Artem Tuzov, Director of the Corporate Finance Department

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Russian investment technology corporation VK has published its financial results for 2023. The corporation's revenue amounted to RUB 132.8 billion. This is 36% more than a year earlier - RUB 97.8 billion. At the same time, the main source of growth was revenue from online advertising, which increased by 40% compared to 2022 and reached RUB 79.7 billion. Adjusted EBITDA for 2023 amounted to RUB 495 million.

at the investment company argentina whatsapp number database IVA Partners, noted the drop in EBITDA: "Despite the high revenue growth rates, the EBITDA situation is not encouraging. It dropped from RUB 20 billion to RUB 500 million. As a result, there is no point in talking about net profit. Operating expenses alone amounted to RUB 133 billion. As a result, the company is ending the second year with a net loss of RUB 30 billion. Only if in 2022 this loss was covered by one-time income from discontinued operations and ultimately amounted to RUB 2.9 billion, then in 2023 there was nothing to reduce the loss with. In general, the planned loss-making nature of operations during market capture is a normal situation. Therefore, it is worth saying that maintaining a growth rate of 37% may be of interest to investors, despite the losses. For example, PJSC Aeroflot has already moved from the stage of accumulating losses to increasing profits."

Artem Mikhaylin, an analyst at the investment company Veles Capital, drew attention to the growth of net loss: "The holding's net loss for 2023 increased several times and exceeded RUB 30 billion. A number of expense items significantly outpaced revenue growth. Marketing expenses grew by 76% year-on-year, while expenses on agency commissions and media content increased by 70%. The debt burden ratio became significantly higher in 2023 amid a decrease in EBITDA and an increase in total debt. From published materials, it became known that at the end of 2023, the VK group acquired 25% in the bank for SMB Tochka for RUB 11.6 billion."

Revenue in the Social Platforms and Media Content segment increased by 35.3% and amounted to RUB 84.6 billion in 2023 against RUB 62.5 billion in 2022. The main drivers were the growth of the VKontakte social network, whose average monthly audience grew by 11% and reached 84.7 million users, and the acquisition of the Zen platform in September 2022.

The Educational Technologies segment showed revenue growth of 41.7% to RUB 15.9 billion in 2023, compared to RUB 11.2 billion in 2022. The growth was driven by steady demand for courses on the educational platforms Skillbox Holding Limited and Uchi.ru, as well as the consolidation of the online platform for schoolchildren Uchi.ru from February 17, 2023, and Tetrika from September 1, 2023.

The highest revenue growth (67.5%) was demonstrated by the Business Technologies segment. Revenue in 2023 amounted to RUB 9.7 billion against RUB 5.8 billion in 2022. The growth drivers were the cloud services of the VK Cloud platform and the VK WorkSpace communication solutions. The segment's EBITDA margin increased by 7.1 percentage points year-on-year and amounted to 27.2% in 2023.

Freedom Finance Global analyst Vladimir Chernov explained the reasons for the revenue growth in the "Business Technologies" segment: "The segment showed the highest growth rates against the backdrop of foreign high-tech companies leaving Russia. The growth drivers were cloud services of the VK Cloud platform and communication solutions of VK WorkSpace. This is indirectly confirmed by the record revenue of the competing service Yandex Cloud. The effect of the low base of 2022 also played a role, when cloud products in the Russian Federation were mainly foreign, such as Google Drive, Icloud, etc."

Revenue in the Ecosystem Services and Other Areas segment increased by 21.2% to RUB 23 billion in 2023 against RUB 19 billion in 2022. The segment includes the services Mail.ru Mail, Mail.ru Cloud, the VK Play gaming platform, the RuStore app store, voice technologies and smart devices.

Vladimir Chernov gave a forecast for VK's revenue growth in 2024: "In 2024, revenue growth rates should slow down due to the base effect, since in 2023 the company demonstrated recovery in the online advertising market, but revenue will still be higher than last year."

FG Finam analyst Leonid Delitsyn named specific indicators: "By the end of 2024, VK's revenue could amount to 168 billion rubles. Adjusted EBITDA will reach 14 billion rubles."