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By Ingrid Lunden

yandex

Yandex (NASDAQ:YNDX), Russia's biggest search company, has posted Q1 earnings, with revenues up 51% to $200.3 million, and net income up 53% to $43 million.

The results beat analyst expectations: on average analysts expected revenues of $194.64 million, with earnings per share of $0.15 (low $0.13; high $0.16), but other numbers may still give investors pause: Yandex's share of the search market in Russia, its largest market by far, is now at 59 percent against competition from Google (NASDAQ:GOOG) and others: last year it was closer to 65 percent.

Before today, Yandex had been trading down amid concerns that competitors (mainly Google) were gaining market share on the company in the search advertising market, an area where Yandex in the past had enjoyed a healthy lead. Yesterday saw the share price dip to its lowest point since December 12.

Yandex today said that text-based ads still account for 90 percent of its revenues - 5.3 billion rubles ($181 million). Some 73 percent of those were on Yandex's own properties, which now have 179,000 advertisers.

Meanwhile, the addition of media powerhouse Rambler to Yandex's ad network helped that business grow revenues by 117 percent. Text-based ads from Yandex's ad network accounted for 17 percent of Yandex's total revenues in the quarter.

Yandex has been focusing a lot of its efforts on making sure that it stays on top in the Russian-language market, which includes other CIS nations and still a lot of opportunity for growth - and growing interest for companies like Google. That's in contrast to, for example, European countries where Google has effectively cornered the market for search. Ilya Segalovich, co-founder and CTO, last week called Google's average 97 percent market share across Europe a "crazy number" that makes it a challenge to break into that region.

More recently Yandex has also been extending its footprint into markets that are less dominated and have some affinity with Russia in economic model - for example, it has this year launched its mapping and navigation products in Turkey. That business is still small, but growing: today Yandex noted that average daily visitors to its sites in Turkey nearly doubled in March compared to January (390,000 versus 200,000).

And yesterday, Yandex showed that it was also interested in looking for ways of moving into new markets by way of venture investments: it became the institutional investor to back Seedcamp, the London-based early-stage seed investment fund and mentoring programme for IT companies. Yandex says that its involvement will involve "sharing knowledge and expertise" both with Seedcamp and startups and the ability to invest in projects will also let it choose projects for investment. "Yandex also acquires a small stake in each project supported by Seedcamp," the company said in a statement. While it didn't provide the value of its investment, TNW notes that each project on average gets €250,000.

There are signs that Yandex could also be looking for a stronger mobile play going forward. That could mean further reach in mobile search - Yandex is reportedly talking to Apple now to become the default search provider on iOS devices in Russia, similar to the deal Yandex already has for Windows Phone and for Samsung's bada feature phones.

And it could mean developing a mobile platform of its own, as its competitor Google has done, possibly becoming one of the latest to try its luck building a device based on a forked, customized version of Android. The recent acquisition of mobile software developer SPB Software, Segalovich says, puts Yandex "Very close to having a full set of mobile services," - mail, maps, and search apps among them - "the only thing missing is the browser."

One of Yandex's local competitors, Mail.ru, is also releasing earnings later today.

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Source: Yandex Q1 Earnings: Revenues Up 51%, Net Income Up 53%