11th Nov 2008 07:00
RAMBLER MEDIA 2008 THIRD QUARTER & NINE MONTH UNAUDITED TRADING UPDATE Nine month revenue up 114% year-on-year to US$80.1 million (9M 2007, US$37.4 million) with continued improvement in profitability Marked slowdown in fourth quarter display sales to erode full year 2008 EBITDA expectations Internet expected to be the most resilient advertising market in 2009 Rambler Media Ltd. ("Rambler" or the "Company"), operating one of Russia's mostpopular internet brands, today issues the following trading update on itsunaudited financial results for the third quarter and nine months ended 30September 2008. THIRD QUARTER 2008 -- Third quarter consolidated revenue (including Begun's partner network) up 69% year-on-year to US$28.4 million (Q3 2007, US$16.9 million) -- 67% year-on-year growth in third quarter like-for-like sales to US$19.5 million (Q3 2007, US$11.7 million) -- Consolidated contextual revenue was US$13.1 million for the third quarter (Q3 2007, US$8.1million). Paid search revenues on Rambler went up by 41% to US$4.1 million (Q3 2007, US$2.9 million). Begun's partner network contributed US$9.0 million, after elimination of intercompany sales, to consolidated revenue -- Display / banner advertising went up by 77% to US$11.7 million (Q3 2007, US$6.6 million) -- Consolidated EBITDA margin continued to improve to 21.3% (Q3 2007, 15%) -- CAPEX was approximately US$0.5 million (Q3 2007, US$0.9 million) -- Cash balance was US$19.5 million at 30 September 2008, excluding US$8 million held within Begun which was classified as an asset for sale. The Company has no debt service obligations NINE MONTHS 2008 -- Nine month consolidated revenue (including Begun's partner network) up 114% year-on-year to US$80.1 million (9M 2007, US$37.4 million) -- 71% year-on-year growth in nine month like-for-like sales to US$54.9 million (9M 2007, US$32.2 million) -- Consolidated contextual revenue was US$36.3 million for the first nine months (9M 2007, US$12.4 million). Paid search revenues on Rambler went up by 53% to US$11.0 million (9M 2007, US$7.2 million). Begun's partner network contributed US$25.3 million, after elimination of intercompany sales, to consolidated revenue -- Display / banner advertising went up by 88% to US$33.4 million (9M 2007, US$17.8 million) -- Closing headcount was 527 at 30 September 2008, excluding 199 employees at Begun (31 December 2007, 544 including 48 employees at Index20 and excluding 143 employees at Begun). Headcount excludes Index20 employees as a result of deconsolidation in Q2 2008. Last year's closing headcount at 30 September 2007 was 515 including 35 employees at Index20 and excluding 116 employees at Begun. -- Percentage of labour expense to revenue went down to 28% in 9M 2008 from 38% the year before -- Consolidated EBITDA margin continued to improve to 18.7% (9M 2007, 8%) -- CAPEX was approximately US$3.2 million (9M 2007, US$2.6 million) -- Impact of foreign currency exchange rate fluctuations on 9 month 2008 results was immaterial as the appreciation of the rouble over the first six months of 2008 was offset by the devaluation of the rouble against the US dollar in August and September 2008 USER UPDATE -- Unique number of visitors to rambler.ru up 30% year-on-year to 36.7 million per month on average in the first nine months of the year (9M 2007, 28.2 million). In the third quarter, Rambler reached a peak of 38.1 million unique visitors in September, 27% higher than for the same month last year (September 2007, 30.0 million). -- Average monthly page views reached 2.6 billion during the first nine months of 2008, up 16% from the same period of 2007. -- Total search queries amounted to 748.3 million during the third quarter of 2008, up 25% year-on-year. -- Total number of registered email accounts reached 41 million, up 72% year-on-year, with over 15 million active accounts, up 54% year-on-year. NEWS UPDATE -- In October 2008, Rambler launched its new homepage, available at www.rambler.ru, featuring a cleaner, brighter look and feel and streamlined navigation tools for the Russian speaking online community. -- Rambler also signed an exclusive multi-year partnership with Netvibes, the leading independent widget and personalized startpage platform on the web, to power Rambler.ru's new widget and customization services to be launched in Q4. -- In September 2008, Rambler announced the launch of "Rambler Kinozal", a unique free video download service and the first of its kind in Russia. The new service, available at http://kinozal.rambler.ru/ , allows users to download high-quality, fully licensed videos free of charge and provides a basis upon which Rambler aims to develop video advertising on the Internet in Russia. -- In September 2008, Rambler launched "Rambler Friends", http://friends.rambler.ru/, Russia's new open internet platform and single point of access for users' personal communication and social networking needs. "Rambler Friends" allows users to access the most popular blogs, email accounts and social networks from one place. -- In July 2008, Rambler completed the acquisition of the remaining 49% of Price Express, a leading Russian product comparison internet service. The acquisition received all required regulatory approvals and, as a result, the Company now wholly owns Price Express. -- In July 2008, Rambler upgraded its internet catalogue and navigation system "Top 100" in order to further enhance the accuracy and speed of its tracking statistics. "Top 100" allows website owners to place a counter on their web property and calculate how many visitors they attract according to specific criteria. "Top 100" is Russia's largest catalogue, tracking internet usage traffic of hundreds of thousands of sites in Russia. AGREEMENT WITH GOOGLE -- On July 18th, Rambler announced it had reached an agreement with Google on the sale of Rambler's contextual advertising company ZAO Begun and a broad commercial agreement to use Google's search and contextual advertising technology on Rambler subject to a number of completion matters, including regulatory approval. -- On October 23rd, the Russian Federal Anti-Monopoly Service (FAS) issued a statement in which it refused to approve Google's acquisition of 100% of Begun. Rambler is reviewing next steps and exploring strategic options that would strengthen its position in the Russian internet contextual advertising market. Rambler will retains its current 50.1% stake in Begun until further notice. OUTLOOK In light of the current economic turmoil, the Company has started to witness amarked slow down in the advertising spend in Russia across all sectors,particularly since the last two weeks of October. The Company estimates that theslow down will continue through 2009. Due to the short lead time required toplace ads on the internet, Rambler is unable to provide a specific forecast forthe year 2009 at this point. Rambler, however, generates sales via a number ofdifferent product and sales channels which are affected to differing degrees.The purpose of this expanded commentary is to help investors and analystsinterpret the underlying conditions. Display advertising sales have been the hardest hit. The Company has seen anadjustment whereby there were significant reductions in campaigns commitmentsover the last few weeks, across all sectors. Net positive bookings have howeverresumed, albeit at lower levels than originally planned for this time of year,up to 50% lower. This appears to be driven more by lower average booking sizesthan a lower number of bookings. There has also been an impact on general CostPer Thousand (CPM) levels on forward bookings. In text advertising via Begun, Rambler is also seeing a slow down in spend andreduction in effective CPM levels, however at lower rates than for displayadvertising. Mobile revenues are holding steady, however the Company hasoutsourced its mobile services to reduce infrastructure costs, which will resultin a lower net revenue figure that will in effect be the Company's netcontribution margin. Other direct and listing fee revenue are also seeing a slowdown but at lower rates than for display advertising. The following is a table of revenues for the first three quarters of 2008. \* T2008 revenue breakdown Q1 Q2 Q3US$ million------------------------- ------------- ------------- -------------Display 7.9 13.8 11.7------------------------- ------------- ------------- -------------Text Rambler 3.4 3.5 4.1------------------------- ------------- ------------- -------------Text Begun network 7.5 8.8 9.0------------------------- ------------- ------------- -------------Listing fees, other direct & mobile 3.9 2.9 3.6------------------------- ------------- ------------- -------------TOTAL 22.7 29.0 28.4------------------------- ------------- ------------- -------------\* T For the full year 2008, Rambler expects to generate sales at the lower end ofits guidance of US$100 to US$110 million. The slow down in advertising spend inQ4 2008 and in sales, particularly in display advertising, is expected to have adirect impact on EBITDA in Q4, resulting in a lower than expected margin for thefull year. The Group expects to break even at best in Q4. In response to thecurrent operating conditions, the Group intends to introduce a significant costreduction programme before the end of the year in order to adjust Rambler's costbase with the objective of resuming progress in improving Rambler's EBITDAmargins in 2009. However, the Company continues to believe that advertisers will allocate anincreasing proportion of their advertising spend online. The underlying dynamicsof more Russian consumers coming online and online users continuing to increasetheir media consumption via the internet, is set to continue. Furthermore,continued growth in broadband connectivity tends to drive up consumers time online. In longer established consumer internet markets, users get up to 25% oftheir media consumption online and the allocation of advertising spend to theinternet is approximately 10-15%. In Russia both these numbers are much lowerwith the advertising spend allocation to the internet approximately 3-4% oftotal spend. If advertisers want to engage with consumers they will have toadvertise where they are. The Company therefore estimates that internetcontinues to offer strong relative growth opportunities in Russia and as a topinternet brand, Rambler occupies a favourable market position. Commenting on the trading update, Rambler's Chief Executive Officer MarkOpzoomer said: "I am pleased with the financial results our teams have delivered in the thirdquarter and nine months of 2008. Since last year, we have made remarkableprogress in our sales organizations and in our product offering in the Russianinternet market. We still have further improvement to achieve. However, facedwith sudden and significant new uncertainties in the Russian advertising market,there will be a pause in our progress. We intend to take all necessary steps inour control to continue to improve our business, consolidate Rambler's positionas a leading internet brand in Russia, and resume progress in our earnings andcashflow". Forward-looking statements Certain statements in this trading update are forward-looking. Although theGroup believes that the expectations reflected in these forward-lookingstatements are reasonable, we can give no assurance that these expectations willprove to be correct. Because these statements involve risks and uncertainties,actual results may differ materially from those expressed or implied by theseforward-looking statements. \* TFor further information, please visit www.ramblermedia.com or contact: Rambler Media Shared Value LimitedMark Opzoomer / Nikita Serguienko Nicolas DuperrierTel. +7 495 500 3826 Tel. +44 (0) 20 7321 5010 [email protected] MediaZhanna BeletskayaTel. +7 495 745 3619\* T *** ABOUT RAMBLER MEDIA Rambler Media is an internet media and services group which operates or hasinterests in leading Russian language internet brands including the Russianinternet homepage and search engine 'Rambler.ru', on-line newspaper 'Lenta.ru',product comparison website 'Price.ru', internet catalogue and navigation system'Top 100', instant messaging service 'Rambler-ICQ', digital advertising agency'Index20' and contextual advertising company 'Begun'. Rambler Media's shares aretraded on AIM, the junior market of the London Stock Exchange under the symbol'RMG'. For more information on Rambler Media, visit our corporate website atwww.ramblermedia.com. Copyright Business Wire 2008Related Shares:
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