Yandex Caps a Stellar Year With More Market-Share Gains

Yandex N.V. (NASDAQ: YNDX) announced better-than-expected fourth-quarter results on Wednesday morning, highlighting continued market-share gains from its core search platform and sustained momentum from its smaller group of complementary businesses.

Shares of the Russian internet search leader were up nearly 8% on the news. Let's dig deeper to see what Yandex accomplished over the past few months, as well as what investors should expect from the company in the coming year.

Yandex office front desk with company logo in the background

IMAGE SOURCE: YANDEX.

Yandex results: The raw numbers

Metric	Q4 2017	Q4 2016	Year-Over-Year Growth
Revenue	27.860 billion RUR	22.119 billion RUR	26%
Net income attributable to Yandex N.V.	3.526 billion RUR	1.228 billion RUR	187.1%
Earnings per share (diluted)	10.61 RUR	3.76 RUR	182.2%

FIGURES IN RUSSIAN RUBLES (RUR), DATA SOURCE: YANDEX.

What happened with Yandex this quarter?

• Revenue excluding traffic acquisition costs (ex-TAC) increased 29%, to 23.071 billion Russian Rubles (RUR).

• On an adjusted (non-GAAP) basis, which excludes items like currency fluctuations and stock-based compensation, quarterly net income grew 62% year over year, to 5.249 billion RUR ($91.1 million).

• Adjusted EBITDA climbed 39% year over year, to 9.3 billion RUR ($161.3 million).

• Yandex's share of the Russian internet search market (including mobile) averaged 56.5% during the quarter, up from 54.9% in Q3 and 54.3% in the second quarter.

• Yandex's search share on Android -- which has historically represented roughly 70% of total traffic -- rose to 45% this quarter, up from 41.2% last quarter and 37% in the same year-ago period.

• Search queries in Russia grew 9% year over year.

• Online advertising revenue climbed 19% year over year, to 25.07 billion RUR, including 22% growth at Yandex properties, to 18.932 billion RUR, and 11% growth from ad network sites, to 6.138 billion RUR.

• Non-advertising revenue grew 150%, to 2.79 billion RUR.

• By segment:

• Russia's Federal Antimonopoly Service approved the combination of Yandex.Taxi and Uber's ride-sharing businesses.

What management had to say

Yandex CEO Arkady Volozh stated:

I am delighted with Yandex's performance in 2017. It was a transformational year for us in many ways, with great partnerships and continuous innovation supported by an improving macro environment. We made enhancements to Search, Zen and Taxi, and launched Alice, our intelligent voice assistant.

"Delivering 26% year-over-year top line growth was quite an accomplishment," added Yandex COO and CFO Greg Abovsky. "Focused investment in leading edge technologies supported solid growth rates in our core business and revenue acceleration in Yandex.Taxi and Classifieds segments."

Looking forward

For the full year of 2018, Yandex expects ruble-based revenue to increase 25% to 30% from 94.1 billion RUR (or $1.633 billion) in 2017. By comparison, Wall Street was modeling growth near the low end of that range.

All things considered, between Yandex's continued search-market-share gains, the outsized growth of its supplemental businesses, and its optimistic outlook, there was little not to like about this report. Investors have every right to celebrate with shares touching a fresh one-year high today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Yandex. The Motley Fool has a disclosure policy.