Yandex N.V. [YNDX] Filings

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

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Commission file number: 001-35173

YANDEX N.V.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name in English)

The Netherlands

(Jurisdiction of incorporation or organization)

Schiphol Boulevard 165

Schiphol P7 1118 BG, The Netherlands

(Address of principal executive offices)

John Boynton, Chairman of the Board of Directors

Schiphol Boulevard 165

Schiphol 1118 BG, The Netherlands

Telephone: +31 20-206-6970

Facsimile: +31 20-446-6372

Email: askir@y-nv.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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Securities registered or to be registered pursuant to Section 12(g) of the Act. None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. Class A Ordinary Shares

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.(1)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ◻

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ◻ No ⌧

Note—checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepared the financial statements included in this filing:

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ◻ Item 18 ◻

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

⁽¹⁾ In addition, we had 558,663 Class A shares held in treasury and nil Class C shares issued and fully paid as of December 31, 2023. Our Class C shares are issued from time to time solely for technical purposes, to facilitate the conversion of our Class B shares into Class A shares. They are held by a Conversion Foundation managed by members of our Board of Directors. For the limited period of time during which any Class C shares are outstanding, they will be voted in the same proportion as votes cast by holders of our Class A and Class B shares, so as not to influence the outcome of any vote.

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In this Annual Report on Form 20-F (this “Annual Report”), references to “Yandex,” the “company,” “we,” “us,” or similar terms are to Yandex N.V. and, as the context requires, its consolidated subsidiaries.

Our consolidated financial statements are prepared in accordance with U.S. GAAP and are expressed in Russian rubles. In this Annual Report, references to “rubles” or “RUB” are to Russian rubles, and references to “U.S. dollars” or “$” are to United States dollars.

Our fiscal year ends on December 31 of each year. References to any specific fiscal year refer to the year ended December 31 of the calendar year specified.

This Annual Report includes market data reported by Yandex Radar (December 2023), data.ai (January 2024), Growth from Knowledge (GfK) (January 2024), the Russian Federal State Statistics Service (Rosstat) (February 2024) and the Bank of Russia (March 2024).

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Forward-Looking Statements

This Annual Report contains forward-looking statements that involve risks and uncertainties. Words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “will,” “may” or other words that convey judgments about future events or outcomes indicate such forward-looking statements. Forward-looking statements in this Annual Report may include statements about:

The forward-looking statements included in this Annual Report are subject to risks, uncertainties and assumptions. Our actual results of operations may differ materially from those stated in or implied by such forward-looking statements as a result of a variety of factors, including those described under Part I, Item 3.D. “Risk Factors” and elsewhere in this Annual Report.

We operate in an evolving environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the effect 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. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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INTRODUCTION AND EXPLANATORY NOTE

The Yandex group is in the midst of the most fundamental changes since the founding of our business more than 25 years ago. Over the past two years, the war in Ukraine and the resulting geopolitical tensions have created exceptional challenges for our group and our team, and we are pleased that we are now implementing steps to address these circumstances.

On February 5, 2024, we announced our definitive agreement with a purchaser consortium to sell all of the group’s businesses in Russia and certain international markets (the “Target”). We were pleased that our shareholders, including our Class A shareholders, approved this proposal in early March. This transaction (the “Sale”) will be implemented in two closings.

We expect that the first closing will occur in the coming weeks. At this closing, Yandex N.V. will sell up to 68% of the Target for total consideration consisting of RUB 230 billion in cash, paid in Chinese Yuan outside Russia, and up to 68 million Class A shares of Yandex N.V. In addition, an amendment of our articles of association that was approved by our shareholders in March will become effective at the first closing. This amendment will significantly simplify our corporate governance and capital structure – in particular, by eliminating the “priority share” previously held by the Public Interest Foundation, as well as the related rights of that Foundation to appoint two members of our board. Further, four Russian members of our Board will resign with effect from that closing. Following the first closing, the members of our Board of Directors will be John Boynton (Chairman), Rogier Rijnja and Charles Ryan.

We expect the second and final closing to occur within seven weeks after the first closing, at which time we will sell our remaining interest in the Target. The consideration at the second closing will be paid in a combination of up to 108 million Class A shares of Yandex N.V., with the balance (if any) to be paid in up to RUB 135 billion in cash, to be paid in Chinese Yuan outside Russia. Following the second closing, Yandex N.V. will have no interest in the Russian businesses.

The number of Class A shares outstanding will be reduced by the number of shares that we receive as partial consideration in the Sale at each of the first and second closing. Following the first closing, we expect that the number of Class A shares outstanding will be approximately 294 million. The Class A shares received as consideration will be held in treasury, pending use under our equity incentive plans and for further financing purposes.

As we work towards the completion of this transaction, we are continuing our preparations for the future of the retained group. We expect to provide updates regarding the new senior management team and their strategy for the retained business in the coming months, and to nominate additional members of the Board in due course. We also expect to introduce a new brand for the retained group, and to ask shareholders to approve a change in the legal name of our company. The Yandex brand will continue to be used by the Target group being sold.

Trading in our Class A shares currently remains halted on Nasdaq. Although we can provide no assurance, we are hopeful that trading may resume following the successful completion of the divestment. We will apply to terminate the listing of our Class A shares on the Moscow Exchange in the coming weeks, which will become effective in connection with the second closing.

In this Annual Report we provide further detail on the Sale and the related risks. We also provide a full report on the year 2023, with respect to the group as a whole before giving effect to the Sale. We have presented separately the descriptions of our continuing operations and the Target businesses being sold. The Sale represents a material change to our company and our group. The Target accounted for more than 95% of the Yandex group’s consolidated revenues in 2023, and approximately 95% of the group’s consolidated assets and employees.

Following the Sale, the company will retain a portfolio of international businesses and other non-Russian assets. The core retained businesses are described in this Annual Report and include:

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The Sale is the result of an extensive strategic process designed to ensure our group’s sustainable development and the success of all of our businesses over the longer term. We look forward to providing updates to shareholders on the development of the retained group in the coming months.

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Item 1.  Identity of Directors, Senior Management and Advisors.

Not applicable.

Item 2.  Offer Statistics and Expected Timetable.

Not applicable.

PART I.

Item 3. Key Information.

Exchange Rate Information

During 2023, the primary operations of Yandex N.V. group were conducted in Russia and the majority of the group’s revenues were denominated in Russian rubles. We have presented our most recent annual results of operations in U.S. dollars for the convenience of the reader. Unless otherwise noted, all conversions from RUB to U.S. dollars and from U.S. dollars to RUB in this Annual Report were made at a rate of RUB 89.6883 to $1.00, the official exchange rate quoted by the Central Bank of the Russian Federation as of December 31, 2023. No representation is made that the RUB amounts could have been, or could be, converted into U.S. dollars at such rate. Following completion of the Sale, we expect to report our results in U.S. dollars.

Risk Factors

Investing in our Class A shares involves a high degree of risk. The risks and uncertainties described below and elsewhere in this Annual Report, including in the section headed “Operating and Financial Review and Prospects”, could materially adversely affect our company, our continuing businesses and the operations to be divested. These are not the only risks that we face; additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, may also become important factors that affect us. Any of these risks could adversely affect our business, financial condition and results of operations. In such case, the trading price of our Class A shares could decline.

Below we first describe the risks related to the divestment of our operations in Russia and certain international markets. As described above under “Introduction – Explanatory Note”, we expect that the first closing of this divestment will occur in the coming weeks. We then describe the risks related to our continuing operations following the divestment. Finally, we describe the risks related to the businesses we are divesting.

Summary of Risk Factors

Risks Relating to the Sale

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Risks Related to Our Continuing Operations Following the Sale

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Risks Related to the Businesses to be Divested

Risks Related to the Current Global Political, Regulatory and Economic Environment

Risks Related to the Business and Industry in which the Group to be Divested Operates

Additional Risks Related to Regulatory Matters

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Risks Related to Tax Matters

Detailed Overview of Risk Factors

Risks Relating to the Sale

We can provide no assurance that the Sale will be completed.

Although we have satisfied the conditions to the Sale, including receiving the required shareholder approvals, a number of mechanical steps must still be completed to move to the first closing, and then the second closing.

If any of these steps is not completed, we may be unable to consummate the Sale. In addition, several of the required regulatory approvals may entail political considerations unrelated to the commercial substance of the Sale. Further, we will need to obtain confirmation from our banks and the purchaser’s correspondent banks that they are able to receive and process the relevant cash consideration payments before the parties can proceed to closing. If these confirmations cannot be obtained, we would not be able to complete the Sale.

Our ability to complete the Sale will remain subject to the continuously evolving international and Russian political and regulatory environment. In particular, changes to Russian legislation or international sanctions could frustrate or block the consummation of the Sale on the agreed terms.

Even if the first closing occurs, we can provide no assurance that the second closing will occur.

Pursuant to the share purchase agreement in connection with the Sale, following the first closing, the purchaser will be obligated to acquire the remaining interest in the Target and to pay the remaining consideration at the second closing. Depending on the outcome of the offer for Class A shares by the purchaser, the purchaser will be obligated to pay some or all of the remaining consideration in cash.

Although we have negotiated contractual protections with a view to ensuring that the second closing occurs, we can provide no assurance in this regard. International or Russian legislative, regulatory or sanctions developments could prevent the parties from effecting the second closing. Moreover, in the event that the purchaser breaches its obligations to effect the second closing, we would have contractual rights to seek recourse but may be unable to obtain specific performance or other injunctive relief, and may not be able to obtain cash compensation in a sufficient amount or at all.

In the event that international sanctions are imposed on any parties involved in the Sale, including on our company, any of its subsidiaries, the purchaser, any of the underlying purchaser consortium members or any of their finance providers, or countermeasures are introduced in Russia that affect the Sale, we may be unable to proceed to second closing in a timely manner or at all. In addition, the second closing of the Sale will require the involvement of a number of international counterparties, including our banks. If any such parties are legally prohibited from acting in connection with the Sale, or decide for policy or other reasons not to act, we may be unable to make alternative arrangements, and the interests of our shareholders could be materially adversely affected.

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The purchaser may be unable to satisfy its obligation to pay cash consideration at the first and/or second closing.

The members of the purchaser consortium are expected to fund the purchaser entity in advance of first and/or second closing with a combination of equity and debt financing in order to meet its cash consideration obligations. If one or more members of the purchaser consortium fails to provide its equity contribution to the purchaser, or if the purchaser’s lender fails to advance the anticipated debt financing, the purchaser may be unable to complete the Sale. We would have limited or no recourse in such circumstances.

If we are not able to complete the proposed Sale, it is possible that steps could be taken pursuant to existing or new Russian legislation that could materially adversely affect our group and some or all of our shareholders.

Actions have been taken in Russia with respect to the Russian operations of several multinational companies in the past two years, including Fortum, Uniper, Danone, Carlsberg and X5 Retail Group N.V. Given the significance of the Yandex operations in Russia and the increasing countermeasures by the Russian government against entities incorporated in “unfriendly” countries such as the Netherlands, it is possible that, in the event we are unable to complete the Sale, similar or other actions could be taken against the Yandex group. Any such actions could result in our loss of ownership or control over our businesses in Russia, which would materially adversely affect the interests of our Class A Shareholders (particularly those outside Russia).

If we are not able to complete the proposed Sale in a timely manner, the future prospects of our company and the retained businesses could be materially and adversely affected.

Our company and the retained businesses have historically been financed principally by the operating businesses in Russia. Due to regulatory restrictions, there are now significant limitations on the transfer of funds from Russia to parent companies incorporated in jurisdictions that are considered to be “unfriendly” by the Russian government. In the event that the Sale is not completed, it may be difficult or impossible to continue to finance the requirements of our company or the retained businesses from our broader group or to find alternative sources of financing, and there would be significant uncertainty regarding their ability to continue as a going concern.

In addition, if the Sale is not completed in a timely manner, we may face a number of other risks, including:

If the Sale is not completed, our Board will need to seek another opportunity or alternative transaction, however we can provide no assurance that we would be successful in doing so.

We will continue to be subject to general business uncertainties and contractual restrictions while the proposed Sale is pending completion, which could adversely affect our existing business and operations.

In connection with the proposed Sale, it is possible that some of our customers, suppliers and other persons with whom we currently or might potentially have a business relationship may delay or defer certain business decisions or seek to terminate, change or renegotiate their relationships with us as a result of the proposed Sale, which could negatively impact our existing revenue streams in respect of the businesses soon to be divested and our retained businesses.

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In addition, the share purchase agreement in connection with the Sale includes customary restrictions on the conduct of business of the Target group prior to the first closing, which may affect the ability of the Target group to execute certain of its business strategies in the near term.

Laws or regulations may be adopted in our core market that may adversely affect our non-Russian shareholders and the value of the shares they hold in our company.

A number of measures have been adopted or proposed in our core market that could adversely affect non-Russian shareholders, including laws related to required redomiciliation of businesses to Russia and termination of “control” by foreign parent companies over businesses in Russia. If we are required to take measures to change our corporate domicile, this would be complex or even impossible and may have adverse tax consequences for our company and our shareholders. Moreover, the rights of shareholders in Russian companies differ from the rights of shareholders of Dutch public limited companies. Many of our international shareholders may be unable to hold or, under current Russian law, trade in securities of a Russian entity.

Any such legislative requirements or other measures targeting non-Russian shareholders or offshore holding companies of Russian businesses could materially affect the rights of our shareholders.

Risks Related to Our Continuing Operations Following the Sale

The retained businesses, which have to date formed a part of the larger Yandex group, are at an early stage of development and have limited experience operating on a stand-alone basis.  

The various Yandex businesses historically operated as an integrated group and ecosystem globally. In preparation for the Sale, we have undertaken significant steps to ensure the complete legal, technical and operational separation of the retained businesses from the Russia-based businesses, with a view to ensuring their ability to function on a stand-alone basis and without any connection to the Russian operations. Given the scale and complexity of these restructuring steps, and the limited experience of our company and the retained businesses operating as part of a smaller group, we may be required to take additional steps to implement the infrastructure required to operate on a stand-alone basis.

In addition, the retained businesses have historically benefited from our larger, profitable businesses in Russia. We have limited experience in managing and financing only early-stage businesses. Although we intend to retain a portion of the net cash proceeds of the Sale to finance the development of the retained businesses, these businesses are in their early stages and are therefore capital intensive. Although we believe that they have a material opportunity for revenue generation and growth in the future, we may need to seek additional equity or debt financing in the near to medium term. We can provide no assurance that we will be able to obtain such financing on acceptable terms or at all.

The retained businesses will no longer have access to the intellectual property created by the group’s Russia-based businesses, and the retained businesses’ prospects and future success depend on their ability to develop new proprietary technology.

The retained businesses have historically benefitted from access to the intellectual property developed and owned by the group’s Russia-based businesses. This intellectual property will remain with the businesses to be divested as part of the Sale and we will not receive any long-term licenses to any such intellectual property. Although the retained businesses will benefit from certain transitional licenses from businesses being divested for various fixed periods in 2024, we may incur significant expense and personnel time in developing new proprietary technology independently. Failure to develop such new proprietary technology could materially adversely affect our prospects and future success.

We have agreed to covenants in connection with the Sale that will impose restrictions on the retained businesses.

We have agreed to certain non-compete obligations for a period of five years following the first closing. Our company and its affiliates will be permitted to operate the retained businesses, including any development or natural evolution of the retained businesses, globally (other than in Russia and Belarus) at any time. However, during the five

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year non-compete period, we will not be permitted to engage in the principal businesses being divested in any territory worldwide. In addition, we have agreed that our company and the retained businesses will not solicit or hire employees of the Target group for a period of five years, subject to certain exceptions.

Although we do not anticipate that these obligations will impose any limits on the ability of the retained businesses to pursue their development plans as presently contemplated, it is possible that they may be required to forego potential opportunities that may arise in the future.

Our retained businesses may be adversely affected by the existing competition in the markets that we operate in, which could negatively impact on our business, financial condition and ability to develop internationally.

Our retained businesses operate in a highly competitive market which necessarily involves rapid commercial and technological advancements. If our competitors are able to develop their technologies more efficiently or faster than we are, we will need to increase our expenditure in order to fund further research, development and marketing, as necessary. We are not able to guarantee that our retained businesses will be able to compete with significant competition from new players and new technologies as well as the existing players in the international market. If we are not able to compete effectively with current and future players, our businesses’ ability to generate income and sustainably fund development will be negatively impacted.

The retained businesses will continue to rely heavily on technological security measures to protect their services, software and products generally. If such security measures are breached or are insufficient, our businesses may suffer significant reputational damage as well as potential legal and financial exposure.

Third parties have in the past attempted, and in the future may attempt, to interfere with our services. We rely on security measures to protect our customers’ and partners’ information, data and personal details as well as to safeguard the smooth operation of our services. If any targeted or random attacks successfully breach our security, interfere with or exploit any flaws in our services, or are able to restrict or prohibit our users from accessing our products and services, our partners and customers going forwards may lose confidence in our ability to safeguard their information or to provide reliable services. To the extent an actual or perceived attack on our services hinders our services and user experience, we may face significant reputational damage and we may be exposed to a risk that new businesses will not wish to partner with us, which in the early stages of our retained businesses’ lifecycles could be detrimental to their development.

Similarly, we cannot guarantee that our security measures will not be breached or left vulnerable due to employee error, malfeasance, system errors or other non-malicious circumstances. If we are not able to implement safeguards, training and sufficient protections against forms of cyber attacks or errors, we could be at risk of losing company information or private user data, exposing us to potential litigation, increased costs, potential liability and damage to reputation, ultimately negatively impacting our ability to generate revenues and develop internationally.

We may be subject to material claims under the share purchase agreement in connection with the Sale.

The share purchase agreement in connection with the Sale contains customary warranties, indemnities and covenants for a material divestment transaction. In the event that the purchaser were to bring successful claims under the share purchase agreement, we could incur significant liabilities. Such risk may be heightened given the limited visibility we have had in recent periods over the operations of businesses to be divested, as well as the geopolitical context in which the Sale is being consummated.

We may incur material tax liabilities in connection with the Sale, which would reduce the amount of net proceeds available for ultimate distribution to our shareholders.

A significant portion of the consideration for the Sale will be paid in the form of Yandex N.V. Class A shares to be delivered by the purchaser. The acquisition of such shares by our company in consideration for shares in the Target will be treated as a repurchase by our company of its own shares for Dutch tax purposes, which would be subject to withholding tax at a 15% rate. However, we anticipate that all or substantially all of the shares so acquired will qualify as “temporary investments”, given our intention and plan to use such shares for our employee equity incentive program and for further financing purposes. We can provide no assurance, however, that the Dutch tax authorities will ultimately

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agree with our assessment in this regard, in which case we may incur a significant Dutch withholding tax liability. We may also need to provide for a reserve in respect of such potential liability, which would reduce the amount of net proceeds available for ultimate distribution to our shareholders.

The price of our Class A shares has been and may continue to be volatile.

On the back of geopolitical tensions and macroeconomic events in Russia since the end of February 2022, the value of traded securities of companies with significant operations in Russia has been adversely affected, including our Class A shares. Trading in our Class A shares on Nasdaq has been subject to a trading halt since February 2022, and in March 2023 the Listing Qualifications Staff of Nasdaq notified us that it had determined that our securities would be delisted from the Nasdaq Stock Market as of March 24, 2023. We appealed such determination, and our appeal was granted, subject to conditions related to the Sale. The trading halt currently remains in place. Even if we successfully complete the Sale, there can be no guarantee if or when the trading halt may be lifted and trading might ultimately resume on Nasdaq or over-the-counter.

Although trading in our Class A shares resumed on the Moscow Exchange in late March 2022 following a suspension, only a limited number of our shares are available for trading on that market at this time, and non-Russian investors from “non-friendly” countries are not permitted to trade. We will apply to terminate the listing of our Class A shares on the Moscow Exchange in the coming weeks, which will become effective in connection with the second closing.

If and when (if at all) our Class A shares resume trading on Nasdaq in the ordinary course, or commence trading over-the-counter, the trading price may be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. We are unable to predict the impact of the Sale on our share price if and when trading results in the ordinary course. Moreover, we will provide updates on the strategy and business plans for the retained businesses, as well as the potential return of capital to shareholders, in due course. As a consequence of these material factors, it may take time for the trading price of our Class A shares to reflect the intrinsic value of our group, and such trading price may experience volatility.

The concentration of voting power with our principal shareholders limits the ability of our minority shareholders to influence corporate matters.

Our Class B shares have ten votes per share and our Class A shares have one vote per share. As of March 31, 2024, our directors, employees, pre-IPO shareholders and the family trust described below together hold Class A and Class B shares carrying approximately 51% of the voting power of our ordinary shares.

Our founder, Arkady Volozh, is the settlor of a trust for the benefit of his family, which holds Class B shares representing a 45.1% voting and an 8.5% economic interest in our company as of March 31, 2024. Mr. Volozh was designated under sanctions in the European Union and Switzerland in June 2022; such designations were removed in March 2024. At the time of his designation, Mr. Volozh irrevocably undertook not to instruct the trustee as to how to vote such shares and, pursuant to the terms of the trust, the trustee would vote such shares on all matters proposed to the shareholders in accordance with the recommendations of the independent members of the Board of Directors. We anticipate that, following the Sale, Mr. Volozh will again be able to provide voting instructions to the trustees in respect of such shares.

Anti-takeover provisions in our articles of association may prevent or delay change-of-control transactions.

Our multiple class share structure may discourage others from initiating any potential merger, takeover or other change-of-control transaction that our public shareholders may view as beneficial. Our articles of association also contain additional provisions that may have the effect of making a takeover of our company more difficult or less attractive, including:

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The Dutch public offer rules, which impose substantive and procedural requirements in connection with the attempted takeover of a Dutch public company, only apply in the case of Dutch target companies that have shares listed on a regulated market within the European Union. We have not listed our shares, and do not expect to list our shares, on a regulated market within the European Union, and therefore these rules do not apply to any public offer for our Class A shares.

We rely on Nasdaq Stock Market rules that permit us to comply with applicable Dutch corporate governance practices, rather than the corresponding domestic U.S. corporate governance practices, and therefore the rights of our shareholders differ from the rights of a shareholder of a domestic U.S. issuer.

As a foreign private issuer whose shares are listed on the Nasdaq Global Select Market, we are permitted in certain cases to follow Dutch corporate governance practices instead of the corresponding requirements of the Nasdaq Marketplace Rules. We follow Dutch corporate governance practices with regard to the quorum requirements applicable to meetings of shareholders and the provision of proxy statements for general meetings of shareholders. In accordance with Dutch law and generally accepted business practices, our articles of association do not provide quorum requirements generally applicable to general meetings of shareholders. Although we do provide shareholders with an agenda and other relevant documents for the general meeting of shareholders, Dutch law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in the Netherlands. Accordingly, our shareholders may not be afforded the same protection as provided under Nasdaq’s corporate governance rules.

We do not comply with all of the provisions of the Dutch Corporate Governance Code. This may affect the rights of our shareholders.

As a Dutch company we are subject to the Dutch Corporate Governance Code, or DCGC. The DCGC contains both principles and best practice provisions for management boards, supervisory boards, shareholders and general meetings of shareholders, financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC applies to all Dutch companies listed on a government-recognized stock exchange, whether in the Netherlands or elsewhere, including the Nasdaq Global Select Market. The principles and best practice provisions apply to the board (in relation to role and composition, conflicts of interest and independence requirements, board committees and remuneration), shareholders and the general meeting of shareholders (for example, regarding anti-takeover protection and obligations of the company to provide information to its shareholders) and financial reporting (such as external auditor and internal audit requirements). The DCGC requires that companies either “comply or explain” any non-compliance and, in light of our compliance with Nasdaq requirements and as permitted by the DCGC, we have elected not to comply with all of the provisions of the DCGC. This may affect the rights of our shareholders who may not have the same level of protection as shareholders in a Dutch company that fully complies with the DCGC.

We cannot assure you that we will not be classified as a passive foreign investment company for any taxable year, which may result in adverse U.S. federal income tax consequence to U.S. holders.

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Based on certain management estimates with respect to our gross income and the average value of our gross assets and on the nature of our business, we believe that we were not a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for the 2023 tax year, and do not expect to be a PFIC in the foreseeable future. However, because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets in such year, and because this is a factual determination made annually after the end of each taxable year and there are uncertainties in the application of the rules, there can be no assurance that we will not be considered a PFIC for the current taxable year or any future taxable year. In particular, the value of our assets may be determined in

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large part by reference to the market price of our Class A shares, which has fluctuated, and may continue to fluctuate, significantly. If we were to be treated as a PFIC for any taxable year during which a U.S. holder held our Class A shares, certain adverse U.S. federal income tax consequences could apply to the U.S. holder.

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Any U.S. or other foreign judgments our shareholders may obtain against us may be difficult to enforce against us the Netherlands.

We have only very limited operations in the United States, most of our assets are located outside of the United States, our company is incorporated in the Netherlands, and some of our directors and most of our senior management are located outside the United States. As a result, it may be difficult to serve process on us or persons within the United States. Although arbitration awards are generally enforceable in the Netherlands, you should note that judgments obtained in the United States or in other foreign courts, including those with respect to U.S. federal securities law claims, may not be enforceable in the Netherlands. There is no mutual recognition treaty between the United States and the Netherlands, and no Dutch law provides for the recognition and enforcement of foreign court judgments. Therefore, it may be difficult to enforce any U.S. or other foreign court judgment obtained against our company, any of our operating subsidiaries or any of our directors in the Netherlands.

The rights and responsibilities of our shareholders are governed by Dutch law and differ in some important respects from the rights and responsibilities of shareholders under U.S. law.

Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The responsibilities of members of our Board of Directors under Dutch law are different than under the laws of some U.S. jurisdictions. In the performance of its duties, our Board of Directors is required by Dutch law to consider the interests of the company and its group, its shareholders, its employees and other stakeholders and not only those of our shareholders. Also, as a Dutch company, we are not required to solicit proxies or prepare proxy statements for general meetings of shareholders.

In addition, the rights of our shareholders are governed by Dutch law and our articles of association and differ from the rights of shareholders under U.S. law. For example, Dutch law does not grant appraisal rights to a company’s shareholders who wish to challenge the consideration to be paid upon a merger or consolidation of the company.

Risks Related to the Business to be Divested

Once the first closing has taken place, we will continue to hold a minority interest in the Target and the Russian businesses before they are fully divested at the second closing. The Target accounted for more than 95% of the Yandex group’s consolidated revenues in 2023, and approximately 95% of the group’s consolidated assets and employees. Below we describe the risks that affect these businesses being divested.

Risks Related to the Current Global Political, Regulatory and Economic Environment

The businesses to be divested may be materially adversely impacted by negative macroeconomic and geopolitical developments including various restrictions in Russia and in other countries in which they operate.

The current geopolitical crisis and international and Russian actions in response have materially and adversely impacted the macroeconomic climate in Russia, resulting in significant currency rate volatility, the imposition of currency controls, significant fluctuations in interest rates and increased inflation, which may lead to a continued contraction in consumer spending. These factors, as well as the impact of sanctions or responses to sanctions on operations, could adversely affect the results of operations of the businesses to be divested.

For instance, the advertising revenues of the businesses to be divested may be adversely affected by an inability to gain access to advertising inventory, and by the possible reduction in advertising budgets of domestic businesses, as well as by intensifying competition with local players (including marketplaces). The e-commerce businesses to be divested may be adversely affected by a possible reduction of discretionary spending by consumers and further supply restrictions which may adversely affect the number and selection of goods available through Yandex Market and a reduction in associated advertising. The ride-hailing business to be divested may likewise suffer from a weaker macroeconomic environment and adverse supply and demand dynamics. Price increases and a potential reduction in the

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availability of new cars and spare parts in Russia, as well as a significant increase of financial lease rates for new and existing lease contracts in the wake of key interest rate increases, may adversely affect the operations of the partners of the businesses to be divested (including fleet management companies), which may negatively impact further growth of the ride-hailing business. Consumer sentiment and spending patterns may result in reductions in revenue from other business units, offset to some extent by decreased competition. Any prolonged economic downturn in Russia or the other countries in which the businesses to be divested operate, whether as a result of sanctions or the broader geopolitical or economic situation, depreciation of the ruble and other national currencies, negative consumer sentiment or other macro factors, could have a material adverse effect on the results of operations of these businesses.

Risks Related to the Business and Industry in which the Group to be Divested Operates

The businesses to be divested rely on the continued availability, development and maintenance of the internet infrastructure in the countries in which they operate.

The success of these businesses depends on the continued availability, development and maintenance of the internet infrastructure globally and particularly in the countries in which they operate. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security for providing reliable internet services. Any disruption in the network access provided by third parties or any failure by them to handle current or higher future volumes of use may significantly harm these businesses. Furthermore, these businesses depend on hardware and software suppliers for prompt delivery, installation and service of servers and other equipment to deliver their services. The current geopolitical crisis and resulting export controls may materially adversely affect the access of these businesses to international software and hardware suppliers.

The businesses to be divested face significant competition, which could negatively affect their business, financial condition and results of operations.

These businesses operate in a market characterized by rapid commercial and technological change, and face significant competition, increasingly from local players. If competitors are able to develop their technologies more quickly than the group to be divested, these businesses may need to increase R&D investments in order to defend their market shares. These businesses may face increased competition from new players and new technologies. We cannot guarantee you that these businesses will be able to continue to compete effectively with current and future companies that may have greater ability to attract and retain users, greater brand recognition, more personnel and greater financial and other resources. A significant decline in user traffic or other business could negatively affect the group’s business, financial condition and results of operations.

Our corporate culture has contributed to our success, and if the businesses to be divested cannot maintain the focus on teamwork and innovation fostered by this environment, their business, financial condition and results of operations would be adversely affected.

We believe that a critical contributor to our success has been our corporate culture, which values and fosters teamwork and innovation. If the businesses to be divested are not able to maintain this corporate culture under new ownership, this may adversely affect their business, financial condition and results of operations.

A systems failure, technical interference or human error could prevent the businesses to be divested from reliably delivering their services, which could lead to a loss of users and advertisers and damage their reputation and materially adversely affect their business, financial condition and results of operations.

The businesses to be divested maintain a robust network of security measures, but their systems remain vulnerable to damage or interruption from terrorist attacks, denial-of-service attacks, computer viruses or other cyber-attacks, power losses, telecommunications failures, floods, fires, extreme weather conditions, earthquakes and similar events. Their data centers are also potentially subject to break-ins, sabotage and intentional acts of vandalism, and other potential disruptions. Such events could reduce revenues and profits, and the businesses brand could be damaged if people believe their services are unreliable.

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The businesses to be divested may not be able to prevent others from unauthorized use of their intellectual property rights or become involved in intellectual property infringement claims, which may adversely affect their competitive position, business, financial condition and results of operations.

The businesses to be divested rely on a combination of patents, trademarks, trade secrets and copyrights, as well as nondisclosure agreements, to protect their intellectual property rights. The protection and enforcement of intellectual property rights in Russia and other markets in which the businesses operate, however, may not be as effective as that in the United States or Western Europe. Also, the efforts the businesses have taken to protect their proprietary rights may not be sufficient or effective. Any significant infringement of their intellectual property rights could harm their business, brand and/or ability to compete, all of which could adversely affect their competitive position, business, financial condition and results of operations.

A number of internet, technology, media and patent-holding companies own or are actively developing patents covering search, indexing, electronic commerce and other internet-related technologies, as well as a variety of online business models and methods. Disputes regarding the ownership of technologies and rights associated with online activities are likely to arise in the future. In addition, the use of open-source software is often subject to compliance with certain license terms, which could be inadvertently breached.

With respect to any intellectual property rights claim, the businesses to be divested may have to pay damages or compensation and/or stop using technology found to be in violation of a third party’s rights. They may have to seek a license for the technology, which may not be available on commercially reasonable terms or at all and may significantly increase operating expenses. They may be required to develop an alternative non-infringing technology, which may require significant effort, expense and time to develop. If they cannot license or develop technology for any potentially infringing aspects of these businesses, they may be forced to limit service offerings and may be unable to compete effectively. They may also incur substantial expenses in defending against third-party infringement claims regardless of the merit of such claims.

As a matter of Russian law, the businesses to be divested are deemed to have acquired copyright and related rights as well as rights to file patent applications with respect to products developed by their employees and contractors. The relevant requirements under the Russian Civil Code, however, are defined in a broad and ambiguous manner and their precise application has never been definitively determined by the Russian courts. Therefore, former or current employees or contractors could either challenge the transfer of intellectual property rights over the products developed by them or with their contribution or claim the right to additional compensation for their works for hire and/or patentable results, in addition to their employment compensation. These businesses may not prevail in any such action and any successful claim, although unlikely to be material, could adversely affect their business and results of operations.

Additional Risks Related to Regulatory Matters

The businesses to be divested may be required to obtain additional licenses, permits or registrations or comply with other requirements, which may be costly or may limit their operational flexibility.

As the legal framework in Russia continues to evolve, the businesses to be divested may be required to take additional actions in order to comply with new legislation. Ambiguities in legislation and the wide discretion granted to regulatory authorities may also result in these businesses being subject to additional regulatory requirements. Compliance with expanded or new regulatory requirements, or new interpretations or applications of existing requirements, may also require the expenditure of additional resources and limit the businesses’ flexibility in providing services.

Regulations regarding the processing and retention of personal and other data may impose additional obligations on the businesses to be divested, limit their flexibility, or harm their reputation with users.

The collection and handling of user data by any entity or person in Russia (as in many other countries) may be subject to certain requirements and restrictions. If these requirements and restrictions are amended, interpreted or applied in a manner not consistent with current practice, these businesses could face fines or orders requiring that they change operating practices, which in turn could have a material adverse effect on their business, financial condition and results of operations. If any inspections result in the determination that companies in the divested group fail to comply with the

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applicable data protection legislation, they could experience financial and reputational losses and could be restricted from providing certain types of services.

The competent authorities could determine that the businesses to be divested hold a dominant position in one or more markets and could impose limitations on their operational flexibility that may adversely affect their business, financial condition and results of operations.

Applicable antimonopoly legislation imposes restrictions on companies that occupy a dominant position in a given market. The competent authorities in Russia or the other countries in which these businesses operate might from time to time investigate the internet or online advertising industries, the ride-hailing business or other sectors in which they operate, and may conclude that, given their market shares, these businesses hold a dominant position in one or more of these markets. If the Russian Federal Antimonopoly Service (FAS) determines that these businesses hold a dominant position in one or more markets, this could result in limitations on future acquisitions and a requirement that the businesses pre-approve with the authorities certain changes to their standard agreements with advertisers and Yandex Advertising Network partners, as well as any specially negotiated agreements with business partners. In addition, if these businesses were to decline to conclude a contract with a third party or terminate an existing agreement without sufficient substantiation this could, in certain circumstances, be regarded as an abuse of a dominant market position.

Risks Related to Tax Matters

Changes in the tax systems in the countries in which we and the businesses to be divested operate, or unpredictable or unforeseen application of existing rules, may materially adversely affect our and their business, financial condition and results of operations.

Russian tax, currency and customs laws and regulations are subject to varying interpretations and changes, which may be frequently revised and reviewed by the authorities. As a result, these businesses’ interpretation of such tax legislation may be challenged by the relevant authorities. Russian tax legislation largely follows the OECD approach but may be implemented in a way which is not in line with international practice or our interpretation. Moreover, under the current conditions of weak economic growth and increased geopolitical risks, the authorities are taking a more assertive position in their interpretation of the tax legislation and, as a result, it is possible that transactions and activities that have not been challenged in the past may now be questioned by the authorities. High-profile companies such as the businesses to be divested can be particularly vulnerable to such assertive positions of the authorities. If the authorities were successful in enforcing interpretations different from those take by these businesses, their tax liability may be greater than the estimated amount expensed to date and paid or accrued on the balance sheet. The determination of worldwide provision for tax liabilities, including digital tax, requires significant judgment and there are many transactions and calculations where the ultimate tax determination is uncertain and subject to regular review and audit by both domestic and foreign tax authorities. Generally, Russian taxpayers are subject to inspection of their activities for a period of three calendar years immediately preceding the year in which an audit is carried out. Tax years 2021, 2022 and 2023 are currently open for tax audit of the principal businesses to be divested.

In light of the current macroeconomic environment and potential budget deficits, the Russian government may impose additional taxes and penalties in the future, as well as the potential elimination of applicable tax benefits, which could adversely affect the business, financial condition and results of operations of the businesses to be divested. International expansion of the business to be divested may also create new tax challenges in the changing tax environment.

There have also been significant developments and proposed changes in recent periods to international tax laws that increase the complexity, burden and cost of tax compliance and may lead to additional tax liabilities. The Global Tax Reform plan (Pillar One and Pillar Two) was adopted in 2021 by 137 countries. Among other provisions, the reform imposes a 15% global minimum tax on multinational corporate groups. A multinational corporate group must assess whether the effective tax rate for each country in which it operates is lower than 15%. If the effective tax rate in a country is lower than 15% a top-up tax may be levied. EU and other countries, including some of those in which we operate, have implemented, or have committed to implement the reform in 2024. The Netherlands have implemented 15% global minimum tax in its domestic tax legislation starting January 1, 2024. This reform may increase our effective tax rate and result in higher tax liabilities.

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Some of the counterparties of the businesses to be divested provide limited transparency in their operations, which could subject the businesses to be divested to greater scrutiny and potential claims from government authorities.

The businesses to be divested do business with a number of small companies that may not always operate in a fully transparent manner and that may engage in unpredictable or otherwise questionable practices with respect to tax obligations or compliance with other legal requirements. As the businesses to be divested are larger and more transparent, with greater resources than such counterparties, governmental authorities may seek to collect taxes and/or penalties from these businesses in relation to such transactions.

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Item 4. Information on the Company.

History and Development of the Company; Organizational Structure.

Yandex N.V. is a Dutch public company with limited liability, which became the parent company of Yandex group in 2007. Its registered office is at Schiphol Boulevard 165, 1118 BG, Schiphol, The Netherlands (tel: +31 (0) 20 206 6970).

Our founders began the development of our search technology in 1989 and launched the yandex website in 1997. In May 2011, the company's Class A shares were listed on the Nasdaq Global Select Market, under the ticker YNDX, and subsequently listed on the Moscow Exchange in June 2014. On February 28, 2022, Nasdaq and the New York Stock Exchange halted the trading in securities of a number of companies with material operations in Russia, including Yandex N.V. The trading halt currently remains in place.

For a discussion of our principal acquisitions in 2023, see “Operating and Financial Review and Prospects — Key Recent Acquisitions”.

Business Overview

As described below, we have entered into a definitive agreement with a purchaser consortium to sell all of the group’s businesses in Russia and certain international markets. The Sale will be completed in two closings; the first closing is expected to take place in the coming weeks. Following first closing, the company will hold a minority interest in the Target group, which will subsequently be sold at second closing, which is expected to occur within seven weeks following the first closing.

Below we describe the business of the combined group in 2023. We have presented separately the descriptions of our continuing operations and the Target businesses being sold.

Overview of Proposed Sale

As we announced on February 5, 2024, Yandex N.V. has entered into a definitive agreement to sell all of the Yandex group's businesses in Russia and certain international markets. Following completion of the Sale, Yandex N.V. will hold no interest in its businesses in Russia and will retain a portfolio of international businesses and other non-Russian assets, including the four early-stage technology businesses described below, a data center in Finland and minority investments in other technology businesses.

Yandex N.V. and its remaining international businesses will cease to use the Yandex brand, other than during a short transition period through the end of July 2024, and in due course we intend to propose to shareholders a change of our legal name. We anticipate that once the Sale transaction is completed, our retained businesses will develop their own branding going forward. The businesses being divested will continue to use the Yandex brand.

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Continuing Operations following the Sale

Nebius AI

Nebius AI is an AI-centric cloud platform that offers robust infrastructure and computing capacity for seamless AI deployment and machine-learning (“ML”) oriented solutions. Following completion of the Sale transaction, Nebius AI will seek to address the shortage of AI compute by being one of the largest providers of GPU capacity in Europe. We also see considerable opportunity to roll-out the Nebius product offering across the EMEA region. Nebius AI’s proprietary data center in Finland excels in energy efficiency, and houses Europe’s most powerful commercially available supercomputer that ranks as the 16th among the 500 most powerful globally (within the top 3%). Today, the Nebius team includes over 400 experts in hardware infrastructure, cloud software development and AI.

Toloka AI

Toloka AI offers data-for-GenAI solutions at every stage of the GenAI lifecycle, from data annotation and generation, model training and fine-tuning, to quality assessment of LLMs for accuracy and reliability. Toloka AI’s solutions leverage both AI-powered auto labeling and human expert input to ensure quality and optimized cost. Toloka AI features one of the most diverse crowds and expert networks covering 120 countries, speaking over 40 languages and over 20 knowledge domains. The platform meets the most rigorous information security and data privacy standards: it is GDPR-compliant and certified to ISO 27001, 27701 and HIPAA. Toloka AI supports research in AI, offering open-source projects, open datasets and collaborating with top academic institutions worldwide.

Avride

The Avride team develops autonomous driving solutions targeting ride-hailing, logistics, e-commerce, and food/grocery delivery as application domains, and focuses on two core products: autonomous vehicles and delivery robots. The team builds on over eight years of experience developing autonomous technologies from scratch in diverse regulatory, cultural and operational contexts, including road testing in comprehensive weather and road conditions. Self-driving vehicles and delivery robots developed by the Avride team have completed over 20 million autonomous kilometers driven on public roads, and over 200,000 successful deliveries from retail and dining establishments, respectively. As of December 2023, Avride holds testing, including driverless testing, and carries out commercial delivery projects across four geographies: the USA, Israel, UAE, and South Korea.

TripleTen

TripleTen is an EdTech service developed by a team with over 15 years of experience in IT education, dedicated to preparing specialists for STEM roles and equipping them with essential technology skills. As of the end of 2023, TripleTen has over 60 partner employers worldwide and offers four immersive study tracks: Software Engineering, Data Science, BI (Business Intelligence) Analytics, and Quality Assurance. These programs, accessible remotely, span North and South America and the Middle East. Across 2022 and 2023, over 5,000 people took advantage of the reskilling opportunities offered by TripleTen. In 2023, TripleTen maintained its position among the top-rated EdTechs in the US based on employment rate, median post-graduation salaries, and student feedback. According to TripleTen's 2023 Outcomes Report, 87% of graduates secured employment within six months of graduation.

For the full year 2023, the four businesses described above have generated 1.8 billion rubles of revenue and incurred an Adjusted EBITDA loss of 24.9 billion rubles. To date, these international businesses have been unable to obtain sufficient capital for their development as a result of significant limitations on the group’s ability to transfer funds from the group’s historically profitable businesses in Russia. In order to support the development of these businesses in the future, we expect to retain a portion of the cash consideration received pursuant to the Sale transaction, the amount of which is to be determined by our Board.

Businesses to be Divested

The businesses described below form the divestment perimeter and will not be a part of the Yandex group following the completion of the proposed Sale transaction.

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The businesses are organized in the following segments:

For a detailed description of the operating segments for financial reporting purposes, see Item 5, “Operating and Financial Review and Prospects”.

Search and Portal

The Search and Portal segment offers a broad range of world-class, locally relevant search and information services that are free to users and that enable them to find relevant information quickly and easily.

Yandex Search

The Yandex search engine offers almost instantaneous access to the vast range of information available online. It utilizes linguistics, mathematics, machine learning and AI to develop proprietary algorithms that efficiently extract, compile, systematize and present relevant information to the users. The organic search results are ranked by computer algorithms based exclusively on relevance, and organic results are clearly segregated from paid results to avoid confusing users. Yandex does not exercise editorial control over the content of the search results.

According to Yandex Radar, Yandex’s total search share reached 63.4% of all search traffic in Russia in 2023, up from 59.8% in 2021 and 61.9% in 2022, which was driven by share growth on both desktop and mobile devices. In 2023, search share on desktop and mobile reached 72.7% and 59.6%, respectively. The business continued to gain share in mobile search, reaching 63.0% on Android and improving the share to 49.9% on iOS in 2023 (from 61.4% and 47.6% in 2022, respectively).The percentage of total search traffic generated from mobile devices averaged approximately 70% in Q4 2023 compared with 68% in Q4 2022, while the percentage of search revenues generated from mobile devices increased to approximately 62% in Q4 2023 from approximately 60% in Q4 2022.

Yandex Search App

Enhanced with the Yandex virtual assistant Alice, the Yandex Search App integrates Yandex’s must-have services into one app, including Search, Weather and many others, available on Android and iOS platforms.

Yandex Browser

Yandex Browser is a browser for computers, TV, Android and iOS smartphones and tablets with built-in “Protect” technology, which checks all downloaded files for viruses, warns users about dangerous websites (whereby

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Yandex Browser prevented users from accessing suspicious websites approximately 110 million times throughout 2023), encrypts users’ passwords with strong cryptography, and ensures safe payments.

Geolocation Services

Geolocation Services integrate Yandex’s advanced technologies (including mapping, cartography, and navigation) to provide a broad range of services, including routing solutions and logistics.

Yandex Maps, a B2C product targeted at a wider audience, provides high-quality, detailed maps of countries where the Yandex ride-hailing service operates. In December 2023, the monthly audience of the service amounted to 39 million monthly average users in the mobile app, 25 million on the website and 52 million in mobile browsers across Russia. Yandex Maps offers users panoramic views, navigation for all forms of transport, driving directions with voice controls, among others.

The business also offers Yandex Navigator, which integrates a virtual assistant Alice and focuses mostly on the navigation scenarios for the B2C audience. In 2023, it was one of Yandex’s most popular mobile apps in terms of usage with 33 million monthly average users in December 2023.

For the B2B audience, the business offers application programming interfaces, or APIs, which allow developers to embed and use Yandex interactive maps in third-party websites and applications, as well as to add extra layers of information, utilizing the technology and licenses to create and edit maps from raw data, including satellite images, GPS coordinates and live user feedback.

Shedevrum

Shedevrum is a Yandex mobile application where users can create animations, images and text using Yandex’s generative neural networks. It is based on two core technologies: YandexART, which generates images and animations, and YandexGPT, which generates posts with a title and relevant illustration. After its launch in April 2023, Shedevrum reached the top of App Store and Google Play in Russia, and, as of Q4 2023, the app approached 10 million downloads.

Monetization and Advertiser Services

The business offers a variety of ad formats to advertisers, including performance-based, brand and video advertising formats. Most revenues are generated from performance-based advertising, on a pay-per-action basis and a pay-per-click basis (in which the share of a cost-per-action (CPA) optimization is growing, where an action can be a purchase, a click, a call etc.); performance-based ads are principally targeted to a particular user query, as well as to the content of a particular website or mobile app being viewed, or to user behavior or characteristics. A further portion of revenues is generated from brand advertising and video advertising, based on the number of impressions delivered.

Yandex Direct

Yandex Direct is an auction-based advertising placement platform, which uses auction theory and relies on a distributed infrastructure to process millions of auctions every day. Yandex Direct lets advertisers cost-effectively deliver relevant ads targeted at particular search queries or content on websites and mobile applications of Yandex or third parties in the Yandex Advertising Network.

During 2023, the business focused on the further development of automated strategies and automatic targeting algorithms, improvement of advertising products and increased efficiency for users, with a particular focus on SMB, and the development of advertising products for e-commerce players.

Yandex Advertising Network

The Yandex Advertising Network partners with search websites and apps, among others, for which Yandex provides search capabilities, as well as contextual network partners, where Yandex serves ads on websites and apps, based on user behavior or characteristics or website content.

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The Yandex Advertising Network helps third-party website and app owners monetize their content while extending the reach of advertisers. Through the Network, partners can deliver performance and brand ads on their search results pages, websites or apps. The advertising algorithms are based on the recent advances in AI including transformer-based architecture, which optimize the clickthrough and conversion rate on the ad network through improved click and conversion prediction.

Yandex’s video advertising network allows users to place full-screen videos, video ads on pages of websites and ads within the video content available on a wide range of advertising resources, including desktop and mobile websites, mobile apps and Smart TV applications.

Mobile Advertising

The business offers advertisers the ability to display ads on mobile versions of Yandex services, including Search and Advertising Network partner websites, as well as in mobile applications, including the Yandex Search App. In 2023, the business significantly extended the advertising network on mobile platforms, including the expansion of advertising into new media channels, such as Telegram, to help advertisers widen their targeted audience as well as publishers’ revenue growth.

Analytics tools

Yandex Metrica is a web analytics tool used by hundreds of thousands of websites. Using a comprehensive set of tools, Metrica users can better understand their clients: from user acquisition to retention. Leveraging the recently open-sourced Metrica tag and proprietary Webvisor technology, businesses can objectively measure and improve the performance of their web assets. Metrica is integrated with Yandex Direct allowing for in-depth analytics of paid traffic.

AppMetrica offers a mobile SDK, an analytical dashboard, and a versatile data platform with streaming capabilities. This set of tools enables clients to obtain insights to improve user acquisition, optimize monetization, and even report crashes.

Yandex Radar is an open access internet analysis tool that provides general market information. This includes market shares of search engines and browsers, as well as more technical data such as the share of different operating systems and device types. The accuracy of Radar insights is enabled by anonymized data from Metrica, AppMetrica, and other Yandex data sources.

Advertisers

Yandex’s advertisers include individuals and small, medium, and large businesses, as well as large multinationals. Small and medium-sized enterprises drive most advertising revenue. No single advertiser accounted for more than 1% of total revenues in 2023.

E-commerce, Mobility and Delivery

The Yandex Mobility business includes a ride-hailing business, Yandex Drive, a car-sharing business for both B2C and B2B and Scooters.

The platform enables access to a wide range of personal mobility services through the Yandex Go super app, which launched in August 2020. In December 2023, total MAU of the Yandex Go super app exceeded 47 million.

Ride-Hailing

Yandex’s ride-hailing business offers a technological platform and delivers proprietary top-notch ride-hailing technologies to local communities ride-hailing services for individual users and businesses and to ensure sufficient driver availability to meet the growing demand.

The platform aggregated 1.75 million active drivers in December 2023, while earnings of the business’s partners totaled 974 billion rubles for the full 2023 year. The business currently builds relationships with drivers for the ride-hailing services both directly and through a wide partner network (Fleet Management Companies or FMCs).

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The business offers FMC partners access to efficient fleet management software to manage their driver base and fleet, optimizing their administrative and technical workflows.

Yandex Drive and Scooters

Alternative methods of transportation include Yandex Drive, a free-floating car-sharing service, launched in 2018, and Scooters, launched in 2022.

Yandex Drive offers on-demand access to cars for users to drive themselves in Moscow, St. Petersburg and Sochi, and provides users various options to reserve the vehicles for varying periods of time through a standalone mobile app, as well as through Yandex Go. As of the end of 2023, Yandex Drive operated approximately 16,500 vehicles.

Scooters is an electric scooter rental service. It provides access to more than 63,000 scooters as of the end of 2023.

Beyond the Mobility business, Yandex Fuel is a contactless payment service at gas stations built into Yandex Navigator, Yandex Maps, Yandex Pro, an app for drivers and couriers, Yandex Drive and a standalone Yandex Fuel app. Yandex Fuel is also available to corporate clients. As of December 2023, more than 11,000 fueling stations including charging stations were connected to the service throughout Russia.

E-commerce business

In 2023 the E-commerce segment included the following businesses: Yandex Market, a multi-category e-commerce marketplace, Yandex Lavka, the hyperlocal convenience store delivery service, and the grocery delivery services of Yandex Eats and Delivery.

Yandex Market

Yandex Market was launched in 2000 as a price comparison service and began its transformation into an e-commerce platform in late 2018. Today, it offers millions of goods for millions of buyers, working in partnership with tens of thousands of merchants. The marketplace operates under both 1P and 3P (third-party) models.

The marketplace business model enables the business to provide the full suite of e-commerce services to merchants, including access to consumers, fulfillment, logistics, advertising and marketing, payments, support and analytics.

Yandex Lavka

Yandex Lavka operated 502 dark stores (small warehouses) as of the end of 2023. Throughout 2023, the business continued to focus on improving operational efficiency and profitability.

FoodTech services Yandex Eats and Delivery

The Yandex Food and Grocery delivery services provide express delivery from restaurants and retail stores in 30 minutes. The Grocery vertical of Yandex Eats and Delivery is developed as a part of the E-commerce business. In 2023, the Food delivery from restaurants service operated as part of the other online-to-offline businesses (although in 2024, food delivery formed part of the E-commerce segment).

Delivery

Yandex Delivery is a last and middle-mile delivery service, launched during the Covid-19 pandemic as a means to serve the increased demand for delivery services. In 2023, the Delivery business benefited from the growing penetration of E-commerce and Food delivery in Russia. The service leverages Yandex’s routing and marketplace efficiency platform to meet growing demand of delivery services in the circumstances of challenging courier supply, especially on the domestic market. Growing order density and batching share led to an increase in courier earnings.

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RouteQ is a cloud platform for optimizing last mile logistics in retail, fast moving consumer goods, and courier services. It automatically forms optimized delivery routes and improves courier monitoring and communication between all parties involved in the delivery process.

Plus and Entertainment Services

Plus and Entertainment Services include the subscription service Yandex Plus, entertainment services (Yandex Music, Kinopoisk, Bookmate and Yandex Afisha), and the production center Plus Studio. Plus and Entertainment Services are available across different platforms, including Yandex Station and Yandex TV.

Yandex Plus

Yandex Plus is a subscription service to Yandex Music and Kinopoisk, and includes cashback loyalty points in a number of other services and apps. Subscribers earn cashback loyalty points when they pay for services and can use these rewards across the Yandex platform.

The subscriber base grew from 19.3 million in December 2022 to 30.4 million in December 2023. The share of paying subscribers exceeded 82% and average revenue per paying subscriber in December 2023 increased by 15% year-on-year.

On average Plus subscribers demonstrate greater than 70% higher frequency compared to non-Plus users across Yandex’s key transactional services as well as higher spending and better retention as of the end of 2023. Plus subscribers continued to generate a substantial part of GMV for the E-commerce and Food Delivery services.

Yandex Music

Yandex Music is a streaming platform that provides access to a catalog of approximately 73 million music tracks and 1.6 million podcast and audiobook episodes. The service matches music for every taste using its recommendation system, creating unique personalized playlists and endless music streams for each user. Yandex Music continues to lead among music streaming services in terms of the number of subscribers (both total and paid subscribers), according to a GfK report for Q4 2023.

Kinopoisk

Kinopoisk is a subscription-based video streaming service offering access to an extensive database of movies, TV-shows, celebrity content and entertainment news, providing users with movie ratings, critic and user reviews, personalized recommendations, local movie showtimes, ticketing, and many other entertainment-related services. Kinopoisk allows users to watch content on a subscription basis (through the Yandex Plus subscription) or purchase selected titles. The Kinopoisk library contains more than 81,000 movies, TV and original series episodes, including licensed and original content. The streaming service is available via Kinopoisk apps on smart TVs, smartphones, tablets, digital media players, video game consoles and via internet browsers on computers.

In 2023, Kinopoisk maintained its leading position on the video-on-demand market based on the total number of subscribers, as well as paid subscribers, according to a GfK study. The number of monthly Yandex Plus subscribers who watch content on Kinopoisk exceeded 11 million in 2023.

Yandex Afisha

Yandex Afisha (“playbill”), an event sales platform, allows users to buy tickets to cinemas, theaters, concerts, exhibitions, and sports events online, and incorporates personalized recommendations.

Plus Studio

Plus Studio is the Yandex production center, which creates video content, co-invests in different projects with other production studios and provides marketing support to movie releases. Throughout 2023, the business continued to

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focus on original content: in the fall of 2023, it announced 11 original projects in the 2023 and 2024 season as well as a musical adaptation.

Classifieds

Yandex’s Classifieds business unit includes Auto.ru, Yandex Realty, Yandex Rent and Yandex Travel.

Auto.ru

Auto.ru is a classifieds platform for the sale of used and new cars. The business develops and provides digital products for users, large car dealers, and medium and small sellers. Every month, more than 25 million people visit Auto.ru projects: the Auro.ru website, the related mobile app and the branded media outlet.

More than 495,000 car classifieds are available on the platform every month. All individuals can use free-to-use options of the platform for safe and effective transactions.

Yandex Realty

Yandex Realty is a real estate classifieds platform for private individuals, developers and realtors. The service provides listings for both sales and rentals of apartments, houses, and commercial property.

Yandex Rent

Yandex Rent is a long-term apartment rental platform available in four regions in Russia, which helps to manage pre-contract rental processes and subsequent administration of the payments. By the end of January 2024, the number of apartments on the platform reached 20,000, with 95% of deals signed online. A mobile app for Yandex Rent was launched in January 2023.

Yandex Travel

Yandex Travel is a travel aggregator service, which allows users to book hotels, search for flight tickets and other transport services. Yandex Travel average MAUs grew from 11 million per month in 2022 to 13 million per month in 2023. In 2023, the GBV (Gross Booking Value) of the service increased by 1.5 times compared to 2022, and the fastest growing product was hotel reservations. Also, Yandex Travel became the leading hotel booking service in Russia following the results of the summer of 2023 (according to hotel industry automation company TravelLine).

Other Business Units and Initiatives

The Other Business Units and Initiatives category includes all other Yandex businesses, including smaller and newer initiatives that are being tested and developed.

Yandex Cloud

Yandex Cloud is a fully-fledged cloud platform that provides B2B customers (SMBs and enterprises) and individual developers with scalable infrastructure, storage, machine learning and development tools to build and enhance cutting-edge digital services and applications. The cloud platform is based on in-house technologies that Yandex uses throughout other Yandex services, such as Search, Maps, and Metrica. Yandex Cloud continues to develop and improve its cloud services, offering customers new efficient solutions, such as SpeechKit (a speech synthesis and recognition service), machine translation services, and computer vision services, among others.

As of the end of 2023, the number of active users exceeded 29,000, while the number of services offered by the Yandex Cloud platform reached over 60 services, including services in the field of data analytics, security, serverless computing, machine learning and many other services.

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Yandex 360

Yandex 360 combines various productivity tools (for both B2C and B2B), such as Yandex Mail, Yandex Disk, a cloud-based storage service, Yandex Telemost, a video conferencing service, Yandex Documents, an online documents editor, Yandex Calendar, Yandex Messenger and many other services.

Self-Driving Group

The Self-Driving Group started developing driverless technologies in early 2017, with the aim of creating a fully autonomous system that can operate various types of vehicles and be applied to various transportation scenarios (including, among others, ride-hailing, logistics, e-commerce, food and grocery delivery) in a wide range of conditions. During 2023, the business launched the public testing of a self-driving taxi service in Moscow and Sochi. By the end of December 2023, the total number of kilometers driven by vehicles in autonomous mode was more than 28 million.

At the end of 2023, the self-driving fleet consisted of over 130 cars with custom-built fleet management system and additional software developed internally.

In the autumn of 2019, Yandex introduced an autonomous Delivery Robot, which leverages a self-driving technology. As of December 2023, these autonomous delivery robots had conducted 310,000 commercial deliveries, including deliveries through Yandex Eats and Lavka services (more than 10,000 orders per month in 2023). As of the end of 2023, more than 200 stores and restaurant chains utilized Yandex delivery robots for their logistics.

Devices and Alice

Smart Speakers and Smart Home

Yandex Station is a Yandex smart speaker with an integrated virtual smart assistant, Alice. The current range of smart devices with Alice consists of Light Station, Mini Station, Midi Station, Station 2, Max Station, DuoMax Station and certain smart home devices. In 2023, 4.2 million Yandex Stations equipped with Alice were sold.

Smart TV and Video Streaming Devices

Since launching the first Yandex smart speaker in 2018, the business has been working on voice control applications for video content consumption. In 2022, Yandex released the Yandex Smart TV with Alice, the first Yandex-branded Smart TV with YaOS and voice control through paired smart speakers. In 2023, the business introduced TV Station and TV Station Pro, which represent a new category of TVs and combine the capabilities of a smart speaker with the virtual smart assistant Alice and smart TV in one device.

Virtual Smart Assistant Alice

Alice is the first virtual smart assistant launched in Russia and is currently the most popular and widely recognized one on that market. Alice helps its users manage daily tasks, such as setting an alarm and scheduling reminders for important events, ordering a taxi, using radio-nanny mode and controlling a user’s ‘smart’ home. It is also widely used for entertainment, such as turning on Yandex Music and radio stations, and composing generative tales together with children and others. In 2023, the business launched a new Alice feature which has the ability to accept orders through the hyperlocal convenience store delivery service Yandex Lavka.

As of December 2023, there were over 77.1 million monthly Alice users across Yandex platforms such as the Yandex Search app and Yandex Browser, smart speakers, smart TVs and navigational apps.

Fintech

In 2021, Yandex acquired a banking license and started to develop financial products. In 2023, Yandex provided multiple financial services including the convenient online and offline payment service Yandex Pay, Yandex Split (a service facilitating purchases made and paid for in instalments, which is now integrated in many other Yandex businesses), Yandex Saver (offering savings accounts with or without a deposit term), the Yandex Pay Debit card with

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cashback options (Yandex Plus points) for purchases made in Yandex services and outside, another debit card option Yandex Pro for drivers and saving and deposits accounts and loans for drivers. Most of these products are aggregated in the Yandex Pay app.

Practicum

In 2019, Yandex launched Practicum, an online EdTech platform offering IT and digital reskilling and upskilling programs for specialists who already have a profession and work experience. In 2023, Practicum announced new online Bachelor and Master programs with several universities. As of March 2024, over 70,000 people have graduated from Practicum.

Competition

Yandex operates in a market characterized by rapid commercial and technological change, and faces significant competition in many aspects of its business. In Search, Yandex competes with Google, VK and Rambler.

Social networking sites, video platforms, online marketplaces, new media channels, and classifieds are becoming significant competitors for online ad budgets. These sites derive a growing portion of their revenues from online advertising and are experimenting with innovative ways of monetizing user traffic, which could create increased competition.

In 2023, Yandex also faced competition across the non-advertising businesses:

Employees and Workplace Culture

We place a high value on technological innovation and compete aggressively for talent. We strive to hire the best computer scientists and engineers, as well as talented sales, marketing, financial and administrative staff. We seek to

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create a dynamic, fulfilling work environment with the best features of a “start-up” atmosphere, encouraging equal participation, creativity, the exchange of ideas and teamwork.

Our total headcount increased from 20,850 at December 31, 2022 to 26,361 at December 31, 2023.

The four international businesses, which will be retained by Yandex N.V. following the completion of the Sale transaction, currently employ approximately 1,300 people, with a significant portion based at our headquarters in Amsterdam and located internationally, including in Israel, Germany, Switzerland, Czech Republic, the US, Serbia, and the UAE.

Intellectual Property

We rely principally on a combination of trademark, copyright, related rights, patent and trade secret laws in Russia and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We enter into confidentiality and patent assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to our proprietary technology.

In connection with the Sale, we will receive transitional licenses to the intellectual property created by businesses within the divestment perimeter for various fixed periods in 2024 in order to facilitate the further development of the retained businesses going forwards.

The businesses being sold will retain the use of the Yandex brand. Our company and the retained businesses will cease to use the Yandex brand following a short transition period.

Facilities

Yandex currently leases a total of approximately 64,700 square meters in a single location in central Moscow that serves as group’s headquarters. Yandex also leases additional office space of about 92,980 square meters in business centers in Moscow. Together with operating subsidiaries, Yandex also lease or own office space in a number of other cities in Russia and internationally.

Governance Structure

Overview of current structure

In December 2019, our shareholders approved targeted changes to Yandex’s corporate governance structure, including the introduction of a priority share and the formation of a Public Interest Foundation. Pursuant to an amendment of our articles of association that was approved by our shareholders in March 2024 and that will become effective at the first closing of the Sale, these elements of our governance structure will be eliminated. Below we provide a brief description of these governance mechanisms as in place during 2023 and until first closing of the Sale.

Public Interest Foundation

The Public Interest Foundation has certain limited and targeted governance rights in our group, which will terminate at the first closing of the Sale. The Public Interest Foundation has no shareholders, owners or beneficiaries, and is governed by the Foundation’s Board of Directors comprising 11 directors, including members appointed by five leading Russian universities and three non-governmental institutions, all of which have long histories of cooperation with Yandex. The Public Interest Foundation Board also includes three representatives of Yandex management. The statutory purpose of the Public Interest Foundation, as set out in its charter, is to preserve the continuity and promote the success of Yandex. The Public Interest Foundation is not permitted by its charter to engage in any commercial activities; its operating costs are covered by Yandex.

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Priority Share

The Public Interest Foundation holds the Priority Share, which gives the Public Interest Foundation the following rights:

Special Voting Interest in Yandex LLC

As an additional protection for the overall structure, the Public Interest Foundation holds a Special Voting Interest in Yandex LLC, which provides limited and defined powers that will be exercisable only in certain specified situations.

Public Interest Committee

The Public Interest Committee has a right of approval over certain specified matters and consists of three members: the Yandex CEO (currently vacant) and both of the designated directors.

The Public Interest Committee is not authorized to review ordinary business or commercial matters; its right of approval is limited to a defined list of the following specific matters deemed to be of public interest:

Government Regulation

Both the continuing operations and the businesses to be divested operate in a rapidly evolving environment of increasing regulatory complexity, reflecting a trend towards increasing scrutiny of large technology companies by policymakers, regulators and the general public in jurisdictions across the globe. In this section, we focus on the current and proposed regulatory framework that is applicable to the businesses to be divested, which constitute a majority of the businesses of the combined group. In the current geopolitical environment, there could also be an increased risk of new legislative or regulatory initiatives that could be seen as protecting national security and/or limiting foreign influence over certain sectors, including actions aimed at effecting changes of control of companies that are considered to be of strategic importance. See also “Risk Factors – In the current environment, there may be a heightened risk of actions by the relevant authorities that may be perceived as reflecting political considerations.”

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In light of the ongoing geopolitical tension in our key markets, a number of new laws and regulations critical to a number of businesses and activities in Russia have been proposed or adopted that are designed to restrict foreign ownership and tighten state control over businesses in certain sensitive sectors of the Russian economy, including strategically important enterprises and mass media. New regulation and laws in Russia could have a significant impact on the businesses to be divested pursuant to our proposed Sale.

Regulation of Sensitive Businesses in Russia

Legislation proposed in the Russian State Duma in the summer of 2019 could limit non-Russian ownership of “significant” internet companies to no more than 20%. A more recent draft law proposed restrictions to audiovisual services limiting their non-Russian ownership to no more than 20%. Yet another recent law imposes restrictions to classifieds services limiting their non-Russian control up to 50%.

Advertising Regulation

The businesses to be divested seek to comply with all advertising laws and regulations. At the same time, the application of the advertising laws, in particular in relation to products or services requiring certification, licensing or approval, can be ambiguous and inconsistent. The application of these laws in an unanticipated manner, or the failure of compliance efforts, may expose the businesses to be divested to substantial liability as distributors of advertising and may restrict their ability to provide some services. Other laws or interpretations of laws, including those of foreign jurisdictions, may also restrict advertising and negatively impact these businesses.

Intellectual Property Regulation

Under Russian law, the businesses to be divested have exclusive rights to trade secrets (know-how) only if they have complied with a legal requirement to introduce reasonable measures to maintain confidentiality of trade secrets. Such measures may be burdensome and difficult to implement. As these businesses rely extensively on the protection afforded to trade secrets, they have implemented a set of measures required by Russian law in order to protect these trade secrets (know-how). However, there is a risk that these measures will be deemed insufficient and, as a result, these businesses will fail to acquire rights to these trade secrets under Russian law.

As a rule, the exclusive rights to works for hire and patentable results are assigned to the employer if the intellectual property is made during the course of employment. However, there are often uncertainties and disputes around the scope of such assignments. In case of employment disputes, Russian courts are often inclined to follow an overly formalistic approach and may take a pro-employee position in the event of uncertainty in a dispute of this nature.

Nonetheless, under Russian law, subject to the risks outlined above, the businesses to be divested are deemed to have acquired copyrights and rights to file patent applications with respect to works for hire and patentable results created by our employees during the course of their employment and within the scope of their job duties, and have the exclusive rights to their further use and disposal subject to compliance with the requirements of the Civil Code of Russia.

Liability of Online Service Providers

In October 2023, legislative changes regulating the use of recommendation technologies have entered into force and now apply to a broad range of services offered by the businesses to be divested (including Search and Yandex Direct). Failure to comply with these requirements may result in the blocking of the information resource. Now the owner of an information resource is obliged:

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Internet Regulation

Certain laws that came into force in November 2019 continue to tightly regulate traffic routing in the Russian internet. There has been limited experience in the application of this regulation, and so its implementation or any uncertainty relating to it, among other things, may lead to a requirement that Russian internet traffic should be routed through Russian communication centers. This could significantly reduce data transfer speeds and even result in interruptions and delays of online services in Russia.

Additional regulation applicable specifically to technological platforms and ecosystems is currently under consideration in a number of jurisdictions. Although there is no goal to limit the development of IT businesses, any restrictive legislation in this sphere to be enacted in Russia or in other countries where we operate may limit flexibility in providing services and adversely impact operations.

Privacy and Personal Data Protection Regulation

In 2022, amendments to the Russian law on personal data were adopted, introducing a procedure of notification of a personal data breach to the supervisory authority (Roskomnadzor). A bill is being prepared that would establish a turnover-based fine (up to 3% of annual revenue) for repeated leaks of personal data. If this version of the draft law is adopted, the possible amount of potential fines could be significant for Yandex. In March 2023, the procedure for prior notification of Roskomnadzor on the cross-border transfer of personal data was introduced. These amendments allow Roskomnadzor to impose a ban on the cross-border transfer of personal data to a specific foreign organization or the country as a whole.

Russian data protection laws provide that an individual must freely consent to the processing of their personal data. Such consent must be concrete, substantive, informed, definite and conscious, and may be provided in any form evidencing the fact that consent has been provided, unless otherwise established by federal law, which requires that it be made in writing, signed by digital electronic signature or evidenced in a similar manner prescribed by laws and regulations.

The businesses to be divested seek this consent from users by asking them to click on a button or select a check-box in appropriate circumstances prior to commencement of the account registration process, indicating the user’s consent to the collection, use, storage and processing of personal data. Furthermore, many of the services offered do not require the creation of an account prior to their use and only limited information is collected in these circumstances. In particular, the businesses place cookies and use other widespread technologies that assist in improving user experience and ultimately benefit both our users and advertisers through behavioral targeting of advertising. No clear legislative guidelines have been provided addressing whether these practices are compliant with the requirements of the data protection legislation in Russia and abroad. There is a risk that such laws may be interpreted and applied in a manner that is not consistent with the businesses’ current data protection practices. Complying with various regulations in this area may require additional costs or changes in business practices. Further, any failure to protect users’ privacy and data may result in a decrease of user confidence in the services offered, and may ultimately result in a loss of users, which would adversely affect these businesses.

Licenses for the Provision of Particular Services

The provision of banking operations, including those provided by Yandex Bank, is heavily regulated, which continually undergo significant changes. Compliance with these requirements is closely reviewed by the regulators.

Entities that provide certain telecommunication services for a fee are required under Russian law to obtain a “telematics” license from Roskomnadzor, which the businesses to be divested have obtained. It is possible that a Russian court or government agency may construe online advertising revenues as a fee and determine that these businesses are required to hold an additional telematics license for such services.

Antimonopoly Regulation

The businesses to be divested could be considered to possess a substantial (and even dominant) market share in the online advertising market, ride-hailing market and/or other markets in which they operate. We understand that the

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regulator from time to time focuses on internet services and, for instance, could in the future recognize online advertising as a separate market, identify dominant players and impose conduct limitations and other restrictions.

Taxation Regulation

Taxation of legal entities and individuals in Russia is regulated primarily by the Tax Code of the Russian Federation. The scope and application of the Tax Code is elaborated by numerous regulations and clarifications from the Ministry of Finance of Russia and by the Federal Tax Service, which enforces the tax laws. Russian tax law and procedures are still not fully developed and local divisions of the Federal Tax Service have considerable autonomy in tax law interpretation and could potentially interpret tax rules inconsistently. Also, there is extensive court practice on the construction of the Code’s provisions, which can sometimes be unpredictable or even contradictory. Both the substantive provisions of the Russian tax law and the interpretation and application of those provisions by the Russian tax authorities and by Russian courts may be subject to rapid and unpredictable change. Taxation in Kazakhstan and other markets outside Russia, where the Company operates, also has significant uncertainties.

Consumer Protection Legislation

Recent amendments to Russian consumer protection legislation impose duties on aggregators of information about goods and services. These norms are applicable to some of services offered by the businesses to be divested and the failure to comply with such norms could lead to liability.

Also, the law “On unacceptable contract terms that infringe on the rights of consumers” adopted in 2022 provides for a wide list of contract terms that are prohibited in contracts with consumers was well as with merchants, and also for aggregators of information about goods and services. There is civil and administrative liability in the event of non-compliance with the requirements. The wording used in the law is vague and generalized, which can lead to legal uncertainty and could negatively affect services that interact with consumers (and may result in liability for violation of such law).

Regulations of Other Business Units; Other Jurisdictions

A number of the businesses to be divested, including in particular Ride-Hailing, operate in sectors that are subject to extensive governmental scrutiny and rapidly evolving regulatory requirements. The new Russian federal law “On taxi” was adopted in December 2022 and came into force in September 2023 in Russia. This law is a comprehensive regulation of the sphere of taxi transportation, it grants self-employed the right to provide transportation services, as well as clarifies the status of the taxi aggregator and establishes a limited list of cases of their liability.

In addition, because many Yandex services are accessible worldwide and are becoming increasingly available to other users globally, certain foreign jurisdictions, including those in which we have not established a local office, employees or infrastructure, may require us to comply with their local laws.

Other Regulations

As mentioned above, in 2022, a number of decrees of the President of the Russian Federation were issued aimed at ensuring the financial stability of the country. Under these decrees, a number of transactions with persons from so called “unfriendly” states applying restrictive measures (including sanctions) to the Russian Federation, its legal entities and individuals, became possible only with the permission of the Government Commission for Foreign Investment Control, Bank of Russia, or the President of the Russian Federation.

​

Item 4A. Unresolved Staff Comments.

None.

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Item 5. Operating and Financial Review and Prospects.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the “Selected Consolidated Financial Information” section of this Annual Report and our consolidated financial statements and related notes appearing elsewhere in this Annual Report. In addition to historical information, this discussion contains forward-looking statements based on our current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” and “Forward-Looking Statements” sections and elsewhere in this Annual Report. The historical results described below are not indicative of the results of the retained businesses or the group to be divested in the Sale in current or future periods.

Overview

Yandex is a technology company that builds intelligent products and services powered by proprietary machine learning and other technologies, with the goal of helping consumers and businesses better navigate the online and offline world. The ongoing geopolitical tensions, their impact on the Russian and global economy, and related pressures on the broader social and business environment, created unprecedented challenges for our business in 2023. Throughout the year we have been primarily focused on the stability of our operations and financial position, safeguarding the interests of our stakeholders and ensuring the well-being of our employees.

On February 5, 2024, the company announced that it had entered into a definitive agreement with a purchaser consortium to sell all of the group’s businesses in Russia and certain international markets (the “Sale”). The first closing pursuant to the Sale transaction is expected to take place in the coming weeks, with the second closing occurring within seven weeks following the first closing. Following the Sale, the company will have no interest in the businesses to be divested in Russia.

The Sale was approved by the Board in February 2024 and by the Company’s shareholders in March 2024. As of December 31, 2023, the Sale had not been approved and, accordingly, the result of operations of the businesses to be divested in the Sale are included consolidated financial results of the Company for the year ended December 31, 2023, and are not presented as discontinued operations or assets held for sale.

Over the last several years, the Yandex group expanded its operations beyond the core advertising and ride-hailing businesses into a number of other areas, including car-sharing, e-commerce, foodtech, video and audio streaming, delivery and logistics business, cloud technologies and fintech.

Yandex has continued to focus on improvements in the quality of Search, which is the largest Yandex service by audience and the basis of the group’s key cash generating business - advertising.

For the Search and Portal business, the principal constituencies are:

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Search and Portal revenues increased by 49% in 2023 compared to 2022. This growth was mainly driven by the strong performance of the core search business and the Yandex Advertising Network underpinned by ongoing investments in the development and efficiency improvements to ad-products and technologies, as well as the expansion of advertising inventory.

The businesses to be divested benefit from a large and diverse base of advertisers. Advertisers include individuals and small, medium and large enterprises across Russia and the other countries in which the business operates, as well as large multinational corporations. No individual advertiser accounted for more than 1% of total revenues in 2021, 2022 or 2023.

In 2023, E-commerce, Mobility and Delivery segment revenues increased by 61% compared to 2022. The increase was mainly driven by E-commerce services (with Yandex Market being the largest contributor to the growth, followed by Yandex Lavka) and Mobility. Mobility revenues increased by 36%, which is lower than GMV growth due to increased investments in driver supply in Russia. E-commerce revenues increased by 77%, slightly surpassing the increase in GMV, reflecting an improvement of 3P take rates and a growing share of advertising revenue. Other O2O services revenues produced 93% growth where Food Delivery was the key contributor to the growth, followed by Yandex Delivery business.

The growth in GMV¹ of Mobility reached 45% in 2023 compared to 2022 driven by an increase in the number of rides on the back of growth in the number of users, a growing share of non-economy tariffs due to the shift of new vehicles supply on the market towards upper-class models, and positive forex effect. The growth in GMV² of E-commerce was 64%, supported by organic growth in the user base, assortment expansion and cross-service synergies with Fintech products (in particular Split and Yandex Pay) and Yandex Plus. GMV³ of other O2O services grew by 72%, with Yandex Delivery and Yandex Food Delivery services being the largest contributors.

Plus and Entertainment Services revenues grew by 110% in 2023 compared to 2022. The increase was primarily driven by the growth of subscription revenue on the back of an expanding base of paid subscribers, changes in tariff mix and options, as well as solid trends in other revenue streams (including advertising, licensing, ticketing and other revenue categories).

We believe the most significant factors that allowed these businesses to show relative stability despite the continually challenging external environment affecting the business throughout 2023 include the following:

¹ GMV (or gross merchandise value) of Mobility is defined as the total amount paid by customers for ride-hailing, car-sharing and scooters rent services booked through the Yandex platform, including VAT.

² GMV of E-commerce is defined as the value of all merchandise sold through the Yandex Market marketplace and Yandex Lavka as well as the value of products sold through Yandex Eats and Delivery grocery service (delivered and paid for), including VAT.

³ GMV of other O2O (online-to-offline) services includes the total amount paid by customers and partner businesses for Yandex Delivery and Yandex Fuel services, the value of orders, delivered through the Yandex Eats and Delivery food delivery services, Lavka Israel, and several other smaller O2O experiments, including VAT.

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Operating Segments

As described elsewhere in this Annual Report, Yandex N.V. has entered into a definitive agreement to sell all of the group’s businesses in Russia and certain international markets. The businesses described below form part of the transaction perimeter and will not continue as part of the Yandex group following the completion of the proposed Sale. Those Target businesses are managed and reported on as part of the following operating segments:

Other Business Units and Initiatives, including a self-driving vehicles business referred to as Yandex SDG, Yandex Cloud and Yandex 360, Yandex Education (consisting of Practicum and other education initiatives), Devices and Alice, FinTech (including Yandex Pay and Yandex ID) and a number of other experiments as well as unallocated corporate expenses.

Certain changes have been made to the reporting segments, effective as of the start of 2024, including (i) the transfer of Edadeal from E-commerce, Mobility and Delivery to Search and Portal, and (ii) the transfer of Food Delivery from other O2O businesses to E-commerce businesses within E-commerce, Mobility and Delivery.

Key Trends Impacting Our Results of Operations

The key factors affecting the results of our operations reflect the current geopolitical and macroeconomic situation, including:

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According to the Russian Federal State Statistics Service, Rosstat, the consumer price index in Russia increased to 8.4% in 2021 and to 11.9% in 2022 and normalized back to 7.4% in 2023. The Central Bank of Russia forecasts that inflation in 2024 could drop further to 4.0-4.5%. Inflation rates dynamics influence our operating expenses and capital expenditures.

Yandex carefully follows the export control restrictions introduced by several countries, including the United States, the United Kingdom, Switzerland and the European Union, and is working closely with its vendors. None of the Yandex group companies operates in the sectors that have been specifically targeted. In July 2023, “Yandex Pay” was designated in Canada; such designation does not apply to Yandex N.V. or its other group companies or operations. Yandex continues to closely monitor developments in this regard.

Given the high level of uncertainty around future geopolitical developments and the macro environment, our visibility over the short- and medium-term is limited and we remain unable to provide any forward-looking expectations at this stage.

In addition to the impact of the current geopolitical and macroeconomic environment, other key trends influencing the group’s results of operations in the ordinary course include the following:

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The businesses to be divested have diversified their operations in recent years from a principally advertising-based business into a comprehensive digital platform for consumers and businesses. The change in revenue mix (towards higher share of Ride-Hailing, E-commerce, Plus and Entertainment Services and other new opportunities with different margin profiles and stages of investments) remains an important driver of consolidated operating margin. Search and Portal revenues have decreased from 45.5% of total revenues in 2021 to 43.3% in 2022 and to 42.2% in 2023.

In the ordinary course of business revenues were impacted by some seasonal factors, including seasonal fluctuations in internet usage, the influence of public holidays and vacations and general seasonal demand fluctuations. As the current geopolitical situation continues to worsen, the uncertainty of seasonal trends and how they will impact the businesses throughout 2024 remains particularly unclear.

Key Recent Acquisitions

Acquisition of Uber’s remaining interest in MLU B.V.

On April 21, 2023, we entered into an agreement (the “Agreement”) with Uber NL Holdings 1 B.V. (“Uber”), a subsidiary of Uber Technologies Inc., and on the same day acquired Uber’s entire remaining 29% interest in MLU B.V, a mobility joint venture, for consideration in cash of $702.5 million (RUB 57,337 million at the exchange rate as of the closing date). The Agreement superseded and was in lieu of the call option Uber granted to us under a Framework Agreement dated September 7, 2021. The call option was exercisable until September 7, 2023. The transaction was accounted for as an equity transaction.

A further description of the acquisitions and their accounting implications can be found in Note 3 – “Business combinations and investment transactions” of our consolidated financial statements included elsewhere in this Annual Report.

Results of Operations

The following table presents our historical consolidated results of operations as a percentage of revenues for the periods indicated:

Our consolidated income/(loss) from operations as a percentage of total revenues increased to an income of 3.6% and 2.5% in 2023 and 2022, respectively from a loss of 3.7% in 2021. The growth of margin in 2023 was mainly

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driven by solid performance across Search and Portal, Plus and Entertainment segments, as well as Devices and Alice segment, partly offset by the loss from operations associated with the impairment of intangible assets in 2023 and investments in the expansion of the group’s businesses and their future growth. The growth of margin in 2022 was mainly driven by the continuing improvement of the Search and Portal, E-commerce, Mobility and Delivery, and Devices and Alice segments’ profitability on the back of the increased operational efficiency and stricter cost control.

The table below presents information about the revenues of the reportable segments:

The table below presents information about the adjusted EBITDA of the reportable segments:

Eliminations represent the elimination of transactions between the reportable segments, including advertising agreements, brand royalties, use of data centers, sales of devices and others.

For a reconciliation between total adjusted EBITDA and net income/(loss) before income tax expense see Note 16 — “Information about segments & geographic areas” of our consolidated financial statements included elsewhere in this Annual Report.

Revenues

The following table presents consolidated revenues, by source, in absolute terms and as a percentage of total revenues for the periods presented:

Service revenues. Service revenues consist of online advertising revenues, revenues from the ride-hailing and logistics services, food delivery services, Plus and Entertainment services, car-sharing services, third party sales through the Yandex Market marketplace platform and other services. Service revenues increased by RUB 228,364 million, or

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53.1% in 2023 and by RUB 129,440 million or 43.1% in 2022, year over year. The growth was mainly attributable to the following:

Revenues related to sales of goods primarily represent revenues from goods sold through the marketplace platform, e-grocery revenue (specifically, Yandex Lavka, which uses a first-party (1P) business model and act as a direct retailer) and from the Devices and Alice business. Revenues related to sales of goods increased by RUB 50,062 million or 54.4% in 2023 and by RUB 36,090 million or 64.5% in 2022, year over year. The growth was primarily due to the FoodTech businesses, driven by hyperlocal grocery delivery service, Yandex Lavka, as well as increasing sales of devices and raising sales through the marketplace platform.

Operating Costs and Expenses

We classify operating costs and expenses as follows: cost of revenues, product development, sales, general and administrative expenses, depreciation and amortization.

Costs of revenues consists of cost of devices and other goods sold, traffic acquisition costs (TAC), cost of corporate ride-hailing and logistics services, logistics costs, content acquisition costs and outsource services, personnel expenses, content assets amortization and other cost of revenues.

TAC are the amounts paid to partners in the Yandex Advertising Network for serving Yandex online ads on their websites and to those partners who distribute Yandex products or otherwise direct search queries to Yandex websites. These amounts are primarily based on revenue-sharing arrangements. Some distribution partners are compensated on the basis of the number of installations of Yandex Browser or search apps. Yandex pays fees to its distribution partners on a non-refundable basis following the period in which the distribution fees are earned. Yandex does not have a standard term or termination provision that applies to agreements with distribution partners.

The following table presents the primary components of the cost of revenues in absolute terms and as a percentage of revenues for the periods presented: