Yesterday Mail.ru Group, a leading, LSE-listed Russian Internet Group, released its annual report for 2014 and provided the final audited segment financial information for the year ended 31 December 2014 and preliminary revenue update for Q1 2015.
The group’s aggregate segment revenue amounted to 35.78 billion rubles in 2014 with EBITDA at 18.3 billion rubles and net profit at 12.52 billion rubles.
The performance over the year was rather weak with aggregate segment revenue growth at just 7.3% year-on-year in Q1 2015 (to 9.43 billion). This indicator was at 24.6% in Q1 2014 and at 29.4% in Q1 2013, Russian high tech portal CNews.ru reminds.
“In Q1 2015 our MMO games and community IVAS revenues remained broadly on budget, but advertising revenues, particularly in display, and our HeadHunter business continued to face difficult conditions as a result of the ongoing economic and geo-political environment,” conceded Dmitry Grishin, Chairman and CEO (Russia) of Mail.Ru Group.
“However we continue to focus on the opportunities presented by both mobile and video advertising across the entire network,” Grishin added, citing myTarget, a mobile ad platform launched in March 2015 to combine the audience of mobile services and social networks in Russia and the CIS, including VKontakte, Odnoklassniki and Moi Mir.
The group announced almost simultaneously the launch of an affiliate network with already 50 mobile apps and sites connected to MyTarget.
>Regarding social network VK — which is now entirely controlled by the group — Q1 revenues grew 27.5% to 1.29 billion. “The focus for 2015 in VK will be the continued expansion of video and mobile advertising,” the group says, noting an all-time record number of registrations in January 2015 (5.56 million).
In Q1 Mail.ru Group continued to execute on its MMO games strategy, “which proved successful over the last years.” Warface remains the group’s largest revenue-generating game with continued strong performance. Skyforge, which was fully released in Russia in Q1 2015, will be launch internationally later this year. Other successful titles will be internationalized under the My.com brand.
“Therefore we expect the MMO games revenues to show solid growth through 2015,” says Grishin.
Also driving international expansion is myMail, which continued to gain traction in Q1. The US is the largest market followed by the UK, France, Germany and Brazil. The group will look to leverage the myMail user base through the international release of games later this year.
Based on current visibility and current market conditions, the group re-iterates its FY 2015 guidance of revenue growth (including both VK and HeadHunter) to be between 7%-12% with EBITDA margins at between 46-47%.
