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Press releases | Archive 2011

RBC posts Q3 and 9M 2011 financial results: revenue from Internet advertising soars 52% in 9M

Headline financial and operating results in Q3 2011:

  • RBC's total revenue climbs 29% to RUB 1,002m;
  • Internet advertising revenue increases 36% to RUB 429m in Q3 and 52% to RUB 1,332m in 9M;
  • RBC's Internet audience rises 52% to 64.8m1 users as of September 30, mainly on the strength of a 166% increase in the audience of the Qip.ru entertainment portal;
  • RBC again raises advertising prices on its online resources by an average 15%-25% effective September 1;
  • RBC acquires a controlling stake in geosocial service OGOROD;
  • RBC TV launches a new studio complex, updates design and programming grid;
  • RBC TV concludes exclusive agreement with Bloomberg TV on the provision of business and financial news on western markets.
  • Key restrictions are lifted on RBC's acquisitions and divestment of non-core assets, after the company agrees with its creditors to amend the relevant provisions of the loan agreement.

Moscow, November 28, 2011 - RBC OJSC (MICEX, RTS: RBCM) announces today its unaudited consolidated financial results for the third quarter and the nine months of 2011.

"RBC showed strong advertising revenue growth in all of its three segments in Q3, despite the fact that most of the reporting period includes summer months when the activity of many of RBC's advertisers is traditionally sluggish. The highest rates were registered in Internet advertising thanks to a sustainable rise in the revenue of one of the most efficient advertising platforms in the Russian language segment of the Internet, Rbc.ru, as well as the Qip.ru entertainment portal, which is rapidly gaining in popularity and monetization, and which witnessed more than fourfold increase in Q3 revenue.

In 9M, the company's advertising revenue in all three segments outperformed the market. Despite a traditional decline in EBITDA in Q3 due to seasonality of RBC's advertising revenue, EBITDA rose 27% year-on-year in January-September 2011. The last three months of the year are central for the company in terms of its business profitability growth, and in Q4 revenue expansion rate will be much higher than that of expenses.

In 2011, RBC has made a huge step forward and laid the foundation for further dynamic growth. We have strengthened our team, considerably improved the quality of our media products and the image of RBC, saw our ratings rise and boosted monetization of our media resources. We are upbeat about 2011 performance and reiterate earlier guidance of at least 30% revenue growth. EBITDA margin is expected to outpace last year's result.

It will be possible to forecast the growth rates of the Russian media market in 2012 no earlier than in February, but one may safely venture to say now that the Internet market will continue to expand regardless of the economic environment as budgets will keep on moving online from other media. The Internet remains a priority for RBC, and we expect to increase its contribution to total revenue to 85% over the next two years," RBC CEO German Kaplun said.

RBC's Q3 revenue

Million rubles Q3 2011 2 Q3 20102 2 Change (%)
Internet 637 476 34%
- Advertising 429 316 36%
- Services 208 160 30%
Television 131 98 34%
Printed Publications 234 203 15%
- Business Publications 3 88 66 33%
- Salon Press Publishing House 146 137 7%
Total revenue 1002 777 29%

RBC's 9M revenue

Million rubles 9M 2011 2 9M 2010 2 Change (%)
Internet 1901 1368 39%
- Advertising 1332 875 52%
- Services 569 493 15%
Television 387 287 35%
Printed Publications 672 584 15%
- Business Publications3 260 193 35%
- Salon Press Publishing House 412 391 5%
Total revenue 2960 2239 32%

Revenue and EBITDA. RBC's total revenue advanced 29% year-on-year to RUB 1,002m in Q3. The rise in revenue reflects the company's high ratings, increased sell-out ratios of its media resources and hikes in advertising prices (in Q4 2010, RBC raised advertising prices in its business publications by 10%, in early 2011 it increased the cost of advertising at RBC TV by an average 15% and by an average 18% on online resources). RBC's Internet services (web hosting and domain name registration account for about 70% of revenue from Internet services), which are not exposed to seasonal fluctuations in advertising, also showed sustainable growth rates of 30%.

In 9M, EBITDA increased 27% year-on-year and reached RUB -97m, which is in line with RBC's budget for this year. EBITDA margin is traditionally low in Q3, which includes the last two summer months. The major increase in RBC's EBITDA margin occurs in Q4, when revenue expansion considerably outpaces the growth of expenses.

Internet. Internet revenue increased 34% in the third quarter of 2011 compared to the same period of 2010, reaching RUB 637m. Revenue from online advertising rose 36% to RUB 429m. Web hosting, domain name registration, e-payment system RBK Money and other paid services advanced 30% to RUB 208m during the reporting period.

RBC's aggregate Internet audience grew 52% year-on-year to 64.8m as of the end of Q3. The audience of Rbc.ru, the major business portal in Russia, shot up 58% to 17.4m users as of the end of September 2011. The number of users of RBC's non-business resources went up 55% year-on-year to 61.2m in September, primarily thanks to a 166% surge in the audience of Qip.ru portal. Its audience reached 35.4m users.

The company increased the advertising prices for its online resources a second time this year by an average 15%-25% effective September 1, 2011 due to a sharp rise in its online audience and high demand for ad placements on RBC's resources. The previous 18% price hike took place in February 2011.

During the reporting period, RBC continued developing one of the world's most popular messaging services QIP, which is used by over 17m people (company data), as well as the entertainment portal Qip.ru. Specifically, RBC rolled out a new messaging client - QIP 2012 - which is fully compatible with Facebook, Twitter and Vkontakte, as well as introduced its mobile applications for Android and iOS.

In order to expand capabilities of users of the messaging client and the Qip.ru portal, RBC acquired a 51% stake in online service OGOROD, which combines geolocation and micro-blogging technologies. The value of the deal, including investments in the project, amounts to $1m. The new service will be integrated into the QIP messenger, its mobile applications and Qip.ru.

In October, RBC reached an agreement with its creditors to change the terms of the loan agreement, signed as part of the debt restructuring process in April 2010. As a result, the main restrictions were lifted on spending free cash flow on company's development program, asset sale and acquisitions, including the takeover of the major Russian domain name registrar RU-Center.

Television. RBC TV's revenue climbed 34% year-on-year to RUB 131m in the third quarter of 2011.

In Q3, RBC completed most of the works under an ambitious upgrade plan for RBC TV, aimed at further growing of the channel's ratings and revenues. Specifically, the channel launched a new studio and technological complex, maintaining an effective price-quality ratio (the company invested approximately RUB 260m). A new programming grid has been introduced, while RBC TV's design has been revamped. In addition, RBC TV signed an exclusive cooperation agreement with a leading international business channel Bloomberg TV, which has become RBC TV's primary provider of business news and topical reports on foreign markets.

As of the end of September, RBC TV's monthly audience in Russia stood at 16.1m viewers, up 7% year-on-year, while the daily audience climbed 7% to 2.2m people. The number of viewers in Moscow stood at 4.4m in September. RBC TV is the largest business channel in Russia by the number of viewers.

Printed Publications. The revenue of RBC's printed publications rose 15% to RUB 234m in Q3, which means that the growth rate of RBC's print segment has recovered compared to Q2 2011. RBC's business publications showed the highest growth rate (+33%): revenue generated by RBC daily newspaper and thematic magazines reached RUB 88m in the third quarter.

During the reporting period, RBC's key publications reconfirmed strong ratings: RBC daily newspaper ranks among the top three most popular business dailies in Moscow, while RBC magazine is the leading business title on the Moscow market.

With the demand for advertising space in RBC's business publications on the rise, the company decided to raise the cost of advertising in RBC daily newspaper and RBC monthly magazine effective October 1, 2011. The price of an advertisement page in the newspaper went up 16.5%, while the cost of advertising in the magazine rose 10% on average on lower discounts.

Outlook for 2011. RBC remains committed to its earlier guidance to boost revenue by at least 30%, whereas RBC's EBITDA margin is expected to be higher than in 2010.

Cautionary note regarding forward-looking statements

Some of the information in this press release may contain statements of future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions, and involve known and unknown risks and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, see “Risk Factors” in the company's latest Annual Report on www.rbcholding.ru. RBC assumes no obligation to update any forward-looking information contained in this document.

1 Statistics on RBC's audience here and hereafter are based on TNS data
2 Financials are based on management accounts (unaudited)
3 Business publications include newspaper RBC daily and magazines RBC, Nashi Dengi and CNews

Press and investor contacts:
Egor Timofeev
Tel: +7 (495) 363-1111
Email: pr@rbc.ru
Web: www.rbcholding.com