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Press releases | Archive 2007

RBC reports another successful quarter: revenue rises 77% in first nine months of 2007

Business highlights

  • RBC continues double-digit expansion thanks to strong operational performance:
    • total revenue up 77% to $125.3m in 1-3Q 2007
    • revenue increases 91% to $48.4m in the 3rd quarter of 2007
  • In line with expansion strategy on the Internet, RBC consolidates leading positions in web hosting and domain name registration in Russia
  • RBC increases ad rates on its Internet resources by 10-20%
  • Enhanced coverage of Moscow enables RBC TV to increase prices by 25%
  • Localized versions of RBC TV, RBC Daily and rbc.ru launched in St. Petersburg
  • RBC broadens its print titles portfolio by acquiring Nashi Dengi and Kvadratny Metr magazines
  • RBC narrows revenue forecast for 2007 towards the upper end of the range: total revenue is expected to reach about $170-180m

Revenue for the 1-3Q 20071

$’000 000

1-3Q 2007

1-3Q 2006

% Growth

Forecast 2007

Media Services2










Print Publications





Total revenue





Revenue for the 3Q 20071

$’000 000

3Q 2007

3Q 2006

% Growth

Media Services2








Print Publications




Total revenue




Moscow, November 8, 2007 - Commenting on the results of RBC Information Systems (MICEX, RTS: RBCI) for the first nine months of 2007 published today, RBC Chairman and CEO German Kaplun said, "I am very pleased with RBC's performance in the third quarter, with all of the company's business lines delivering excellent growth. We have continued to broaden our Internet, television and print media audiences by developing new products, making compelling acquisitions and expanding our distribution channels. I am confident that an increasing number of users of RBC's media sources and a well diversified position are creating a solid foundation for the company's sustained competitiveness and long-term growth in the media market. We are moving in the right direction, and the results we have achieved to date prove the effectiveness of our growth strategy. I am convinced that 2007 will be another successful year for RBC".

Revenue. In the first nine months of 2007, the total revenue surged 77% from $70.8m to $125.3m compared to the corresponding period of 2006, due to increasing demand for advertising on RBC's resources, strong brand and dynamic audience expansion across all of the business units, in addition to aggressive marketing. Top line growth was also supported by the company's expansion into the print media sector and the accelerating performance of recently launched media products. A continued favorable macroeconomic situation in Russia, coupled with record-high oil prices, served as a growth driver for the whole media industry as well as for RBC. In the total 1-3Q 2007 revenue mix, Media Services accounted for 54%, RBC TV contributed 24%, and the remaining 22% came from Print Publications.

Media Services. Revenue from Media Services advanced 47% in the first nine months of 2007 from $46.3m to $68.2m, mainly due to price increases on the Internet, supported by the development of new advertising capacities and significant Internet audience growth.

In the period under review, along with the implementation of the company's investment program in the consumer Internet segment, RBC updated and improved its existing web-sites, such as RBC Sport and RBC St. Petersburg. These changes touched upon the design of RBC Sport, a web-site dedicated to sport events in the country, and resulted in new additional sections, and the creation of new possibilities for interaction among users and editors of the site. The new RBC St. Petersburg portal provides comprehensive coverage of the most important events in the city and the northwestern region, as well as gives access to the business newspaper RBC Daily St. Petersburg and RBC TV's online broadcasting in St. Petersburg. The portal has also consolidated the regional versions of the RBC Real Estate and RBC Auto projects. Thus, additional advertising capacities, which were quickly filled with local and national advertisements, coupled with price increases boosted ad sales on the Internet. RBC lifted ad rates for its online resources by 10-20% depending on the web site at the beginning of September 2007.

RBC continued to invest in expansion in the area of consumer Internet by developing startup projects and making successful acquisitions in Russia and the CIS. For example, RBC entered a dynamically growing and high margin web hosting segment. The company consolidated six web hosting providers in Russia and one in Ukraine (Hosting-Center, Centrohost, Garant-Park-Telecom, SpaceWeb, PeterHost, Arbatek and host.com.ua) at an average P/EBITDA ratio of 7.2. As a result, RBC became the largest player on the Russian web-hosting market and the second largest domain name registration provider. RBC management expects the total turnover of these companies to reach $11m in 2007 and generate an average EBITDA margin of about 30%. The hosting business is projected to grow at a strong pace in the next few years and will enable RBC to diversify its revenue streams to mitigate against the seasonality of ad revenues.

Overall, RBC management is pleased with the audience growth demonstrated by its non-business related websites in the first nine months of 2007. The company is planning to retain the services of a well-known international Internet audience measurer and publish independent statistics of its total Internet audience at the beginning of 2008.

RBC TV's revenue was up 21% from $24.5m in 2006 to $29.6m in the first nine months of 2007, demonstrating recovery after a slowdown in the previous quarter. The growth was achieved thanks to the intensification of the ad clients' activity in the third quarter, and supported by expansion of the channel's audience.

Effective September 1, 2007, RBC TV lifted its ad rates by 25% on the back of the overall high demand for TV advertising in Russia, and due to the fast growth of RBC TV's audience, which topped 10.03 million people on a monthly basis. As expected, in September 2007, RBC TV's coverage of the Moscow audience exceeded 50% (approximately 1.8m households). RBC management anticipates that by the middle of 2008 the channel will be available in the majority of the capital's districts.

Additionally, in September 2007, RBC established a TV studio in St. Petersburg and began broadcasting the most relevant breaking news on business and finance in Russia's northwestern region to RBC TV's programming schedule in St. Petersburg. This step is expected to have a positive effect on the channel's viewership statistics in the region.

Print Publications. Revenue from RBC's print media resources reached $27.5m in the first nine months of 2007, of which $19.8m were contributed by EDI S PRESS Holding and other acquisitions, while the remaining $7.7m came from the RBC Daily newspaper and the RBC and AutoNews magazines.

EDI S PRESS Holding's solid performance together with the growing sales of the RBC magazine after a 20% advertising price increase in April 2007, which was backed by strong demand for advertising in company's titles, resulted in a significant expansion of RBC's print media business in the third quarter.

Additionally, in the period under review, RBC acquired two niche titles, Nashi Dengi magazine dedicated to personal finances and Kvadratny Metr weekly covering real estate news. They were bought at a P/S 2007 ratio of 1.8. RBC's management expects that in 2008 the new titles will bring additional revenue of about $5m on account of strong synergy with the company's print and Internet resources.

As part of its regional expansion strategy, RBC launched the RBC Daily newspaper in St. Petersburg, providing a lot of information on business activities in the country's northwest region. The management expects that the venture into local markets, such as St. Petersburg, will lead to an increase in the overall ratings of RBC's business mass media products and boost advertising sales.

Outlook for 2007. RBC narrowed its total revenue forecast for 2007 toward the upper end of the range due to the solid performance achieved to date and favorable macroeconomic and media market trends. The company is expected to generate total revenue of about $170-180m. This figure is projected to consist of about $95-102m from Media Services (including $6-7m from new Internet sites and services), around $41-45m from RBC TV, and approximately $33-37m from Print Publications. EBITDA of the company's existing business is estimated to reach $55-62m (excluding expansion costs). Including the impact of expansion costs, EBITDA is expected to amount to $25-30m.

Cautionary note regarding forward-looking statements

Some of the information in this press release may contain statements of future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions, and involve known and unknown risks and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, see "Risk Factors" in the company's latest Annual Report on www.rbcinfosystems.com. RBC assumes no obligation to update any forward-looking information contained in this document.

1 - Based on management accounts in accordance with IFRS
2 - Includes Internet advertising & subscription and marketing communications

Press and investor contacts:
Egor Timofeev
Tel: +7 (495) 363-1111
Email: pr@rbc.ru
Web: www.rbcholding.com