Social networks & content services segment performance – Q2 2023 and H1 2023

RUB bn, unless otherwise stated	Q2 2022	Q2 2023	YoY	6M 2022	6M 2023	YoY
Revenue	17.6	23.5	33.8%	32.2	45.0	39.7%
Operating expenses	11.6	20.1	72.9%	21.9	35.9	64.3%
Adjusted EBITDA	5.9	3.4	(2.5)	10.4	9.1	(1.3)
EBITDA margin	33.8%	14.5%	(19.3 pp)	32.2%	20.2%	(12.0 pp)

Main projects: VKontakte, Odnoklassniki, Dzen, Portal, Mail.ru, VK Music, VK Clips, VK Video, VK Messenger

The revenue of the “Social networks & content services” segment in the first half of 2023 increased by 40% YoY, reaching RUB 45 bn. The growth in online advertising revenue was the primary driver of the revenue growth. VKontakte revenue growth, in particular, reached 27% YoY. The segment’s revenue incorporates the revenue of the Dzen and News projects since their consolidation in September 2022. The segment's active product development, aiming at boosting audience growth and involvement, resulted in an increase in staff and marketing expenditures, and the consequent decline in EBITDA.

 

VKontakte

The average VKontakte MAU in Russia in Q2 2023 grew by 12% YoY to 84.6 mn users, while the average DAU in Russia grew by 10% compared to Q2 2022 to reach 54.2 mn users. On average, VKontakte reached 85% of the Russian internet audience monthly in Q2 2023, and the daily reach was 53% of the daily Russian internet audience.

Revenues of creators using VK Donut increased by 116% YoY in Q2 2023 to more than RUB 197 mn.

Total news feed and recommendations feed views climbed by 10% YoY in Q2 2023, owing to the evolution of recommendations and increased audience engagement. Also, as a result of algorithm development, the number of confirmed recommended friend requests increased by 16% according to A/B testing data.

The number of mobile games in the VKontakte catalog rose by 82% YoY in June 2023, while revenue from in-game purchases on mobile devices increased by 46% YoY in Q2 2023.

Ad monetization within mini-apps on the VK Mini Apps platform increased by 63% YoY in Q2 2023. Growth in the first half of 2023 was 93% YoY.

The average MAU of VK Dating in Q2 2023 reached 2.4 mn users (+30% YoY), while revenue for the same period increased by 169%.

 

Odnoklassniki (OK)

The average MAU for OK in Russia was stable at 36.4 mn in Q2 2023. In Q2 2023, users sent 11.2 bn virtual gifts, 632 mn postcards, and 499 mn stickers.

OK continues to develop content and strengthen its collaboration with creators. The average MAU of Hobbies service reached around 22 mn users in Q2 and the first half of 2023. In Q2 2023, the reach of content creator and media communities increased by 25% YoY. In the first half of 2023, the growth reached 39% YoY. At the end of Q2 2023, OK launched an initiative for bloggers that allows them to release their own shows on the platform.

OK continues to expand its own lineup of shows about popular Russian hobbies. In Q2 2023, OK launched a series of projects that will be released over the summer season. More than 50 episodes for seven shows about traveling, pets, cooking, and outdoor recreation were filmed in total.

In Q2 2023, OK ended airing its first hobby show “OKnutye Lyudi” (“OK People”) as part of the new positioning of the social network, which received over 90 mn views on the social network. Its success on the platform led to a collaboration with CTC TV channel, one of the country's leading television networks. OK signed an agreement with CTC to air the show, allowing the social network to expand its project’s reach and attract new audience. CTC also acquired the broadcast rights to the original OK series “5+”.

 

Dzen

Dzen platform daily audience in Q2 2023 amounted to 32 mn users. The platform launched eight originals in the spring of 2023 to coincide with the debut of a new advertising campaign for Dzen. Famous bloggers became the creators and hosts of these shows on their channels. The exclusive shows received over 40 mn views in Q2 2023.

Dzen launched additional product opportunities for its mobile app users in Q2 2023, including background listening mode – now users can listen to any horizontal video on the platform even when the smartphone screen is switched off. Furthermore, the Dzen video player now supports AirPlay and Chromecast, allowing users to effortlessly connect mobile devices to their TVs and enjoy films from Dzen authors on a larger screen.

 

Mail.ru email

Mail.ru average MAU reached 48.9 mn people in Q2 2023, while average DAU amounted to 16.4 mn. Mail.ru revenue in Q2 2023 rose by 65% YoY to RUB 932 mn thanks to updates in the advertising formats, adding new ad sources, and optimizing settings to improve their effectiveness for advertisers.

Mail.ru email service launched a beta version of the new Notes service on May 2023. Users will be able to use it to edit text, make lists, and focus on their tasks. Smart algorithms have made it possible to repeatedly remind users via push notifications about essential emails if they have not read them. Furthermore, Mail.ru smart calendar underwent a number of updates, including a new simple widget for users, automatic new events from emails, crucial reminders, subscription payment alerts, and the option to attach files to events. The Mail.ru home page and Calendar added the dark theme option in Q2 2023.

 

Mail.ru Cloud

Mail.ru Cloud average MAU in Q2 2023 amounted to 22 mn people, and the average DAU – to 2.4 mn. In total, 8 bn files were uploaded to the Cloud in Q2 2023.

In Q2 2023, Mail.ru services launched a single Mail Space subscription that integrates Cloud and Mail. Also, in that period, smart algorithms in charge of selecting stories from user images in the Cloud received a technical update. Cloud application now has new scenarios used to form thematic photo galleries.

 

VK Video

VK Video average daily views (not including VK Clips) reached 1.91 bn in Q2 2023, up by +14% YoY, thanks in part to improved recommendation algorithms – views for the main video page increased by 38% YoY in Q2 2023.

In Q2 2023, the platform continued to add professional content, including exclusive one. In May, VK Video debuted mini-series from the French company Studio+, as well as premieres of popular K-dramas.

In June 2023, the platform received access to exclusive releases from Medium Quality, the largest producer of entertainment shows. In Q2 2023, new season of the show “What happened next?” was released on VK Video, with its first episode scoring 88 mn views and around 870 thousand reactions (likes and comments) as of the end of the quarter.

At the end of May 2023, VK Video introduced a range of exclusive VK Video Originals content. The following shows debuted on the platform: By the Way, Session, Office Games, as well as an exclusive relaunch of popular projects LAB with Anton Belyaev and Party at Margulis.

In Q2 2023, VK Video also released a beta version of the Android OS app. VK Video's mobile web edition now has an improved recommendation page, enhanced search, and an upgraded player.

 

VK Clips

Daily views of VK Clips in Q2 2023 increased by 36% YoY to 935 mn. Time spent for VK Clips in Q2 2023 increased by 86% YoY in part due to the new recommendation system. The number of published clips increased by 65% YoY, while the number of content creators increased by 58%.

VK Clips launched a new video editor in Q2 2023, adding flexible color correction controls, the ability to add stills to movies, sound effects, editorial playlists, and the ability to extract audio from videos. In addition, VK Clips introduced an “experience constructor”: a new suggestions concept based on machine learning algorithms that assists in the selection of short videos based on the viewer's mood. Furthermore, VK Clips launched a neural network with an inappropriate content filter to protect users from comment spam and harmful links. In Q2 2023, a section featuring VK Clips became available to all OK app users.

 

VK Music

Average global MAU for VK Music stood at 44 mn in Q2 2023, while in Russia average MAU amounted to 40 mn users. Subscriber base growth in June 2023 was 68% YoY.

In Q2 2023, VK Music introduced radio stations streaming on the VKontakte social network on mobile devices, as well as a mobile VK Music Studio. The company also continued to develop the service in CIS countries, with users in Armenia, Kazakhstan, Uzbekistan, Azerbaijan, and Belarus now having access to local music charts on VK Music. In April 2023, a campaign was launched in Russia and CIS countries to motivate new users to subscribe to the service by offering three months of free music access.

 

VK Messenger

The average MAU of VK Messenger in Q2 2023 grew by 2% YoY to 67 mn users. The number of installations of VK Messenger standalone app reached around 12.5 mn by the end of June.

VK Messenger introduced dynamic reactions in chats and video message transcription into text in Q2 2023. Group conversations now have an avatar generator and the ability to check who has read sent messages. In addition, users now have access to the web version of the service (web.vk.me), and calls to an infinite number of participants are now available via the VK Messenger desktop app.

 

VK Calls

VK Calls, a free video conferencing platform, has added a session room option: during a conference, participants can be divided into groups to work in a smaller circle. The service allows to create up to 50 rooms in a single call, with no limit on the number of participants in each room. The web version of VK Calls now supports animated vmoji: users can login to meetings with personal avatars without turning on the camera's video. Several shows premiered on the platform using the co-watching function. VK Calls, for example, aired the first episode of the series “Mystery of the Missing Village” in collaboration with streaming service Ivi. The first episode garnered more than 1.6 mn views in one day.

 

EDTECH SEGMENT

EdTech segment performance – Q2 2023 and H1 2023

RUB bn, unless otherwise stated	Q2 2022	Q2 2023	YoY	6M 2022	6M 2023	YoY
Revenue	2.6	3.6	36.7%	5.5	7.0	28.3%
Operating expenses	2.5	3.5	38.3%	5.6	6.9	23.9%
Adjusted EBITDA	0.1	0.1	-	(0.1)	0.1	0.2
EBITDA margin	3.1%	2.0%	(1.1 pp)	(2.5%)	1.0%	3.5 pp

Main projects: Skillbox, GeekBrains, SkillFactory, Mentorama, Lerna, Sferum, Uchi.ru

The “EdTech“ segment's revenue in the first six months of 2023 increased by 28% YoY reaching RUB 7 bn due to high demand for courses and as a result of the consolidation of the online platform for schoolchildren Uchi.ru. In the first half of 2023, the segment broke even in terms of EBITDA.

 

Skillbox Holding Limited

At the end of Q2 2023, the number of students registered on the educational platforms of Skillbox Holding Limited increased by 19% YoY to 13.5 mn. The number of paying students rose by 41% YoY to 592,000. In Q2 2023, the number of new paying students joining the platforms was 37,000, and in the first six months of 2023 the platforms saw 73,000 new paying students. The average check in Q2 2023 grew by 14% YoY and reached RUB 63,800. The average check in the first half of 2023 grew by 17% YoY and reached RUB 67,200.

The Skillbox educational platform opened its first offline school in Novosibirsk in Q2 2023.

As part of the product strategy update Skillfactory changed its approach to learning and launched Factory, a platform where businesses may delegate work to students. Skillfactory announced two new online master's programs in collaboration with universities in May – “Information Security” with Moscow Engineering Physics Institute (MEPI) and “Natural Language Processing (NLP) in Linguistics and IT” with Tomsk State University.

 

Uchi.ru

The average MAU of Uchi.ru in Q2 2023 was 2.8 mn people. In July 2022 – June 2023, 13.3 mn students, 2.1 mn parents, and 718,000 teachers were active on the platform’s services. In that time, the number of paying students amounted to 953,000 and increased by 12% YoY.

In Q2 2023, the number of new active students reached 438,000, while 41,000 new paying students joined the platform. In the first half of 2023, the number of new active students reached 1.6 mn, and 250,000 new paying students joined the platform.

 

Sferum

At the end of Q2 2023, the overall number of users of the Sferum educational profile on VK Messenger rose 2.8-fold, reaching 9.9 mn users, including around 8.3 mn students and over 1.6 mn teachers, while 3 mn additional students joined the service in the first half of 2023.

The service continues to evolve, and its functionality is updated on a regular basis to reflect user preferences and feedback. In Q2 2023, the Sferum educational profile in VK Messenger received a separate desktop app, the option to transfer contacts from chats to WhatsApp on Android smartphones was added, and other upgrades were made. Sferum is also working actively to integrate electronic teacher and student journals in the Russian regions.

 

VK TECH SEGMENT

VK Tech segment performance – Q2 2023 and H1 2023

RUB bn, unless otherwise stated	Q2 2022	Q2 2023	YoY	6M 2022	6M 2023	YoY
Revenue	1.1	1.9	68.9%	1.8	3.0	63.6%
Operating expenses	1.2	1.5	23.9%	2.2	2.8	27.7%
Adjusted EBITDA	(0.1)	0.3	0.4	(0.4)	0.2	0.6
EBITDA margin	(12.3%)	17.6%	29.9 pp	(19.9%)	6.4%	26.3 pp

Main projects: VK Cloud, VK WorkSpace communication services

VK Tech's revenue increased by 64% YoY in the first half of 2023, reaching RUB 3 bn. The key growth drivers were VK WorkSpace communications solutions, which revenue grew by 218% YoY in Q2 and by 153% YoY in the first half of the year, and services of the VK Cloud platform, which revenue grew by 54% YoY in Q2 2023 and by 72% YoY in the first half of the year. Revenue from HR services sales rose almost fourfold YoY in Q2 2023 and 1.7-fold YoY in the first half of 2023.

VK Tech generated a positive EBITDA in both Q2 2023 and the first half of 2023, compared to a loss the previous year. Furthermore, segment profitability increased by 30 p.p. YoY in Q2 2023 and by 26 p.p. in the first half of 2023.

The VK Tech team released Tarantool 2.11 in Q2 2023, which improved data processing performance and stability while also increasing product information security.

In May 2023, the localized VK Cloud platform was launched in Kazakhstan. The solution is hosted at the QazCloud data center in Kazakhstan and is tailored to local businesses.

 

NEW BUSINESS LINES SEGMENT 

New business lines segment performance – Q2 2023 and H1 2023

RUB bn, unless otherwise stated	Q2 2022	Q2 2023	YoY	6M 2022	6M 2023	YoY
Revenue	1.2	1.1	(8.0%)	2.6	2.5	(3.4%)
Operating expenses	2.5	2.5	-	4.6	5.8	25.9%
Adjusted EBITDA	(1.3)	(1.4)	(0.1)	(2.1)	(3.3)	(1.2)

Main projects: VK Play, RuStore, VK Pay, Youla, Marusia, VK Capsule, Movika

The “New Business Lines” segment’s revenue totaled RUB 2.5 bn in the first half of 2023, while adjusted EBITDA loss reached RUB 3.3 bn in the same period.

 

VK Play

By the end of Q2 2023, more than 22 mn accounts were registered on VK Play. In Q2 2023, the project's average MAU was more than 11.5 mn users. The major reasons for the increase in registrations and audience growth are marketing efforts such as prize giveaways and free distribution of game titles, as well as the launch of nine tournaments with a cash prize fund of RUB 3 mn. Major game releases such as Atomic Heart and Battle Teams 2 were big revenue drivers for VK Play in the first half of 2023.

 

RuStore

RuStore average MAU reached more than 10 mn users in Q2 2023. The store’s library continues to grow – at the end of June 2023, the store had over 8,000 apps, including 500 foreign apps.

More than 6,000 developers are registered on the platform, with 59% of them being private individuals. Monetization tools became available to self-employed developers in Q2 2023. This allows any publisher to profit from the publication of commercial applications, in-app sales, and subscriptions. The store continues to expand its audience enter new platforms. A version of RuStore for TV and media players, as well as adapted UI for tablets, were announced in June 2023.

 

Voice technologies (Marusia and VK Capsule)

VK debuted the VK Capsule Mini smart speaker in pink in April 2023. Daily audience of the Marusia voice assistant increased by 30% in Q2 2023. In Q2 2023, twice as many smart devices were sold as in the same period in 2022. The number of smart speakers sold to end users in the first half of 2023 rose 2.2-fold YoY.

 

VK KEY CORPORATE EVENTS IN Q2 2023

• On April 14, 2023, VK fulfilled obligations to holders of VK's Senior Unsecured Convertible Bonds ISIN XS2239639433, whose rights are recorded by Russian securities depositories, on paying coupon payments due October 1, 2022 and April 1, 2023.
• On May 5, 2023, VK completed the private placement of uncertificated interest-bearing non-convertible bonds subject to centralized title registration, series 01, with a total par value of RUB 60 bn, ISIN RU000A1064H1.
• On June 23, 2023, VK announced that a written resolution approving changes to the Memorandum of Association and the Articles of Association in connection with a change of the registration agent and registered address for the Company has been passed by the shareholders of the Company.
• On June 28, 2023, VK announced it had acquired 100% of the shares of Zinger CJSC, which owns long-term lease rights to the Singer House in St. Petersburg, which has been the headquarters for VKontakte social network since 2010.   

For additional information, please contact:

VK IR team
Email: ir@vk.team    

VK PR team
Email: pr@vk.team