Nebius Group NV Q1 FY2021 earnings call

Management Statement and Operational Highlights

• Business Recovery: Advertising and ride-hailing businesses showed recovery, with strong momentum in Media Services, food delivery, and logistics.
• E-commerce Progress: Total e-commerce GMV including Yandex.Market grew 186% YOY in Q1. Yandex.Market GMV accelerated to 126% YOY. Yandex.Plus subscribers exceeded 9 million, with Plus members contributing significantly to GMV in Yandex Market.
• Search and Portal: Search share on Android reached 59.4% in March 2021, total search share 60% in Q1. Search ad revenues grew 18%. Focus on video and simplified solutions for small and midsized businesses.
• Zen: Revenue increased 65% YOY in Q1. Video format gained traction, with daily audience growth.
• Taxi Group Details: Taxi Group revenues were RUB 6.8 billion, a 69% YOY growth. FoodTech orders grew 131% YOY. E-commerce GMV reached RUB 25 billion in Q1, 45% of 2020 full year

Segment Performance

• Search and Portal: Revenue growth accelerated to 15% year-on-year (YOY), with ex TAC revenue up 17% YOY. Search ad revenues grew 18%. Adjusted EBITDA margin was 46.6% in Q1 2021.
• Taxi: Overall revenues increased 89% YOY. Ride-hailing and FoodTech revenue grew 11% YOY. Yandex.Eats revenue rose 139% YOY. Yandex.Drive revenues were down 5% YOY. Adjusted EBITDA of the Taxi group was RUB 3.7 million.
• Yandex.Market: Marketplace GMV accelerated to 126% YOY. Revenue growth was more moderate. Adjusted EBITDA loss was RUB 6.5 billion.
• Media Services: Revenues were RUB 3.5 billion, up 143% YOY. Adjusted EBITDA loss was RUB 1.3 billion.
• Classifieds: Revenue grew 20% YOY. Adjusted EBITDA margin was 21.6%.
• Other Business Units and Initiatives: Revenue increased 171% YOY. Devices revenue grew over 4x, and Cloud revenue grew 3.7x. Adjusted EBITDA loss was RUB 2.4 billion

Guidance

• Upgraded full year revenue forecast to between RUB 315 billion and RUB 330 billion.
• Increased Search and Portal revenue growth guidance to high-teens from mid-teens.
• Confident in achieving full year e-commerce GMV growth target of 2.5 times

Risks

• Forward-looking statements involve risks and uncertainties. Factors like pandemic-related impacts, supply chain bottlenecks, and competitive landscape could affect results

Question and Answer

Q: On ride-hailing margins and food delivery margins A: Yevgeny Senderov discussed ride-hailing margin trends and food delivery investments Q: On e-commerce GMV mix A: Vadim Marchuk said tracking well with guidance Q: On Taxi GMV sustainability and Search and Portal growth A: Yevgeny Senderov and Vadim Marchuk commented on sustainability and growth trends Q: On fintech, adjusted net income, tax treaty A: Vadim Marchuk discussed fintech progress, adjusted net income, and tax treaty implications Q: On Yandex.Market investments and Media Services market structure A: Vadim Marchuk commented on Yandex.Market initiatives and Media Services market structure Q: On software pre-installation, Yandex.Plus correlation, and GMV dynamics A: Vadim Marchuk addressed pre-installation impact, Yandex.Plus correlation, and GMV breakdown Q: On CapEx and HQ construction A: Vadim Marchuk provided updates on CapEx and HQ construction progress