Good day. And welcome to the Q4 and FY 2016 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Katya Zhukova, Investor Relations Director. Please go ahead, madam. Katya Zhukova Hello, everyone and welcome to Yandex's fourth quarter and full year 2016 Earnings Call. We distributed our earnings release earlier today. You can find the copy of the press release on the company’s IR website and on Newswire services. On the call today, we have Alexander Shulgin, our Chief Operating Officer; Greg Abovsky, our Chief Financial Officer; and Mikhail Parakhin, our Chief Technology Officer. The call will be recorded and the recording will be available on our IR website in a few hours. We've also prepared a few slides supplementary to the story, which are currently available on the IR website. Now, I will quickly cover the Safe Harbor statement. Various remarks that we make during this call about our future expectations, plans and prospects constitute forward-looking statements. Our actual results may differ materially from those indicated or suggested by the forward-looking statements, as a result of various important factors, including those discussed in the Risk Factors section of our Annual Report on Form 20-F dated March 21, 2016 which is on file with the SEC and is available online. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Although we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. During this call, we will be referring to some non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with U.S. GAAP. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is provided in the earnings release we issued today. And now, I am turning the call over to Alexander.

Thank you, Katya and hello everyone. Thank you for joining our fourth quarter earnings call. We delivered another solid set of results in Q4 with revenues up 22% and ex-TAC revenues up 24% year-over-year. This is a remarkable performance given the tough comps we faced with the launch of the VCG auction in September 2016. Our full year revenue grew 27% year-over-year, 3 percentage points above the top end of our revenue guidance. The install [ph] mega trend has certainly boosted our performance, but I also believe that our execution quality has improved as we realized our operations upon three pillars. The core search and portal business with three business units and the experiments. Within the search and portal visits, we have been leveraging our expertise in machine learning and AI to increase the relevance of our search results and to improve quality for [indiscernible] With all three business units Taxi, E-commerce and Classifieds, we have tried to create nimble and agile organizations with equity compensation directly linked to value creation. In our Experiments segments shows have proving ground for even more early stage entrepreneurial activities. I am excited about the prospects of Media Services, including Yandex.Music and Discovery services, which is our AI based personalized content recommendation service. I'm extremely proud of everything that the team has achieved over the last 12 months. In the search and portal segment, revenue grew 21% which inline with the growth rate in Q3 2016. This is also due to our focus on FX [ph] that Mikhail will cover in a few minutes, launch of new ad formats and the gross of revenues coming from owned properties, including news, mail, weather and certain events, intelligence content discoveries developed by our Discovery services. We started experimenting with that in 2015 and sold it out…

Thank you, Sasha. And hello everyone. In 2016 we significantly increased our pace of innovation. Throughout the year we were focused on maximization of the total economic value of clicks to our advertisers. The launch of VCG in September 2015 allowed us to significantly increase the relevancy of our ads on search and to provide our advertisers with higher value clicks. In summer of 2016 we significantly improved our broad match capabilities, both on search and in our ad network, to cover user’s unspoken interest and to enhance advertisers reach with high-quality clicks. In late summer, early fall, we introduced a bit correction algorithm that either dramatically reduces the advertisers bid or chooses not to show that their ad at all, in case expects that the quality of the click will be insufficiently high. While the implementation of this correction has led to a slowdown in our ad network revenue growth rates in Q4, we were able to significantly increase advertisers ROI earning their royalty and trust. In 2016 we also leveraged our capital investments in servers and datacenters to greatly improve targeting for our ads. Taken together, these improvements help to offset the top comps from the launch of VCG in September of 2015. While we are on ad topic, I would like to emphasize their growing global demand for high-quality ad analytics, as more and more ad budgets shift online. Currently our Yandex.Metrica is the second largest traffic analytics solution worldwide in terms of coverage. Initially developed for internal needs to be succeeded in scaling up Yandex.Metrica into a truly global product, which currently has access to 1.5 billion cookies that allow us to analyze traffic from over approximately half a billion devices across the globe. It's worth noting that by the end of 2016 share of traffic…

Thank you, Mikhail and thank you all for joining our call today. In Q4 we delivered another solid set of results. Our consolidated revenues grew 22% year-on-year and reached RUB22.1 billion. On a full year basis our revenues grew 27% and reached RUB75.9 billion. Online advertising revenues accounted for 95% of total revenues in Q4 and increased 20% year-on-year. Yendex websites revenue grew 20% year-on-year in Q4, driven by technological implementations throughout the year, that Mikhail mentioned earlier, as well as by the growth of ad inventory on Yandex's owned properties. Revenues from our ad network grew 19% and comprised 25% of total revenues in the quarter. This is approximately 100 basis points lower than in Q3 2016. The slowdown of growth rates of our ad network was partly due to bit correction that we implemented at September 2016. In terms of ad budgets across our advertising categories, we saw a strong growth in real estate, auto. Real estate ad budgets grew 25% year-on-year, despite the high base in Q4 of last year. Auto ad budgets grew 22% despite the fact that new car sales were still down 1% in Russia. B2B, finance and insurance, eating out, FMCG in sports all demonstrated above average growth rates. Growth rates in the travel segment, as well as consumer electronics continue to be soft, but improved compared with the trends we saw in Q3. Other revenues grew 93%, primarily driven by the growth of Yandex.Taxi, which constitutes the bulk of the other revenue line in consolidated revenues. Traffic acquisition cost related to the partner advertising network grew 16%, slower than ad network revenues in Q4. The main factors remain the same as in previous quarters, a change in our partner mix. As a result, our partner TAC comprised 56.2% of our ad network…

Thank you. [Operator Instructions] We will now take our first question from Cesar Tiron from Bank of America. Please go ahead.

Yes. Hi, everyone. I have two questions. The first one is on the OpEx, you mentioned on the 3Q call that you would delay expenses into Q4 and I was just wondering if it is both for search, but also taxi? Basically, I want to understand how wrong it would be multiply the taxi OpEx by four, or if you spend by four in Q4 2016 and forecasted in 2017? And then my second question would be on the bid correction mechanism, can you please share some light on how negative impact it had on your revenues in Q4 and whether it would help to increase CPC over time? Thank you so much.

Hi, Cesar, it's Greg. Let me take the first part of the question related to taxi. So look, clearly the magnitude of our investment in taxi for the course of the year will depend on the speed with which that business is growing. As Alexander mentioned in his prepared remarks, the business is accelerating meaningfully already. It grew faster in December, that in grew in all of Q4 and it grew faster in January than it did in December. And so the magnitude of investment in the business will obviously depend on how fast we are able to scale it up. On the other hand, we believe that as the business becomes more and more mature, the magnitude of investment will actually decline, as certain cities reach their maturities, as monetization begins, and as minimum fare guarantees are amended. So I would say it's not something that we can predict, given that the rapid scale that the business is evolving in and you know, we'll obviously provide more updates as the year goes on. And then I'll pass it on to Mikhail to discuss the correction.

Hi. Mikhail, here. So again, as I said in my statement, we did implement and rolled out bit correction 100% of publishers, mainly due to the reason that we were – we are getting more and more traffic from mobile properties and in fact the pace of monetization of mobile properties were exceeding – was exceeding the pace of traffic increase actually. So what was happening is that, the mobile traffic for the advertisers was becoming more and more brighter compared to desktop traffic. And so we did implement a bit correction to equalize that - to equalize the situation and it did slowdown the growth in network, but it wasn’t - it was like basically you know, growth that could not be sustained over time and still growing very rapidly and we still on a yearly basis see the increase in monetization higher than increase in traffic. So I wouldn't say the impact is materially negative.

Okay, thank you so much. If you allow me just a very quick follow up, Greg, would you say something on the core search margins for 2017?

Sure. On core search margins, we are aiming to balance once again the pace of the investment in core search and the various things that we are doing related to core search, such as you know, the voice technologies that Mikhail talked about or the investments that we are making in location-based services and monetization of those, as well as investments we're making in our relationships with automakers, such as the integration of Yandex Map and Navigation into the head units of a number of OEMs in the Russian market. And so what we want to do essentially balance off the kind of the natural operating leverage in the search and portal business against the investments that we're making. So the net of that as we expected the search and portal more margins will be roughly flat year-on-year in 2017 and the other businesses will sort of receive investment over the course of the year, as they prove themselves out.

Thank you.

We will now take our next question from Miriam Adisa from Morgan Stanley. Please go ahead.

Hi, everyone. I just wanted to ask you about the sort of trends that you are seeing based on Q1, I notice [ph] this quite early, but how do things [indiscernible] business in Q4 and you mentioned things like real estate and ad budgets more up in Q4, have you seen any indication that they are also growing in the first quarter?

Sure, Miriam. It’s Greg. I'll take that. Actually the trends that we're seeing year-to-date in Q1 are broadly inline with the trends that we saw in Q3 and Q4. So the core growth of the search and portal business remains largely unchanged.

Great. That’s helpful. Thank you.

[Operator Instructions] We will now take our next question from Vladimir Bespalov from VTB Capital. Please go ahead.

Hello. My question is on your cash flow, it looks like its - accumulating cash, are there any limits when – how are you going to use this cash, because this is not the most efficient way to have this cash on the balance sheet, especially given that your debt capacity is pretty good and this year it looks like more or less stable and the Yandex [ph] is trustable. And the second question, could you give an update on how this situation with your market share is developing because based on the numbers you provided, it looks like you are still loosing your market share in mobile, but it looks like you have stabilized to your market share in total and to the expense of desktop – by increasing your desktop market share. Is there any progress in improving your market share on mobile in this first quarter for example. Thank you.

Hey, Vladimir. It’s Greg. I'll answer the first part of your question relating to the cash and I will hand it over to Alexander to discuss our market share. Look, with respect to cash, what we said before is that you know, certainly dividends is one of the options that we would consider. Obviously on the one hand we have an opportunity to invest some of the cash that we have on balance sheet and very highly attractive return opportunity such as Yandex Taxi and that's the investments we've been making. On the other hand, we do see that the situation in Russia starting to stabilize with exchange rates, which look broadly favorable with the overall macro environment, which is starting to stabilize as well and potentially improve. And so I think while the decision is up to the board, I would say that it's not unlikely for the Board of Directors to revisit that question sort of next board meeting or two.

Hi. This is Alexander. I will take the question about search share. So I'll [indiscernible] stable at 64%, and on mobile platforms we looked about one percentage points compared to Q3. So for example on android its 37% as of the end of Q4 compared to 38% in Q3. As we discussed in the previous call, we added several distribution deals that will - we expect to have positive impact on our search share, but it takes time for devices to get sold to through the retail channel and eventually start to get in use. So what was for Q4 was actually expected and we believe the combination of product investments and distribution changes we will be able to stabilize the share on mobile and potentially grow it again. So all in all, what it takes to grow shares is a high-quality product which we have and undertake distribution opportunity and here it actually a lot depends on practical implementation of the FAS ruling And just to give you a quick update on FAS status, so the FAS prescription to Google is in force since late August, but Google has been completed so far and continues to bill. The case is now at cessation [ph] stage and we believe we are confident that FAS will take the necessary actions to bring competition back to the market.

Thank you.

[Operator Instructions] We will now take a follow up question from Vladimir Bespalov from VTB Capital. Please go ahead.

Thank you for taking my follow up. I would like to ask you about Yandex market, first could you provide some numbers, what is the, like blended average commission on the DCGC model and under the take rate model, and what is the schedule of transition, are you going to follow the same schedule you announced sometime ago or are there any changes in this schedule following the departure of the former CEO of Yandex market, could you just update from this strategy for this line of your business? Thank you.

Hi. This is Alexander speaking. Again, so first of all, I have say that we are committed to continuing the shift or take rate base, market base model from the current CPC base advertising model. Revenue growth rate in Q4 has slowed down and you could view this is an investment in lessen [ph] transition. We are sacrificing the revenue growth in the short term by building a viable robust marketplace in the Russian e-commerce.. Why revenue is - growth rate is slowing down? Because we intentionally set the marketplace commission, CPA commission substantially lower than the effective commission on CPC model. CPA commission is between 2% to 3%, while effective commission in CPC model is over 6%. Over time we believe these commissions will eventually equalize, but currently we're incentivizing notions to transact by offering lower take rate condition in market base model.

And when are you planning to complete the transition or there is no like schedule for when this is going to happen?

It’s difficult to make a commitment in this area, but I think bigger part of Yandex market will complete transaction by late 2017 and early 2018 and rest of the marketplace will transition when we see a need to do so.

Okay. Thank you.

We will now take our next question from Cesar Tiron from Bank of America. Please go ahead.

Yes. Could you please give us some update on the process with FAS and also with any new handset manufacturers where you reach agreement to [indiscernible] your ops? And also probably tell us if in the – on those smartphones the market share is either around 50%? Thank you.

Hi. This is Alexander. So on FAS, as I said, the prescription is in force since August last year. Google hasn’t complied so far, partially complied, but not on the key things that they have to do. We believe that FAS will eventually bring competition to the market by implement - making Google implement whatever the prescription is. On distribution deals, I don't think I'll be able due to commercial reasons, and name the exact OEMs that distribute Yandex, but there is definitely improvement in midsize OEM manufacturers.

And then your market share on those smartphones, is it about 50%?

Certainly, when we are able to preinstall Yandex Search in a same manner that Google does, our market share on this device is substantially higher than 50%.

Thank you.

We will now take our next question from Alexander Vengranovich [Otkritie Capital]. Your line is open. Please go ahead.

Yes, hi. I have a question on classified segment, one of your competitors recently reported fourth quarter numbers and basically there were some significant slowdown of the revenue growth and some negative impact on the margin and they explain it with the growing competition, do you have similar billings that there were some exploration of the competition between the players in those markets and do you think it will put some additional pressure on your profitability of the segment in 2017? Thank you.

Hey, Alexander. This is Greg. Let me comment a little bit on classifieds. Obviously I don't want to comment about a competitor or what they are experiencing. From where we stand we see very little competition in our core regions, from other players we are the leading resource for automotive sales of new and used cars, and we offer what we believe is sort of the best tools for a person to buy or sell, including things like the certification center that Alexander talked about. We do not play in general classifieds, where some of the competition may be coming from or from players like Mail.ru, which released obviously a very good product, which is aimed squarely at the general classifieds segment. With Zen, like I said, the auto vertical – or what we found is our competitive position in our core markets is strengthening and we're gaining share in some of the new regions. So we feel pretty good about the outlook for that segment.

Okay, great. Thank you.

We will now take our next question from Kirill Panarin from Renaissance Capital. Please go ahead.

Hi. I've got a question on EBITDA margin in 2017, obviously investments in Yandex Taxi are difficult to predict, but where do you feel happy for consensus expectations to sit at this early stage in the year? Thank you.

Kirill. Hi, this is Greg. Look on margins, I will just repeat what I've said before, we think that we can keep the balance of investment and harvest within the search and portal business such that the core margins will be in the search and portal business will be roughly flat year-on-year and at the same time we are committed to making a substantial investments in the other business units. We feel you know very good about the outlook for classifieds for market and especially for taxi, and so we'll make those investments. I don't think it's prudent for me to comment specifically with respect to what consolidated margins will look like. And so maybe the best way to model the business is sort of in some of the parts basis where you will make judgments about what each of the businesses should grow and what the margins of that business should be.

Thank you.

We will now take our next question from Dmytro Konovalov from HSBC. Your line is open. Please go ahead.

Hello. I have a question about your real estate projects, like you are trying switch the offices and I think why they decided not to go for it in the past and also understand there are some new projects in the hopper, could you please give a little bit more information on your plans to get better returns in terms of your leases?

Sure, Dmytro. This is Greg again. Let me answer that question. In terms of our real estate footprint, you may have read some speculations in the press, which I can confirm, we have taken some additional office space in a business park not far from our headquarters, which will house some of our divisions. It will – it covers about 10,000 square meters of space. Its ruble based and it’s substantially more attractive terms than our existing leases.’ With respect to our existing leases for headquarters, as I mentioned in my prepared remarks, we're currently evaluating the potential of hedging out the US dollar leases related to those headquarters, such that we are may be isolated from further FX shock down the line. And then finally beyond the expiration of our current headquarters lease, we are exploring options for you know for new home for Yandex, which would potentially be at much more attractive rates than our current facilities.

Thank you.

We will now take our next question from Sergey Libin from Raiffeisenbank. Please go ahead.

Hello. Thanks for taking the question. So it’s about your expectations on the growth rates, as you said on this call, year-to-date you see growth similar to last two quarters over the last year suggesting that advertising is growing about 20%. So where do you expect slowdown in the coming quarters or is it just you are trying to be conservative again?

Hi, Sergey. Look obviously we're very early in the year and it’s most prudent to be conservative. As you will recall, in 2016 our initial guidance called for growth rates of 14% to 18%, and we ended up delivering 27% revenue growth. And so, given how early we are in the year, I would like to be conservative again and revenue outlook is based on what we see today. At the same time, as I mentioned earlier in the question that Miriam had raised, the growth rates in the core business are probably similar to what we saw in Q4 and you know, like Q3. So the businesses essentially trending as expected.

Okay. Thank you.

There are no further questions in the queue at this time. I would now like to turn the call back to Katya for any additional or closing remarks.

Thank you very much everyone to join our Q4 and full-year 2016 earnings call. If you have any follow up questions, please feel free to reach out to me and you'll hear about from us when we report Q1 results. Thank you so much. Good-bye.

Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.