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Edited Transcript of HHR.OQ earnings conference call or presentation 13-Mar-20 1:00pm GMT

Q4 2019 HeadHunter Group PLC Earnings Call

Mar 13, 2020 (Thomson StreetEvents) -- Edited Transcript of HeadHunter Group PLC earnings conference call or presentation Friday, March 13, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dmitry Sergienkov

HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC

* Grigorii Moiseev

HeadHunter Group PLC - CFO

* Mikhail Zhukov

HeadHunter Group PLC - CEO & Director

* Roman Safiyulin

HeadHunter Group PLC - Head of IR

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Conference Call Participants

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* Anna Kurbatova

Joint Stock Company Alfa-Bank, Research Division - Senior Analyst

* Evgeny Annenkov

BofA Merrill Lynch, Research Division - Analyst

* Ivan Kim

Xtellus Capital Partners, Inc., Research Division - Equities Analyst

* Miriam Anuoluwapo Adisa

Morgan Stanley, Research Division - Equity Analyst

* Vyacheslav Degtyarev

Goldman Sachs Group Inc., Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter and full year 2019 financial results conference call. (Operator Instructions)

I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker today, Roman. Please go ahead.

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Roman Safiyulin, HeadHunter Group PLC - Head of IR [2]

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Hello, everyone, and welcome to Headhunter Group Fourth Quarter and Full Year 2019 Earnings Call. On the call today, Mikhail Zhukov, our Chief Executive Officer; Grigorii MoiseevGrigorii, our Chief Financial Officer; and Dmitry Sergienkov, our Chief Strategy Officer.

A press release containing our fourth quarter and full year 2019 results was issued earlier today and a copy may be obtained through our website at investor.hh.ru.

Now, I will quickly walk you through the safe harbor statement. Today's discussion will contain forward-looking statements. Actual results may differ materially from the results predicted or implied by such statements, and forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ, please see the risk factor section in our final prospectus in connection with our initial public offering that was filed with the U.S. Securities and Exchange Commission on May 9, 2019.

During this call, we will be referring to some non-IFRS financial measures. These non-IFRS financial measures are not prepared in accordance with IFRS. A reconciliation of the non-IFRS financial measures to the most directly comparable IFRS measures is provided in the press release we issued today and the slide presentation, each of which is available at our website at investor.hh.ru.

Now I'll turn the call over to Mikhail to make a quick opening remarks. Please go ahead.

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Mikhail Zhukov, HeadHunter Group PLC - CEO & Director [3]

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Thank you, Roman, and good afternoon, everyone.

I wish I could start off by discussing the great business results that we delivered in our first yield post-IPO. But as we now find the globe with 1 of the most volatile environments observed during the past decade, I have to shift focus to that, and let my colleagues discuss the rest. The rapid and violent coronavirus outbreak, which has turned into global pandemic, forces the entire world to confront challenges not faced in a long time, plunging all aspects so far with daily life in this period of high unpredictability. Although, the virus' direct impact on Russia, in general, has been limited so far. And we have not observed an impact on our business to date. We have ruled out that should those economies which have been hit the hardest, lead to a global recession, it will have a material impact on our economy as well as will the decline in the price of crude oil, and the corresponding weakness in the ruble exchange rate. In this uncertainty, I think it is a matter of extreme importance to reassure and remind our investors of the fundamental strength of our business and its resilience: firstly, we are operating at consistently high profitability and very low CapEx needs, both of which consistently help us generate stable cash flows throughout the year; secondly, our business model is based on a significant point of predictable subscription-based revenues paid in advance, and we serve a very diversified number of clients in industries; thirdly, how we have a strong balance sheet and substantial and utilized debt capacity that could be put to work if required. We are not exposed to hard currency denominated obligations, and we do not incur material foreign currency costs deviate from our functional currency.

And finally, during our 20-year history, we have successfully overcome several economic and geopolitical crisis, and we are an experienced management team, that fully expects not only to overcome the current market challenges, but to be able to use our market-leading position to take advantage of opportunities that may arise. We are talking the virus -- we have taking the virus problem very seriously, and we have developed all necessary contingency plans for various scenarios in the event of escalation, which we stand ready to activate in the most optimal way as a challenge continues to evolve and the picture becomes more clear. We are facing this volatility in the strongest business position we have ever been in. And we remain confident that we will overcome these challenges until we finally see global stabilization, which should benefit the business environment, in general, in our industry, in particular. Meanwhile, please take care of your selves and your relatives.

Now let me turn it to Dmitry to walk you through our key highlights of the fourth quarter and the full year.

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [4]

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Thanks, Mikhail. Good afternoon, and thank you for joining us on this call. I'll begin with some full year highlights and then jump into regular quarterly update, including proposal for dividends and annual guidance. As usual, try to leave plenty of time for Q&A. I'll kick it off.

So overall, as you can see on Page 3 of the supplementary materials, we have delivered a very strong results in 2019. We made a great progress expanding our business across all strategic areas, while coupling top line growth with margin expansion year-on-year. As a result, delivering on the upgraded market guidance given in December. We've shown considerable revenue expansion. Our revenue adjusted for the effect of disposal went up by 28%. We sustained growth of our client base, have inquired almost 70,000 net new customers across all geographies, extending offerings to small and medium accounts, blue collar areas, both feeding into powerful networks ETRs that is reinforcing our future growth, creating strong competitive barriers. We have demonstrated our abilities to manage resources in efficient way, to scale up the business faster than cost base, which resulted in growth in our EBITDA margin by nearly 4% compared to previous year, reaching 50.5%.

We have mentioned the volatility and certainty around the virus outbreak going forward. But having considered the strength of our business model and the health of our balance sheet, we still decided to reward our shareholders dividends, growing nearly 60% in absolute terms year-on-year. Now to reflect on the past year operationally, this time around, we wanted to touch upon our core operating metrics, development outlined on Page 4. Our traffic measured by a number of per user sessions increased by 35% in Q4 year-on-year, predominantly driven by growing mobile audience. As we migrated to mobile-first product development this year and targeting the areas where small screens sometimes the only device in use, we consider circa 80% share of mobile traffic being quite a milestone to us. We managed to significantly expand our native app installation base, adding 7 million new doubles and reaching a total of more than 22 million downloads, both iOS, Android. That demonstrates the breadth of our multi-platform capabilities, sets a very strong basis for in this user interaction going forward and future product development. This will remain our key focus going forward as well.

In terms of content on both sides of our marketplace, it has demonstrated healthy dynamics on the back of continuous product personalization, customization and effective investments across a number of market channels. Even though our penetration and our employable population in Russia is already trending towards 50%, we still absorb great CV database growth. In '19, we've added close to 8 million CVs, which is nearly equal to half of total all-time CV database of our closest competitor. We sustained leadership in all Russian regions in terms of new CV inflows and see the gap between headcount and competitors expanding. Especially strong growth we see in blue collar job seekers. We have demonstrated 23% year-on-year candidate growth. Number of total job posting has been growing at mid-single digits versus previous year. That is mainly to intensive promotional activity occurred at 2018, when many of our existing clients had the opportunity to post 3 blue collar job vacancies in regions in order to broaden our content database. In '19, we they made efforts to monetize that content somewhat use promotions. So if you adjust for this promotional activity then in terms of payback and the content, we demonstrated a strong midteens growth in '19.

To conclude we to address all the critical elements of this virtuous cycle embedded in the business model, and we expect this to grow and drive our business growth going forward.

Now we are moving on to Page 5. We'd also like to give you some perspective on our performance against competitors, which is always quite challenging because of the lack of official data, also variety of ways how we can look at it. So we believe the traffic evolution being, if not the most, but definitely one of the most important indicators of the situation. Again, you can use various vendors, to ways to look. So we decided to take probably 2 of to the most frequently used sources, Liveinternet and SimilarWeb. So I would encourage you to disregard the absolute numbers because they actually deviate from our internal metrics when we use it for, for instance, derived from Google Analytics, but rather look at relative dynamics and the gap evolution. In 2019, we managed to widen the gap against all players, despite them starting investing more in products, more in marketing than the year before. As you can see, this trend is actually consistently across both sources. These dynamics prove that our strong leadership position reinforced by investment is highly resilient, and that despite all the increased focused and higher capital deployment, it's becoming increasingly difficult for our competitors to sur come this competitive move. And at the core of this defense line, we see the share of organic traffic.

We enjoy in user acquisition, in customer acquisition, in app downloads, everwhere. All shares regarding traffic, well above 80% of total. Now moving to Page 6. I would like to quickly talk through quarterly financial results. In the fourth quarter, our revenue was by -- up by 22% year-on-year. The growth base came slower comparing to the previous 9 months, fully driven by the core to the previous core effects on the free job posting cancellation. So no other signs of deceleration contributors that was worth mentioning. Our adjusted EBITDA margin in the fourth quarter remained relatively flat compared with the same period of last year at the level of45.5%. But we follow a slightly different investment allocation strategy last year, especially with regards to marketing. Our CapEx in Q4 was RUB 155 million, primarily due to RUB 79 million office renovation costs. So excluding renovation costs, our CapEx have been broadly flat versus previous year level of 3.7% of revenue with a very high cash conversion.

On Page 7, you can see how our key product dynamics, that's generally consistent what you saw in the previous quarters. Job posting remained the highest growing category, the expansion of SMA customer base and our efforts, drive consumption growth in key accounts. We maintain a comfortable share of subscription revenue in our portfolio, approximately 49%. Value-added service revenue growth was somewhat slower compared to third quarter because part of HH Annual HR conference revenue was allocated to Q3, while last year's revenue was fully financed in Q4. So it's just a seasonal effect. Turning now to our results by customer segment. Key accounts in Moscow, St. Petersburg demonstrated revenue growth of 14%.

The growth of key accounts is mainly attributable to a 17% increase in ARPC, Moscow, St. Petersburg, driven equally by monetization initiatives and increase in service usage. To preempt your question judging by experience previous calls, you could probably notice again an optical churn that 3% in the key accounts, circa 80% of which is explained just by migration from one paying legal entity to another, that is temporary classified as SMA, due to the lack of reliable segmentation data. So aside from that, there were no churn on key accounts. To reiterate on this point. Regional key accounts demonstrated revenue growth of 22% on the basis of solid customer base growth of 80% and accelerating 13% increase in ARPC. Revenue from small and medium accounts in Moscow, St. Petersburg were up 17%, driven by a 12% increase in the number of paying customers, a healthy growth of 5%. Finally, revenue from miscellaneous regions demonstrated the highest revenue expansion based on the level of 36%, by increasing the number of paying customers by 21% and 12% ARPC growth. Now here is Grigorii talk about our financial performance and profitability.

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Grigorii Moiseev, HeadHunter Group PLC - CFO [5]

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Thanks, Dmitry, and hello, everyone. As Dmitry mentioned, we have managed to significantly expand our EBITDA margin in 2019, full year. This is on the back of our personnel marketing and other costs decreased and as a percentage of revenue, excluding adjustable items. And let me walk you through these expense buckets one-by-one.

If we start from the personnel expenses, they have increased by circa RUB 156 million in Q4 compared to the last year or 35% growth. The main factor that contributed to these increase is the share-based compensation rewards. We also hired 80 new employees during 2019, primarily in our development and production teams and made the wages and taxation in the first quarter of last year. Our personnel transfers, excluding share-based compensation remained relatively flat as a percentage of revenue. For the full year 2019, personnel expenses, excluding share-based compensation decreased by 0.6 percentage points to 26.4% of revenue. Now moving to marketing expenses, they increased by RUB 66 million or 32% in the fourth quarter 2019 year-on-year. This increase is primarily due to the actually different allocation in this year when the expenses are more evenly allocated throughout the whole year. On a full year basis, marketing costs as a percentage of revenue have decreased by circa 2 percentage points to 13.4% of revenue. And our others are mostly presented by subcontractor and other direct costs, office rents and professional services. As you can see, they have increased by circa RUB 43 million, mainly because of the insurance cover related to the IPO. And excluding these item, the other costs have actually decreased by circa 1 percentage point on a full year basis. So as a result, our adjusted EBITDA for the fourth quarter reached RUB 1.23 billion, which is 49.5% margin. And for the full year, adjusted EBITDA was RUB 3.9 billion, with a margin of 50.5% or up 3.8 percentage points year-on-year. Our CapEx in 2019 was RUB 492 million, which is the increase of RUB 237 million year-on-year, which was primarily due to the circa RUB 200 million renovation costs in our offices in Moscow and Yaroslavl, which we nearly completely redesigned, and we expect some part of the year's budget to be -- to appear in 2020 due to some construction delays. Our net working capital as of the December 31, 2019, increased to RUB 2.9 billion or 14.1% year-on-year, mostly due to the increase in contract liabilities from the growth in sales. Income tax expense was RUB 644 million in 2019 compared to RUB 509 million in 2018.

We had a significant progress in the effective tax rate, which decreased from 33% in 2018 to 29% in 2019. Due to us migrating to Russian tax residency and those eliminating some intragroup interest expense, which was not deductible. Now turning to cash generation metrics. In 2019 full year, we have generated circa RUB 2.6 billion from operating activities, so this is compared to RUB 2 billion -- RUB 2.1 billion in the year 2018. The growth was primarily driven by the increase in sales. We used circa RUB 637 million in investment activities in 2019. The key component of net cash used in investment activities was the acquisition of 25% ownership interest in Skillaz for RUB 235 million. Our net cash used in financing activities was RUB 2.6 billion in 2019, and the change between the risk was primarily due to the dividend paid to shareholders of RUB 1.1 billion, and other financial activities. Our net debt decreased mostly due to a net increase in cash generated from trading activities and debt repayment. Leverage has declined from 1.3x EBITDA as of the end of 2018 to 0.8x as of the end of last year.

Now moving to the dividends. The combination of strong cash flow and the prudent capital structure, means we have a strong balance sheet in terms of credit metrics, we also operate well within our banking covenants. So we are pleased to announce the full year 2019 total proposed dividend of USD 25 million, which represents circa 75% of the adjusted net income for 2019. Now thank you very much, and I would like to turn the word back to Dmi, to comment on guidance for 2020 and make the closing remarks.

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [6]

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Thank you, Grigorii. I think what Mikhail said at the, this is probably the most unfortunate point to provide the guidance for the year. On the one hand, we haven't seen any direct impact on our business year-to-date. The vast majority of our clients operate business as usual. And from the other hand, we have all fundamental reasons to believe that OPEC deal collapse leading to oil price drop and currency devaluation, alongside the global turmoil caused by the virus, will impact business activity in our markets and end result may affect our operations. At this point, it's very early to draw any certain conclusions. And we obviously hope for the sooner global stabilization. At the same time, we retain option to review this guidance again once we digest the impact on our business and come up with the revised in due course. Having said that, it brings the above-mentioned external shops and fully based on our competitive position and performance year-to-date. We expect our revenue to grow in the range of 21%, 25% in 2020 compared to 2029 (sic) [2019]. On the profitability side, we see opportunity to retain, even expand our margins compared to last year, especially to manage to deliver on our growth targets on the back of high operating leverage embedded in our business model. Therefor, we expect our adjusted EBITDA margin to stand between 50% and 52%. And that is it for Q4 and full year results on our side. We are now opening the floor for your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

The first question is coming from the line of Slava Degtyarev from Goldman Sachs.

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Vyacheslav Degtyarev, Goldman Sachs Group Inc., Research Division - Equity Analyst [2]

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Two questions. Firstly, there was quite sizable deceleration of small and medium accounts in other regions in Q4. Would you attribute that to any specific factor? And how do you see that progressing in 2020? And secondly, can you elaborate on the process of price setting for the next year? When are you planning to make those decisions? And how the process is going to be structured for this year?

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [3]

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Okay. Slava, I think I can probably comment. First of all, on the on question on SMEs, as I mentioned, we believe that the full deceleration effect is explained by the cancellation of a free job posting that happened in 2018 in Q4, right? So effectively, we got that revenue boost in 2018, which is actually kind of extinguished in Q4 2019. And that, I think, explains circa 5% of total revenue growth. And we -- as I mentioned during the presentation, we don't see any other deceleration signs. So we still see CCB markets are really underpenetrated. So we expect client growth to remain pretty strong in this segment. But obviously, the effect from cancellation of free job posting that result in that higher growth in 2018, but it's not expected to have a significant effect going forward, that's on the SMB question. And on the price setting, I think we -- weather you saw a usual kind of playbook. Now we are again prepared for kind of midyear or maybe third quarter a discussion with our clients on the next year pricing.

As we mentioned before, we, at the moment, running very important experiments of migration to a newer monetization model of our subscriptions. We plan to effectively impose some kind of limits and gradually migrate towards paper contact model of monetization and subscriptions. For that, we kind of choose a number of clients who were kind of voluntarily migrated to this model already. So we are assessing there -- it's actually the behavior. We're getting feedback, implementing it in our price setup, et cetera. So I think in next 2, 3 months, we probably have a good picture on the final configuration. And we plan to discuss it with our Board of Directors by end of May. And effectively, if everything goes as planned, and we'll be in a position to start discussing with clients, softly and casually in the third quarter. And probably, we will kind of announce something to the market in sort of fourth quarter similar to what we did last year.

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Operator [4]

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Next question is coming from the line of Miriam Adisa from Morgan Stanley.

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Miriam Anuoluwapo Adisa, Morgan Stanley, Research Division - Equity Analyst [5]

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Two questions, please. Firstly, just on small and medium accounts in the other regions, but this time ARPU. We've seen a bit of -- a further deceleration there. Just wondering when you expect ARPU to small and medium accounts to stabilize? And secondly, on the guide, if you could just talk about the difference in the variable between the 21% and the 25% growth? Is it mainly higher volumes? Or is it mainly higher volumes or is it mainly pricing?

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [6]

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Yes. Miriam, to be honest, I think the first one I addressed -- at least my comprehensive actually the same as it was at the Slava question. As I said, we probably kind of extinguished one significant growth driver in SMBs by way of cancellation of job posting in regions, free job posting in regions. But obviously, we're still driving new customers to our platform. We believe that probably monetization will become a bit more sizable and significant factor our SMB growth, right? And we're even considering potentially opportunity to raise prices for products by mid of the year, if we feel that's actually appropriate and competition wise and just economy wise.

So that's probably it.

On your second question, on guidance. That is entirely defined and probably would be a product of future economic development. Because on the lower end of the guidance, obviously, we see some future impact from the existing turmoil regarding the virus and the oil price and then the ruble devaluation, right? So that's kind of downside risk, and we believe if they're no sort of steeples from the new cabinets, the economy and the economy performed as it performed last year, then we'll probably be closer to the lower end. On the other side, if there are some stimulus and the global unrest settled down, then we actually get up the ladder. And this is very early in the year, actually, because in the first few months, and nearly 50% or 40% of our contracts actually activated old prices. So we actually haven't seen the actual impact from the monetization yet. And it's also quite holiday intense period. That's why it's quite hard for us sometimes to come up with the kind of narrow guidance in the first few months.

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Operator [7]

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Next question is coming from the line of Ivan Kim from Xtellus Capital.

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Ivan Kim, Xtellus Capital Partners, Inc., Research Division - Equities Analyst [8]

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I had two questions, please, on my side. Firstly, on the guidance, I just wanted to make sure, if you look at the trend so far, and I understand that a lot of repricing hasn't happened yet, and you haven't seen any particularly from the virus. But based on what you see in the first quarter, the growth should be 25%, is that right? That's the first question. And the second question is on tax expense. I might have missed that, but I was just wondering why the effective tax rate came down to 13% in the fourth quarter?

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [9]

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I don't think we can really comment on the year-to-date performance with such precision, right? Because first the quarter hasn't over yet. And as I said, we'll have to see how our actual monetization kicks in, and there might be actually defer -- the effects in different directions, also the economic solutions before. I wouldn't -- I would like to avoid kind of providing very exact numbers here. What we see year-to-date, I would say that we're kind of comfortable ignoring comparing all the other the external shocks. We are quite comfortable providing this guidance, seeing how the year been developing since the beginning. On tax, I think I'll hand over to Grigorii.

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Grigorii Moiseev, HeadHunter Group PLC - CFO [10]

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Yes. Ivan, this is Grigorii. Yes, you're right. There's actually one item that contributed to this significant decrease. It's that we have reversed short-term provision for income tax related to uncertain tax position because of the exploration of the tax period. So effectively, a year 2016 is no longer open for authorities to claim anything. And the provision that's related to that year was released in our financials. And that's contributed to the decrease in effective tax rate.

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Operator [11]

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Next question is coming from the line of Evgeny Annenkov from Bank of America.

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Evgeny Annenkov, BofA Merrill Lynch, Research Division - Analyst [12]

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I have two questions, please. First, on competition, given the launch of the large marketing campaign by Robota that are [you obviously enter]. Can you please comment what impact on your traffic and marketing costs it will have if any, and if it was within your 2020 initial marketing budget? And second is on your guidance. Of course, you mentioned you do not incorporate any impact from the virus for now. But in general, can you please discuss how sensitive your product usage the economic slowdown is? And if it's materially different for key accounts and SMEs? And probably, could you remind the impact of the growth in 2015? And how you acted through the changes probably via large price discounts?

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [13]

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Yes. Thanks, I'll take the first and Grigorii the second one. On Robert and competition overall. You're right, the recent competitors' marketing activities is quite high, and we see initially, all of them on TV. So we noticed certain uplift in investments in mobile downloads, specifically from Robota. We're working throughout. We respond in line with certain budget scenarios as we have it and developed in advance. That is reflected in our market guidance. And so in terms of the impact, to be honest, to our knowledge, from our point of observation, this investment by both our and others, have not led to any visible impact, not only on our KPIs, but also on their KPIs. Again, from our point of observation. Neither a new CV, new CV inflows, or the basic inflow, neither traffic both on mobile or desktop. So of course, you can see certain KPIs, but both are kind of bottoming up, right? But that's been from such a low base. It's like 10x gap with us in terms of mobile audience, for example, and still growing quite relatively at a low rate, right? And it's important to understand that probably, apart from a deep and specifically, Robota, I don't think they have high share of organic traffic. And that their dynamics is actually a function of continuing cash burn. So once you stop, it stops, right?

And we have seen this in the past, and we're kind of seeing it again. Not that we are dealing something extraordinary or something we haven't dealt in the past. So in terms of, say, cost, you mentioned -- again, you're right, the application from this elevated investment in digital, is that the they -- actually, we see increase in traffic acquisition costs, right? But I also -- only in paid channels because it's kind of a working thing there those digital auctions. You can logically conclude that the uptick in the CPC network traffic of course competitor actually disproportionately, right? Because that corresponds to higher share in their actual traffic. Because we're enjoying 83% of organic traffic. And even the growth in paid traffic doesn't affect us the same way as our competitors. So it actually also help us. That's a competition. On the second question, I'll hand it to (inaudible)

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Grigorii Moiseev, HeadHunter Group PLC - CFO [14]

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Yes. Well, there's certainly no reliable forecast right as to how Russian market will -- change in this year, right? So we can just only speculate, I think, on whether we shell compared with the 2015, for instance, crisis, right, but if we do, we think our model was very resilient in this crisis, specifically. Basically, we saw a 4% decrease in GDP in Russia and the 50% drop in oil prices in 2015. And our revenue in 2015 compared to '14 remained flat. That was a combination of several factors. There was a small drop in Moscow accounts, both in key accounts and small medium businesses, which was offset by regional clients actually growing in spite of the crisis effect. And our adjusted EBITDA, for instance, is relatively flat. I think, it's -- it even increased to circa 40% in 2015. So very healthy levels. We actually saw a little attrition in -- a little increase in attrition, I would say, in key accounts, which virtually all get kept their annual subscriptions. We saw some deceleration in usage, obviously. But we also saw positive impacts like key accounts who used to pay to several market players, we choose to use our service only just because of their budget restrictions in these times.

So overall, we think that we went very well for that crisis. And again, it was a very severe -- it went on the business -- on the backdrop of 50% oil price decline and a 4% drop in GDP, which we don't think is the current estimation for 2020. And to answer of your question directly, I think you mentioned about discounts. I frankly do not recall any massive discounts we would provide to key accounts in order to keep them on -- with us in 2015.

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Operator [15]

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Next question is coming from the line of Anna Kurbatova from Alfa-Bank.

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Anna Kurbatova, Joint Stock Company Alfa-Bank, Research Division - Senior Analyst [16]

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I would like to -- make a question about marketing expense. Should we expect your distribution of your marketing budget in 2020, more or less, comparable and equally spread between the quarters as it was in 2019? Or you now suggest some different distribution between periods. So maybe it will be more volatility between the quarters? And the related question, as long as you make campaigns on TV I would like to ask what do you absorb in terms of -- what situation do you observe in TV marketing -- in TV advertising? So can you, for example, tell us that in terms of the cost of the price of GRP, TV advertising is becoming or became, for example, are more cheaper than in the previous years, or it's stable?

So whether you enjoy this weakening demand for TV advertising, so you take advantage of maybe more beneficial pricing. And the second question, a small one, but interesting for me. You showed in the fourth quarter, some increase in -- of various services share in total revenue. So -- and the same I see in the fourth quarter last year. So I wonder about some specifics of this value-added service revenue, whether you recognize some or see some contracts that have been -- have signed at the end of the year. So this drives this type of revenue going up in the total mix at the end of the year.

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [17]

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Anna, on the first -- on the marketing allocation, I'm not sure if any of our competitors listening to this core, but they different like me to respond to this question. And unfortunately, half of them are not going to do this because it's extremely competition sensitive, right? So we obviously, we have some budget flexibility in marketing. We have some strategy when we could address the audience and which audience we want to address when. And it very much also depends on what our competitors do, right? And how the overall year unfolds. Before -- at this point of time, I don't think you can really deep dive in. And I can only say that we guide on the margins. You can kind of expect -- you should probably expecting something crazy from the marketing side. But I don't want to discuss the exact timing.

Then on the TV side, it's actually -- we're not marketing experts, so you don't have our chief marketing on the call, but as far as I remember, the cost for TV went slightly up. I think, again, it very much depends on the volumes and I don't want to discuss the business this opening on the call. And the last question, I would defer to Grigorii to discuss. Grigorii, do you want to Okay. I can address myself. And the value-added services -- see I really touched upon this during the presentation that we actually had -- it just time and quite big conference that where we paid much much -- sell tickets. And the year before, it was fully in -- the fourth quarter, right? While, here, it was the part of revenue was recognized in the fourth quarter and 50% and 50% in the fourth quarter. Therefore, you kind of saw the increase in percentage of total in the fourth quarter and then [inflows]. But eventually, the share of value add services that kind of more or less flat year-over-year. So they're growing more or less in line with the core revenue.

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Operator [18]

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(Operator Instructions)

There are no more questions at this time. Please continues.

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Dmitry Sergienkov, HeadHunter Group PLC - Chief Strategy Officer of Headhunter LLC [19]

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Yes. Thank you, everybody, for joining. Goodbye.

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Operator [20]

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That does conclude our conference for today. Thank you for participating. You may all disconnect.