Yandex Disappointed by Covid-Invoked Weakness, but Reiterated Hopes for Distant Robust Recovery

Yandex (YNDX) just published its scheduled quarterly earnings report. Q3 GAAP EPS of $0.13 beat consensus by $0.33 (negative). Revenue of $1.25 billion jumped +70.7% YoY, and came in-line with expectations. Cash, cash equivalents and term deposits as of September 30 accounted for RUB 134.6 billion ($1.85 billion).

Despite beating an excessively negative consensus forecast, Yandex numbers were far from exciting with a loss of $46.5 million in its Q3. On a per-share basis, the world’s second largest Internet search and infrastructure company said it had a loss of 13 cents, as we mentioned above. Earnings, adjusted for non-recurring costs, came to 5 cents per share.

Current YNDX management guidance was upgraded based on the company’s recent performance: total group revenues will be between RUB340B and RUB350B for the full year 2021. Consensus Revenue Estimate for 2021 is $4.85 billion. “We are increasing our Search & Portal ruble-based revenue outlook to high-twenties growth (from mid-twenties previously) for the full year 2021 compared with 2020. The higher-than-expected growth is underpinned by our targeted investments into enhancement of search and advertising technologies, products for small and mid-sized businesses and increases in the search market share on iOS devices. We thus estimate Adjusted EBITDA margin for the full year 2021 to be marginally lower compared with full year 2020, although still over 48%.” – their statement said.

As we repeatedly warned against Yandex’ permabulls, the company really faced strong headwinds in the Covid era with many taxi and car-sharing services being disrupted. We must note, though, that Yandex managed those hits nicely, trying to offset losses by improving delivery and Yandex.Market services, which partly compensated corresponding adverse impacts. Building a rather tangible cash position, that is now sufficient to pay off all the company's current debt, makes more sense in forecasting its improving market standing, but, perhaps, not earlier than Q3 2022.