Yandex N.V.

Ladies and gentlemen, thank you for standing by and welcome to the third quarter 2021 financial results call. I must advise you this conference is being recorded today, Wednesday the 27th of October 2021. We'd now like to hand the call over to your first speaker for today, Yulia Gerasimova, Investor Relations Director. Please go ahead.

Hello, everyone, and welcome to Yandex 3rd Quarter 2021 Earnings Call. You can find our earnings release, additional prepared remarks, and supplementary slides on our IR website. The key speakers on our call today are Tigran Fuderedan, our Deputy Chief Executive Officer, and Svetlana Dibishkevich, our Chief Financial Officer, Vadim Marchuk, our Chief Operating Officer, Danil Shuleyka, the Head of E-Commerce and Vitek Business Group, and Yevgeny Senderov, Chief Financial Officer of Yandex Taxi, will be available on the Q&A session. Now, I will quickly walk you through the safe harbor statement. The right remarks that we made during the call regarding our financial performance and operations may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the Risk Factors section of our most recent annual report on Form 20-F filed with the SEC. During the call, we'll be referring to certain non-GAAP financial measures. You can find a reconciliation of non-GAAP to GAAP measures in the earnings release we published today. And now, I'm turning the call over to Tigran.

Thank you, Yulia, and hello, everyone. Let me give you a quick overview of the key highlights from the third quarter. Our results again show strong growth momentum across key verticals, including the two largest advertising and write-allings. These businesses continue to generate solid cash flow for us to reinvest in a number of attractive opportunities. In addition to that, both businesses continue to grow faster than their peers, further cementing our leadership in advertising and mobility. Searching Portal delivered 33% revenue growth supported by our investment in AdTech, SMB Products, and IOS Share. IOS Share improved during the quarter to 43.1% in the last week of September 2021. up 2.4% points year-over-year. This growth was underpinned by targeted investments in product and marketing. Right-hailing revenues increased by almost 70% on the back of solid growth of rights and JV. We continue to improve our operation efficiency and optimize our cost structure, with operational expenses decreasing as a percentage of January both quarter-on-quarter and year-over-year. At the same time, we invested in service quality and in growing the driver base, which led to a better supply-demand balance as well as 33% increase year-over-year in the number of drivers on the platform. Our initiatives in retailing provision as well for further growth and improvements to profitability. During the third quarter, we also demonstrated our commitment to invest in the future growth of the Yandex ecosystem with a particular focus on expansion in the e-commerce, Yandex Plus, and logistics verticals. We are pleased with the results delivered by these businesses. The number of Yandex Plus subscribers doubled year-over-year to 10.5 million, with even faster growth in paying subscribers. In e-commerce, GMG increased more than three times year-over-year. and its delivery grew 4.5 times year-over-year. This was partially driven by the low base effect of the previous year. However, quarter-on-quarter growth was also robust, with third-quarter revenue up 40% plus compared to second quarter. E-commerce remains our top priority, which is substantial progress in this key vertical, with the GMV growth accelerating to over 200% year-on-year, record levels of assortment reaching 21 million SKUs, further growth of seller numbers and expansion of logistics infrastructure and significant progress in terms of service quality. During the quarter, we reduced the defect rate in fully controlled logistics by 2.5 times to a level comparable with our key competitors. Product-wise, one of the key priorities for us in e-commerce is further diversifying both our assortment and geography of our operations. We are actively investing in both of these areas. We have also introduced a category-centric approach to organization, with appointed leaders responsible for end-to-end customer experience in categories such as FMCG and fashion. We are developing and continuing to invest in other business initiatives, such as fintech, self-driving technology, and cloud, to ensure we are ready to meet future demand and to create additional foundations for sustainable long-term growth. With this, let me turn the mic over to Svetlana.