OREANDA-NEWS. October 25, 2012. Mail.Ru Group Limited (LSE: MAIL, hereinafter referred as "the Company" or "the Group"), a leading Internet company in the high-growth Russian-speaking Internet markets, today provides an update on the preliminary unaudited segment revenues for Q3 2012.

Q3 2012 Performance Highlights
Q3 2012 Group aggregate segment revenue grew 36.5% Y-o-Y to RUR 4,965 million (9 months 2012 Group aggregate segment revenue grew 44.4% Y-o-Y)
Monthly audience (TNS Russia) of Mail.Ru portal in September 2012 reached 31.9 million Russian users with Q3 average monthly Y-o-Y growth of 16%
Monthly audience (TNS Russia) of Odnoklassniki in September 2012 reached 21.8 million Russian users with Q3 average monthly Y-o-Y growth of 24%

Key Recent Developments
Email service localisations for CIS countries (Kazakhstan, Belarus, Uzbekistan)
New email list design with user profile pictures
News@Mail.Ru applications for iPhone, Android and WP7
New features for groups in OK: video, photo collages and recommendations based on user interests
OK introduced photo filters in applications for iPhone and WP7
Ability to log into third party mobile applications with OK account (mobile authorization)
Web Agent now supports calls to fixed-line and mobile phones and SMS
Launched ICQ 8 for Windows featuring new design, better voice and video calls and supporting calls to fixed-line and mobile phones
Launched free-to-play MMORPG Dragon Nest
Launched Allods in China
Warface has exceeded 55,000 PCU
Search market share was 8.2% in September 2012 (LiveInternet)
Launch of own web-browser Amigo integrated with main social networks (OK, My World, VK, Facebook)
Money@Mail.Ru obtained a non-credit financial organisation status
Two major events held - 2012 Russian Code Cup and Mail.ru Group Technology Forum
Mail.Ru Group moves to 100% ownership of Headhunter having acquired the remaining 2.8%
Free float increased to 36%

Commenting on the results of the Group, Dmitry Grishin, Co-Founder and CEO of Mail.Ru Group, said:

"I am pleased that the Group has continued the positive growth trajectory of H1 2012 into Q3 2012. Aggregate segment revenues grew 36.5% Y-o-Y to RUR 4,965 million, contributing to 9 months 2012 aggregate segment revenue growth of 44.4% Y-o-Y.

Our strategy has been proving successful and we continue executing on it in our core Russian-speaking market. Increasing and continued focus on mobile is evident in the growth of our mobile audience – 38% of OK’s average monthly audience and 50% of Mail.ru Agent average monthly audience in Q3 accessed the service from a mobile device. Continued product improvements across the board drove audience and engagement growth of OK as well as increased overall audience growth in our core email and portal service.  

Our core products generate increasingly diverse revenue streams – notably, in Q3 2012 user generated revenues (MMO and Community IVAS) contributed 54% of our aggregate segment revenue, compared with 49% in Q3 2011. At the same time, online advertising contributed 34% of our revenue compared to 39% in Q3 2011. Community IVAS has continued growing rapidly at 72% Y-o-Y in Q3. The main driver of this growth is unchanged - the increase of paying user engagement.

Evidenced by ongoing improvement in Q3 Y-o-Y revenue growth of 30.8%, we continue to execute on our MMO games strategy. Most of our core games continued their robust performance during Q3. In addition, Warface (now a top 4 game) has seen increasing traction in terms of both users and revenues and we have also launched our second licensed AAA game this year (Dragon Nest) in September.

While context advertising continued to grow at a healthy rate, we have seen a slowdown of growth in display revenue. In Q3 this was mainly driven by the previously discussed planned reduction in advertising inventory. However, during late Q3 and early Q4 we have also noted deterioration in the display advertising market. As a result, we expect the weakness in the display revenue growth rate to continue into Q4 2012.

Notwithstanding the more challenging conditions in the display advertising market, the diversity of our revenue base, the underlying structural drivers and the ongoing execution on our strategy allows us to reiterate our FY 2012 guidance of Group aggregate segment revenue growth of 40% and aggregate segment EBITDA margin percentage in the low fifties."