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Russian Rambler announces first-half results

Rambler, the No.2 search engine in Russia with a 20% share in the market, have released their financial statement for the 1st half of 2006 [LSE: RMG]

Report highlights

  • Total revenue up nearly 100% period on period to US$ 16 million (US$ 8 million)
  • Internet total revenue up 137% to US$ 12.3 million (US$ 5.2 million), representing 78% of total Group revenue
  • Group business profitable for first time in first half of the year with net profit of US$ 2.5 million (net loss of US$ 2.3 million)
  • Strong balance sheet with US$ 20 million of cash at period end
  • Over 50% period on period increase in number of unique monthly users of Rambler.ru to over 21 million
  • 80% increase in monthly page views to 1.5 billion
  • More than 1.6 million Rambler-ICQ Instant messaging unique users per month in less than one year after the service was launched
  • Acquisition of 51% of Price Express, a leading Russian price comparison internet company, operating www.price.ru, www.domoteka.ru and www.tyndex.ru , enabling Rambler to expand its range of online services
  • Acquisition of 51% of online Russian social network www.damochka.ru and 51% of online banner technology company Bannerbank

Irina Gofman, Chief Executive Officer of Rambler Media, commented:

Rambler Media reports its second consecutive profitable half year for the Group. Our growth continued to accelerate through the first six months of 2006, driven by the introduction of new innovative online services and increasing internet penetration in Russia. These solid results (+137% internet revenue period on period) reflect our continued focus on our internet business, now accounting for nearly 80% of our group revenue, and reinforce Rambler’s position as the number one multi-service internet portal for the Russian community.

Our TV division continues to demonstrate strong sales growth and we have successfully adapted our strategy in our Mobile Content business to quickly reach profitability in the segment. We are confident that these favourable market trends will continue in the second half of the year and beyond

Overall, it looks like strong growth for Rambler. Their revenue of US$ 16m for the first half of 2006 compares well with their total revenue of 2005 (US$ 21.4m). They still need to work on expanding their branding to others areas, as Yandex has done with their mapping and payment system but they have done the next best thing and created partnerships with existing technology providers, notably ICQ.

Their commitment to more traditional media channels, such as TV certainly sets them apart from Yandex. It will be interesting to see if this strategy pays off for them as that sector starts to develop online. In this authors opinion though, they are missing an opportunity to develop their own in-house contextual advertising program. They currently use Begun.ru for their contextual advertising on search results (selling banner space themselves). The race is on to see which engine will deliver a contextual advertising program for ordinary webmasters in Russia to rival Google.

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Nick Wilsdon

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