Russian search company Yandex files for IPO

The company accounts for 65% of the Russian search market, but can it hold onto its lead?

Yandex, the Google of Russia, announced Thursday that it has officially filed for an IPO. The number of shares to be sold and their price range have not yet been disclosed, but the company has listed Morgan Stanley, Piper Jaffray, Goldman Sachs, Deutsche Bank Securities, and Pacific Crest Securities as its underwriters.

Founded in 1997, Yandex raked in $440 million in revenues in 2010 for a net income of $134.3 million, with a healthy Q1 2011 income of $28.8 million, despite increasing competition from its primary competitor, Google. Google touched down in Russia in 2001, opening its first Russian office and launching its first Russian-language search engine. In 2006, Google developed and launched its Russian-language morphology-based search capabilities. But to date, Google accounts for less than a quarter (22%) of the Russian search market, compared to Yandex’s share of 65%.

Another mounting concern for the company is the Russian government, which declared in January 2011 that a “national” search engine is a top governmental priority. That might not be so bad in itself, but Yandex notes that such a project would likely benefit from governmental subsidies and other forms of preferential treatment not available in the private sector.

Aside from the Russian government, the company’s main domestic competitor is Mail.ru, which competes with Yandex for text-based advertising, display advertising, and other services. Additionally, Yandex notes that Mail.ru offers a number of hugely popular services in Russia—like the leading Russian email service—that are comparable to Yandex’s services and, in some cases, more widely used than Yandex’s.

Nevertheless, Yandex is trucking along nicely. In March 2011, the site drew 38.3 million unique visitors via PCs, mobile phones, tablets, and other devices. Additionally, the company provides local search results for over 1400 cities.

Yandex will be hitting NASDAQ under the ticker symbol YNDX. Earlier this month, WSJ reported that Yandex has been given a preliminary valuation between $6 and $9 billion, according to sources.

Image source: englishrussia.org