which include enhanced ranking and design of our product search results, the introduction of the film vertical, the launch of search results by objects in the medical field, the release of substantial improvements on our mobile Yandex Browser, and further developments to our Corporate Yandex Browser, among others). Our search share on iOS reached 49.1% in Q1, increasing 3.0 pp compared to a year ago, while on Android our search share amounted to 62.6%, up 2.7 pp compared to Q1 2022.
We continue to leverage our technological expertise in developing in-house language models and in-house AI training capabilities to further advance our AI models. We are currently working on an enhanced version of our next generation language model YaLM 2.0 (Yet Another Language Model), a GPT-like bilingual neural network for generating and processing text.
The Advertising Network was the key driver of the growth in our ad revenue in Q1 2023 (ahead of Search), which was supported by both our efforts to expand ad inventory (especially in apps) as well as development of our ad products portfolio (adding new and improving efficiency of existing ad formats). As of the end of March 2023, the total number of partners increased by a third compared to the same period in 2022, with a strong 3x growth observed in our in-app ad network.
Product-wise we continue to focus on the SMB and e-commerce sector. Yandex Business (our easy-to-use monthly subscription for SMB) now allows our clients to advertise products from different marketplaces within a single ad campaign as well as the expanded number of platforms where the clients promote their businesses. In addition, our efforts in ad efficiency improvement allowed us to bring 20% more conversions for the same ad budgets to our Yandex Business clients on a year-on-year basis in Q1 2023, while keeping the growth pace in both the average check and number of clients.
In Q1 2023, our conversion-oriented strategies (aimed at better customization and higher ad efficiency for our clients) contributed 54% to Search & Portal ad revenue and 74% to Yandex’s ad network revenue (up 4 pp and 7 pp from Q4 2022 respectively).

3. Mobility

Our Mobility business performed well in Q1 2023. Mobility trips grew by 22% year-on-year on the back of rider base increase and order frequency growth across all our regions of presence. GMV grew 34% year-on-year to RUB 225 billion, driven by a solid increase of share of non-economy tariffs which grew by 3 pp year-on-year.
Earnings of our ride-hailing partners grew 37% year-on-year which is faster than Mobility GMV growth and totaled RUB 200 billion in Q1 2023. Earnings per active driver increased 15% year-on-year across all of our geographies. This growth was driven by further improvements of marketplace efficiency: rides per active driver grew by 3% year-on-year in total and by 8% in Russia specifically. We ended the quarter with 1.4 million active drivers worldwide; this is a 19% increase compared to the previous year. Our effective take rate was below 10% in Q1 2023.
In March 2023 we had 40.9 million active customers in our Yandex Go app, up 19% year-on-year and up 1.7% quarter-on-quarter. User base growth was driven by the fast-growing CIS and EMEA regions as well as by our mature market in Russia.
CIS and EMEA growth in trips brought about 60% of total Mobility trips increase in absolute terms. EMEA trips continued to grow, at a rate of 3.1 times year-on-year, followed by the CIS which increased by 40% year-on-year. Total share of trips outside of Russia continued to grow and constituted 31% of total in Q1 2023 compared to 25% a year ago. Trips in Russia demonstrated an acceleration of year-on-year growth: 12% in Q1 2023 compared with 8% in Q4 2022.

4. E-commerce

Q1 2023 E-commerce GMV grew by 67%, bringing absolute GMV to RUB 108 billion (broadly in line with RUB 112 billion in seasonally strongest Q4 2022). The growth dynamic was affected by the abnormally high base of last year, when GMV growth in February 2022 exceeded 2.7 times and was 2.6 times in March 2022. In April 2023, we are seeing an acceleration of GMV growth rates due to the expansion of the merchant base and assortment, the development of advertising tools (which resulted in ad revenue increase by 2.4 times year-on-year) and logistics infrastructure (primarily an expansion of our branded pick-up points network).
In Q1 2023, we continued to focus on the improvement of unit economics across all E-commerce businesses and achieved 240 bps year-on-year improvement. Yandex Market was the main contributor with approximately 3 pp

improvement in unit economics compared to Q1 2022. Key factors contributing to this dynamic were increasing efficiency in fulfillment and delivery (due to higher share of orders delivered to our branded pickup points), growth of 3Р take rates, as well as optimization of customer acquisition costs and promo activities.
We continued to develop our logistics infrastructure, primarily our branded pick-up points network, which almost doubled to 7.7 thousand during the first quarter and exceeded 8.5 thousand in early Q2 2023. We are now processing more than half of all orders through pick-up points, and we expect to increase GMV per pick-up point in future. The development of pick-up points not only helps to reduce delivery costs (cost per order improved by 35% year-on-year in Q1 2023), but also increases brand awareness, which optimizes customer acquisition costs.
Unit Economics of our Lavka Russia and Eats grocery verticals (excluding the effect of our acquisition of Delivery Club) also improved by 5 pp each, compared to Q1 2022, while Lavka in Russia achieved breakeven on adjusted EBITDA level in Q1 2023. The efficiency of both Eats grocery and Lavka benefited from further optimization of fulfilment and logistics costs, as a result of growing density (orders per dark store per day grew by more than 30% in Lavka Russia), as well as a result of increased share of smart batching. Our grocery business also enjoyed significant growth of user frequency in new and mature cohorts.
Among other developments, we note the following:
oThe number of active sellers increased by 86% year-on-year in Q1 2023 to 52.9 thousand, while the number of total unique sellers listed on our platform reached 81 thousand.
oThe total number of SKUs increased by 1.8 times quarter-on-quarter to 75.3 million at the end of Q1 2023, and the share of ex-Electronics categories continued to grow (in line with our assortment diversification strategy).
oOrder frequency increased by 10% compared to the previous quarter on the back of assortment expansion, growing share of high frequency categories (such as FMCG and Home), and further development of Market 15 (an efficient instrument of new customers acquisition and frequency increase).
oThe number of active buyers grew by 42% year-on-year to 15.3 million driven by improvements in our B2C product and user experience.

5. Other O2O services:

GMV of our other O2O services grew by 71% year-on-year in Q1 2023, with Yandex Food Delivery and Yandex Delivery services including Delivery Club, being the largest contributors, with the growth exceeding 121% year-on-year.
Yandex Food Delivery continued to benefit from integration with Delivery Club. We continued to focus on improving operational efficiency. With doubled share of batched orders in Q1 2023, we managed to reduce click-to-eat time by 10% year-on-year. All these efforts resulted in orders-per-hour increase by 50% year-on-year in Q1 2023, which in turn allowed our partnering couriers to earn more on a per-hour basis and provided our restaurant partners with incremental orders.
Our last- and middle-mile Delivery business accelerated parcel growth rates in Q1 2023 compared to the previous quarter on the back of growing penetration of e-commerce and food delivery as well as business expansion beyond Russia. Share of deliveries outside of Russia approached a quarter of total deliveries in Q1 2023. GMV grew slower than the number of parcels in Q1 2023, at 79% year-on-year, as a result of an increased share of batched orders and a growing share of next-day-delivery (NDD). These models are essential for facilitating further growth of ecommerce development across our geographies, including our internal e-commerce services, as well as third party food and non-food retailers.

6. Additional comments on other fast-growing businesses:

Plus and Entertainment Services revenues increased by 129% year-on-year, which was mainly driven by the growth of subscription revenue (which grew 102% year-on-year) on the back of the expanding base of paid subscribers and changes in tariff mix, as well as solid trends in other revenue streams, including licensing, advertising and Afisha. The number of Yandex Plus subscribers reached 22.1 million (up 77% year-on-year) as of the end of Q1 2023. Average revenue per paying subscriber in March 2023 increased by 43% year-on-year compared to 34% in December 2022.
On average, Plus subscribers demonstrate higher frequency (by c.30%) and higher spending (by c.70%) compared to non-Plus users across our key transactional services as well as better retention. Plus subscribers continued to generate a substantial part of GMV for our Food Delivery and E-commerce services: on average, more than 67% of GMV for Lavka, Eats and Market compared to 55% in the previous quarter.

Kinopoisk maintains its top position on the video-on-demand market based on the total number of subscribers, as well as paid subscribers, according to a GfK report for Q1 2023. The number of monthly viewing subscribers has reached 9.6 million.
In February 2023, we publicly released Index Kinopoisk Pro, which evaluates viewers’ interest and measures popularity of all TV series in Russia since January 2021. "King and Jester", the original project of Kinopoisk, became one of the most popular among all TV series in Russia in the first quarter of 2023 and the most successful Kinopoisk premiere to date reaching an audience of 3 million viewing subscribers. It is also our first project around which Plus Studio has built a large-scale franchise involving other Yandex services: an exhibition with tickets exclusively sold on Yandex Afisha, a podcast about band history and film making aired on Yandex Music, an upcoming book release on Bookmate, as well as the clothing collection promoted and sold in collaboration with Yandex Market.
Yandex Music continues to lead among music streaming services in terms of the number of subscribers (both total and paid subscribers), according to a GfK report for Q1 2023. We continued to expand our Yandex Music library: the number of podcasts and audiobook episodes has now exceeded 1.2 million. The monthly listening audience of the service (MAU) has almost doubled in March 2023 compared to last year, where our recommendation system “My Vibe” was the largest contributor to growth.

Cloud revenues increased 127% year-on-year in Q1 2023, supported by product portfolio expansion as well as an improvement in our market share on the back of increasing demand for our services. Product-wise, during this quarter we introduced a significant update of Yandex Tracker for businesses, enhanced the SpeechKit Brand Voice product line, introduced a new version of the Call Center service and many other features, helping our customers to improve the quality of their client interactions.

The revenue of Devices and Alice increased by 172% year-on-year to RUB 6.1 billion in Q1 2023. The business benefited from solid demand for our smart devices and own-branded smart TVs supported by effective promotional activities. Since the launch of our first smart device in late 2018, we have sold more than 6 million items. In early April, we introduced new smart home devices with Zigbee protocol support. We have already launched a sale of our new Max Station, Yandex Hub and a set of sensors in Russia, Belarus and Kazakhstan.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts, including, without limitation, statements regarding our future financial and business performance, our business and strategy and the impact of the current geopolitical and macroeconomic developments on our industry, business and financial results, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “guide,” “intend,” “likely,” “may,” “will” and similar expressions and their negatives are intended to identify forward-looking statements. 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, macroeconomic and geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment and regulatory and business responses to that crisis, competitive pressures, changes in advertising patterns, changes in user preferences, technological developments, 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 “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2022 and “Risk Factors” in the Shareholder Circular filed as Exhibit 99.2 to our Current Report on Form 6-K, which were filed with the U.S. Securities and Exchange Commission (SEC) on April 20, 2023 and November 18, 2019, respectively, and are available on our investor relations website at https://ir.yandex/sec-filings and on the SEC website at https://www.sec.gov/. All information in this document is as of April 27, 2023, and Yandex undertakes no duty to update this information unless required by law.

USE OF NON-GAAP FINANCIAL MEASURES

To supplement the financial information prepared and presented in accordance with U.S. GAAP, we present the following non-GAAP financial measures: adjusted EBITDA, adjusted EBITDA margin and adjusted Net income/(loss). The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. These non-GAAP financial measures are used by management for evaluating financial performance as well as decision-making. Management believes that these metrics reflect


the organic, core operating performance of the company, and therefore are useful to analysts and investors in providing supplemental information that helps them understand, model and forecast the evolution of our operating business. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable U.S. GAAP measures”, included in Yandex’s press release dated April 27, 2023.