mailru
DESCRIPTION
testing.TRANSCRIPT
Investor/Analyst Presentation
Moscow, 18 September 2008Moscow, 18 September 2008
I. BackgroundI. Background
Key Milestones of Development
• [email protected] launched
• [email protected] launched
Mail.ru’s History of Successful Growth
1998:Creation of
Port.ru
• Employed more
than 100 employees
• Merger of Port.ruand NetBridge,
Mail.ru became the
main brand of
combined company
[email protected] launched
• My [email protected],
a social networking
service, was
launched
• Gogo.ru, a search
engine developed
by Mail.ru, was
launched
……
2000:Founding of NetBridge Business
2007200620052001 2003
IV. Mail.ru Overview
II. Key Investment AttributesII. Key Investment Attributes
Key Investment Highlights
� Large Potential in High
Growth Market
���� No. 1 Russian Language
Website
� Strong Management Team
with Proven Track Record
4
� Strong and Proven
Monetisation Model
�Clear Strategic Roadmap
� Strong Technology
Platform
II. Key Investment Highlights
80 90
17 26
13
2
38
33
33
7
61
34
77
15
16
9
13
7
19
0
17
1
US China Western
Europe
Eastern
Europe
UK Russia Ukraine
Large and High Growth Market
� c. 23,000 new internet users in Russia per
day vs. c.3,600 in the US in 2008E
� 2007 Russian internet user penetration of
24% which is less than the US internet user
penetration of 30% in May/June 1997
� 50% growth in broadband accounts in
Russia in 2008E
2007-2012E
CAGR: 0.3% 17.1% 4.6% 9.9% 0.9% 18.1% 15.9%
20
4
20
7
41
8
Internet Users (m)
����
5
54
3 1,1
64
16
4
32
18
1
33
3
22
7
11
78
2
1,0
34
50
7,7
58
1,2
683,4
47
4,3
75
16
,11
2
3,6
50
6,4
00
8,0
45
US UK Western
Europe
China Eastern
Europe
Russia Ukraine
Europe Europe
Source: Pyramid Research December 2007, Zenith OptiMedia March 2008, Harris Poll May 2006Note: Western Europe includes Germany, Italy, Spain, France. Eastern Europe includes Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary.
� Internet advertising dollars adjusted by GDP
per capita of $6.8 in the Russian 2007
estimated to grow to $17.5 by 2010E
– $34.4 for US in 2007 on same basis
– $33.8 for UK in 2007 on same basis
– $28.2 for Western Europe in 2007 on
same basis
2003 2007 2012
2003 2007 2010
2007-2010E
CAGR: 17.1% 22.5% 22.9% 42.3% 32.9% 65.8% 65.7%
25
,86
4
Internet Display Advertising Market Spend (US$m)
II. Key Investment Highlights
Market Size Considerations
2007 Internet Penetration¹
2x Difference Internet Penetration
8x Difference Broadband Penetration
67.5%
54.4% 53.8%
46.8%40.8%
46.5%40.0%
6
US Western Europe UK Eastern Europe Russia Ukraine China
Broadband Penetration² Non-broadband Penetration
Source: Pyramid Research December 2007Note: Western Europe includes Germany, Italy, Spain, France. Eastern Europe includes Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary¹ Defined as internet users/population.² Defined as broadband accounts/households.
23.5%
15.9% 14.4%59.2%
53.5% 60.0%
27.4%7.1% 2.6% 16.7%
46.5%40.0%
72.6%
92.9%97.4% 83.3%
III. Internet in Russia
55.6
Global Total Advertising Outlook
Global Total Advertising Overview 2007 (Nominal US$bn)
2007-2010ECAGR: 2.7% 2.7% 6.1% 17.3% 9.6% 24.3% 24.3%
179.3
5 out of the 10 fastest growing advertising markets
globally are in Russia and
7
15.0
9.6 9.0
0.9
23.3
US Western Europe UK China Eastern Europe Russia Ukraine
Source: Zenith OptiMedia March 2008Note: Western Europe includes Germany, Italy, Spain, France. Eastern Europe includes Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary
globally are in Russia and CIS
III. Internet in Russia
$2,893 m
$3,429 m
$4,370 m
Market Size Potential
Internet Display Ad Spend Market Expansion Potential – “What If” Scenarios
3xCurrent
12xCurrent
14xCurrent
18xCurrent
“What if?”:
Applying metrics of other regions and countries to Russia and
Ukraine
8
$755 m
$238 m
Russia + Ukraine
Current: Population of
189m
Market Size based on
Eastern Europe
Statistics
Market Size based on
Western Europe
Statistics
Market Size based on
UK Statistics
Market Size based on
US Statistics
Internet Penetration1 19.7% 46.8% 54.4% 53.8% 67.5%
2007 Internet Display Ad $6.4 $8.6 $28.2 $33.8 $34.4
Spend Per Internet User2
Source: Pyramid Research December 2007, Zenith OptiMedia March 2008, EIUNote: Western Europe includes Germany, Italy, Spain, France. Eastern Europe includes Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary¹ Defined as internet users/population.² Adjusted for difference in online ad spend per online person as % of GDP per capita with Russia in 2007.
Current
Russian Market Has Potential to Grow 3x to 18x By Matching Metrics of Other Countries in 2007
III. Internet in Russia
1,034
689
59.1
50.4
41.8
Key Stats for Russia and the Ukraine Over Next Three Years
37.8
33.4
29.0
24.8
Number of Computers (m) Internet Users (m) and Penetration Internet Advertising Spend (US$m)
Russia2007-2010E
CAGR: 65.8%
Russia2007:2010E
CAGR: 21.0%
Russia2007-2010E
CAGR: 15.0%
9
414
227
50402211
2007 2008 2009 2010
41.8
33.4
12.711.49.2
7.4
2007 2008 2009 2010
5.24.53.62.9
2007 2008 2009 2010
Ukraine2007-2010E
CAGR: 65.7%
Ukraine2007-2010E
CAGR: 19.9%
Ukraine2007-2010E
CAGR: 20.6%
Source: Pyramid Research December 2007, Zenith OptiMedia March 2008Note: Western Europe includes Germany, Italy, Spain, France. Eastern Europe includes Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary¹ Defined as internet users/population.
Penetration¹ -
Russia: 23.5% 29.5% 35.7% 41.9%
Ukraine: 15.9% 20.0% 24.9% 27.8%
Russia
Ukraine
High Broadband Growth
9,686
7,665
5,719 Ukraine2007-2010E
CAGR: 53.9%
Russia 2007-2010ECAGR: 36.4%
Broadband Accounts (’000)
10
3,815
1,8521,427
896508
2007 2008 2009 2010
CAGR: 53.9%
Source: Pyramid Research December 2007¹ Defined as broadband accounts/households.
Penetration1:
Russia: 7.1% 10.7% 14.3% 18.0%
Ukraine: 2.6% 4.5% 7.2% 9.3%
Russia Ukraine
Russia is Leapfrogging From Offline to Broadband
III. Internet in Russia
No. 1 in:
— Email41m active email
mailboxes
— Video10,500 videos
No. 1 Russian Language Website����
11
10,500 videos
uploaded daily
— Photo550,000 photos
uploaded daily
— Answers2.2m active users
— Dating2m active users
Source: Alexa.com, J’son & Partners, company statistics
II. Key Investment Highlights
The Russian Speaking World
Geographic Distribution of the Russian Language Russian Speakers
Estimated Russian
Speaking People
Online: 60m
Over 300m RussianSpeakers
Over 300m RussianSpeakers
5th Most SpokenLanguage Globally
5th Most SpokenLanguage Globally
12
Indicates an area whereRussian is an official language
Indicates an area whereRussian is spoken
Source: G. Weber, "Top Languages", Language Monthly; J’son & Partners, SIL International
Note: Assumes blended internet penetration rate of 19.7%, which is the average of Russia and Ukraine
2007 Russian Speaking People: 306m
60m Online Users - Larger Than Any Other Single European Market
Position Language
1 Mandarin
2 English
3 Hindi
4 Spanish
5 Russian5
III. Internet in Russia
Unique Position in Russia – Market Dominated by Russian Companies
1. Почта@Mail.ru - mail.ru
2. V Kontakte - vkontakte.ru
3. Одноклассники.ru - odnoklassniki.ru
4. Яndex - yandex.ru
5. Рамблер - rambler.ru
6. Google - google.ru
7. Ucoz.ru - ucoz.ru
8. Narod.ru - narod.ru
6 . Google - www.google.ru
Top 20 Russian Language Websites
1. Google - google.de2. Ebay - ebay.de3. YouTube - youtube.com4. Google - google.com5. Yahoo! - yahoo.com6. Studiverzeichnis - studiverzeichnis.com7. Schuelervz.net - schuelervz.net8. Wikipedia - wikipedia.org9. Gmx.net - gmx.net10. Windows Live - live.com11. Myspace - myspace.com12. Web.de - web.de
Top 13 German Websites
1. Google - google.de
2. Ebay - ebay.de
3. YouTube - youtube.com
4. Google - google.com
5. Yahoo! - yahoo.com
8. Wikipedia - wikipedia.org
10. Windows Live - live.com
11. Myspace - myspace.com
= non domestic websites
� Google is the only
international website
that has made any
inroads into the
Russian market -
although it remains a
distance behind local
players
13
9. Zaycev.net - zaycev.net
10. LiveInternet.ru - liveinternet.ru
11. Ifolder.ru - ifolder.ru
12. Torrents.ru - torrents.ru
13. Nnm.ru - nnm.ru
14.Фишки.NET - fishki.net
15. Ukr.net - ukr.net
16. Loveplanet.ru - loveplanet.ru
17. Ath.cx - ath.cx
18. Readme.ru - readme.ru
19. Санкт-Петербург - spb.ru
20. Radikal.ru - radikal.ru
Source: Alexa.com – Top Russian Language Websites, Top Websites in Germany, Top Websites in the China. All data from April 2008
12. Web.de - web.de13. Amazon.de GmbH - amazon.de
1. Baidu - baidu.com2. QQ.com - qq.com3. Sina - sina.com.cn4. 51.com - 51.com5. Windows Live - live.com6. Taobao - taobao.com7. Youku.com - youku.com8. ku6.com - ku6.com9. 163.com - 163.com10. 56.com - 56.com11. Wikipedia - wikipedia.org12. Mop.com - mop.com13. Poco.cn - poco.cn
Top 13 Chinese Websites
13. Amazon.de GmbH - amazon.de
5. Google - google.cn
11. Google - google.com
� Well-known brands in
the west like Ebay,
Yahoo and Facebook
are virtually unkown
in Russia
� First mover
advantage critical in
any market for
Internet
� Focus on high
switching costs and
sticky services for
mail to maintain long
term leading position
Strong and Proven Monetisation Model
55.8
Mail.ru Revenue Development (US$m)
Revenue approx. doubling every year since 2003
����
14
10.6
29.3
c. 4.7c. 2.2
2003¹ 2004¹ 2005 2006 2007
Source: Company statistics¹ 2003 and 2004 financials are unaudited financials.
II. Key Investment Highlights
Monetising the Large User Base
27.2
43.9
4.7% 1.3%
7.7%
1.8%
13.5%
2005-2007 CAGR: 65.6%
Evolution of Mail.ru Visitors¹ (m) 2007A Revenue Breakdown
15
27.2
16.0
Dec-05 Dec-06 Dec-07
69.0%
1.3%
Display Advertising (Cash) RevenuesBarter RevenuesContext RevenuesListing FeesPartnership Projects RevenuesFee-based ServicesOther
2007 Revenue: $55.8m
Source: Company financials and statistics¹ Visitors refer to computers or other devices visiting Mail.ru (cookies). This is different from unique users which refer to individuals. An individual, according to company statistics, generates about 1.5 cookies
VIII. Monetization Strategy
Customer Base is Highly Diverse
Advertisers Worldwide Advertising Agencies
16
Working with Large and Diverse Range of Multinational Advertisers and Key Advertising Agencies
VIII. Monetization Strategy
Selected Other VerticalsSelected Other VerticalsCommunication Services – Core of StrategyCommunication Services – Core of Strategy
Dating
#1
Games – Casual and MMO
Price Comparison
Travel
Automotive
Clear Strategic Roadmap
Photo
����
17
SearchSearch
Mail.ru Search
GoGo.ru Search
Video
New Develop-
ments
Instant Messag-
ing
Social Net-
working
#1Russian Internet Communication
Services
Automotive
Real Estate
Jobs
II. Key Investment Highlights
New Developments
Strong Technology Platform
22
31
41
Email Instant Messaging
26
46
41
IMs sent per day 05-07 CAGR: 129%
Active mailboxes 05-07 CAGR: 59%
Ave. emails received
per day 05-07 CAGR: 84%
Peak Concurrent IM users
05-07 CAGR: 121%
����
18
12
58
1720
2005 2006 2007 Q1 2008
Active email mailboxes (m)
Average emails received per day (m)¹
8
941
735
411
150
2005 2006 2007 Q1 2008
IMs sent per day (m)
Peak concurrent IM users ('000)
Source: Company statistics¹ After spam-filter
Strong Technology Platform With Proven Scalability
II. Key Investment Highlights
Presenter Position
Strong Management Team with Proven Track Record
Dmitri Grishin
Chief Executive Officer
� Experience
– Joined Mail.ru in Mar-2000
– Mail.ru, Technical Director, Executive Director
– netBridge Services, Molotok.ru Project Manager
– Axiom Int. (USA)
� Education
– Moscow State Technical University
Dmitri Kreines
Chief Financial Officer
� Experience
– Joined Mail.ru in Aug-2006
– JSC Razgulyay, Deputy CFO, Head of Corporate Finance
– RAO UES, Deputy Head of Corporate Finance, Head of Treasury
Experience
����
19
– RAO UES, Deputy Head of Corporate Finance, Head of Treasury
� Education
– Finance Academy under the Government of the Russian Federation,
PhD in Finance
Vladimir Gabrielyan
Chief Technical Officer
� Experience
– Joined Mail.ru in Jul-2003
– Arteysof, Chief Technical Officer
– Web-hosting.ru, Chief Executive Officer
– Markets.ru, Web Developer
� Education
– Moscow State Open University
Aleksey Katkov
Commercial Director
� Experience
– Joined Mail.ru in Feb-2000
– Prior positions in Mail.ru include Head of Sales, Sales Manager and
Clients Manager
� Education
– Diploma of Manager; Academy of National Economy under the
Government of the Russian Federation
II. Key Investment Highlights
III. Competitive Environment
20
III. Competitive Environment
Leader in Russian Language Communication
1st Place (5/10) 3rd Place (2/10)Key Service 2nd Place (2/10)
Top 3 in 9 out of 10 Segments
Photo¹
Social Network
Video¹
21
Photo¹
Blogs
Answers
Dating
Search
News
Source: J’son & Partners, Multiple Webcounters, Expert Interviews Q1 2008¹ Not considering photo/video hostings on social networks (e.g. vKontakte, Odnoklassniki etc.)
Instant Messaging
IV.Mail.ru Internet ProductsIV.Mail.ru Internet Products
Core Offerings – Mail.ru Main Page
Search
News
Project Links
Paid AdPaid Ad
23
Dating
Blog
Videos
Info
Photos
Shopping
Paid Ad
Paid Ad
Communication Products – Email
Email Folders
Paid Ad
24
Paid Ad
Communication Products – IM
� Total IM registered users 6 million
� Average daily number of sent
messages approx. 52.0 million
� Peak concurrent users – 941 k
IM: KEY METRICS
25
Source: Company statistics as of Q1 2008
Communication Services – Social Networking
26
Communication Services – Dating
Paid Ad
Paid Ad
27
Paid Ad
Communication Services – News
Paid Ad
28
Paid Ad
Communication Services – User Generated Content
Photos Video
29
Communication Services – User Generated Content
Answers Blogs
30
Search – Mail.ru Search and GoGo.ru
Mail.ru Search Gogo.ru
31
Key Verticals – Games and Shopping
Games Shopping
32
Key Verticals – Real Estate and Job
Real Estate Listings Job Listings
33
Key Verticals – Travel and Auto
Travel Autos
34
���� Strong Technology Platform – Proven Scalability
21.8
31.0
41.0
3
47.9
Email Instant Messaging Photos & Videos
57.5
48.7
Photo 05-07 CAGR: 288%
Video 06-07 Growth: 122%
IMs sent per day 05-07 CAGR: 150%
Mailboxes 05-07 CAGR: 59%
Emails received per day 05-07
CAGR: 84% Peak Concurrent IM users
05-07 CAGR: 121%
35
12.2
5
8
17
20
2005 2006 2007 Q1 2008
Email mailboxes (m)
Emails received per day (m)
1
2.3
1.7
2005 2006 2007 Q1 2008
Videos downloaded daily (m)
Photos downloaded daily (m)
7.8
25.7941
735
411
150
2005 2006 2007 Q1 2008
IMs sent per day (m)
Peak Concurrent IM users ('000)
NA
Source: Company statistics
Strong Technology Platform With Well Proven Scalability
Core Offerings
Email / Social Networking
Instant Messenger (IM)
Dating
User Generated Content:
Communication Products
Photo
Verticals
Travel
Games
Price Comparison
36
Video
Answers
Blogs
Search Products
Mail.ru Search
Gogo.ru
Automotive
Real Estate
Jobs
News
VI. Mail.ru Internet Products
IX. Financial OverviewIX. Financial Overview
Thank You
38