Nebius Group N.V. annual report, Q4 FY2023

Business context and reporting period

This is Yandex N.V.’s audited Form 20-F for the fiscal year ended December 31, 2023, prepared under U.S. GAAP in Russian rubles (RUB). It is not a standalone fourth-quarter report; the filing does not provide clear Q4-only financial results. The reported FY2023 results include the businesses subsequently agreed to be sold.

In February 2024, Yandex agreed to sell the Russian operations and certain international businesses for a stated total valuation of RUB 475 billion, subject to a mandatory 50% discount to fair value under Russian law. The transaction was planned in two closings and remained pending at the filing date. The businesses to be divested generated over 95% of 2023 group revenue and represented approximately 95% of assets and employees. The retained portfolio includes Nebius AI, Toloka AI, Avride, TripleTen, a Finnish data center and minority investments. These four retained businesses generated RUB 1.8 billion of 2023 revenue and an Adjusted EBITDA loss of RUB 24.9 billion.

Key financial metrics

Amounts below are RUB billions unless noted; USD figures are convenience translations.

At year-end, cash and cash equivalents were RUB 96.5 billion (USD 1.08 billion); total debt was RUB 141.5 billion, including RUB 92.0 billion current debt. Cash exceeded current debt by RUB 4.5 billion, before considering other liabilities and restrictions. Total assets were RUB 786.6 billion and shareholders’ equity RUB 296.3 billion. Contractual obligations totaled RUB 262.8 billion.

Material changes versus prior year

• Revenue growth came across major segments: Search and Portal rose 49%; E-commerce, Mobility and Delivery 61%; Plus and Entertainment 111%; and Classifieds 97%.
• Search and Portal remained the principal earnings contributor: revenue was RUB 337.5 billion and Adjusted EBITDA RUB 173.0 billion. E-commerce, Mobility and Delivery recorded an Adjusted EBITDA loss of RUB 23.6 billion, wider than the prior-year RUB 19.6 billion loss. Plus and Entertainment moved to positive Adjusted EBITDA of RUB 2.9 billion.
• Despite higher operating income, net income fell as 2022 included one-time gains of RUB 38.1 billion from the News and Zen deconsolidation and RUB 9.3 billion from convertible-debt restructuring. FY2023 also included RUB 22.9 billion of foreign-exchange gains, higher interest expense of RUB 10.9 billion, and RUB 7.5 billion of long-lived-asset impairment charges.
• Investment and financing needs rose: investing cash outflow increased substantially, and total debt rose from RUB 51.2 billion to RUB 141.5 billion. The company also paid USD 702.5 million (RUB 57.3 billion) to acquire Uber’s remaining 29% interest in MLU B.V.

Outlook, risks and unusual items

• Management said geopolitical and macroeconomic uncertainty limited visibility and that it could not provide forward-looking expectations. It cited sanctions and export controls, currency volatility, inflation, higher interest rates, capital controls and changing consumption as key factors.
• The independent auditor highlighted substantial doubt about the company’s ability to continue as a going concern if the sale is not completed. Russian operating businesses historically financed the group, while restrictions limit transfers from Russia to the Dutch parent. The financial statements nevertheless use a going-concern basis and include no adjustments for a failure to continue as a going concern.
• As described in the filing, the sale’s completion depended on closing steps, regulatory and sanctions developments, and the purchaser’s ability to fund cash consideration. Failure or delay could impair financing for the retained businesses, risk employee and partner losses, and affect Nasdaq listing status. The sale could also trigger tax liabilities and purchaser claims under the agreement.
• The company warned that retained operations were early-stage, had limited standalone operating experience, and would lose long-term access to intellectual property held by the divested businesses. It also disclosed five-year non-compete and employee non-solicitation obligations, and potential need for additional financing.
• Potential unaccrued non-income-tax contingencies were estimated at approximately RUB 59.1 billion, including penalties and interest; RUB 14.3 billion of related contingencies was accrued across specified balance-sheet lines. Management noted tax-law uncertainty and ongoing audit exposure.
• Nasdaq trading in Class A shares remained halted. The company expressed hope trading might resume after the sale but gave no assurance; it planned to terminate its Moscow Exchange listing in connection with the second closing.

Most important facts for investors to verify

1. Whether and on what final terms both sale closings completed, including actual cash and share consideration, proceeds received outside Russia, and any tax or transaction costs.
2. The retained company’s post-sale cash, debt, funding needs, standalone costs and operating performance; historical consolidated results are not representative of the retained businesses.
3. Whether Nasdaq trading resumed and how the share count, treasury shares and capital structure changed after the transaction.
4. The basis and cash implications of the RUB 59.1 billion estimated non-income-tax contingencies, accrued tax exposures and any additional sale-related tax liabilities.
5. How the auditor’s going-concern warning and financing assumptions were resolved after the reporting date.