Mail.Ru Group Limited (LSE: MAIL, hereinafter referred as “the Company” or “the Group”), one of the largest Internet companies in the high-growth Russian-speaking Internet market, today provides the following preliminary unaudited segment financial information and key operating highlights for the full year ended 31 December 2013.
FY 2013 Performance Highlights
- FY 2013 Group aggregate segment revenue grew 29.6% Y-o-Y to RUR 27,404 million
- FY 2013 Group aggregate segment EBITDA grew 30.8% Y-o-Y to RUR 15,087 million
- FY 2013 Group aggregate net profit grew 36.1% Y-o-Y to RUR 11,447 million
- Net cash position as of 31 December 2013 was RUR 31,303 million
Key Developments in 2013
- Launch of my.com project that focuses on international markets and provides a suite of communication and entertainment mobile app: myMail, a mobile email client that lets users manage all email accounts in one place; myChat, a mobile messaging service for free text messages, voice and video call; and myGames, a collection of mobile games: Jungle Heat, Lucky Fields, Poker Arena, Evolution (February 2014 launch)
- Email web service updated with new interface and tutorial for new users
- Support for third-party email accounts in Mail.Ru email web service and mobile apps for iOS and Android
- Introduction of email for business – free email service for your domain powered by Mail.Ru
- Launch of Cloud.Mail.Ru with 100GB of free cloud storage and file syncing clients for Windows, Mac, iOS and Android
- OK music service updated with personalized radio, faster and easier music uploader and modern design
- OK video service updated with new back-end, new design, and new tools (channels, uploader, search)
- Enhanced tools for viewing and managing photos in OK (large photos, full-screen mode, new uploader, move, delete and set as main quick actions)
- Multiple improvements of newsfeed, search and security algorithms for OK
- New web design of My World
- MyWorld iOS and Android apps updated with new chat, built-in games and support for groups, gifts, music and video
- Warface continued growth, major update in November 2013 with “Liquidation” expansion pack
- Launch of web-based MMO games Pirate Code and War of Thrones
- Jungle Heat major update with “Heroes” expansion pack
- ArcheAge closed beta test gained significant attention from gaming community
- Announcement of H1 2014 release of World of Speed – AAA free-to-play online racing MMO
- Mail.Ru Agent for iOS and Android updated with video calls, themes and stickers
- Target.Mail.Ru launched mobile ad platform on Odnoklassniki and My World
- New UI for campaign management, new targetings, new reports and stats introduced by Target.Mail.Ru
- Mail.Ru Group’s proprietary search engine provides all search results since July 1, 2013
- Signed search monetization agreement with Yandex
- Search index volume has grown from 5 to 10 billion documents
- Significantly redesigned version of Amigo browser released
- Mail.Ru Group Moscow team moved to new Headquarters building in June 2013
- Launched non-profit platform Dobro.Mail.Ru for charity crowd-funding
Commenting on the results of the Group, Dmitry Grishin, Chairman and CEO of Mail.Ru Group, said:
“I am pleased to report FY 2013 Mail.Ru Group preliminary results during which time our company has had another successful period, meeting or exceeding key performance indicators, and hence delivering strong growth across all segments. Compared to FY 2012, Group aggregate segment revenue increased by 29.6%, reaching RUR 27,404 million and Group aggregate segment EBITDA rose 30.8% to RUR 15,087 million as the company continued to exercise tight control over costs.
Overall advertising continued to grow in line with the market with growth of 24.3% for FY 2013. Throughout the year contextual advertising continued to be strong supported by a continued focus on the Target product, and our solid market share in search. In addition in H2 contextual advertising also benefited from our monetization agreement with Yandex. Looking into 2014 we expect that advertising budgets will continue the trend of the last few years and continue to move online, away from all other genres. As such we expect another solid year in advertising growth.
As evidenced by the 40.6% growth we continued to execute on our MMO games strategy through 2013. Warface remains an important component of this and continues to see increasing traction in terms of both users (reaching over 170k PCU by the end of the year) and revenues, and during H2 2013 it remained our top revenue generating game. The closed launch of ArcheAge in Q4 2013 was well received and the initial signs for the game are very promising. With a number of further releases in 2014, and new genres of games, we expect that the MMO games revenues will continue to see good growth in both paying users and revenues.
In addition Jungle Heat, which was released under the my.com brand in June 2013, has seen strong initial success and in H2 became a material revenue contributor with the US as the largest market, and near 90% of the revenues outside of Russia. Since June 2013 the game has had over 10.6m downloads. Lucky Fields (launched in July 2013) has also been well received with over 1.0m downloads thus far. With the first launch of Evolution in Q1 2014 and further 2014 releases the initial signs for my.com games are promising and the site has had over 2.1m visits since it went live in November 2013.
Community IVAS remained an important contributor to our revenues in FY 2013 delivering 29.1% growth. The main driver of this growth is the continued increase of paying users reaching 7.6m monthly paying users in H2. As in 2013 we expect that IVAS will continue to show good growth in 2014 growing broadly in line with group revenues as we remain focused on increasing user engagement and improving our product.
While we continue to invest in the business, our sustained growth and the operating leverage in the business delivered strong margins with FY 2013 EBITDA margins of 55.1%.
Looking into 2014 the structural drivers of our business remain unchanged and we also continue to expand into new markets. As such we look into 2014 with confidence and we expect to see FY 2014 Group aggregate revenue growth of between 22-24%. We expect that this revenue growth will be broadly reflected in advertising, games and IVAS all seeing revenue growth rates at, or around, the overall group growth rate.
We continue to put a strong emphasis on dedicating resources to driving user engagement and product development. Further we will continue to invest in the best R&D talent and maintain our focus on the quality of our development base. As a result, and even taking into account costs associated with the expansion of my.com, the operating leverage in our business remains unchanged. We would therefore expect FY 2014 Group aggregate segment EBITDA margins of between 53-54%.”
