Will Text-Based Advertising Continue To Dominate Yandex NV (YNDX)’s 2Q Earnings?

Yandex NV (NASDAQ:YNDX) is a leading search engine firm from Russia. The company established itself very well in Turkey. However, the recent developments related to the Internet bill in Russia are turning out to be a dampener in its growth objectives. The company protested against the bill without any success. As a result, the shares are getting hammered of late. Let’s look at the strength and the weakness of the company.

Key Points

As much as 93% of the total revenue for Yandex NV (NASDAQ:YNDX) comes from text-based advertising. The segment witnessed 14% YOY growth in the first quarter. Going further, the company’s websites contribute revenues of 68% from text-based advertising. That was based on the first quarter results that witnessed 14% YOY growth.

The Internet search company also gets revenue from text-based advertising from its ad network. The segment represented 25% of the total revenue and witnessed 13% growth from the year-ago quarter. Its paid clicks on the company, as well as, its partners’ websites advanced 12% on average while cost per click grew 2% from the previous year quarter.

Display Ad Revenue

Yandex NV (NASDAQ:YNDX) suffered a setback in display advertising revenue due to the weak macroeconomic environment. Its revenue dipped 16% in the first quarter. Its share of total revenue also dipped to 5% from 7%. The company would not have faced any turnaround of fortunes in the second quarter due to continued ambiguity.

In the June quarter, the company was well placed as far as the search competitive landscape was concerned and it appeared to be stable. But the e-commerce, mobile and social networks would be the potential disruptive. Yandex NV (NASDAQ:YNDX) also faces pressure from operating sides. Its product development cost as a percentage of revenue jumped to 27.1% in the March quarter from 18.4%. Similarly, S,G&A as a percentage of revenue increased to 18.7% from 16.2% during the period under review. There would not be any respite from these in the second quarter too. The company will report its numbers on July 30.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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