Company Presentation September 216
Forward Looking Statement Disclaimer This presentation contains forward-looking statements that involve risks and uncertainties. These include statements regarding the anticipated development of the internet search and the online advertising markets, the planned growth of our business, our anticipated revenues and capital expenditures as well as statements regarding potential impact of the Krasnaya Roza transaction on the Company s financial numbers and timing of the anticipated closing. 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, competitive pressures, our ability to attract and retain users, advertisers and partners, changes in advertising patterns, changes in internet usage patterns, changes in the legal and regulatory environment, 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 Management s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 2-F dated March 21, 216, which is on file with the Securities and Exchange Commission and is available on our investor relations website. All information provided in this presentation is as of August 28, 216, and Yandex expressly disclaims any duty to update this information unless required by law.
Yandex is a Market Leader in Russia 1 Search Leader 2 Leading Online Advertising Platform 3 Business Diversification 4 Largest Internet Business 56.1% search market share in Russia 1 61% online ad market share 2 Search and Portal E-commerce Taxi Classifieds $82 MM Revenues 3 in 215 (+18% YoY in RUR) $288 MM Adjusted EBITDA 3 in 215 (flat YoY in RUR) 1 Source: Liveinternet.ru, through July 31, 216 2 Based on the AKAR estimates of the Russian advertising market for the FY 215 (http://www.akarussia.ru/knowledge/market_size/id6462), adjusted for commissions 3 Company Information for FY 215, using an exchange rate of RUR72.8827 to $1. as of 31 December 215 Adjusted EBITDA is a Non-GAAP financial measure. For a reconciliation of this non-gaap financial measure to the most directly comparable US GAAP measure, see slide 22 3
Yandex is the Consistent Search Leader in Russia In Q2 216 search share across different platforms were approximately 1 : 64% on desktop 7 6 54.9 56.1 4% on Android 5 43% on ios 4 37.6 Yandex Browser continues to strengthen its position on the desktop as well as on mobile 1 : Share on desktop 19.5% Overall share, including mobile, 17% 3 2 1 21.5 8.6 5.4 7/8 1/9 7/9 1/1 7/1 1/11 7/11 1/12 7/12 1/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 Source: Liveinternet.ru through July 31, 216; includes desktop and mobile 1 Based on company estimates, as provided on Q2 216 earnings call 4
Online Advertising is Outperforming and is Projected to Continue ONLINE AS % OF TOTAL AD SPEND 215 Online advertising has been growing faster than any other advertising segment and is projected to continue to gain share In 215, online ad budgets increased 15% YoY 6% 5% 4% 3% 2% 1% % 51% 46% 32% 31% 3% 28% 26% 25% 8% 3% UK China Russia France Germany USA Italy Spain India Brazil Online advertising increased its share of total advertising market by 7 p.p. and reached 32% of total ad spend in 215, vs 25% in 214 ONLINE AS % OF TOTAL AD SPEND 218E 7% 6% 6% 58% 5% 4% 3% 38% 37% 36% 35% 3% 29% 2% 1% % China UK USA Russia Germany France Spain Italy India Brazil 11% 3% Source: AKAR, FY215 for Russia (http://www.akarussia.ru/knowledge/market_size/id6462); ZenithOptimedia, Advertising Expenditure Forecasts, March 216 5
Yandex Revenues and Contribution by Source CONSOLIDATED REVENUE 1 BREAKDOWN, MM RUB, % REVENUE BREAKDOWN BY SEGMENTS 2, MM RUB, % 7 7, 6 5 4 3 2 39,52 2% 2% 5,767 2% 23% 59,792 2% 25% 26,259 2% 25% 34,513 4% 27% 6, 5, 4, 3, 2, 39,52 7% 5,767 1% 1% 1% 6% 59,792 1% 1% 2% 6% 26,259 1% 1% 2% 5% 34,513 1% 2% 3% 6% 1 1, 78% 75% 72% 73% 69% 213 214 215 H1'15 H1'16 94% 94% 93% 94% 92% 213 214 215 H1'15 H1'16 Yandex Websites Online Ad Revenues Ad Network Revenues Other Search and Portal E-commerce Taxi Classifieds Experiments 1 Revenues are recognized net of VAT, discounts and commissions, but gross of TAC 2 Segments sum to more than 1% due to intersegment transactions, primarily related to advertising, which are eliminated in the consolidation 6
Segment Results
5 % % -5 % -1 % -15 % Search and Portal REVENUE, RUB MM FY * H1 Search and Portal includes all services offered in Russia, Ukraine, Belarus and Kazakhstan, other than those included in e-commerce, Taxi, Classifieds and Experiments 35, 3, 25, 2, 15, 1, 5, 13% 13% 17% 22% 3% 26% 11,62 13,17 14,55 16,673 15,147 16,532 75, 65, 55, 45, 35, 25, 15, 37,39 29% 17% 13% 28% 55,95 47,92 31,679 24,727 % -2% -4% -6% -8% Revenues grew 26% YoY in Q2 16 and 28% YoY in H1 16, driven by: Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Revenue growth, YoY, % 5, -5, 213 214 215 H1'15 H1'16-1% VCG and new ranking formula implementation on Sep 1, 215 as well as elimination of volume discounts on Yandex.Direct Increased inventory in Yandex Ad Network 14, 12, 1, 8, 6, 4, 2, ADJUSTED EBITDA AND MARGIN, RUB MM, 42% 43% 37% 39% 31% 7,128 6,41 4,897 5,911 3,585 42% 6,927 3, 45% 25, 4% 35% 2, 3% 25% 15, 2% 1, 15% 1% 5, 5% 44% 43% 39% 2,417 21,651 16,136 34% 8,482 41% 12,838 4% 3% 2% 1% % -1% -2% Improvements in targeting technology and in mobile monetization Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 % 213 214 215 H1'15 H1'16-3% * We do not show YoY growth rates of BUs in 213, as we had not yet formed segments in 212 Items may not total due to rounding 8
5 % % -5 % -1 % -15 % 6 % 4 % 2 % % -2 % -4 % -6 % 8 % 6 % 4 % 2 % % -2 % -4 % e-commerce REVENUE, RUB MM FY * H1 Our e-commerce segment includes Yandex.Market service Yandex.Market provides access to 1+ mln offers from 2,+ online retailers Revenues grew 46% YoY in Q2 16 and 51% YoY in H1 16 3, 2,5 2, 1,5 1, 5 55% 34% 46% 3% 1% 18% 671 73 827 1,172 1,43 1,69 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Revenue growth, YoY, % 5,5 4,5 3,5 2,5 1,5 5-5 51% 3% 18% 6% 3,4 2,81 2,889 2,112 1,41 213 214 215 H1'15 H1'16 % -1% -2% -3% -4% -5% Yandex.Market allows retailers to use both CPC and CPA (cost per action) bidding models 1,4 1,2 1, 8 6 4 2 ADJUSTED EBITDA AND MARGIN, RUB MM, % 59% 56% 53% 41% 36% 3% 393 411 436 486 38 325 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 3,9 3,4 2,9 2,4 1,9 1,4 9 4-1 74% 65% 51% 57% 2,71 1,873 1,726 33% 84 75 213 214 215 H1'15 H1'16 * We do not show YoY growth rates of BUs in 213, as we had not yet formed BUs in 212 Items may not total due to rounding 9
3 % 2 % 1 % % -1 % -2 % -3 % -4 % -5 % -6 % 5 % % -5 % -1 % -15 % -2 % -25 % -3 % 3 % 2 % 1 % % -1 % -2 % -3 % -4 % -5 % -6 % % -1 % -2 % -3 % -4 % -5 % -6 % -7 % Taxi REVENUE, RUB MM FY * H1 Taxi segment is our Yandex.Taxi service It is the most popular online transportation service in Russia, focused on providing the best customer experience, extremely short arrival times and affordable prices Currently available in 35 cities in Russia and Kazakhstan, Belarus, Armenia and Georgia Revenues grew 172% YoY in Q2 16 and 174% YoY in H1 16 1, 9 8 7 6 5 4 3 2 1 25 2 15 1 5 247% 254% 395 445 161 194 234 ADJUSTED EBITDA AND MARGIN, RUB MM 54% 26% 19% -5% % 87 5 44 191% 171% 176% 172% 528 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Revenue growth, YoY, % -29% -19-153 2,5 1,55 1,5 55 5-45 3 2 1 192% 21% 25% 174% 984 973 112 327 355 213 214 215 H1'15 H1'16 51% 66% 16% 39% -16% 217 162 137 57-153 -5-1 -1-15 -2-2 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 213 214 215 H1'15 H1'16 * We do not show YoY growth rates of BUs in 213, as we had not yet formed BUs in 212 Items may not total due to rounding 1
2 % 1 % % -1 % -2 % -3 % -4 % 6 % 4 % 2 % % -2 % -4 % -6 % -8 % -1 % 5 % % -5 % 1 % % -1 % -15 % -2 % -1 % -2 % -3 % -4 % -5 % Classifieds REVENUE, RUB MM FY * H1 Our Classifieds segment includes Auto.ru Yandex.Realty Yandex.Jobs Yandex.Travel Revenues grew 48% YoY in Q2 16 and 42% YoY in H1 16 1, 9 8 7 6 5 4 3 2 1 124% 174% 61% 13% 35% 48% 179 211 243 261 241 313 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Revenue growth, YoY, % 1,5 1,3 1,1 9 7 5 3 1-1 149% 65% 66% 42% 894 327 539 39 554 213 214 215 H1'15 H1'16 Non-advertising revenues grew 73% YoY in Q2 16 Our first certification center for used vehicles opened in Moscow in June 17 12 7 2 ADJUSTED EBITDA AND MARGIN, RUB MM 32% 34% 6% 83 67 1-5% -2% -14-6 7% 23 45 4 35 3 25 2 15 1 5 68% 221 52% 278 16% 2% 146 77 3% 17-3 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 213 214 215 H1'15 H1'16 * We do not show YoY growth rates of BUs in 213, as we had not yet formed BUs in 212 Items may not total due to rounding 11
Consolidated Financials
Financial Summary REVENUES (RUR MM) 1 ADJUSTED EBITDA (RUR MM) 2 1, 8, 6, 4, 2, $82 3 59,792 5,767 39,52 28,767 34,513 26,259 2,33 12,5 21 211 212 213 214 215 H1'15 H1'16 35, 3, 25, 2, 15, 1, 5, $288 3 21,52 2,969 17,367 13,142 12,532 9,237 6,164 8,388 21 211 212 213 214 215 H1'15 H1'16 ADJUSTED NET INCOME (RUR MM) 3 CAPEX (RUR MM, as % of REVENUE) 17% 28% 14% 12% 19% 22% 34% 11% 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, - 3,968 6,3 8,768 12,14 13,751 12,179 5,4 7,74 21 211 212 213 214 215 H1'15 H1'16 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, - $167 3 $179 3 2,151 5,53 3,984 4,936 9,679 13,45 8,862 3,941 21 211 212 213 214 215 H1'15 H1'16 1 Revenues are recognized net of VAT, discounts and commissions, but gross of TAC 2 Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA margin and Adjusted Net Income margin are non-gaap financial measures. For Reconciliations see slides 22-24 3 Translated using an exchange rate of RUR72.8827 to $1. as of Dec 31, 215. $ figures shown in charts expressed in millions 13
Adjusted EBITDA ADJUSTED EBITDA (RUR MM) AND MARGIN 1 (%) 4, 35, 3, 25, 2, 52% 56% 55% 56% 55% 44% 47% 43% 43% 44% 17,367 49% 37% 53% 41% 57% 45% 53% 53% 41% 41% 21,52 37% 29% 44% 35% 5% 46% 45% 44% 47% 39% 36% 35% 35% 37% 2,969 6% 4% 2% % 15, (2)% 1, 5, 3,54 4,33 4,412 5,148 4,42 5,27 5,95 6,78 3571 4,817 6,21 6,56 5,77 6,762 (4)% (6)% Q1'13 Q2'13 Q3'13 Q4'13 213 Q1'14 Q2'14 Q3'14 Q4'14 214 Q1'15 Q2'15 Q3'15 Q4'15 215 Q1'16 Q2'16 (8)% Adjusted EBITDA Adjusted EBITDA margin Adjusted EBITDA margin ex-tac 1 Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA margin ex-tac are Non-GAAP financial measures. For a reconciliation of these non-gaap financial measures to their most directly comparable US GAAP measures, see slides 22-24 14
Adjusted Net Income ADJUSTED NET INCOME (RUR MM) AND MARGIN 1 (%) 26, 21, 16, 36% 3% 4% 4% 33% 31% 38% 38% 29% 31% 12,14 31% 23% 35% 27% 38% 3% 34% 35% 27% 27% 13,751 23% 18% 26% 2% 29% 23% 25% 26% 24% 2% 2% 19% 12,179 27% 22% 4% 2% % 11, (2)% 6, 2,41 3,58 3,153 3,519 2,552 3,318 3,914 3,967 2,249 2,791 3,57 3,632 3,168 3,96 1, (4)% -4, Q1'13 Q2'13 Q3'13 Q4'13 213 Q1'14 Q2'14 Q3'14 Q4'14 214 Q1'15 Q2'15 Q3'15 Q4' 15 215 Q1'16 Q2'16 Adjusted Net Income Adjusted Net Income margin Adjusted Net Income margin ex-tac (6)% 1 Adjusted Net Income, Adjusted Net Income margin and Adjusted Net Income margin ex-tac are Non-GAAP financial measures. For a reconciliation of these non-gaap financial measures to their most directly comparable US GAAP measures, see slides 22-24 15
Capex CAPEX AND CAPEX/REVENUE RATIO 1 (RUR MM) 25, 2, 11% 7% 17% 14% 12% 19% 18% 19% 2% 19% 39% 29% 16% 9% 22% 9% 14% 4% 2% % 15, 13,45-2% 1, 9,679-4% 5, 859 685 1,727 1,665 4,936 2,65 2,146 2,47 2,998 4,836 4,26 2,524 1,659 1,455 2,486-6% -8% - Q1'13 Q2'13 Q3'13 Q4'13 213 Q1'14 Q2'14 Q3'14 Q4'14 214 Q1'15 Q2'15 Q3'15 Q4'15 215 Q1'16 Q2'16 Capex Capex as % of Revenue -1% 1 Historical figures have been restated to exclude Yandex.Money capex for all periods. Capex as % of Revenue excludes Yandex.Money from numerator and denominator 16
Traffic Acquisition Costs PARTNER TAC AS % OF AD NETWORK REVENUE, MM RUB, % 6, 5, 4, 3, 2, 1, 62.7% 62.3% 82 89 69.% 68.2% 65.3% 64.3% 63.2% 6.9% 6.3% 61.2% 59.3% 57.6% 56.3% 55.7% 1,644 2,23 1,789 1,84 1,825 2,12 1,866 2,113 2,333 2,669 2,495 2,641 8.% 7.% 6.% 5.% 4.% 3.% 2.% 1.% - Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16.% Partner TAC Partner TAC as % of Ad Network Revenue DISTRIBUTION TAC AS % OF YANDEX WEBSITES REVENUE, MM RUB, % 3, 2,5 2, 7.5% 7.6% 7.8% 8.9% 9.7% 9.2% 9.3% 9.1% 9.5% 9.% 8.5% 8.2% 7.8% 7.3% 12.% 1.% 8.% 1,5 1, 5 485 575 68 85 779 847 937 993 851 99 949 1,51 895 913 6.% 4.% 2.% - Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Distribution TAC Distribution TAC as % of Yandex Websites Revenue.% Note: As online advertising formats continue to converge, starting from Q1 216 we are no longer providing a breakdown of our online ad revenues into text-based and display revenues. However, we continue to separately present online advertising revenues from Yandex websites and revenues from our Ad Network. As a result, we now show Partner TAC as % of our Ad Network revenue, which includes revenues from textbased ad network and our display ad network, and distribution TAC as % of our online advertising revenues from text-based and display advertising on Yandex websites. 17
Headcount Evolution - Personnel Breakdown by GAAP Cost Category HEADCOUNT 1 BY GAAP COST CATEGORY 2 7 21% 2% 18% 16% 22% 2% 18% 2% 27% 24% 2% 18% 23% 21% 3% 6 5 4 3 2 3,972 35% 55% 4,298 4,49 36% 34% 55% 58% 4,92 32% 6% 5,136 33% 59% 5,3 33% 59% 5,514 5,616 5,63 32% 33% 32% 59% 59% 61% 5,458 5,412 5,463 5,464 5,559 32% 32% 32% 33% 34% 6% 6% 6% 6% 58% 1% -1% -3% -5% -7% 1-9% 1% 9% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Cost of Sales Product Development SG&A Personnel costs as % of Revenue -11% 1 As of the end of the period 2 Items may not total due to rounding 18
Operational Metrics Growth in Paid Clicks and CPC 124% 131% 117% 14% 93% 94% 92% 82% 73% 6% 62% 67% 69% 68% 65% 61% 62% 57% 57% 55% 52% 51% 5% 52% 49% 41% 39% 43% 43% 43% 39% 4% 43% 38% 37% 37% 33% 33% 35% 35% 37% 29% 28% 29% 34% 47% 36% 3% 29% 24% 26% 28% 26% 27% 24% 27% 22% 26% 24% 24% 2% 29% 19% 18% 19% 13% 2% 18% 14% 16% 14% 12% 12% 14% 12% 15% 19% 17% 21% 7% 13% 13% 8% 19% 18% 5% 11% 14% 9% 12% 5% 12% 1% 13% 8% 3% -9% -1% 1% 3% % -11% 2% -7% -8% -7% -5% -12% -7% -5% -5% -7% -15% -13% -14% -16% -17% -18% Q1'9 Q2'9 Q3'9 Q4'9 Q1'1 Q2'1 Q3'1 Q4'1 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 * Yandex Websites Revenue Y/Y Growth Ad Network Revenue Y/Y Growth Clicks Y/Y Growth CPC Y/Y Growth *Starting from Q1 216 we are no longer providing a breakdown of our online ad revenues into text-based and display revenues. Therefore, Q1 16 revenue growth for this respective period represents growth rate of our online advertising revenues from Yandex websites, which include our text-based and display revenues, derived from Yandex Websites, and growth rate of online advertising revenues from our Ad Network, which include our text-based and display revenues, derived from Yandex Advertising Network. Data for periods prior to Q1 16, is consistent with what was presented previously and provides growth rates of textbased revenues from Yandex Websites and growth rates of text-based revenues from Ad Network 19
Ownership Structure The total number of shares issued and outstanding of June 3, 216 was 32,93,459, including: 275,332,489 Class A shares 45,597,969 Class B shares One Priority share Excludes 9,126,295 Class A shares held in treasury as a result of Yandex s share repurchase program Shareholders Economic ownership as of June 3, 216* Principal pre-ipo Shareholder, Directors, Officers and Employees 16.9% Baring Vostok.1% Arkady Volozh (CEO) 1.7% Other Directors.8% Other Officers & Employees 5.3% Other Pre-IPO Shareholders 2.2% Public Investors 8.8% Total 1% * Items may not total due to rounding 2
Supplementary Materials
Reconciliation of Non-GAAP Financial Measures 1 Reconciliation of Ex-TAC Revenues to US GAAP Revenues In RUR millions Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 21 211 212 213 214 215 Total revenues 7,999 9,199 1,218 12,86 1,885 12,158 13,57 14,667 12,339 13,92 15,439 18,94 16,473 18,4 12,5 2,33 28,767 39,52 5,767 59,792 Less: traffic acquisition costs (TAC) 1,35 1,465 2,252 2,828 2,568 2,651 2,762 3,95 2,717 3,22 3,282 3,72 3,39 3,554 1,573 2,998 4,78 7,85 11,76 12,741 Ex-TAC revenues 6,694 7,734 7,966 9,258 8,317 9,57 1,295 11,572 9,622 1,898 12,157 14,374 13,83 14,486 1,927 17,35 23,987 31,652 39,691 47,51 Reconciliation of Adjusted EBITDA to US GAAP Net Income In RUR millions Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 21 211 212 213 214 215 Net income 2,246 2,915 4,967 3,346 2,68 2,396 4,372 7,572 2,127 423 4,278 2,851 1,69 2,58 3,817 5,773 8,223 13,474 17,2 9,679 Add: depreciation and amortization 879 912 914 99 1,69 1,114 1,95 1,26 1,49 1,874 2,152 2,275 2,394 2,316 1,181 1,874 2,951 3,695 4,484 7,791 Add: share-based compensation expense 151 151 229 223 255 275 34 376 56 594 671 893 891 881 16 329 376 754 1,21 2,718 Add: compensation expense related to contingent consideration 21 22 24 14-7 1 18 35 153 15 88 45 48 - - 361 81 35 291 Add: goodwill impairment - - - - - - - - - - - 576 - - - - - - - 576 Less: interest income, net (368) (452) (483) (414) (172) (23) (224) (257) (484) (356) (415) (489) (523) (437) (156) (222) (1,2) (1,717) (856) (1,744) Less: other income/loss, net (26) (17) (2,22) (94) (668) 617 (1,77) (5,175) (833) 1,787 (2,76) (1,137) 1,181 842 (24) (62) (118) (2,159) (6,296) (2,259) Add: provision for income taxes 61 772 783 1,83 878 821 1,418 2,338 676 342 1,396 1,53 713 1,54 1,186 1,545 2,351 3,239 5,455 3,917 Adjusted EBITDA 3,54 4,33 4,412 5,148 4,42 5,27 5,95 6,78 3,571 4,817 6,21 6,56 5,77 6,762 6,164 9,237 13,142 17,367 21,52 2,969 Reconciliation of Adjusted Net Income to US GAAP Net Income In RUR millions Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 21 211 212 213 214 215 Net income 2,246 2,915 4,967 3,346 2,68 2,396 4,372 7,572 2,127 423 4,278 2,851 1,69 2,58 3,817 5,773 8,223 13,474 17,2 9,679 Add: SBC expense 151 151 229 223 255 275 34 376 56 594 671 893 891 881 16 329 376 754 1,21 2,718 Less: reduction in income tax attributable to SBC expense (2) (2) (2) (3) (5) (5) (5) (5) (9) (11) (1) (11) (14) (1) - (13) (4) (9) (2) (41) Add: compensation expense related to contingent consideration 21 22 24 14-7 1 18 35 153 15 88 45 48 - - 361 81 35 291 Less: foreign exchange (gain)/loss (7) (35) 2 (99) (647) 625 (1,824) (4,77) (716) 1,869 (1,947) (1,19) 1,281 958 (11) (11) 57 (139) (6,553) (1,93) Add: increase/(reduction) in income tax attributable to foreign exchange (gain)/loss 1 7-2 129 (125) 383 937 127 (374) 386 216 (26) (198) 2 15 (11) 28 1,324 355 Add: impairment of investment in equity securities - - - - - - 7 - - - - - - - - - - - 7 - Less: reduction in income tax attributable to impairment of investment in equity securities - - - - - - (175) - - - - - - - - - - - (175) - Less: gain from sale and deconsolidation of equity investments - - (2,67) - - - - - - - - - - - - - (234) (2,67) - - Add: goodwill impairment - - - - - - - - - - - 576 - - - - - - - 576 Less: gain from repurchases of convertible debt - - - - - - - (548) (11) (4) (93) (67) (53) - - - - - (548) (31) Add: increases in income tax attributable to gain from repurchases of convertible debt - - - - - - - 137 27 11 23 16 13 - - - - - 137 77 Add: amortization of debt discount - - - 24 183 19 195 243 273 218 241 235 262 225 - - - 24 811 967 Less: reduction in income tax attributable to amortization of debt discount - - - (6) (43) (45) (46) (56) (65) (52) (57) (56) (66) (56) - - - (6) (19) (23) Adjusted net income 2,41 3,58 3,153 3,519 2,552 3,318 3,914 3,967 2,249 2,791 3,57 3,632 3,168 3,96 3,968 6,3 8,768 12,14 13,751 12,179 1 Figures may not add due to rounding 22
Reconciliation of Non-GAAP Financial Measures (cont d) 1 Reconciliation of Adjusted EBITDA Margin and Adjusted Ex-TAC EBITDA Margin to US GAAP Net Income Margin In RUR millions US GAAP Actual Net Income Net Income Margin (1) Adjustment (2) Adjusted EBITDA Adjusted EBITDA Margin (3) Adjusted Ex-TAC EBITDA Margin (4) Three months ended March 31, 213 2,246 28.1% 1,258 3,54 43.8% 52.3% Three months ended June 3, 213 2,915 31.7% 1,388 4,33 46.8% 55.6% Three months ended September 3, 213 4,967 48.6% (555) 4,412 43.2% 55.4% Three months ended December 31, 213 3,346 27.7% 1,82 5,148 42.6% 55.6% Three months ended March 31, 214 2,68 24.6% 1,362 4,42 37.1% 48.6% Three months ended June 3, 214 2,396 19.7% 2,631 5,27 41.3% 52.9% Three months ended September 3, 214 4,372 33.5% 1,533 5,95 45.2% 57.4% Three months ended December 31, 214 7,572 51.6% (1,494) 6,78 41.4% 52.5% Three months ended March 31, 215 2,127 17.2% 1,444 3,571 28.9% 37.1% Three months ended June 3, 215 423 3.% 4,394 4,817 34.6% 44.2% Three months ended September 3, 215 4,278 27.7% 1,743 6,21 39.% 49.5% Three months ended December 31, 215 2,851 15.8% 3,79 6,56 36.3% 45.6% Three months ended March 31, 216 1,69 6.5% 4,71 5,77 35.% 44.1% Three months ended June 3, 216 2,58 11.4% 4,74 6,762 37.5% 46.7% Twelve months ended December 31, 21 3,817 3.5% 2,347 6,164 49.3% 56.4% Twelve months ended December 31, 211 5,773 28.8% 3,464 9,237 46.1% 54.2% Twelve months ended December 31, 212 8,223 28.6% 4,919 13,142 45.7% 54.8% Twelve months ended December 31, 213 13,474 34.1% 3,893 17,367 44.% 54.9% Twelve months ended December 31, 214 17,2 33.5% 4,32 21,52 41.5% 53.% Twelve months ended December 31, 215 9,679 16.2% 11,29 2,969 35.1% 44.6% (1) Net income margin is defined as net income divided by total revenues. (2) Adjusted to eliminate depreciation and amortization expense, SBC expense, expense related to contingent compensation, interest income, net, other income, net, other loss, net, and provision for income taxes. For a reconciliation of adjusted EBITDA to net income, please see the table above. (3) Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenues. (4) Adjusted ex-tac EBITDA margin is defined as adjusted EBITDA divided by ex-tac revenues. For a reconciliation of ex-tac revenues to GAAP revenues, please see the table above. 1 Figures may not add due to rounding 23
Reconciliation of Non-GAAP Financial Measures (cont d) 1 Reconciliation of Adjusted Net Income Margin and Adjusted Ex-TAC Net Income Margin to US GAAP Net Income Margin In RUR millions US GAAP Actual Net Income Net Income Margin (1) Adjustment (2) Adjusted Net Income Adjusted Net Income Margin (3) Adjusted Ex-TAC Net Income Margin (4) Three months ended March 31, 213 2,246 28.1% 164 2,41 3.1% 36.% Three months ended June 3, 213 2,915 31.7% 143 3,58 33.2% 39.5% Three months ended September 3, 213 4,967 48.6% (1,814) 3,153 3.9% 39.6% Three months ended December 31, 213 3,346 27.7% 173 3,519 29.1% 38.% Three months ended March 31, 214 2,68 24.6% (128) 2,552 23.4% 3.7% Three months ended June 3, 214 2,396 19.7% 922 3,318 27.3% 34.9% Three months ended September 3, 214 4,372 33.5% (458) 3,914 3.% 38.% Three months ended December 31, 214 7,572 51.6% (3,65) 3,967 27.% 34.3% Three months ended March 31, 215 2,127 17.2% 122 2,249 18.2% 23.4% Three months ended June 3, 215 423 3.% 2,368 2,791 2.1% 25.6% Three months ended September 3, 215 4,278 27.7% (771) 3,57 22.7% 28.8% Three months ended December 31, 215 2,851 15.8% 781 3,632 2.1% 25.3% Three months ended March 31, 216 1,69 6.5% 2,99 3,168 19.2% 24.2% Three months ended June 3, 216 2,58 11.4% 1,848 3,96 21.7% 27.% Twelve months ended December 31, 21 3,817 3.5% 151 3,968 31.7% 36.3% Twelve months ended December 31, 211 5,773 28.8% 23 6,3 3.% 35.2% Twelve months ended December 31, 212 8,223 28.6% 545 8,768 3.5% 36.6% Twelve months ended December 31, 213 13,474 34.1% (1,334) 12,14 3.7% 38.4% Twelve months ended December 31, 214 17,2 33.5% (3,269) 13,751 27.1% 34.6% Twelve months ended December 31, 215 9,679 16.2% 2,5 12,179 2.4% 25.9% (1) Net income margin is defined as net income divided by total revenues. (2) Adjusted to eliminate SBC expense (as adjusted for the income tax reduction attributable to SBC expense), expense related to contingent compensation, foreign exchange gains and losses (as adjusted for the increase in income tax attributable to the gains and losses), gain from repurchases of convertible debt (as adjusted for the increase in income tax attributable to gains/losses) and amortization of debt discount (as adjusted for the reduction in income tax attributable to the expense). For a reconciliation of adjusted net income to net income, please see the table above. (3) Adjusted net income margin is defined as adjusted net income divided by total revenues. (4) Adjusted ex-tac net income margin is defined as adjusted net income divided by ex-tac revenues. For a reconciliation of ex-tac revenues to US GAAP revenues, please see the table above. 1 Figures may not add due to rounding 24
Krasnaya Roza Transaction Overview 1 PROPERTY Complex of 7 office buildings with GLA of c. 8, m 2 Class A and Class B split of c. 5/5 Approximately 4 hectares of land in the middle of Moscow (central business district) High-tech campus with room for future expansion CONSIDERATION Yandex will issue 12.9 mn new Class A ordinary shares in exchange for a 1% interest in a newly-created company that will hold title to the office complex and that will have approximately $49 mn of debt at closing The seller has agreed to enter into a lock-up agreement in respect of these Yandex shares for a period of 9 days from closing CLOSING Closing is expected to happen October 216 Closing conditions include significant time from signing to closing, required for reorganization process (transfer of assets, utility contracts) and regulatory approvals 1 Information as provided on the Transaction Overview call on Feb 19, 216 25
Krasnaya Roza Transaction - Indicative Impact on P&L 1 REVENUES COST OF REVENUES, PRODUCT DEVELOPMENT, SG&A EXPENSES ADJUSTED EBITDA IMPACT D&A INTEREST INCOME, NET PROVISION FOR INCOME TAX NUMBER OF CLASS A SHARES OUTSTANDING EPS COMMENT Would add third party lease income from renting of c. 28, m 2 Class B office space in Other revenues line These revenues are currently predominantly denominated in USD Would remove Moscow headquarters rent expenses, expected to be at c. $5 mn in 216, from each expense category, allocated pro rata to headcount Would remove utilities expense, connected with our Moscow headquarters Would add operating expenses related to the whole office complex of c. 8, m 2, including management company fees, utilities and property tax Incremental positive effect on EBITDA margin should expected to be c. at least 6 bps at the current exchange rate (pro-forma for full year) Would add depreciation of the whole office complex, calculated based on fair value at closing Would add interest expense from the remaining debt balance priced at LIBOR +6.2%. The debt matures in 224 Yandex intends to repay approximately half of c. $49 mn of debt at closing and therefore we would forego interest income on c. $25 mn of cash Net effect of the above changes would be taxed at 2% Russian statutory tax rate Would add 12.9 mn new Class A ordinary shares EPS is expected to be accretive in high-single digits (fully diluted, pro-forma for full year, excluding transaction related expenses and repayment of part of the debt at closing) One-time effects of the transaction related expenses (including legal and consulting expenses and debt prepayment penalty) are not included in the analysis above 1 Information as provided on the Transaction Overview call on Feb 19, 216 26
Zen Your Personalized Content Recommendation Technology Zen, a part of Discovery products, was launched as an experimental feature within Yandex launcher app in 215 in Mexico and Brazil Subsequently, we localized Zen for 32 countries, our DAU is 2.2MM worldwide, with 84% of users in Russia, and our average time spent per user increased 4 times - from 5 mins to 2 mins This is in line with average time spent per user on social networks In comparison to other large apps, time spent per user on Zen is comparable with Instagram and Snapchat, higher than Twitter, but lower than FB In June 216 we started to distribute Zen within Yandex Browser which increased user engagement and created additional inventory for ads Currently Zen is available within Yandex Launcher and Yandex Browser for iphone, Android and web 27
Contact us at: askir@yandex-team.ru +7 495 974-3538