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Press releases | Archive 2008

RBC delivers solid 46% revenue growth in the first quarter of 2008, with Internet business being the main growth driver

Business highlights

  • RBC's revenue advances 46% thanks to strong growth of the company's core businesses and accelerating performance of the new Internet resources and RBC's business titles
  • The most dynamic growth of 67% is delivered by the Internet business
  • RBC's Internet resources, which were acquired and launched in 2007, contribute $6.2m to the total revenue and already breakeven at the consolidated EBITDA level
  • RBC's Internet audience surges 106% year-on-year to 34mln unique users per month, while the all-Russia readership of the company's flagship titles doubles on average in six months
  • RBC continues expansion in the mass market Internet and introduces a number of promising projects (for example, tata.ru and fidel.ru)
  • RBC buys two regional broadcasting stations and significantly enhances coverage in Russia (Novosibirsk and Rostov-on-Don)
  • MICEX upgrades RBC shares to the Quotation List A1, thus making RBC stock an eligible investment target for pension and insurance funds
  • RBC successfully places the first-ever issue of commercial paper in Russia for RUB1.5bn
  • The company reconfirms its forecast for 2008: total revenue is expected to reach approximately $265-275m, consolidated EBITDA is estimated at a level of $75-85m

RBC revenue for the 1st quarter 2008

$'000 000 1st quarter 20081 1st quarter 20071 Growth (%)
Media Services
  - Internet advertising &services
  - Other2
RBC TV 9.8 7.9 24%
Print Publications 11.5 8.0 44%
Total revenue 46.2 31.6 46%

1 Based on management accounts in accordance with IFRS
2 Mainly consists of marketing communications

Moscow, April 28, 2008 - Today, RBC Information Systems (RTS, MICEX: RBCI) reported its preliminary financial results for the first quarter of 2008. "I am delighted with the very strong results that RBC delivered in the first quarter, which is traditionally the weakest advertising season of the year, accounting for approximately 15% of the total annual revenue of the company. The results achieved demonstrate the solid growth of the company's core business and rising contributions from new Internet resources and RBC's business titles in the print media. We already feel that RBC has the potential to outperform the initial financial outlook for the year, but being conservative, we haven't revised our projections for the full year 2008 results," RBC Chairman and CEO German Kaplun said.

Revenue. The company's total revenue increased 46% to $46.2m in the first quarter of 2008 from $31.6m in 2007, thanks to the sustained development of RBC's core businesses, increasing contributions from RBC's business titles and new Internet products launched and acquired in 2007. The growth was also bolstered by a significant expansion in the audience and client base, primarily in the Internet and print media segments. In total 1Q2008 revenue mix, 54% was contributed by Media Services, 21% was generated by RBC TV, and the remaining 25% came from Print Publications.

Media Services. Total revenue from Media Services rose 59% to $24.9m from $15.7m, mainly due to strong development and growing monetization of the company's mass market Internet resources as well as high capacity utilization of advertising spots on RBC's business-related web-properties. Out of $23.5m Internet revenue, approximately 81% came from advertising, while the remaining 19% were online service fees. This is in line with the company's strategy for increasing the share of service fees in the total Internet revenue of the company to about 30% in 2010.

In the period under review, RBC continued building a strong foothold in the area of general interest Internet in Russia. For instance, it entered the contextual advertising market and acquired a context-based advertising network Magna in order to complete the range of advertising services provided to RBC's clients and to attract new customers from the SME sector. Additionally, RBC acquired a controlling stake in one of the largest online stores in Russia selling copyright protected digital content, Fidel.ru.

One example of RBC's own projects launched in 1Q2008 is a lifestyle portal for women, Tata.ru, which is set to take the advantage of the huge inflow of advertising budgets from the glossy print titles for women to the Internet segment. As a result of the acquisitions made and development of the company's own resources, RBC's Internet audience expanded to approximately 34mln unique users per month as of the end of the first quarter, representing a 106% growth year-over-year.

On the whole, in the first quarter RBC's resources in the consumer Internet segment contributed $6.2m to the revenue from Internet advertising and services as compared to approximately $1m in the same period the year before. These positive trends make RBC management confident in achieving its full year 2008 revenue target of approximately $30m by the non-business Internet resources.

RBC TV's revenue advanced 24% to $9.8m in the first quarter of 2008 from $7.9m in 2007, as a result of further enhancement of the channel's coverage in Russia's largest cities.

In the period under review, RBC continued its successful strategy of TV content localization in the most economically developed Russian regions. Thus, RBC acquired two TV signal operators in Novosibirsk and Rostov-on-Don. Both acquisitions added a total of 3mln viewers to RBC TV's coverage in these cities. RBC management expects that the regional expansion will have a positive impact on the national audience ratings of RBC TV, will enable it to add more local advertisers to its client list and increase advertising rates.

Additionally, starting from March, RBC TV has been added to all basic packages offered by AKADO, the second largest cable network in Moscow, providing digital telecommunications services to over 800,000 households in Moscow and the Moscow region.

Based on the positive results of the first quarter, RBC plans the next increase in ad prices for RBC TV in September 2008. At the same time, RBC intends to continue enhancing coverage in the major Russian cities through cable operators and acquisitions of the regional broadcasting stations.

Print Publications. Revenue generated by RBC's print media resources reached $11.5m in the first quarter of 2008, up 44% from $8.0m in 2007, on the back of high advertising sales demonstrated by the company's flagship interior & design magazines and a two-fold revenue growth of RBC's business titles. The latter was achieved thanks to the growing volume of advertising in RBC's business publications and a price increase.

The total sales growth was supported by the dynamic audience expansion demonstrated by the RBC, Idei Vashego Doma and Salon Interior magazines in Russia. According to TNS Gallup Media, their all-Russia readership figures doubled on average in the past six months.

Outlook for 2008. Based on the strong first quarter results and positive Russia's media sector growth forecast, RBC reiterates its previous outlook for 2008. "We anticipate the healthy growth of the Russian media market during the year. We do not feel any slowdown in the advertising activity of our clients, who have reconfirmed their annual advertising budgets. This makes us feel comfortable about achieving another successful year," said German Kaplun. Total revenue is estimated to reach about $265-275m. Revenue from Internet advertising & services is expected to expand by approximately 50-60%. The revenue growth of the Print Publications is estimated at about 35%, while RBC TV is forecasted to deliver roughly 25-30% revenue growth. Consolidated EBITDA is expected to reach $75-85m.

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.

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