Table of Contents


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

 

July 1, 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. (the “Company”) as of and for the three-months ended March 31, 2021.

The Company intends to publish its quarterly unaudited condensed consolidated financial statements, with notes, on a quarterly basis going forward.

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such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.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.

 

 

YANDEX N.V.

 

 

 

 

 

 

Date: July 1, 2021

By:

/s/ Svetlana Demyashkevich

 

 

Svetlana Demyashkevich

 

 

Chief Financial Officer


INDEX TO EXHIBITS

Exhibit No.

Description

99.1

Unaudited Condensed Consolidated Financial Statements of Yandex N.V. as of and for the three months ended March 31, 2021


EXHIBIT 99.1

YANDEX N.V.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Page

Unaudited Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2021

F-2

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2021

F-3

Unaudited Condensed Consolidated Statements of Comprehensive Income/(loss) for the Three Months Ended March 31, 2020 and 2021

F-4

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2021

F-5

Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2020 and 2021

F-7

Notes to the Unaudited Condensed Consolidated Financial Statements

F-8

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

As of

    

Notes

    

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

ASSETS

Cash and cash equivalents

 

4

 

132,398

 

92,878

1,226.9

Term deposits

 

 

105,787

 

138,137

1,824.7

Investments in marketable equity securities

4

-

44

0.6

Accounts receivable, less allowance for doubtful accounts of RUB 1,798 and RUB 2,104, respectively

 

4

 

25,440

 

27,229

359.7

Prepaid expenses

 

6,727

 

6,478

85.5

Inventory

4,810

6,409

84.7

Funds receivable, net

 

 

2,289

 

2,731

36.1

Other current assets

4

 

12,950

 

17,759

234.6

Total current assets

 

 

290,401

 

291,665

3,852.8

Property and equipment, net

 

7

 

61,772

 

62,599

826.9

Operating lease right-of-use assets

8

20,800

29,481

389.4

Intangible assets, net

 

9

 

21,842

 

22,757

300.6

Non-current content assets, net

11

 

7,464

 

9,661

127.6

Goodwill

 

9

 

104,275

 

116,525

1,539.3

Long-term prepaid expenses

 

1,391

 

2,172

28.6

Investments in non-marketable equity securities

 

4

 

1,135

 

1,145

15.1

Deferred tax assets

1,639

1,821

24.1

Investments in marketable equity securities

4

-

8,991

118.8

Other non-current assets

 

4

 

4,893

 

6,608

87.3

Total non-current assets

225,211

261,760

3,457.7

TOTAL ASSETS

 

515,612

 

553,425

7,310.5

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Accounts payable and accrued liabilities

 

4

 

43,634

 

64,726

855.0

Income and non-income taxes payable

 

4

 

12,573

 

12,866

170.0

Deferred revenue

6,645

6,437

85.0

Total current liabilities

 

62,852

84,029

1,110.0

Convertible debt

13

83,277

85,863

1,134.2

Deferred tax liabilities

 

 

3,705

 

3,946

52.1

Operating lease liabilities

 

8

 

12,830

 

20,077

265.2

Other accrued liabilities

 

 

4,846

 

7,927

104.7

Total non-current liabilities

 

 

104,658

 

117,813

1,556.2

Total liabilities

167,510

201,842

2,666.2

Commitments and contingencies

 

12

 

Redeemable noncontrolling interests

 

3,167

 

1,859

24.6

Shareholders’ equity:

Priority share: €1.00 par value; shares authorized (1 and 1), shares issued (1 and 1) and outstanding (1 and 1)

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 321,430,479, Class B: 35,708,674 and 35,708,674, and Class C: 1,429,984 and nil, respectively); shares outstanding (Class A: 318,501,858 and 320,287,099, Class B: 35,708,674 and 35,708,674, and Class C: nil)

 

278

 

279

3.7

Treasury shares at cost (Class A: 1,928,621 and 1,143,380, Priority share: nil and nil, respectively)

(6)

(5)

(0.1)

Additional paid-in capital

160,857

167,836

2,217.0

Accumulated other comprehensive income

4

17,923

18,381

242.9

Retained earnings

145,789

143,229

1,892.0

Total equity attributable to Yandex N.V.

324,841

329,720

4,355.5

Noncontrolling interests

20,094

20,004

264.2

Total shareholders’ equity

344,935

349,724

4,619.7

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

515,612

553,425

7,310.5

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)

Three months ended March 31,

Notes

2020

2021

2021

    

    

RUB

    

RUB

    

$

Revenues

15

47,003

73,136

966.1

Operating costs and expenses:

Cost of revenues(1)

16,235

 

34,042

449.7

Product development(1)

7,928

 

11,009

145.4

Sales, general and administrative(1)

13,641

 

23,095

305.2

Depreciation and amortization

4,010

 

5,257

69.4

Total operating costs and expenses

41,814

 

73,403

969.7

Income/(loss) from operations

5,189

 

(267)

(3.6)

Interest income

728

 

1,177

15.5

Interest expense

(225)

 

(793)

(10.5)

Loss from equity method investments

4

(1,106)

 

(1)

Other income, net

 

4

4,532

 

459

6.1

Net income/(loss) before income taxes

9,118

 

575

7.5

Income tax expense

 

10

3,690

 

3,795

50.1

Net income/(loss)

5,428

 

(3,220)

(42.6)

Net loss attributable to noncontrolling interests

366

 

243

3.2

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

5,794

 

(2,977)

(39.4)

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

Basic

 

2

17.55

 

(8.38)

(0.11)

Diluted

 

2

17.14

 

(8.38)

(0.11)

Weighted average number of Class A and Class B shares outstanding:

Basic

 

2

330,099,251

 

355,411,772

355,411,772

Diluted

 

2

337,591,226

 

355,411,772

355,411,772


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

Cost of revenues

    

76

 

124

    

1.6

Product development

 

1,682

 

3,442

 

45.5

Sales, general and administrative

 

993

 

2,238

 

29.6

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)

Three months ended March 31,

    

2020

2021

2021

RUB

RUB

$

Net income/(loss)

5,428

(3,220)

(42.6)

Foreign currency translation adjustment:

Foreign currency translation adjustment, net of tax of nil

10,122

659

8.8

Total other comprehensive income

10,122

659

8.8

Total comprehensive income/(loss)

15,550

 

(2,561)

(33.8)

Total comprehensive (income)/loss attributable to noncontrolling interests

(1,531)

42

0.6

Total comprehensive income/(loss) attributable to Yandex N.V.

14,019

(2,519)

(33.2)

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)

Three months ended March 31,

    

Notes

2020

2021

2021

RUB

RUB

$

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/(loss)

5,428

(3,220)

(42.6)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment

7

3,333

3,776

49.8

Amortization of intangible assets

9

677

1,481

19.6

Amortization of content assets

11

587

1,390

18.4

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

2,642

2,399

31.7

Amortization of debt discount and issuance costs

144

517

6.8

Share-based compensation expense

14

2,751

5,804

76.7

Deferred income tax benefit

(448)

(403)

(5.3)

Foreign exchange gains

(4,450)

(264)

(3.4)

Loss from equity method investments

4

1,106

1

0

Other

93

(51)

(0.7)

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

Accounts receivable, net

1,027

(1,566)

(20.7)

Prepaid expenses and other assets

(691)

(5,070)

(67.0)

Inventory

(17)

(1,606)

(21.2)

Accounts payable and accrued liabilities

(2,729)

6,941

91.7

Deferred revenue

40

(175)

(2.3)

Content assets

(1,086)

(4,659)

(61.5)

Content liabilities

(713)

3,266

43.1

Net cash from operating activities

7,694

8,561

113.1

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchases of property and equipment and intangible assets

 

(2,405)

(3,559)

(47.0)

Proceeds from sale of property and equipment

 

9

23

0.3

Acquisitions of businesses, net of cash acquired

 

3

(7,228)

(95.5)

Investments in non-marketable equity securities

(15)

(110)

(1.5)

Proceeds from sale of equity securities

157

2.1

Investments in marketable securities

(8,447)

(111.6)

Investments in term deposits

(61,745)

(130,310)

(1,721.3)

Maturities of term deposits

27,299

100,171

1,323.2

Loans granted, net of proceeds from repayments

(86)

(1.1)

Net cash used in investing activities

(36,857)

(49,389)

(652.4)

CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:

Proceeds from exercise of share options

14

620

8.2

Repurchases of share options

(42)

(0.6)

Proceeds from issuance of convertible debt

82,046

Repurchases of ordinary shares

(8,446)

Payment for contingent consideration

(10)

(10)

(0.1)

Payment for finance leases

(114)

(74)

(1.0)

Other financing activities

(33)

(71)

(0.9)

Purchase of redeemable noncontrolling interests

(637)

(8.4)

Net cash from/(used in) financing activities

73,457

(214)

(2.8)

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

24,442

1,521

20.0

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

68,736

(39,521)

(522.1)

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

56,453

132,446

1,749.6

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

125,189

92,925

1,227.5

RECONCILIATION OF CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH AND CASH EQUIVALENTS:

Cash and cash equivalents, beginning of period

56,415

132,398

1,748.9

Restricted cash and cash equivalents, beginning of period

38

48

0.7

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

56,453

132,446

1,749.6

Cash and cash equivalents, end of period

125,142

92,878

1,226.9

Restricted cash and cash equivalents, end of period

47

47

0.6

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

125,189

92,925

1,227.5

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)

Three months ended March 31,

    

Notes

2020

2021

2021

RUB

RUB

$

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for income taxes

3,292

4,399

58.1

Cash paid for acquisitions

3

7,300

96.4

Convertible notes coupon paid

344

4.5

Interest paid for finance leases

59

0.8

Operating cash flows from operating leases

2,910

2,715

35.9

Non-cash operating activities:

Right-of-use assets obtained in exchange for operating lease obligations

600

10,209

134.9

Non-cash investing activities:

Acquired property and equipment and intangible assets not yet paid for

3,229

2,841

35.1

Non-cash financing activities:

Right-of-use assets obtained in exchange for finance lease obligations

523

6.9

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)

Three months ended March 31, 2020

Priority Share

Ordinary Shares

Accumulated

Redeemable

Issued and

Issued and

Treasury

Additional

Other

Non-

 

non-

Outstanding

Outstanding

shares at

Paid-In

Comprehensive

Retained

redeemable

 

controlling

Shares

Amount

Shares

Amount

cost

Capital

Income

Earnings

NCI

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

 

2,302

2,302

Exercise of share options (Note 14)

 

1,320,043

16

16

Tax withholding related to exercise of share awards

(34)

(34)

Repurchases of shares

 

(3,495,988)

(8,683)

(8,683)

Reissue of shares for options exercised

 

3,365

(3,365)

Repurchase of share options

168

(16)

152

(151)

Issuance of convertible debt

6,792

6,792

Foreign currency translation adjustment

8,225

1,845

10,070

52

Other

 

1

(1)

240

14

254

Net income / (loss)

5,794

(366)

5,428

1

Change in redemption value of redeemable noncontrolling interests

(87)

(87)

87

Balance as of March 31, 2020

 

1

327,682,221

262

(5,730)

74,169

13,073

127,245

21,738

230,757

14,235

Three months ended March 31, 2021

Priority Share

Ordinary Shares

Accumulated

Redeemable

Issued and

Issued and

Treasury

Additional

Other

Non-

 

non-

Outstanding

Outstanding

shares at

Paid-In

Comprehensive

Retained

redeemable

 

controlling

Shares

Amount

Shares

Amount

cost

Capital

Income

Earnings

NCI

Total

 

interests

    

    

RUB

    

    

RUB

RUB

RUB

RUB

RUB

RUB

    

RUB

    

RUB

Balance as of December 31, 2020

 

1

    

    

354,210,532

    

278

(6)

160,857

17,923

145,789

20,094

 

344,935

3,167

Share-based compensation expense

5,966

5,966

Exercise of share options (Note 14)

 

1,785,241

628

628

Tax withholding related to exercise of share awards

(60)

(60)

Reissue of shares for options exercised

2

(2)

Repurchase of share options

302

6

308

(870)

Foreign currency translation adjustment

458

201

659

Other

1

(1)

145

(26)

(48)

71

Net loss

(2,977)

(243)

(3,220)

Change in redemption value of redeemable noncontrolling interests

437

437

(438)

Balance as of March 31, 2021

1

355,995,773

279

(5)

167,836

18,381

143,229

20,004

349,724

1,859

Balance as of March 31, 2021, $

 

3.7

(0.1)

2,217.0

242.9

1,892.0

264.2

4,619.7

24.6

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-7


Table of Contents

YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 period ended March 31, 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 management, all adjustments considered necessary for a fair presentation have been included, and the Company believes that the disclosures are adequate to ensure the information is not misleading.

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 an update of accounting policy in relation to the new music content obtained in 2021.

In 2021 the Company obtained the music content for customers through licensing agreement with fixed payment schedules. The Company recognizes an intangible asset within other current assets and non-current content assets lines of the unaudited condensed consolidated balance sheet depending on the initial maturity of the licenses 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.

The results for the three months ended March 31, 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.

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 75.7023 to $1.00, the prevailing exchange rate as of March 31, 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.

F-8


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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 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 months ended March 31, 2020 and 2021 is computed on the basis of the weighted average number of ordinary shares outstanding using the two class method. Basic net income/(loss) per share is computed using the weighted average number of ordinary shares outstanding during the period, including restricted shares. Diluted net income/(loss) per ordinary share is computed using the effect of the outstanding 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 March 31, 2020 and 2021, was 2,074,337 and 13,735,881, respectively.

The convertible notes due 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 months ended March 31, 2020 and 2021.

F-9


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The components of basic and diluted net income/(loss) per share were as follows:

Three Months ended March 31,

2020

2021

Class A

Class B

Class A

Class A

Class B

Class B

    

RUB

    

RUB

    

RUB

    

$

    

RUB

    

$

Net income/(loss), allocated for basic

5,142

652

(2,678)

(35.3)

(299)

(4.0)

Reallocation of net income/(loss) as a result of conversion of Class B to Class A shares

 

652

 

 

(299)

 

(4.0)

 

 

Reallocation of net loss to Class B shares

 

 

(15)

 

 

 

 

Dilution in Classifieds

(9)

Net income/(loss), allocated for diluted

 

5,785

 

637

 

(2,977)

 

(39.3)

 

(299)

 

(4.0)

Weighted average ordinary shares outstanding—basic

 

292,961,208

 

37,138,043

 

319,703,098

 

319,703,098

 

35,708,674

 

35,708,674

Dilutive effect of:

Conversion of Class B to Class A shares

 

37,138,043

 

 

35,708,674

 

35,708,674

 

 

Share-Based Awards

 

7,491,975

 

 

 

 

 

Weighted average ordinary shares outstanding—diluted

 

337,591,226

 

37,138,043

 

355,411,772

 

355,411,772

 

35,708,674

 

35,708,674

Net income/(loss) per share attributable to ordinary shareholders:

Basic

 

17.55

 

17.55

 

(8.38)

 

(0.11)

 

(8.38)

 

(0.11)

Diluted

 

17.14

 

17.14

 

(8.38)

 

(0.11)

 

(8.38)

 

(0.11)

3. BUSINESS COMBINATIONS AND INVESTMENT TRANSACTIONS

Acquisition of Axelcroft Group

On February 2, 2021, MLU B.V., a subsidiary of the Company, 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 US GAAP requirements.

The acquisition-date fair value of the consideration payable amounted to RUB 12,916 ($170.6), including RUB 7,300 ($96.4) 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 ($74.2) subject to successful achievement of certain integration milestones and other purchase price adjustments.

The holdback amount will be retained pending satisfaction of certain post-closing conditions, and is to be settled with a maximum payment of RUB 1,282 ($16.9) (undiscounted) within 3 years of the acquisition date.

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 integration consideration is payable in June 2021 upon completion of the integration. The fair value of contingent consideration at the acquisition date was estimated at RUB 4,557 ($60.2). The Company estimated the fair value of the integration consideration based on the 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. As of March 31, 2021, there were no significant changes in the range of outcomes for the contingent consideration recognized as a result of the acquisition.

The impact of the contingent consideration obligations on the operating results of the Company can vary over time as the Company may revise its outlook regarding the likelihood of achieving the performance targets underlying the arrangements. This impact on operating results may be significant, depending on a number of factors, including the magnitude of the change in the outlook for each individual performance target.

Set out below is the condensed balance sheet of Axelcroft Group as of February 2, 2021, reflecting the preliminary allocation of the purchase price. The Company is in the process of obtaining third-party valuations of certain

F-10


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

intangible assets; thus, the measurements of intangible assets, goodwill and deferred income tax assets are provisional and are subject to change.

    

February 2,
2021

RUB

ASSETS:

Cash and cash equivalents

 

72

Intangible assets

1,774

Goodwill

 

12,250

Other current and non-current assets

1,474

Total assets

 

15,570

LIABILITIES:

Deferred income tax liabilities

 

323

Other current and non-current liabilities

2,331

Total liabilities

2,654

Total net assets acquired

 

12,916

Total purchase consideration

 

12,916

The purchase price allocation is expected to be completed within 12 months after the acquisition date.

Of the RUB 1,774 ($23.4) allocated to intangible assets, RUB 1,024 ($13.5) and RUB 292 ($3.9) 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 ($3.4) represents driver relationships, included in the customer relationships category (Note 9), that will be amortized over a period of 2 years. RUB 200 ($2.6) was assigned to IT software and technology, included in the content and software category (Note 9), which are mainly represented by driver’s and client’s mobile applications that were discontinued at the end of the technical integration period, i.e. April 2, 2021, and therefore were fully amortized as of 31 March 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 ($161.8) 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 363 ($4.8) 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 months ended March 31, 2021 and 2020. Accordingly, no pro forma financial information is presented.

4. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DETAILS

Cash and Cash Equivalents

Cash and cash equivalents as of December 31, 2020 and March 31, 2021 consisted of the following:

F-11


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

    

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

Cash

 

60,006

42,435

 

560.5

Cash equivalents:

Bank deposits

 

72,369

50,416

666.0

Investments in money market funds

 

4

5

0.1

Other cash equivalents

19

22

0.3

Total cash and cash equivalents

 

132,398

92,878

1,226.9

Current expected credit losses for cash, cash equivalents, term deposits, funds receivable and other financial assets were immaterial for the three months ended March 31, 2020 and 2021. All of the Company’s cash is held at financial institutions that management believes to be of high credit quality.

The financial assets measured at amortized cost primarily consist of trade accounts receivable.

Accounts Receivable, Net

Accounts receivable as of December 31, 2020 and March 31, 2021 consisted of the following:

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

Trade accounts receivable

27,238

29,333

387.5

Allowance for credit losses

(1,798)

(2,104)

(27.8)

Total accounts receivable, net

25,440

 

27,229

359.7

Movements in the allowance for expected current credit losses on trade receivables for the three months ended March 31, 2020 and 2021 are as follows:

Three months ended March 31,

2020

2021

2021

RUB

RUB

$

Balance at the beginning of period

815

1,798

23.8

Adoption of ASU No. 2016-13

214

Current period provision for expected credit losses

143

306

4.0

Write-off

(3)

Foreign exchange difference

60

3

Balance at the end of period

1,232

2,104

27.8

The Company’s past due receivables exceeding one year were in the amount of RUB 1,063 and RUB 1,215 ($16.0) as of December 31, 2020 and March 31, 2021, respectively.

F-12


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Other Current Assets

Other current assets as of December 31, 2020 and March 31, 2021 consisted of the following:

    

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

VAT reclaimable

 

7,573

10,302

136.1

Prepaid income tax

1,484

1,745

23.0

Current content assets

499

 

1,476

19.5

Loans to employees

1,238

1,469

19.4

Other receivables

 

819

1,197

15.8

Loans granted to third parties

528

649

8.6

Interest receivable

426

500

6.6

Contract assets

164

2.2

Prepaid other taxes

148

136

1.8

Restricted cash

29

28

0.4

Loans granted to related parties

6

6

0.1

Other

 

200

 

87

1.1

Total other current assets

 

12,950

 

17,759

234.6

The loans granted to third parties as of March 31, 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 as of December 31, 2020 and March 31, 2021 was in the amount of RUB 426 and RUB 500 ($6.6), respectively, and is reflected in other current assets within the Company’s unaudited condensed consolidated balance sheets and excluded from the amortized cost basis of financing receivables. The Company did not write-off any accrued interest receivable during the three months ended March 31, 2020 and 2021.

Other Non-current Assets

Other non-current assets as of December 31, 2020 and March 31, 2021 consisted of the following:

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

Loans to employees

3,855

 

4,153

54.9

VAT reclaimable

718

 

675

8.9

Contract assets

234

340

4.5

Other receivables

 

102

1.3

Loans granted to related parties

32

30

0.4

Restricted cash

19

19

0.3

Loans granted to third parties

18

 

Other non-current assets

17

1,289

17.0

Total other non-current assets

4,893

 

6,608

87.3

Investments in Equity Securities

The Company's investments in equity securities as of December 31, 2020 and March 31, 2021 consisted of the following:

    

December 31, 2020

    

March 31, 2021

March 31, 2021

RUB

RUB

 $

Investments in marketable equity securities, current

44

0.6

Investments in marketable equity securities, non-current

 

 

8,991

118.8

Total investments in marketable equity securities

 

 

9,035

119.4

Equity method investments - technology companies

453

446

5.9

Other equity investments - venture capital funds

499

512

6.8

Other equity investments - technology companies

 

183

 

187

2.4

Total investments in non-marketable equity securities

 

1,135

 

1,145

15.1

F-13


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Investments in non-current marketable equity securities consisted of the investments in several publicly traded special purpose acquisition companies (SPACs). The Company measured those investments at fair value with the changes recognized in earnings within the Other income, net line in the unaudited condensed consolidated statements of operations.

Non-marketable equity securities are investments in privately held technology companies and venture capital funds without readily determinable market values. There were no changes in the percentage share in the non-marketable equity holdings in the three months ended March 31, 2021.

All gains and losses, realized and unrealized, and impairments on marketable and non-marketable equity securities are recognized within the Other income, net line in the unaudited condensed consolidated statements of operations. Gains and losses related to the equity securities other than those accounted for under the equity method for the three months ended March 31, 2020 and 2021 are summarized below:

Three months ended March 31,

2020

2021

2021

RUB

RUB

$

Unrealized (losses)/gains recognized for the period on equity securities still held at the reporting date

(29)

44

0.6

Net gains recognized for the period on equity securities sold during the period

63

0.8

Distributed income from the investments in venture capital funds

 

 

127

1.7

Net (losses)/gains recognized during the period on equity securities

 

(29)

 

234

3.1

Gains and losses on equity securities accounted for under the equity method are summarized below:

Three months ended March 31,

2020

2021

2021

RUB

RUB

$

Yandex.Market B.V.

(1,215)

Yandex.Money

112

Other

 

(3)

 

(1)

Net losses recognized during the period on equity method investments

 

(1,106)

 

(1)

In July 2020, the Company completed the acquisition of the Sberbank 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.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities as of December 31, 2020 and March 31, 2021 comprise the following:

    

December 31, 2020

    

March 31, 2021

    

March 31, 2021

RUB

RUB

$

Trade accounts payable and accrued liabilities

 

30,598

 

43,189

 

570.5

Operating lease liabilities, current (Note 8)

8,620

9,309

123.0

Salary and other compensation expenses payable/accrued to employees

 

4,046

 

6,734

 

89.0

Accounts payable for acquisition of businesses

49

5,098

67.3

Finance lease liability, current (Note 8)

321

396

5.2

Total accounts payable and accrued liabilities

 

43,634

 

64,726

 

855.0

Other Income, Net

The following table presents the components of other income, net for the three months ended March 31, 2020 and 2021:

F-14


YANDEX N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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