Nebius Group NV (YNDX) 2014 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Yandex first-quarter 2014 earnings call. My name is Maddy and I will be your coordinator for today's conference. (Operator Instructions). I will now hand you over to Mr. Gregory Abovsky, Vice President of Investor Relations to begin today's conference. Thank you.

-- (In progress) quarter 2014 earnings call. We distributed our earnings release earlier today. You can find the copy of the press release on the Company's Investor Relations website, as well as on newswire services.

Today we have on the call our CEO Arkady Volozh, and our CFO Alexander Shulgin. Our call will be recorded. The recording will be available on Yandex's IR website in a few hours. We've put together a few supplementary slides, which are currently available on our IR website.

Now, I will quickly take you through the Safe Harbor statement. Various remarks that we make during this call about our future expectations, plans and prospects constitute forward-looking statements. Our actual results may differ materially from those indicated or suggested by these forward-looking statements as a result of various important factors, including those discussed in the risk factor section of our Annual Report on Form 20-F dated April 4, 2014, which is on file with the SEC and is available online.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Although we may elect to update those forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

During this call, we'll be referring to certain non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with US GAAP. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today.

And now I'll turn the call over to Arkady, who will give you an update of our Q1 operational activities.

Thank you, Greg, and thank you all for joining us for our first quarter earnings conference call. The Company continues its strong performance, demonstrating solid growth of its online advertising business and making investments into future growth. I would like to highlight three areas today. One, we continue to make important steps forward on mobile. Two, we are making good progress on improving our core advertising technologies. And three, we're investing in talent development together with Russia's Higher School of Economics.

And now in more detail. Traditionally I begin with a couple of words about our search share. According to LiveInternet our overall share of searches in Russia across all platforms grew 30 basis points, from 61.6% a year ago to 61.9% in Q1 2013. Our search share in Ukraine also grew from 28% to more than 30% this year. Search share on mobile devices also grew. iOS added 2% with iPad being the major contributor to this share gain and Android added 2% and we currently estimate our share on Androids at 54%.

On mobile in Q1 2013 we released Yandex. Kit, a set of software that allows OEMs to differentiate their products with their own app store, home screen, dialer, browser, map library and cloud services. The first two devices with the Yandex. Kit went to sale early in April and they are Huawei Honor 3 and Explay Flame.

We believe that Yandex. Kit is a great product and is well positioned to gain popularity among users and device revenues. Another important partnership that we announced in Q1 was with Nokia. Nokia is a very popular brand in Russia with approximately 9% smartphone unit share. Now its X-series smartphones which are compatible with Android apps are shipped into Russia and Belarus with a number of Yandex services including search and app store pre-installed.

In March, we acquired an Israeli startup called KitLocate. KitLocate provides geolocation data to mobile applications without relying on battery draining embedded GPS systems. We believe this technology is very important for those services that track changes in the user location. KitLocate already has its clientele across different geographies and we believe that these technologies will be complementary to many of our services including mobile (inaudible).

Let me now turn to changes we are making to our core advertising technologies. As we invest in modernizing Yandex. Direct, we are focusing on making it even better for our large scale advertisers. In Q1, we introduced multi-currency billing. As of today, we offer a choice of seven currencies, including Russian rubles, Turkish liras, euros, dollars, Swiss francs and tenge. Each currency has its own minimum bid and is tied to the exchange rate of Central Bank of Russia. This functionality is extremely useful for our overseas advertisers, making billing easier and more transparent for them.

We also rolled a common account which allows an advertiser to run multiple campaigns out of a single Yandex. Direct account. This allows advertisers to set up specific rules for automatic distribution of money among various ad campaigns, optimizing their ad spend with predetermined set of rules and strategies.

Also advertisers on Yandex. Direct are now able to upload more than 10 times as many keyword objects and perform real-time AV testing on live queries. And we will continue to rollout further improvements to core advertising technology [TAC] over the course of 2014.

And now on a totally different topic, investment in talent. You all know that Russia has a strong education tradition in math and sciences. And to facilitate the preparation of high quality computer science specialists, we announced the opening of computer science faculty at the Higher School of Economics. The computer science department will start accepting students this fall in two principal areas, applied mathematics and software engineering. We are excited to be a part of this prestigious institution and we believe it is important to invest in talent as it is the main asset of any innovative company and for Yandex in particular.

And finally, I'm pleased to reiterate our previously issued revenues outlook for this year. We continue to expect our revenues to grow 25% to 30% in 2014 on a like-for-like basis.

And with this, let me pass the mic to Alex Shulgin, our CFO.

Thank you, Arkady, and thank you all for joining us today. In the first quarter of 2014, Yandex's consolidated revenues increased 36% year on year to RUB10.9 billion. Excluding the impact of Yandex. Money from Q1 2013, our total revenues grew 39%. Text-based advertising accounted for 92% of total revenues in Q1 and demonstrated a healthy growth of 41% year on year.

Yandex owned and operated websites constituted 68% of total revenues and grew 26% year on year, driven by changes made to core advertising technologies. Our text-based advertising network grew 104% year on year. This growth was driven by our partnership with Mail.ru started on July 1, 2013. As a result, contribution of ad network revenues to total revenues grew from 16% in Q1 2013 to 24% in Q1 2014, and 100 basis points sequentially.

Display advertising accounted for 7% of total revenues. Starting from Q1 2014, we separate display advertising into revenues generated from Yandex websites and from the ad network. In Q1, owned and operated display grew 4%. Display ad network revenues grew to RUB76 million from RUB3 million a year ago. All in all, display revenue grew 16% year on year.

Other revenues tripled but still comprise less than 1% of the total revenues. Growth was primarily driven by revenues received from Yandex. Taxi. Traffic acquisition costs related to the partner advertising network grew 118% at a nearly similar rate as our network revenues overall. Partner TAC as percent of partner revenue was 67% in Q1 2014; that is over 430 basis points reduction compared to 71% in Q4 2013. The reduction of partner TAC as a percent of revenue compared to Q4 2013 is due to the effort of our sales team targeted at decreasing revenue share and percentage.

Important to note that partner TAC represents revenue sharing for both display and text-based partner revenues.

Distribution TAC grew 61%, faster than our revenues from owned and operated websites. The increase in distriubtion TAC as a percentage of O&O revenue was about 220 basis points year on year and 50 basis points sequentially. Growth of distribution TAC in Q1 is explained by the increased activity of already existing distribution partners as well as by addition of the new partners.

While distribution TAC again increased significantly as percentage of O&O revenue, we have taken a number of steps to address the amount of TAC we pay out and this actions will begin to bear fruit later in 2014. Total TAC increased 97% year on year.

Text-based revenue was driven by the growth in paid clicks, which increased 49% year over year. And once again, considerable growth was demonstrated both on owned and operated and on the ad network. Growth in the number of paid clicks on the owned websites was driven by CTR improvements and by changes in ad layout. Growth in the number of paid clicks on the network front was in large part driven by Mail.ru. Cost per click decreased 5% year on year.

Now turning to our cost structure, our total operating cost and expenses excluding traffic acquisition cost and depreciation and amortization expense grew 35% in Q1. Excluding stock-based compensation expense, our cost grew 33%. I would like to note that from Q4 2011 until Q4 2013 we were paying contingent compensations related to the acquisition of SPB Software. This expense was fully paid out in Q4 2013. Starting from Q2 2014, we will be paying contingent compensation that related to our acquisition of KitLocate in March 2013.

Personnel cost remained our largest cost item. In this past quarter, we added 234 employees to our headcount. The rate of growth has substantially decreased given that in Q4 2013 we added 493 employees.

Employees were added mainly to product development to support our key services and initiatives. As a result, our personnel cost increased 49% year over year in Q1 and was 22% of total revenues. To remind you, personnel cost as a percent of revenues have a well-pronounced seasonality. It is explained with revenue to cost ratio that is typically high in Q1 as well as with aggressive social tax scale, which provides for a use tax rate when cumulative annual salary of an employee exceeds RUB624,000.

And this provides for this proportionally high social tax in personnel costs in Q1 with gradual decrease throughout the next quarters. All in all, we confirm our intention to keep personnel cost within 20% of total revenues on an annual basis.

Our depreciation and amortization expense for the quarter increased 22% and our adjusted EBITDA grew 15% year on year and our adjusted EBITDA margin was 37%.

The decline in margin on a year-over-year basis was the result of an increase in partner and distribution TAC as well as growth of our personnel cost. This quarter the impact from foreign exchange effect was RUB647 million gain related to dollar denominated assets and liabilities on our balance sheet as the ruble weakened from RUB32.7 as of December 31, 2013 to RUB35.7 on March 31, 2014.

Our effective income tax rate was 24.7% in Q1 on US GAAP basis. This is significantly higher than the effective tax rate of previous quarters because of deferred tax accrual on 50% of unlimited earnings that may be transferred to Yandex N.V. from Yandex LLC.

The Company plans to gradually accumulate a US dollar balance in the Netherlands to support future M&A deals and the repayment of the convertible loan due in 2018. Adjusted net income grew 6% and adjusted net income margin was 23.4%.

Our Q1 CapEx was RUB2.1 billion or 19% of Q1 revenue as expected. As we warned previously, CapEx is not spread evenly across quarters and some capital expenditures shifted from Q4 last year to Q1 this year.

As of March 31, 2014, we repurchased 11.6 million shares within our share repurchase program, authorized for up to 15 million shares, and ended the quarter with $1.4 billion and cash and equivalents.

And now, turning to the full-year revenue guidance. On a like-for-like basis, excluding Yandex. Money revenues from 2013 and based on the current trends within our business, we reaffirm our previously announced guidance and expect revenues to grow from 25% to 30%.

Now, I will turn the call over to the operator for the Q&A session.

(Operator Instructions).

Lloyd Walmsley, Deutsche Bank.

Clearly, the revenue numbers you are putting up suggest the business remains quite healthy. Curious, if you are looking out, have you seen any shifts in ad budgets in general with a kind of slowing macro environment in Russia? And then specifically can you talk about what you are seeing from some of your largest customers as you integrate some of these new features like multi-currency bidding, common account? That would be great.

Hi Lloyd. This is Alexander speaking. Thank you for the question. So talking about macro, the growth rate of the Russian GDP is projected to be below 1% in this quarter, in Q1 2014, and the Ministry of Economy projects the full-year GDP growth to be at 0.5%, which is substantial decrease compared to previous years. So clearly the trading environment becomes more challenging over the last few quarters.

But coming back to our business, text-based advertising, which accounts for 92% of our total revenues, continues to demonstrate healthy trends, which is why we are comfortable with reiterating our revenue guidance range.

When we look at the industry mix in text-based advertising, we saw a small reduction in automobile industry spend and a small pickup in finance and insurance, while all other industries are largely stable year over year. It's also important to note that revenues coming from foreign clients based outside of Russia grow faster than from the local customers since foreign customers continue to see interest in the Russian market.

Talking about largest customers, in text-based it remains quite stable. In display, as you can see, the growth rate has slowed down compared to Q4 since display advertising is much more volatile to economic downturns or even perception of economic downturns. And big customers in display are willing to cut back on their advertising without any short-term impact on their sales. So just to summarize, we remain healthy in contextual advertising and display is weaker.

And just as a follow-up, have you seen a lot of your customers take advantage of the ability to upload more than 10 times the number of keywords and integrate multiple campaigns into one account? Is that something you're seeing actively or expect to see a lot of adoption there and what kind of impact do you think that can have?

Absolutely. Actually, this feature was implemented based on request from our biggest advertisers, local and national ones together. I think it will be difficult to see immediate impact of this implementation in our revenue trends, but it's definitely helping our biggest customers to run better and more effective campaigns.

Thank you.

Edward Hill-Wood, Morgan Stanley.

I have a question on OpEx and your margins and just judging from the comments you've been making on the call on the pace of hiring, maybe some commentary around the distribution TAC and social taxes. It seems to imply that you would expect a meaningful improvement within the margin as we go through the year. I was just wondering if you can give us some commentary around how -- and some confidence that that some of the initiatives you're putting through particularly in the distribution TAC side will aid the margin, the relative margin progression as we go through this year and whether or not you'd still believe that the Company can deliver margins within sort of one or two points of 2013 still at this point please?

Sure Ed. Thanks for the question. That's again Alexander speaking. So talking about Q1 EBITDA margin, it was negatively impacted by increase in personnel costs and TAC both in partner network and distribution front.

Partner TAC is impacted only by Mail.ru deal, which [optically] reduced our margin. On distribution TAC, we saw some increase compared to Q4 2013, but our distribution team has already taken steps to optimize the mix of distribution partners and revenue sharing terms. And we expect to start seeing the effect of these actions later in this year hopefully starting from Q2.

On personnel costs, the increase was driven primarily by our hirings made in the second half of 2013 in product development and commercial teams. But on a sequential basis, our cash operating expenses increased only 4% and this is solely because of the social tax which is frontloaded in Q1.

Compared to Q4 last year, we reduced our hiring rate by more than half and intend to keep our personnel costs to revenue ratio within 20% as we discussed.

So moving on to full-year adjusted EBITDA margin, our view that we expect the adjusted EBITDA margin to be around 100 to 150 basis points lower than it was in 2013 full-year given that the overall trading environment has become incrementally more challenging over the last few months.

In a more difficult trading environment, we will likely experience lower revenue growth and given that we have many fixed costs in our business and we're committed to keep investing in new products and services, EBITDA margin could be down from 200 to 300 basis points compared to 2013 if we come in near the lower end of our revenue guidance range.

Okay, that's extremely helpful. Could I just have a follow-up on paid click growth and CPC? You've given some commentary around paid click growth of the business. I was wondering if you could give the similar commentary over the O&O business which you provided in the last previous two quarters, please, as well just to see how the trends are there.

Yes. The growth rates of paid clicks was quite close between partner network and O&O. In O&O, it was driven by improvements in secure and technology and also ads layout. In the network, growth was driven primarily by Mail.ru deal.

Brilliant. Thank you very much.

Olga Bystrova, Credit Suisse Europe.

Just a follow-up maybe on the question macro impact. Growth in the number of advertisers has slowed a little bit in the first quarter. The first quarter typically seems to be seasonally weaker. But is that actually an indication of the client activity that you're seeing or -- and do you think or do you see anything worsening already sort of in the beginning of April now that we are at the end of the month?

And a related question I guess, do you see some more cautious view on the market activity from small and medium enterprises and particularly in the regions? Thank you.

Hi Olga. This is Alexander speaking again. Thanks for the question. So on customer growth, the growth rate in Q1 last year was also slowing down compared to Q4, so we attribute it solely due to seasonality, because, as you know, Q1 is weak from the sales and advertising perspective in Russia.

Given that we see strong and robust revenue growth trend in contextual advertising network -- I mean in text-based advertising overall, I would assume that activity of small and medium enterprises remains high as usual because text-based advertising for these customers is usually a very important sales channel.

So as long as they continue to have demand from their customers, they continue to spend on text-based advertising especially on search.

Okay, thank you. And the regional behavior has it changed at all from fourth quarter last year?

No material changes in the trends. Regions continue to grow faster than Moscow, but we see solid revenue growth trend in Moscow as well.

Okay, thank you. And also would you mind --sort of a related question, would you mind giving maybe a breakdown of the sector exposure? You mentioned that auto has slowed down a little bit, finances has improved. What are the percentages that auto sector contributes to your revenues and maybe a couple of other sectors that -- to which you have the biggest exposure?

Well, it's quite evenly spread between multiple and very different industries. I could say that no single sector accounts for more than 15% of the total revenues. And it's, as I said, very well spread out between different industries, starting from, say, partner and consumer goods to B2B sector.

Okay. Thank you very much.

Anna Lepetukhina, Sberbank.

Actually, I just wanted to continue the topic of macroeconomic influence on your revenues growth. Can you probably clarify, I mean, how dependent you on large customers? Mainly you have small and medium customers, but maybe you can break down on what percentage top 10% advertisers account in your revenues?

Also, I mean recently Video International assumed that contextual advertising is growing due to inflow of money that before the advertising market hasn't seen. Do you agree with this and do you see inflow of money from small companies that previously spent money on something else?

And also my third question, can you please explain what is the reason for the decline in TAC related to partner networks as a percentage of revenues because it declined quarter on quarter? Can you please give some color? Thank you.

Hi Anna. This is Alexander again. Thank you for three questions. So talking about our exposure to large customers, as you know, our display advertising revenue accounts for 7% and it comes primarily from big multinational corporations as well as big local companies.

In text-based, it's very well spread out and no single customer accounts for more than 1% of our total revenues. And given that we have 280,000 active customers, you can assume that, say, each one of them is relatively -- doesn't account for a big share of our revenues and comes from very different industries and different regions.

Talking about partner TAC, the decrease in partner TAC as a percentage of partner network revenues is the result of activity of our commercial team by optimizing the revenue sharing terms.

And can you probably give some example if possible?

Hey, this is Greg speaking. So basically what we've done is we've tried to optimize our mix of partner TAC. For certain partners where we were able to negotiate better deals for ourselves, we have done so and we have done that for a very large portion of our overall partner network.

We obviously have similar efforts underway to do the same thing in our distribution front, as Alexander mentioned, although those efforts are still in process. Some of them have already taken place but will only start to show up in the numbers in Q2 and later.

Thank you.

Anastasia Obukhova, VTB Capital.

Can you please elaborate more on your Yandex.Market initiative if possible please [with respect to] the number of shops which switched to this scheme or do you have any results from your initiatives regarding CPA?

And if possible, the second question, the contribution -- you mentioned that -- Arkady mentioned that you already concluded some agreements with platforms and providing your operating system, et cetera. So where do you think your other revenue share as a percentage of total revenues by the end of 2014 and maybe in the 2015 as well? Thank you.

Hi. This is Arkady. I try not to mention the numbers since the project in full is planned to be launched later this year as we promised. Now we see a growing number of customers of CPA, cost per action. It is growing.

We see a lot of customers switch to MultiShip, the company which we acquired and are making a part of this project. MultiShip allows to track delivery for end users and now we have more than 400 Yandex. Market clients already participating in MultiShip. And just yesterday we launched the CPA bidding for beta testing for our first partners.

So all in all, we still continue to develop the product. Now the full launch is scheduled later for this year as we promised last quarter.

And regarding other revenues -- I mean other than from Yandex.Market, Yandex.Direct, other than kind of existing ones, so maybe from your B2B kind of agreements?

We are now working on a number of out of advertising models. The one which we usually mention, as you know, is taxi and our Yandex. Taxi business is growing very well. It's the most popular taxi application here, at least six to eight times larger than any other application on the market. We are also experimenting with other models, which we are not ready to report now, but hope to report in the later quarters.

Thank you.

Ulyana Lenvalskaya, UBS.

My first question will be on the cash pile. Given how big it is now, almost to $1.5 billion and this is, say, 15% of the market cap, can you please talk a bit on maybe opportunities or acquisitions, potential acquisitions you might see or opportunities for dividends?

Hi Ulyana. This is Greg. I think our policy and outlook with respect to our shareholder returns policy is unchanged. We continue to prefer share buybacks as an optimal way of returning cash to shareholders at this point, although we continue to evaluate all sorts of different ways of returning cash to shareholders.

In terms of M&A, I think our policy very much remains one of tuck-in acquisitions, where we are adding talented teams or interesting technologies and products to our core stack. The acquisition of KitLocate which was fairly small but significant we think in terms of capabilities that it does add to search and advertising as well on mobile devices. We are quite excited about the technology and we are working on integrating that into our mobile search product. I think you will see more of the same in terms of the types of acquisitions we are making.

Okay, thank you. And my second question will be about the legislation changes. There were some news about the requirements to store some sizable amount of data. Could you please comment if this should lead for higher CapEx for Yandex in the coming years or you have enough data centers to store this data according to the law?

Hi Ulyana. This is Alexander speaking. So the law was just recently introduced, so we are evaluating the impact of this law on our CapEx. What I could say at this point in time that based on our current exchange rate, we expect our full-year CapEx to be between 14% to 16% of revenue, close to the upper range of the guidance. And this impact of the new law is to be evaluated and reported back in Q3.

Thank you.

Alexander Vengranovich, Otkritie Capital.

First a very traditional question, can you share the percentage of revenue generated by mobile devices this quarter and what share of search requests was also generated by mobile devices?

And the second question, have you already seen the impact on your market share of search requests on the back of the introduction of Yandex. Kit and agreement with Nokia? And if not, do you expect to demonstrate some visible impact on your search market share in the upcoming quarters? Thank you.

Yes Alexander. It's Arkady talking. We see a continued growth of the share of mobile queries. We now reached more than 18% of searches coming from mobile devices, which is 2 percentage points up from Q4. And we now have 13% of our revenues coming from mobile, which is up 1% from Q4.

On the Yandex. Kit, as I already mentioned, we have the first two models launched with it. They have been launched just a couple of weeks ago in Q2. We don't know the results of sales yet and we just co-launched the Nokia devices and we hope that that will be a mass market product, Nokia X, the new devices all powered by Yandex. So we hope very much that these kind of Android devices will bring us some more market share.

As I mentioned again, our market share in Android is now more than half, 54%, which is up from 52% last quarter. And we are also growing Apple as well because of Yandex browser, distribution and so on.

Okay. And just a quick follow-up on Yandex. Kit, so I've seen there was a big spend in Barcelona of Yandex promoting -- fully like devoted to Yandex. Kit actually. Did you get like any, I would say, big interest from the devices producers in that product? So what's your, I would say, initial thoughts? And I understand that you have already two products, two devices launched, should be working on it. But should we expect like any additional big deals coming from the product pretty soon?

As soon as we have any big deals to announce, of course we will. Just recently we announced deals I just mentioned. And of course we hope that more is coming. We hope very much for this product.

Okay, thanks.

Mitch Mitchell, BCS.

Another traditional question, can you give us an update on your Turkey initiative?

Well, we continue to grow in the market. The public data on our market share is available. We are extremely positive on what's going on there. Maybe that's enough for this quarter. We will discuss it later.

Olga Bystrova, Credit Suisse.

Sorry for the follow-up. But on the distribution TAC, in the fourth quarter conference call you were talking about basically distribution TAC normalizing through the year. Maybe I misunderstood a little bit and I thought sort of it will start normalizing towards last year's level already in the first quarter. Or perhaps you had other initiatives that basically happened, for example, Nokia partnership or maybe some others, Yandex browser distribution, events that are actually potentially positive for your business going forward. If you could comment on that? So basically what has changed from your guidance in the fourth quarter?

And the second, follow-up on CapEx, given your guidance is 14%-16% but clearly is for first quarter at 19%, which is typically not the highest capital spend quarter, is there anything specific that happened in the first quarter? Was it deferred CapEx or is there any risk, upside risk to CapEx numbers for 2014 potentially? Thank you.

Olga, this is Alexander speaking once again. So on distribution TAC as percentage of O&O revenue, we said that we expect 2014 distribution TAC as percentage of O&O revenue to be close to 2013. The activities that we are implementing now on optimizing the revenue sharing terms took a little longer. And it's obvious because it takes time to negotiate with many multiple partners that we have and that's why, as I said previously, we expect to see results of those activities in Q2 and later in 2014. So we still intend to manage the distribution TAC as percentage of O&O revenue.

Coming back to CapEx, just to remind, our CapEx to revenue ratio in 2013 was lower than we initially expected because of the shift of CapEx between -- from Q4 to Q1, and that's why you see that Q1 is higher than the guidance that we provide for the full year.

Okay, perfect. Thank you so much.

Anna Lepetukhina, Sberbank.

I have just a general question. Just if we were to look going forward two to three years -- I mean you are exploring various directions and launching services. Where do you see the fastest growth and what can be the driver for your growth going forward, whether it's e-commerce, Atom -- Yandex Atom, big data or something else? If you can share your view, that would be great. Thank you.

Well, we're working in different directions here. It's too early to say which one we'll be best playing off in three years. You know that we are working in e-commerce. We are working in geographical expansion, and Turkey is one of the markets. We work in the area of expanding our core competencies in big data machine learning to other industries.

We are experimenting with a new business models like Yandex. Taxi. It's too early to say which one will be the best model for us in three years from now. I'd say that we are now at the stage of experimentation. We are just like 15 years ago. We are trying to find the next expansion path.

Thank you.

Ulyana Lenvalskaya, UBS.

I have a couple of technical follow-ups. First, Arkady was mentioning several times the addition of market share of iOS device is by 3 percentage points. Could you please provide us with the market share, the estimated market share of iOS?

Our current market share in Apple is something like 45%. Actually it's hard to say because the measurement tools here were very weak and they change several times a quarter. But it's growing.

Okay. Another follow-up will be on the Yandex. Market. There were some news about [NVIDIA] trying to fight against Yandex. Market and kind of accusing sales of grey electronics. What's your view on the news? Is it just a negative PR or is it a real threat to the business?

Hi, this is Alexander speaking. We definitely do not think it's a threat to our business and more like a misunderstanding because Yandex. Market is an advertising platform and Yandex is not selling any goods.

So we are absolutely confident that our position is correct and hope to resolve this conflict with NVIDIA without resorting to court litigations or something like that.

Thank you.

Thank you. And we have no further questions coming through, so I'll hand you back to Gregory Abovsky to conclude today's conference. Thank you.

All right. Thank you everybody again for listening in and dialing in to our call, and we look forward to updating you on our progress among many different fronts on Q2 earnings conference call in July.

Thank you, ladies and gentlemen, for joining today's conference. You may now replace your handsets. Thank you.