from VK Company
VK Company Limited audited IFRS results for FY 2021
|
VK Company (VKCO)
VK Company Limited audited IFRS results for FY 2021
March 3, 2022. VK Company Limited (LSE, MOEX: VKCO, hereinafter referred to as "the Company" and together with its subsidiaries "VK" or "the Group"), one of the largest companies in the Russian-speaking Internet market, today releases audited IFRS results and segment financial information for the year ended 31 December 2021.
Performance highlights* Results for the three months ended 31 December 2021:
Results for the twelve months ended 31 December 2021:
* Performance highlights are based on the Group aggregate segment financial information, which is different from IFRS accounts. See "Presentation of Aggregate Segment Financial Information".
Commenting on the results of the Group, Vladimir Kirienko, CEO (Russia) of VK, said:
"Given that this is my first reporting as the CEO of VK (Russia), I would like to discuss the key financial parameters and share my initial impressions.
First of all, we have achieved good results. In Q4, Group revenue grew by more than 12%, with Education Technology services (+38%), Other (+25%) and online advertising (around +15%) revenues showing superior growth rates. MMO Games continued to expand despite the challenging base effect, combined with no new games launches.
Q4 revenue split:
VKontakte remains the key contributor to our core online advertising revenue stream and to the largest Communications & Social (C&S) reporting segment. Its quarterly revenue reached RUB 8.1bn (+12% YoY), with Q4 providing the toughest comp within 2021 (+17.2% YoY in Q4 2020). VKontakte delivered 21.9% YoY revenue growth to RUB 27.9bn for the year and further strengthening of its leading position on the domestic social networking market remains among our major strategic priorities.
In terms of advertising products, performance remained the key driver (+20% YoY) in Q4. Within advertising formats, we saw 27% YoY growth for video.
Community IVAS (14% of Group revenue in Q4) grew by 2.9% YoY, driven by Music.
With 97% of Community IVAS and 81% of Online advertising revenues booked within the C&S segment, it saw 10.2% growth with significant margin improvement as EBITDA margin expanded to 45.7% versus 40.7% in Q4 2020, as we continued to focus on efficiency and exercise tight cost control in all the key verticals of the segment.
MMO Games (27% of Group revenue in Q4) grew by 3.3% YoY, with the overall Games segment (represented by MY.GAMES) delivering 5.1% growth to RUB 11.6bn. EBITDA of MY.GAMES was RUB 3.8bn with a margin of 32.7% compared to 24.2% in Q3 and 13% in Q4 2020. MY.GAMES delivered RUB 10.4bn in EBITDA in 2021, having more than doubled EBITDA versus 2018 level (RUB 5.0bn) a year ahead of guidance. EBITDA Margin was 23.6% for the year, a significant improvement versus 16.0% in 2020 and in line with the target low to mid-20s through-the-cycle margin for this business outlined in 2018.
EdTech segment (Skillbox Holding Limited) revenues grew by 38.1% YoY in Q4 (to RUB 3.6bn) with RUB 10.4bn in revenue delivered in 2021. EBITDA margin stood at minus 12.7% in Q4 versus minus 13.0% in Q3 given the ongoing investment into the course offer along with international experiments.
Within the New Initiatives segment, Youla remains the largest component, with RUB1.1bn in revenue in Q4 (+11% YoY). Youla delivered RUB 3.8bn in revenue in 2021, arriving within guidance of RUB 3.6-3.9bn. The EBITDA margin stood at minus 20% in Q4 2021 versus minus 59% in Q4 2020.
For the year, VK revenues were RUB 125.8bn versus guidance of RUB124-127bn with a stable margin of 25.3%. Forward guidance and outlook will be provided following the completion of the ongoing strategic review and upon better overall visibility.
Our net debt position excluding lease liabilities at the end of December stood at RUB 35,030m (RUB 50,478m including lease liabilities), with RUB 21.6bn invested into the O2O JV, $60.3mn into the AER JV and RUB 4.7bn into online education and games in 2021.
Also, I want to share my initial impressions. I believe that VK offers a phenomenal combination of assets, which cover almost all the daily online, and now also many offline, needs of millions of users. The company has unique technologies and platform solutions with up-to-date services that allow people to stay in touch, support each other, work, study and much more.
I have also been impressed with the team at all levels and their motivation to either remain or become the leaders in their directions. And we have a strong brand and unique culture. In my view, the company generally has everything it needs for us as a team to succeed in our main goal - develop the VK ecosystem and solidify its role on the Russian market".
Commenting on the results of the Group, Dmitry Grishin, Chairman of the Board of VK, said: "I have a lot of confidence in our team and our unified ability to make VK the best it can be. We will continue to develop the VK ecosystem and strengthen the Group's leadership positions in the key areas. I remain confident that our services will remain indispensable for our users and partners in solving their everyday tasks in a highly convenient and safe way".
Postponement of conference call and webcast: In light of the current level of uncertainty and market volatility, the conference call and webcast, which had been previously scheduled for today to discuss the results and outlook will be postponed until there is better visibility. We continue to assess the situation and are in the process of contingency planning for all potential sanctions outcomes. Continuity of our business with ongoing protection of our employees and our customers are our top priorities.
We will host a group call as soon as possible. In the meantime, all our stakeholders are welcome to send any questions related to our business using the contact details available below and we remain available for individual incoming call requests.
Financial and operational highlights around our most material non-consolidated assets among associates and joint ventures including AliExpress Russia JV and O2O JV can be found below in the "Joint Ventures" section of the press release.
Segmental highlights
Communications and Social segment
The segment's revenue was up 10.2% YoY to RUB 17.9bn in Q4 2021 driven by advertising revenue growth. EBITDA increased by 23.8% YoY to RUB 8.2bn in Q4 (with a margin of 45.7% vs 40.7% a year ago, mainly driven by increased efficiencies across the largest cost items, including Personnel, Marketing and Agent/Partner fees) despite the ongoing product investments, particularly into content and music.
Communications and Social Segment Performance - Q4 2021 & FY 2021
VKontakte
VKontakte leads among the local social networking platforms, with an average Russia MAU of 72.5mn and DAU of 47mn in Q4. According to Mediascope*, VKontakte reaches 76% of the Russian Internet audience every month, with 45% visiting the platform daily.
The number of VK Mini Apps rose by 53% YoY in December to over 39,700, with MAU of 46mn (+18% YoY). Monetization of mini apps and games on the VK Mini Apps platform is expanding, with its in-app ad revenue increasing by 300% YoY in Q4.
Video is a major focus area, with VKontakte's revenue from video ads increasing by 6.25x YoY in Q4. VK Video was rolled out in October with DAU of 40mn in Q4. To further drive engagement, an updated video player with automatic Russian subtitles was rolled out in October. In November, a new interface, along with an updated search and recommendations system was released, with the full video catalogue enabled for unregistered users in December. The first series of a VK Video originals generated 44mn views within three months.
48mn content creators published content on VKontakte every month in Q4. Creators using VK Donut earned over RUB 53mn in Q4 (+23% QoQ), with the number of public pages using VK Donut up 1.8x and the number of donating subscribers up 2x YoY in 2021.
Among the latest social commerce initiatives was the addition of a new tool for VKontakte stores that shows related products.
* Source: Mediascope, October 2021, Russia (all cities, age 0+), mobile app
Odnoklassniki (OK)
Average Russia MAU stood at 38mn in Q4, with high engagement reflected in more than 7.3bn virtual gifts, 731mn postcards and 573mn stickers sent during the quarter.
Average mobile games MAU exceeded 13mn. DAU in mobile games grew by 7% YoY in Q4, with penetration exceeding 10% of overall OK mobile DAU. Total payments to game developers exceeded RUB 3.2bn in 2021, with ~40% of payments made to mobile game developers. Total games advertising revenue grew nearly 4x YoY in Q4.
Moments MAU reached 27mn in December (+2.2x YoY), with reach exceeding 50% of total OK MAU. The number of views stood at 434mn (+4x YoY) and reactions at 46mn (+4.8x YoY) in Q4.
Some of the multiple latest product initiatives include recommended publications within newsfeed, new content formats based on machine learning and AI-algorithms, updated business platform, new social commerce tools, major mobile interface update etc.
OK continues to develop advertising based monetization, with the revenue from the internal ads manager within OK up 38% YoY in Q4.
Cross-integrations continue, with the launch of VK Mini Apps application on desktop in October, along with the ongoing integration of VK Pay Checkout on the web platform.
Games segment (represented by MY.GAMES)
MY.GAMES revenue grew by 10.5% YoY in 2021 (to RUB 43.8bn), including 5.1% YoY growth in Q4 (to RUB 11.6bn). ~67% of Q4 revenues came from mobile games (versus 76% in Q4 2020). The share of revenue coming from markets outside of Russia & CIS stood at 73% (versus 77% in Q4 2020), with the top-3 international markets being the US, Germany and the UK. MY.GAMES revenue splits by geographies and platforms in Q4 2021 were affected by strong performance of PC/console games in the quarter (saw traditionally high demand on Russian market) and ongoing adaptation to IDFA-related changes.
Average MAU rose by 5.2% QoQ to 22.1mn in Q4, with hyper-casual players of Mamboo Games being the key driver, while the share of monthly paying users was stable at 4.31%.
In Q4 2021, MY.GAMES EBITDA grew 163.6% to RUB 3.8bn, with a margin of 32.7%. MY.GAMES reached its goal of doubling EBITDA versus RUB 5.0bn delivered in 2018 a year ahead of schedule, with its 2021 EBITDA reaching RUB 10.4bn.
MY.GAMES Venture Capital (MGVC) completed 2 new minority investments in Q4 (Square Triangle and Talerock), with 12 transactions including 2 consolidations (Mamboo Games and Playkey) executed in 2021.
Games Segment Performance - Q4 2021 & FY 2021
Mobile
The top-5 revenue-generating mobile titles in Q4 remained War Robots, Rush Royale, Hustle Castle, Grand Hotel Mania and Left to Survive.
|