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
November 23, 2021
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): ◻
EXPLANATORY NOTE
Filed as Exhibit 99.1 to this Report on Form 6-K is a copy of the unaudited condensed consolidated financial statements of Yandex N.V. as of and for the three and nine months ended September 30, 2021.
INCORPORATION BY REFERENCE
Exhibit 99.1 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statements on Form S-8 (Nos. 333-177622 and 333-213317) and Form F-3ASR (No. 333-239391) of Yandex N.V. (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
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.
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YANDEX N.V. |
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Date: November 23, 2021 |
By: |
/s/ Svetlana Demyashkevich |
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Svetlana Demyashkevich |
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Chief Financial Officer |
EXHIBIT 99.1
YANDEX N.V.
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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Page |
Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and September 30, 2021 |
F-2 |
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2021 |
F-3 |
Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss) for the Three and Nine Months Ended September 30, 2020 and 2021 |
F-4 |
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2021 |
F-5 |
Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2021 |
F-7 |
Notes to the Unaudited Condensed Consolidated Financial Statements |
F-9 |
F-1
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of Russian rubles (“RUB”) and U.S. dollars (“$”), except share and per share data)
d
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As of |
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Notes |
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December 31, 2020 |
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September 30, 2021 |
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September 30, 2021 |
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RUB |
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RUB |
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$ |
ASSETS |
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Cash and cash equivalents |
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4 |
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132,398 |
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81,425 |
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1,119.1 |
Term deposits |
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105,787 |
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53,189 |
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731.0 |
Investments in marketable equity securities |
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— |
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3,792 |
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52.1 |
Accounts receivable, less allowance for doubtful accounts of RUB 1,798 and RUB 2,570, respectively |
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4 |
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25,440 |
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32,111 |
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441.3 |
Prepaid expenses |
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6,727 |
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12,902 |
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177.4 |
Inventory |
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4,810 |
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7,039 |
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96.7 |
Funds receivable, net |
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2,289 |
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2,685 |
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36.9 |
Investments in debt securities |
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— |
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657 |
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9.0 |
VAT reclaimable |
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7,573 |
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12,310 |
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169.2 |
Other current assets |
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4 |
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5,377 |
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6,957 |
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95.6 |
Total current assets |
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290,401 |
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213,067 |
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2,928.3 |
Property and equipment, net |
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7 |
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61,772 |
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88,788 |
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1,220.3 |
Operating lease right-of-use assets |
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8 |
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20,800 |
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37,097 |
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509.8 |
Intangible assets, net |
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9 |
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21,842 |
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22,946 |
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315.4 |
Content assets, net |
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11 |
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7,464 |
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12,704 |
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174.6 |
Goodwill |
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9 |
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104,275 |
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117,701 |
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1,617.6 |
Long-term prepaid expenses |
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1,391 |
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3,011 |
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41.5 |
Investments in non-marketable equity securities |
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1,135 |
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3,923 |
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53.9 |
Deferred tax assets |
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1,639 |
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5,736 |
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78.8 |
Other non-current assets |
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4 |
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4,893 |
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7,620 |
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104.7 |
Total non-current assets |
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225,211 |
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299,526 |
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4,116.6 |
TOTAL ASSETS |
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515,612 |
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512,593 |
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7,044.9 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Accounts payable and accrued liabilities |
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4 |
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43,634 |
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87,172 |
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1,198.0 |
Income and non-income taxes payable |
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4 |
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12,573 |
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12,804 |
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176.0 |
Deferred revenue |
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6,645 |
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7,777 |
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106.9 |
Bank deposits and liabilities, current |
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— |
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91 |
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1.3 |
Total current liabilities |
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62,852 |
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107,844 |
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1,482.2 |
Convertible debt |
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13 |
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83,277 |
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83,549 |
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1,148.3 |
Deferred tax liabilities |
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3,705 |
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2,910 |
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40.0 |
Operating lease liabilities |
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8 |
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12,830 |
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26,218 |
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360.3 |
Finance lease liabilities |
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8 |
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3,387 |
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13,697 |
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188.2 |
Bank deposits and liabilities, non current |
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— |
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141 |
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1.9 |
Other accrued liabilities |
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1,459 |
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4,109 |
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56.6 |
Total non-current liabilities |
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104,658 |
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130,624 |
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1,795.3 |
Total liabilities |
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167,510 |
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238,468 |
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3,277.5 |
Commitments and contingencies |
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11, 12 |
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Redeemable noncontrolling interests |
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3,167 |
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1,058 |
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14.5 |
Shareholders’ equity: |
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Priority share: €1 par value; 1 share authorized, issued and outstanding |
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— |
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— |
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— |
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: 320,430,479 and 323,800,479, Class B: 35,708,674 and 35,698,674, and Class C: 1,429,984 and 10,000, respectively); shares outstanding (Class A: 318,501,858 and 322,860,322, Class B: 35,708,674 and 35,698,674, and Class C: nil) |
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278 |
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281 |
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3.9 |
Treasury shares at cost (Class A: 1,928,621 and 940,157, respectively) |
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(6) |
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(3,361) |
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(46.2) |
Additional paid-in capital |
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160,857 |
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108,804 |
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1,495.4 |
Accumulated other comprehensive income |
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17,923 |
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16,570 |
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227.7 |
Retained earnings |
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145,789 |
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135,920 |
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1,868.0 |
Total equity attributable to Yandex N.V. |
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324,841 |
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258,214 |
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3,548.8 |
Noncontrolling interests |
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20,094 |
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14,853 |
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204.1 |
Total shareholders’ equity |
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344,935 |
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273,067 |
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3,752.9 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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515,612 |
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512,593 |
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7,044.9 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-2
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions of Russian rubles and U.S. dollars, except share and per share data)
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Three months ended September 30, |
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Nine months ended September 30, |
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Notes |
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2020 |
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2021 |
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2021 |
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2020 |
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2021 |
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2021 |
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RUB |
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RUB |
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$ |
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RUB |
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RUB |
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$ |
Revenues |
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15 |
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58,335 |
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91,305 |
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1,254.9 |
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146,745 |
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245,843 |
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3,378.8 |
Operating costs and expenses: |
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Cost of revenues(1) |
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22,141 |
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45,671 |
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627.7 |
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54,288 |
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121,487 |
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1,669.7 |
Product development(1) |
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9,414 |
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12,222 |
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168.0 |
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26,312 |
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34,465 |
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473.7 |
Sales, general and administrative(1) |
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15,742 |
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32,961 |
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453.0 |
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41,740 |
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83,532 |
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1,148.0 |
Depreciation and amortization |
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4,780 |
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6,135 |
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84.3 |
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12,842 |
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17,033 |
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234.1 |
Total operating costs and expenses |
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52,077 |
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96,989 |
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1,333.0 |
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135,182 |
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256,517 |
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3,525.5 |
Income/(loss) from operations |
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6,258 |
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(5,684) |
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(78.1) |
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11,563 |
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(10,674) |
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(146.7) |
Interest income |
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4 |
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1,009 |
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1,146 |
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15.8 |
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2,708 |
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3,503 |
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48.1 |
Interest expense |
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(723) |
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(938) |
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(12.9) |
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(1,626) |
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(2,592) |
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(35.6) |
Effect of Yandex.Market consolidation |
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19,230 |
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— |
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— |
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19,230 |
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— |
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— |
Other income/(loss), net |
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4 |
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(440) |
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2,690 |
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36.9 |
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799 |
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3,373 |
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46.4 |
Net income/(loss) before income taxes |
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25,334 |
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(2,786) |
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(38.3) |
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32,674 |
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(6,390) |
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(87.8) |
Income tax expense |
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10 |
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3,573 |
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1,122 |
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15.4 |
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9,229 |
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5,402 |
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74.3 |
Net income/(loss) |
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21,761 |
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(3,908) |
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(53.7) |
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23,445 |
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(11,792) |
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(162.1) |
Net loss attributable to noncontrolling interests |
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239 |
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523 |
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7.2 |
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952 |
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1,551 |
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21.4 |
Net income/(loss) attributable to Yandex N.V. |
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22,000 |
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(3,385) |
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(46.5) |
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24,397 |
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(10,241) |
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(140.7) |
Net income/(loss) per Class A and Class B share: |
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Basic |
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2 |
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62.61 |
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(9.32) |
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(0.13) |
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72.49 |
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(28.28) |
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(0.39) |
Diluted |
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2 |
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60.72 |
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(9.32) |
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(0.13) |
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70.27 |
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(28.28) |
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(0.39) |
Weighted average number of Class A
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Basic |
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2 |
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351,372,700 |
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363,390,831 |
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363,390,831 |
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336,558,174 |
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362,097,366 |
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362,097,366 |
Diluted |
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2 |
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361,941,154 |
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363,390,831 |
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363,390,831 |
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346,728,394 |
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362,097,366 |
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362,097,366 |
(1) | These balances exclude depreciation and amortization expenses, which are presented separately, and include share-based compensation expenses of: |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-3
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In millions of Russian rubles and U.S. dollars)
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Three months ended September 30, |
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Nine months ended September 30, |
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2020 |
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2021 |
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2021 |
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2020 |
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2021 |
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2021 |
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RUB |
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RUB |
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$ |
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RUB |
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RUB |
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$ |
Net income/(loss) |
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21,761 |
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(3,908) |
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(53.7) |
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23,445 |
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(11,792) |
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(162.1) |
Foreign currency translation adjustment: |
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Foreign currency translation and other, net of tax of nil |
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10,590 |
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135 |
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1.9 |
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18,308 |
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(1,239) |
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(17.0) |
Reclassification adjustment, net of tax of nil |
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893 |
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— |
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— |
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893 |
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— |
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— |
Total other comprehensive income/(loss) |
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11,483 |
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135 |
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1.9 |
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19,201 |
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(1,239) |
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(17.0) |
Total comprehensive income/(loss) |
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33,244 |
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(3,773) |
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(51.8) |
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42,646 |
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(13,031) |
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(179.1) |
Total comprehensive (income)/loss attributable to noncontrolling interests |
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(827) |
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626 |
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8.6 |
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(1,152) |
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1,437 |
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19.7 |
Total comprehensive income/(loss) attributable to Yandex N.V. |
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32,417 |
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(3,147) |
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(43.2) |
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41,494 |
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(11,594) |
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(159.4) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-4
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of Russian rubles and U.S. dollars)
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Nine months ended September 30, |
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Notes |
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2020 |
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2021 |
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2021 |
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RUB |
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RUB |
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$ |
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: |
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Net income/(loss) |
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23,445 |
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(11,792) |
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(162.1) |
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
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Depreciation of property and equipment |
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7 |
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10,218 |
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12,719 |
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174.8 |
Amortization of intangible assets |
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9 |
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2,624 |
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4,314 |
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59.3 |
Amortization of content assets |
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11 |
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2,276 |
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5,445 |
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74.8 |
Operating lease right-of-use assets amortization and the lease liability accretion |
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7,036 |
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8,040 |
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110.5 |
Amortization of debt discount and issuance costs |
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13 |
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1,141 |
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1,554 |
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21.4 |
Share-based compensation expense |
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14 |
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10,913 |
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15,801 |
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217.2 |
Deferred income tax benefit |
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(15) |
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(5,403) |
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(74.3) |
Foreign exchange gains |
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4 |
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(3,632) |
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(86) |
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(1.2) |
Effect of Yandex.Market consolidation |
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(19,230) |
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— |
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— |
Other |
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3,289 |
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(2,286) |
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(31.4) |
Changes in operating assets and liabilities excluding the effect of acquisitions: |
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Accounts receivable, net |
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222 |
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(6,437) |
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(88.5) |
Prepaid expenses and other assets |
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|
808 |
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(17,273) |
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(237.3) |
Inventory |
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(3,907) |
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(2,257) |
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(30.9) |
Accounts payable and accrued liabilities |
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(5,114) |
|
9,897 |
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136.0 |
Deferred revenue |
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|
|
666 |
|
1,173 |
|
16.1 |
Bank deposits and liabilities |
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— |
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(48) |
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(0.7) |
Content assets |
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(4,797) |
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(9,603) |
|
(132.0) |
Content liabilities |
|
|
|
523 |
|
2,132 |
|
29.3 |
Net cash provided by operating activities |
|
|
|
26,466 |
|
5,890 |
|
81.0 |
CASH FLOWS (USED IN)/PROVIDED BY INVESTING ACTIVITIES: |
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|
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Purchases of property and equipment and intangible assets |
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(17,375) |
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(25,742) |
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(353.8) |
Proceeds from sale of property and equipment |
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|
|
74 |
|
62 |
|
0.9 |
Acquisitions of businesses, net of cash acquired |
|
3 |
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(33,469) |
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(8,236) |
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(113.2) |
Investments in non-marketable equity securities |
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(15) |
|
(658) |
|
(9.0) |
Proceeds from sale of marketable equity securities |
|
|
|
— |
|
5,652 |
|
77.7 |
Investments in marketable equity securities |
|
|
|
— |
|
(9,869) |
|
(135.6) |
Investments in term deposits |
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|
|
(267,957) |
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(240,676) |
|
(3,307.8) |
Maturities of term deposits |
|
|
|
161,456 |
|
292,031 |
|
4,013.6 |
Loans granted |
|
|
|
— |
|
(1,103) |
|
(15.3) |
Proceeds from repayments of loans |
|
|
|
391 |
|
1,277 |
|
17.6 |
Net cash (used in)/provided by investing activities |
|
|
|
(156,895) |
|
12,738 |
|
175.1 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-5
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions of Russian rubles and U.S. dollars)
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
F-6
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions of Russian rubles and U.S. dollars, except share and per share data)
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Three months ended September 30, 2020 |
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Priority Share |
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Ordinary Shares |
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Accumulated |
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Redeemable |
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Issued and |
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Issued and |
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Treasury |
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Additional |
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Other |
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Non- |
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non- |
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Outstanding |
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Outstanding |
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shares at |
|
Paid-In |
|
Comprehensive |
|
Retained |
|
controlling |
|
|
|
controlling |
||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
cost |
|
Capital |
|
Income |
|
Earnings |
|
interests |
|
Total |
|
interests |
|
|
|
|
RUB |
|
|
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
Balance as of June 30, 2020 |
|
1 |
|
— |
|
350,074,420 |
|
275 |
|
(3,690) |
|
145,975 |
|
11,528 |
|
122,944 |
|
20,524 |
|
297,556 |
|
15,081 |
Share-based compensation expense |
|
— |
|
— |
|
— |
|
— |
|
— |
|
5,683 |
|
— |
|
— |
|
— |
|
5,683 |
|
— |
Exercise of share options |
|
— |
|
— |
|
2,195,030 |
|
— |
|
— |
|
44 |
|
— |
|
— |
|
— |
|
44 |
|
— |
Tax withholding related to exercise of share awards |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(47) |
|
— |
|
— |
|
— |
|
(47) |
|
— |
Reissue of shares for options exercised |
|
— |
|
— |
|
— |
|
— |
|
3,685 |
|
(3,685) |
|
— |
|
— |
|
— |
|
— |
|
— |
Repurchase of share options |
|
— |
|
— |
|
— |
|
— |
|
— |
|
8,783 |
|
— |
|
(2,183) |
|
— |
|
6,600 |
|
(9,523) |
Foreign currency translation adjustment |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,453 |
|
— |
|
1,066 |
|
10,519 |
|
— |
Acquisition of Yandex Market |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
47 |
|
47 |
|
493 |
Disposal of investment in Yandex.Money (Note 4) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
893 |
|
— |
|
— |
|
893 |
|
— |
Yandex Self-Driving and Yandex Drive Car-Sharing
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1,561) |
|
71 |
|
— |
|
(219) |
|
(1,709) |
|
— |
Change in redemption value of redeemable noncontrolling interests |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
371 |
|
— |
|
371 |
|
(371) |
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
22,000 |
|
(242) |
|
21,758 |
|
3 |
Other |
|
— |
|
— |
|
— |
|
3 |
|
(3) |
|
(17) |
|
— |
|
(3) |
|
1 |
|
(19) |
|
— |
Balance as of September 30, 2020 |
|
1 |
|
— |
|
352,269,450 |
|
278 |
|
(8) |
|
155,175 |
|
21,945 |
|
143,129 |
|
21,177 |
|
341,696 |
|
5,683 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
F-7
YANDEX N.V.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2020 |
||||||||||||||||||||
|
|
Priority Share |
|
Ordinary Shares |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Redeemable |
||||
|
|
Issued and |
|
Issued and |
|
Treasury |
|
Additional |
|
Other |
|
|
|
Non- |
|
|
|
non- |
||||
|
|
Outstanding |
|
Outstanding |
|
shares at |
|
Paid-In |
|
Comprehensive |
|
Retained |
|
controlling |
|
|
|
controlling |
||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
cost |
|
Capital |
|
Income |
|
Earnings |
|
interests |
|
Total |
|
interests |
|
|
|
|
RUB |
|
|
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
Balance as of December 31, 2019 |
|
1 |
|
— |
|
329,858,166 |
|
261 |
|
(411) |
|
68,050 |
|
4,848 |
|
121,786 |
|
20,261 |
|
214,795 |
|
14,246 |
Effect of adoption of ASU 2016-13 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(232) |
|
(16) |
|
(248) |
|
— |
Adjusted balance as of January 1, 2020 |
|
1 |
|
— |
|
329,858,166 |
|
261 |
|
(411) |
|
68,050 |
|
4,848 |
|
121,554 |
|
20,245 |
|
214,547 |
|
14,246 |
Share-based compensation expense |
|
— |
|
— |
|
— |
|
— |
|
— |
|
11,177 |
|
— |
|
— |
|
— |
|
11,177 |
|
— |
Exercise of share options |
|
— |
|
— |
|
5,116,607 |
|
— |
|
— |
|
93 |
|
— |
|
— |
|
— |
|
93 |
|
— |
Tax withholding related to exercise of share awards |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(116) |
|
— |
|
— |
|
— |
|
(116) |
|
— |
Repurchases of shares |
|
— |
|
— |
|
(4,228,163) |
|
— |
|
(10,586) |
|
— |
|
— |
|
— |
|
— |
|
(10,586) |
|
— |
Reissue of shares for options exercised |
|
— |
|
— |
|
— |
|
— |
|
10,993 |
|
(10,993) |
|
— |
|
— |
|
— |
|
— |
|
— |
Repurchase of share options |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,000 |
|
— |
|
(2,199) |
|
— |
|
6,801 |
|
(9,724) |
Issuance of convertible debt |
|
— |
|
— |
|
— |
|
— |
|
— |
|
6,792 |
|
— |
|
— |
|
— |
|
6,792 |
|
— |
Issue of new shares (Public Offering and PIPE) |
|
— |
|
— |
|
21,522,840 |
|
17 |
|
— |
|
72,538 |
|
— |
|
— |
|
— |
|
72,555 |
|
— |
Foreign currency translation adjustment |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
16,133 |
|
— |
|
2,052 |
|
18,185 |
|
52 |
Acquisition of Yandex Market |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
47 |
|
47 |
|
493 |
Disposal of investment in Yandex.Money (Note 4) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
893 |
|
— |
|
— |
|
893 |
|
— |
Yandex Self-Driving and Yandex Drive Car-Sharing
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1,561) |
|
71 |
|
— |
|
(219) |
|
(1,709) |
|
— |
Change in redemption value of redeemable noncontrolling interests |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(619) |
|
— |
|
(619) |
|
619 |
Net income/(loss) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
24,397 |
|
(949) |
|
23,448 |
|
(3) |
Other |
|
— |
|
— |
|
— |
|
— |
|
(4) |
|
195 |
|
— |
|
(4) |
|
1 |
|
188 |
|
— |
Balance as of September 30, 2020 |
|
1 |
|
— |
|
352,269,450 |
|
278 |
|
(8) |
|
155,175 |
|
21,945 |
|
143,129 |
|
21,177 |
|
341,696 |
|
5,683 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
F-8
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions of Russian rubles and U.S. dollars, except share and per share data)
1. | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Description of Business
Yandex N.V., the parent company, together with its consolidated subsidiaries (collectively “Yandex” or the “Company”), is a technology company that builds intelligent products and services powered by machine learning. Yandex is one of Europe's largest internet companies and the leading search and ride-hailing provider in Russia.
Yandex N.V. was incorporated under the laws of the Netherlands in June 2004 and is the holding company of Yandex LLC, incorporated in the Russian Federation in October 2000, and other subsidiaries.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. As such, the information included in these unaudited condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2021 should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 20-F for the year ended December 31, 2020.
In the opinion of the Company, the accompanying unaudited condensed financial statements contain all adjustments, which are of a normal recurring nature, necessary for a fair statement of its financial position as of September 30, 2021, and its results of operations, comprehensive income/(loss), cash flows and change in equity for the periods presented. The condensed consolidated balance sheet as of December 31, 2020, was derived from audited annual consolidated financial statements included in the Annual Report on Form 20-F for the year ended December 31, 2020 but does not contain all of the related footnote disclosures.
There have been no material changes in the Company’s significant accounting policies and estimates as compared to those described in the Company’s Annual Report on Form 20-F for the year ended December 31, 2020, except for updates of the accounting policies in relation to the new music content acquired in 2021 and in relation to certain investments in marketable securities.
In 2021 the Company acquired music content for customers through licensing agreements with fixed payment schedules. The Company recognizes an intangible asset within the content assets, net lines of the unaudited condensed consolidated balance sheets and a corresponding liability for the amounts owed. The Company amortizes these content assets in the cost of revenues line on the unaudited condensed consolidated statements of operations based on the estimated number of paying subscribers. Payments for these content assets, including additions to assets and the changes in related liabilities, are classified within net cash from operating activities in the unaudited condensed consolidated statements of cash flows.
In 2021 the Company invested a small portion of its cash reserves in special purpose acquisition companies (“SPACs”). The Company accounts for the investments in SPACs as marketable equity securities measured at fair value with both realized and unrealized gains and losses recognized within the other income/(loss), net line of the unaudited condensed consolidated statements of operations based on the readily determinable fair values available on a securities exchange registered with the U.S. Securities and Exchange Commission. The Company presents investments in SPACs in the investments in marketable equity securities line of the unaudited condensed consolidated balance sheets. Payments for and the sales of these investments are presented in the unaudited condensed consolidated statements of cash flows within the investments in marketable securities and proceeds from sales of marketable securities lines, respectively.
The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results expected for the year ending December 31, 2021 or any other future period. Additionally, there are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact its customers, employees, suppliers, vendors, and other business partners.
F-7
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and amounts of revenues and expenses for the reporting period. The Company bases its estimates on historical experience and on various other assumptions, the results of which form the basis for making judgments about the carrying values of assets and liabilities, that are believed to be reasonable. These estimates are inherently subject to judgment and actual results could differ from those estimates.
Convenience Translation
Translations of amounts from RUB into U.S. dollars for the convenience of the reader have been made at the exchange rate of RUB 72.7608 to $1.00, the exchange rate as of September 30, 2021 (except as otherwise stated). No representation is made that the RUB amounts could have been, or could be, converted into U.S. dollars at such rate.
Reclassifications and changes in presentation
Certain reclassification has been made to the prior year consolidated balance sheets due to the separation of certain line items:
Revision of Previously Issued Financial Statements
In the first quarter of 2021 the Company corrected the Dutch VAT returns of Yandex N.V. for periods beginning in 2016 through the fourth quarter of 2020. The Company revised its previously issued consolidated financial statements for the periods impacted. Refer to Note 16 for additional information.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). ASU 2019-12 removes certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods. The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. The Company adopted the standard effective January 1, 2021, without significant impact on the unaudited condensed consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815,” which clarifies the interaction of the accounting for equity investments under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted the standard effective January 1, 2021, without significant impact on the unaudited condensed consolidated financial statements.
2. | NET INCOME/(LOSS) PER SHARE |
Basic net income/(loss) per Class A and Class B ordinary share for the three and nine months ended September 30, 2020 and 2021 is computed on the basis of the weighted average number of ordinary shares using the two class method. Basic net income/(loss) per share is computed using the weighted average number of ordinary shares
F-10
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
during the period and including vested restricted share units. Diluted net income/(loss) per ordinary share is computed using the dilutive effect of share-based awards calculated using the “treasury stock” method.
The computation of the diluted net income/(loss) per Class A share assumes the conversion of Class B shares, while the diluted net income/(loss) per Class B share does not assume the conversion of those shares. The net income/(loss) per share amounts are the same for Class A and Class B shares because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. The number of share-based awards excluded from the diluted net income/(loss) per ordinary share computation, because their effect was anti-dilutive for the three months ended September 30, 2020 and 2021, was nil and 5,762,917 respectively and for the nine months ended September 30, 2020 and 2021, was 504,000 and 8,987,457, respectively.
The convertible notes due in 2025 provide for a flexible settlement feature. The Company intends to settle upon conversion the principal amount of the debt for cash. The convertible debt is included in the calculation of diluted net income per share if its inclusion is dilutive under the treasury stock method. The convertible debt was anti-dilutive in the three and nine months ended September 30, 2020 and 2021.
The components of basic and diluted net income/(loss) per share were as follows:
F-11
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
3. | BUSINESS COMBINATIONS AND INVESTMENT TRANSACTIONS |
Transaction with Uber
On August 30, 2021, the Company entered into a Framework Agreement with Uber Technologies, Inc., and certain of its affiliates (“Uber”), to restructure their joint ventures, MLU B.V. (“MLU”) and Yandex Self Driving Group B.V. (“SDG”). Pursuant to this agreement, for total consideration of $1,000 in cash, the Company has acquired from Uber its entire equity interest in SDG and an additional 4.5% (4.6% based on the total number of outstanding shares) interest in MLU, both of which were completed in September 2021, as well as Uber’s entire indirect interest in Yandex.Eats, Yandex.Lavka and Yandex.Delivery (the “Demerged Businesses”), each of which is expected to be demerged from MLU by the end of 2021. The transaction provides the Company and its employees a total of 71.0% (70.2% based on the total number of outstanding shares) ownership in the newly restructured MLU which will focus on mobility businesses, including ride-hailing and car-sharing services.
On September 7, 2021 (the “Initial Closing”), the Company paid $800 (RUB 58,363 at the exchange rate as of Initial Closing) in cash under the agreed payment terms and following the completed milestones of the transaction. The remaining $200 (RUB 14,591 at the exchange rate as of Initial Closing) of consideration is to be paid upon the completion of the demerger and subsequent transfer of Uber’s shares in Demerged Businesses, which are expected to take place by the end of 2021.
Since the Framework Agreement includes an obligation of the Company to pay $200 (RUB 14,591 at the exchange rate as of Initial Closing) upon completion of the transaction, the Company has recorded a liability of $198 (RUB 14,448 at the exchange rate as of Initial Closing), representing the present value of the remaining payment due to Uber. Upon completion of the transaction, the Company will have fully acquired the non-controlling interest relating to the Demerged Businesses. Accordingly, no earnings are allocated to the noncontrolling interest relating to the Demerged Businesses after the Initial Closing, as these interests are considered to be mandatorily redeemable. In order to account for all of the equity ownership changes contemplated in the transaction, the Company reduced the amount of the non-controlling interest and additional paid-in capital by RUB 3,756 ($51 at the exchange rate as of Initial Closing) and RUB 69,676 ($955 at the exchange rate as of Initial Closing), respectively.
Under the terms of the Framework Agreement, the Company has also received an American call option to acquire Uber’s remaining 29.0% (29.8% based on the total number of outstanding shares) interest in the newly restructured MLU during the two-year period beginning on the Initial Closing. The call option has an initial exercise price of $1,811 (RUB 132,119 at the exchange rate as of Initial Closing) which increases to approximately $2,005 (RUB 146,272 at the exchange rate as of Initial Closing) if exercised in September 2023. The call option is determined to be embedded in the non-controlling interest in the newly restructured MLU and did not fall under the guidance of ASC 480 nor meet the definition of a derivative under ASC 815. Therefore, the call option does not impact the accounting of the remaining noncontrolling interest in the newly restructured MLU.
Acquisition of Axelcroft Group
On February 2, 2021, MLU entered into a share purchase agreement (“SPA”) with Fasten CY Limited (together referred to as “parties”) and completed the acquisition of 100% of the shares of Axelcroft Limited and its subsidiaries (“Axelcroft Group”), representing certain components of the ride-hailing and cargo business of Vezet Group. The transaction will allow the Company to strengthen its position and enhance customer care across Russian regions. The Company expects to achieve synergies and cost reductions resulting from increased operating efficiency due to an improved balance of supply and demand in Russian regions. The Company applied the acquisition method to account for the transaction according to U.S. GAAP requirements.
The acquisition-date fair value of the consideration payable amounted to RUB 12,916 ($177.5), including RUB 7,300 ($100.3) paid in cash at the acquisition date in U.S. dollars ($96.7 at the exchange rate as of acquisition date) and a holdback amount and contingent consideration of up to RUB 5,616 ($77.2) subject to successful achievement of certain integration milestones and other purchase price adjustments.
The contingent consideration consists of up to $61.3 (undiscounted) (RUB 4,625 (undiscounted) at the exchange rate as of acquisition date) payable to Fasten CY Limited, depending on Axelcroft Group meeting defined integration performance targets. The fair value of contingent consideration at the acquisition date was estimated at $60.4 (RUB 4,557 at the exchange rate as of the acquisition date). The Company estimated the fair value of the integration
F-12
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
consideration based on probability adjusted present value of consideration expected to be transferred using significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined by ASC 820. Key assumptions used in these estimates include discount rates and probability assessments with respect to the likelihood of achieving the performance targets given the integration mechanism and the tools available under SPA to the parties to achieve integration milestones.
In July 2021, the parties completed the assessment of the achieved integration performance targets and determined the integration milestone payments due in connection with the acquisition of Axelcroft Group. The total amount paid was RUB 5,791 ($79.6) ($78.7 at the exchange rate as of payment date), consisting of RUB 4,509 ($62.0) ($61.3 at the exchange rate as of payment date) of integration consideration and RUB 1,282 ($17.6) of holdback amount.
Set out below is the condensed balance sheet of Axelcroft Group as of February 2, 2021, reflecting the allocation of the purchase price to net assets acquired.
Of the RUB 1,774 ($24.4) allocated to intangible assets, RUB 1,024 ($14.1) and RUB 292 ($4.0) relates to the acquired customer relationships and trademarks of Vezet Group, included in the customer relationships and trade names and domain names categories (Note 9), respectively, which will be amortized over a period of 10 years; and RUB 258 ($3.5) represents driver relationships, included in the customer relationships category (Note 9), that will be amortized over a period of 2 years. RUB 200 ($2.7) were assigned to IT software and technology, included in the content and software category (Note 9), which are mainly represented by driver and client mobile applications that were discontinued at the end of the technical integration period, April 2, 2021, and therefore were fully amortized as of March 31, 2021. The Company used the income approach for the estimation of the fair value of customer relationships and trademarks, and the cost approach for IT software and technology and driver relationships. The most significant quantitative inputs used for the valuation of client relationships and trademarks were future revenue growth rates, projected adjusted profitability margins and user retention rates. The most significant quantitative input used for the valuation of IT software technology was time in man-hours required to reconstruct the software applications. The most significant quantitative input used for the valuation of driver relationships was driver acquisition costs. These inputs are not observable in the market and thus represents a Level 3 measurement as defined by ASC 820.
Goodwill recognized in the amount of RUB 12,250 ($168.4) is attributable primarily to the expected synergies described above and was assigned to the Taxi reportable segment. None of the goodwill is expected to be deductible for income tax purposes.
The Company recognized separately from the acquisition RUB 408 ($5.6) of acquisition related costs that were expensed in the current period. These costs were recorded in sales, general and administrative expenses in the unaudited condensed consolidated statements of operations.
The revenue and earnings of Axelcroft Group for the period prior to acquisition would not have had a material impact on the Company’s revenue and earnings for the three and nine months ended September 30, 2021 and 2020. Accordingly, no pro forma financial information is presented. The Company has determined that the presentation of
F-13
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
revenue and earnings of Axelcroft Group from the date of acquisition is impracticable due to the integration of the operations upon acquisition.
Acquisition of Acropol Bank
On July 16, 2021, the Company completed the acquisition of a 100% ownership interest in Commercial Bank ACROPOL, JSC (“Acropol Bank” or “Acropol”). As a result of the acquisition, the Company received all of Acropol’s licenses, including a universal banking license. Cash consideration transferred totaled RUB 986 ($13.6). The acquisition was accounted for as a business combination.
Set out below is the condensed balance sheet of the Acropol Bank as of July 16, 2021, reflecting the allocation of the purchase price to net assets acquired:
The results of operations of Acropol for the period prior to the acquisition would not have had a material impact on the Company’s results of operations for the nine months ended September 30, 2020 and 2021. Accordingly, no pro forma financial information is presented. The results of operations of Acropol after the acquisition did not have a material impact on the Company’s results of operations for the nine months ended September 30, 2021.
Other
During the nine-month period ended September 30, 2021, the Company completed other acquisitions for a total consideration of approximately RUB 1,575 ($21.6). In aggregate, RUB 6 ($0.1) cash was acquired, RUB 623 ($8.6) was attributed to intangible assets, RUB 1,071 ($14.7) was attributed to goodwill, and RUB 124 ($1.7) was attributed to deferred tax liabilities. Goodwill is mainly attributable to the Classifieds reportable segment and primarily arises due to specific synergies that result from the integration with the existing operations of other businesses or technologies of the Company.
4. | UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DETAILS |
Cash and Cash Equivalents
Cash and cash equivalents as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Cash |
|
60,006 |
|
33,631 |
|
462.2 |
Cash equivalents: |
|
|
|
|
|
|
Bank deposits |
|
72,369 |
|
47,573 |
|
653.8 |
Other cash equivalents |
|
23 |
|
221 |
|
3.1 |
Total cash and cash equivalents |
|
132,398 |
|
81,425 |
|
1,119.1 |
F-14
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Current expected credit losses for cash, cash equivalents, term deposits, funds receivable and other financial assets were immaterial for the three and nine months ended September 30, 2020 and 2021. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality.
Accounts Receivable, Net
Accounts receivable as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Trade accounts receivable |
|
27,238 |
|
34,681 |
|
476.6 |
Allowance for credit losses |
|
(1,798) |
|
(2,570) |
|
(35.3) |
Total accounts receivable, net |
|
25,440 |
|
32,111 |
|
441.3 |
Movements in the allowance for current expected credit losses on trade receivables for the three and nine months ended September 30, 2020 and 2021 were as follows:
The Company’s past due receivables exceeding one year were in the amount of RUB 1,063 and RUB 1,378 ($18.9) of December 31, 2020 and September 30, 2021, respectively.
Other Current Assets
Other current assets as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Loans to employees |
|
1,238 |
|
2,214 |
|
30.4 |
Prepaid income tax |
|
1,484 |
|
1,764 |
|
24.2 |
Other receivables |
|
819 |
|
724 |
|
10.0 |
Loans granted to third parties |
|
528 |
|
503 |
|
6.9 |
Interest receivable |
|
426 |
|
496 |
|
6.8 |
Contract assets |
|
— |
|
361 |
|
5.0 |
Prepaid other taxes |
|
148 |
|
127 |
|
1.7 |
Loans granted to related parties |
|
6 |
|
54 |
|
0.7 |
Content assets |
|
499 |
|
— |
|
— |
Restricted cash |
|
29 |
|
23 |
|
0.3 |
Other |
|
200 |
|
691 |
|
9.6 |
Total other current assets |
|
5,377 |
|
6,957 |
|
95.6 |
The loans granted to third parties as of September 30, 2021 represent RUB denominated loans bearing interest of 3-15% which are expected to be fully repaid, along with accrued interest within 12 months after the reporting date.
The accrued interest receivable is excluded from the amortized cost basis of financing receivables. The Company did not write-off any accrued interest receivable during the three and nine months ended September 30, 2020 and 2021.
F-15
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Other Non-current Assets
Other non-current assets as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Loans to employees |
|
3,855 |
|
4,868 |
|
66.9 |
VAT reclaimable |
|
718 |
|
678 |
|
9.3 |
Contract assets |
|
234 |
|
502 |
|
6.9 |
Other receivables |
|
— |
|
321 |
|
4.4 |
Loans granted to related parties |
|
32 |
|
272 |
|
3.7 |
Restricted cash |
|
19 |
|
39 |
|
0.5 |
Other non-current assets |
|
35 |
|
940 |
|
13.0 |
Total other non-current assets |
|
4,893 |
|
7,620 |
|
104.7 |
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities as of December 31, 2020 and September 30, 2021 comprised the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Trade accounts payable and accrued liabilities |
|
27,272 |
|
46,171 |
|
634.6 |
Liability from transaction with Uber (Note 3) |
|
— |
|
14,410 |
|
198.0 |
Operating lease liabilities, current (Note 8) |
|
8,620 |
|
10,078 |
|
138.5 |
Salary and other compensation expenses payable/accrued to employees |
|
4,046 |
|
8,892 |
|
122.2 |
Content liabilities |
|
3,326 |
|
5,684 |
|
78.1 |
Finance lease liability, current (Note 8) |
|
321 |
|
1,206 |
|
16.6 |
Accounts payable for acquisition of businesses |
|
49 |
|
731 |
|
10.0 |
Total accounts payable and accrued liabilities |
|
43,634 |
|
87,172 |
|
1,198.0 |
Investments in marketable equity securities
As of September 30, 2021 investments in current marketable equity securities in the amout of RUB 3,792 ($52.1) consisted of the investments in SPACs.
Interest income
The following table presents the components of interest income for the three and nine months ended September 30, 2020 and 2021:
F-16
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Other Income/(loss), Net
The following table presents the components of other income/(loss), net for the three and nine months ended September 30, 2020 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||
|
|
2020 |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2021 |
|
|
RUB |
|
RUB |
|
$ |
|
RUB |
|
RUB |
|
$ |
Foreign exchange gains |
|
478 |
|
377 |
|
5.2 |
|
3,632 |
|
86 |
|
1.2 |
Loss from equity method investment in Yandex.Market |
|
(119) |
|
— |
|
— |
|
(2,470) |
|
— |
|
— |
Income from investments in venture capital funds |
|
133 |
|
2,333 |
|
32.1 |
|
148 |
|
3,187 |
|
43.8 |
Income from equity method investment in Yandex.Money |
|
51 |
|
— |
|
— |
|
316 |
|
— |
|
— |
Loss on divestment of Yandex.Money |
|
(926) |
|
— |
|
— |
|
(926) |
|
— |
|
— |
Other |
|
(57) |
|
(20) |
|
(0.4) |
|
99 |
|
100 |
|
1.4 |
Total other income/(loss), net |
|
(440) |
|
2,690 |
|
36.9 |
|
799 |
|
3,373 |
|
46.4 |
In July 2020, the Company completed the acquisition of Sberbank’s interest in Yandex.Market (approximately 50%) and sold to Sberbank a 25% plus RUB 1 interest in Yandex.Money. Prior to these transactions the Company accounted for its investments in Yandex.Market and Yandex.Money under the equity method.
Income and non-income taxes payable
Income and non-income taxes payable on the consolidated balance sheets includes income taxes payable in the amount of RUB 454 and RUB 437 ($6.0) as of December 31, 2020 and September 30, 2021, respectively.
Reclassifications Out of Accumulated Other Comprehensive Income
Reclassifications of losses out of accumulated other comprehensive income in the three and nine months ended September 30, 2020 and 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||
|
|
|
|
2020 |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2021 |
|
|
|
|
RUB |
|
RUB |
|
$ |
|
RUB |
|
RUB |
|
$ |
Foreign Currency Translation Adjustment, net of tax of nil |
|
Other income/(loss), net |
|
893 |
|
— |
|
— |
|
893 |
|
— |
|
— |
For the three and nine months ended September 30, 2020, the reclassifications resulted from the sale of a 25% plus one ruble interest in the charter capital of Yandex.Money.
5. | DERIVATIVE AND NON-DERIVATIVE FINANCIAL INSTRUMENTS |
The Company does not enter into derivative arrangements for trading or speculative purposes. However, some of the Company’s contracts have embedded derivatives that are bifurcated and accounted for separately from the host agreements. Also the Company uses derivative financial instruments to protect the Company from the risk that the future U.S. dollar-denominated cash flows related to the purchases of its servers and network equipment will be adversely affected by changes in the exchange rates.
The Company recognizes such derivative instruments as either assets or liabilities on the consolidated balance sheets at fair value and records changes in the fair value of the derivatives in the consolidated balance sheets through accumulated other comprehensive income.
The Company recognized RUB 74 ($1.0) of derivative liabilities as of September 30, 2021 in the unaudited condensed consolidated balance sheet. No derivatives were recognized as of December 31, 2020.
The effect of derivative instruments not designated as hedging instruments on income amounted to nil for the three months ended September 30, 2020 and 2021, respectively, and to a loss of RUB 1,647 and nil for the nine months ended September 30, 2020 and 2021, respectively.
F-17
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
6. | FAIR VALUE MEASUREMENTS |
The fair value of assets and liabilities as of December 31, 2020 and September 30, 2021, including those measured at fair value on a recurring basis, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
||||||||||||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
Total |
|
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
$ |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to employees and related parties |
|
— |
|
5,131 |
|
— |
|
5,131 |
|
— |
|
6,990 |
|
— |
|
6,990 |
|
96.1 |
Loans granted to third parties |
|
— |
|
546 |
|
— |
|
546 |
|
— |
|
503 |
|
— |
|
503 |
|
6.9 |
Marketable securities |
|
— |
|
— |
|
— |
|
— |
|
3,792 |
|
— |
|
— |
|
3,792 |
|
52.1 |
Investments in debt securities |
|
— |
|
— |
|
— |
|
— |
|
152 |
|
505 |
|
— |
|
657 |
|
9.0 |
|
|
— |
|
5,677 |
|
— |
|
5,677 |
|
3,944 |
|
7,998 |
|
— |
|
11,942 |
|
164.1 |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debt |
|
— |
|
119,739 |
|
— |
|
119,739 |
|
— |
|
126,683 |
|
— |
|
126,683 |
|
1,741.1 |
Derivative contracts |
|
— |
|
— |
|
— |
|
— |
|
— |
|
74 |
|
— |
|
74 |
|
1.0 |
Redeemable noncontrolling interests |
|
— |
|
— |
|
3,167 |
|
3,167 |
|
— |
|
— |
|
1,058 |
|
1,058 |
|
14.5 |
|
|
— |
|
119,739 |
|
3,167 |
|
122,906 |
|
— |
|
126,757 |
|
1,058 |
|
127,815 |
|
1,756.6 |
The Company measures the fair value of convertible debt and loans to employees for disclosure purposes. The carrying amount and fair value of convertible debt and loans to employees as of December 31, 2020 and September 30, 2021 were as follows:
There were no transfers of financial assets and liabilities between the levels of the fair value hierarchy for the three and nine months ended September 30, 2020 and 2021.
7. | PROPERTY AND EQUIPMENT, NET |
Property and equipment, net of accumulated depreciation, as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Servers and network equipment |
|
74,381 |
|
86,517 |
|
1,189.1 |
Land and buildings |
|
18,587 |
|
18,857 |
|
259.2 |
Infrastructure systems |
|
14,343 |
|
16,424 |
|
225.7 |
Office furniture and equipment |
|
5,847 |
|
8,327 |
|
114.4 |
Finance lease right-of-use assets |
|
3,858 |
|
15,865 |
|
218.0 |
Leasehold improvements |
|
3,087 |
|
3,220 |
|
44.3 |
Other equipment |
|
3,249 |
|
6,101 |
|
83.9 |
Assets not yet in use |
|
5,817 |
|
12,386 |
|
170.2 |
Total |
|
129,169 |
|
167,697 |
|
2,304.8 |
Less: accumulated depreciation |
|
(67,397) |
|
(78,909) |
|
(1,084.5) |
Total property and equipment, net |
|
61,772 |
|
88,788 |
|
1,220.3 |
Assets not yet in use primarily represent infrastructure systems, computer equipment and other assets under installation, including related prepayments, and comprise the cost of the assets and other direct costs applicable to
F-18
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
purchase and installation. Leasehold improvements included in assets not yet in use amounted to RUB 85 and RUB 252 ($3.5) as of December 31, 2020 and September 30, 2021, respectively.
Depreciation expenses related to property and equipment amounted to RUB 3,549 and RUB 4,704 ($64.6) for the three months ended September 30, 2020 and 2021, respectively, and RUB 10,218 and RUB 12,719 ($174.8) for the nine months ended September 30, 2020 and 2021, respectively.
8. | LEASES |
The Company has operating leases for corporate offices, warehouses, sorting centers, cars and parking spots. The Company’s leases have remaining lease terms of 1 to 9 years, some of which include options to terminate the leases within 1 year.
The Company has finance leases for warehouses, call centers, sorting centers, cars and warehouse equipment. The Company’s leases have remaining lease terms of 1 to 20 years, some of which include options to terminate the leases within 1 year.
The components of lease expense consist of the operating lease cost, which is disclosed in the unaudited condensed consolidated statements of cash flows, and the following costs:
Variable lease payments mainly relate to car leases for Yandex.Drive and represent mileage-based payments.
Supplemental balance sheet information related to leases was as follows:
Maturities of lease liabilities as of September 30, 2021 were as follows:
F-19
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Information about weighted-average remaining lease terms and weighted-average discount rates is presented below:
|
|
|
|
|
|
|
|
|
Weighted average remaining
|
|
Weighted average discount
|
||||
|
December 31, 2020 |
|
September 30, 2021 |
|
December 31, 2020 |
|
September 30, 2021 |
Operating leases |
4.2 |
|
4.0 |
|
6.2% |
|
6.2% |
Finance leases |
8.0 |
|
10.2 |
|
6.4% |
|
7.0% |
The Company recognized sublease income of RUB 2,712 and 3,457 RUB ($47.5) for the three months ended September 30, 2020 and 2021, respectively, and RUB 6,001 and 9,011 RUB ($123.9) for the nine months ended September 30, 2020 and 2021, respectively, presented within the revenues line in the unaudited condensed consolidated statements of income.
As of September 30, 2021, the Company had additional operating leases that have not yet commenced of RUB 1,903 ($26.2). These operating leases will commence in the remainder of fiscal year 2021 and 2022 with lease terms of 2 to 9 years.
As of September 30, 2021, the Company had additional finance leases of RUB 21,990 ($302.2) which have not yet commenced. These finance leases will commence in the remainder of fiscal year 2021 and 2022 with lease terms of 3 to 20 years.
9. | GOODWILL AND INTANGIBLE ASSETS, NET |
The changes in the carrying amount of goodwill for the three and nine months ended September 30, 2020 and 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Search and Portal |
|
Taxi |
|
Yandex.
|
|
Classifieds |
|
Media Services |
|
Other business units and initiatives |
|
Total |
|
Total |
|
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
RUB |
|
$ |
Balance as of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,527 |
|
43,682 |
|
— |
|
5,194 |
|
2,140 |
|
— |
|
53,543 |
|
— |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
— |
|
|
2,527 |
|
42,920 |
|
— |
|
5,194 |
|
1,564 |
|
— |
|
52,205 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
— |
|
42 |
|
— |
|
— |
|
— |
|
— |
|
42 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,527 |
|
43,724 |
|
— |
|
5,194 |
|
2,140 |
|
— |
|
53,585 |
|
— |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
— |
|
|
2,527 |
|
42,962 |
|
— |
|
5,194 |
|
1,564 |
|
— |
|
52,247 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
— |
|
— |
|
53,770 |
|
— |
|
— |
|
— |
|
53,770 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,527 |
|
43,724 |
|
53,770 |
|
5,194 |
|
2,140 |
|
— |
|
107,355 |
|
— |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
— |
|
|
2,527 |
|
42,962 |
|
53,770 |
|
5,194 |
|
1,564 |
|
— |
|
106,017 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
192 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
192 |
|
— |
Remeasurement |
|
— |
|
— |
|
(1,934) |
|
— |
|
— |
|
— |
|
(1,934) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,719 |
|
43,724 |
|
51,836 |
|
5,194 |
|
2,140 |
|
— |
|
105,613 |
|
1,451.5 |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
(18.4) |
|
|
2,719 |
|
42,962 |
|
51,836 |
|
5,194 |
|
1,564 |
|
— |
|
104,275 |
|
1,433.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions (Note 3) |
|
— |
|
12,250 |
|
— |
|
— |
|
— |
|
46 |
|
12,296 |
|
169.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,719 |
|
55,974 |
|
51,836 |
|
5,194 |
|
2,140 |
|
46 |
|
117,909 |
|
1,620.5 |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
(18.4) |
|
|
2,719 |
|
55,212 |
|
51,836 |
|
5,194 |
|
1,564 |
|
46 |
|
116,571 |
|
1,602.1 |
F-20
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions (Note 3) |
|
— |
|
— |
|
— |
|
1,025 |
|
— |
|
105 |
|
1,130 |
|
15.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount of goodwill |
|
2,719 |
|
55,974 |
|
51,836 |
|
6,219 |
|
2,140 |
|
151 |
|
119,039 |
|
1,636.0 |
Accumulated impairment loss |
|
— |
|
(762) |
|
— |
|
— |
|
(576) |
|
— |
|
(1,338) |
|
(18.4) |
|
|
2,719 |
|
55,212 |
|
51,836 |
|
6,219 |
|
1,564 |
|
151 |
|
117,701 |
|
1,617.6 |
Intangible assets, net of amortization, as of December 31, 2020 and September 30, 2021 consisted of the following intangible assets:
The following table represents the amortization of intangible assets for the three and nine months ended September 30, 2020 and 2021:
10. | INCOME TAX |
Income taxes are computed in accordance with Russian Federation, Dutch and other national tax laws. The taxable income of Yandex LLC is subject to federal and local income tax at a combined nominal rate of 20% for the three and nine months ended September 30, 2020 and 2021. Yandex N.V. is incorporated in the Netherlands, and its taxable profits are subject to income tax at the rate of 25% for the three and nine months ended September 30, 2020 and 2021.
The Company recorded income tax expense of RUB 3,573 and RUB 1,122 ($15.4) for the three months ended September 30, 2020 and 2021, respectively, and RUB 9,229 and RUB 5,402 ($74.3) for the nine months ended September 30, 2020 and 2021, respectively.
The Company’s tax provision for income taxes for interim periods is determined based on actual effective tax rate. The amount of income tax expense that would result from applying the Dutch statutory income tax rate to income before income taxes reconciled to the reported amount of income tax expense for the three and nine months ended September 30, 2020 and 2021 was as follows:
F-21
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||
|
|
2020 |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2021 |
|
|
RUB |
|
RUB |
|
$ |
|
RUB |
|
RUB |
|
$ |
Expected provision at Dutch statutory income tax rate of 25% |
|
6,334 |
|
(697) |
|
(9.6) |
|
8,169 |
|
(1,598) |
|
(22.0) |
Effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-deductible share‑based compensation |
|
1,017 |
|
1,284 |
|
17.6 |
|
2,757 |
|
3,950 |
|
54.3 |
Accrual/(reversal) of unrecognized tax benefit |
|
(6) |
|
(1) |
|
— |
|
48 |
|
1,300 |
|
17.9 |
Expenses not deductible for tax purposes |
|
551 |
|
510 |
|
7.0 |
|
1,548 |
|
1,411 |
|
19.4 |
Change in valuation allowance |
|
878 |
|
1,486 |
|
20.4 |
|
2,189 |
|
2,296 |
|
31.6 |
Tax on intercompany dividends |
|
287 |
|
(1,375) |
|
(18.9) |
|
666 |
|
(838) |
|
(11.5) |
Equity method loss of Yandex.Market |
|
30 |
|
— |
|
— |
|
618 |
|
— |
|
— |
Effect of Yandex.Market consolidation |
|
(4,807) |
|
— |
|
— |
|
(4,807) |
|
— |
|
— |
Difference in foreign tax rates |
|
(785) |
|
(132) |
|
(1.8) |
|
(1,830) |
|
(923) |
|
(12.7) |
Other |
|
74 |
|
47 |
|
0.7 |
|
(129) |
|
(196) |
|
(2.7) |
Provision for income taxes |
|
3,573 |
|
1,122 |
|
15.4 |
|
9,229 |
|
5,402 |
|
74.3 |
As of December 31, 2020 and September 30, 2021, the Company included accrued interest and penalties related to unrecognized tax benefits, totaling RUB 157 and RUB 585 ($8.0), respectively, as a component of other accrued liabilities in the consolidated balance sheets.
As of December 31, 2020 and September 30, 2021, RUB 427 and RUB 1,459 ($20.1), respectively, of unrecognized tax benefits, if recognized, would affect the effective tax rate. The Company does not anticipate significant increases or decreases in unrecognized income tax benefits over the next twelve months.
Movements in the valuation allowance for the three and nine months ended September 30, 2020 and 2021 were as follows:
11. | CONTENT ASSETS, NET |
Content assets, net as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
Licensed content, net |
|
|
|
|
|
|
Released licensed content, net |
|
5,882 |
|
8,073 |
|
111.0 |
Advances for licensed content |
|
— |
|
852 |
|
11.6 |
Produced content, net |
|
|
|
|
|
|
Released, less amortization |
|
844 |
|
1,658 |
|
22.8 |
Completed and not released |
|
116 |
|
— |
|
— |
In production and in development |
|
1,121 |
|
2,121 |
|
29.2 |
Total |
|
7,963 |
|
12,704 |
|
174.6 |
Less current content assets, net |
|
499 |
|
— |
|
— |
Сontent assets, net |
|
7,464 |
|
12,704 |
|
174.6 |
F-22
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
The following table represents the amortization of content assets for the three and nine months ended September 30, 2020 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||
|
|
2020 |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2021 |
|
|
RUB |
|
RUB |
|
$ |
|
RUB |
|
RUB |
|
$ |
Licensed content |
|
690 |
|
2,271 |
|
31.2 |
|
2,043 |
|
5,248 |
|
72.1 |
Produced content |
|
38 |
|
102 |
|
1.4 |
|
233 |
|
197 |
|
2.7 |
Total amortization of content assets |
|
728 |
|
2,373 |
|
32.6 |
|
2,276 |
|
5,445 |
|
74.8 |
During the nine months ended September 30, 2021 the Company has entered into commitments for streaming content with future payments, excluding value added tax, amounting to RUB 1,497 in 2021, RUB 1,327 in 2022, RUB 882 in 2023 and RUB 42 in 2024 and thereafter.
12. | COMMITMENTS AND CONTINGENCIES |
Legal Proceedings
In the ordinary course of business, the Company is a party to various legal proceedings, and subject to claims, certain of which relate to copyright infringement, as well as to the alleged breach of certain contractual arrangements. The Company intends to vigorously defend any lawsuit and believes that the ultimate outcome of any pending litigation, other legal proceedings or other matters will have no material adverse effect on the financial condition, results of operations or liquidity of the Company.
As of December 31, 2020 and September 30, 2021, the Company recorded liabilities of RUB 39 and RUB 7 ($0.1) respectively, in the accounts payable and accrued liabilities line of the consolidated balance sheets for all pending legal matters that were probable and reasonably estimable.
As of September 30, 2021, the Company was subject to various legal and regulatory matters that have arisen in the normal course of business. Related claims amounted to RUB 3,399 ($46.7) and include, among others, employment related claims, data and privacy matters, claims for compensation in connection with car accidents in the Taxi segment, claims for termination of contracts, copyright infringement claims and other matters. Regulatory matters amounted to RUB 4,377 ($60.2) and include administrative proceedings before the Russian competition authority. The Company has not recognized a liability in respect of those claims and administrative proceedings because management does not believe that the Company has incurred a probable material loss by reason of any of those matters.
Environment and Current Economic Situation
The Company’s operations are primarily located in the Russian Federation. Consequently, the Company is exposed to the economic and financial markets of the Russian Federation which display characteristics of an emerging market. The legal, tax and regulatory frameworks continue to develop and are subject to interpretation and frequent changes.
Taxes are subject to review and investigation by a number of authorities authorized by law to impose fines and penalties. Although the Company believes it has provided adequately for all tax liabilities based on its understanding of the tax legislation, the above factors may create tax risks for the Company. As of September 30, 2021, except for the income tax contingencies described above, the Company accrued RUB 2,415 ($33.2) for contingencies related to non-income taxes, including penalties and interest. Additionally, the Company has identified possible contingencies related to non-income taxes, which are not accrued. Such contingencies could materialize and require the Company to pay additional amounts of tax. As of September 30, 2021, the Company estimates such contingencies related to non-income taxes, including penalties and interest, to be up to approximately RUB 24,045 ($330.5).
Business, economic and other risk factors may make the Company's estimates or concentrations vulnerable to significant changes in the short term. The Company's evaluation of the effect that such risk factors may have on the unaudited condensed consolidated financial statements has not changed significantly since December 31, 2020.
F-23
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
13. | CONVERTIBLE DEBT |
The carrying value of the Company’s convertible debt as of December 31, 2020 and September 30, 2021 consisted of the following:
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
September 30, 2021 |
|
September 30, 2021 |
|
|
RUB |
|
RUB |
|
$ |
0.75% Convertible Senior Notes due March 2025 |
|
92,344 |
|
90,951 |
|
1,250.0 |
Unamortized debt discount |
|
(8,343) |
|
(6,817) |
|
(93.7) |
Unamortized debt issuance cost |
|
(724) |
|
(585) |
|
(8.0) |
Total convertible debt |
|
83,277 |
|
83,549 |
|
1,148.3 |
The remaining unamortized debt discount of RUB 6,817 ($93.7) as of September 30, 2021 will be amortized over the remaining life of the convertible debt, which is approximately 3.4 years.
The Company recognized RUB 504 and RUB 518 ($7.1) as interest expense related to the amortization of the debt discount and issuance expenses and RUB 173 and RUB 172 ($2.4) as interest expenses related to the contractual interest coupon for the three months ended September 30, 2020 and 2021. The Company recognized RUB 1,141 and RUB 1,554 ($21.4) as interest expense related to the amortization of the debt discount and issuance expenses and RUB 394 and RUB 520 ($7.1) as interest expense related to the contractual interest coupon for the nine months ended September 30, 2020 and 2021. The effective interest rate on the liability component for the period was 3.3%.
As of September 30, 2021, none of the conditions allowing the conversion of the Notes were met and no redemption events occurred.
For additional details related to convertible debt, see Note 13 in the notes to consolidated financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2020.
14. | SHARE-BASED COMPENSATION |
The Company has granted Share-Based Awards to employees of the Company pursuant to its Fourth Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) and the 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2007 Plan, the “Plans”).
Share-Based Compensation Expense
The following table summarizes information about recognized share-based compensation expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
||||||||
|
|
2020 |
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2021 |
|
|
RUB |
|
RUB |
|
$ |
|
RUB |
|
RUB |
|
$ |
Restricted Share Units ("RSUs") |
|
3,419 |
|
3,968 |
|
54.5 |
|
8,743 |
|
11,644 |
|
160 |
Synthetic Options Programs |
|
111 |
|
520 |
|
7.1 |
|
335 |
|
1,212 |
|
16.7 |
RSUs in respect of the Self-Driving Group |
|
— |
|
95 |
|
1.3 |
|
— |
|
1,185 |
|
16.3 |
Performance Share Units ("PSUs") |
|
— |
|
333 |
|
4.6 |
|
— |
|
965 |
|
13.3 |
Options |
|
95 |
|
113 |
|
1.6 |
|
280 |
|
337 |
|
4.6 |
RSUs and Options in respect of MLU Group |
|
115 |
|
66 |
|
0.9 |
|
1,199 |
|
202 |
|
2.8 |
Other Business Unit Equity Awards |
|
213 |
|
40 |
|
0.6 |
|
356 |
|
256 |
|
3.5 |
Total share‑based compensation expenses |
|
3,953 |
|
5,135 |
|
70.6 |
|
10,913 |
|
15,801 |
|
217.2 |
F-24
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Yandex N.V. Equity Incentive Plans
The following table summarizes information about non-vested share awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
RSUs |
|
PSUs |
|
||||||||
|
|
|
|
Weighted |
|
|
|
Weighted |
|
|
|
Weighted |
|||
|
|
|
|
Average |
|
|
|
Average |
|
|
|
Average |
|||
|
|
Quantity |
|
Grant Date |
|
Quantity |
|
Grant Date |
|
Quantity |
|
Grant Date |
|||
|
|
|
|
Fair Value |
|
|
|
Fair Value |
|
|
|
Fair Value |
|||
Non-vested as of December 31, 2020 |
|
1,064,346 |
|
$ |
15.48 |
|
10,517,968 |
|
$ |
44.77 |
|
218,159 |
|
$ |
94.23 |
Granted |
|
650,000 |
|
|
27.05 |
|
4,086,660 |
|
|
66.5 |
|
343,001 |
|
|
109.75 |
Vested |
|
(364,020) |
|
|
15.38 |
|
(3,962,577) |
|
|
49.36 |
|
- |
|
|
0 |
Forfeited |
|
(138,334) |
|
|
14.53 |
|
(1,085,480) |
|
|
48.4 |
|
(10,964) |
|
|
106.31 |
Cancelled |
|
— |
|
|
— |
|
(169,285) |
|
|
31.37 |
|
(117,918) |
|
|
103.00 |
Non-vested as of September 30, 2021 |
|
1,211,992 |
|
$ |
21.82 |
|
9,387,286 |
|
$ |
52.11 |
|
432,278 |
|
$ |
103.85 |
As of September 30, 2021, there was RUB 37,684 ($517.9) of unamortized share-based compensation expense related to unvested share options, RSUs and PSUs which is expected to be recognized over a weighted average period of 2.72 years.
Business Unit Equity Awards
The Company finalized the process of restructuring certain of the business units into separate legal structures in its Classifieds segment in 2016 and its Media Services segment in 2018 (together, the “Participating Subsidiaries”) to align the incentives of the relevant employees with the operations of the Participating Subsidiaries. For the nine months ended September 30, 2021 the Company granted 0.1 million equity incentive awards under the 2016 Plan to the senior employees of these business units, which entitle the participants to receive options to acquire redeemable depositary receipts of shares in the respective operating subsidiaries upon the satisfaction of defined vesting criteria (the “Business Unit Equity Awards”) and 2.1 million remain outstanding as of September 30, 2021. The exercise price of the Business Unit Equity Awards is determined from time to time by the Board and the standard vesting schedule for Business Unit Equity Awards under the 2016 Plan is consistent with Share-Based Awards granted in the Company’s shares. Business Unit Equity Awards and any awards granted to management of the Participating Subsidiaries outside of the 2016 Plan are not to exceed 20% of such Participating Subsidiary’s shares issued and outstanding from time to time.
Self-Driving Group 2021 Equity Incentive Plan
Yandex Self-Driving Group B.V., a subsidiary of the Company (“SDG”), adopted the SDG 2021 Equity Incentive Plan (the “SDG Plan”) on February 11, 2021. Under the SDG Plan, SDG may grant equity-based awards, including restricted share unit awards, in respect of SDG. RSUs awarded under the SDG Plan entitle the holder to receive a fixed number of depositary receipts (“DRs”) representing Class A shares in SDG at no cost upon the satisfaction of certain time-based vesting criteria. On February 11, 2021, the Supervisory Board of SDG approved the grant of an aggregate of 2,132,749 SDG RSUs, representing a total of approximately 6.3% of the equity of Self-Driving Group on a fully diluted basis.
The following table summarizes information about non-vested share awards:
|
|
|
|
|
RSUs |
|
|
Quantity |
Non-vested as of December 31, 2020 |
|
— |
Granted |
|
2,132,749 |
Vested |
|
(1,098,019) |
Non-vested as of September 30, 2021 |
|
1,034,730 |
As of September 30, 2021, the unvested SDG B.V. RSUs is expected to be recognized over a weighted average period of 2.96 years.
Synthetic Options Equity Incentive Plans
The Company also grants share-based awards to the employees of several business units, comprised of a synthetic option awards in respect of the relevant business unit (“Synthetic Options”) and a linked RSU award. Synthetic
F-25
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
Options entitle the participants to receive phantom or synthetic “shares” in the relevant business unit, which represent the participant’s right to an amount (the “Payout Amount”) based on the appreciation in value of the synthetic “shares” from the grant date to the vesting or exercise date. Such Payout Amounts are satisfied by the vesting of the linked RSU award, which are ultimately settled in the Company’s Class A shares. The Company estimates the fair value of Synthetic Options using the Monte-Carlo pricing model.
The following table summarizes information about non-vested share awards:
As of September 30, 2021, there was RUB 4,370 ($60.1) of unamortized share-based compensation expense related to unvested Synthetic Options which is expected to be recognized over a weighted average period of 3.23 years.
15. | INFORMATION ABOUT SEGMENTS, REVENUES & GEOGRAPHIC AREAS |
The Company determined its operating segments based on how the chief operating decision maker (“CODM”) manages the business, allocate resources, makes operating decisions and evaluates operating performance. The Company determined the following operating and reportable segments: Search and Portal, Taxi, Yandex.Market, Classifieds and Media Services. The results of the Company’s remaining operating segments, including self-driving vehicles business (“Yandex SDG”), Zen, Yandex.Cloud, Yandex.Education, Devices, FinTech, Yandex.Uslugi (“Services”) and Yandex.Lavka experiments in international markets (“Lavka Overseas”), that do not meet the quantitative or the qualitative thresholds for disclosure, are combined into the other category defined as Other Business Units and Initiatives which is shown separately from the reportable segments and reconciling items.
Starting 2021, the Company introduced the following changes to its segments under which the Company reported quarterly financial results previously, in order to better reflect operational performance of businesses:
● | The Company transferred Devices and Yandex.TV from Search and Portal to the Other Business Units and Initiatives segment; |
● | The Company transferred Geo from the Other Business Units and Initiatives segment to Search and Portal; |
● | The Company transferred Yandex.Uslugi (“Services”) from Search and Portal to the Other Business Units and Initiatives segment; |
These changes are applied retroactively to all periods presented.
Reportable segments derive revenues from the following services:
● | Search and Portal, which includes Search, Geo, Yandex 360, Weather, News, Travel, Alice voice assistant and a number of other services offered in Russia, Belarus and Kazakhstan; |
● | The Taxi segment includes mobility businesses, which consists of the Ride-hailing business (including Yandex.Taxi in Russia and 17 other countries across CIS and EMEA, and Uber in Russia and CIS) for both B2C and B2B, and Yandex.Drive, car-sharing business; the FoodTech businesses (including Yandex.Eats, a ready-to-eat and grocery delivery service, and Yandex.Lavka, a hyperlocal convenience store delivery service); and Yandex.Delivery (Logistics), a last-mile logistics solution for individuals, small and medium businesses and enterprises; |
F-26
YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
● | The Yandex.Market segment includes marketplace, price comparison service, and several small experiments; |
● | The Media Services segment includes the subscription service Yandex.Plus, Yandex.Music, KinoPoisk, Yandex.Afisha and production center Yandex.Studio; |
● | The Classifieds segment includes Auto.ru, Yandex.Realty, Yandex.Jobs, and Yandex Classifieds. |
Operating segments of the Company may integrate products managed by other operating segments into their services, for which they pay royalties or other types of compensation. Such compensation represents intersegment transactions, which are included in revenues of the reportable segments presented below. The Company considers it is impracticable to separately present revenues from external customers and intersegment transactions for each reportable segment as such information is not readily available and is not presented to the CODM.
The Company accounts for intersegment revenues as if the services were provided to third parties, that is, at the level approximating current market prices.
The measures of the segments’ profits and losses that are used by the CODM to assess segment performance and decide how to allocate resources for the three and nine months ended September 30, 2020 and 2021 are presented below. The CODM does not evaluate operating segments using asset information and, accordingly, the Company does not report asset information by segments.
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YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
* Financial results of Yandex.Market for the three and nine months ended September 30, 2020 were included in Yandex’s consolidated financial results on a consolidated basis since July 24, 2020. Yandex’s portion of the results of Yandex.Market prior to the date of acquisition was recognized in the line item “Other income/(loss), net”.
The reconciliation between adjusted operating income and net income/(loss) for the three and nine months ended September 30, 2020 and 2021 is as follows:
The Company’s revenues for the three and nine months ended September 30, 2020 and 2021 consist of the following:
(1) | The Company records revenue net of VAT, advertising bonuses and discounts. Because it is impractical to track bonuses and discounts for online advertising revenues generated on Yandex websites and on those of the Yandex ad network members separately, the Company has allocated bonuses and discounts between its Yandex websites and the Yandex ad network websites proportionately to their respective gross revenue contributions. |
Revenues disaggregated by geography, based on the billing address of the customer, consist of the following:
The following table sets forth long-lived assets other than financial instruments and deferred tax assets by geographic area:
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YANDEX N.V.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In millions of Russian rubles and U.S. dollars, except share and per share data)
16. | REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS |
In the first quarter of 2021 the Company corrected the Dutch VAT returns of Yandex. N.V. for periods beginning in 2016 through the fourth quarter of 2020. The cumulative effect of a correction together with other immaterial discrepancies identified as of December 31, 2020 amounted to RUB 1,199 ($16.2 at the exchange rate as of December 31, 2020). The Company evaluated the materiality of the impact on the financial statements quantitatively and qualitatively and concluded it was not material to any of the affected prior periods. Consolidated revenues are not affected. Therefore, the Company revised its previously issued consolidated financial statements for the periods impacted.
The following table presents the impact of corrections on affected consolidated balance sheet line items as of December 31, 2020:
17. | SUBSEQUENT EVENTS |
New grants
In November 2021, the Company granted pursuant to the 2016 Plan (i) RSUs to purchase an aggregate of up to 2,487,086 Class A shares to its employees; (ii) 267,127 Synthetic Options in respect of the Company’s business units; and (iii) 116,864 RSUs in respect of the Self-Driving Group.
Repurchases of ordinary shares
In October 2021, the Company repurchased 645,191 Class A shares at an average price of $77.71 per share, for a total amount of $50.1. Such shares will be held in treasury for use under the Company’s equity incentive plans.
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