Mail.ru Group announced the results of Q4 2016. The Group's revenue exceeded analysts' forecasts, reaching 13.24 billion rubles. The Internet company said it had received a privilege for the exemption of game business from VAT, which has brought it more than 340 million rubles.
In Q4 2016 the total revenue of Mail.ru Group increased by 19.2% and reached 13.24 billion rubles, said the Internet company. Quarterly revenue surpassed assessment of Renaissance Capital. They forecast a figure of total net income, excluding the tax rate at the level of 11.7 billion rubles, while it amounted to 12.6 billion rubles, an increase of 18%.
At the end of 2016 Mail.Ru Group's revenue rose by 14.8% compared with the previous year and amounted to 42.8 billion rubles. In 2017 Mail.ru Group expects to increase this figure by 16-19% to 49,6-50,9 billion rubles, EBITDA profit margin is projected at 42%.
In Q4 2016 revenues from advertising rose by 26%, amounting to almost 6 billion rubles. Co-founder and Chairman of the Board of Directors of Mail.Ru Group Dmitry Grishin and its CEO Boris Dobrodeev noted the improvement in the dynamics of revenue from the search in Q4, as well as "stable growth" of targeted advertising in social networks, especially on mobile devices. "We expect that in general the trends observed in 2016 will continue in 2017: this applies to the redistribution of advertising budgets in favor of online advertising, and to the growth of the mobile segment and native advertising," they said.
Mail.ru Group's revenue from MMO-games increased by 36.5% in Q4, to 3.8 billion rubles. The largest game is Warface, followed by War Robots. "The schedule of important releases in 2017 is very tight: in the first half we've planned to release one of our key franchises Revelation Online in the international market and Skyforge version for consoles. In addition, we plan releases of mobile games. With this in mind, we look forward to significant growth of the games in 2017," said Grishin and Dobrodeev.
According to Renaissance Capital, the dynamics of the proceeds from the games was affected by the acquisition of Pixonic studio, which key game is War Robots. Followers of Pixonic since the acquisition in October 2016 have doubled, according to a press release.
In January 2017 the gaming business of Mail.ru Group received a benefit from the Federal Tax Service of Russia, which can further accelerate the growth of the Group's revenue in 2017, according to the company's message. The FTS confirmed that the revenues from Mail.ru Group on the Russian market of online games will not be subject to VAT from Q4 2016. Due to this, the group has already received 342 million rubles. In 2017, the proportion of revenues that the group will receive in connection with the exemption from VAT, will be about 1 billion rubles, expects Mail.ru Group.
Analysts at Renaissance Capital believe that in Q4 2016 Mail.Ru Group was able to improve performance mainly due to the advertising segment, the growth of VKontakte, the accession of new assets. In addition to Pixonic Group last year it bought for $10 million service Delivery Club. "We expect that in the short term, the total value of EBITDA in Pixonic and Delivery Club is close to zero, as we continue to invest in the development of these businesses," -said Dmitry Grishin and Boris Dobrodeev.
Revenue from social network VKontakte, which is owned by Mail.Ru Group, in Q4 increased by 49.9% and amounted to 3 billion rubles. At the year-end 2016, the revenues of VKontakte increased by 43.4%, to 8.9 billion rubles. Mail.Ru Group recalled that, having consolidated in September 2014 100% of the social network, it planned at least to double its revenues in three years. This goal has been achieved in two years, and within the next three to four years the revenues of VKontakte will probably double again, according to Mail.ru Group.
The report says that in 2017 VKontakte will focus on native advertising, particularly in the mobile and video advertising in the news. Monthly audience of VKontakte has reached 95 million people, according to reports. While monthly active audience of Mail.Ru Group is 77.7 million users.
In February, the financial results for Q4 and entire 2016 were published by Yandex, also receiving the basic income from advertising. Consolidated revenues of Internet companies grew during the quarter by 22% and amounted to 22.1 billion rubles. Net profit decreased by 57%, to 1.2 billion rubles. According to LiveInternet, the share of Yandex on the Russian search market in Q4 2016 averaged 55.4%. As a result, the company's net profit decreased by 30% and amounted to 6.8 billion rubles., And the company's consolidated revenue increased by 27%, to 75.9 billion rubles. EBITDA increased by 25%, to 26.1 billion rubles.