VKVKCO407,00
VK Company owns shares in joint ventures, and the results of these businesses also affect the performance of the company.
Share in "AliExpress Russia" — 15%. The joint venture was established in 2019. In addition to VK as a shareholder of Alibaba Group — 57,7%, USM International Alisher Usmanov — 24,3% and RDIF — 5%. The company develops the AliExpress marketplace in Russia.
Share in O2O — 45,01%. joint venture, established in 2019 with Sber: companies develop food delivery services Delivery Club, "Kick scooter", "Kitchen on the area", as well as car-sharing "Citydrive".
11 August, the company published a report for the second quarter of 2022, and here are the main conclusions from it.
General results
In the report for the second quarter, the company cites both adjusted indicators, and IFRS indicators. In the review, we will take into account the adjusted indicators, because they take into account the adjustment of the results taking into account the fluctuation of the ruble exchange rate and more accurately reflect the results for the quarter and the first half of the year.
To make you understand, the difference is palpable: under IFRS for the second quarter, the company received a profit of 3.6 billion rubles, and, taking into account the adjustment, a loss of 3.43 billion rubles.
Group revenue growth slowed down: in the second quarter, the growth was 4% by last year, and at the end of six months — 6%, and this is the slowest revenue growth rate in five years on an annualized basis..
Advertising revenues for the quarter increased by 28%, and at the end of six months — on 17% compared to last year. Although the market expected more impressive results due to the blocking of foreign social networks.
Adjusted net loss increased by 53% compared to last year and amounted to 3.43 billion rubles in the quarter. According to the results of six months, the adjusted loss amounted to 10.8 billion rubles.
Adjusted EBITDA margin for the quarter decreased by 9 percentage points, to 13,5%, in the first six months, this indicator decreased by 10 percentage points, to 11,5%.
In the context of segments, revenue was distributed as follows::
- Social Networks and Communication Services — 55%.
- Games — 30%.
- Educational Technologies — 7%.
- New initiatives — 8%.
The debt burden of VK Company increased compared to last year by 22%, to 75.2 billion rubles. The ratio of total debt to adjusted EBITDA increased to 2,9 against 2,3 a year earlier.
Indicators by sources of revenue, billion rubles
| 2к2022 | Annual dynamics | Share in total revenue | |
|---|---|---|---|
| Online advertising | 14,3 | +27,5% | 46% |
| MMO games | 9,22 | −1,5% | 26% |
| Custom payments | 4,19 | −7,5% | 13% |
| Educational technologies | 2,57 | +28,2% | 8% |
| Other revenue | 2,5 | −1,2% | 7% |
Financial performance of the company by year, billion rubles
| 2019 | 2020 | 2021 | 1p2022 | |
|---|---|---|---|---|
| Adjusted revenue | 96,2 | 100,5 | 126,1 | 62,02 |
| Adjusted EBITDA | 28,1 | 19,3 | 29,5 | 7,16 |
| Adjusted net income | 18,7 | −20,9 | −15,5 | −10,8 |
| Adjusted EBITDA margin | 29,2% | 19,2% | 23,4% | 11,5% |
Results by segment
Social networks and communication services. This segment includes social networks "Vkontakte", "Odnoklassniki" and "My World", as well as Mail.ru mail services, ad services, news portals, ICQ and Tamtam messengers and other projects.
Since 2022, the segment includes recommendation services "Pulse" and Relap, which were previously part of the "new initiatives" segment. In this segment, the company earns on advertising and user payments for virtual gifts., stickers and subscription to the music service.
Adjusted segment revenue in the second quarter of 2022 increased by 22% year-on-year and amounted to 17.27 billion rubles.
Its main source was revenue from advertising and user payments.. A positive impact on revenue was made by the inclusion in the segment of recommendation platforms "Pulse" and Relap from 2022.
Segment Adjusted EBITDA increased by 29% on an annualized basis, to RUB 7.2 billion. The main reason for this dynamics is the growth of revenue and a decrease in remuneration for agents and partners..
Adjusted EBITDA margin for the first half of the year decreased from 41 to 38%.
The average daily number of active users of "Vkontakte" increased by 4,5% compared to last year, to 49.1 million people. During the month, the social network was visited by an average of 75.7 million people - this is an increase in 5,5% compared to last year.
In the second quarter, the number of created communities in Russia increased by 24%, and community revenue, using the official VKontakte monetization tools, grew by 116% year to year. Authors, using VK Donut, earned 101 million rubles for the quarter - an increase in 225% year to year. Number of communities, in which this tool is used, grew by 51% year to year, a number of subscribers, transferring money through the platform, increased by 141%.
In the second quarter, VK Messenger was launched - a separate application for communication, available on iOS- and Android devices.
Games. The segment includes online gaming services under the My.Games brand. Here the company earns on in-game advertising, selling in-game items to users, game licenses and subscriptions to the cloud gaming platform.
Adjusted revenue decreased by 17% on an annualized basis, to RUB 9.2 billion. The main reason for this dynamics is the strengthening of the ruble. About 94% adjusted revenue for the quarter accounted for F2P games, and the share of the mobile segment was 72% of the total volume against 77% for the same period in 2021.
Segment adjusted EBITDA decreased by 82%, up to 552 million rubles, by the results of the second quarter. The main reason is again, strengthening of the ruble, which hit international revenue, as well as the lack of new game releases.
Adjusted EBITDA margin for the first half of the year fell from 24 to 4%.
Average monthly active audience, MAU, increased by 24,6%, up to 26 million people. But the number of paying users has decreased to 3,8% compared to 4,9% a year earlier.
Educational technologies. This segment includes GeekBrains educational services, Skillbox and Skillfactory, and the sale of training courses to users brings income.
Adjusted revenue increased by 4% compared to last year, to RUB 2.26 billion. Adjusted EBITDA loss decreased by 61% and amounted to 369 million rubles against a loss of 948 million rubles a year earlier.
In the second quarter, the number of registered users of educational services increased by 480 thousand and reached 11.3 million people - this is on 40% more, than a year ago. According to the results of the second quarter, the number of new paying users is 37 thousand people compared to 31 thousand a year earlier.
Adjusted EBITDA margin for the first half of the year increased from −25% to −16%.
New initiatives. Various services are combined in this segment, not suitable for the definition of the first three segments: Yula ad service, «VK Clips», business solutions, smart column "VK Capsule" and others.
Segment adjusted revenue decreased in the second quarter by 9%, to RUB 2.47 billion. The main reason for the fall is the transfer of the recommendation platforms "Pulse" and Relap to the segment of "social networks and communication services".
Adjusted EBITDA loss increased 242%, to RUB 3.05 billion, due to the growth of investments in the development of VK Play, "VK Clips" and other new services of the company.
Revenue of B2B-projects increased by the end of the quarter by 43% compared to the same period last year and reached 1 billion rubles. The main source of revenue remains VK Cloud Solutions.
Joint ventures and associated companies:
- O2O — loss of 2.64 billion rubles against a loss of 3.9 billion rubles a year earlier.
- "AliExpress Russia" - 0 million rubles against a loss of 489 million rubles a year earlier.
- "Uchi-ru" - a profit of 43 million rubles against a loss of 25 million rubles a year earlier.
- "Umskul" — profit 11 million rubles. VK Company acquired a stake in the service 25% in October 2021.
News: purchase «Zena», separation of assets, benefits and Latham
Since March 2022, VK Company has been negotiating with holders of bonds with a maturity in 2025 for a total amount of $ 400 million. At the time of publication of the reporting, VK bought part of the issue as a result of a number of agreed market transactions., but which one is unknown.. 4 In August, the government provided large Russian Internet companies with preferential loans to refinance the debt in the amount of 130 billion rubles in connection with the cessation of trading in their securities. Among the recipients of support was VK Company.
28 April 2022 VK agreed to purchase the services "Zen" and "News" from "Yandex", but the terms of the deal were not disclosed by the company.. Integration of services will help VK Company to strengthen its position in the segment of recommendation systems and expand the scope of its advertising offers. To complete the transaction, the parties must obtain FAS approval.
7 July 2022 became known, that VK and Sber are discussing the separation of joint assets from the O2O holding. After the separation of assets, VK can gain control over the delivery service of ready-made food Delivery Club, but this business does not fit into the concept of development of VK Company. Probably, the deal to purchase a recommendation and news service from Yandex included the option of subsequent transfer of the Delivery Club business to it, but the companies did not make official statements about this..
15 July 2022 VK Company bought a stake 90% in the Brazilian company Mentorama for 700 million rubles - the company manages the online education service in Latin America. The service will be integrated into Skillbox and will allow you to cover a fast-growing market. According to statista forecasts, the online education market in Latin America will grow to $ 3 billion by 2023, and VK Company plans to make money on this.
What's the bottom line?
The report did not meet market expectations. Despite the departure of foreign social networks and services, MAU "Vkontakte" grew slightly - on 5,5%. In 2021, MegaFon conducted a study of mobile traffic in Russia, according to which on "Vkontakte" accounted 28%, on Instagram* — 35,5%, and on Tiktok — 24%. The remaining 13% shared with each other other other social networks. At the same time, the most active audience is at Vkontakte.: it is visited daily 73% social network users. "Instagram"* is located in second place with an average daily audience 60%, and Tiktok has 35%.
Advertising revenue growth by 17% for the first half of the year looks weak in comparison with the growth in the number of advertisers on the platforms of VK Company: for the second quarter, the number of paying advertisers of small and medium-sized businesses increased by 89%. Maybe, such growth is associated with the launch of the updated advertising platform "VK Advertising" in April 2022 - and not all advertisers have yet managed to deal with it.
Due to the high level of uncertainty, the company refrained from forecasts for the next period and refused to hold a general conference call on reporting.. The future results of VK Company will be influenced by the dynamics of the ruble exchange rate, as well as transactions, announced in July.
The integration of Yandex services will increase the reach and opportunities for the growth of the advertising business, and the division of assets with Sber will get rid of ballast, which greatly worsens the financial results of VK Company.
