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

   

For the month of February, 2020

   

YANDEX N.V.

   

Schiphol Boulevard 165

1118 BG, Schiphol, the Netherlands.

Tel: +31 202 066 970

(Address, Including ZIP Code, and Telephone Number,

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

   

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

   

Form 20-F ☒    Form 40-F 

   

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

   

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

   

   

   

 

Furnished as Exhibit 99.1 to this Report on Form 6-K is a press release of Yandex N.V. (the “Company”) dated February 14, 2020, announcing the Company’s results for the fourth quarter and full year ended December 31, 2019.

   

 

 

   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.

   

   

 

INDEX TO EXHIBITS

 

 

 

Exhibit 99.1

Yandex Announces Fourth Quarter and Full-Year 2019 Financial Results

 

Q4 2019 Revenues were up 33% year-over-year and reached RUB 51.7 billion

FY 2019 Revenues excluding Yandex.Market grew 39% year-over-year and reached RUB 175.4 billion

 

MOSCOW and AMSTERDAM, the Netherlands, February 14, 2020 -- Yandex (NASDAQ and MOEX: YNDX), one of Europe's largest internet companies and the leading search provider in Russia, today announced its unaudited financial results for the fourth quarter and the full year ended December 31, 2019.

 

Q4 2019 Financial Highlights(1)(2)(3)

 

Q4 2019 consolidated financial results

 

FY 2019 Financial Highlights(1)(2)(3)

 

FY 2019 consolidated financial results

 

 

Cash, cash equivalents and term deposits as of December  31, 2019:

 

Q4 2019 Operational and Corporate Highlights

 

Search

 

Business Units and Experiments

 

Corporate

 

“2019 was an excellent year for us,” said Arkady Volozh, Chief Executive Officer of Yandex. “We demonstrated 39% year-on-year revenue growth on a like-for-like basis, with solid contributions from all of our businesses. We made incredible progress in the development of our world-class self-driving technology, which is now on par with global leaders in the space, and which we developed at a fraction of the cost. And we are well positioned for further innovation and ongoing growth of other outstanding businesses within our ecosystem, including our content feed product, Zen, as well as our newly launched hyperlocal convenience store delivery business, Lavka.

 

“In Q4 we delivered another solid set of results with revenue growth of 33% year-on-year, or 38% on an ex-TAC basis,” said Greg Abovsky, Chief Operating Officer and Chief Financial Officer of Yandex. “We demonstrated profitability in our ride-hailing segment on an annual basis in 2019 and achieved record profitability in our Classifieds segment.”

 

 

The following table provides a summary of our key consolidated financial results for the three and twelve months ended December  31, 2018 and 2019, which includes Yandex.Market financial results through April 27, 2018, the date as of which that business was deconsolidated:

 

 

*  Adjusted for restatement of operating costs and expenses and other income/(loss), net due to adoption of ASC 842 Leases

 

 

 

 

Our segment disclosure is available in the Segment financial results section below Income from operations.

 

 

 

Consolidated revenues breakdown

 

 

 

 

Online advertising revenues grew 16% in Q4 2019 compared with Q4 2018 and generated 66% of total revenues. Online advertising revenues include revenues derived from performance and brand advertising on Yandex properties and in our advertising network.

 

Online advertising revenues from Yandex properties increased 23% in Q4 2019 compared with Q4 2018 and accounted for 53% of total revenues.

 

Online advertising revenues from our advertising network decreased 5% in Q4 2019 compared with Q4 2018 and accounted for 13% of total revenues.

 

Revenues related to Taxi segment grew 71% in Q4 2019 compared with Q4 2018 and accounted for 23% of total revenues, compared with 18% of total revenues in Q4 2018.  This increase mainly reflected the growth of our ride-hailing business driven by increase in the number of rides, solid performance of our corporate Taxi business, which we recognize on a gross basis, as well as the growing contribution of our food tech services.

 

Other revenues grew 127% in Q4 2019 compared with Q4 2018 and amounted to 11% of total revenues. The growth was primarily driven by our car-sharing service Yandex.Drive, subscription revenues of Media Services and our initiatives related to IoT (Internet of Things).

 

 

Consolidated Operating Costs and Expenses

 

Yandex’s operating costs and expenses consist of cost of revenues, product development expenses, sales, general and administrative expenses (SG&A) and depreciation, amortization expenses (D&A) and goodwill impairment. Apart from D&A and goodwill impairment, each of the above expense categories include personnel-related costs and expenses, relevant office space rental, and related share-based compensation expense. Increases across all cost categories reflect investments in overall growth. In Q4 2019 Yandex's headcount

increased by 504 full-time employees. The total number of full-time employees was 10,092 as of December 31, 2019, up by 5% compared with September 30, 2019, and up 15% from December 31, 2018.

 

 

Cost of revenues, including traffic acquisition costs (TAC)

 

 

TAC grew 8% in Q4 2019 compared with Q4 2018 and represented 12.8% of total revenues, 310 basis points lower than in Q4 2018 and flat compared with Q3 2019 as a result of revenue mix effect.

 

Costs related to Taxi segment increased 83% compared with Q4 2018. The growth was mainly a result of the increase of costs related to our corporate Taxi offering, as well as due to the increase of the costs of goods sold (COGS) in our food tech services. We are the principal in transactions with our Taxi corporate clients, therefore, we recognize both revenues and cost of revenues on a gross basis. The increase of COGS in our food tech services primarily relates to the launch of Yandex.Lavka, our hyperlocal grocery delivery service, in Q4 2019.

 

Other cost of revenues in Q4 2019 increased 100% compared with Q4 2018,  mainly reflecting the growth of costs related to Yandex.Drive, our investments in content within Media Services and Search and Portal, as well as our IoT initiatives.

 

Product development

 

 

Product development expenses grew 38% in Q4 2019 compared to Q4 2018, primarily reflecting new hires, salary and other personnel-related costs increases, as well as growth of share-based compensation in Q4 2019.

 

Sales, general and administrative (SG&A)

 

 

SG&A expenses grew 56% in Q4 2019 compared to Q4 2018. The growth was mainly driven by the increase of personnel costs, growth of advertising and marketing expenses, as well as due to the increase of professional services costs as a result of a one-off expense of RUB 882 million related to our corporate restructuring. Excluding an impact of this one-off, SG&A expenses grew 47% year-on-year in Q4 2019.

 

Share-based compensation (SBC) expense

 

SBC expense is included in each of the cost of revenues, product development, and SG&A categories discussed above.

 

 

Total SBC expense increased 66% in Q4 2019 compared with Q4 2018. The growth was primarily related to new equity-based grants made in 2018-2019.

 

Depreciation and amortization (D&A) expense

 

 

D&A expense increased 24% in Q4 2019 compared with Q4 2018. The D&A expense increase was mainly driven by our investments in servers and data center equipment, expansion of Yandex.Drive’s car-sharing fleet,  as well as by costs related to purchases of office equipment. We have both operating and finance leases in Yandex.Drive. According to the ASC 842 rules, we divide lease  payments under finance leases into the interest and amortization components and recognize the latter under D&A expense. In addition, we depreciate the cost of certain equipment that we install on Yandex.Drive’s cars, such as infotaintment systems and telematics.  

 

 

Income from operations

 

 

Income from operations decreased 34% in Q4 2019 compared with Q4 2018. The decrease primarily reflects the growth of SG&A costs which were impacted by a one-off cost of RUB 882 million for professional services related to our corporate restructuring incurred in Q4 2019 as well as Food Party goodwill impairment of RUB 762 million.

 

Segment financial results

 

Search & Portal

 

Search and Portal segment offers a broad range of services in Russia, Belarus, Kazakhstan and Uzbekistan.

 

 

*IoT stands for Internet of Things

 

Taxi

 

Taxi segment includes our Ride-hailing business (including Yandex.Taxi and Uber in Russia and neighboring countries), FoodTech business (including Yandex.EATs, Yandex.Chef, a meal kit subscription service, and Yandex.Lavka, a hyperlocal grocery delivery service) and our Self-Driving Cars (“SDC”) division.

 

 

 

Adjusted EBITDA of Taxi was RUB 271 million in Q4 2019, up from negative RUB 129 million in Q4 2018. The increase of adjusted EBITDA was driven by the improving profitability of our ride-hailing business,  partially offset by investments in autonomous vehicles and food tech initiatives as we expanded our AV  (autonomous vehicles) fleet and launched Yandex.Lavka service.

 

Classifieds

 

Classifieds segment includes Auto.ru, Yandex.Realty and Yandex.Jobs. 

 

 

Media Services

 

Media Services segment includes KinoPoisk, Yandex.Music, Yandex.Afisha, Yandex.TV program, our production center Yandex.Studio and our subscription service Yandex.Plus.

 

 

Other Bets and Experiments

 

Other Bets and Experiments category includes Zen, Yandex.Cloud, Yandex.Drive, Geolocation Services and Yandex.Education.

 

 

Other Bets and Experiments revenues grew 128% in Q4 2019 compared with Q4 2018. The increase was primarily driven by our car-sharing service Yandex.Drive, as well as the growth of Geo Services and Zen.

 

Eliminations

 

Eliminations in our revenues represent the elimination of transactions between the reportable segments, primarily related to advertising. Eliminations related to our adjusted EBITDA mainly reflect reallocation of a portion of Search and Portal D&A expenses related to leasehold improvements to office rent expenses of our business units.

 

 

*   Total segment results for the twelve months ended December 31, 2018 include financial results of our E-commerce segment. E-commerce segment revenues and adjusted EBITDA include revenues and adjusted EBITDA of Yandex.Market through April 27, 2018.

 

Adjusted EBITDA increased 7% in Q4 2019 compared with Q4 2018. The growth was mainly driven by the solid performance of Search and Portal segment and continuing improvement of our Taxi and Classifieds segments profitability, which were slightly offset by our investments in car-sharing business and Media Services.

 

 

Interest income in Q4 2019 was RUB 807 million, compared with RUB 929 million in Q4 2018.

 

Interest expense in Q4 2019 was RUB 31 million, down from RUB 221 million in Q4 2018.

 

Foreign exchange loss in Q4 2019 was RUB 999 million, compared with a foreign exchange gain of RUB 273 million in Q4 2018. This loss reflects the appreciation of the Russian ruble during Q4 2019 from RUB 64.4156 to $1.00 on September 30, 2019, to RUB 61.9057 to $1.00 on December 31, 2019. Yandex's Russian operating subsidiaries' functional currency is the Russian ruble, and therefore changes due to exchange rate fluctuations in the ruble value of these subsidiaries' monetary assets and liabilities that are denominated in other currencies are recognized as foreign exchange gains or losses within the other income/(loss), net line in the condensed consolidated statements of income. Although the U.S. dollar value of Yandex's U.S. dollar-denominated assets and liabilities was not impacted by these currency fluctuations, they resulted in a downward revaluation of the ruble equivalent of these U.S. dollar-denominated monetary assets and liabilities in Q4 2019.

 

Income tax expense for Q4 2019 was RUB 3,068 million, up from RUB 2,412 million in Q4 2018. Our effective tax rate of 91.6% in Q4 2019 was higher than in Q4 2018, primarily due to increase in stock-based compensation which is non-deductible. Adjusted for SBC expense, certain losses from equity-method investments which are non-deductible, goodwill impairment and certain tax provisions recognized, our effective tax rate for Q4 2019 was 33.0%, compared with 27.9% for Q4 2018 as adjusted for SBC expense and similar effects in that year. The increase in the adjusted effective tax rate was primarily driven by certain additional valuation allowances provided in Q4 2019.

 

Net income was RUB 0.3 billion ($4.5 million) in Q4 2019, down 95% compared with Q4 2018.

 

Adjusted net income in Q4 2019 was RUB 5.4 billion ($87.2 million), a 22% decrease from Q4 2018. 

 

Adjusted net income margin was 10.4% in Q4 2019, compared with 17.9% in Q4 2018.

 

As of December 31, 2019, Yandex had cash, cash equivalents and term deposits of RUB 88.3 billion ($1,426.5 million), including cash, cash equivalents and term deposits of Yandex.Taxi in total amount of RUB 24.4 billion ($394.4 million). 

 

Net cash flow provided by operating activities for Q4 2019 was RUB 8.6 billion ($139.3 million) and capital expenditures were RUB 5.5 billion ($89.4 million).

 

Redeemable noncontrolling interests presented in our condensed consolidated balance sheets relate to the equity incentive arrangements we have made available to the senior employees of the Taxi and Classifieds segments, pursuant to which such persons are eligible to acquire depositary receipts, or receive options to acquire depositary receipts, which entitles them to economic interests in the respective business unit subsidiaries.

 

The total number of shares issued and outstanding as of December 31, 2019 was 329,858,166 including 292,719,508 Class A shares, 37,138,658 Class B shares, and excluding one Priority share and 808,147 Class A shares held in treasury and all Class C shares outstanding solely as a result of the conversion of Class B shares into Class A shares. All such Class C shares were cancelled.

 

There were also employee share options outstanding to purchase up to an additional 3.3 million shares, at a weighted average exercise price of $37.17 per share, 1.5 million of which were fully vested; equity-settled share appreciation rights (SARs) for 0.1 million shares, at a weighted average measurement price of $32.75, all of which were fully vested; and restricted share units (RSUs) covering 12.8 million shares, of which RSUs to acquire 3.6 million shares were fully vested. Equity awards in respect of business unit subsidiaries are described under Redeemable noncontrolling interests above.

 

Financial outlook

 

We expect our ruble-based revenues to be between 214.0 and 221.0 billion rubles, or to grow in the range of 22% to 26% for the full year 2020 compared with 2019. 

 

We expect our Search and Portal ruble-based revenue ex-TAC to grow in the range of 14% to 17% in the full year 2020 compared with 2019.

 

This outlook reflects our current view, based on the trends that we see at this time, and may change in light of market and economic developments in the business sectors and jurisdictions in which we operate.

 

Conference Call Information

 

Yandex’s management will hold an earnings conference call on February 14, 2020 at 8:00 AM U.S. Eastern Time (4:00 PM Moscow time; 1:00 PM London time).

 

To access the conference call live, please dial:

 

US: +1 866 966 1396

UK/International: +44 (0) 844 571 8892

Russia: 8 10 800 2357 5011

Passcode: 5721088

 

A replay of the call will be available until February 21, 2020. To access the replay, please dial:

 

US: +1 917 677 7532

UK/International: +44 (0) 844 571 8951

Russia: +7 495 249 9138

Passcode: 5721088

 

A live and archived webcast of this conference call will be available at

 

https://edge.media-server.com/mmc/p/6rwzvs8g

 

 

ABOUT YANDEX

 

Yandex (NASDAQ and MOEX:YNDX) is a technology company that builds intelligent products and services powered by machine learning. Our goal is to help consumers and businesses better navigate the online and offline world. Since 1997, we have delivered world-class, locally relevant search and information services. Additionally, we have developed market-leading on-demand transportation services, navigation products and other mobile applications for millions of consumers across the globe. Yandex, which has 34 offices worldwide, has been listed on the NASDAQ since 2011.

More information on Yandex can be found at https://yandex.com/company.

 

FORWARD-LOOKING STATEMENTS

 

This press release contains forward-looking statements that involve risks and uncertainties. These include statements regarding our anticipated revenues for full year 2020. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, macroeconomic and geopolitical developments affecting the Russian economy or our business, changes in the political, legal and/or regulatory environment, competitive pressures, changes in advertising patterns, changes in user preferences, technological developments, and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions “Risk Factors” and “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2018 and “Risk Factors” in the Shareholder Circular filed as Exhibit 99.2 to our Current Report on Form 6-K,  which were filed with the U.S. Securities and Exchange Commission (SEC) on April 19, 2019 and November 18, 2019, respectively, and are available on our investor relations website at http://ir.yandex.com/sec.cfm and on the SEC website at www.sec.gov. All information in this release and in the attachments is as of February 14, 2020, and Yandex undertakes no duty to update this information unless required by law.

 

USE OF NON-GAAP FINANCIAL MEASURES

 

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

 

 

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

 

Although our management uses these non-GAAP financial measures for operational decision-making and considers these financial measures to be useful for analysts and investors, we recognize that there are a number of limitations related to such measures. In

particular, it should be noted that several of these measures exclude some recurring costs, particularly share-based compensation. In addition, the components of the costs that we exclude in our calculation of the measures described above may differ from the components that our peer companies exclude when they report their results of operations.

 

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

 

TAC

 

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

 

SBC

 

SBC is a significant expense item, and an important part of our compensation and incentive programs. As it is a non-cash charge, however, and highly dependent on our share price at the time of equity award grants, we believe that it is useful for investors and analysts to see certain financial measures excluding the impact of these charges in order to obtain a clearer picture of our operating performance.

 

Acquisition-related costs

 

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

 

Foreign exchange gains and losses

 

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

 

One-off restructuring expenses

 

Adjusted net income and adjusted EBITDA for Q4 2019 exclude expenses related to restructuring targeted amendments to Corporate Governance Structure approved by shareholders in December 2019.    We believe that it is useful to present adjusted net income, adjusted EBITDA and related margin measures excluding impacts not related to our operating activities.

 

Effect of deconsolidation of Yandex.Market/former subsidiaries

 

We believe that it is useful to present adjusted net income and related margin measures excluding the effect of deconsolidation of former subsidiaries and to present certain other financial metrics described above in order to provide a clearer picture of our underlying operating performance and to provide meaningful period-to-period comparisons. Adjusted net income in 2018 excludes a gain from deconsolidation of Yandex.Market following the formation of Yandex.Market joint venture by Yandex and Sberbank in April 2018.

 

Amortization of debt discount

 

We also adjust net income for interest expense representing amortization of the debt discount related to our convertible notes issued in Q4 2013 and Q1 2014 which matured in Q4 2018. We have eliminated this expense from adjusted net income as it is non-cash in nature and is not indicative of our ongoing operating performance.

 

 

Goodwill impairment

 

Adjusted net income and adjusted EBITDA for Q4 2019 exclude a loss from goodwill impairment related to Food Party business. We test our goodwill annually for impairment. In Q4 2019, we recognized a goodwill impairment charge for RUB 762 million which is the amount by which the carrying value of goodwill exceeds its implied fair value. We believe that it is useful to present adjusted net income, adjusted EBITDA and related margin measures excluding impacts not indicative of our ongoing operating performance.

 

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

 

 

 

YANDEX N.V.

 

Unaudited Condensed Consolidated Balance Sheets

 

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

 

*      Derived from audited consolidated financial statements except for restatement of balances due to adoption of ASC 842 Leases, which required the recognition of right-of-use assets and lease liabilities for operating leases

YANDEX N.V.

 

Unaudited Condensed Consolidated Statements of Income

 

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

 

 

 

 

 

*  Adjusted for restatement of operating costs and expenses and other income/(loss), net due to adoption of ASC 842 Leases, which required the recognition of right-of-use assets and lease liabilities for operating leases

 

 

 

YANDEX N.V.

 

Unaudited Condensed Consolidated Statements of Income

 

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

 

 

 

*  Adjusted for restatement of operating costs and expenses and other income/(loss), net due to adoption of ASC 842 Leases, which required the recognition of right-of-use assets and lease liabilities for operating leases

 

 

 

YANDEX N.V.

 

Unaudited Condensed Consolidated Statements of Cash Flows

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

 

*  Adjusted for restatement of cash flows from operating activities due to adoption of ASC 842 Leases, which required the recognition of right-of-use (ROU) assets and lease liabilities for operating leases

YANDEX N.V.

 

Unaudited Condensed Consolidated Statements of Cash Flows

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