1. What is Yandex and Yandex Labs Search
Arkady Borkovsky
Chief Technology Officer (CTO)
January 2012
Stanford Engineering
European Entrepreneurship & Innovation (ME421)
January 30 2012

2. Introduction
Yandex at a glance
#1 Search #1 Internet
Leader Destination
61% search market share in Russia1 44 million unique visitors per month2
44% of Russian users’ homepages3
Leading Online Largest Russian
Advertising Platform Internet Business
180,000+ advertisers (2010) $161.9 million Revenues (Q3 2011)
(65% Y/Y Growth Rate)
58% online ad market share (2010)
$73.3 million Adj. EBITDA (Q3 2011)4
(54% Y/Y Growth Rate)
1 Source: Liveinternet, December 2011
2 Source: comScore, November 2011
3 Source: TNS
4 Adjusted EBITDA is EBITDA before share-based compensation, See Appendix for a reconciliation to US GAAP
2

3. Key Investment Highlights
Local Champions Can Win in Search
Yandex
Baidu
Naver
(launched 1997) (launched 2001) (launched 1999)
Yandex
61%1 Baidu NHN 66%3 3
80%2
Russia South
China Korea
26% 10%
13% Google 15%
5% 24%
Others Others Others Google
Google
1. As of December 2011, Liveinternet.ru
2. As of December 2011, CNZZ.com
3. As of May 2011, comScore
3

4. Google Sites
125.2
Baidu.com Inc.
12.7
Yahoo! Sites
11.0
Key Investment Highlights
Microsoft Sites
5.2
Source: comScore, November 2011
Yandex Sites
3.6
NHN Corporation
3.1
eBay
3.0
FACEBOOK.COM
2.5
Alibaba.com Corporation
2.1
Ask Network
1.5
World Search Properties (B Searches/month)
Yandex Sites
43.9
Mail.ru Group
43.7
Google Sites
36.8
Vkontakte
36.0
BitTorrent Network
23.7
Wikimedia Foundation Sites
21.6
Ucoz Web Services
20.4
RosBusinessConsulting
19.6
Microsoft Sites
18.2
Yandex position compared to the world’s internet properties
Rambler Media
16.7
Top 10 Web Properties in Russia (MM Users)
4

5. Key Investment Highlights
Leader of Russian search ….
Russian Search Traffic Market Share, %
70%
60% 61%
50%
November 2009
Launch of MatrixNet
40%
January 2006
• Google opens office in Russia January 2010
30%
• Google introduces Russian Mail.ru stops using Yandex
language morphology for search 26%
20%
10%
8%
1%
0%
Oct-04
Jan-05
Oct-05
Jan-06
Oct-06
Jan-07
Oct-07
Jan-08
Oct-08
Jan-09
Oct-09
Jan-10
Oct-10
Jan-11
Oct-11
Jan-12
Apr-12
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Jul-09
Jul-05
Jul-06
Jul-07
Jul-08
Jul-10
Jul-11
Source: LiveInternet.ru (through December, 2011)
Search traffic reflects Russian users to Russian websites
5

6. Key Investment Highlights
Internet penetration still low, but catching up fast…
800 120%
700 Internet Penetration in Russia (%)
Internet Users vs. Penetration
100%
600
80% 82%
78%
80%
500 485 69%
66%
62%
58%
400 60%
46%
300 272 120%
37%
40%
36% 100%
200 80% 72%
66%
60% 53%
100 20%
40%
100 76 40%
65 53 51 45
8% 22 20%
7 6
- 0% 0%
Moscow
Rest of Russia
Saint-Petersburg
Cities, 1M+ population
Germany
Hungary
US
UK
France
India
China
Russia
Poland
Brazil
Czech
Source: FOM (Public Opinion Foundation) release, June 2011.
Data for the countries other than Russia is provided by InternetWorldStats.com as of June 2011.
6

7. The gateway to the Russian internet
Russia’s Most Popular Homepage – 44% of All Russian Users*
News
Mail
Traffic Jams / Maps
Comparison
Shopping
Weather
Auto
Jobs TV listings
Music
Yandex.Money
Analytics tool
* TNS, Russian audience aged 12-54
7

8. Key Investment Highlights
Yandex in Palo Alto -- What
• Opened Sept 2008
• About 20 people
• mostly senior researchers / developers,
mostly from Yahoo & Google
• Working on search quality
• Ranking, content selection
• Focusing on English language search
• Social applications
8

9. Key Investment Highlights
Yandex in Palo Alto -- Why
• Leverage skills and industry experience of the
Silicon Valley
• From a Yandex Labs job posting:
• … made a significant contribution to a major
web search engine
• Technology acquisition
• Exposure to a different development culture
• Yandex future is in expanding to more markets
9

10. Key Investment Highlights
Yandex in Palo Alto -- Challenges
• Hiring
• Negative:
• Working at a satellite office
• Less plug-in into Silicon Valley life
• Positive:
• The only place to compete with Google in Search
• Language
• Cultural differences
• Russians just look like Caucasian 
• Mixing business and personal
• Costs:
• Is worth it
10

11. Key Investment Highlights
Yandex in Palo Alto -- Language
• Not as big an issue as expected
• All the correspondence is English
• Intranet is automatically translated:
• Search Results Page => SERP
• SERP => СЕРП
• Серп => sickle
• A challenge for Russian speakers in the audience:
• Malicious Pinocchio
• Grigoriev's Light
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