REG - Mail.ru Group Ltd - Unaudited results for Q3 2021

VKAnnouncement

28/10/2021 07:05

RNS Number : 5015Q
  
Mail.ru Group Limited
  
28 October 2021
  
 

 
Mail.ru Group Limited unaudited results for Q3 2021
 
October 28, 2021. Mail.ru Group Limited (MAIL, hereinafter referred to as "the Company" and together with its subsidiaries "VK" or "the Group"), one of the largest companies in the Russian-speaking Internet market, today releases unaudited IFRS results and segment financial information for the three and nine months ended 30 September 2021.
 
Performance highlights*
Results for the three months ended 30 September 2021:




·      


Q3 2021 Group aggregate segment revenue grew 19% YoY to RUB 30,418m




·      


Q3 2021 Group aggregate segment EBITDA rose 28% YoY to RUB 8,426m




·      


Q3 2021 Group aggregate net profit from consolidated subsidiaries grew 41% YoY to RUB 3,836m




·      


Q3 2021 Group aggregate net loss including key strategic associates and joint ventures was RUB (1,371m), compared to Q3 2020 net loss of RUB (415m), including the following contributions:




o  O2O JV: RUB (3,882m) in Q3 2021 vs RUB (2,968m) in Q3 2020;
o  AER JV: RUB (1,212m) in Q3 2021 vs RUB (162m) in Q3 2020;
o  Uchi.ru Group: RUB (113m) in Q3 2021
 
Results for the nine months ended 30 September 2021:




·      


9M 2021 Group aggregate segment revenue rose 21% YoY to RUB 88,699m




·      


9M 2021 Group aggregate segment EBITDA grew 8% YoY to RUB 21,159m




·      


9M 2021 Group aggregate net profit from consolidated subsidiaries declined 2% YoY to RUB 8,070m




·      


9M 2021 Group aggregate net loss including key strategic associates and joint ventures was RUB (5,299m), compared to 9M 2020 net profit of RUB 674m, including the following contributions:




o  O2O JV: RUB (11,098m) in 9M 2021 vs RUB (6,866m) in 9M 2020;
o  AER JV: RUB (2,179m) in 9M 2021 vs RUB (695m) in 9M 2020;
o  Uchi.ru Group: RUB (92m) in 9M 2021
 
* Performance highlights are based on the Group aggregate segment financial information, which is different from IFRS accounts. See "Presentation of Aggregate Segment Financial Information".
Commenting on the results of the Group, Dmitry Grishin, Chairman of the Board, and Boris Dobrodeev, CEO (Russia) of VK, said:
 
In Q3, Group revenue grew by 18.6% (to RUB 30.4bn). We saw a particularly strong YoY performance from online advertising (+28.2%) and Education Technology services (+56.2%). Community IVAS returned to growth (+5.7% YoY versus -2.3% in Q2), with largely flat performance from MMO Games (-0.8% YoY) given the continued challenging base effect (+34% YoY in Q3 2020), combined with no major new games launches.
 
Q3 revenue split:
·      Advertising: +28.2% YoY to RUB 12,229m
·      MMO: -0.8% YoY to RUB 8,841m
·      Community IVAS: +5.7% YoY to RUB 4,479m
·      Education Technology services: +56.2% YoY to RUB 2,546m
·      Other: 74.9% YoY to RUB 2,323m
 
VKontakte remains the key contributor to our core online advertising revenue stream as well as the largest Communications & Social (C&S) reporting segment, with its quarterly revenue exceeding RUB 7bn on the back of 29% YoY revenue growth. In terms of advertising products, performance remained the key driver (+40% YoY). Within advertising formats, we saw 52% YoY growth in our in-stream video revenue in Q3, with the further monetization of video among our key strategic priorities. As the base effect becomes more challenging, we expect further QoQ moderation in the advertising revenue growth rate in Q4, but with the goal to continue to outgrow the broader digital market.
 
Community IVAS (~14.7% of Group revenue in Q3), which returned to growth in Q3 (5.7% versus -2.3% in Q2), was driven by Music, which sits at the heart of our VK Combo loyalty program, with >4.5mn subscribers as of the end of September. We expect a broadly similar growth rate for IVAS in Q4, with moderate growth for the year. 
 
With >97% of Community IVAS and >80% of Online advertising revenues booked within the C&S segment, it saw solid underlying trends in Q3, with 20.2% YoY growth. C&S segment also saw margin improvement, with an EBITDA margin of 49.1% versus 41.3% in Q2 and 46.1% in Q3 2020.
 
While MMO Games (29.1% of Group revenue) was largely flat YoY in Q3, the overall Games segment (represented by MY.GAMES) delivered slight growth (+2.3% YoY, RUB 10.1bn). EBITDA of MY.GAMES was RUB 2.4bn with a margin of 24.2%, an improvement compared to 20.2% margin in Q3 2020. MY.GAMES is set to deliver an EBITDA margin of ~20% in 2021 versus 16% in 2020, along with some revenue growth.
 
EdTech segment (Skillbox Holding Limited) revenues grew >56% YoY in Q3 (to RUB 2.5bn), supported by active ongoing course offer expansion, which helps drive paying user growth (+37,000 in Q3). EdTech revenues are now expected to exceed RUB 10bn in 2021. EBITDA margin improved to -13% in Q3 versus -38% in Q2 and we target further improvement in profitability in Q4.
 
Within the New Initiatives segment, Youla saw 28% revenue growth in Q3 (to RUB 968m), with a continued reduction in EBITDA burn, to -17% in Q3, versus -20% in Q2 and -58% in Q3 2020. Youla is on track to deliver RUB3.6-3.9bn in revenues in 2021, with major progress towards break-even, expected in 2022. 
 
We are very bullish on the growth prospects of MY.GAMES, but with 2021 being more focused on EBITDA growth for the segment. This is due to the high COVID-19 related base effect for growth along with IDFA-related changes, which shifted launches into 2022, allowing for a period of adjustment for our marketing models to maximize efficiency of the key cost item for MY.GAMES. As a result, we currently see RUB124-127bn in revenue as the base case for 2021, with 16.5-19.4% growth for this year. The target for slight YoY margin improvement versus 25.3% delivered in 2020 remains in place.
 
Our net debt position excluding lease liabilities at the end of September stood at RUB 29,231m (RUB 45,025m including lease liabilities). During the quarter Mail.ru Finance finalized the placement of the RUB 15bn in exchange-traded local bonds with a 7.9% annual coupon rate, with proceeds used for investments into the O2O and AliExpress Russia (AER) JVs as well as online education and games. In 2021, we invested RUB 21.5bn into the O2O JV, $60.3mn into the AER JV and RUB 4bn into online education and games as we see these assets as strategically important ecosystem elements and growth areas for the Group. 
 
The Group's rebranding from "Mail.ru Group" into "VK" is also part of our ecosystem development strategy. The positive impact the "VK" brand has on awareness and use of products is clear and should help drive the Group's reach, engagement and monetization, while also stimulating the internal culture of togetherness and collaboration. 
 
Also, to closer align with our stakeholders, the Remuneration and Nomination Committee of the Board has recently approved the shift to a new long-term incentive program (LTI) for Executives. It is equity-based with awards in Performance Stock Units ("PSUs") and options linked to GDRs, with annual vesting over 4 years, starting in 2022. Vesting of PSUs is subject to meeting performance conditions linked to financial parameters such as budgeted Revenue and Adjusted Free-Cash-Flow, while options have a strike price of $20/GDR (which will only have value in case of share price appreciation above that level), with any gains to be settled in GDRs. Under the Program, PSUs or options may be clawed back in the event of misconduct or certain accounting irregularities. 
 
Financial and operational highlights around our most material non-consolidated assets among associates and joint ventures including AliExpress Russia JV and O2O JV can be found below in the "Joint Ventures" section of the press release.
 
As of September 2021, we reassessed the probability of successfully completing the Payments and Financial Services JVs deal in its current structure as agreed in February 2021 as not highly probable. Hence, we ceased to classify assets and liabilities related to Money.Mail.Ru, VK Pay and InPlat as held for sale. The event is P&L neutral and the Group intends to form Payments JV and Financial Services JV in the foreseeable future, and is currently in active negotiations on the matter. 
 
Segmental highlights
 
Communications and Social segment
 
The segment's revenue was up 20.2% YoY to RUB 15bn in Q3 2021 driven by advertising revenue growth along with improved Community IVAS performance. EBITDA increased by 28.1% YoY to RUB 7.4bn in Q3 (with a margin of 49% vs 46% a year ago) due to the improvement seen in the high margin Community IVAS revenue and despite the ongoing product investments, particularly into content and music.
 
Communications and Social Segment Performance - Q3 2021 & 9M 2021
 




RUB millions


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




Revenue


 


 


 


 


 


 




External revenue


12,456


14,910


 


36,464


42,283


 




Intersegment revenue


(2)


62


 


(3)


222


 




Total revenue


12,454


14,972


20%


36,461


42,505


17%




Total operating expenses


6,718


7,622


13%


18,492


23,356


26%




EBITDA


5,736


7,350


28%


17,969


19,149


7%




EBITDA margin, %


46.1%


49.1%


3.0pp


49.3%


45.1%


-4.2pp




 
VKontakte 
 
VKontakte maintained its local social networking leadership, with a stable average Russia MAU of 72mn and DAU of 46.2mn (+0.2% YoY) in Q3. Mobile time spent stood at ~33 minutes per day as of August, including ~48 minutes per day for the most engaged 12-24 age groupa.
 
The number of VK Mini Apps rose by almost 70% YoY in September to above 36,800, with MAU of 34mn (+26% YoY). Monetization of mini apps and games based on the VK Mini Apps platform is progressing, with related in-app ads revenue rising by 550% YoY in Q3. 
 
Communication products and related technology enhancements continued, with the rollout of free-of-charge unlimited duration group video calls for up to 2,048 simultaneous participants on desktop, with video call MAU of 20mn. VKontakte launched VK Mail, an email service integrated with VKontakte messenger with authorization via VK ID. 5.7mn email accounts were registered in VK Mail within the first three days. 
 
Video remains a major focus area, with several significant video platform updates. VKontakte is focused on content creation as a driver of video consumption, having launched VK Squad, an educational project for bloggers. VKontakte is also boosting its video monetization tools, which includes the launch of revenue share with authors, initially available for Groups participating in the VKontakte partner program. These initiatives helped drive a 5x YoY increase in VKontakte's revenue from video ads in Q3, to be further stimulated by the rollout of VK Video in October, unifying all of the Group's video resources in a platform with 40mn video DAU, the largest in Russia.
 
Сontent creators using VK Donut earned >RUB 126mn since its launch in late June 2020. The VKontakte Mobile Games catalogue grew by 135% YoY, with +15% YoY growth in mobile games audience in Q3. 
 
Technological enhancements are ongoing, with VKontakte being among the pioneers to have implemented the advanced technology of data transmission based on the new network protocol QUIC, which accelerated delivery of content by 2x.
 




a


Source: Mediascope, August 2021, Russia (all cities, age 12+), Mobile app




 
Odnoklassniki (OK)
 
Average Russia MAU stood at 38mn in Q3. Users sent more than 6.6bn virtual gifts, 500mn postcards and 450mn stickers during Q3. Additional IVAS growth contribution came from social games. Average DAU in mobile games on the OK platform grew by 22% YoY in Q3, with penetration exceeding 10% of OK's overall mobile DAU. Game advertising revenue inside OK also continues to grow, with total games advertising revenue up by 340%.
 
Moments MAU reached 26mn in September, with the number of views and reactions growing by 390mn and 42mn respectively during the period. 
 
OK continues to develop advertising based monetization, with the number of advertisers increasing by 17% YoY in Q3. Revenue from the internal advertising manager within OK was up 74% YoY in Q3.
 
Cross-integrations continue, with the launch of a recruiting service and a special section in OK main menu with VK Jobs. In September, OK rolled out the AI-based voice message transcription feature on the basis of the technology developed by VKontakte, and enhanced its music service.
 
Games segment (represented by MY.GAMES)
 
MY.GAMES revenues grew 2.3% YoY in Q3 (to RUB 10.1bn) given the still elevated COVID-19 base effect from 2020 along with no major new launches as of 9M21 (versus 8 during the same period last year). ~96% of revenues came from F2P games, with mobile share at 75% of the total in Q3 (versus 73% in Q3 2020). War Robots, Warface, Hustle Castle, Rush Royale and Grand Hotel Mania were the largest revenue contributors for the quarter. 
 
The Games segment EBITDA stood at RUB 2.4bn in Q3, delivering 22.6% YoY growth, with a margin of 24.2% (versus 20.2% in Q3 2020), and the segment is firmly on track to deliver margin growth for the year. Average MAU stood at 21mn in Q3 with a 4.32% share of monthly paying users and Average Revenue Per User (ARPU) of RUB 160. 
 
Games Segment Performance - Q3 2021 & 9M 2021
 




RUB millions


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




Revenue


 


 


 


 


 


 




External revenue


9,822


10,054


 


28,498


32,083


 




Intersegment revenue


30


26


 


73


78


 




Total revenue


9,852


10,080


2%


28,571


32,161


13%




Total operating expenses


7,865


7,644


-3%


23,682


25,615


8%




EBITDA


1,987


2,436


23%


4,889


6,546


34%




EBITDA margin, %


20.2%


24.2%


4.0pp


17.1%


20.4%


3.3pp




 
The share of revenue coming from markets outside of Russia & CIS stood at 77% (versus 75% in Q3 2020), with the US, Germany and France holding the largest share of international revenue. 
 
MY.GAMES Venture Capital (MGVC) completed four minority investments in new studios in Q3 (VOX, Tworogue Games, Breach Studios, Wideview Games) and consolidated Mamboo Games. 
 
MY.GAMES continued to grow by supporting its existing portfolio with product updates, spreading existing titles to other platforms as well as expanding its portfolio with new IP consolidations. Mamboo games joined MY.GAMES in late Q3 to drive further portfolio diversification into the attractive and fast-growing hyper casual and hybrid casual genres. A total of 14 internal studios of MY.GAMES have 20 new titles in active development across PC, console and mobile platforms, set to support future growth, to be further enhanced by MGVC acquisitions.
 
Mobile
The top-5 revenue-generating mobile titles in Q3 remained War Robots, Rush Royale, Hustle Castle, Grand Hotel Mania and Left to Survive, with the most recently launched (December 2020) Rush Royale now ranked second in terms of quarterly revenue.
 
War Robots (2014, Pixonic studio) shooter had 200mn registered users in September, with average monthly revenue of ~RUB 850mn in Q3 and significant positive EBITDA contribution. 
 
Hustle Castle (2017, Nord studio) RPG title exceeded 71mn in downloads, with >RUB 300mn in average monthly revenue in Q3. The Nord Studio also operates Zero City (~19mn downloads, ~RUB 100mn in average monthly revenue). American Dad! Apocalypse Soon continued to scale, with ~10mn in cumulative downloads as of the end of Q3.
 
Grand Hotel Mania (2020, Deus Craft studio) time management game approached 13mn installs, with nearly RUB 200mn in average monthly revenue in Q3.
 
Left to Survive (2018, Whalekit studio) shooter reached 42mn downloads and exceeded RUB 150mn in average monthly revenue in Q3. Another title from this studio, Warface: Global Operations (2020), reached 20mn downloads.
 
Rush Royale (2020, IT Territory studio) tower defence game reached ~14mn downloads with average monthly revenue reaching a new record of >RUB 400mn in September, being the most successful launch in MY.GAMES' history. 
 
Tacticool (2019, Panzerdog) top-down PvP mobile shooter game reached 21mn downloads and achieved nearly RUB 100mn in average monthly revenue in Q3.
 
In Q3, MY.GAMES continued to port its mobile titles to PC on MY.GAMES Store as part of internal cross-selling and cross-integration, with Tacticool and Grand Hotel Mania ported in Q3.
 
PC & Console
The Warface (2013, PC/console/mobile) first-person shooter franchise reached 120mn players worldwide across all platforms and remains a top-3 revenue generator for MY.GAMES. Warface cross-play via console platforms connects over 24mn players to the same server, with growth supported by the rollout of the new Heist season on PlayStation 4 and Xbox One in September, to be soon extended to Nintendo Switch.  
 
Lost Ark (PC, licensed from Smilegate RPG) MMORPG reached 3mn in registered users.
 
Tactical action MMO Conqueror's Blade (2019, PC, licensed from Booming Tech) reached 3.5mn in users in Q3.
 
Free-to-play MMO Skyforge (2017, PC, Allods Team) reached 13.2mn in registered users.
 
MY.GAMES and the third-party developer (The Farm 51 studio) launched Early Access to tactical online multiplayer FPS World War 3, which is set to launch globally in Q1 2022.
 
EdTech segment (represented by Skillbox Holding Limited)
 
The segment continued to demonstrate solid performance in Q3, with revenue rising by 56% YoY to RUB 2.5bn. EdTech delivered an EBITDA loss of RUB 0.3bn in Q3 compared to a positive RUB 0.3bn contribution in Q3 2020 due to personnel, content development cost as well as marketing expense increases. An increase in the tax burden relative to 2020 also had a negative effect (with 4% margin excluding this tax effect). At the same time, the economics of the business improved QoQ, with a negative EBITDA margin of -13% vs -38% during the prior quarter.
 
EdTech Segment Performance - Q3 2021 & 9M 2021
 




RUB millions


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




Revenue


 


 


 


 


 


 




External revenue


1,630


2,545


 


3,522


6,869


 




Intersegment revenue


-


1


 


-


2


 




Total revenue


1,630


2,546


56%


3,522


6,871


95%




Total operating expenses


1,319


2,875


118%


2,872


8,024


180%




EBITDA


311


(329)


n/m


650


(1,153)


n/m




EBITDA margin, %


19.1%


-12.9%


 -32.0pp


18.5%


-16.8%


 -35.3pp




 
The platforms exceeded 1.94mn in combined cumulative registered students as of the end of September, up 1.5x YoY, with 210,000 in new registrations during the quarter. The cumulative number of paying students approached 273,000, up 2.1x YoY, with nearly 37,000 new paying students added during Q3.
 
The units launched 163 new courses and programs (professions and faculties) during Q3, with most additions in programming and gaming (41), design (30), marketing (21) and management (19), and the overall number of available courses reaching 1,210. The average check stood at RUB 67,000 in Q3 (+13% YoY).
 
Accounting for the consolidation of SkillFactory since the back end of September, we expect EdTech revenues to exceed RUB 10bn in 2021 with further QoQ improvement in EBITDA margin in Q4.
 
New Initiatives segment
 
The segment's revenue was up 68% to RUB 2.9bn in Q3 driven mainly by Youla. New Initiatives EBITDA loss amounted to RUB 1bn (vs. the loss of RUB 1.5bn in Q3 2020), which implies a -35.2% margin (-83.2% in Q3 2020) due to the ongoing improvement in profitability across most product groups, including Youla, recommendation platforms and B2B (including Cloud).
 
New Initiatives Segment Performance - Q3 2021 & 9M 2021
 




RUB millions


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




Revenue


 


 


 


 


 


 




External revenue


1,737


2,909


 


4,910


7,464


 




Intersegment revenue


8


17


 


33


30


 




Total revenue


1,745


2,926


68%


4,943


7,494


52%




Total operating expenses


3,197


3,957


24%


8,809


10,877


23%




EBITDA


(1,452)


(1,031)


-29%


(3,866)


(3,383)


-12%




EBITDA margin, %


-83.2%


-35.2%


48.0pp


-78.2%


-45.1%


33.1pp




 
Youla (classifieds)
Youla grew revenues by 28% YoY in Q3 to RUB 968mn, driven by the rising share of B2B sales. EBITDA loss as a proportion of revenue continued to decline, at -17% in Q3 versus -58% in Q3 2020. MAU grew by 27% YoY reaching 33mn in September, stimulated by the ongoing rollout of VK Classifieds, with 115,000 Groups in VKontakte now able to show relevant listings via VK Classifieds (+130% QoQ). 
 
The revenue of the Jobs vertical (VK / Youla Jobs) nearly doubled YoY, with related DAU rising by 32% YoY, and the number of new CVs increasing by 144% YoY. Within the VKontakte social network, more than 90% of job search Groups are now connected to the VK Jobs. 
 
Youla remains on track to deliver RUB 3.6-3.9bn in revenues in 2021, with significant progress towards break-even.
 
VK ID (unified ID)
Since its launch in June 2020, 51.5mn people have used VK ID for authentication, not counting for authentication on vk.com, with their number growing 27% QoQ in Q3. 27 Group services are now using VK ID (versus 24 as of the end of June), including CityDrive and VK Mail among the most recently added.
 
VK Clips (short video)
VK Clips' video inventory now exceeds 8mn+ clips, with 2.1mn unique authors.
 
Engagement continues to rise, with daily video views reaching up to 350mn and DAU at 20mn in September. 
 
Time spent per user in Clips grew by 62% YoY in September, with the number of users spending 10+ minutes per day on Clips rising by 71% during the same period.
 
Product enhancements continue, with VK Clips being the first short video platform to launch thematic feeds. There is already certain advertising-based monetization in Clips with two main formats used: traditional video promos and special projects (with special effects, AR masks, challenges, etc), albeit the main near-term focus remains on rising engagement and retention on the platform.
 
Pulse and Relap (recommendation platforms)
In Q3, Pulse DAU stood at 9mn (+144.8% YoY), with MAU of 70.4mn (+87.5% YoY). Relap DAU stood at 6.3mn (+1.63% YoY) in Q3, with MAU of 84.5mn (-7.27% YoY), driven by the change in the cookie-collection policy of the major internet browsers. The two platforms' combined revenue reached RUB 345mn in Q3 (+141% YoY). So far in Q4, the first iteration of integration with the VK Video platform was completed and Pulse launched a video uploading feature for authors via Pulse personal cabinet. At the end of September, UGC video recommendations on pulse.mail.ru were launched, with Pulse now offering bloggers a new way to monetize on the recommendation platform. 
 
Joint Ventures
 
O2O JV (equal 45.01% ownership between Sber and VK)
GMV of O2O JV reached 47.7bn (+55% YoY) in Q3. EBITDA burn stood at RUB 7.6bn, as its units remain in an active investment phase. At the same time, continuous focus on operational efficiency resulted in an EBITDA margin of -16% (as % of GMV), an improvement versus -20% in Q2 and -25% in Q3 2020. 
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




GMV, RUB mn


30,829


47,745


55%


75,645


133,442


76%




EBITDA, RUB mn


(7,598)


(7,631)


-0.4%


(17,730)


(23,003)


-30%




EBITDA margin, as % of GMV


-25%


-16%


8.7pp


-23%


-17%


6.2pp




 
Food-tech, including Delivery Club (98%), Samokat (85%), r_keeper (99%) and Local Kitchen (85%)
 
Delivery Club generated RUB 4bn in gross revenue (+53% YoY) in Q3, with a 45% YoY growth in orders to 22mn. 1P orders stood at 64% of total platform orders in Q3 (versus 59% in Q3 2020), while egrocery orders amounted to 17% of the total (versus 6% in Q3 2020).
 
Delivery Club is present in all federal districts and covers >50% of the Russian population, with a connected partner network exceeding 47,000 September (+55% YoY), including 6,270 retail stores. 
 
As a result of the expanding offer and the ongoing improvements in the service level (with an average delivery time of 32.9 min in Moscow in September), the average frequency increased QoQ as well as YoY, with ~4.3 orders/active user in Q3 and the number of active customers up 27% YoY to 5mn.
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




Gross revenue, RUB mn


2,622


4,014


53%


6,963


10,850


56%




Number of orders, mn


15.3


22.1


45%


42.2


60.5


44%




Share of egrocery orders


6%


17%


 


4%


14%


 




Share of 1P orders


59%


64%


 


57%


63%


 




Number of vendors, thousands,

end of period


30.7


47.5


 


 


 


 




Active customers, mn


4.0


5.1


27%


 


 


 




Average frequency, orders


3.8


4.3


14%


 


 


 




 
Samokat grew gross revenue by 4.5x YoY (to RUB 9.5bn) in Q3, with 18.9mn in orders (+4.2x YoY), including up to 250,000 in daily orders in September.
 
Samokat launched operations in 2 additional cities in Q3, now available across 22 Russian cities with access to ~19% of the local population. It plans further expansion, including into cities with <500,000 in population.
 
Samokat's dark store base reached 758 in September (+2.6x YoY), being among the largest networks globally. 
 
The entire category base has greatly expanded, including into cosmetics, with plans to further scale this into categories such as medicine. The private label SKU base reached 720 and contributed >16% of revenue in Q3.
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




GMV, RUB mn


2,340


10,808


362%


5,300


26,782


405%




Gross revenue, RUB mn


2,093


9,497


354%


4,725


23,556


399%




Share of revenue from private label

assortment


13%


16%


 


10%


16%


 




Number of orders, mn


4.5


18.9


324%


9.5


45.6


379%




Number of dark stores


290


758


161%


 


 


 




 
Local Kitchen delivered 1.8mn orders (+27% YoY) and generated RUB 930mn in gross revenue (+29% YoY) in Q3 from its 50 dark kitchens across Moscow. 
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




GMV, RUB mn


849


1,110


31%


1,972


3,157


60%




Gross revenue, RUB mn


719


930


29%


1,671


2,654


59%




Number of orders, mn


1.4


1.8


27%


3.2


5.0


56%




Average number of kitchens


33


50


 


 


 


 




Active users, thousands


169


238


41%


 


 


 




 
Mobility, including Citymobil (97%) and Citydrive (former YouDrive) (77%)
In Q3, Citymobil completed 44.6mn rides with GMV growth of 8.5% YoY (to RUB 14.6bn), supported by the ongoing growth in B2B (+3.2 YoY) and Premium segment rides (+1.9x YoY). Focus on unit economics resulted in a 20% increase in contribution profit per passenger ride QoQ in Q3. Delivery business continues to expand, with up to 21,000 deliveries in peak days in September.  
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




GMV, RUB mn


13,444


14,592


9%


30,433


44,450


46%




Number of rides, mn


49.7


44.6


-10%


125


146


17%




Active riders, mn


4.4


3.9


-11%


3.5


4.2


20%




 
Citydrive grew rides by 1.5x YoY in Q3 through its 5,690 car park with GMV more than doubling to RUB 1bn.  
 




 


Q3 2020


Q3 2021


YoY, %


9M 2020


9M 2021


YoY, %




GMV, RUB mn


483


1,000


107%


854


2,345


174%




Number of rides, mn


1.4


2.1


47%


2.6


5.4


105%




Number of cars, end of period


4,329


5,690


31% 


4,329


5,690


31% 




 
AliExpress Russia (AER) JV (15% stake held by VK)
AER continues its diversification, with the local marketplace GMV growing 126% YoY during H1 FY22 (April 2021 - September 2021), including ~5.5x YoY growth in orders, reflecting the focus on category diversification towards higher frequency categories. The number of local sellers exceeded 75,000 in September (+172% YoY), with the number of local SPUs (Standardized Product Units) growing by 230% YoY to 11.7mn. Including the cross-border business, the platform offers a total of 176mn SPUs from 350,000+ sellers with a total GMV of RUB 133.3bn in H1 FY22 (139.2mn of total orders). LTM active buyers reached 27.9mn, with 114% YoY growth of buyers in local.
 
Target remains to reach ~30mn total buyers, with local GMV approaching 50% of the total by the end of AER's FY2022 (April 2022) versus 33% as of September.
VK provided $60.3mn in additional capital to AER in August as part of its ongoing funding round, which is expected to close by the end of November. Group's shareholding is expected to remain broadly unchanged. 

 
Conference call and webcast:
 
The management team will host an analyst and investor conference call and webcast at 16.00 Moscow time (14.00 London, 9.00 New York) on the same day, including a Question and Answer session.
 
Conference call details:
Date: Thursday, October 28
Time: 16:00 (Moscow), 14:00 (London), 9:00 (New York)
 
Dial-in Numbers (recommended option to be able to ask questions*):
From the UK/International:                 +44 (0)330 336 9434 (local access) / 0800 279 7209 (toll free)

From Russia:                                      +7 495 646 9190 (local access) / 8 10 8002 8675011 (toll free)
From the US:                                      +1 929 477 0324 (local access) / 800 458 4148 (toll free)
Confirmation Code: 8774578
 
Webcast (recommended option to be able to listen and view related slides):
https://www.webcast-eqs.com/mailru20211028
 
*We recommend participants to dial at least 5 minutes prior to the start of the conference call.
 
For further information please contact:
Investors
Tatiana Volochkovich
Phone: +7 495 725 6357 extension: 3434
Mobile: +7 905 594 6604
E-mail:  t.volochkovich@vk.team
 
Press
Sergei Luchin
Mobile: +7 915 223 35 71
E-mail:  s.luchin@vk.team
 
Cautionary Statement regarding Forward Looking Statements and Disclaimers
This press release contains statements of expectation and other forward-looking statements regarding future events or the future financial performance of the Group. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "forecast", "intend", "will", "could", "may" or "might", the negative of such terms or other similar expressions including "outlook" or "guidance". The forward-looking statements in this release are based upon various assumptions that are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and may be beyond the Group's control. Actual results could differ materially from those discussed in the forward-looking statements herein. Many factors could cause actual results to differ materially from those discussed in the forward looking statements included herein, including competition in the marketplace, changes in consumer preferences, the degree of Internet penetration and online advertising in Russia, concerns about data security, claims of intellectual property infringement, adverse media speculation, changes in political, social, legal or economic conditions in Russia, exchange rate fluctuations, and the Group's success in identifying and responding to these and other risks involved in its business, including those referenced under "Risk Factors" in the Group's public filings. The forward-looking statements contained herein speak only as of the date they were made, and the Group does not intend to amend or update these statements except to the extent required by law to reflect events and circumstances occurring after the date hereof.
 
About VK 
VK develops the ecosystem helping millions of people with their day-to-day needs online. More than 90% of the Russian internet audience use it every day. 
 
The ecosystem enables people to keep in touch (using social networks OK and VK, messaging apps and email service), play video games (via MY.GAMES), get and offer items and services, browse jobs and hire talent (via Youla and VK Jobs), order food and grocery delivery (via Delivery Club, Samokat and Local Kitchen), get a ride (with Citymobil and Citydrive), master new skills (at GeekBrains, Skillbox and other educational services), buy and sell at AliExpress Russia and fulfill other needs.
 
The VK ecosystem features a number of shared elements bringing the services together. Users can sign in to different services with a single VK ID account, pay and earn cash back with the VK Pay platform, get discounts and deals with VK Combo, access their favorite services via the VK Mini Apps platform - and the Marusya voice assistant can help with any task.
 
The company offers enterprises to employ its dynamic ecosystem to digitize their business processes, providing a range of solutions from online promotion and predictive analytics to corporate social networks, cloud services and enterprise automation.
 
Filing of the Interim Condensed Consolidated Financial Statements for 9m 2021
The Group's interim condensed consolidated financial statements for the nine months ended 30 September 2021 prepared in accordance with IFRS and accompanied by an independent auditor's review report have been filed on the National Storage Mechanism appointed by the Financial Conduct Authority and can be accessed at https://data.fca.org.uk/#/nsm/nationalstoragemechanism or on the Group's website at https://vk.company/media/files/vkifrsq32021.pdf. 
 
Group Aggregate Segment Financial Information*




RUB millions


Q3 
2020


Q3 2021


YoY, %


9m 2020


9m 2021


YoY, %




Group aggregate segment revenue (1)


 


 


 


 


 


 




Online advertising


9,540


12,229


28.2%


26,225


33,949


29.5%




MMO games


8,910


8,841


-0.8%


26,060


27,788


6.6%




Community IVAS


4,237


4,479


5.7%


13,433


13,403


-0.2%




Education Technology services


1,630


2,546


56.2%


3,521


6,865


95.0%




Other revenue**


1,328


2,323


74.9%


4,155


6,694


61.1%




Total Group aggregate segment revenue


25,645


30,418


18.6%


73,394


88,699


20.9%




 


 


 


 


 


 


 




Group aggregate operating expenses


 


 


 


 


 


 




Personnel expenses


6,068


7,615


25.5%


17,273


23,050


33.4%




Agent/partner fees


7,000


7,967


13.8%


19,549


24,418


24.9%




Marketing expenses


4,707


4,654


-1.1%


13,088


15,828


20.9%




Server hosting expenses


202


225


11.4%


567


635


12.0%




Professional services


236


318


34.7%


627


1,038


65.6%




Other operating (income)/expenses, excl. D&A


850


1,213


42.9%


2,648


2,571


-2.9%




Total Group aggregate operating expenses


19,063


21,992


15.4%


53,752


67,540


25.7%




Group aggregate segment EBITDA (2)


6,582


8,426


28.0%


19,642


21,159


7.7%




margin, %


25.7%


27.7%


 


26.8%


23.9%


 




 


 


 


 


 


 


 




Depreciation and amortisation (3)


2,779


3,592


29.3%


8,123


10,412


28.2%




Share of loss of key JVs and equity associates


3,130


5,207


66.4%


7,561


13,369


76.8%




Other non-operating income (expense), net


(578)


(385)


-33.2%


(1,576)


(1,385)


-12.1%




Profit/(loss) before tax (4)


95


(758)


n/m


2,382


(4,007)


n/m




Income tax expense (5)


510


613


20.2%


1,708


1,292


-24.4%




Group aggregate net profit from consolidated subsidiaries (6)


2,715


3,836


41.3%


8,235


8,070


-2.0%




margin, %


10.6%


12.6%


 


11.2%


9.1%


 




 


 


 


 


 


 


 




Group aggregate net profit/(loss) (7)


(415)


(1,371)


n/m


674


(5,299)


n/m




margin, %


-1.6%


-4.5%


 


0.9%


-6.0%


 




 (*) The numbers in this table and further in the document may not exactly foot or cross-foot due to rounding.
(**) Including Other IVAS revenues.
 




(1)        


Group aggregate segment revenue is calculated by aggregating the segment revenue of the Group's operating segments and eliminating intra-segment and inter-segment revenues. This measure differs in significant respects from IFRS consolidated net revenue. See "Presentation of Aggregate Segment Financial Information" below.




(2)        


Group aggregate segment EBITDA is calculated by subtracting Group aggregate segment operating expenses from Group aggregate segment revenue. Group aggregate segment operating expenses are calculated by aggregating the segment operating expenses (excluding the depreciation and amortisation) of the Group's operating segments including allocated Group's corporate expenses, and eliminating intra-segment and inter-segment expenses. See "Presentation of Aggregate Segment Financial Information".




(3)        


Group aggregate depreciation, amortisation and impairment expense is calculated by aggregating the depreciation, amortisation and impairment expense of the subsidiaries consolidated as of the date hereof, excluding amortisation and impairment of fair value adjustments to intangible assets acquired in business combinations.




(4)        


Profit before tax is calculated by deducting from Group aggregate segment EBITDA Group aggregate depreciation, amortisation and impairment expense and adding/deducting Group aggregate other non-operating incomes/expenses primarily consisting of interest income on cash deposits, interest expenses, dividends from financial and available-for-sale investments and other non-operating items.




(5)        


Group aggregate income tax expense is calculated by aggregating the income tax expense of the subsidiaries consolidated as of the date hereof. Group aggregate income tax expense is different from income tax as would be recorded under IFRS, as  it is adjusted for the tax effect of differences in profit before tax between Group aggregate segment financial information and IFRS.




(6)        


Group aggregate net profit from consolidated subsidiaries is the (i) Group aggregate segment EBITDA; less (ii) Group aggregate depreciation, amortisation and impairment expense; less (iii) Group aggregate other non-operating expense; plus (iv) Group aggregate other non-operating income; less (v) Group aggregate income tax expense. 




(7)        


Group aggregate net profit is the (i) Group aggregate net profit from consolidated subsidiaries; less (ii) Share of loss of key JVs and equity associates. Group aggregate net profit differs in significant respects from IFRS consolidated net profit. See "Presentation of Aggregate Segment Financial Information".




 
Operating Segments
The composition of the reporting segments reflects the Group's strategy, the way the business is managed and units' interconnection within its eco-system. From the first quarter of 2021 the Group has identified the following reportable segments on this basis:
 




•     


Communications and Social;




•     


Games; 




•     


Education Technologies (EdTech); and




•     


New initiatives.




 
The Communications and Social segment includes email, instant messaging and portal (main page and media projects). It earns substantially all revenues from display and context advertising. This segment also aggregates the Group's social network VKontakte (VK) and two other social networks (OK and My World) and earns revenues from (i) commission from application developers based on the respective applications' revenue, (ii) user payments for virtual gifts, stickers and music subscriptions and (iii) online advertising, including display and context advertising. It also includes Search and music services (UMA). These businesses have similar nature and economic characteristics as they are represented by social networks and online communications, common type of customers for their products and services and are regulated under similar regulatory environment.
 
The Games segment includes online gaming services, including MMO, social and mobile games operated by the Group. It earns substantially all revenues from (i) sale of virtual in-game items to users, (ii) royalties for games licensed to third-party online game operators and (iii) in-game advertising.
 
The Education Technologies (EdTech) segment includes our consolidated education businesses presented by GeekBrains and Skillbox. The businesses earn substantially all revenues from education technology services.
 
The New initiatives segment primarily consists of Youla classifieds earning substantially all revenues from advertising and listing fees, VK Clips with potential to become a major separate product with the planned launch of own application and target presence across the various Group's services, B2B new projects including cloud along with other services, which are considered insignificant by the CODM for the purposes of performance review and resource allocation.
 
Each segment's EBITDA is calculated as the respective segment's revenue less operating expenses (excluding depreciation and amortisation and impairment of intangible assets), including our corporate expenses allocated to the respective segment.
 
Operating Segments Performance - Q3 2021




RUB millions


Communications and Social


Games


EdTech


New initiatives


Eliminations


Group




Revenue


 


 


 


 


 


 




External revenue


 14,910


 10,054


 2,545


 2,909


 -


 30,418




Intersegment revenue


 62


 26


 1


 17


 (106)


 -




Total revenue


 14,972


 10,080


 2,546


 2,926


 (106)


 30,418




Total operating expenses


 7,622


 7,644


 2,875


 3,957


 (106)


 21,992




EBITDA


 7,350


 2,436


 (329)


 (1,031)


 -


 8,426




EBITDA margin, %


49.1%


24.2%


-12.9%


-35.2%


 


27.7%




Net profit from consolidated subsidiaries


 


 


 


 


 3,836




Net profit from consolidated subsidiaries margin, %


 


 


 


12.6%




Share of loss of key JVs and equity associates:


 


 


 


 




Aliexpress Russia JV


 


 


 


 


 


 (1,212)




O2O JV


 


 


 


 


 


 (3,882)




Uchi.ru


 


 


 


 


 


 (113)




Net loss


 


 


 


 


 


 (1,371)




Net loss margin, %


 


 


 


 


 


-4.5%




 


Operating Segments Performance - Q3 2020




RUB millions


Communications and Social


Games


EdTech


New initiatives


Eliminations


Group




Revenue


 


 


 


 


 


 




External revenue


 12,456


 9,822


 1,630


 1,737


 -


 25,645




Intersegment revenue


 (2)


 30


 -


 8


 (36)


 -




Total revenue


 12,454


 9,852


 1,630


 1,745


 (36)


 25,645




Total operating expenses


 6,718


 7,865


 1,319


 3,197


 (36)


 19,063




EBITDA


 5,736


 1,987


 311


 (1,452)


 -


 6,582




EBITDA margin, %


46.1%


20.2%


19.1%


-83.2%


 


25.7%




Net profit from consolidated subsidiaries


 


 


 


 2,715




Net profit from consolidated subsidiaries margin, %


 


 


 


10.6%




Share of loss of key JVs 


 


 


 


 




Aliexpress Russia JV


 


 


 


 


 


 (162)




O2O JV


 


 


 


 


 


 (2,968)




Net loss


 


 


 


 


 


 (415)




Net loss margin, %


 


 


 


 


 


-1.6%




 


Operating Segments Performance - 9m 2021




RUB millions


Communications and Social


Games


EdTech


New initiatives


Eliminations


Group




Revenue


 


 


 


 


 


 




External revenue


 42,283


 32,083


 6,869


 7,464


 -


 88,699




Intersegment revenue


 222


 78


 2


 30


 (332)


 -




Total revenue


 42,505


 32,161


 6,871


 7,494


 (332)


 88,699




Total operating expenses


 23,356


 25,615


 8,024


 10,877


 (332)


 67,540




EBITDA


 19,149


 6,546


 (1,153)


 (3,383)


 -


 21,159




EBITDA margin, %


45.1%


20.4%


-16.8%


-45.1%


 


23.9%




Net profit from consolidated subsidiaries


 


 


 


 8,070




Net profit from consolidated subsidiaries margin, %


 


 


 


9.1%




Share of loss of key JVs and equity associates:


 


 


 


 




Aliexpress Russia JV


 


 


 


 


 


 (2,179)




O2O JV


 


 


 


 


 


 (11,098)




Uchi.ru


 


 


 


 


 


 (92)




Net loss


 


 


 


 


 


 (5,299)




Net loss margin, %


 


 


 


 


 


-6.0%




 


Operating Segments Performance - 9m 2020




RUB millions


Communications and Social


Games


EdTech


New initiatives


Eliminations


Group




Revenue


 


 


 


 


 


 




External revenue


 36,464


 28,498


 3,522


 4,910


 -


 73,394




Intersegment revenue


 (3)


 73


 -


 33


 (103)


 -




Total revenue


 36,461


 28,571


 3,522


 4,943


 (103)


 73,394




Total operating expenses


 18,492


 23,682


 2,872


 8,809


 (103)


 53,752




EBITDA


 17,969


 4,889


 650


 (3,866)


 -


 19,642




EBITDA margin, %


49.3%


17.1%


18.5%


-78.2%


 


26.8%




Net profit from consolidated subsidiaries


 


 


 


 8,235




Net profit from consolidated subsidiaries margin, %


 


 


 


11.2%




Share of loss of key JVs:


 


 


 


 




Aliexpress Russia JV


 


 


 


 


 


 (695)




O2O JV


 


 


 


 


 


 (6,866)




Net profit


 


 


 


 


 


 674




Net profit margin, %


 


 


 


 


 


0.9%




 
Liquidity
As of 30 September 2021, the Group had RUB 30,820 million of cash and cash equivalents and RUB 60,051 million of debt outstanding (excluding lease liabilities). The Group's net debt position was RUB 29,231 million excluding lease liabilities and RUB 45,025 million including lease liabilities.
 
Presentation of Aggregate Segment Financial Information
The Group aggregate segment financial information is derived from the financial information used by management to manage the Group's business by aggregating the segment financial data of the Group's operating segments and eliminating intra-segment and inter-segment revenues and expenses. Group aggregate segment financial information differs significantly from the financial information presented on the face of the Group's consolidated financial statements in accordance with IFRS. In particular:
 




•     


The Group's segment financial information excludes certain IFRS adjustments which are not analysed by management in assessing the core operating performance of the business. Such adjustments affect such major areas as revenue recognition, share-based payment transactions, disposal of and impairment of investments, fair value adjustments, amortisation and impairment thereof, net foreign exchange gains and losses, as well as irregular non-recurring items that occur from time to time and are evaluated for adjustment as and when they occur. The tax effect of these adjustments is also excluded from segment reporting.




•     


In 2021 the Group changed the approach to the presentation and composition of reporting segments in order to better reflect the Group's strategy and the way the business is managed. From the first quarter of 2021 the Group has presented reportable segments based on the consolidation scope as determined in accordance with IFRS, a change from previously applying a pro forma approach to acquisitions, disposals and assets held for sale. 




•     


Segment revenues do not reflect certain other adjustments required when presenting consolidated revenues under IFRS. For example, segment revenue excludes barter revenues and adjustments to defer online gaming, social network and education revenues under IFRS.




 
A reconciliation of group aggregate segment revenue, as presented to the CODM, to IFRS consolidated revenue of the Group for the three months ended September 30, 2021 and 2020 is presented below:
 




RUB millions 


Q3 2021


Q3 2020




Group aggregate segment revenue, as presented to the CODM


30,418


25,645




Adjustments to reconcile revenue as presented to the CODM to consolidated revenue under IFRS:


 


 




Differences in timing of revenue recognition


 (377)


 (1,128)




Consolidated revenue under IFRS


30,041


24,517




 
A reconciliation of group aggregate segment EBITDA, as presented to the CODM, to IFRS consolidated loss before income tax expense of the Group for the three months ended September 30, 2021 and 2020 is presented below:
 




RUB millions 


Q3 2021


Q3 2020




Group aggregate segment EBITDA, as presented to the CODM


8,426


6,582




Adjustments to reconcile EBITDA as presented to the CODM to consolidated loss before income tax expenses under IFRS:


 


 




Differences in timing of revenue recognition


 (377)


 (1,128)




Share-based payment transactions


27


 (447)




Other


12


 (95)




EBITDA


8,088


4,912




Depreciation and amortisation


 (4,562)


 (3,578)




Share of loss of equity accounted associates and joint ventures


 (5,451)


 (4,986)




Finance income


340


76




Finance expenses


 (993)


 (627)




Other non-operating income/(loss)


47


 (15)




Net gain on derivative financial assets and liabilities at fair value through profit or loss


698


3,939




Gain on remeasurement of previously held interest in equity accounted associate


305


 -




Loss on remeasurement of financial instruments


 (116)


 (53)




Net foreign exchange (loss)/gain


 (205)


331




Consolidated loss before income tax expense under IFRS


 (1,849)


 (1)




 
A reconciliation of group aggregate net loss, as presented to the CODM, to IFRS consolidated net loss of the Group for the three months ended September 30, 2021 and 2020 is presented below: 
 




RUB millions 


Q3 2021


Q3 2020




Group aggregate net loss, as presented to CODM


 (1,371)


 (415)




Adjustments to reconcile net loss as presented to the CODM to consolidated net loss under IFRS:


 


 




Differences in timing of revenue recognition


 (377)


 (1,128)




Share-based payment transactions


27


 (447)




Other non-operating income/(loss)


47


 (15)




Net gain on derivative financial assets and liabilities at fair value through profit or loss


698


3,939




Gain on remeasurement of previously held interest in equity accounted associate


305


 -




Loss on remeasurement of financial instruments


 (116)


 (53)




Net foreign exchange (loss)/gain


 (205)


331




Amortisation of fair value adjustments to intangible assets


 (970)


 (800)




Net loss on financial liabilities at amortised cost


 (227)


 -




Differences in recognition of net share in loss of equity accounted associates and joint ventures


 (244)


 (1,856)




Other


 (29)


 (67)




Tax effect of the adjustments


108


249




Consolidated net loss under IFRS


 (2,354)


 (262)




 
A reconciliation of group aggregate segment revenue, as presented to the CODM, to IFRS consolidated revenue of the Group for the nine months ended September 30, 2021 and 2020 is presented below:
 




RUB millions 


9m 2021


9m 2020




Group aggregate segment revenue, as presented to the CODM


88,699


73,394




Adjustments to reconcile revenue as presented to the CODM to consolidated revenue under IFRS:


 


 




Differences in timing of revenue recognition


 (1,235)


 (4,168)




Consolidated revenue under IFRS


87,464


69,226




 
A reconciliation of group aggregate segment EBITDA, as presented to the CODM, to IFRS consolidated loss before income tax expense of the Group for the nine months ended September 30, 2021 and 2020 is presented below:
 




RUB millions 


9m 2021


9m 2020




Group aggregate segment EBITDA, as presented to the CODM


21,159


19,642




Adjustments to reconcile EBITDA as presented to the CODM to consolidated loss before income tax expenses under IFRS:


 


 




Differences in timing of revenue recognition


 (1,235)


 (4,168)




Share-based payment transactions


 (711)


 (1,380)




Expected credit loss on consideration receivable


 (473)


 -




Other


 (18)


 (149)




EBITDA


18,722


13,945




Depreciation and amortisation


 (13,405)


 (10,526)




Share of loss of equity accounted associates and joint ventures


 (14,181)


 (10,327)




Finance income


716


280




Finance expenses


 (2,910)


 (1,868)




Other non-operating income


25


23




Goodwill impairment


 -


 (6,430)




Net gain on derivative financial assets and liabilities at fair value through profit or loss


2,023


3,525




Impairment of equity accounted associates


 -


 (260)




Gain on remeasurement of previously held interest in equity accounted associate


305


46




Loss on remeasurement of financial instruments


 (414)


 (230)




Net foreign exchange gain


7


425




Consolidated loss before income tax expense under IFRS


 (9,112)


 (11,397)




 
A reconciliation of group aggregate net (loss)/profit, as presented to the CODM, to IFRS consolidated net loss of the Group for the nine months ended September 30, 2021 and 2020 is presented below:
 




RUB millions 


9m 2021


9m 2020




Group aggregate net (loss)/profit, as presented to CODM


 (5,299)


674




Adjustments to reconcile net (loss)/profit as presented to the CODM to consolidated net loss under IFRS:


 


 




Differences in timing of revenue recognition


 (1,235)


 (4,168)




Share-based payment transactions


 (711)


 (1,380)




Expected credit loss on consideration receivable


 (473)


 -




Other non-operating income


25


23




Goodwill impairment


 -


 (6,430)




Net gain on derivative financial assets and liabilities at fair value through profit or loss


2,023


3,525




Impairment of equity accounted associates


 -


 (260)




Gain on remeasurement of previously held interest in equity accounted associate


305


46




Loss on remeasurement of financial instruments


 (414)


 (230)




Net foreign exchange gain


7


425




Amortisation of fair value adjustments to intangible assets


 (2,993)


 (2,399)




Net loss on financial liabilities at amortised cost


 (659)


 -




Differences in recognition of net share in loss of equity accounted associates and joint ventures


 (812)


 (2,766)




Other


 (168)


 (165)




Tax effect of the adjustments


616


954




Consolidated net loss under IFRS


 (9,788)


 (12,151)




 


Consolidated IFRS Statement of Financial Position




RUB millions


September 30, 2021 (unaudited)


December 31, 2020 (audited)




ASSETS


 


 




Non-current assets


 


 




Investments in equity accounted associates and joint ventures


48,045


41,948




Goodwill


138,003


135,670




Right-of-use assets


15,330


15,618




Other intangible assets


19,160


19,623




Property and equipment


15,511


11,651




Financial assets at fair value through profit or loss


5,382


2,305




Deferred income tax assets


4,407


2,924




Long-term loans issued


1,298


422




Advance under office lease contracts


460


249




Total non-current assets


247,596


230,410




Current assets


 


 




Trade accounts receivable


16,251


16,707




Prepaid income tax


340


358




Prepaid expenses and advances to suppliers


1,807


853




Loans issued


623


2,441




Inventories


148


98




Other current assets


1,826


1,247




Cash and cash equivalents


30,820


39,297




Total current assets


51,815


61,001




Total assets


299,411


291,411




EQUITY AND LIABILITIES


 


 




Equity attributable to equity holders of the parent


 


 




Issued capital


-


-




Share premium


77,920


77,101




Treasury shares


 (1,044)


 (1,071)




Retained earnings


94,929


103,103




Foreign currency translation reserve


873


1,195




Total equity attributable to equity holders of the parent


172,678


180,328




Non-controlling interests


407


1,663




Total equity


173,085


181,991




Non-current liabilities


 


 




Deferred income tax liabilities


1,509


1,379




Deferred revenue


2,076


1,871




Non-current lease liabilities


12,358


11,338




Non-current financial liabilities at fair value through profit or loss


1,622


3,506




Long-term interest-bearing loans and bonds


51,369


41,497




Other non-current liabilities


265


265




Total non-current liabilities


69,199


59,856




Current liabilities


 


 




Trade accounts payable


12,947


10,923




Income tax payable


2,450


2,673




VAT and other taxes payable


3,422


2,259




Deferred revenue and customer advances


18,766


16,912




Short-term portion of long-term interest-bearing loans


7,060


3,718




Current lease liabilities


3,436


3,861




Other payables, accrued expenses and contingent consideration liabilities


9,046


9,218




Total current liabilities


57,127


49,564




Total liabilities


126,326


109,420




Total equity and liabilities


299,411


291,411




 


Consolidated IFRS Statement of Comprehensive Income




RUB millions


Q3 2021

(unaudited)


Q3 2020

(unaudited)


9m 2021

(unaudited)


9m 2020

(unaudited)




Online advertising


12,229


9,543


33,950


26,230




MMO games


8,888


8,514


27,649


23,527




Community IVAS


4,425


4,109


13,316


13,086




Education technology services


2,173


934


5,924


2,097




Other revenue


2,326


1,417


6,625


4,286




Total revenue


30,041


24,517


87,464


69,226




 


 


 


 


 




Personnel expenses


 (7,589)


 (6,515)


 (23,762)


 (18,653)




Agent/partner fees


 (7,970)


 (7,002)


 (24,430)


 (19,549)




Marketing expenses


 (4,653)


 (4,709)


 (15,827)


 (13,093)




Server hosting expenses


 (225)


 (202)


 (635)


 (567)




Professional services


 (321)


 (238)


 (1,050)


 (637)




Other operating expenses


 (1,195)


 (939)


 (3,038)


 (2,782)




Total operating expenses 


 (21,953)


 (19,605)


 (68,742)


 (55,281)




EBITDA


8,088


4,912


18,722


13,945




 


 


 


 


 




Depreciation and amortisation


 (4,562)


 (3,578)


 (13,405)


 (10,526)




Share of loss of equity accounted associates and joint ventures


 (5,451)


 (4,986)


 (14,181)


 (10,327)




Finance income


340


76


716


280




Finance expenses


 (993)


 (627)


 (2,910)


 (1,868)




Other non-operating income/(loss)


47


 (15)


25


23




Goodwill impairment


-


-


-


 (6,430)




Net gain on financial assets and liabilities at fair value through profit or loss  


698


3,939


2,023


3,525




Impairment of equity accounted associates


-


-


-


 (260)




Gain on remeasurement of previously held interest in equity accounted associate


305


-


305


46




Loss on remeasurement of financial instruments


 (116)


 (53)


 (414)


 (230)




Net foreign exchange (loss)/gain


 (205)


331


7


425




Loss before income tax expense 


 (1,849)


 (1)


 (9,112)


 (11,397)




Income tax expense


 (505)


 (261)


 (676)


 (754)




Net loss


 (2,354)


 (262)


 (9,788)


 (12,151)




 


 


 


 


 




Attributable to:


 


 


 


 




Equity holders of the parent


 (2,096)


 (141)


 (9,424)


 (11,886)




Non-controlling interest


 (258)


 (121)


 (364)


 (265)




Other comprehensive loss that may be reclassified to profit or loss in subsequent periods


 


 


 


 




Exchange differences on translation of foreign operations:


 


 


 


 




Differences arising during the period


202


244


 (322)


128




Total other comprehensive income/(loss), net of tax effect of 0


202


244


 (322)


128




Total comprehensive loss, net of tax


 (2,152)


 (18)


 (10,110)


 (12,023)




Attributable to:


 


 


 


 




Equity holders of the parent


 (1,894)


103


 (9,746)


 (11,758)




Non-controlling interest


 (258)


 (121)


 (364)


 (265)




Loss per share, in RUB:


 


 


 


 




Basic loss per share attributable to ordinary equity holders of the parent


 (9.00)


 (1.00)


 (42.00)


 (55.00)




Diluted loss per share attributable to ordinary equity holders of the parent


n/a


n/a


n/a


n/a






Consolidated IFRS Statement of Cash Flows




RUB millions


Nine months ended

 September 30, 2021


Nine months ended

September 30, 2020




Cash flows from operating activities


 


 




Loss before income tax


 (9,112)


 (11,397)




Adjustments to reconcile loss before income tax to cash flows:


 


 




Depreciation and amortisation


13,405


10,526




Share of loss of equity accounted associates and joint ventures


14,181


10,327




Finance income


 (716)


 (280)




Finance expenses


2,910


1,868




Expected credit loss allowance on trade and other receivables


326


310




Goodwill impairment


-


6,430




Net gain on financial assets and liabilities at fair value through profit or loss


 (2,023)


 (3,525)




Impairment of equity accounted associates


-


260




Gain on remeasurement of previously held interest in equity accounted associates


 (305)


 (46)




Loss on remeasurement of financial instruments 


414


230




Net foreign exchange gain


 (7)


 (425)




Сash settled and equity settled share-based payments


711


1,380




Other non-cash items


25


29




Net loss on disposal of intangible assets


-


11




Impairment of intangible assets


-


56




Change in operating assets and liabilities:


 


 




Decrease in accounts receivable


134


556




(Increase)/decrease in prepaid expenses and advances to suppliers


 (971)


37




(Increase)/decrease in inventories and other assets


 (1,202)


384




Increase in accounts payable and accrued expenses


2,587


102




Decrease/(increase) in other non-current assets


208


 (103)




Increase in deferred revenue and customer advances


1,535


4,213




Increase in financial assets at fair value through profit or loss


 (3,724)


 (375)




Operating cash flows before interest and income taxes 


18,376


20,568




Interest received


36


355




Interest paid


 (2,347)


 (1,868)




Income tax paid


 (2,234)


 (2,535)




Net cash provided by operating activities


13,831


16,520




Cash flows from investing activities


 


 




Cash paid for property and equipment


 (7,331)


 (4,432)




Cash paid for intangible assets


 (4,057)


 (2,399)




Dividends received from equity accounted associates


883


29




Loans issued


 (15,962)


 (408)




Loans collected


139


507




Cash paid for acquisitions of subsidiaries, net of cash acquired


 (1,762)


 (19)




Cash paid for investments in equity accounted associates and joint ventures


 (4,717)


 (6,577)




Net cash used in investing activities


 (32,807)


 (13,299)




Cash flows from financing activities


 


 




Payment of lease liabilities


 (2,714)


 (2,956)




Loans repaid


 (1,960)


 (1,969)




Proceeds from bonds issued


15,000


-




Proceeds from issuance of GDR, net of issuance costs paid


-


15,209




Cash received from disposal of non-controlling interests in subsidiaries


655


-




Cash paid for non-controlling interests in subsidiaries


 (20)


-




Dividends paid by subsidiaries to non-controlling shareholders


 (215)


 (235)




Net cash provided by financing activities


10,746


10,049




Net (decrease)/increase in cash and cash equivalents


 (8,230)


13,270




Effect of exchange differences on cash balances


 (247)


1,578




Cash and cash equivalents at the beginning of the period


39,297


9,825




Cash and cash equivalents at the end of the period


30,820


24,673




 
 
 
 

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