HeadHunter Group PLC Announces First Quarter 2021 Financial Results
HeadHunter Group PLC (HHR) reported strong Q1 2021 results with revenue reaching ₽2,841 million, a 42.7% increase from ₽1,990 million in Q1 2020. Net income surged by 126.0% to ₽930 million, reflecting both revenue growth and a ₽223 million gain on the remeasurement of equity interests. Adjusted EBITDA rose 38.4% to ₽1,342 million. The company highlighted significant growth in its customer base, especially among Small and Medium Accounts, with an increase of 48.7% in paying customers. A dividend of $0.55 per share was announced, indicating a commitment to shareholder returns.
- Revenue increased by 42.7% to ₽2,841 million.
- Net income surged 126.0% to ₽930 million.
- Adjusted EBITDA rose 38.4% to ₽1,342 million.
- 48.7% increase in paying customers, particularly in Small and Medium Accounts.
- Announced a dividend of $0.55 per share, supporting shareholder returns.
- Adjusted EBITDA margin decreased to 47.2%, down from 48.7%.
MOSCOW, May 27, 2021 (GLOBE NEWSWIRE) -- HeadHunter Group PLC (Nasdaq: HHR, MOEX: HHRU) announced today its financial results for the quarter ended March 31, 2021. As used below, references to “we,” “our,” “us” or the “Company” or similar terms shall mean HeadHunter Group PLC.
First Quarter 2021 Financial and Operational Highlights
| (in millions of RUB(1) and USD(2)) | Three months ended March 31, 2021 | Three months ended March 31, 2020 | Change(3) | Three months ended March 31, 2021 | |||
| RUB | RUB | USD(4) | |||||
| Revenue | 2,841 | 1,990 | 37.5 | ||||
| Russia Segments(6) Revenue | 2,662 | 1,838 | 35.2 | ||||
| Net Income | 930 | 412 | 12.3 | ||||
| Net Income Margin, % | 12.1 ppts | ||||||
| Adjusted EBITDA(5)(7) | 1,342 | 970 | 17.7 | ||||
| Adjusted EBITDA Margin, %(5)(7) | (1.5) ppts | ||||||
| Adjusted Net Income(5)(7) | 850 | 581 | 11.2 | ||||
| Adjusted Net Income Margin, %(5)(7) | 0.7 ppts |
(1) “RUB” or “₽” denote Russian Ruble throughout this release.
(2) “USD” or “$” denote U.S. Dollar throughout this release.
(3) Percentage movements and certain other figures in this release may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.
(4) Dollar translations throughout this release are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of March 31, 2021 (RUB 75.7023 to USD 1).
(5) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are non-IFRS measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation from the nearest IFRS measure.
(6) Includes our “Russia (hh.ru)” and “Russia (Zarplata.ru)” operating segments revenue.
(7) Beginning from the first quarter of 2021, we modified the presentation of Adjusted EBITDA and Adjusted Net Income, our non-IFRS measures, to exclude the impact of foreign exchange gains and losses. Prior period amounts have been reclassified to conform to this presentation. Please see “Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” and “Use of Non-IFRS Financial Measures” elsewhere in this release.
- Revenue is up
42.7% to ₽2,841 million on the back of a rebound in customer activity as well as the consolidation of Zarplata.ru from January 1, 2021. - Net income is up
126.0% to ₽930 million, driven by an increase in revenue as well as recognition of ₽223 million gain on remeasurement of interest in equity-accounted investees. - Adjusted EBITDA is up
38.4% to ₽1,342 million; Adjusted EBITDA Margin is down to47.2% from48.7% , or by 1.5 ppts, as a decrease in marketing expenses and personnel costs as percentage of revenue in our “Russia (hh.ru)” segment was offset by lower margins in our “Russia (Zarplata.ru)” segment on the back of more accentuated revenue seasonality and timing of marketing expenses in this segment. - Adjusted Net Income is up
46.2% to ₽850 million.
| (in millions of RUB and USD) | As of March 31, 2021 | As of December 31, 2020 | Change | As of March 31, 2021 | |||
| RUB | RUB | USD | |||||
| Net Working Capital(1) | (5,269) | (3,849) | (69.6) | ||||
| Net Debt(1) | 3,356 | 4,909 | (31.6)% | 44.3 | |||
| Net Debt to Adjusted EBITDA Ratio(1) (2) | 0.7х | 1.2х |
(1) Net Working Capital, Net Debt, and Net Debt to Adjusted EBITDA Ratio are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.
(2) For the purposes of calculation of this ratio as of March 31, 2021, Adjusted EBITDA is calculated on the last twelve months basis.
- Net Working Capital as of March 31, 2021 decreased by ₽1,420 million, or
36.9% , compared to December 31, 2020, primarily due to (i) an increase in contract liabilities by ₽710 million from customer prepayments, and (ii) an increase in trade and other payables (current portion) mainly due to ₽623 million consideration payable for the acquisition of LLC “Skillaz” (see “Potential substantive rights over Skillaz”). - Net Debt decreased by ₽1,553 million, or
31.6% , primarily due to an increase of cash from operating activities, a decrease of cash used in financing and investing activities and the effect of exchange rate fluctuations on cash (see “Cash Flows”). - Net Debt to Adjusted EBITDA Ratio decreased from 1.2x to 0.7x, mainly due to a decrease in Net Debt.
CEO quote
“In Q1 2021, we saw a robust expansion of our core business driven by an improving market environment and strong strategy execution” said Mikhail Zhukov, Chief Executive Officer of HeadHunter Group PLC.
“We continued to observe significant competition for labor force, prompting more businesses in Russia to adopt new and effective online recruitment channels. With that in mind and looking at our customer base and content dynamics year to date, we are happy to significantly upgrade our growth outlook for 2021.
"Following our long-term strategy of expansion into adjacent markets, we consolidated control in Skillaz, one of the leading Russia recruitment SaaS companies. We believe this acquisition will result in a unique combination of a powerful sourcing platform and state-of-the-art recruitment process automation technologies. This will enable us to deliver one-stop solutions for enterprise clients.
"Lastly, we remain committed to rewarding our shareholders through the cycle and, having evaluated our current business strength and balance sheet liquidity, we are glad to announce a 2020 dividend payment in the amount of
Acquisition of Zarplata.ru in December 2020
In December 2020, we acquired
For the purposes of analysis of our key performance indicators, such as the number of paying customers and the average revenue per customer (“ARPC”), we combine our “Russia (hh.ru)” and “Russia (Zarplata.ru)” (collectively “Russia segments”) revenues, as we believe that our combined ARPC and combined number of paying customers allows us to assess better our results and position on Russian online recruitment market, on which both these segments operate.
Potential substantive rights over Skillaz
As at March 31, 2021, the Group had
As at March 31, 2021, based on recent performance of Skillaz in the first quarter 2021, future business plans and the resulting projected future cash flows, the exercise of the call options became beneficial for the Group. Given that the Group is exposed to variable returns from its involvement with the investee, as well as has the ability to use its power over the investee to affect the amount of those returns via potential substantive rights, the Group obtained control over Skillaz for accounting purposes as at March 31, 2021.
Accordingly, on March 31, 2021 the Group ceased to account for its investment in Skillaz under the equity method and consolidated Skillaz as a subsidiary. As the consolidation occurred on the last day of the first quarter of 2021, results of Skillaz for the first quarter 2021 are not included in our statement of income and comprehensive income for this quarter. They will be included in our statement of income and comprehensive income from the second quarter of 2021.
On May 25, 2021 the Board of Directors of the Group has approved the exercise of the option to acquire
Modification of the presentation of Adjusted EBITDA and Adjusted Net Income
Beginning from the first quarter of 2021, we modified the presentation of Adjusted EBITDA and Adjusted Net Income, our non-IFRS measures, to exclude the impact of foreign exchange gains and losses as the nature of such gains and losses is not operational. We believe this revised presentation will provide a better understanding of our operating performance and a more meaningful comparison of our results between periods.
Prior period amounts have been reclassified to conform to this presentation. These changes have no impact on any of the previously reported IFRS results for any periods presented.
The following table presents the effects of the changes on the presentation of non-IFRS measures as reflected in the Company's previous reports:
| (in millions of RUB) | For the three months ended March 31, 2020 | |||||||
| Non-IFRS Prior Presentation | Net foreign exchange gain and related income tax effect | Non-IFRS Revised Presentation | ||||||
| Adjusted EBITDA | 1,045 | (75 | ) | 970 | ||||
| Adjusted EBITDA Margin, % | 52.5 | % | (3.8 | %) | 48.7 | % | ||
| Adjusted Net Income | 613 | (32 | ) | 581 | ||||
| Adjusted Net Income Margin, % | 30.8 | % | (1.6 | %) | 29.2 | % | ||
| (in millions of RUB) | For the year ended December 31, 2020 | |||||||
| Non-IFRS Prior Presentation | Net foreign exchange gain and related income tax effect | Non-IFRS Revised Presentation | ||||||
| Adjusted EBITDA | 4,187 | (83 | ) | 4,104 | ||||
| Adjusted EBITDA Margin, % | 50.6 | % | (1.1 | %) | 49.5 | % | ||
| Adjusted Net Income | 2,733 | (50 | ) | 2,683 | ||||
| Adjusted Net Income Margin, % | 33.0 | % | (0.6 | %) | 32.4 | % | ||
Impact of the COVID-19 Pandemic on Our Operations and Financial Position
The original outbreak of COVID-19 pandemic in the first half of 2020 affected our financial results mostly via the decrease in business activity in Russia on the back of measures taken by authorities to curb spread of the disease, especially such measures as shelter-in-place orders, non-working days announcements, and businesses closures. A decrease in business activity resulted in a decrease in the number of job postings advertised by our customers and the number of CV database subscriptions purchased or renewed, leading to a decrease in our revenues.
The most severe restrictions in Russia were in place from March 30, 2020 to May 11, 2020, when a nation-wide period of non-working days was introduced and shelter-in-place orders were in effect in Moscow. This affected our revenues in the first and second quarter of 2020. A gradual recovery of business activities followed in the third quarter 2020, resulting in the gradual recovery in our KPIs. No such restrictions had been introduced since until recently, when a period of four working days from May 4, 2021 to May 7, 2021 was announced as a period of non-working days. This was a similar, but much smaller, measure the period of non-working days in 2020.
As a result, we see no measurable impact of COVID-19 on our financial results for the first quarter of 2021 and financial position as at March 31, 2021. Year-to-year comparison of our financial results for the first, and, prospectively, second and third quarters of 2021 is affected by the low base effect of the corresponding periods in 2020. Our financial position, results and liquidity may be affected in the future by any further adverse developments related to COVID-19.
Operating Segments
For management purposes, we are organized into operating segments based on the geography of our operations or other subdivisions as presented in internal reporting to our chief operating decision-maker (“CODM”). Our operating segments include “Russia (hh.ru),” “Russia (Zarplata.ru),” “Belarus,” “Kazakhstan” and other countries. As each segment, other than “Russia (hh.ru)” and “Russia (Zarplata.ru)”, individually comprises less than
Customers
We sell our services predominantly to businesses that are looking for job seekers to fill vacancies inside their organizations. We refer to such businesses as “customers.” In Russia, we divide our customers into (i) Key Accounts and (ii) Small and Medium Accounts, based on their annual revenue and employee headcount. We define “Key Accounts” as customers who, according to the Spark-Interfax database, have an annual revenue of ₽2 billion or more or a headcount of 250 or more employees and have not marked themselves as recruiting agencies on their page on our website. We define “Small and Medium Accounts” as customers who, according to the Spark-Interfax database, have both an annual revenue of less than ₽2 billion and a headcount of less than 250 employees and have not marked themselves as recruiting agencies on their page on our website. Our website allows several legal entities and/or natural persons to be registered, each with a unique identification number, under a single account page (e.g., a group of companies). Each legal entity registered under a single account is defined as a separate customer and is included in the number of paying customers metric. Natural persons registered under a single account are assumed to be employees of the legal entities of that account and, thus, are not considered separate customers and so are not included in the number of paying customers metric. However, in a specific reporting period, if only natural persons used our services under such account, they are collectively included in the number of paying customers as one customer.
Seasonality
Revenue
We generally do not experience seasonal fluctuations in demand for our services and, prior to COVID-19, our revenue remained relatively stable throughout each quarter. However, our customers are predominately businesses and, therefore, use our services mostly on business days. As a result, our quarterly revenue is affected by the number of business days in a quarter, with the exception of our services that represent “stand-ready” performance obligations, such as subscriptions to access our curriculum vitae (“CV”) database, which are satisfied over the period of subscription, including weekends and holidays.
Public holidays in Russia predominantly fall during the first quarter of each year, which results in lower business activity in that quarter. Accordingly, our first quarter revenue is typically slightly lower than in the other quarters. For example, our first quarter revenue in our “Russia (hh.ru)” segment in 2019 was
The number of business days in a quarter may also be affected by calendar layout in a specific year. In addition, the Government of Russia decides on an annual basis how public holidays that occur on weekends will be reallocated to business days throughout the year as a requirement of the Labor Code of Russia. As a result, the number of business days in a quarter may be different in each year (while the total number of business days in a year usually remains the same). Therefore, the comparability of our quarterly results, including with respect to our revenue growth rate, may be affected by this variance. In addition, when a calendar layout in a specific year provides for several consecutive holidays or a small number of business days between holidays or holidays adjacent to weekends, HR managers of our customers may take short vacations, further contributing to the decrease in business activities in these periods.
The following table illustrates the number of business days by quarter for the years 2019 to 2021. In 2021, compared to 2020, there is one business day less in the first quarter and in the total year, two business days more in the second quarter, and two business days less in the fourth quarter, meaning that a negative calendar effect is expected in each of the first and fourth quarter, and a positive effect is expected in the second quarter:
| Number of business days | As % of total business days per year | |||||||||||||
| 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | |||||||||
| First quarter | 56 | 57 | 57 | 22.7 | % | 23.0 | % | 23.1 | % | |||||
| Second quarter | 62 | 60 | 59 | 25.1 | % | 24.2 | % | 23.9 | % | |||||
| Third quarter | 66 | 66 | 66 | 26.7 | % | 26.6 | % | 26.7 | % | |||||
| Fourth quarter | 63 | 65 | 65 | 25.5 | % | 26.2 | % | 26.3 | % | |||||
| Year | 247 | 248 | 247 | 100.0 | % | 100.0 | % | 100.0 | % | |||||
Operating costs and expenses (exclusive of depreciation and amortization)
Our operating costs and expenses (exclusive of depreciation and amortization) consist primarily of personnel and marketing expenses. Personnel and marketing expenses, in total, accounted for
Marketing expenses are more volatile in terms of allocation to quarters and are affected by our decisions on how we realize our strategy in a particular year, which can differ from year to year. Therefore, total marketing expenses as a percentage of revenue for a particular quarter may not be fully representative of the whole year. Personnel expenses are relatively stable over the year. However, they are also affected by other dynamics, such as our hiring decisions. Some costs and expenses, such as share-based compensation or foreign exchange gains or losses, can be significantly concentrated in a particular quarter.
As an example, the first quarter segment external expenses in our “Russia (hh.ru)” segment in 2019 and 2020 were
Net income and Adjusted EBITDA
Even though our revenue remains relatively stable throughout each quarter, seasonal revenue fluctuations, as described above, affect our net income. As a result of revenue seasonality, our profitability in the first quarter is usually lower than in other quarters and for the full year, because our expenses as a percentage of revenue are usually higher in the first quarter due to lower revenue. Our profitability is also affected by our decisions on timing of expenses, as described above.
Contract liabilities
Our contract liabilities are mostly affected by the annual subscriptions’ renewal cycle in our Key Accounts customer segment. A substantial number of our Key Accounts renew their subscriptions in the first quarter but prepay us in the fourth quarter of a previous year, as per our normal payment terms. As a result, we receive substantial prepayments from our customers in the fourth quarter which causes a consequential increase in our contract liabilities at the end of that quarter. For example, our contract liabilities as of March 31, June 30, September 30, and December 31, 2020 were ₽2,584 million, ₽2,355 million, ₽2,323 million, and ₽2,785 million, respectively.
Net cash generated from operating activities
Our net cash generated from operating activities is affected by seasonal fluctuations in business activity as explained in “Revenue” and by substantial prepayments from our customers (see “Contract liabilities”), as well as by our decisions in regard to timing of expenses (see “Operating costs and expenses (exclusive of depreciation and amortization)”), and to a lesser extent by payment terms provided to us by our largest suppliers, such as TV advertising agencies and others.
Net Working Capital
Our Net Working Capital is primarily affected by changes in our contract liabilities. As our contract liabilities have usually been highest in the fourth quarter, our Net Working Capital has usually been lowest in the fourth quarter. For example, our Net Working Capital of March 31, June 30, September 30, and December 31, 2020 was ₽ (3,130) million, ₽ (2,865) million, ₽ (3,111) million, and ₽ (3,849) million, respectively.
First Quarter 2021 Results
Our revenue was ₽2,841 million for the three months ended March 31, 2021 compared to ₽1,990 million for the three months ended March 31, 2020, primarily due to an increase in our “Russia (hh.ru)” and “Russia (Zarplata.ru)” segments (collectively – “Russia segments”).
In our Russia segments, revenue increased by
The following table breaks down revenue by product for the periods indicated:
| For the three months ended March 31, | ||||||
| (in thousands of RUB) | 2021 | 2020 | Change | |||
| Bundled Subscriptions | 766,466 | 577,713 | 32.7 | % | ||
| CV Database Access | 588,965 | 470,586 | 25.2 | % | ||
| Job Postings | 1,244,511 | 781,413 | 59.3 | % | ||
| Other value-added services | 241,173 | 160,697 | 50.1 | % | ||
| Total revenue | 2,841,115 | 1,990,409 | 42.7 | % | ||
The following table sets forth the revenue broken down by type of customer and region for the periods indicated:
| For the three months ended March 31, | ||||||
| (in thousands of RUB) | 2021 | 2020 | Change | |||
| Key Accounts in Russia | ||||||
| Moscow and St. Petersburg | 642,938 | 495,398 | 29.8 | % | ||
| Other regions of Russia | 259,866 | 192,953 | 34.7 | % | ||
| Sub-total | 902,804 | 688,351 | 31.2 | % | ||
| Small and Medium Accounts in Russia | ||||||
| Moscow and St. Petersburg | 886,278 | 627,759 | 41.2 | % | ||
| Other regions of Russia | 763,059 | 426,407 | 79.0 | % | ||
| Sub-total | 1,649,337 | 1,054,166 | 56.5 | % | ||
| Foreign customers of Russia segments | 19,983 | 15,875 | 25.9 | % | ||
| Other customers in Russia segments | 89,819 | 79,852 | 12.5 | % | ||
| Total for Russia operating segments | 2,661,943 | 1,838,244 | 44.8 | % | ||
| Other segments | 179,172 | 152,165 | 17.7 | % | ||
| Total Revenue | 2,841,115 | 1,990,409 | 42.7 | % | ||
The following table sets forth the number of paying customers and ARPC for the periods indicated:
| Number of paying customers | ||||||
| For the three months ended March 31, | ||||||
| 2021 | 2020 | Change | ||||
| Key Accounts in Russia | ||||||
| Moscow and St. Petersburg | 5,123 | 4,695 | 9.1 | % | ||
| Other regions of Russia | 5,631 | 4,966 | 13.4 | % | ||
| Sub-total | 10,754 | 9,661 | 11.3 | % | ||
| Small and Medium Accounts in Russia | ||||||
| Moscow and St. Petersburg | 80,329 | 61,730 | 30.1 | % | ||
| Other regions of Russia | 128,930 | 79,031 | 63.1 | % | ||
| Sub-total | 209,259 | 140,761 | 48.7 | % | ||
| Foreign customers of Russia segments | 958 | 719 | 33.2 | % | ||
| Total for Russia segments | 220,971 | 151,141 | 46.2 | % | ||
| Other segments | 13,451 | 12,750 | 5.5 | % | ||
| Total number of paying customers | 234,422 | 163,891 | 43.0 | % | ||
| ARPC (in RUB) | ||||||
| Key Accounts in Russia | ||||||
| Moscow and St. Petersburg | 125,500 | 105,516 | 18.9 | % | ||
| Other regions of Russia | 46,149 | 38,855 | 18.8 | % | ||
| Sub-total | 83,951 | 71,250 | 17.8 | % | ||
| Small and Medium Accounts in Russia | ||||||
| Moscow and St. Petersburg | 11,033 | 10,169 | 8.5 | % | ||
| Other regions of Russia | 5,918 | 5,395 | 9.7 | % | ||
| Sub-total | 7,882 | 7,489 | 5.2 | % | ||
| Other segments, total | 13,320 | 11,935 | 11.6 | % | ||
- In our Key Accounts in Moscow and St. Petersburg customer segment, revenue increased by
29.8% , mostly due to an increase in the ARPC by18.9% , which was primarily driven by annual price increase and introduction of limits on a number of CV views in our CV database subscriptions effective August 2020. - In our Key Accounts in Other regions of Russia customer segment, revenue increased by
34.7% , mostly due to an increase in the ARPC by18.8% , which was primarily driven by an annual price increase and the addition of revenues from these customers received in our “Russia (Zarplata.ru)” operating segment. - In our Small and Medium Accounts in Moscow and St. Petersburg customer segment, revenue increased by
41.2% , mostly due to an increase in the number of customers by30.1% , which was primarily driven by acquisition of new customers, as well as low base effect in the end of the first quarter 2020. - In our Small and Medium Accounts in Other regions of Russia customer segment, revenue increased by
79.0% , mostly due to an increase in the number of customers by63.1% , which was equally driven by acquisition of new customers and by addition of customers of our “Russia (Zarplata.ru)” operating segment, as well as low base effect in the end of the first quarter 2020.
Operating Costs and Expenses (exclusive of depreciation and amortization)
Operating costs and expenses (exclusive of depreciation and amortization) were ₽1,569 million for the three months ended March 31, 2021 compared to ₽1,139 million for the three months ended March 31, 2020, representing an increase by ₽430 million, or
The following table sets forth operating costs and expenses (exclusive of depreciation and amortization) for the periods indicated:
| (in thousands of RUB) | For the three months ended March 31, | |||||||
| 2021 | 2020 | Change | ||||||
| Personnel expenses | (845,709 | ) | (581,237 | ) | 45.5 | % | ||
| Marketing expenses | (441,770 | ) | (317,866 | ) | 39.0 | % | ||
| Other general and administrative expenses: | ||||||||
| Subcontractors and other expenses related to provision of services | (50,404 | ) | (37,180 | ) | 35.6 | % | ||
| Office rent and maintenance | (56,224 | ) | (46,280 | ) | 21.5 | % | ||
| Professional services | (60,840 | ) | (79,147 | ) | (23.1 | )% | ||
| Insurance costs | (46,071 | ) | (43,173 | ) | 6.7 | % | ||
| Hosting and other web-site maintenance | (14,460 | ) | (12,034 | ) | 20.2 | % | ||
| Other operating expenses | (53,171 | ) | (21,702 | ) | 145.0 | % | ||
| Operating costs and expenses (exclusive of depreciation and amortization) | (1,568,649 | ) | (1,138,619 | ) | 37.8 | % | ||
The following table sets forth operating costs and expenses (exclusive of depreciation and amortization) as percentage of revenue for the periods indicated:
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | Change | ||||||
| Personnel expenses | 29.8 | % | 29.2 | % | 0.6 | % | ||
| Marketing expenses | 15.5 | % | 16.0 | % | (0.4 | )% | ||
| Other general and administrative expenses: | ||||||||
| Subcontractors and other expenses related to provision of services | 1.8 | % | 1.9 | % | (0.1 | )% | ||
| Office rent and maintenance | 2.0 | % | 2.3 | % | (0.3 | )% | ||
| Professional services | 2.1 | % | 4.0 | % | (1.8 | )% | ||
| Insurance services | 1.6 | % | 2.2 | % | (0.5 | )% | ||
| Hosting and other web-site maintenance | 0.5 | % | 0.6 | % | (0.1 | )% | ||
| Other operating expenses | 1.9 | % | 1.1 | % | 0.8 | % | ||
| Operating costs and expenses (exclusive of depreciation and amortization) | 55.2 | % | 57.2 | % | (2.0 | )% | ||
Personnel expenses
Personnel expenses for the three months ended March 31, 2021 increased by ₽264 million, or
Personnel expenses increased as a percentage of revenue from
Our headcount has increased to 1,111 people as of March 31, 2021 from 832 people as of December 31, 2020, mostly due to addition of our “Russia (Zarplata.ru)” operating segment personnel.
Marketing expenses
Marketing expenses for the three months ended March 31, 2021 increased by ₽124 million, or
Marketing expenses as percentage of revenue were
Other general and administrative expenses
Our other general and administrative expenses consist primarily of professional services, insurance costs and office rent and maintenance costs. Our total other general and administrative expenses for the three months ended March 31, 2021 increased by ₽42 million, or
Our other general and administrative expenses as a percentage of revenue decreased from
Our other general and administrative expenses (excluding items unrelated to our core business activity) as a percentage of revenue increased from
Net foreign exchange gain
Net foreign exchange gain was nil for the three months ended March 31, 2021 compared to ₽75 million for the three months ended March 31, 2020. The net foreign exchange gain for the three months ended March 31, 2020 reflects mostly the foreign exchange gain on USD-denominated cash balances, partly offset by the foreign exchange loss on USD-denominated payable, mainly dividends payable. There were no significant balances denominated in foreign currency for the three months ended March 31, 2021.
Depreciation and amortization
Depreciation and amortization were ₽238 million for the three months ended March 31, 2021 compared to ₽184 million for the three months ended March 31, 2021. The increase by
Finance income and costs
Finance income was ₽69 million for the three months ended March 31, 2021 compared to ₽19 million for the three months ended March 31, 2020. The increase of ₽50 million was mainly due to the ₽35 million gain on remeasurement of option to acquire
Finance costs were ₽151 million for the three months ended March 31, 2021 compared to ₽119 million for the three months ended March 31, 2020. The increase of ₽32 million was primarily due to ₽67 million interest accrued on non-convertible bonds issued in the fourth quarter 2020 to finance Zarplata.ru acquisition, partly offset by a decrease in interest accrued on the bank loan due to a decrease in the key rate of the Central Bank of Russia.
Gain on remeasurement of previously held interest in equity accounted investees
Gain in the amount of ₽223 million reflects remeasurement of the previously held
Income tax expense
Income tax expense for the three months ended March 31, 2021 increased by ₽23 million, or
The effective tax rate was
Net income, Adjusted EBITDA and Adjusted Net Income
In the three months ended March 31, 2021 compared to the three months ended March 31, 2020, our net income has increased by
Cash Flows
The following table sets forth the summary cash flow statements for the periods indicated:
| (in thousands of RUB) | For the three months ended March 31, | |||||||
| 2021 | 2020 | Change | ||||||
| Net cash generated from operating activities | 1,912,574 | 942,362 | 970,212 | |||||
| Net cash used in investing activities | (195,915 | ) | (101,224 | ) | (94,691 | ) | ||
| Net cash used in financing activities | (257,829 | ) | (58,892 | ) | (198,937 | ) | ||
| Net increase in cash and cash equivalents | 1,458,830 | 782,246 | 676,584 | |||||
| Cash and cash equivalents, beginning of period | 3,367,610 | 2,089,215 | 1,278,395 | |||||
| Effect of exchange rate changes on cash | 7,399 | 232,877 | (225,478 | ) | ||||
| Cash and cash equivalents, end of period | 4,833,839 | 3,104,338 | 1,729,501 | |||||
Net cash generated from operating activities
For the three months ended March 31, 2021, net cash generated from operating activities was ₽1,913 million, compared to ₽942 million generated for the three months ended March 31, 2020. The change between the periods of ₽970 million was primarily driven by: (i) an increase in net income (adjusted for non-cash items and items not affecting cash flow from operating activities), (ii) an increase in contract liabilities due an increase in advances received from customer, (iii) in the first quarter of 2020, certain payments of taxes, mainly VAT, were shifted to the second quarter 2020 due to period of non-working days, and (iv) an increase in operating expenses due to acquisition of Zarplata.ru.
Net cash used in investing activities
For the three months ended March 31, 2021, net cash used in investing activities was ₽196 million, compared to ₽101 million used for the three months ended March 31, 2020. The change between the periods of ₽95 million was mainly due to the ₽234 million deferred consideration paid in the first quarter 2021 for acquisition of Zarplata.ru, partly offset by: (i) cash acquired in the amount ₽67 million of due to obtaining potential substantial rights over Skillaz, and (ii) a decrease in the acquisition of fixed assets as we completed renovations in our Moscow and Yaroslavl offices in the second quarter of 2020.
Net cash used in financing activities
For the three months ended March 31, 2021, net cash used in financing activities was ₽258 million, compared to ₽59 million used for the three months ended March 31, 2020. The change between the periods of ₽199 million was primarily due to (i) repayment of bank and other loans in the amount of ₽121 million in the first quarter 2021 not occurring in the first quarter 2020 due to COVID-related period of non-working days, and (ii) ₽42 million origination fees paid in relation with ₽4 billion non-convertible bond issue in the fourth quarter of 2020 to finance acquisition of Zarplata.ru.
Capital Expenditures
Our additions to property and equipment and intangible assets for the three months ended March 31, 2021 were ₽611 million compared to ₽102 million for the three months ended March 31, 2020, an increase of ₽509 million was primarily due to acquisition of property and equipment and intangible assets, including intangible assets relating to consolidation of Skillaz (see “Potential substantive rights over Skillaz” elsewhere in this release) in the amount of ₽552 million, partly offset by a decrease of ₽62 million primarily due to office renovation costs incurred in the first quarter 2020 not occurring in the first quarter 2021.
Dividend
Our Board of Directors has approved payment of an interim dividend in 2021 of
As a Russian tax resident, we are subject to the Russian Tax Code requirements and withhold a tax on dividends at a generally applicable rate of
Financial Outlook
The following forward-looking statement reflects our expectations as of May 27, 2021:
Based on our recent performance, as well as to reflect the consolidation of LLC “Skillaz” we currently expect our revenue to grow in the range of
This outlook reflects our current view, based on the trends that we see at this time, and may change considering market, economic and social developments in jurisdictions in which we operate.
First Quarter 2021 Financial Results Conference Call
HeadHunter will host a conference call and webcast to discuss its results at 9:00 a.m. U.S. Eastern Time (4:00 p.m. Moscow time, 2:00 p.m. London time) on May 27, 2021.
We recommend to use the dial-in option only if you would like to ask questions. In this case please dial in at least 15 minutes prior to the call start time and clearly state the requested information. For listen only mode, please use the webcast link. The earnings release can be accessed through our website at https://investor.hh.ru/. Following the call, a replay will be available on our website.
To participate in the conference call, please use the following details:
| Standard International: | +44 (0) 2071 928338 |
| UK (local): | +44 (0) 8444 819752 |
| UK (toll free): | 0800 279 6619 |
| USA (local): | +1 646 741 3167 |
| USA (toll free): | +1 877 870 9135 |
| Russian Federation (local): | +7 495 249 9851 |
| Russian Federation (toll free): | 810 800 2114 4011 |
| Conference ID: | 2580407 |
Webcast:
https://edge.media-server.com/mmc/p/yg2j9sri
Contacts:
Investor Inquiries
Roman Safiyulin
E-mail: r.safiyulin@hh.ru
Media Inquiries
Alexander Dzhabarov
E-mail: a.dzhabarov@hh.ru
About HeadHunter Group PLC
HeadHunter is the leading online recruitment platform in Russia and the Commonwealth of Independent States focused on providing comprehensive talent acquisition services, such as access to extensive CV database, job postings (jobs classifieds platform) and a portfolio of value-added services.
USE OF NON-IFRS FINANCIAL MEASURES
To supplement our consolidated financial statements, which is prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), we present the following non-IFRS1 financial measures: Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. For more information on these non-IFRS financial measures, please see the tables captioned “Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures”, included following the accompanying financial tables. We define the various non-IFRS financial measures we use as follows:
- “Adjusted EBITDA” as net income/(loss) plus: (1) income tax expense; (2) net interest costs; (3) depreciation and amortization; (4) transaction costs related to business combinations; (5) expenses related to equity-settled awards, including related social taxes; (6) secondary public offering (“SPO”) related costs; (7) insurance expenses related to IPO; (8) (income) from the depositary; (9) share of (profit)/loss of equity-accounted investees; (10) net (gain)/loss on financial assets measured at fair value through profit and loss; (11) net foreign exchange loss/(gain); (12) (Gain) on remeasurement of previously held interest in equity-accounted investees; (13) other financing and transactional costs .
- “Adjusted Net Income” as net income/(loss) plus: (1) transaction costs related to business combinations; (2) expenses related to equity-settled awards, including related social taxes; (3) secondary public offering (“SPO”) related costs; (4) insurance expenses related to IPO; (5) (income) from the depositary; (6) share of (profit)/loss of equity-accounted investees; (7) amortization of intangible assets recognized in business combinations; (8) tax effect on adjustments; (9) net (gain)/loss on financial assets measured at fair value through profit and loss; (10) net foreign exchange loss/(gain); (11) (Gain) on remeasurement of previously held interest in equity-accounted investees; (12) other financing and transactional costs.
- “Adjusted EBITDA Margin” as Adjusted EBITDA divided by revenue.
- “Adjusted Net Income Margin” as Adjusted Net Income divided by revenue.
____________________________
1 Denotes International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”).
Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and its operations. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.
Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:
- Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,
- Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect changes in, or cash requirements for, our working capital needs, and
- the fact that other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin differently than we do, which limits their usefulness as comparative measures.
The tables at the end of this release provide detailed reconciliations of each non-IFRS financial measure we use from the most directly comparable IFRS financial measure.
We provide earnings guidance on a non-IFRS basis and do not provide earnings guidance on an IFRS basis. A reconciliation of our Adjusted EBITDA Margin guidance to the most directly comparable IFRS financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including depreciation and amortization, expenses related to equity-settled awards and the other adjustments reflected in our reconciliation of historical non-IFRS financial measures, the amounts of which, could be material.
Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization)
Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) is a financial measure not defined under IFRS. We believe that Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) is a useful metric to assess our operating activities. We excluded expenses incurred in connection with potential financing and strategic transactions, including IPO and SPO- related expenses that are not indicative of our ongoing expenses. We also excluded equity-settled awards as these are non-cash expenses and highly dependent on our share price at the time of equity award grants. Therefore, we believe that it is useful for investors and analysts to see operating costs and expenses financial measures excluding the impact of these charges in order to obtain a clearer picture of our operating activity. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization).
Net Working Capital
Net Working Capital is a financial measure not defined under IFRS. We define Net Working Capital as our trade and other receivables plus prepaid expenses and other current assets, less our contract liabilities and trade and other payables, in all cases, a current portion of a specific asset or liability. We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Working Capital.
Net Debt and Net Debt to Adjusted EBITDA Ratio
Net Debt and Net Debt to Adjusted EBITDA Ratio are financial measures not defined under IFRS. We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt. These measures should not be considered in isolation or as a substitute for any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Debt and discussion of Net Debt to Adjusted EBITDA Ratio.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the year ending December 31, 2021, anticipated dividend payments, potential substantive rights over Skillaz, the anticipated impact of the COVID-19 pandemic on our business and results of operations, the sufficiency of our resources and our ability to finance our operations for the foreseeable future, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, significant competition in our markets, our ability to maintain and enhance our brand, our ability to improve our user experience and product offerings, our ability to respond to industry developments, our reliance on Russian Internet infrastructure, macroeconomic and global geopolitical developments affecting the Russian economy or our business, including the impact of the COVID-19 pandemic, changes in the political, legal and/or regulatory environment, privacy and data protection concerns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the caption “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2020, as such factors may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (“SEC”), each of which is on file with the SEC and is available on the SEC website at www.sec.gov. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Unaudited Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands of RUB and USD, except per share amounts)
| For the three months ended March 31, | ||||||||
| 2021 | 2020 | 2021 | ||||||
| RUB | RUB | USD | ||||||
| Revenue | 2,841,115 | 1,990,409 | 37,530 | |||||
| Operating costs and expenses (exclusive of depreciation and amortization) | (1,568,649 | ) | (1,138,619 | ) | (20,721 | ) | ||
| Depreciation and amortization | (237,973 | ) | (184,406 | ) | (3,144 | ) | ||
| Operating income | 1,034,493 | 667,384 | 13,665 | |||||
| Finance income | 69,492 | 19,158 | 918 | |||||
| Finance costs | (150,731 | ) | (118,833 | ) | (1,991 | ) | ||
| Other income | 13,077 | 9,689 | 173 | |||||
| Net foreign exchange (loss)/gain | (222 | ) | 75,313 | (3 | ) | |||
| Gain on remeasurement of previously held interest in equity accounted investees | 223,308 | – | 2,950 | |||||
| Share of loss of equity-accounted investees (net of income tax) | (4,864 | ) | (9,544 | ) | (64 | ) | ||
| Profit before income tax | 1,184,553 | 643,167 | 15,648 | |||||
| Income tax expense | (254,207 | ) | (231,429 | ) | (3,358 | ) | ||
| Net income for the period | 930,346 | 411,738 | 12,290 | |||||
| Attributable to: | ||||||||
| Owners of the Company | 898,801 | 363,463 | 11,873 | |||||
| Non-controlling interest | 31,545 | 48,275 | 417 | |||||
| Comprehensive (loss)/income | ||||||||
| Items that are or may be reclassified subsequently to profit or loss: | ||||||||
| Foreign currency translation differences | 9,218 | 25,518 | 122 | |||||
| Total comprehensive income, net of tax | 939,564 | 437,256 | 12,411 | |||||
| Attributable to: | ||||||||
| Owners of the Company | 906,138 | 386,012 | 11,970 | |||||
| Non-controlling interest | 33,426 | 51,244 | 442 | |||||
| Earnings per share | ||||||||
| Basic (in Russian Rubles per share) | 17.86 | 7.27 | 0.24 | |||||
| Diluted (in Russian Rubles per share) | 17.34 | 7.05 | 0.23 | |||||
Unaudited Condensed Consolidated Statement of Financial Position
As at
| (in thousands of RUB and USD) | March 31, 2021 | December 31, 2020 | March 31, 2021 | |||||
| RUB | RUB | USD | ||||||
| Non-current assets | ||||||||
| Goodwill | 10,669,381 | 9,875,224 | 140,939 | |||||
| Intangible assets | 3,856,940 | 3,439,959 | 50,949 | |||||
| Property and equipment | 442,332 | 466,725 | 5,843 | |||||
| Equity-accounted investees | – | 129,666 | – | |||||
| Right-of-use assets | 196,862 | 215,120 | 2,600 | |||||
| Deferred tax assets | 224,658 | 176,328 | 2,968 | |||||
| Loans issued to equity-accounted investees | – | 11,541 | – | |||||
| Other financial assets | – | 25,491 | – | |||||
| Other non-current assets | 26,983 | 22,176 | 356 | |||||
| Total non-current assets | 15,417,156 | 14,362,230 | 203,655 | |||||
| Current assets | ||||||||
| Trade and other receivables | 95,982 | 69,120 | 1,268 | |||||
| Indemnification asset | 188,624 | 186,473 | 2,492 | |||||
| Loans issued (current portion) | 3,224 | 8,178 | 43 | |||||
| Prepaid expenses and other current assets | 145,040 | 179,118 | 1,916 | |||||
| Cash and cash equivalents | 4,833,839 | 3,367,610 | 63,853 | |||||
| Total current assets | 5,266,709 | 3,810,499 | 69,571 | |||||
| Total assets | 20,683,865 | 18,172,729 | 273,226 | |||||
| Equity | ||||||||
| Share capital | 8,597 | 8,597 | 114 | |||||
| Share premium | 2,015,613 | 1,987,044 | 26,626 | |||||
| Foreign currency translation reserve | (84,803 | ) | (92,140 | ) | (1,120 | ) | ||
| Retained earnings | 2,434,938 | 1,536,137 | 32,165 | |||||
| Total equity attributable to owners of the Company | 4,374,345 | 3,439,638 | 57,784 | |||||
| Non-controlling interest | 156,771 | 69,104 | 2,071 | |||||
| Total equity | 4,531,116 | 3,508,742 | 59,854 | |||||
| Non-current liabilities | ||||||||
| Loans and borrowings | 7,678,085 | 7,791,326 | 101,425 | |||||
| Lease liabilities | 144,706 | 164,245 | 1,912 | |||||
| Deferred tax liabilities | 634,230 | 658,970 | 8,378 | |||||
| Contract liabilities | 134,004 | – | 1,770 | |||||
| Trade and other payables | 118,727 | 178,607 | 1,568 | |||||
| Provisions | 99,747 | 87,822 | 1,318 | |||||
| Other non-current liabilities | 131,812 | 142,531 | 1,741 | |||||
| Total non-current liabilities | 8,941,311 | 9,023,501 | 118,111 | |||||
| Current liabilities | ||||||||
| Contract liabilities | 3,495,800 | 2,785,402 | 46,178 | |||||
| Trade and other payables | 1,973,102 | 1,273,089 | 26,064 | |||||
| Loans and borrowings (current portion) | 512,038 | 485,100 | 6,764 | |||||
| Lease liabilities (current portion) | 79,199 | 77,752 | 1,046 | |||||
| Income tax payable | 461,535 | 401,733 | 6,097 | |||||
| Provisions (current portion) | 649,101 | 578,651 | 8,574 | |||||
| Other current liabilities | 40,663 | 38,759 | 537 | |||||
| Total current liabilities | 7,211,438 | 5,640,486 | 95,260 | |||||
| Total liabilities | 16,152,749 | 14,663,987 | 213,372 | |||||
| Total equity and liabilities | 20,683,865 | 18,172,729 | 273,226 | |||||
Unaudited Condensed Consolidated Statement of Cash Flows
For the three months ended
| (in thousands of RUB and USD) | ||||||||
| March 31, 2021 | March 31, 2020 | March 31, 2021 | ||||||
| RUB | RUB | USD | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income for the period | 930,346 | 411,738 | 12,290 | |||||
| Adjusted for non-cash items and items not affecting cash flow from operating activities: | ||||||||
| Depreciation and amortization | 237,973 | 184,406 | 3,144 | |||||
| Net finance costs | 81,239 | 99,675 | 1,073 | |||||
| Gain on remeasurement of previously held interest in equity accounted associates | (223,308 | ) | – | (2,950 | ) | |||
| Net foreign exchange (gain)/loss | 222 | (75,313 | ) | 3 | ||||
| Other non-cash items | (617 | ) | (724 | ) | (8 | ) | ||
| Management incentive agreement, including social taxes | 66,591 | 53,506 | 880 | |||||
| Share-based payments to Board of directors | 5,433 | 5,319 | 72 | |||||
| Share of loss of equity-accounted investees, net of income tax | 4,864 | 9,544 | 64 | |||||
| Income tax expense | 254,207 | 231,429 | 3,358 | |||||
| Change in trade receivables and other operating assets | 14,098 | (7,029 | ) | 186 | ||||
| Change in contract liabilities | 671,946 | 210,117 | 8,876 | |||||
| Change in trade and other payables | 285,756 | (63,828 | ) | 3,775 | ||||
| Change in other liabilities | (12,462 | ) | (8,526 | ) | (165 | ) | ||
| Income tax paid | (266,002 | ) | (100,762 | ) | (3,514 | ) | ||
| Interest paid | (137,712 | ) | (7,190 | ) | (1,819 | ) | ||
| Net cash generated from operating activities | 1,912,574 | 942,362 | 25,264 | |||||
| INVESTING ACTIVITIES: | ||||||||
| Payment of deferred consideration for the acquisition of subsidiary | (233,836 | ) | – | (3,089 | ) | |||
| Acquisition of subsidiary, net of cash acquired | 66,524 | – | 879 | |||||
| Acquisition of intangible assets | (43,598 | ) | (27,083 | ) | (576 | ) | ||
| Acquisition of property and equipment | (14,279 | ) | (81,695 | ) | (189 | ) | ||
| Interest received | 29,274 | 7,554 | 387 | |||||
| Net cash used in investing activities | (195,915 | ) | (101,224 | ) | (2,588 | ) | ||
| FINANCING ACTIVITIES: | ||||||||
| Bank loans and other borrowings origination fees paid | (41,971 | ) | – | (554 | ) | |||
| Bank loan repaid | (121,447 | ) | – | (1,604 | ) | |||
| Payment for lease liabilities | (19,440 | ) | (10,445 | ) | (257 | ) | ||
| Dividends paid to non-controlling interest | (74,971 | ) | (48,447 | ) | (990 | ) | ||
| Net cash used in financing activities | (257,829 | ) | (58,892 | ) | (3,406 | ) | ||
| Net increase/(decrease) in cash and cash equivalents | 1,458,830 | 782,246 | 19,271 | |||||
| Cash and cash equivalents, beginning of period | 3,367,610 | 2,089,215 | 44,485 | |||||
| Effect of exchange rate changes on cash | 7,399 | 232,877 | 98 | |||||
| Cash and cash equivalents, end of period | 4,833,839 | 3,104,338 | 63,853 | |||||
Reconciliations of non-IFRS financial measures from the nearest comparable IFRS measures
Reconciliation of EBITDA and Adjusted EBITDA from net income, the most directly comparable IFRS Financial measure:
| (in thousands of RUB) | For the three months ended March 31, | ||||
| 2021 | 2020 | ||||
| Net income | 930,346 | 411,738 | |||
| Add the effect of: | |||||
| Income tax expense | 254,207 | 231,429 | |||
| Net interest costs | 115,747 | 99,675 | |||
| Depreciation and amortization | 237,973 | 184,406 | |||
| EBITDA | 1,538,273 | 927,248 | |||
| Add the effect of: | |||||
| Equity-settled awards, including related social taxes(1) | 65,106 | 52,060 | |||
| Other financing and transactional costs(2) | 3,656 | – | |||
| SPO-related costs(3) | – | 14,920 | |||
| Transaction costs related to business combinations (4) | – | 11,119 | |||
| Insurance cover related to IPO(5) | – | 38,832 | |||
| Income from depository(6) | (12,462 | ) | (8,526 | ) | |
| Net foreign exchange loss/(gain) (7) | 222 | (75,313 | ) | ||
| (Gain) on remeasurement of previously held interest in equity-accounted investees (8) | (223,308 | ) | – | ||
| (Gain) on financial asset measured at fair value through profit or loss(9) | (34,508 | ) | – | ||
| Share of loss of equity-accounted investees(10) | 4,864 | 9,544 | |||
| Adjusted EBITDA | 1,341,843 | 969,884 | |||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(2) Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
(3) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(4) Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(5) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(6) In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(7) Foreign exchange gains or losses do not relate to our operating activities.
(8) Reflects gain on remeasurement of the previously held interest in LLC “Skilaz” at fair value as at the acquisition date as of March 31, 2021.
(9) Represents change in fair value of the call option to purchase an additional
(10) On May 6, 2019, we acquired a
Reconciliation of Adjusted Net Income from net income, the most directly comparable IFRS Financial measure:
| (in thousands of RUB) | For the three months ended March 31, | ||||
| 2021 | 2020 | ||||
| Net income | 930,346 | 411,738 | |||
| Add the effect of: | |||||
| Equity-settled awards, including related social taxes(1) | 65,106 | 52,060 | |||
| Other financing and transactional costs(2) | 3,656 | – | |||
| SPO-related costs(3) | – | 14,920 | |||
| Transaction costs related to business combinations (4) | – | 11,119 | |||
| Insurance cover related to IPO(5) | – | 38,832 | |||
| Income from depository(6) | (12,462 | ) | (8,526 | ) | |
| Net foreign exchange loss/(gain) (7) | 222 | (75,313 | ) | ||
| (Gain) on remeasurement of previously held interest in equity-accounted investees (8) | (223,308 | ) | – | ||
| (Gain) on financial asset measured through profit or loss(9) | (34,508 | ) | – | ||
| Share of loss of equity-accounted investees(10) | 4,864 | 9,544 | |||
| Amortization of intangible assets recognized in business combinations(11) | 144,689 | 103,947 | |||
| Tax effect on adjustments(12) | (28,938 | ) | 22,873 | ||
| Adjusted Net income | 849,667 | 581,194 | |||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming a Russian tax resident in June 2019.
(2) Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
(3) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(4) Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(5) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(6) In connection with our IPO, we signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(7) Foreign exchange gains or losses do not relate to our operating activities.
(8) Reflects gain on remeasurement of the previously held interest in LLC “Skilaz” at fair value as at the acquisition date as of March 31, 2021.
(9) Represents change in fair value of the call option to purchase an additional
(10) On May 6, 2019, we acquired a
(11) As a result of the following business combinations: acquisition of
(12) Represents income tax on taxable or deductible adjustments.
Reconciliation of operating costs and expenses (exclusive of depreciation and amortization), the most directly comparable IFRS financial measure, to Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization):
| For the three months ended March 31, 2021 | For the three months ended March 31, 2020 | ||||||||||||||||||||||
| (in thousands of RUB) | Personnel expenses | Marketing expenses | Other general and administrative expenses | Total | Personnel expenses | Marketing expenses | Other general and administrative expenses | Total | |||||||||||||||
| Operating costs and expenses (exclusive of depreciation and amortization) | (845,709 | ) | (441,770 | ) | (281,170 | ) | (1,568,649 | ) | (581,237 | ) | (317,866 | ) | (239,516 | ) | (1,138,619 | ) | |||||||
| Add the effect of: | |||||||||||||||||||||||
| Equity-settled awards, including social taxes(1) | 65,106 | – | – | 65,106 | 52,060 | – | – | 52,060 | |||||||||||||||
| Insurance cover related to IPO(2) | – | – | – | – | – | – | 38,832 | 38,832 | |||||||||||||||
| Transaction costs related to business combinations(3) | – | – | – | – | – | – | 11,119 | 11,119 | |||||||||||||||
| SPO-related costs(4) | – | – | – | – | – | – | 14,920 | 14,920 | |||||||||||||||
| Other financing and transactional costs(5) | – | – | 3,654 | 3,654 | – | – | – | – | |||||||||||||||
| Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) | (780,603 | ) | (441,770 | ) | (277,516 | ) | (1,499,889 | ) | (529,177 | ) | (317,866 | ) | (174,645 | ) | (1,021,688 | ) | |||||||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming a Russian tax resident in June 2019.
(2) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(3) Reflects transaction costs mainly related to the acquisition of Zarplata.ru in December 2020.
(4) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(5) Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements.
Calculation of our Net Working Capital is presented in the table below:
| (in thousands of RUB) | As of March 31, 2021 | As of December 31, 2020 | |||
| Trade and other receivables | 95,982 | 69,120 | |||
| Prepaid expenses and other current assets | 145,040 | 179,118 | |||
| Contract liabilities | (3,495,800 | ) | (2,785,402 | ) | |
| Trade and other payables | (1,973,102 | ) | (1,273,090 | ) | |
| Other current liabilities | (40,663 | ) | (38,758 | ) | |
| Net Working Capital | (5,268,543 | ) | (3,849,012 | ) |
We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt.
Calculation of our net debt is presented in the table below:
| (in thousands of RUB) | As of March 31, 2021 | As of December 31, 2020 | |||
| Loans and borrowings | 7,678,085 | 7,791,326 | |||
| Loans and borrowings (current portion) | 512,038 | 485,100 | |||
| Cash and cash equivalents | (4,833,839 | ) | (3,367,610 | ) | |
| Net Debt | 3,356,284 | 4,908,816 |
Calculation of Adjusted EBITDA on the last twelve months basis as of March 31, 2021:
| (in thousands of RUB) | RUB | |
| Adjusted EBITDA for the year ended December 31, 2020 (1) | 4,103,715 | |
| Less Adjusted EBITDA for the three months ended March 31, 2020 | (969,884 | ) |
| Add Adjusted EBITDA for the three months ended March 31, 2021 | 1,341,841 | |
| Adjusted EBITDA on the last twelve months basis as of March 31, 2021 | 4,475,672 | |
(1) Beginning from the first quarter of 2021, we modified the presentation of Adjusted EBITDA and Adjusted Net Income, our non-IFRS measures, to exclude the impact of foreign exchange gains and losses. Prior period amounts have been reclassified to conform to this presentation. Please see “Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” and “Use of Non-IFRS Financial Measures” elsewhere in this release.
We calculate our Net Debt to Adjusted EBITDA Ratio by dividing Net Debt by Adjusted EBITDA.
| (in thousands of RUB, except ratio) | As of March 31, 2021 | As of December 31, 2020 | |
| Net Debt | 3,356,284 | 4,908,816 | |
| Adjusted EBITDA | 4,475,672 | 4,103,715 | |
| Net Debt to Adjusted EBITDA Ratio | 0.7x | 1.2x |
Reconciliation of EBITDA and Adjusted EBITDA for the year ended December 31, 2020 from net income, the most directly comparable IFRS Financial measure:
| (in thousands of RUB) | For the year ended December 31, | |
| 2020 | ||
| Net income | 1,885,825 | |
| Add the effect of: | ||
| Income tax expense | 685,772 | |
| Net interest costs | 350,216 | |
| Depreciation and amortization | 750,558 | |
| EBITDA | 3,672,371 | |
| Add the effect of: | ||
| Equity-settled awards, including social taxes(1) | 249,286 | |
| SPO-related costs(2) | 151,087 | |
| Insurance cover related to IPO(3) | 54,772 | |
| Income from depository(4) | (41,617 | ) |
| Net foreign exchange loss/(gain) (5) | (83,030 | ) |
| Transaction costs related to business combinations(6) | 51,665 | |
| Share of loss of equity-accounted investees(7) | 49,181 | |
| Adjusted EBITDA | 4,103,715 | |
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(2) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(3) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(4) In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(5) Foreign exchange gains or losses do not relate to our operating activities.
(6) Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(7) On May 6, 2019, we acquired a
FAQ
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