REG-VK Company VK Company Limited unaudited results for Q1 2022
28/04/2022 07:15
============
VK Company (VKCO)
VK Company Limited unaudited results for Q1 2022
28-Apr-2022 / 09:00 MSK
Dissemination of a Regulatory Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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VK Company Limited unaudited results for Q1 2022
April 28, 2022. VK Company Limited (LSE, MOEX: VKCO, hereinafter referred to as "the Company"
and together with its subsidiaries "VK" or "the Group"), today releases unaudited IFRS results
and segment financial information for the three months ended 31 March 2022.
Performance highlights*
Results for the three months ended 31 March 2022:
• Q1 2022 Group Total Adjusted revenue grew 9% YoY to RUB 30,902m. Total IFRS revenue was up
10% YoY to RUB 30,577m.
• Q1 2022 Group Total Adjusted EBITDA declined 51% YoY to RUB 2,961m
• Q1 2022 Group Total Adjusted net loss was RUB (7,370m), compared to Q1 2021 Total Adjusted
net loss of RUB (998m), including the following contributions from key strategic
associates and joint ventures:
◦ O2O JV: RUB (5,104m) in Q1 2022 vs RUB (3,313m) in Q1 2021, including RUB (1,763m)
contribution from Citymobil in Q1 2022 vs RUB (1,278m) in Q1 2021;
◦ AER JV: RUB (828m) in Q1 2022 vs RUB (478m) in Q1 2021;
◦ Uchi Group: RUB 37m in Q1 2022 vs RUB 46m in Q1 2021;
◦ Umskul: RUB 69m in Q1 2022 (the Group acquired the 25% stake in October 2021)
• Q1 2022 Group Total IFRS net loss was RUB (54,907m), compared to Q1 2021 Total IFRS net
loss of RUB (2,457m), including the following contributions from key strategic associates
and joint ventures:
◦ O2O JV: RUB (9,301m) in Q1 2022 vs RUB (3,495m) in Q1 2021, including RUB (5,365m)
contribution from Citymobil in Q1 2022 vs RUB (1,278m)in Q1 2021;
◦ AER JV: RUB (1,228m) in Q1 2022 vs RUB (641m) in Q1 2021;
◦ Uchi Group: RUB (34m) in Q1 2022 vs RUB 46m in Q1 2021;
◦ Umskul: RUB 36m in Q1 2022 (the Group acquired the 25% stake in October 2021)
RUB millions Q1 2021 Q1 2022 YoY, %
Adjusted revenue 28,290 30,902 9%
Revenue 27,735 30,577 10%
Adjusted EBITDA 6,071 2,961 -51%
Adjusted net loss (998) (7,370)
Net loss (2,457) (54,907)
* This release presents Adjusted revenue, Adjusted EBITDA, Adjusted net profit/loss, which are
non-IFRS financial measures.
RUB millions Q1 2021 Q1 2022 YoY, %
Online advertising Revenue 10,471 11,106 6%
Adjustments:
Barter revenues - (15)
Online advertising Adjusted revenue 10,471 11,091 6%
MMO games Revenue 9,399 9,506 1%
Adjustments:
Changes in deferred revenues 25 487
MMO games Adjusted revenue 9,424 9,993 6%
Community IVAS Revenue 4,359 4,893 12%
Adjustments:
Changes in deferred revenues 118 (25)
Community IVAS Adjusted revenue 4,477 4,868 9%
Education Technology services 1,740 2,822 62%
Revenue
Adjustments:
Changes in deferred revenues 412 (113)
Education Technology services 2,152 2,709 26%
Adjusted revenue
Other Revenue 1,766 2,250 27%
Adjustments:
Changes in deferred revenues - (9)
Other Adjusted revenue 1,766 2,241 27%
VK's net debt position excluding lease liabilities at the end of March stood at RUB 54,387m
(RUB 70,689m including lease liabilities). Net Debt (including lease liabilities) to LTM
Adjusted EBITDA was 2.46x as of the end of March.
Due to the ongoing suspension of trading of VK's GDRs on the London Stock Exchange, a
"De-listing Event" for VK convertible bonds has occurred. The Company is developing a proposal
to the bondholders to address the event and possible alternatives to the put option exercise
together with the appointed advisors.
The Company has also announced a number of changes to the Board of Directors as well as the
management team in year-to-date. The Board of Directors was enhanced with additions of a
number of Russian Scientific Community Members, along with appointments of a number of senior
leaders in areas such as AI, Information Security, Investments and Business Development,
Marketing and others within the management team. VK has also added a new position of a
dedicated ESG Manager as a reflection of its ongoing focus on the sustainable development
agenda.
Given the still limited visibility and high level of uncertainty, the Company refrains from
providing forward guidance and outlook at this stage. While there will be no regular results
call at this time, VK welcomes any queries from its stakeholders using the Investor Relations
contact details below and remains available for individual incoming call requests.
In our effort to further enhance our reporting quality, we transformed Group's aggregate
segment financial information previously presented in the form of management (CODM) accounts
starting from Q1 2022 results. In addition to IFRS-based disclosure, we will report adjusted
metrics, which are used in the management decision making process, with a clear transition
between IFRS-based results and adjusted metrics to be provided, including within segmental
disclosure.
In 2022 the Company changed its approach to allocation of corporate service expenses. Previous
period (2021) was restated accordingly for comparison basis with related reference file
available on the VK website: 1 https://vk.company/en/investors/materials/. The Company
analyzed functionality of key services and defined appropriate drivers to allocate expenses
for each service. Previously the Company applied a single driver in allocation of all such
expenses based on the share of each segment in direct costs.
Segmental highlights
Communications and Social segment
The segment's Adjusted revenue was up 9% YoY to RUB 14.6bn in Q1 2022, with advertising
revenue and Community IVAS being the largest revenue components. The segment's IFRS revenue
was up 10% YoY to RUB 14.6bn in Q1 2022. Adjusted EBITDA declined by 13% YoY to RUB 4.9bn in
Q1 (with a margin of 34% vs 42% a year ago) due to higher personnel expenses and investments
into music content.
Communications and Social Segment Performance - Q1 2022
RUB millions Q1 2021 Q1 2022 YoY, %
Revenue 13,301 14,644 10%
Adjustments:
Changes in deferred revenues 117 (34)
Adjusted revenue 13,418 14,610 9%
External revenue 13,362 14,577
Intersegment revenue 56 33
Operating expenses (7,804) (9,701) 24%
Adjusted EBITDA 5,614 4,909 -13%
Adj. EBITDA margin, % 42% 34% -8pp
VKontakte
VKontakte maintains its lead among social networks in Russia with an average MAU of 73.4mn
(+1.3% YoY) and DAU of 47.2mn in Q1. March marked several new records, including Russia MAU of
75.8mn, peak Russia DAU of 50mn, along with global MAU exceeding 100mn for the first time
(100.4mn, +2.4% YoY). As of March, mobile time spent on VKontakte was at 44.2 minutes per day
and as high as 57.1 minutes per day for the most engaged age group, 12-24 y.o*.
The number of VK Mini Apps rose by 43% YoY in March to 42,000, with an average MAU of 41.8mn
in Q1 (+8.4% YoY). In the meantime, in-app ad revenue of mini apps and games on the VK Mini
Apps platform grew by 89% YoY in Q1.
VK Video (rolled out in October 2021) reached an all-time high of 2.45bn daily views in March
with average daily views at 2.11bn for the quarter. In March, VK Video was scaled to Smart
TVs. VKontakte saw growth in video views on the social network itself, with 957mn (+20% YoY)
in average daily views in Q1, peaking at >1.3bn views in March.
VKontakte is seeing an increase in content creation and consumption in Russia. In March, the
number of created communities increased by 68% YoY, while the number of confirmed friend
requests was up 30% YoY. The number of newly registered users also rose by 63% YoY, and news
feed views increased by 16% YoY.
Creators using VK Donut earned over RUB 67mn in Q1 (+25% QoQ), with the number of public pages
using VK Donut up 1.6x YoY and the number of paid community subscribers up 2x YoY in Q1.
The total number of active businesses on VKontakte reached 2.4mn in March.
* Source: Mediascope, March 2022, Russia (all cities, age 12+), Mobile.
Odnoklassniki (OK)
Average Russia MAU stood at 38mn in Q1, with high engagement reflected in more than 8.9bn
virtual gifts, 580mn postcards and 545mn stickers sent during the quarter. The number of new
user registrations in March grew +17.8% YoY and the number of restored profiles grew +30.5%
YoY, driven by the 25-45 y.o. age group, with new users demonstrating above average
engagement.
Moments MAU reached 28.5mn in March (+1.7x YoY). The number of views stood at 450mn (+2.2x
YoY) and reactions at 41mn (+2x YoY) in Q1.
Payments to game developers for advertising in their projects increased by 2.2x YoY in Q1.
Pulse and Relap (recommendation platforms)
In Q1, Pulse DAU stood at 7.6mn (+32% YoY), with MAU of 86.8mn (+40% YoY). Relap DAU stood at
7.4mn (+0.1% YoY) in Q1, with MAU of 100mn (+0.3% YoY). Combined Adjusted revenue reached RUB
559mn in Q1 (+224% YoY). Timespent per active user increased by 17% YoY to 13.5 minutes.
Games segment (represented by MY.GAMES)
MY.GAMES Bookings (Revenue adjusted for changes in deferred revenue or Adjusted revenue)
increased by 5.3% YoY to RUB 11.5bn. ~94% of Bookings came from F2P games, with mobile share
at 76% of the total in Q1 (versus 78% in Q1 2021).
The Games segment Adjusted EBITDA declined to RUB 0.2bn (versus RUB 2.1bn in Q1 2021) due to
heavy user acquisition (UA) investments.
Average MAU stood at 27.9mn in Q1 (+33.6% YoY). The share of monthly paying users declined to
3.8% given the higher exposure to the hyper casual genre.
Games Segment Performance - Q1 2022
RUB millions Q1 2021 Q1 2022 YoY, %
Revenue 10,925 11,061 1%
Adjustments:
Changes in deferred revenues 26 474
Bookings (Adjusted revenue) 10,951 11,535 5%
External revenue 10,927 11,498
Intersegment revenue 24 37
Operating expenses (8,872) (11,314) 28%
Adjusted EBITDA 2,079 221 -89%
Adj. EBITDA margin, % 19% 2% -17pp
EdTech segment (represented by Skillbox Holding Limited), which includes Skillbox, Geekbrains,
Skillfactory, Mentorama, Lerna
Adjusted revenue rose by 27% YoY to RUB 2.7bn in Q1 2022, while the segment's IFRS revenue was
up 62% YoY to RUB 2.8bn. EdTech delivered an Adjusted EBITDA loss of RUB 0.4bn in Q1 compared
to a loss of RUB 0.1bn in Q1 2021 due to weaker demand in March and accrued tax reserves in
1Q.
EdTech Segment Performance - Q1 2022
RUB millions Q1 2021 Q1 2022 YoY, %
Revenue 1,740 2,826 62%
Adjustments:
Changes in deferred revenues 412 (100)
Adjusted revenue 2,152 2,726 27%
External revenue 2,152 2,712
Intersegment revenue - 14
Operating expenses (2,276) (3,151) 38%
Adjusted EBITDA (124) (425) 243%
Adj. EBITDA margin, % -6% -16% -10pp
The platforms reached 10.8mn in combined cumulative registered learners as of the end of
March, up 1.5x YoY, with 0.5mn in new registrations during the quarter. The cumulative number
of paying learners approached 383,000, up 1.9x YoY, with nearly 34,000 of new paying learners
added during Q1.
New Initiatives segment
The segment's Adjusted revenue was up 15% to RUB 2.1bn in Q1, with B2B (including Cloud) being
the main growth contributor. New Initiatives Adjusted EBITDA loss amounted to RUB 1.7bn (vs.
the loss of RUB 1.3bn in Q1 2021), which implies a -78% margin.
New Initiatives Segment Performance - Q1 2022
RUB millions Q1 2021 Q1 2022 YoY, %
Revenue 1,850 2,125 15%
Adjusted revenue 1,850 2,125 15%
External revenue 1,849 2,115
Intersegment revenue 1 10
Operating expenses (3,117) (3,786) 21%
Adjusted EBITDA (1,267) (1,661) 31%
Adj. EBITDA margin, % -68% -78% -10pp
VK Clips (short video)
Daily views of VK Clips averaged 471mn (+111% YoY) in Q1, with a new record of 1bn daily views
reached on 3 April. Content creators posted more than 4mn new Clips in Q1 (+154% YoY). In
March, VK Clips launched a RUB 100mn grant program to support content creators.
Youla (classifieds)
Average MAU grew by 27% YoY reaching 42mn in Q1, stimulated by the ongoing rollout of VK
Classifieds - 196,000 Groups in VKontakte are now able to show relevant listings via VK
Classifieds.
Joint Ventures
O2O JV (equal 45.01% ownership between Sber and VK: Delivery Club 98%, Samokat 85%, r_keeper
99%, Local Kitchen 85%, Citymobil 97%, Citydrive 77%)
GMV of O2O JV reached RUB 56bn (+39% YoY) in Q1, with +84 YoY growth excluding Citymobil*.
Adjusted EBITDA burn stood at minus RUB 6.4bn with e-grocery being the main investment area.
At the same time, continuous focus on operational efficiency resulted in an Adjusted EBITDA
margin of minus 11% (as % of GMV), an improvement versus minus 16% in Q1 2021.
Q1 2021 Q1 2022 YoY, %
GMV, RUB mn 40,596 56,336 39%
Revenue, RUB mn 10,320 22,544 118%
Adjusted EBITDA, RUB mn -6,476 -6,379 -1.5%
Adj.EBITDA margin, as % of GMV -16% -11% 4.6%
Key-asset highlights
Delivery Club generated RUB 4.8bn in revenue (+75% YoY) in Q1, with a 71% YoY growth in orders
(to 30.2mn). 1P orders stood at 67% of total platform orders in Q1 (versus 59% in Q1 2021),
while e-grocery orders amounted to 29% of total (versus 11% in Q1 2021), with a new milestone
of 120,000+ in daily delivered orders from retail stores reached in March. Delivery Club's
partner network reached almost 56,900 in March (+31% YoY), including around 9,500 retail
stores.
As a result of the expanding offer and the ongoing improvements in the service level (with an
average delivery time of 29.6 minutes in Moscow in March), the average frequency increased QoQ
and YoY, with ~5.4 orders/active user in Q1 and the number of active customers up 19% YoY to
5.6mn.
Q1 2021 Q1 2022 YoY, %
Revenue, RUB mn 2,770 4,842 75%
Number of orders, mn 17.6 30.2 71%
Share of egrocery orders 11% 29%
Share of 1P orders 59% 67%
Number of vendors, thousands, 43.3 56.9 31%
end of period
Active customers, mn 4.7 5.6 19%
Average frequency, orders 3.8 5.41 44%
Samokat grew revenue by 2.6x YoY (to RUB 15.3bn) in Q1, with 28.5mn in orders (+2.6x YoY),
including up to 317,000 in daily orders in March. Samokat launched operations in 9 new cities
in Q1, now available across 49 Russian cities with access to ~32% of the local population.
Samokat's dark store base reached 1,092 in March (+2.2x YoY), being among the largest
globally.
The category base continues to expand with an addition of ready-to-eat food and Beauty in
Moscow. The private label SKU base reached 764 and contributed almost 20% of revenue in Q1.
Q1 2021 Q1 2022 YoY, %
GMV, RUB mn 6,872 17,941 161%
Revenue, RUB mn 5,899 15,312 160%
Share of revenue from private label 16% 19%
assortment
Number of orders, mn 11.1 28.5 157%
Number of dark stores 490 1,092 123%
Citydrive grew rides by 1.8x YoY in Q1 through its 9,375 car park with GMV more than doubling
to RUB 1.3bn.
Q1 2021 Q1 2022 YoY, %
GMV, RUB mn 614 1,318 115%
Number of rides, mn 1.6 2.9 83%
Number of cars, end of period 4,386 9,375 114%
*O2O JV has signed legally binding documents on the sale of Citymobil assets on April 15th.
The deal is scheduled to be closed in Q2 2022.
For further information please contact:
Investors
Tatiana Volochkovich
Phone: +7 495 725 6357 extension: 3434
E-mail: 2 t.volochkovich@vk.team
Press
Alina Fedorova
Mobile: +7 916 238 1297
E-mail: 3 alina.fedorova@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 VKontakte,
messaging apps and email service), play video games (via MY.GAMES), get and offer items and
services (via Youla), order food and grocery delivery (via Delivery Club, Samokat and Local
Kitchen), get a ride (with 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.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE
INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (REGULATION 596/2014/EU) AS
IT FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS
AMENDED. UPON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Filing of the Annual Report for FY 2021 and Interim Condensed Consolidated Financial
Statements for Q1 2021
The Group's Annual Report and audited consolidated financial statements for the year ended
December 31, 2021 prepared in accordance with IFRS and accompanied by an independent auditor's
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/vkarfy2021.pdf
The Group's interim condensed consolidated financial statements for the three months ended 31
March 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 http:// vk.company/media/files/vkifrsq12022.pdf.
*
RUB millions Three months ended 31 March
2021 2022 YoY, %
Revenue
Online advertising 10,471 11,106 6.1%
MMO games 9,399 9,506 1.1%
Community IVAS 4,359 4,893 12.3%
Education technology services 1,740 2,822 62.2%
Other revenue 1,766 2,250 27.4%
Total revenue 27,735 30,577 10.2%
Adjustments
Barter revenues - (15) n/m
Changes in deferred revenues 555 340 -38.7%
Total adjusted revenue** 28,290 30,902 9.2%
Operating expenses
Personnel expenses (7,964) (13,792) 73.2%
Agent/partner fees (7,832) (9,021) 15.2%
Marketing expenses (5,799) (7,468) 28.8%
Server hosting expenses (203) (210) 3.4%
Professional services (343) (281) -18.1%
Other operating expenses, excl. D&A (409) (1,344) n/m
Total operating expenses (22,550) (32,116) 42.4%
Adjustments
Share-based payment transactions 306 4,159 n/m
Other 25 16 -36.0%
Adjusted EBITDA** 6,071 2,961 -51.2%
Adjusted EBITDA margin, % 21.5% 9.6%
Net loss (2,457) (54,907) n/m
Net loss margin -8.9% -179.6%
Adjusted Net loss** (998) (7,370) n/m
Adjusted Net loss margin -3.5% -23.8%
(*) The numbers in this table and further in the document may not exactly foot or cross-foot
due to rounding.
(**) Please refer to "Presentation of Segment Financial Information" for reconciliation of
non-IFRS measures (Adj.revenue, Adj EBITDA and Adj. net income/(loss) to IFRS
Operating Segments
In order to assess operational performance and allocate resources, the Chief Executive Officer
of the Group, who is the Group's Chief Operating Decision Maker (CODM), reviews selected items
of each segment's income statement, assuming 100% ownership in all of the Group's key
operating subsidiaries, based on management reporting.
In our effort to further enhance our reporting quality and transparency, the Group's aggregate
segment financial information previously presented in the form of management (CODM) accounts
has been transformed starting from Q1 2022. In addition to IFRS-based disclosure, we have
reported adjusted metrics, which are used in the management decision making process, with a
clear transition between IFRS-based results and adjusted metrics to be provided, including
within segmental disclosure.
Revenue in Segments Performance correspond with revenue according to IFRS. To supplement the
financial information prepared and presented in accordance with IFRS, we have presented the
following non-IFRS financial measures: Adjusted revenue, Adjusted EBITDA, Adjusted Net profit.
The composition of the reporting segments reflects the Group's strategy, the way the business
is managed and units' interconnection within its eco-system. 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 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. 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 a similar regulatory environment.
The Games segment contains online gaming services, including MMO, social and mobile games,
games streaming and platform solutions operated by the Group under the MY.GAMES brand and
within the MY.GAMES ecosystem. It earns substantially all revenues from (i) sale of virtual
in-game items to users (f2p) or sale of digital copies of the games (b2p), (ii) royalties for
games and gaming solutions licensed to third-party online game operators (iii) in-game
advertising and (iv) revenues from streaming services and gaming platform services.
The EdTech segment includes the Group's online education platforms with educational courses
and programs (such as GeekBrains, Skillbox and Skillfactory) and earns substantially all
revenue from individuals for education technology services.
The New initiatives reportable segment represents separate operating segments aggregated in
one reportable segment for their similar nature of newly acquired or newly launched and
dynamically developing businesses. This segment primarily consists of Youla classifieds that
earns 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, that are considered insignificant by the CODM for the purposes of performance
review.
Since Q1 2022 the Group has changed its approach to allocation of corporate services expenses.
The Group has analyzed the functionality of key services and defined appropriate drivers to
allocate expenses of each service. Previously the Group applied a single driver in allocation
of all corporate services expenses, based on the share of each segment in direct costs.
Non-allocated items - Allocations exclude services that are mostly related to general group
issues, as well as expenses that cannot be tied to a particular BU, such as PR, Investor
Relations, Government Relations, and other services.
Operating Segments Performance - Q1 2022
RUB millions Communications Games EdTech New Non-allocated Eliminations Group
and Social initiatives
Revenue 14,644 11,061 2,826 2,125 15 (94) 30,577
Adjustments
Barter - - - - (15) - (15)
revenues
Changes in
deferred (34) 474 (100) - - - 340
revenues
Adjusted 14,610 11,535 2,726 2,125 - (94) 30,902
revenue
External 14,577 11,498 2,712 2,115 - - 30,902
revenue
Intersegment 33 37 14 10 - (94) -
revenue
Total
operating (9,701) (11,314) (3,151) (3,786) (4,258) 94 (32,116)
expenses
Adjustments
Share-based
payment - - - - 4,159 - 4,159
transactions
Other - - - - 16 - 16
Adjusted 4,909 221 (425) (1,661) (83) - 2,961
EBITDA
Adjusted
EBITDA 33.6% 1.9% -15.6% -78.2% - - 9.6%
margin, %
Group Adjusted net loss (7,370)
Adjusted profit margin, % -23.8%
Including Share of loss of equity
accounted associates and joint
ventures:
Aliexpress (828)
Russia JV
O2O JV (5,104)
Umskul 69
associate
Uchi.ru 37
associate
Other (41)
Operating Segments Performance - Q1 2021
RUB millions Communications Games EdTech New Non-allocated Eliminations Group
and Social initiatives
Revenue 13,301 10,925 1,740 1,850 0 (81) 27,735
Adjustments
Changes in
deferred 117 26 412 - - - 555
revenues
Adjusted 13,418 10,951 2,152 1,850 - (81) 28,290
revenue
External 13,362 10,927 2,152 1,849 - - 28,290
revenue
Intersegment 56 24 - 1 - (81) -
revenue
Total
operating (7,804) (8,872) (2,276) (3,117) (562) 81 (22,550)
expenses
Adjustments
Share-based
payment - - - - 306 - 306
transactions
Other - - - - 25 - 25
Adjusted 5,614 2,079 (124) (1,267) (231) - 6,071
EBITDA
Adjusted
EBITDA 41.8% 19.0% -5.8% -68.5% 0.0% 21.5%
margin, %
Group Adjusted net loss (998)
Net Adjusted profit margin, -3.5%
%
Including Share of loss of equity
accounted associates and joint
ventures:
Aliexpress (478)
Russia JV
O2O JV (3,313)
Uchi.ru 46
associate
Other 801
Liquidity
As of 31 March 2022, the Group had RUB 19,086m of cash and RUB 73,473m of debt outstanding
(excluding lease liabilities), therefore the Group's net debt position was RUB 54,387 million.
Presentation of 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.
• 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 adjusted EBITDA to IFRS consolidated loss before income tax expense
of the Group for the three months ended 31 March 2021 and 2022 is presented below:
RUB millions Q1 2022 Q1 2021
Group Adjusted EBITDA 2,961 6,071
Barter revenue 15 -
Changes in deferred revenues (340) (555)
Share-based payment transactions (4,159) (306)
Other (16) (25)
Depreciation and amortisation (5,272) (4,430)
Impairment of intangible assets (1,009) -
Share of loss of equity accounted associates and joint ventures (10,568) (3,289)
Finance income 256 130
Finance expenses (6,757) (962)
Other non-operating (loss)/income (85) 39
Goodwill impairment (9,256) -
Net (loss)/gain on derivative financial assets and liabilities at fair (4,440) 1,299
value through profit or loss
Impairment of equity accounted associates and joint ventures (12,825) -
Loss on remeasurement of financial instruments (150) (174)
Expected credit loss allowance on restricted cash (3,736) -
Net foreign exchange loss (1,724) (600)
Consolidated loss before income tax expense under IFRS (57,105) (2,802)
A reconciliation of Group adjusted net loss to IFRS consolidated net loss of the Group for the
three months ended 31 March 2021 and 2022 is presented below:
RUB millions Q1 2022 Q1 2021
Group Adjusted net loss (7,370) (998)
Changes in deferred revenues (340) (555)
Share-based payment transactions (4,159) (306)
Other non-operating (loss)/income (85) 39
Goodwill impairment (9,256) -
Impairment of intangible assets (1,009) -
Net (loss)/gain on financial assets and liabilities at fair value through (4,440) 1,299
profit or loss
Impairment of equity accounted associates and joint ventures (12,825) -
Loss on remeasurement of financial instruments (150) (174)
Expected credit loss allowance on restricted cash (3,736) -
Net foreign exchange loss (1,724) (600)
Amortisation of fair value adjustments to intangible assets (841) (1,006)
Net loss on financial liabilities at amortised cost (5,626) (216)
Differences in recognition of net share in loss of equity accounted (4,701) (345)
associates and joint ventures
Other (38) (119)
Tax effect of the adjustments 1,393 524
Consolidated net loss under IFRS (54,907) (2,457)
Interim Condensed Consolidated IFRS Statement of Financial Position
RUB millions March 31, December 31,
2022 2021
ASSETS
Non-current assets
Investments in equity accounted associates and joint ventures 33,935 48,921
Goodwill 129,344 138,600
Right-of-use assets 15,110 14,843
Other intangible assets 17,238 18,324
Property and equipment 18,035 15,798
Financial assets at fair value through profit or loss 6,749 6,903
Deferred income tax assets 6,688 5,157
Long-term loans issued 64 69
Advance under office lease contracts 461 462
Total non-current assets 227,624 249,077
Current assets
Trade accounts receivable 16,771 20,688
Prepaid income tax 841 359
Prepaid expenses and advances to suppliers 3,167 2,353
Loans issued 107 109
Inventories 143 157
Other current assets 2,117 1,445
Cash and cash equivalents 19,086 23,737
Total current assets 42,232 48,848
Total assets 269,856 297,925
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Issued capital - -
Share premium 80,616 79,397
Treasury shares (1,039) (1,044)
Retained earnings 35,279 89,985
Foreign currency translation reserve 5,182 1,578
Total equity attributable to equity holders of the parent 120,038 169,916
Non-controlling interests 109 346
Total equity 120,147 170,262
Non-current liabilities
Deferred income tax liabilities 1,060 1,228
Deferred revenue 1,489 1,455
Non-current lease liabilities 10,915 11,327
Non-current financial liabilities at fair value through profit or loss 1,015 879
Long-term interest-bearing loans and bonds 23,410 50,810
Other non-current liabilities 579 522
Total non-current liabilities 38,468 66,221
Current liabilities
Trade accounts payable 15,650 14,541
Income tax payable 2,857 3,208
VAT and other taxes payable 5,079 4,391
Deferred revenue and customer advances 18,831 17,980
Short-term portion of long-term interest-bearing loans and bonds 50,063 7,078
Current lease liabilities 5,387 4,121
Current financial liabilities at fair value through profit or loss 3,829 -
Other payables and accrued expenses 9,545 10,123
Total current liabilities 111,241 61,442
Total liabilities 149,709 127,663
Total equity and liabilities 269,856 297,925
Interim Condensed Consolidated IFRS Statement of Comprehensive Income
RUB millions Three months ended March 31,
2022 2021
Online advertising 11,106 10,471
MMO games 9,506 9,399
Community IVAS 4,893 4,359
Education technology services 2,822 1,740
Other revenue 2,250 1,766
Total revenue 30,577 27,735
Personnel expenses (13,792) (7,964)
Agent/partner fees (9,021) (7,832)
Marketing expenses (7,468) (5,799)
Server hosting expenses (210) (203)
Professional services (281) (343)
Other operating expenses (1,344) (409)
Total operating expenses (32,116) (22,550)
Depreciation and amortisation (5,272) (4,430)
Impairment of intangible assets (1,009) -
Share of loss of equity accounted associates and joint ventures (10,568) (3,289)
Finance income 256 130
Finance expenses (6,757) (962)
Other non-operating (loss)/gain (85) 39
Goodwill impairment (9,256) -
Net (loss)/gain on financial assets and liabilities at fair value (4,440) 1,299
through profit or loss
Impairment of equity accounted associates and joint ventures (12,825) -
Loss on remeasurement of financial instruments (150) (174)
Expected credit loss allowance on restricted cash (3,736) -
Net foreign exchange loss (1,724) (600)
Loss before income tax expense (57,105) (2,802)
Income tax benefit 2,198 345
Net loss (54,907) (2,457)
Other comprehensive income
Other comprehensive income that may be reclassified to profit or
loss in subsequent periods
Effect of translation to presentation currency of Group's joint 1,002 229
ventures
Exchange difference on translation of foreign operations 2,602 387
Total other comprehensive income that may be reclassified to 3,604 616
profit or loss in subsequent periods
Total other comprehensive income net of tax effect of 0 3,604 616
Total comprehensive loss, net of tax (51,303) (1,841)
Net loss, attributable to:
Equity holders of the parent (54,706) (2,465)
Non-controlling interests (201) 8
Total comprehensive loss, net of tax, attributable to:
Equity holders of the parent (51,102) (1,849)
Non-controlling interests (201) 8
Loss per share, in RUB:
Basic loss per share attributable to ordinary equity holders of (242) (11)
the parent
Diluted earnings per share attributable to ordinary equity n/a n/a
holders of the parent
Interim Condensed Consolidated IFRS Statement of Cash Flows
RUB millions Three months ended Three months ended
March 31, 2022 March 31, 2021
Cash flows from operating activities
Loss before income tax (57,105) (2,802)
Adjustments to reconcile loss before income tax to cash
flows:
Depreciation and amortisation 5,272 4,430
Impairment of intangible assets 1,009 -
Share of loss of equity accounted associates and joint 10,568 3,289
ventures
Finance income (256) (130)
Finance expenses 6,757 962
Expected credit loss allowance on trade receivables 247 122
Expected credit loss allowance on restricted cash 3,736 -
Goodwill impairment 9,256 -
Net loss/(gain) on financial assets and liabilities at 4,440 (1,299)
fair value through profit or loss
Impairment of equity accounted associates and joint 12,825 -
ventures
Loss on remeasurement of financial instruments 150 174
Net foreign exchange loss 1,724 600
Сash settled and equity settled share-based payments 1,224 306
Other non-cash items 88 (26)
Change in operating assets and liabilities:
Decrease in accounts receivable 4,785 1,464
(Increase)/decrease in prepaid expenses and advances to (884) 28
suppliers
Increase in inventories and other assets (83) (1,277)
Increase/(decrease) in accounts payable and accrued 8 (55)
expenses
Decrease in other non-current assets 1 271
Increase in deferred revenue and customer advances 885 670
Increase in financial assets at fair value through (464) (1,426)
profit or loss
Operating cash flows before interest and income taxes 4,183 5,301
Interest received 168 51
Interest paid (1,579) (842)
Income tax paid (334) (617)
Net cash provided by operating activities 2,438 3,893
Cash flows from investing activities
Cash paid for property and equipment (4,255) (1,887)
Cash paid for intangible assets (1,370) (819)
Dividends received from equity accounted associates - 461
Loans issued (5,160) (3,836)
Loans collected 75 -
Cash paid for acquisitions of subsidiaries, net of cash - (192)
acquired
Cash paid for investments in equity accounted associates (2,000) (103)
and joint ventures
Net cash used in investing activities (12,710) (6,376)
Cash flows from financing activities
Payment of lease liabilities (1,115) (956)
Loans received 10,014 -
Loans repaid (1,767) (653)
Cash paid for non-controlling interests in subsidiaries - (24)
Dividends paid by subsidiaries to non-controlling (36) (53)
shareholders
Net cash provided by/(used in) financing activities 7,096 (1,686)
Net decrease in cash and cash equivalents (3,176) (4,169)
Effect of exchange differences on cash balances 2,261 618
Change in expected credit loss allowance on restricted (3,736) -
cash
Cash and cash equivalents at the beginning of the period 23,737 39,297
Cash and cash equivalents at the end of the period 19,086 35,746
══════════════════════════════════════════════════════════════════════════════════════════════
ISIN: US5603172082
Category Code: QRF
TIDM: VKCO
LEI Code: 2138009IXUP41SPL5B50
Sequence No.: 158116
EQS News ID: 1337609
End of Announcement EQS News Service
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