Yandex Q2 2011 Market Update

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Q2 2011 Update Search

July 2011

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2

Forward Looking Statement Disclaimer

This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical fact, including statements regarding the expected growth of the internet search market and the number of internet and broadband users in the countries in which we operate; competition in the internet search market in the countries in which we operate; our anticipated growth and investment strategies; our future business development, results of operations and financial condition; expected changes in our margins and certain cost or expense items as a percentage of our revenues; our ability to attract and retain users, advertisers and partners; future advertising supply and demand dynamics; are forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could cause actual outcomes and results to be materially different from those projected. These risks, uncertainties and assumptions expressly qualify all subsequent oral and written forward-looking statements attributable to Yandex or persons acting on its behalf and include, but are not limited to, the following: the growth of the online advertising market; competitive dynamics in our market; quarterly fluctuations in our operating results; seasonality; our ability to attract users and search traffic; our ability to continue to develop successful services; the adoption of social, mobile and the web as relationship marketing channels; our ability to maintain profitability; global economic conditions; political, legislative and regulatory developments and the other risks described under “Risk Factors” and elsewhere in our prospectus. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this presentation may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. We cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of these forward-looking statements after the date of this presentation or to confirm these statements to actual results or revised expectations, and we disclaim any obligation to do so, except as required by law.

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3

Introduction

Yandex: World-Class Technology & Internet Leader

#1 Internet Destination

38 million unique visitors per month

44% of Russian users’ homepages

#1 Search Leader

65% search market share in Russia

Leading Online Advertising Platform

180,000+ advertisers

58% online ad market share

Largest Russian Internet Business

$440 million Revenues (2010)

$217 million Adj. EBITDA (2010)

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14% 22%

65% 80%

14%6%

69%

4%27%

4

Key Investment Highlights

Naver

Yandex

Baidu

(launched 1997) (launched 2001) (launched 1999)

1 2 3

1.  As of March 2011 2.  Average market share for 2010 3.  As of August 2010

Russia China South Korea

Yandex

Google Others

Baidu

Google

Others Others Google

NHN

Source: Liveinternet.ru, iResearch, SearchEngineWatch.com, Nielsen KoreanClick

Local Champions Can Win in Search

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5


Source: Company information, Liveinternet.ru, iResearch, SearchEngineWatch.com, comScore

Continuous Focus on Innovation

1. Baidu News Service launch date based on being available as of the date of IPO

1998

1997 2000 2002 2004

2002 2004 2006

2001 2005 2008

1

Search

Mail

Maps Shopping News

Payments

Language Understanding

1989

2005

1989

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Local Focus and Understanding Russia/CIS is our “Backyard” Locally-relevant Content and Services

Financial Review

Our Ad Campaigns Have a Russian Accent…

Search Verticals Maps/Traffic Street Views

Images Videos Music

Goods Blogs

…

“The monitor does not give consultations.”

1,400 different territories for Yandex

Russia + Ukraine + Kazakhstan + Belarus

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Source: LiveInternet.ru (March 2011)


Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11


22%

7%

2%

5%

5%

26%

Search Traffic Share 1

Yandex: The Search Market Leader in Russia

1. Search traffic reflects Russian users to Russian websites

2006 • Google opens office in Russia • Google introduces Russian

language morphology

65% 58%

November 2009 Launch of MatrixNet

January 2010 Mail.ru stops using Yandex for search

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Yandex is Replicating Success in Adjacent Markets Key Investment Highlights

Share of Search Traffic in Ukraine, Kazakhstan and Belarus 1

Apr-09

Jun-09

Aug-09

Oct-09

Jan-10

Mar-10

May-10

Aug-10

Oct-10

Dec-10

Mar-11

Jan-10

Apr-10

Jun-10

Aug-10

Nov-10

Jan-11

Mar-11

Ukraine Kazakhstan Belarus


(2005) (2009) (2010)

19%

29%

3% 3%

73%

64%

26%

52%

48%

22%

24%

20% 6%

7%

40% 37%

48% 46%

1. Search traffic reflects transitions by respective country’s users to local and Russian sites

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Sources: LiveInternet.ru (March 2011) 1. Based on monthly search traffic to Russian websites from Russian IP addresses

9

Number of Searches per Month (MM) 1

Leadership in a Fast-Growing Market

сен.05 мар.06 сен.06 мар.07 сен.07 мар.08 сен.08 мар.09 сен.09 мар.10 сен.10 мар.11

2,336

54

254

783

68

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The Gateway to the Russian Internet

News

Traffic Jams / Maps

Yandex.Money

Comparison Shopping

Mail

Russia’s Most Popular Homepage – 44% of All Russian Users

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The Most Popular Online Destination in Russia

Monthly Unique Visitors in Russia (MM)

Source: comScore (March, 2011)

38.335.7

31.6

28.4

23.3

YANDEX MAIL.RU Vkontakte Google Odnoklassniki

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Russia: Large and High Growth Internet Market Opportunity Key Investment Highlights

Growth in Internet Users vs. Penetration

0

20

40

60

80

100

0 5 10 15

Inte

rnet

Pen

etra

tio

n 2

01

0 (

%)

Internet users CAGR 2010-14e (%)

Source: Euromonitor (January 2011), FOM (March 2011) for Russia

Key Developed Markets

Total Internet Users (MM)

Brazil

China

India

Russia 2010

80

5054

66

3933 31

Germany UK Russia France Italy Spain

2010 2014E

Russia 2014e

2010 2014e

BRIC

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7.9

9.6

11.8

14.6

2010 2011e 2012e 2013e

2%

5%

10%11%

13%

15%

18%18%20%

29%

UK China Germany France US Spain Russia Italy Brazil India

13

The Russian Advertising Market Is Booming Market Overview

Source: ZenithOptimedia (April 2011)

Russian Total Ad Market ($ Bn) Online as % of Total Ad Spend – 2010

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Russia – A Rich Source of Technical Talent

Education in “Hard” Sciences Math & Programming Olympiads

Financial Review

Yandex School of Data Analysis Best Place to Work for Russian Developers

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Technology, Technology,

Technology, Local Focus,

Culture. 15

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v Simple auction based bidding; but with some local differences v Geographic targeting is important; but you can dip your toes in without it

v Russian language is very different; localization and translation from English is difficult

v “Conversion” can be different; make sure you are measuring the right things

4 Things to Remember when you use Yandex

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17

v Contact International Business Development team

v Free translation, training and initial setup v Local optimization and campaign feedback v Dedicated English speaking Account Manager in Moscow v Web based reporting, budgeting, etc. available in English language interface

v Yandex U.S. entity available for simplified payment, invoicing & contracting

v Dollars vs. Rubles v Post pay billing available v U.S. vs. Russian legal jurisdiction v European entity planned for late 2011

Get Stare

Want to try Yandex?

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Preston Carey Director, Business Development [email protected] +1 857.288.8762 @prestoncarey

Thank You!