Yandex NV (NASDAQ:YNDX) 1Q Profit Decline 21%

Yandex NV (NASDAQ:YNDX) 1Q net profit declined 21% YOY to 2.1 billion roubles due to an increase in rent and personnel expenses. The increase in rent expenses was due to additional office space acquired in Moscow that it commenced leasing in May 2014. Also, the rouble weakened against the U.S. currency. Some of its rents are to be paid in dollars. There was rise in personal costs due to increase in investment in product development. The adding of headcount surged 12% compared to a year ago.

Learn what the indicators are telling the analyst about YNDX.

The highlights

Yandex expected revenue growth to decline to 9% to 12% in 2Q, mentioning a tough macroeconomic environment. The challenging environment has affected various industries including consumer electronics, financial services and auto industry. The company has advertisers from different segments and expects a strong potential for increased budgets in goods, construction services, healthcare and real estate industry. The revenue in 1Q surged 13% to 12.3 billion roubles, supported by a 14% growth in its core and text-based ad revenues. However, the display ad revenues plunged 16%. The results were even lower than the company’s guidance of 15% growth rate.

The market

Yandex reported that its share in the search market of Russia, including mobile platform, averaged 58.6% in 1Q after reporting 59.7% in the previous quarter. Yandex mentioned that it is ahead of search engine company Google Inc (NASDAQ:GOOGL) in Russia but has faced stiffed competition on mobile phones as users have preferred android based devices that have pre-loaded apps with of Google. Such pre-loaded applications compete directly with the applications of Yandex.

The antitrust issues

The EU’s antitrust investigation into Google resulted in a big rally in share price of YNDX in April while antitrust regulator in Russia is also probing Google’s competitive practices. It took the required measures after Yandex urged for a probe into the matter.

Brown Terrel

Brown Terrel

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.