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Enabling Russia to Buy and Sell Online
Company Presentation
November 2015
Disclaimer
The information contained in this presentation is public information only, but it does not necessarily represent all
information related to the issues discussed or presented herein, or all views of the company. The information has been
researched by the company with due care and all and any evaluations or assessments stated herein represent the
company’s opinions. We advise you that some of the available information has been independently verified and may be
based on statements by third persons, but no representation or warranty, expressed or implied, is made as to, and no
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herein. Certain statements contained herein may be statements of future expectations and other forward-looking
statements that are based on our current personal views and assumptions and involve known and unknown risks and
uncertainties that may cause actual results, performance or events to differ materially from those expressed or implied in
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matters concerning any investment decision.
Strictly Confidential
2
Agenda
Topic
Speaker
Introduction to Avito
Filip Engelbert, Co-Founder, Group CEO
3Q Results
Vladimir Pravdivy, Group CFO
Changes in Avito Shareholder Structure
Listing Fees: Mechanics, Sales, Recent
Developments
Filip Engelbert, Co-Founder, Group CEO
Henning Stenhammar, Head of Sales
Product and Technology in Avito
Following Mobile Shift
Dmitry Kovalev, Vice President, Product &
Technology of Avito Russia
Domofond.ru
Erik Segerborg, Domofond.ru CEO
Strictly Confidential
3
Clear #1 in Russia (1/3)
Strong Operations
Profitable since Q2
2013
Selective
introduction of
professional listing
fees in 1H 2015,
with recent federal
roll-out in certain
categories
8.7 bn
Page Views in
Sep-2015 across
all devices
generated by 25
mm people
250K – 300K
listers per day, of
which ca. 10% list
for the first time
33.1 mm
ItemDays(1) on the
site as of 30-Sep
2015
Domofond.ru
successfully
launched in Q1
2015
Ca. 770
employees, of
which ca. 160
moderators
11,500+
Local SMEs on
subscription model
RUB 2,378 mm
9M 2015 EBITDA
(+41% to 9M
2014)
RUB 4,529 mm
9M 2015
(+49% to 9M
2014)
40%(2)
of all used cars
sold in Russia in
2014 sold on Avito
1) ItemDays - number of active items during the day
2) NumberStrictly
of soldConfidential
used cars in Russia 2014 according to Autostat is 6.01m. Users indicated 2.4m cars as “sold on Avito”. 2.4/6.01=40%
Source: Company IFRS accounts, Internal data
4
Clear #1 in Russia (2/3)
Strong in Mobile
Over 50% of
Traffic is Mobile
Ca. 8.5 mm
Active Apps in
Sep-2015
Ca. 37% of
Listers are
Mobile-based
Ca. 1.2 mm App
Downloads in
Sep-2015
Ca. 27% of VAS
Revenue is
Mobile
One of Russia’s
Top-Ranked
Apps
Strictly Confidential
5
Clear #1 in Russia (3/3)
One Country, Many Cities, Five Verticals
Size Relative to #2 Classified Site in Key Verticals by Page Views
Auto(2)
2.2x
Real Estate
21.6x
Jobs
1.0x
By far the largest
classified in Russia and
one of the biggest general
classifieds worldwide
Top-of-mind in many
categories
St. Petersburg
1.8x(1)
Size of Russian
classifieds market
Moscow
Voronezh
N. Novgorod
Yakutsk
Rostov
Kazan
Volgograd
Samara
Ufa
Chelyabinsk
Omsk
Krasnoyarsk
Novosibirsk
Services
71.1x
General
70.1x
Khabarovsk
Irkutsk
All Categories
4.3x
Vladivostok
1) In terms of page views, calculated based on Liveinternet data for Russian top-50 classifieds. Excludes App Page Views
2) Includes page views from Avito apps
Strictly Confidential
Source: Liveinternet is used for relative size calculation
6
Avito Connects a Buyer and a Seller
A Seller
• Simple registration
A Buyer
Before
• Easy listing process with
phone verification
• No registration on Avito
needed
• Access to all listings, no
limitations
• 24/7 Pre- and PostModeration
During
• C2C or B2C
• Contact the sellers via site or
telephone
• Q&A from buyers
• Seller removes ad when the
object is sold
After
• Payment on delivery, no
interaction with Avito
• High retention
Strictly Confidential
7
Making Money in a Freemium Model
Currently Four Growing Streams of Monetisation
1
2
Value Added Services (VAS): 59% of Revenue(1)
Desktop Listings Page
Advertising: 28% of Revenue(1)
Advances in ad technologies, effective audience
segmentation
and optimized sales channels mix (RTB, Networks) drive
Avito RPM(3) growth
Mobile Purchase Interface
Premium
Agencies
Programmatic
VIP
3
Highlight
Avito Promo:
DIY Advertising
Listing Fees: 7% of Revenue(2)
• In the process of federal roll-out currently
• May become a key revenue stream in the long-term
Example of VAS Products for the Auto Category in Moscow (2)
Description
Avito Context:
DIY Advertising
• Key initiative launched in 4Q 2014
Push-up
Product
E-сommerce
Clients
Days
• No cannibalization of VAS
Cost ($)
Turbo For Package containing Premium, VIP, Highlight + 5
Sale
Push-ups
7
25
Quick For VIP + 3 Push-ups
Sale
7
13
4
Avito Shops: 6% of Revenue(1) (Subscription)
• Subscription revenue
model
Premium
Places ads at the most prominent locations + 1
Push-up
7
13
VIP
Places ads in a special VIP section to the right
7
6
• SME showcase
nested inside Avito.ru
Highlight
Highlights your post with gold shading + 1 Pushup
7
4
• Over 11,500 stores
Push-up
2 Push-ups against regular ads in the search
results
n.a
4
• Significant buyers of
Avito advertising,
VAS and listing fees
1) Split based on 9M 2015 Revenue
2) Indicative VAS prices, vary by type of a car. Indicative LF prices vary by Subcategory. Converted at an RUB/$ exchange rate of 65
3) Revenue
per 000
people
Strictly
Confidential
Source: Internal data
8
Evolution from C2C General Classifieds to Leading
Player across All Verticals
Avito Business Development
Weekly Page Views (mm)
Q2 2014
Launch of
Domofond.ru, a
dedicated real estate
classified
2 400
2 000
1 600
August 2011
Target total
of 28 cities
Q1 2010
Focus on Moscow
and St.Pete
1 200
January 2012
Avito has national
coverage
September 2010
Target 13 additional
cities
800
400
0
Jan-09
Oct-09
Jul-10
Apr-11
Jan-12
Oct-12
+RE & Cars
+B2C
Goods
C2C
Q1 2015: Listing Fees
Launch
Q3 2015:
Listing Fees Federal
Roll-out Initiation
Q2 2013
Merger with Slando
and Olx reaffirmed #1
position in the Russian
market
Jul-13
Apr-14
+Jobs
+Services
Jan-15
Oct-15
+Vertical
+Listing Fees
+Pro tools
Path from Investment Stage to Cash Flow Generation
Stage 1
Position
• Competing with others
Economics • Heavy investment
Focus
• Build user base
Stage 2
Stage 3
• Ahead of competition
• x times ahead of competition
• Approximately break-even
• High EBITDA margin
• Develop business model and build
leading brand
• Focus on monetization enhancement;
attract professional classifieds market
spend
Source: Google Analytics, LiveInternet, Internal data
Strictly Confidential
9
Clear Strategy Driving Growth and Monetisation (1/2)
1 Core Business
2 Verticalisation
•
•
•
•
•
Preserve C2C DNA & freemium model
Win-win for both sellers and buyers
Focus on liquidity and the rest will come
Customer satisfaction is top priority
Focus on winning remaining “winnable” regions & categories
•
Further development of Auto, Real Estate, Jobs and Services
verticals to improve the information model
Grow the total number of SME members
Developing suite of tools including mobile for local merchants
and service providers to further enable their businesses
Possible launch of new verticals on and adjacent to Avito.ru
which will provide a unique value proposal for our users
•
•
•
Product and
3 Technology
development
•
•
•
•
Agile approach
Continuous improvements
Best in class: Easy to use, fast, innovative
All platforms: Mobile, tablet, desktop, etc
Strictly Confidential
10
Clear Strategy Driving Growth and Monetisation (2/2)
•
•
•
Proprietary
4 Revenue
Sources
•
•
Proprietary revenue sources
High margin mass market revenues on our marketplace
Develop many sources of revenues with preference to recurring
and to quantity rather than price
Own the relationship with the clients and minimize dependence
on 3rd parties
Own advertising solutions in the forefront of Russian publishing.
Ensure that Avito delivers measurable ROI
•
•
•
•
Engagement and brand building marketing
Top of mind for both sellers and buyers
Drive user retention and re-engagement
Opportunistic
•
•
Make educated decisions
Leveraging strong capabilities and immense knowledge about
users and buying patterns across categories and geographies
for pricing and targeting
Opportunistic M&A/JVs
•
5 Marketing
Business
Intelligence
6
and Business
Development
•
Strictly Confidential
11
Avito in 9M 2015
Strong KPI Growth in 9M 2015
Traffic Dynamics
z
Page Views
MAU
bn
mm
100.0
+43%
75.0
Audience Evolution
z
Total User Base(1)
Desktop Only
40.0
75.0
30.0
35.0
26.7
24.9
Sep-2014
Sep-2015
52.4
50.0
20.0
25.0
10.0
0.0
0.0
9M 2014
9M 2015
Sep-2015
Financial Performance
z
Revenue
EBITDA
RUB mm
6,000
+49%
4,500
RUB mm
2,800
2,100
3,043
3,000
1,400
1,500
700
0
0
9M 2014
+41%
4,529
9M 2015
2,378
100%
75%
1,689
55.5%
52.5%
50%
25%
0%
9M 2014
EBITDA
9M 2015
Margin
Source: Internal data, TNS as of September 2015, non-audited 9M 2015 IFRS
1) Internal Estimate
Strictly Confidential
12
Naspers Proposed to Increase its Stake in Avito
Deal Details
• Naspers is buying shares from existing
shareholders to become the largest shareholder
in Avito
Stake increase from 17.4% to 67.9% on
a fully diluted basis
• Deal value of ca. $1.2 bn, which implies Avito
equity value (incl. cash) of ca. $2.7 bn
• Naspers first became Avito shareholder in 2013
by investing its OLX assets
Resulting Shareholder Structure
Founders
Management
4.6%
4.2%
10.0%
13.3%
• For Naspers, the transaction further strengthens
its position as global leader in online classifieds
and is a continued commitment to a very
attractive business
67.9%
• Avito’s management will remain invested
• The transaction is subject to approval by antitrust authorities and by the South African
Reserve Bank
Strictly Confidential
Calculated on a fully diluted basis
13
Key Investment Highlights
1
Vast Opportunity – World’s 6th Largest Internet Audience
2
Outstanding Business Model, Winner Takes All
3
Avito is the Clear Market Leader
4
Significant Further Monetisation Potential
5
Very Attractive Financial Model
6
Strong and Complete Leadership Team
Strictly Confidential
14
1 Vast Opportunity
Auto: Addressable Market Offers Significant Upside Potential
Key Monetization Steps
• Pro listing fees launch
• Unified car search for
both used and new
cars
• Continuous
enhancement and
deepening of
information model
Significant Upside Potential…
• Avito currently represents 3% of Total Auto Budget
and 7% of Auto Online Spend, excl. OEM
…Many Avito Peers Take the Most
of it on Their Markets(2)
70%
Auto Ad
Budget(1):
$800 m
70%
• Product development:
68%
Pro tools for
stock, client and
lead management
Marketing Pro
tools
Built-in analytical
features
66%
Auto Online Ad
Spend(1):
$350 m
Possibility to
publish listings on
many classifieds
Continuous
diversification and
enhancement of
mobile apps
…Addressable Markets Also Have
Attractive Growth Prospects
Metric
Population, m
Avito
2014 Auto
Revenue(1):
~$26 m
• Avito Context launch
in Auto Vertical
Internet
Penetration, %
Vehicle Density,
Per '000 ppl
Used / New Cars
USA
AUS
UK
RUS
319
24
64
144
85%
85%
91%
64%
387
575
505
294
2.8
n/a
3.1
2.3
1,200
246
415
26
Key Player
Revenue of Key
Player, $ m
Source: Internal data, Euromonitor, company fillings, broker reports, public sources
1) Converted at a RUB/$ exchange rate of 39.6, 2014 CBR average
2) Data on market shares is from different sources and should be used for illustrative purposes only. For markets with clear duopoly market share of
both players is presented. Autohome and Bitauto 2013 share of online auto ad spend in China, Autotrader USA and Cars.com share of total US car
Strictly Confidential
listings as of July 2013, Autotrader UK 2014 share of UK auto classified spend, incl. print
3) Vehicle density includes passenger cars in use only
15
1 Vast Opportunity
Real Estate: Addressable Market Offers Significant Upside Potential
Key Monetization Steps
• Pro listing fees launch
• Continuous
enhancement and
deepening of
information model
• Integration of
Domofond.ru catalogue
Significant Upside Potential…
• Avito currently represents 3% of Total RE Budget
and 5% of RE Online Spend, incl. Developers
…Many Avito Peers Take the Most
of it on Their Markets(2)
76%
RE Ad Budget(1):
$1,000 m
57%
• Product development:
56%
Pro tools for stock,
client and lead
management
Marketing Pro tools
Built-in analytical
features
Possibility to
publish listings on
many classifieds
Continuous
diversification and
enhancement of
mobile apps
• Avito Context launch in
Real Estate Vertical
40%
LT target
RE Online Ad
Spend(1):
$600 m
…Addressable Markets Also Have
Attractive Growth Prospects
Metric
Population, m
Avito
2014 RE
Revenue(1):
~$27 m
• Domofond.ru
monetization
Stock Density
(room/person)
Share of Rent
Stock
(3)
Key Player
Revenue of Key
Player, $ m
USA
AUS
UK
RUS
319
24
64
144
2.3
2.3
1.9
0.9
33%
n/a
34%
7%
470
470
275
27
Source: Internal data, OECD, company fillings, broker reports, public sources
1) Converted at a RUB/$ exchange rate of 39.6, 2014 CBR average
2) Data on market shares is from different sources and should be used for illustrative purposes only. For markets with clear duopoly market share of both
players is presented. Soufun and Leju 2013 share of online RE ad spend in China, ReA 2014 share of Australia RE ad spend, incl. print, Rightmove 16
Strictly Confidential
and Zoopla 2014 share of UK auto classified spend, incl. print, Next share of relocating users in Japan
3) Zillow 2014 revenue PF of Trulia
1 Vast Opportunity
Jobs and Services: Addressable Market Offers Significant Upside Potential
Jobs: Significant Upside Potential…
Jobs Ad Budget(1):
$320 m
Services: Significant Upside Potential…
Services Ad Budget(1):
$90 m
• Avito currently
represents 2.5% of
Jobs Total Budget
and 3% of Jobs
Online Spend
Jobs Online Ad
Spend(1):
$230 m
Services Online Ad
Spend(1):
$60 m
Avito
2014 Jobs
Revenue(1):
~$8 m
Avito 2014
Services
Revenue(1):
~$10 m
…Many Peers Exploit
it on Their Markets
51%
70%
…Addressable Markets Also Have
Attractive Growth Prospects
Metric
Economically
Active Pop, m
Key Player
Revenue of Key
Player, $ m
AUS
12
232
GER
42
134
FRA
Key Monetization Steps
RUS
29
37
75
81
•
Pro listing fees introduction
•
Expand beyond construction and transportation
•
Continuous enhancement and deepening of information model
•
Brand new mobile application with services request scenario (SRP),
built-in tools for service providers and service requesters and a mobile
directory
•
Capitalizing on products, allowing providers to stand out in a
fragmented market, new type of VAS in the SRP
Key Monetization Steps
•
•
•
•
•
• Avito currently
represents 11% of
Services Total
Budget and 17% of
Services Online
Spend
Pro listing fees introduction
CV database introduction
Enhancement of search capabilities and developing user features
Advertising products connected with company page and listings
Packaging and pricing of offering to suit recruiters
Source: Internal data, Euromonitor, company fillings, broker reports, public sources
1) Converted at a RUB/$ exchange rate of 39.6, 2014 CBR average
2) Data on market shares is from different sources and should be used for illustrative purposes only. Seek 2013 share of visits and ads, Xing share of
Strictly Confidential
users base 2015E, Xing user base is projected to grow as in 2014
17
2 Outstanding Business Model
Liquidity, Brand, Moderation and Ease of Use
Description
Barrier to Entry
• Strong network effects. Sellers attract
buyers and buyers attract sellers
• Everyone benefits from one marketplace
with all the goods
• Being free for a private seller makes it
nearly impossible to take Avito out of
business
1 Liquidity
2 Brand
• Site has to be top of mind among buyers and sellers
• Achieved through significant marketing spending and
word of mouth from satisfied customers/users
3 Moderation
• Accessibility and popularity create incentive to cheat
• Huge inflow of listings has to be controlled to uphold quality
and keep users safe. Economies of scale
4 Easy to use
product
• Need to provide an easy to use product both for sellers and buyers
• However, a good product alone does not win the classifieds game
Strictly Confidential
Very high
Very high
Medium
Low
18
2 Outstanding Business Model
High Seller Retention – People Come back Because it Works
Lister Dynamics
Ca. 79% of October 2010 Listers
k
# of Listers
Share of initial listers
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Oct-12
Aug-12
0%
Apr-12
0
Jun-12
4%
Feb-12
60
Dec-11
8%
Oct-11
120
Aug-11
12%
Jun-11
180
Apr-11
16%
Feb-11
240
Dec-10
20%
Oct-10
300
Listed Items Dynamics
Ca.11x of October 2010 Items
k
# of Items Listed
Share of initial Items
1 000
50%
800
40%
600
30%
400
20%
200
10%
• In October
2010 the
sellers listed
ca. 460k items.
Up until
September
2015 the same
group listed
over 4.9m
additional
items
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
Oct-11
Aug-11
Jun-11
Apr-11
Feb-11
Dec-10
0%
Oct-10
0
• In October
2010 there
were ca. 242k
new sellers.
Out of these
191k (79%)
listed again in
the following
ca. 5 years
Source: Internal data
Strictly Confidential
19
2 Outstanding Business Model
Successfully Converting New Listers to Money over Time
VAS Spend Dynamics
VAS amount
RUBk
Share of initial VAS amount
Ca.30x of October 2011 VAS Spend
10 000,0
150%
8 000,0
120%
6 000,0
90%
4 000,0
60%
2 000,0
30%
• Within ca.
4 years they
spent 30x this
amount (gross)
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
Feb-12
Dec-11
0%
Oct-11
0,0
• In October
2011 new
listers spent ca.
RUB4.5m
Source: Internal data
Strictly Confidential
20
3 Clear Market Leader
#1 in All Verticals
…Having Fast-Tracked its Way to Undisputed Market Leadership in Russia
Mobile
Presence(1)
Platform
Launch
Date
MAU (m)
Desktop and Mobile
HTML Page Views (m)
5,578
5,578
24.9
2009
/
#16 / 16
PV vs. #2
2001
7.4
2000
5.6
832
832
#161 / 209
1996
5.3
496
496
153 / 490
2000
4.2
7878
528 / 369
2002
0.8
1,311
1,311
(3)
4646
#379 / -
226 /414
Key Categories
Auto
Real Estate
Jobs
Services
General &
E-commerce
#1
#1
#2
#1
#1
2.2(2)x
21.6x
1.0x
71.1x
70.1x
#2
#1
#2
Domofond.ru is
currently a #2 Player
after Avito Real Estate
Source: TNS, ComScore as of September 2015, Liveinternet as of September 2015, Appannie
1) As indicated by app rating in the App Store / Google Play
2) Includes page views from Avito apps
Strictly
Confidential
3) Auto.ru
numbers
as of May 2015
21
4 Significant Further Monetisation Potential
Large Upside Potential Compared to Peers
Strong Earnings of Established Players with Room to Grow for
Avito…
Revenue(1)/Internet Capita 2014 ($)
Revenue(1) 2014 ($ mm)
46.8
…Already High Margins with Additional Upside Potential
EBITDA Margin 2014 (%)
75.4%
229
69.5%
37.8
15.9
159
67.4%
59.9%
137
54.4%
(2)
14.4
822
(2)
7.7
428
52.1%
50.6%
49.4%
1.3
109
The significant part of online classifieds revenue is not reflected for the
UK and France
44.1%
TradeMe margins are generall y over 70%, in 2014 margins are lower due
increased investment in marketing and product developm ent
1) Revenues calendarized and converted at an average exchange rate for the period; Avito revenue is converted at an RUB/$ exchange rate of 39.6, 2014 CBR average
2) LaCentrale and Caradisiac revenue for 2013 is used, Zoopla financials not calendarized
Source: Company Filings, Broker reports, public data
Strictly Confidential
22
4 Monetization Potential Unfolding
Main Initiatives
A
Listing Fees Roll-out: a
New Revenue Stream
G
B
Domofond.ru: First
National Online Real
Estate Classified Platform
Mobile Monetization:
Following Avito User
F
C
Business Intelligence:
Leveraging Big Data and
Machine Learning to
Maximize Monetization
E
Monetization
Unfolding
New Advertising Products:
Avito Context and AvitoPromo
D
Verticalization: Tailored
Business Development to
Excel in Each Single
Category and Geography
Strictly Confidential
Pro Tools: Addressing
Needs of Avito Pro
Universe
23
A
Listing Fees Roll-out (1/2)
How Does It Work?
• Increase current
monetization by
introducing additional
revenue stream
Rationale
• Increase content quality,
listing fees act as a
natural moderator
• Increase liquidity for Pros
How Monetization Mechanism Works
1•
Payments for new items
Post an item
2•
Payments to re-activate expired items in regions with Listing Fees
Activate
3•
No expected drop in VAS
Sell faster
• Target Pros and stay free
for Privates
Principles
• Target categories /
regions with content
quality issues
Monetization Potential
Avito New Items and Activations Universe by Sub-categories and Regions
LF already rolled out (as of
October 2015)
• Extensive testing
LF not rolled-out
• Continuous optimization
of all processes involved
Strategy
• Heavy regional expansion
at a later stage on the
back of solid insight
obtained during the
testing
Source: Internal data
Strictly Confidential
24
A
Listing Fees Roll-out (2/2)
Tests in Progress with a Goal to Increase Monetization and Content Quality
1
2
Listing Fees Tests
3
Regional Expansion
Monetization Increase
Current Phase
• Launch small samples of
listing fees covering as many
relevant categories as
possible
• Gather customer data and
develop insight on customer
behavioral patterns
Key
Steps
• Gain knowledge about the
vertical-specific reaction and
discover technical and
process inefficiencies
• Detailed action strategy
Results
• Forecasting model
• Roll out listing fees in more
regions in categories where
tests were successful
• Analyze price elasticity to
determine optimal prices and
discount structures
• Build a framework to
optimize listing fee
parameters for each
category-region combination
• Listing fee parameters for all
categories and regions
• Mass launch of listing fees in
all categories and regions
where it is economically viable
based on the results of
previous phases
• Price increases and discount
reduction for existing listing
fees
• Continuous tracking, analysis
and fine-tuning of existing
listing fees to improve revenue
• Listing fees in place across all
chosen categories and regions
• Detailed mass launch plan
Continuous optimization of all processes involved: technology support, customer support, sales
Strictly Confidential
25
B
Mobile Monetization (1/3)
Following Avito User
Present Moment
Era
Avito User is Moving Mobile
Desktop Dominance
Platform Coexistence
Mobile
Dominance
Devices
Feature phones
Smartphones
Laptops
Tablets
Tech
Basic HTML
Rich HTML
Product
Native Apps
Simple Web
Strictly Confidential
Simplified Web and
Native Apps
Full-Featured Web and Native Apps
with Mobile-Tailored UX
26
B
Mobile Monetization (2/3)
Mobile Getting More Visible
Significant Increase in Mobile Traffic
Monetization of Mobile Devices Rolling Out
Focus on Apps Development
Y-o-Y Quarterly Page Views Growth(1),
as of Sep-2015
VAS Revenue by Platform(1)
Monthly App Downloads, th
160%
100%
1,000
121%
120%
17%
27%
750
75%
80%
50%
52%
40%
39%
500
83%
73%
25%
10%
0%
Apps
Mobile
HTML
Desktop
Total
0%
Sept-14
Desktop
Quarterly Page Views Breakdown(1)
100%
75%
17%
Advertising Revenue by Platform
100%
28%
52%
22%
Sept-15
Mobile
16%
250
0
Jan-13
Sep-13
May-14
Android
Jan-15
Sep-15
IOS
Cumulative App Downloads, mm
20.0
16.6
29%
75%
15.0
4.5
24%
50%
25%
50%
60%
48%
84%
10.0
71%
25%
5.0
0%
0.0
7.5
2.6
12.2
4.9
0%
Sept-14
Sept-15
Desktop
Mobile HTML
Apps
Sept-14
Desktop
Sept-15
Mobile
Sept-14
Android
Sept-15
IOS
Source: Internal data
Notes: (1) PV and revenue from avito.ru from mobile devices is included in mobile HTML
Strictly Confidential
27
B
Mobile Monetization (3/3)
Avito Application Rankings
IOS
• Latest Rank:
16
• 6M Change:
+2
Competitor
Latest Rank
HH.ru
153
Auto.ru
161
Cian
226
IRR
528
6M Rank Change
Google Play
• Latest Rank:
16
• 6M Change:
+21
Competitor
Latest Rank
HH.ru
490
Auto.ru
209
Cian
414
IRR
369
6M Rank Change
n/a
Source: Appannie Rankings for Russia as of 3 November 2015
Strictly Confidential
28
C
New Advertising Products
DiY Advertising: Avito Context, Avito-Promo
Avito Context
Avito Promo
• Context advertising launched in General and some Auto categories
• Currently employs context targeting, plans for behavioral targeting
in the future
• The product is on Avito own infrastructure
Context
Create your own targeted ad campaign
Name your campaign
Choose a platform (web/mobile)
Choose a payment type (CPM/CPC)
Choose a size of the item
Choose a format (image / image + text)
Drag the image
Select required regions
Select required categories
Select display period
Let us know your budget
Source: Internal data
Strictly Confidential
29
D
Pro Tools
Addressing Needs of Avito Pro Universe
•
Avito is using a “Verticalized” approach to Pro Tools Development to Reach the Most
Diversified Pro User Base Possible
Auto and Real Estate: ActiDealer and ActiAgent
Concept
Key Features
• Web-based and mobile software
• One-stop solution for Pro users:
Increases efficiency of Pro users by
helping them to manage their stock,
marketing budgets and clients
effectively
Educates Pros by providing them with
various dimensions of market analytics,
valuation tools, marketing consulting
Increases value of Pro users for their
clients: they become not just
dealers/realtors for their clients, but also
consultants
Strictly Confidential
Version 1.0
Avito and Domofond integration
Listings management
Market analytics
Statistics with built in analytics
Leads management
CRM
30
Verticalization
E
Tailored Business Development
Three Levels of Verticalization
1
Organizational Verticalization
• Introducing “verticalized” management
Dedicated vertical business development teams
in all major categories: Auto, Real Estate, Jobs,
Services, Avito General and E-commerce
Close cooperation with product development
and business intelligence to maximize
monetization of each Vertical
2
“Verticalized” Approach to Addressable Market
• Assessment of Avito addressable market – one of the
key projects
• “Verticalized” approach. Goals:
Estimate number of players in each Vertical
Estimate wallet size in each Vertical
Understand Avito share and potential
Increase share and maximize monetization
3
“Verticalized” Product Development
• Verticals – one of the key dimensions of product
development:
Significant work is being done in Auto, Real
Estate and Services verticals as part of Pro
tools projects
Strictly Confidential
31
F
Business Intelligence
Leveraging Big Data and Machine Learning to Maximize Monetization
1 Creating a Base for Many Pro Tools
BI Does
Pro User Gets
• Tracking user
behavior
• Lead
generation
• Pricing models
• Valuation tools
• Internal
database
• Analytical tools
2
Increasing Content Quality
Operating Metric Forecast
Advanced Artificial Intelligence System
that performs 80% automatically
Fraud detection
Illicit content detection
Item duplicate detection
Pricing models
Bot detection
Reliable
forecasting
model based on
extensive internal
database and
applied statistical
methods
Jan-14
4
8 Consolidated Single Source of Truth
Data Warehouse
• 360 User profile
• Consolidation of all
data sources
• Single source of truth
• Full control of data
7
3 Forecasting Avito Business Trends
The Team includes 3 PhDs
in Machine Learning
• Network mediation – finding optimal
architecture of advertising networks
composition to maximize revenue
• Real-time user interests detection to
provide unique targeting capabilities
for advertisers
Strictly Confidential
6
Product Pricing
• Optimizing VAS
prices for various
products in various
locations using
advanced
statistical
modelling methods
Nov-15
Self-Serve BI
• Enterprise
reporting to let
business dig
deep into data
and promote
data-centric
culture
Business
Intelligence (BI):
Advertising Optimization
Dec-14
5
Increasing User Engagement
• Personalized
recommenda
tions
• Targeted offers
32
G
Domofond.ru (1/3)
First National Online Real Estate Classified Platform
The Case for Success
Domofond.ru Evolution
• There is no leading national
player in the real estate
vertical in Russia
• Domofond.ru is well
positioned for success and
has so far seen promising
results
1 • The largest listing
database through
leveraging Avito’s
customer database
Page Views Dynamics
2014: Focus on product development and building the team
2015: Focus on brand building as well as increasing traffic and market share
Jan 2015 – Present:
Marketing Campaign
• New Developments section
launched
• International section, price
statistics, improved
geographical search etc.
• TV advertising
campaign
Jan-May 2014: Establishment
• Brand development and
registration
• JV agreement: Korbitec, a
South-African developer of
software and online products
for the property industry
• Company foundation
2 • Advanced product in
constant improvement
through technology and
know how from JV partner
Korbitec
May 2014: First Version of
Site
Oct-Dec 2014: Mobile, Apps,
Further Site Developments
• Native iOS app
• Mobile site
• Desktop map including “draw
search”, analytics section,
building info added to
Moscow listings
• Native Android
app launched
3 • Promising results so far
Advanced to 1st
largest vertical RE site
within one year of
operations
High engagement,
even compared to
international peers
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Source: Internal data
Strictly Confidential
33
G
Domofond.ru (2/3)
Avito and Domofond.ru: Strong Market Position
Avito and Domofond.ru: Leading on Federal and Moscow Level
Market Share by Page Views for Real Estate(1)
Moscow and Moscow Region
Russia
69%
4%
18%
11%
25%
7%
31%
75%
68%
71%
8%
8%
88%
82%
80%
Jul-14
Jul-15
Oct-15
Avito
Domofond.ru
As of October 2015
Cian.ru
Other
Complementary Business Models: Most Users and Agents will Likely Use Both
The natural C2C marketplace, easy to list
The specialist, more focused on B2C
Clean, simple search experience
Focus on real estate specific features, (map, prices, automatic
valuation, mortgages
Focus on size, speed and freshness
Focus on quality – the cleanest database
Users in all stages of the buying process – huge audience
Users in the late stages of the buying process – audience is smaller,
but closer to purchase
Biased towards rentals where speed and simplicity are key features
Biased towards New Developments – information and specialized
product are key features
Source: Liveinternet
1) Does not include page views from apps
Strictly Confidential
34
G
Domofond.ru (3/3)
Future Ambition: Building an Ecosystem Based on our Three Assets
Professionals
Domofond.ru
ActiAgent
[]
The leading real estate vertical
• Leading site on new
developments
• Leading information resource
on real estate
Consumers and owners
The must-have CRM tool for
real estate agents
• A part of the daily work for an
agent
• Easy management of
database, marketing and
leads
Strictly Confidential
Avito
The leading general classified
site
• Generates highest quantity of
leads
• Best C2C market place
35
5 Very Attractive Financial Model
Showing Robust Revenue Growth and Attractive Yield
Revenue Q-o-Q Dynamics, RUBm
2,000
194%
173%
131%
115%
84%
78%
57%
42%
47%
56%
90%
1,750
1,572
1,500
65%
65%
53%
48%
46%
803
1,000
34%
580
632
1,262
1,122
59%
1,207
51%
46%
1,069
40%
39%
852
25%
500
15%
0
-10%
2Q 2013
3Q 2013
4Q 2013
Revenue
1Q 2014
2Q 2014
3Q 2014
EBITDA Margin
4Q 2014
1Q 2015
xx%
2Q 2015
3Q 2015
Y-o-y growth rate
Source: IFRS accounts
Strictly Confidential
36
6 Strong and Complete Leadership Team
Filip Engelbert
Co-Founder, Group CEO
Jonas Nordlander
Co-Founder, CEO of Avito Russia
2014
Extensive experience in investment
banking and online entrepreneurship
in emerging markets
Proven track-record with 4 start-ups
and
over
10
years
of
entrepreneurship within the online
segment
Top 5
Employer in
Russia
Under Filip’s management, Remium
Fondkommission
became
the
leading small- and mid-cap focused
investment bank in Sweden
Developed Tradera.com – one of the
leading online commerce services in
Sweden. Sold the company to eBay
for $65m
Vladimir Pravdivy
Group CFO
Christoffer Norman
COO of Avito Russia
Over
17
years
of
financial
management experience spanning a
variety of industries and companies
Participated in one of the largest
(over
$750m)
strategic
M&A
transactions in Russian media
space, several bond issuances and
IPO preparation processes
Previous
experience
in
the
management consulting industry
Ca. 770 Well-Qualified and
Committed Employees
Departm ent
Henning Stenhammar
Head of Sales of Avito Russia
8 years of experience in sales and
management in Russia
Has been with Avito since 2011
Strictly Confidential
Sep'14
Sep'15
72
123
193
320
12
19
Sales
116
191
Other
106
115
Total
499
768
Technology
Customer Support
Business Intelligence
Dmitry Kovalev
Vice President, Product &
Technology of Avito Russia
Previous work experience as CPO,
project manager and web developer
9 years of experience in online
product & project management
Has been with Avito since 2009
37