Yandex NV Earnings Call: Revenue Soars Amid Challenges

Yandex NV ((NBIS)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Yandex NV painted a largely optimistic picture, highlighting exceptional revenue growth and strategic partnerships. Despite these positive developments, the company acknowledged ongoing challenges related to profitability and increased capital expenditure. Nevertheless, Yandex NV is poised to expand its market presence and continue its technological advancements.

Explosive Revenue Growth

Yandex NV reported a staggering revenue growth of nearly 400% year-over-year, with an annualized run rate revenue increase of almost 700%. This explosive growth underscores the company’s ability to capture market opportunities and scale its operations effectively.

Strong Cash Position

The company ended the quarter with a robust cash balance of $1.4 billion, providing a solid foundation for future investments and strategic initiatives. This strong cash position is crucial as Yandex NV navigates its expansion and technological development plans.

New Partnerships and Locations

Yandex NV has established significant partnerships with industry giants like NVIDIA, Meta, and Llama. Additionally, the company has expanded its geographical footprint by adding new locations in the U.S., Europe, and the Middle East, enhancing its global reach and market penetration.

Product Launches and Technological Advancements

The company has made notable strides in product development, launching Slurm-based cluster upgrades, improving object storage, and expanding integrations with AI platforms. These advancements position Yandex NV as a leader in tech innovation, catering to the growing demand for AI solutions.

Customer and Market Expansion

Yandex NV continues to expand its customer base across various industries, driven by strong demand for AI compute. The company is well-positioned to capitalize on this demand, ensuring sustained growth in the coming quarters.

Negative Adjusted EBITDA Guidance

Despite the positive revenue trends, Yandex NV expects its adjusted EBITDA to be negative for the full year. However, the company has a plan to turn this around and achieve positive EBITDA by the second half of 2025, indicating a strategic focus on long-term profitability.

Increased CapEx Guidance

Yandex NV has raised its CapEx guidance to approximately $2 billion for 2025, up from the previous $1.5 billion. This increase reflects the company’s commitment to seizing new opportunities, including a new data center in Israel, which will bolster its infrastructure and service capabilities.

Long-Term Profitability Challenges

While Yandex NV aims for mid-term EBIT margins of 20% to 30%, achieving profitability remains a future goal. The company is optimistic about reaching higher long-term margins, but acknowledges the challenges that lie ahead in realizing these targets.

Forward-Looking Guidance

Looking ahead, Yandex NV has set ambitious revenue targets, aiming for mid-single-digit billions in revenue in the midterm. The company expects EBIT margins of 20% to 30% and has reiterated its ARR guidance for the full year, set between $750 million to $1 billion, with overall revenue guidance ranging from $500 million to $700 million. Despite the expectation of a negative adjusted EBITDA for the year, Yandex NV is confident in achieving profitability by the second half of 2025.

In conclusion, Yandex NV’s earnings call reflects a positive sentiment, driven by remarkable revenue growth and strategic partnerships. While challenges related to profitability and capital expenditure persist, the company’s forward-looking strategies and technological advancements position it well for future success.