Cian PLC Announces Second Quarter and Six Months 2022 Financial Results

LARNACA, Cyprus–(BUSINESS WIRE)–Cian PLC (NYSE: CIAN, MOEX: CIAN) (“Cian”, the “Group” or the “Company”), a leading online real estate classifieds platform in Russia, today announced its financial results for the second quarter and six months ended June 30, 2022.

Second Quarter 2022 Key Financial and Operational Highlights¹

• Revenue increased by 31% Y-o-Y to RUB 1,905 million ($37.2 million).
• Loss for the period amounted to RUB 433 million ($8.5 million) due to foreign currency exchange loss described in the corresponding section below.
• Adjusted EBITDA² increased by 303% Y-o-Y and reached RUB 480 million ($9.4 million).
• Adjusted EBITDA Margin² increased by 17 ppt Y-o-Y to 25.2%.
• Average UMV (Unique Monthly Visitors)³ decreased by 13% Y-o-Y to 17.3 million.
• Core Business revenue increased by 30% Y-o-Y to RUB 1,781 million ($34.8 million).
• Core Business Adjusted EBITDA⁴ increased by 106% Y-o-Y to RUB 645 million ($12.6 million).
• Core Business Adjusted EBITDA Margin^2,5 improved by 13 ppt Y-o-Y and reached 36.2%.

Six Months 2022 Key Financial and Operational Highlights¹

• Revenue increased by 34% Y-o-Y to RUB 3,631 million ($71.0 million).
• Loss for the period amounted to RUB 389 million ($7.6 million).
• Adjusted EBITDA² increased by 951% Y-o-Y and reached RUB 536 million ($10.5 million).
• Adjusted EBITDA Margin² increased by 13 ppt and amounted to 14.8%.
• Average UMV (Unique Monthly Visitors)³ decreased by 11% Y-o-Y to 18.2 million.
• Core Business revenue increased by 33% Y-o-Y to RUB 3,403 million ($66.5 million).
• Core Business Adjusted EBITDA⁴ increased by 103% Y-o-Y to RUB 906 million ($17.7 million).
• Core Business Adjusted EBITDA Margin^2,5 improved by 9 ppt Y-o-Y and reached 26.6%.

Dmitriy Grigoriev, Chief Executive Officer of Cian PLC, commented: “We are pleased with the growth of the Cian business during the second quarter, especially as we have been operating in unprecedentedly adverse market conditions. Our focus has been on delivering revenue growth in our Core Business while maintaining operating expense discipline.

The Core Business revenue growth was the result of a strong uptick in our listing and lead generation revenue from the Moscow and Moscow region, strong increase in demand for leads from developers following market cooldown, and the successful roll out of price increases in key segments of the market. As our revenue levels are being restored, we resumed our spendings as well.”

Second Quarter and Six Months 2022 Results

Factors affecting year-over-year trends and comparisons

We believe that trends in the real estate market in the first half of 2022 were particularly characterized by the following events: (i) the key interest rate increase to 20.0% in late February 2022 which, in combination with tight subsidized mortgage limits, led to an overall decrease in the demand mortgages and subsequently for primary and secondary real estate; (ii) the gradual decrease of the key interest rate (from 20.0% in late February to 8.0% since late July) by the Central Bank of the Russian Federation (CBR) and recovery in subsidized mortgage programs both by the Government and developers led to a gradual demand recovery from the second half of May.

Second Quarter 2022 Results

Audience

Average UMV (Unique Monthly Visitors) for the three months ended June 30, 2022 decreased by 13% Y-o-Y to 17.3 million. This decline in visitors was mainly driven by the overall decrease in demand for primary and secondary real estate following the key interest rate hike in February 2022. In response to this uncertainty and decreased overall demand for real estate, the Company decreased its marketing expenses to avoid ineffective spending.

Revenue

Revenue for the three months ended June 30, 2022 amounted to RUB 1,905 million compared to RUB 1,372 million for the three months ended June 30, 2021, an increase of RUB 449 million, or 31%. The revenue increase was primarily driven by growth in the Core Business segment.

The following table outlines a breakdown of revenue by segment and type for the periods indicated (in millions of RUB and USD):

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¹ Dollar translations throughout this release are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of June 30, 2022 (RUB 51.1580 to USD 1.00)

Core Business segment revenue

Core Business revenue reached RUB 1,781 million for the three months ended June 30, 2022, an increase of 30% from RUB 1,372 million for the three months ended June 30, 2021. Core Business revenue growth was driven by strong performance across all key revenue streams – listing revenue, lead generation, and display advertising revenue.

Listing revenue (secondary and commercial real estate verticals)

Listing revenue increased by 21% to RUB 1,143 million for the three months ended June 30, 2022 from RUB 943 million for the same period of the prior year.

The following table presents the listing revenue, the number of listings and the average daily revenue per listing for the periods indicated:

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¹ Listings means the daily average number of real estate listings posted on our platform by agents and individual sellers for a particular period

² Average daily revenue per listing is calculated as listing revenue divided (i) by the total number of listings for the corresponding period and (ii) by the number of days during the period

The growth of the Сore Business listing revenue was primarily driven by the following factors:

1. re-launch of paid listing services following their temporary suspension from April 2020 due to the COVID-19 pandemic; and
2. listings services price increases, which were implemented as a part of a regular review of listing rates.

In the three months ended June 30, 2022, we had approximately 1.86 million listings on our platform, compared to approximately 2.25 million in the three months ended June 30, 2021. The decrease in the number of listings from the Other Russian Regions was predominantly driven by monetization re-introduction and price increases. Meanwhile, a 10% Y-o-Y growth of content in Moscow and the Moscow region was the important driver of listing revenue growth in this region. Since April, the number of listings has been increasing M-o-M. The Company’s successful “+30% of content for free” campaign also contributed to the growth of listings.

Lead generation and display advertising revenue (primary real estate vertical)

Lead generation revenue increased by 65% to RUB 487 million in the three months ended June 30, 2022 from RUB 295 million in the three months ended June 30, 2021. Display advertising revenue increased by 8% to RUB 144 million for the three months ended June 30, 2022.

Lead generation revenue growth was mainly driven by the increase in the average revenue per lead to developers as a result of more active participation of developers in auctions¹, higher investment by developers in value-added services, price increases, and a new tariff roll-out.

Mortgage marketplace segment revenue

Mortgage Marketplace revenue was RUB 31 million for the three months ended June 30, 2022 compared to RUB 74 million for the same period of the prior year, corresponding to a decrease of RUB 43 million or 58%. This decrease was due to the key interest rate hike in late February. This segment grew during the second quarter due to general recovery in the market as a result of the gradual key interest rate decrease and re-introduction of subsidized mortgage programs by the government and developers.

Operating expenses

Total operating expenses decreased by 39% to RUB 1,674 million in the three months ended June 30, 2022 compared with RUB 2,737 million in the three months ended June 30, 2021, primarily driven by a decrease in marketing and employee-related expenses.

The following table sets forth a breakdown of our operating expenses for the periods indicated (in millions of RUB and USD):

Employee-related expenses

Employee-related expenses decreased by 51% to RUB 906 million in the three months ended June 30, 2022 from RUB 1,833 million in the three months ended June 30, 2021. This was mainly due to a decrease in the share-based payment expense, as the previous Phantom Share Program was settled upon the IPO. Wages, salaries, and related taxes and other employee-related expenses were a total of RUB 708 million for the three months ended June 30, 2022 compared to RUB 567 million for the three months ended June 30, 2021. This increase was primarily due to headcount growth and salary growth in line with the market level.

Wages, salaries and related taxes as a percentage of revenue decreased year-over-year from 38.9% for the second quarter of 2021 to 37.2% for the second quarter of 2022.

Marketing expenses

Marketing expenses decreased to RUB 349 million in the three months ended June 30, 2022 from RUB 524 million in the three months ended June 30, 2021. This decrease was primarily driven by lower spending on online marketing due to the uncertainty on the mortgage market and limited visibility on the broader economic situation.

Marketing expenses as a percentage of revenue decreased to 18.3% in the second quarter of 2022 from 36.0% in the second quarter of 2021.

IT expenses

IT expenses decreased by 5% to RUB 126 million in the three months ended June 30, 2022 from RUB 133 million in the three months ended June 30, 2021. This decrease was primarily driven by positive FX effect, as part of the Company’s hosting expenses are denominated in foreign currency.

Other operating expenses

Other operating expenses increased by 25% to RUB 222 million in the three months ended June 30, 2022 from RUB 177 million in the three months ended June 30, 2021. This was primarily driven by the cost of properties sold as part of our Home Swap service, which totaled RUB 66 million in the second quarter of 2022. Another factor contributing to the increase was growth in capital markets and consulting expenses.

Loss for the period

Loss for the three months ended June 30, 2022 was RUB 433 million compared to a loss of RUB 1,287 million for the three months ended June 30, 2021. The change in loss for the period was driven primarily by the same factors as affecting our Adjusted EBITDA described below as well as a foreign currency exchange loss of RUB 663 related to our USD-denominated cash balances.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for the three months ended June 30, 2022 reached RUB 480 million compared to RUB 119 million for the three months ended June 30, 2021. The increase in Adjusted EBITDA was primarily driven by the revenue growth supported by the decrease in operating costs.

Adjusted EBITDA Margin increased by 17.0 ppt to 25.2% for the three months ended June 30, 2022.

Core Business Adjusted EBITDA increased by 106% to RUB 645 million in the three months ended June 30, 2022 from RUB 313 million in the three months ended June 30, 2021. This increase was driven primarily by revenue growth of the Core Business segment, including the growth in listing, lead generation and display advertising revenue that outpaced the growth of Core Business operating expenses.

Core Business Adjusted EBITDA Margin improved by 13.4 ppt reaching 36.2% for the three months ended June 30, 2022.

Mortgage Marketplace Adjusted EBITDA was negative RUB 45 million in the three months ended June 30, 2022 compared to negative RUB 106 million in the three months ended June 30, 2021. The dynamic was primarily driven by a sharp decrease in demand on mortgage (as a result of a hike of CBR key rate) and substantial decrease in marketing spendings due to uncertainty in the mortgage market.

Six Months 2022 Results

Audience

Average UMV (Unique Monthly Visitors) for the six months ended June 30, 2022 was down by 11% Y-o-Y to 18.2 million. The main reasons for that decrease were a high level of uncertainty in the second quarter of 2022 due to the key interest rate increase in February 2022 (please refer to the corresponding section above for a more detailed description).

Revenue

Revenue for the six months ended June 30, 2022 amounted to RUB 3,631 million compared to RUB 2,704 million for the six months ended June 30, 2021, demonstrating an increase of RUB 927 million, or 34%. The revenue growth was mainly driven by growth of the Core Business segment.

The following table sets forth a breakdown of our revenue by segment and type for the periods indicated (in millions of RUB and USD):

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¹ Dollar translations throughout this release are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of June 30, 2022 (RUB 51.1580 to USD 1.00)

Core Business segment revenue

Core Business revenue reached RUB 3,403 million for the six months ended June 30, 2022, increasing by 33% compared to RUB 2,563 million for the six months ended June 30, 2021. Similar to the second quarter, Core Business revenue growth was driven by a positive performance across all key revenue streams.

Core Business revenue in Moscow and the Moscow region for the six months ended June 30, 2022 was RUB 2,516 million, an increase of RUB 620 million, or 33%, compared to RUB 1,896 million for the same period of the prior year. Core Business revenue in other Russian regions for the six months ended June 30, 2022 was RUB 887 million, an increase of RUB 220 million, or 33%, as compared to RUB 667 million for the same period of the prior year.

Listing revenue (secondary and commercial real estate verticals)

Listing revenue increased by 26% to RUB 2,141 million for the six months ended June 30, 2022 from RUB 1,697 million for the same period of the prior year.

The following table presents the listing revenue, the number of listings and the average daily revenue per listing for the periods indicated:

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¹ Listings means the daily average number of real estate listings posted on our platform by agents and individual sellers for a particular period

² Average daily revenue per listing is calculated as listing revenue divided (i) by the total number of listings for the corresponding period and (ii) by the number of days during the period

The growth of the Сore Business listing revenue was primarily driven by re-launch of paid listing services after the COVID-19 pandemic and listings services price increases.

In the six months ended June 30, 2022, we had approximately 1.78 million listings on our platform, compared to approximately 2.14 million in the six months ended June 30, 2021. The decrease in the number of listings was predominantly driven by monetization re-introduction and price increases. The market has yet to fully recover following the mortgage rate increase in late February-March.

Lead generation and display advertising revenue (primary real estate vertical)

Lead generation revenue increased by 61% to RUB 960 million in the six months ended June 30, 2022 from RUB 595 million in the six months ended June 30, 2021. Display advertising revenue increased by 9% to RUB 290 million for the six months ended June 30, 2022.

Core Business lead generation revenue growth was mainly driven by the increase in the average revenue per lead to developers. Increase in the average revenue per lead to developers resulted from price increases in September 2021, December 2021, and March 2022. Since March 2022, there was increased demand from buyers attempting to invest their savings in property and utilize previously approved mortgages on the back of the key rate increase.

Mortgage marketplace segment revenue

Mortgage Marketplace revenue amounted to RUB 100 million for the six months ended June 30, 2022 compared to RUB 119 million for the same period of the prior year, representing a decrease of RUB 19 million, or 16%, as the demand did not fully recover after the key interest rate increase in late February.

Operating expenses

Total operating expenses decreased by 17% to RUB 3,587 million in the six months ended June 30, 2022 from RUB 4,345 million in the six months ended June 30, 2021, primarily driven by a decrease in marketing and employee-related expenses.

The following table sets forth a breakdown of our operating expenses for the periods indicated (in millions of RUB and USD):

¹ Dollar translations throughout this release are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of June 30, 2022 (RUB 51.1580 to USD 1.00)

Employee-related expenses

Employee-related expenses decreased by 32% to RUB 1,790 million in the six months ended June 30, 2022 from RUB 2,632 million in the six months ended June 30, 2021. Wages, salaries and related taxes and other employee-related expenses were a total of RUB 1,397 million for the six months ended June 30, 2022 compared to RUB 1,124 million for the six months ended June 30, 2021. This increase was primarily due to headcount growth and salary growth in line with the market level.

Wages, salaries and related taxes as a percentage of revenue decreased year-over-year from 41.6% for the first half of 2021 to 38.5% for the first half of 2022.

Marketing expenses

Marketing expenses decreased to RUB 1,040 million in the six months ended June 30, 2022 from RUB 1,129 million in the six months ended June 30, 2021. This decrease was primarily driven by reduced spending on online advertising, especially in the second quarter of 2022 in response to increased levels of uncertainty. As the key interest rate decrease and audience activity started recovering, the Company increased its marketing activities.

Marketing expenses as a percentage of revenue decreased to 28.6% in the first half of 2022 from 41.8% in the first half of 2021, driven primarily by the increase in revenue and decrease of marketing spendings.

IT expenses

IT expenses increased by 14% to RUB 262 million in the six months ended June 30, 2022 from RUB 229 million in the six months ended June 30, 2021. This increase was primarily driven by an additional rollout of hosting on Yandex (as a backup), expansion of our call tracking as well as currency rate growth in the first quarter of 2022.

Other operating expenses

Other operating expenses increased by 61% to RUB 356 million in the six months ended June 30, 2022 from RUB 221 million in the six months ended June 30, 2021, primarily driven by the costs of properties sold as part of our Home swap service, which totaled RUB 81 million in the first half of 2022; another factor was growth in capital markets and consulting expenses.

Loss for the period

Loss for the six months ended June 30, 2022 was RUB 389 million compared to a loss of RUB 1,670 million for the six months ended June 30, 2021. The change in loss for the period was driven primarily by the same factors as affecting our Adjusted EBITDA described below as well as a foreign currency exchange loss of RUB 478 related to our USD denominated cash balances.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for the six months ended June 30, 2022 reached RUB 536 million, compared to RUB 51 million for the six months ended June 30, 2021. The increase in Adjusted EBITDA was primarily driven by the revenue growth partially supported by decrease in operating costs.

Adjusted EBITDA Margin increased by 13 ppt to 14.8% for the six months ended June 30, 2022.

Core Business Adjusted EBITDA increased by 103% to RUB 906 million in the six months ended June 30, 2022 from RUB 446 million in the six months ended June 30, 2021. This increase was driven primarily by revenue growth of the Core Business segment, including the growth in listing, lead generation and display advertising revenue that outpaced the growth of Core Business operating expenses.

Core Business Adjusted EBITDA Margin improved by 9.2 ppt reaching 26.6% for the six months ended June 30, 2022.

Mortgage Marketplace Adjusted EBITDA was negative RUB 104 million in the six months ended June 30, 2022 compared to negative RUB 229 million in the six months ended June 30, 2021. The dynamic was primarily driven by a decrease of more than 40% in operating expenses, outpacing the decrease in revenue (-16% Y-o-Y) in this segment.

Second Quarter and Six Months 2022 Financial Results Conference Call

In light of the existing uncertainty and market volatility, the Company will not be conducting its second quarter and first six months 2022 conference call. Investors, analysts, and media are welcome to send their inquiries to the Company using the contact details provided in this release.

About Cian

Cian is a leading online real estate classifieds platform in the large, underpenetrated and growing Russian real estate classifieds market, with a strong presence across Russia and leading positions in the country’s key metropolitan areas. The Company ranks among the top seven most popular online real estate classifieds globally in terms of traffic (based on SimilarWeb traffic data for other online real estate classifieds and Google Analytics data for Cian for June 2022). Cian’s networked real estate platform connects millions of real estate buyers and renters to millions of high-quality real estate listings of all types — residential and commercial, primary and secondary, urban and suburban.

Contacts

Investor contacts:
Daria Fadeeva

ir@cian.ru

Media contacts:
Olga Podoliaka

po@cian.ru

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