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 Filed Pursuant 424(b)(5)
 Registration No. 333-239560
Prospectus Supplement to Prospectus dated June 30, 2020
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4,500,000 American Depositary Shares
HeadHunter Group PLC
American Depositary Shares Representing
4,500,000 Ordinary Shares
$37.00 per ADS
Our existing shareholders, Highworld Investments Limited, a subsidiary of Elbrus Capital Fund II, L.P. and Elbrus Capital Fund II B, L.P. (together, “Elbrus Capital”), and ELQ Investors VIII Limited, a subsidiary of The Goldman Sachs Group, Inc. (together with Highworld Investments Limited, the “Selling Shareholders”) are selling 4,500,000 of our American Depositary Shares (“ADSs”) in this offering. Each ADS will represent one ordinary share. We will not receive any proceeds from the sale of ADSs by the Selling Shareholders. The public offering price is $37.00 per ADS.
The underwriters may also exercise their option to purchase up to 675,000 additional ADSs from the Selling Shareholders at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus supplement.
Our ADSs are listed on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “HHR.” On June 2, 2021, the last reported share sale price of our ADSs on Nasdaq was $38.43.
We are both an “emerging growth company” and a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and are eligible for reduced public company disclosure requirements. See “Prospectus Supplement Summary — Implications of Being an ‘Emerging Growth Company’ and a ‘Foreign Private Issuer.’
Investing in our ADSs involves risks. See “Risk Factors” beginning on page S-27 of this prospectus supplement and the risk factors contained or incorporated by reference in this prospectus supplement and the accompanying prospectus.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
Per ADS
Total
Public offering price
$ 37.00 $ 166,500,000.00
Underwriting discount(1)
$ 1.2950 $ 5,827,500.00
Proceeds, before expenses to the Selling Shareholders
$ 35.7050 $ 160,672,500.00
(1)
We refer you to “Underwriting (Conflicts of Interest)” for additional information regarding underwriting compensation.
The underwriters expect to deliver the ADSs to purchasers on or about June 7, 2021 through the book-entry facilities of The Depository Trust Company.
Goldman Sachs & Co. LLC
Morgan Stanley
Prospectus supplement dated June 2, 2021

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ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus form part of a registration statement on Form F-3 that we filed with the U.S. Securities and Exchange Commission (“SEC”) using a shelf registration process. This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of ADSs and certain other matters relating to us, our business and prospects. The second part, the accompanying prospectus, contains a description of our ordinary shares and our ADSs and certain other information.
The information contained in this prospectus supplement may add, update or change information contained in the accompanying prospectus or in documents that we file or have filed with the SEC. To the extent the information contained in this prospectus supplement differs or varies from the information contained in the accompanying prospectus or documents incorporated by reference filed before the date of this prospectus supplement, the information in this prospectus supplement will supersede such information.
For investors outside the United States: Neither we, the Selling Shareholders nor the underwriters have taken any action that would permit this offering or possession or distribution of this prospectus supplement or the accompanying prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ADSs and the distribution of this prospectus supplement or the accompanying prospectus outside the United States.
We are responsible for the information contained or incorporated by reference in this prospectus supplement. Neither we nor the Selling Shareholders have authorized anyone to provide you with different information, and neither we nor the Selling Shareholders take responsibility for any other information others may give you. We, the Selling Shareholders, and the underwriters are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus supplement and the accompanying prospectus or the documents incorporated herein or therein by reference is accurate as of any date other than its date regardless of the time of delivery of this prospectus supplement or of any sale of the ADSs.
Except where the context otherwise requires or where otherwise indicated, the terms “Zemenik Trading Limited,” “HeadHunter,” the “Company,” “Group,” “we,” “us,” “our,” “our company” and “our business” refer to HeadHunter Group PLC, together with its consolidated subsidiaries as a consolidated entity.
We are incorporated in Cyprus, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
All references in this prospectus to “rubles,” “RUB” or “” refer to Russian rubles, the terms “dollar,” “USD” or “$” refer to U.S. dollars and the terms “€” or “euro” refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.
 
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
We report under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”). None of our financial statements were prepared in accordance with generally accepted accounting principles in the United States. We present our consolidated financial statements in rubles.
On February 24, 2016, Zemenik Trading Limited, which we converted into HeadHunter Group PLC prior to our initial public offering on May 8, 2019 (our “IPO”), acquired all of the outstanding equity interests of Headhunter FSU Limited (the “Acquisition”) from Mail.Ru Group Limited (LSE: MAIL) (“Mail.Ru”).
In March 2017, we divested the business through which we historically conducted operations in Estonia, Latvia and Lithuania, CV Keskus. In April 2018, we divested the business through which we historically conducted operations in Ukraine, HeadHunter LLC (Ukraine). Unless otherwise specified, our operational metrics presented in this prospectus supplement, including the number of curriculum vitae (“CVs”) in our CV database and the number of job postings on our platform, exclude information from CV Keskus and HeadHunter LLC (Ukraine).
On December 25, 2020, we completed an acquisition of 100% of the issued charter capital of LLC “Zarplata.ru” ​(“Zarplata.ru”) from Hearst Shkulev Digital Regional Network B.V. Unless otherwise specified, our operational metrics presented in this prospectus supplement, including the number of CVs in our CV database, the number of job postings on our platform, personnel headcount and internet traffic, exclude information for Zarplata.ru.
On May 26, 2021, we exercised an option to acquire 40.01% of the issued charter capital of LLC “Skilaz” ​(“Skillaz”) from Sergey Soldatenkov, Anna Serebryanikova, Petr Komarov and Lubov Strelkina. Unless otherwise specified, our operational metrics presented in this prospectus supplement, including the number of CVs in our CV database, the number of job postings on our platform, personnel headcount and internet traffic, exclude information for Skillaz.
Percentages and certain other figures in this prospectus supplement may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.
Use of Non-IFRS Financial Measures
Certain parts of this prospectus supplement contain non-IFRS financial measures, including, among others, EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin, Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization). We define:

EBITDA as net income/(loss) plus: (i) income tax expense; (ii) net interest (income)/expense; and (iii) depreciation and amortization.

Adjusted EBITDA as net income/(loss) plus: (i) income tax expense; (ii) net interest costs; (iii) depreciation and amortization; (iv) transaction costs related to business combinations; (v) (gain)/loss on the disposal of subsidiary; (vi) expenses related to equity-settled awards, including related social taxes; (vii) IPO-related costs; (viii) SPO-related costs; (ix) insurance expenses related to the IPO; (x) (income) from the depositary; (xi) one-off litigation settlement and related legal costs; (xii) share of (profit)/loss of equity-accounted investees; (xiii) net (gain)/loss on financial assets measured at fair value through profit and loss; (xiv) net foreign exchange loss/(gain); (xv) (gain) on remeasurement of previously held interest in equity-accounted investees; (xvi) transaction costs related to the disposal of a subsidiary; and (xvii) other financing and transactional costs.

Adjusted Net Income as net income/(loss) plus: (i) transaction costs related to business combinations; (ii) (gain)/loss on the disposal of subsidiary; (iii) expenses related to equity-settled awards, including related social taxes; (iv) IPO-related costs; (v) SPO-related costs; (vi) insurance expenses related to the IPO; (vii) (income) from the depositary; (viii) one-off litigation settlement and related legal costs; (ix) share of (profit)/loss of equity-accounted investees; (x) net (gain)/loss on financial assets measured at fair value through profit and loss; (xi) net foreign exchange loss/(gain); (xii) (gain) on remeasurement of previously held interest in equity-accounted investees; (xiii) transaction costs related to the disposal of a subsidiary; (xiv) amortization of intangible assets recognized in business combinations;
 
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(xv) tax effect on adjustments; (xvi) other financing and transactional costs and (xvii) (gain)/loss related to remeasurement and expiration of tax indemnification asset.

EBITDA Margin as EBITDA divided by revenue.

Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

Adjusted Net Income Margin as Adjusted Net Income divided by revenue.

Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as operating costs and expenses (exclusive of depreciation and amortization) plus: (i) transaction costs related to business combinations; (ii) expenses related to equity-settled awards, including related social taxes; (iii) IPO-related costs; (iv) SPO-related costs; (v) insurance expenses related to the IPO; and (vi) other financing and transactional costs.
Beginning from the first quarter of 2021, we modified the presentation of Adjusted EBITDA and Adjusted Net Income, our non-IFRS measures, to exclude the impact of foreign exchange gains and losses as the nature of such gains and losses is not operational. See “ Prospectus Supplement Summary—Summary Consolidated Financial and Operating Data—Modification of the presentation of Adjusted EBITDA and Adjusted Net Income.”
EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are used by our management to monitor the underlying performance of the business and its operations. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as reported by us to EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as reported by other companies. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.
EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin or Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,

EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) do not reflect changes in, or cash requirements for, our working capital needs, and

the fact that other companies in our industry may calculate EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) differently than we do, which limits their usefulness as comparative measures.
 
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Accordingly, prospective investors should not place undue reliance on EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) or the other non-IFRS financial measures contained in this prospectus supplement.
 
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MARKET AND INDUSTRY DATA
We obtained the industry, market and competitive position data used or incorporated by reference in this prospectus supplement from our own internal estimates and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties.
We believe that it is important that we maintain as broad a view on industry developments as possible. We have retained consultants to prepare general industry and market studies for us, including individual analyses of the online recruitment markets in the markets in which we operate, including the report called “Online Recruitment Landscape in Russia” by J’Son & Partners, and such information is included in this prospectus in reliance on J’Son & Partners’ authority as an expert in such matters. See “Experts.” In addition, we have obtained certain industry and market data from the report called “Brand Awareness Study” by Socis MR Rus.
To assist us in formulating our business plan and in anticipation of our IPO and this offering, we retained J’Son & Partners in 2017, 2018, 2020 and 2021 to provide an independent view of the online recruitment landscape in Russia, including an overview of recent macroeconomic and labor market dynamics, the evolution of the recruitment market over time and analysis of its underlying trends and potential growth factors, an assessment of the current competitive landscape and other relevant topics. In connection with the preparation of the J’Son & Partners’ report, we furnished to J’Son & Partners certain historical information about our company and some data available on the competitive environment. J’Son & Partners, in conjunction with third-party experts with extensive experience in the Russian recruitment business, conducted research in preparation of the report, including a study of market reports prepared by other parties and a study of a broad range of secondary sources including other market reports, association and trade press publications, other databases and other sources. We use the data contained in J’Son & Partners’ report to assist us in describing the nature of our industry and our position in it.
Due to the evolving nature of our industry and competitors, we believe that it is difficult for any market participant, including us, to provide precise data on the market or our industry. However, we believe that the market and industry data we present in this prospectus supplement provide accurate estimates of the market and our place in it. Industry publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as other forward-looking statements in this prospectus supplement.
 
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TRADEMARKS, SERVICE MARKS AND TRADENAMES
We have proprietary rights to trademarks used or incorporated by reference in this prospectus supplement that are important to our business, many of which are registered under applicable intellectual property laws.
Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus supplement contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus supplement are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
 
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PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information appearing elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus supplement, the accompanying prospectus and the financial data and related notes and other information incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding whether to invest in our ADSs.
Overview
We are the leading online recruitment platform in Russia and the Commonwealth of Independent States (“CIS”) and focus on connecting job seekers with employers. We offer potential employers and recruiters paid access to our extensive CV database and job postings platform. We also provide job seekers and employers with a value added services (“VAS”) portfolio centered around their recruitment needs.
Our user base consists primarily of job seekers who use our products and services to discover new career opportunities. The majority of the services we provide to job seekers are free. Our customer base consists primarily of businesses using our CV database and job posting service to fill vacancies inside their organizations.
The quality and quantity of CVs in our database attract an increasing number of customers, which leads to more job seekers turning to us as their primary recruitment and related services provider, creating a powerful network effect that has allowed us to continuously solidify our market leadership and increase the gap between us and our competitors.
Recent Developments
The onset of the COVID-19 pandemic began to impact our business starting in March 2020. We anticipated and experienced a decrease in revenue of 19.3% in the three months ended June 30, 2020 and, in response, we began implementing prudent operational control measures, including putting all non-essential hiring on hold, substantially reducing all non-essential and discretionary operating costs, optimizing marketing budgets and limiting non-essential capital expenditures, including office renovations.
From the second half of April 2020, we saw a steady recovery on our platform as the Russian government began to gradually lift the restrictive measures imposed to reduce the spread of COVID-19. By the end of June 2020, all our key operating metrics had reached pre-pandemic levels and continued increasing through the year.
Positive dynamics in operating metrics translated into solid topline performance. Our revenue increased by 7.7% from the three months ended September 30, 2019 to the three months ended September 30, 2020 and by 18.5% from the three months ended December 31, 2019 to the three months ended December 31, 2020, and, as a result, our revenue for the year ended December 31, 2020 grew by 6.3% compared to the prior year, demonstrating the resilience of our business.
Throughout the year ended December 31, 2020, we demonstrated strict financial discipline and the ability to manage our cost base in line with our business performance. Our net income for the years ended December 31, 2019 and 2020 was 1,581 million and 1,886 million, respectively, and we retained our Adjusted EBITDA margin above 49% in 2020.
Sound performance of our business also allowed us to pay the previously deferred interim dividend in the amount of 75% of our Adjusted Net Income in 2019 in the three months ended September 30, 2020.
Capitalizing on the continued economic recovery and high demand for labor, we sustained strong momentum in the three months ended March 31, 2021 as our revenue increased by 42.7% compared to the same period in 2020, and our number of job postings reached an all-time high of over 1 million.
 
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Despite overall macroeconomic headwinds, we made significant progress along our long-term strategy, specifically:
1)
Continuing to further penetrate the recruitment market and despite the headwinds caused by the COVID-19 outbreak, we increased the number of paying customers by nearly 28,000 customers for the year ended December 31, 2020, which represented 8.7% growth compared to the year ended December 31, 2019. On top of organic growth, we acquired Zarplata.ru, a strong online platform focused on highly attractive market segments, regional blue collars and Small and Medium Accounts. Together with the accelerated structural transition from offline to online due to the COVID-19 pandemic, this supported significant growth in the number of paying customers in the first three months of 2021, which amounted to 43.0% relative to the same period last year.
2)
In line with our monetization strategy to link the cost of our services to the value that we deliver to our customers, we announced the introduction of consumption limits for our subscription products starting from August 2020. Even though this transition has had a limited impact on our revenue growth, the other pricing differentiation initiatives that were previously launched contributed to average revenue per customer (“ARPC”) growth across all client categories in the three months ended December 31, 2020 and March 31, 2021, with ARPC in Moscow and St. Petersburg Key Accounts growing by 18.2% and 18.9% in the three months ended December 31, 2020 and March 31, 2021 compared to the same periods in prior years, respectively.
3)
We have also continued to expand the scope and depth of our services along the entire recruiting value chain through acquisitions and internal development. On May 26, 2021, we exercised the option to purchase an additional 40.01% stake in Skillaz. By exercising the purchase option contract that we held, we acquired a controlling stake in a rapidly developing HR technology company, Skillaz, which automates routine recruiting processes by implementing complex built-to-suit integration projects for high-end-market customers. Our original investment in Skillaz helped transform it from a promising startup into one of the leading SaaS platforms in Russia, significantly expanding its revenue and customer base. During 2020, Skillaz doubled its revenue and client
 
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base, despite the challenging macroeconomic environment, indicating further accelerating growth on the back of market recovery.
As we believe that employer review solutions benefit both job seekers and employers via driving transparency in recruiting process, on April 30, 2021, we acquired a 25% stake in LLC Dream Job (“Dream Job”), an early-stage startup developing an employer review platform, which has a business model that is well tested in developed markets.
Our Strengths
We are the leading online recruitment platform in Russia and the CIS focused on providing comprehensive talent acquisition services. We operate in a high growth market, as HR services globally are undergoing continuous digitalization and the Russian market remains significantly underpenetrated in terms of the share of online recruitment spend relative to GDP. We believe the following competitive strengths have contributed to our success.
Number one online recruitment platform in Russia with a leading position in other CIS countries
We are the leading online recruitment platform in Russia, focusing on facilitating the recruitment process and connecting millions of job seekers with hundreds of thousands of employers annually. We are also the leading player in Kazakhstan, Uzbekistan and Belarus and are among the top five players in Azerbaijan and Kyrgyzstan, which makes us a leader in online recruitment in the CIS region as of April 1, 2021.
We have more visible CVs in our database and more job postings on our platform than any of our direct competitors. We are also among the most visited online recruitment websites in our markets, with 22.5 million unique monthly visitors (“UMVs”) coming to our website on average during the year ended December 31, 2020, which is four times more than our closest peer, according to LiveInternet. We enjoy strong user traffic dynamics and are the fourth most visited job and employment website based on this metric globally, according to the latest data available from SimilarWeb as of April 1, 2021.
Powerful network effect reinforcing our market leading position
Our extensive, high quality CV database, large database of job postings relevant to job seekers and significant user traffic create a strong network effect as employers and job seekers tend to use job classifieds resources that offer the widest range of options and the highest efficiency. 56% of our total visible CVs (excluding CVs acquired from Job.ru) were used to apply to a job posting at least once over the last two years, and 70% of our total visible CVs (excluding CVs acquired from Job.ru) were used to apply at least once for a job posting or were edited in the last two years as of December 31, 2020. This high level of user traffic creates a cycle that has reinforced our market leadership position and increased the gap between us and our competitors, as demonstrated by the following key performance metrics:

Job postings:   The number of job postings on our website grew at a compound annual growth rate (“CAGR”) of 15% from 2017 to 2020.

CVs:   The number of visible CVs in our database increased at a CAGR of 24% from 2017 to 2020.

Paying customers:   Our number of paying customers grew at a CAGR of 23% from 2017 to 2020.

User traffic:   The number of UMVs to our website increased at a CAGR of 8% from 2017 to 2020, while the gap with our nearest competitor based on this metric increased by 16 million UMVs, according to LiveInternet. This gap has increased by approximately 14 times since 2010, as demonstrated by the chart below.
 
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We believe that our strong leadership position is highly defensible, and that it is becoming increasingly difficult for our competitors to overcome this competitive moat, as demonstrated by our consistent revenue growth linked to the growth of our key operating metrics presented above.
Most recognized brand and nationwide technology-empowered sales function creating strong customer relationships
We believe that our brand and our sales function are distinct competitive advantages as we expand our product offering and enter new market segments.
As one of the first online recruitment platforms in Russia (operating since 2000), we have established “HeadHunter” as a strong brand with top-of-mind brand awareness of 54.6% (combined with the top-of-mind brand awareness of Zarplata.ru) according to Socis MR Rus as of September 30, 2020, which differentiates us from our competitors. Our nearest competitor had top-of-mind brand awareness of 19%, and other market participants had top-of-mind brand awareness in the single digits, according to Socis MR Rus as of September 30, 2020. We are not only the leader in the white collar segment with a top-of-mind brand awareness of 60.6% (combined with the top-of-mind brand awareness of Zarplata.ru in the white collar segment), which traditionally is our strongest market, but we are also the leader in the blue collar segment with a top-of-mind brand awareness of 45.3% (combined with the top-of-mind brand awareness of Zarplata.ru in the blue collar segment), according to Socis MR Rus as of September 30, 2020. We were ranked first among career-focused websites in Russia by SimilarWeb based on user traffic as of April 1, 2021. According to our internal data, as of December 2020, 91% of our traffic was free, which demonstrates strong user affinity for our brand and the high organic traffic of our platform. Direct traffic, which is comprised of organic, type-in and email distributions traffic, accounted for 51% of our traffic. We intend to further increase the popularity of our brand and user loyalty through the efficient use of TV and online advertising in our markets and by focusing on the high quality of our user experience and customer service.
Our sales function consists of a sales force with an established and extensive presence across Russia and the CIS, a well-developed customer support function and a fully integrated customer relationship management (“CRM”) platform, incorporating predictive analytics tools.
As of December 31, 2020, our sales force consisted of 226 sales professionals, which we believe makes it one of the largest and most experienced sales forces in our markets and has helped us to become the online recruiting platform of choice for Russian employers. We have also created strong relationships with the corporate HR departments of some of our key accounts, or customers that are organizations that, according to the Spark-Interfax database, have an annual revenue of at least 2 billion or a headcount of at least 250 employees and are not recruiting agencies (“Key Accounts”). These strong relationships date back more
 
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than 10 years, positioning us to successfully cross sell and upsell our existing and developing services. Our sales team is efficiently organized and strategically placed in Moscow, St. Petersburg and other regional offices, and is further specialized by industry and customer type. As of December 31, 2020, we had 104 professionals, for example, who are dedicated to selling services to Small and Medium Accounts and 78 professionals covering Key Accounts, each with specialized expertise and training. The Key Accounts group consists of 20 people based in Moscow, eight people based in St. Petersburg and 37 people in nine other regional offices, which maintain personalized interactions with these customers. This structure allows us to provide truly local, individualized, high quality service to our customers. Our revenue per sales account manager for Key Accounts grew from 36.3 million for the year ended December 31, 2019 to 37.3 million for the year ended December 31, 2020.
A new customer first interacts with our registration group, which consists of 38 people based in Yaroslavl, who are responsible for client verification and fraud prevention. The registration group inputs key data and ensures an accurate and smooth onboarding process. Then our telesales team, which consists of 64 people based in Yaroslavl, takes over, and the customer is assigned to a sales manager depending on its region of operations.
Our CRM system serves as a powerful tool for our sales function. It is linked to our main platform and, combined with predictive analytics tools, provides real time analysis of customer activity on our website and suggests relevant actions to our sales force.
Robust business model generating diversified and growing revenue streams from a loyal customer base
Our business model is built around four key pillars of monetization: subscription-based access to our CV database, job posting fees, bundled subscriptions and VAS. Our diversified revenue stream, including highly predictable, recurring subscription-based fees (for CV database access and bundled subscriptions) that accounted for 50.5% of our total revenue in the year ended December 31, 2020, allowed us to increase our revenue at a CAGR of 21.0% from 2017 to 2020.
We believe that our business model provides a substantial degree of protection from the volatility of economic cycles. Our customers are spread across many sectors of the Russian economy, diversifying our exposure and protecting our revenue from downturns and unfavorable developments in any single sector.
Our business model and customer-oriented approach allow us to maintain high rates of customer retention. Given the relatively low cost of our services, underpinned by the relatively low elasticity of demand for our services, we believe there is still significant room for increased monetization.
Superior profitability and cash flow generation profile
Capitalizing on our leading market position and the strong network effect, our scalable, asset-light, capital-efficient operating model allows us to expand our service offering and geographical footprint in our existing markets and increase our revenue from a growing customer base without significant investments, while maintaining negative working capital as we receive payments from customers for a number of our services in advance. Our net working capital as of December 31, 2018, 2019 and 2020 and March 31, 2021 was (2,623) million, (2,994) million and (3,849) million and (5,403) million, respectively. This is reflected in our attractive profitability and cash conversion profile, both in the Russian and in the global context. We generated 2,611 million, 3,215 million and 1,913 million cash from operating activities in the years ended December 31, 2019 and 2020 and the three months ended March 31, 2021, respectively. Our net income margin in the years ended December 31, 2018, 2019 and 2020 and the three months ended March 31, 2021 was 16.9%, 20.3%, 22.8% and 32.7%, respectively. Our Adjusted EBITDA Margin in the years ended December 31, 2018, 2019 and 2020 and the three months ended March 31, 2021 was 46.8%, 51.1%, 49.5% and 47.2%, respectively, and we believe that, considering the high operating leverage of our business and inspired by the example of the leading international players in their respective markets, we have significant further upside in margins as we further grow our market share and revenue base.
Strong technology foundation and scalable infrastructure to support future growth
We have developed a sophisticated technology platform, focused on scalability and security, which allows us to create additional value, to improve monetization of our products and to maintain our competitive edge.
 
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Extensive deployment of machine learning algorithms and artificial intelligence at all key stages of interaction with job seekers and customers.   AI lies at the core of our platform, moderating 100% of incoming CVs (with approximately 70% of all CVs ultimately approved for publication by AI and our heuristic system in the year ended December 31, 2020), and we use machine learning algorithms to rank CVs in our database and match candidates with the relevant vacancies. As a result, we save on costs associated with CV moderation while improving conversion throughout the job seeker’s funnel, thereby increasing the value of core services to our customers and laying a solid base for monetization enhancement. Our AI also improves the effectiveness of our products, decreasing the amount of manual work required for a candidate search. For example, the share of invitations and CV contact views facilitated by our AI recommendations within all invitations and CV contact views generated via database search increased from 13% in March 2020 to 27% in March 2021.
Best mobile solution for job seekers and customers.   We believe we are the leading human resources (“HR”) mobile platform in Russia, with the majority of our traffic currently coming from mobile users. With both customers and job seekers increasingly demanding on-the-go and on-demand access to recruiting and HR services, we consider our mobile platform to be a strategic pillar of our business. As we continuously enhance the user experience on our mobile apps, in 2019, we updated our first time user session experience and created simpler, more intuitive interactions on our apps in order to optimize user engagement and encourage more conversions. We are developing a sequenced “call-to-action” approach powered by AI in our mobile apps, which drives users through a funnel to the desired action. Our mobile app is ranked among the top job search related applications in iOS and Android appstore in Russia, and since launch in 2012, our mobile applications have been downloaded 28.3 million times cumulatively as of December 31, 2020. The total number of cumulative downloads since launch for the year ended December 31, 2020 increased by 27.0% compared to the year ended December 31, 2019.
Scalable and robust proprietary platform.   Our IT infrastructure was built to be highly agile and scalable enabling us to expand our product portfolio while significantly growing our user base. The scalability of our technology platform allows us to handle large volumes of traffic without significant incremental capital investment. In addition, we tend to avoid using third-party proprietary IT tools to prevent vendor lock, and instead we seek to utilize well known and proven open source tools.
Continuously improving technology Key Performance Indicators (“KPIs”).   We work to the highest technology standards and aim to constantly improve our platform. The number of technical bugs per release decreased by 36.4% in the year ended December 31, 2020 compared to the year ended December 31, 2019. Business continuity for our customers is paramount to us, and we have demonstrated an average uptime rate of 99.92%, 99.94% and 99.92% in the years ended December 31, 2018, 2019 and 2020, respectively. We create different types of user interfaces for different users and simplify user interface forms depending on the context, which we believe improves conversion rates and increases monetization.
Data protection and security.   We take protection of job seekers’ personal data and customers’ corporate data extremely seriously. All data between our servers and customers’ browsers is transmitted over secure protocols. We use monitoring and protection services to limit potential hacking attacks. Our application and database servers are located on an internal network that is isolated from the internet and is additionally protected by a dual firewall. We perform regular penetration testing under multiple scenarios. Roskomnadzor inspects our compliance with applicable personal data processing laws, and we fully comply with all such requirements.
Strong and experienced management team supported by a highly competent board of directors and reputable shareholders
Our experienced management team has a proven track record of delivering on our focused and ambitious strategy as evidenced by our operating and financial results. Since 2010, our management has successfully grown the traffic gap between us and our key competitors, guided us through periods of macroeconomic uncertainty, defended our market positions against aggressive new market entrants and positioned us as the undisputed market leader in Russia and the CIS. We believe that our management team has a proven ability to identify key market opportunities, as demonstrated by our success in introducing AI and machine learning into HR processes, capturing the mobile trend and moving our services further into HR funnels, and has positioned us to capitalize on global HR trends as they gain relevance in our market.
 
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We believe that the skills, industry knowledge and operating expertise of our senior executives, combined with the support of our board of directors, provide us with a distinct competitive advantage as we continue to grow.
Our Growth Strategy
Consistent with the examples of the leading online classified businesses in both developed and emerging markets with certain “winner takes all” characteristics, we aim to continue growing faster than the Russian online recruitment market, thereby increasing our market share while maintaining profitability. To achieve our goals, we have designed our strategy around the following pillars:
Continue to broaden candidate reach
We plan to continue strengthening our candidate sourcing capabilities by enhancing our coverage of the overall employable population of Russia and the CIS regions. In addition to our traditional white collar and Moscow and St. Petersburg based markets, we are increasingly emphasizing penetration into the blue collar segment and the other Russian regions, as well as other specific categories of job seekers, such as passive candidates and youth, where we are noticing an increase in customer demand. We have adopted a wide range of marketing channels and tools that aim to attract diverse candidate audiences to our platform and apps. These channels and tools include TV marketing, digital marketing, email distributions and other types of communications. In order to reach all job seeker candidate audiences, we also aim to build a presence across new communication channels, such as social networks and messengers.
Increase the share of candidates from Russian regions
We see strong demand for both white collar and blue collar professionals in the Russian regions outside of Moscow and St. Petersburg. As of December 31, 2020, CVs from Russian regions accounted for 50% of our total visible CV database, compared to 49% as of December 31, 2019. We plan to further increase this share, benefiting from our long-standing leadership by number of CVs in regions.
Increase the share of blue collar job seekers
We aim to continue diversifying our job seeker base and increase the number of blue collar professionals using our platform, who we believe are a segment of the Russian online job seeker market that has historically been hard to reach online, and therefore, represents significant potential. Our key initiatives in this regard include:

further simplifying the CV preparation and application processes;

focusing on offline marketing channels, which have proven to be effective to date in attracting blue collar job seekers; and

considering potential acquisitions of smaller competitors who have historically focused on blue collar job seekers.
In line with this strategy:

we increased our top-of-mind brand awareness among blue collar job seekers from 22% as of June 28, 2017 to 45% (combined with the top-of-mind brand awareness of Zarplata.ru in the blue collar segment) as of September 30, 2020, according to Socis MR Rus;

in January 2018, we acquired the assets of Job.ru, a platform that has historically focused on blue collar job seekers; and

in December 2020, we acquired Zarplata.ru, a platform that has historically focused on blue collar job seekers and Small and Medium Accounts in Siberia and Ural regions of Russia.
Increase the share of other categories of job seekers, such as passive and young candidates
We believe that providing access to all job seekers, including both active candidates and passive candidates who may not be actively looking to change jobs, is crucial to making our platform more
 
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attractive to employers. Our extensive machine learning tools effectively identify specific types of passive job seeker candidates who may potentially be open to new opportunities. Although we consider the substantial majority of candidates on our platform to be active job seekers, we plan to focus further on tools that increase the engagement of passive candidates, as we believe these tools are particularly relevant for our customers who focus primarily on talent acquisition or high-frequency recruitment. We believe that competition for entry level professionals is set to intensify in the coming years due to demographic factors (i.e., low birth rates in Russia in the 1990s into the beginning of the 2000s). Hence, we consider it essential to ensure high engagement and retention of the younger audience on our platform.
We aim to solidify our market leadership in this segment (by number of CVs of young professionals) by significantly increasing content targeted at youth (particularly internship postings), further improving our user interface and conducting selective marketing efforts aimed at young professionals (if considered necessary). We also intend to design innovative mobile solutions to suit young professionals’ needs and employment habits, such as elevated turnover rate, the preference for temporary or remote employment and higher activity on-the-go.
Increase and enhance job advertisements database
Our strategic goal is to be the leader by job advertisements across all regions of Russia and all customer segments.
Increase customer penetration in Russian regions
We plan to capitalize on the relatively low penetration level of online recruitment services in Russia. We aim to continue expanding into Russian regions, focusing on cities with more than 50,000 inhabitants, where we believe high growth opportunities in our industry exist due to the ongoing shift from offline to online. The CAGR of our number of customers in the Russian regions, excluding Moscow and St. Petersburg, was 45% from 2016 to 2020, compared to 17% in Moscow and St. Petersburg during the same period, which demonstrates the importance of the regional focus of our geographical expansion strategy.
Besides benefiting from a steadily growing online recruitment market, we aim to gain market share from other regional and multi-regional online job classifieds platforms due to our strong competitive advantages, including our highly trained, local sales force, ability to publish job postings and CVs across broad geographies, technological edge and expansion of social media, TV and other marketing programs to further increase our brand awareness and engagement of job seekers and customers.
Increase the share of Small and Medium Accounts
We aim to substantially increase the number of Small and Medium Accounts on our platform, which we believe represent the most underpenetrated segment of the Russian job classifieds market. The number of our Small and Medium Accounts grew by 10.4% in the year ended December 31, 2020 compared to the year ended December 31, 2019, reaching 314,845 accounts for the year ended December 31, 2020, while the number of Key Accounts grew by 6.1% during the same period, reaching 11,801 accounts for the year ended December 31, 2020.
Our key initiatives in this regard include:

attracting additional candidates from regions and industries that are relevant to our Small and Medium Accounts;

increasing the effectiveness and engagement level of the Small and Medium Accounts-focused part of our sales function;

implementing offline and online advertising campaigns at a more granular, targeted level; and

simplifying and adopting our platform to better meet the needs of small and medium businesses (with a particular focus on onboarding requirements and user interface).
Provide the most effective candidate delivery product by maintaining technological edge across all platforms
As we continue to grow our candidate and employer databases and as traffic on our platform continues to increase, it is critical that we continue developing our technology and data capabilities to optimize job seeker and employer matching, thus enabling a streamlined and efficient recruitment process for both parties.
 
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We will continue to extensively use and develop AI technology and machine learning algorithms at all key stages of interaction with job seekers and employers. Our main goals for our AI and machine learning algorithms are to further enhance our smart search and matching functionalities in job postings and our CV database and make our recommendation system more tailored to specific qualities and recruitment criteria, each of which we expect will improve the quality of our recommendations and matches and in turn increase the number of people hired through our platform.
We benefit from high barriers to entry combined with the ability to compile unique data based on the recruitment needs of our customers, which allows us to steadily develop innovative products. Our strategy is to continue collecting and using this data to feed into our Smart Matching and Machine Learning Recommendation systems, while also maintaining data protection standards and continuing to be in full compliance with all relevant personal data related regulations. In this regard, we will continue applying stringent information security standards and continue stress and access testing of our IT systems under different scenarios to meet evolving security challenges and ensure the safety and privacy of our job seekers’ and customers’ data.
We plan to pursue a platform agnostic approach and boost usage of our mobile platform by developing and improving access to a larger range of our services on “all screens.” Growing mobile internet and smartphone penetration in Russia is a major trend, and we aim to leverage this development to further increase our customer and job seeker reach. We consider mobile expansion to be not only a natural evolution of our desktop audience, but also a way to expand our ability to access such job seekers and customers who prefer mobile to desktop use. As of December 31, 2020, 74% of registered job seekers used our mobile platform only (including both mobile website and apps), while 15% used the desktop only. The share of registered job seekers only using our mobile applications increased from 19% in January 2017 to 46% in December 2020. We continuously seek to enhance the functionality of our mobile platform. Our mobile app for job seekers now provides full functionality and we continue to add functionality to our mobile app for customers. As a result, we see a growing share of our traffic from mobile devices, reaching 72% and 71% for the years ended December 31, 2019 and 2020, respectively, and improving conversions of mobile traffic into applications from job seekers.
Enhance customer monetization potential
We believe there is significant untapped monetization potential in our business due to the relatively low costs of our services to our customers, in both absolute and relative terms as compared to foreign markets, and we believe this leads to relatively low elasticity of demand, particularly for large enterprises.
We developed an individual pricing strategy designed to link the cost of our services to the value that we deliver to our customers. Our legacy tariff pricing structure involved high amounts of discounts, both for subscriptions and job postings, which enabled large enterprises to utilize our services at a disproportionally lower price per unit than smaller enterprises. As the first step towards linking the cost of our services directly to the value delivered to our customers, we removed our unlimited job posting package in 2016, and as a result, we gained substantial flexibility in up-selling job posting packages, which in turn drove the ARPC for our Key Accounts. Following this successful step, we announced the introduction of consumption limits for our subscription products starting from August 2020. Upon reaching the consumption limit, clients would have to purchase additional contacts at a certain price per contact. We believe there is significant potential in implementing variable pricing into our rates, starting with region- and professional area-based pricing. Currently, our flat fee model results in the same costs for the relevant application for positions with different skill sets and compensation levels. We believe this variable pricing approach will allow us to better monetize our customers’ willingness to pay for high skilled positions.
We expect that transitioning from a flat fee model to an individual pricing model will allow us to better capitalize on our competitive strengths without adversely affecting the lower end of the market, such as rapidly expanding areas like small and medium enterprises and the blue collar segment.
We believe that there are also opportunities to change certain parts of our business to performance-based pricing models in order to increase the monetization of our services. For example, the introduction of our CPC-based Virtual Recruiter product (as described below) enabled us to increase the ARPC from a
 
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certain number of our customers by multiple times within a single year, and we plan to roll out this product further across suitable market segments, such as mass recruitment.
We strive to continue to upsell our core services with value added products, such as branding and advertising, applicant tracking system (“ATS”), assessment and analytics and more, which helps to extend our portfolio of services across the recruitment value chain and grow both our ARPC and customer retention over time.
We expect that these monetization changes will be supported by our strong pricing power, which we derive from our clear market leading position and product and service superiority on the back of powerful network effects.
Continue to expand the scope and depth of our services to reach the entire recruiting value chain through acquisitions and internal development
We plan to continue transforming our business into a comprehensive, integrated recruiting platform by broadening our product range along the recruitment services value chain (from sourcing to onboarding). We may seek out acquisitions of control of, minority stakes in or strategic partnerships in either our direct competitors or assets in adjacent markets, such as ATS and automation software, employer branding, professional education and temporary workers. We continue to assess and we are regularly and actively exploring opportunistic acquisitions that are consistent with our growth strategy as we believe that being acquisitive is a key component of our long-term success. We will also continue to strive to expand the scope and depth of our services to job seekers and to complement our core product portfolio by introducing new products through internal development.
Our goal is to capture and automate the entire recruiting process and seamlessly manage it through our platform. We believe that integrating our online classified, program-based, off-platform lead generation capabilities and process management software in one solution will increase our customer value proposition, enhance customer loyalty and increase customer spend within our recruitment ecosystem and ancillary businesses, which we believe will enhance our core product portfolio. We believe that our vast customer base, deep insight into its hiring needs as well as broad candidate sourcing capabilities give us advantages in creating value throughout the recruiting process while enhancing customer engagement and increasing our overall customer retention and ARPC.
Our proprietary Software-as-a-Service (“SaaS”) based ATS, Talantix, allows employers to automate candidate processing and talent acquisition, which is vital to creating value throughout the entire recruiting process. Talantix has been gaining traction among our midmarket customers that look for an end-to-end solution with minimal customization and integration requirements. This allows us to scale this offering across a broader customer base without embarking on long-lasting integrations.
In order to address our customers’ need for process automation and streamlining work tasks, we introduced our “Virtual Recruiter” product in 2017, which is predominantly aimed at mass recruitment vacancies or positions with limited qualifications that are mainly in the retail segment and are characterized by high employee turnover. Virtual Recruiter uses our sourcing capabilities (both on and outside of our platform) and chat bot technologies to help customers automatically draw a wide range of potential suitable candidates from various sources, run pre-screening and scoring processes, schedule interviews and more, without any human involvement on the customer’s side. We aim to continue developing this product and fully integrate it into our ATS solutions.
On May 6, 2019, we acquired a 25.01% stake in Skillaz, a rapidly developing HR technology company that automates routine recruiting processes by implementing complex built-to-suit integration projects. Strong execution across product, sales and operations allowed Skillaz to significantly diversify its client base and nearly double the revenue during 2020, despite macroeconomic headwinds. Solid financial and operational traction coupled with results of joint product development initiatives reiterated Skillaz’s fit into our long-term strategy, and in December 2020, we served a notice of intent to exercise the option to purchase an additional 40.01% stake in Skillaz and confirmed the purchase price with the sellers. We exercised the option to purchase this further stake on May 26, 2021. We obtained control over Skillaz for accounting
 
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purposes as at March 31, 2021. Accordingly, on March 31, 2021, we ceased to account for our investment in Skillaz under the equity method and consolidated Skillaz as a subsidiary.
On April 30, 2021, we acquired a 25% stake in Dream Job, an early-stage startup developing an employer review platform.
Russian Online Recruitment Market Size
Recruitment Spend in Russia
Total recruitment spend in Russia was estimated to be 48.8 billion in 2020, while adjacent markets, such as ATS and automation software, employer branding, contingent labor, corporate and individual education, account for more than 80.0 billion, according to J’Son & Partners. Total recruitment spend was evenly split between Moscow and St. Petersburg and Other regions of Russia, or 23.3 billion and 25.5 billion, respectively. At the same time, large enterprises accounted for 25.1 billion, and small and medium enterprises accounted for 23.7 billion of total recruitment spend in 2020. In terms of split between white and blue collar positions, the white collar market represents 20.7 billion and the blue collar market was estimated to be 28.1 billion in 2020.
Metric
2016
2017
2018
2019
2020E
Population employed, million
72.4 71.8 72.5 72.1 70.2
White collar
30.9 30.7 30.8 30.6 29.8
Blue collar
41.5 41.1 41.7 41.4 40.4
Positions closed, million
19.5 19.5 20.7 20.8 20.2
White collar
4.5 4.5 4.7 4.7 4.6
Blue collar
15.0 15.0 16.0 16.0 15.6
Employee turnover rate, %
26.9% 27.1% 28.5% 28.8% 28.7%
White collar
14.5% 14.6% 15.3% 15.5% 15.4%
Blue collar
36.2% 36.4% 38.2% 38.7% 38.6%
Job positions advertised (online and offline), million
11.3 11.3 12.0 12.5 12.8
White collar
3.3 3.3 3.4 3.5 3.4
Blue collar
8.1 8.1 8.6 9.0 9.4
Average cost per hire, ‘000 RUB
3.9 3.9 3.9 3.8 3.8
White collar
6.0 6.0 6.0 6.0 6.0
Blue collar
3.0 3.0 3.0 3.0 3.0
Total direct recruitment spend, RUB billion
43.8 43.8 46.3 48.0 48.8
White collar
19.5 19.5 20.6 21.0 20.7
Blue collar
24.2 24.2 25.78 27.0 28.1
Source: J’Son & Partners
Online Recruitment Market Structure
Metric, RUB million
2016
2017
2018
2019
2020E
Online recruitment platforms revenue
6,238 8,050 10,304 12,777 13,548
from large enterprises
3,638 4,560 5,691 6,677 7,165
from small & medium enterprises
2,600 3,490 4,613 6,100 6,383
Online recruitment platforms revenue
6,238 8,050 10,304 12,777 13,548
from Moscow & St. Petersburg
4,333 5,454 6,452 7,330 7,441
from Other regions of Russia
1,905 2,596 3,852 5,447 6,107
Online recruitment platforms revenue
6,238 8,050 10,304 12,777 13,548
from white collar job positions
4,717 6,019 7,541 8,779 9,194
from blue collar job positions
1,521 2,031 2,763 3,998 4,354
Source: J’Son & Partners
 
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Russian Recruitment Market Decomposition
% total
CAGR 17 – 20
2017
2020
2017
2020
Online channels
8,445 14,488 19.3% 29.7% 19.7%
Online recruitment platforms
8,050 13,548 18.4% 27.8%
Professional Online Networks
175 170 0.4% 0.3%
Social Media
220 770 0.5% 1.6%
Print and other offline
3,230 2,220 7.4% 4.6% (12)%
Print Classifieds
1,920 1,020 4.4% 2.1%
Offline Branding
800 760 1.8% 1.6%
Recruitment Events
510 440 1.2% 0.9%
Recruitment agencies
7,400 8,861 16.9% 18.2% 6%
Internal costs of recruiting process
24,681 23,183 56.4% 47.6% (2)%
Total recruitment market spend
43,756 48,752 100.0% 100.0% 4%
Source: J’Son & Partners
Russian Online Recruitment Market Landscape
HeadHunter
SuperJob
Rabota
Avito
Zarplata
VK Jobs
Visible CV database, million (April 30, 2021)
37.5 15.3 10.3 2.6 7.3 3.3
30-day job postings, thousand (April 30, 2021)
1,061 593 100 561 338 59
Difference in UMVs from HeadHunter and Zarplata,
multiples (average, for 12 months ended
April 2021)(4)
3x 4x 26x
Year of foundation
2000 2000 1998 2007(1) 2013(2) 2019(3)
(1)
Year of Avito.ru foundation
(2)
Zarplata.ru web portal established in 1999. On December 25, 2020, we completed the acquisition of 100% of the issued charter capital in Zarplata.ru.
(3)
Acquired by Mail.ru in 2019 and rebranded from Worki to VK Jobs in 2021.
(4)
Includes the UMVs for both HeadHunter Group PLC and Zarplata.ru, assuming no overlap in operating metrics.
Source: J’Son & Partners, Socis MR Rus
Corporate Information
We were incorporated in Cyprus on May 28, 2014 under the Cyprus Companies Law, Cap. 113 as Zemenik Trading Limited, and our registered office is located at 42 Dositheou Street, Strovolos, Nicosia, Cyprus. On March 1, 2018, Zemenik Trading Limited was converted from a private limited company incorporated in Cyprus into a public limited company incorporated in Cyprus, and the Company’s legal name changed, pursuant to a special resolution at a general meeting of the shareholders, to HeadHunter Group PLC. The legal effect of this conversion under Cypriot law was limited to the change of legal form. Our commercial name is HeadHunter. In June 2019, we changed the effective place of management of HeadHunter Group PLC from Cyprus to Russia, which resulted in HeadHunter Group PLC becoming a Russian tax resident.
The principal executive office of our key operating subsidiary, Headhunter LLC, is located at 9/10 Godovikova Street, Moscow, 129085, Russia. The telephone number at this address is +7 495 974-6427. Our website address is www.hh.ru. The information contained on, or that can be accessed through, our
 
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website is not a part of, and shall not be incorporated by reference into, this prospectus supplement. We have included our website address as an inactive textual reference only.
Implications of Being an “Emerging Growth Company” and a “Foreign Private Issuer”
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). As such, we are eligible, for up to five years, to take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);

not being required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” and

not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of the IPO or such earlier time that we are no longer an emerging growth company. As a result, we do not know if some investors will find our ADSs less attractive. The result may be a less active trading market for our ADSs, and the price of our ADSs may become more volatile.
We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenue exceeds $1.07 billion; (ii) the last day of the fiscal year during which the fifth anniversary of the date of the IPO; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.00 billion in non-convertible debt securities during any three-year period.
We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.
Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.
 
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THE OFFERING
ADSs offered by the Selling Shareholders
4,500,000 ADSs, each representing one ordinary share.
Ordinary shares to be outstanding after this offering
50,635,720 ordinary shares.
Option to purchase additional ADSs
The Selling Shareholders have granted the underwriters an option to purchase up to 675,000 additional ADSs within 30 days of the date of this prospectus supplement.
American Depositary Shares
The underwriters will deliver our ordinary shares in the form of ADSs. Each ADS, which may be evidenced by an American Depositary Receipt (“ADR”) represents an ownership interest in one of our ordinary shares. As an ADS holder, we will not treat you as one of our shareholders. The depositary, JPMorgan Chase Bank, N.A., will be the holder of the ordinary shares underlying your ADSs.
You will have ADS holder rights as provided in the deposit agreement, dated as of May 8, 2019. Under the deposit agreement, you may only vote the ordinary shares underlying your ADSs if we ask the depositary to request voting instructions from you. The depositary will pay you the cash dividends or other distributions, if any, it receives on our ordinary shares after deducting its fees and expenses and applicable withholding taxes. You may need to pay a fee for certain services, as provided in the deposit agreement.
You are entitled to the delivery of the ordinary shares underlying your ADSs upon the surrender of such ADSs, the payment of applicable fees and expenses and the satisfaction of applicable conditions set forth in the deposit agreement.
To better understand the terms of the ADSs, you should carefully read “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, the form of which was filed as an exhibit to our Form 20-F for the year ended December 31, 2020, which is incorporated by reference herein.
Depositary
JPMorgan Chase Bank, N.A.
Use of proceeds
The Selling Shareholders will receive all of the net proceeds from the sale of the ADSs. We will not receive any proceeds from the sale of ADSs by the Selling Shareholders.
Dividend policy
We have historically paid dividends, and while we have not adopted a formal dividend policy, we currently expect to continue to do so in the future. Subject to the recommendation of the board of directors and shareholder approval, we plan to annually distribute at least 50% of our Adjusted Net Income, as defined in “Presentation of Financial and Other Information,” subject to our investment and debt repayment requirements. Any future determination regarding the payment of a dividend will depend on many factors, including the availability of distributable profits, our liquidity and financial position, our future growth initiatives and strategic plans, including possible acquisitions, restrictions imposed by our financing arrangements, tax considerations and other relevant factors. If we declare dividends on our ordinary shares, the depositary will pay you
 
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the cash dividend and other distributions it receives on our ordinary shares net of withholding tax, after deducting its fees and expenses. See Item 8.A “Consolidated Statements and Other Financial Information — Dividend Policy” of our Form 20-F for the year ended December 31, 2020 incorporated by reference herein.
Risk factors
See “Risk Factors” and the other information included and incorporated by reference in this prospectus supplement for a discussion of factors you should consider before deciding to invest in our ADSs.
Lock-up agreements
We have agreed with Goldman Sachs & Co. LLC, as representative of the several underwriters, and Morgan Stanley & Co. LLC, subject to certain exceptions, not to sell or dispose of any of our ADSs or securities convertible into or exchangeable or exercisable for our ADSs until 60 days after the date of this prospectus supplement. Our executive officers and our board members have agreed to similar lockup restrictions for a period of 60 days, and the Selling Shareholders have agreed to similar lockup restrictions for a period of 180 days. See “Underwriting (Conflicts of Interest).”
Pre-emptive rights
Under the law of Cyprus, existing holders of shares in Cypriot public companies are entitled to pre-emptive rights on the issue of new shares in that company (if shares are issued for cash consideration). In addition, our shareholders authorized the disapplication of pre-emptive rights for a period of five years from the date of the completion of the IPO. See “Description of Share Capital and Articles of Association — Pre-emptive Rights.”
Nasdaq trading symbol
“HHR.”
Unless otherwise indicated, all information contained in this prospectus supplement assumes no exercise by the underwriters of their option to purchase additional ADSs in this offering.
 
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The following tables present our summary consolidated financial data as of and for the periods indicated. The summary consolidated statements of operations data for the years ended December 31, 2018, 2019 and 2020 are derived from our audited consolidated financial statements and related notes included in our Form 20-F for the year ended December 31, 2020, incorporated by reference herein. The summary consolidated statement of operations data for the year ended December 31, 2017 are derived from our audited consolidated financial statements. The summary consolidated financial data as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 has been derived from our unaudited condensed consolidated interim financial information, which are included elsewhere in this prospectus supplement. The unaudited condensed consolidated interim financial information reflects, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair presentation of the results of the unaudited interim periods. Our historical audited results are not necessarily indicative of the results that should be expected in any future period.
The financial data set forth below should be read in conjunction with, and is qualified by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus supplement and the consolidated financial statements and notes thereto included in our Form 20-F for the year ended December 31, 2020, incorporated by reference herein.
Income Statement Data
(in thousands of RUB, except per share data)
For the year ended December 31,
For the three months
ended March 31,
2017(1)(2)
2018(2)
2019
2020
2020
2021
Revenue
4,732,539 6,117,773 7,788,741 8,282,107 1,990,409 2,841,115
Operating costs and expenses
(exclusive of depreciation and amortization)
(2,788,576) (3,432,860) (4,300,263) (4,691,300) (1,138,619) (1,568,649)
Depreciation and amortization
(560,961) (586,131) (683,317) (750,558) (184,406) (237,973)
Operating income
1,383,002 2,098,782 2,805,161 2,840,249 667,384 1,034,493
Finance income
70,924 90,602 76,764 59,329 19,158 69,492
Finance costs
(706,036) (644,326) (603,280) (409,545) (118,833) (150,731)
Gain on remeasurement of previously held interest in equity-accounted investees(3)
223,308
Gain on disposal of subsidiary
439,115 6,131
Net foreign exchange gain/(loss)
96,300 (8,742) (46,508) 83,030 75,313 (222)
Share of loss of equity-accounted investees (net of income tax)
(30,542) (49,181) (9,544) (4,864)
Other income(4)
23,853 47,715 9,689 13,077
Profit before income tax
1,283,305 1,542,447 2,225,448 2,571,597 643,167 1,184,553
Income tax expense
(820,503) (509,602) (644,422) (685,772) (231,429) (254,207)
Net income
462,802 1,032,845 1,581,026 1,885,825 411,738 930,346
Attributable to:
Owners of the Company
400,189 949,307 1,448,018 1,748,960 363,463 898,801
Non-controlling interest
62,613 83,538 133,008 136,865 48,275 31,545
Earnings per share
Basic
8.00 18.99 28.96 34.84 7.27 17.86
Diluted
8.00 18.99 28.42 33.90 7.05 17.34
Dividends declared per share(5)
RUB(6)
67.50 22.29 36.94
USD
1.16 0.36 0.50
 
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(1)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated.
(2)
We adopted IFRS 16 at January 1, 2019 using the modified retrospective approach. Under the transition method chosen, comparative information is not restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.
(3)
Reflects gain on remeasurement of the previously held interest in Skillaz at fair value as at the acquisition date as of March 31, 2021. Please refer to Note 7 of our unaudited condensed consolidated financial information for the three months ended March 31, 2021.
(4)
Other income includes income from the depositary. Please refer to Note 25 of our consolidated financial statements for the years ended December 31, 2018, 2019 and 2020.
(5)
On March 1, 2018, we subdivided 100,000 shares into 50,000,000 shares. We retrospectively applied the change in the number of ordinary shares to its measurement of earnings per share and dividends declared per share for the year ended December 31, 2017.
(6)
As the distribution to shareholders was made in several tranches during the year ended December 31, 2017, the USD per share amount for the year ended December 31, 2017 was translated from the Russian ruble amount using the average exchange rate for the year ended December 31, 2017 of the Central Bank of Russia of $1 to 58.35.
Balance Sheet Data
(in thousands of RUB)
As of March 31, 2021
Total non-current assets
15,417,156
Total current assets
5,266,709
Total assets
20,683,865
Total equity
4,531,116
Total non-current liabilities
8,941,311
Total current liabilities
7,211,438
Total liabilities
16,152,749
Non-IFRS Measures and Other Financial Information
(in millions of RUB, except percentages)
For the year ended December 31,
For the three months ended March 31,
2017(7)(8)
2018(8)
2019
2020
2020
2021
EBITDA(9) 2,479 2,682 3,435 3,673 927 1,538
EBITDA Margin(10)
52.4% 43.8% 44.1% 44.3% 46.6% 54.1%
Adjusted EBITDA(11)
2,159 2,864 3,977 4,104 970 1,342
Adjusted EBITDA Margin(12)
45.6% 46.8% 51.1% 49.5% 48.7% 47.2%
Adjusted Net Income(13)
801 1,548 2,441 2,683 581 850
Adjusted Net Income Margin(14)
16.9% 25.3% 31.3% 32.4% 29.2% 29.9%
(7)
We adopted IFRS 15 at January 1, 2018 using the full retrospective approach. Under the transition method chosen, certain comparative information has been restated.
(8)
We adopted IFRS 16 at January 1, 2019 using the modified retrospective approach. Under the transition method chosen, comparative information is not restated. Please refer to Note 4 of our consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019.
(9)
We define EBITDA as net income/(loss) plus: (i) income tax expense; (ii) interest expense/(income); and (iii) depreciation and amortization.
 
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(10)
We define EBITDA Margin as EBITDA divided by revenue.
(11)
We define Adjusted EBITDA as net income/(loss), plus: (i) income tax expense; (ii) net interest costs; (iii) depreciation and amortization; (iv) transaction costs related to business combinations; (v) (gain)/loss on the disposal of subsidiary; (vi) expenses related to equity-settled awards, including related social taxes; (vii) IPO-related costs; (viii) SPO-related costs; (ix) insurance expenses related to the IPO; (x) (income) from the depositary; (xi) one-off litigation settlement and related legal costs; (xii) share of (profit)/loss of equity-accounted investees; (xiii) net (gain)/loss on financial assets measured at fair value through profit and loss; (xiv) net foreign exchange loss/(gain); (xv) (gain) on remeasurement of previously held interest in equity-accounted investees; (xvi) transaction costs related to the disposal of a subsidiary; and (xvii) other financing and transactional costs.
(12)
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
(13)
We define Adjusted Net Income as net income/(loss), plus: (i) transaction costs related to business combinations; (ii) (gain)/loss on the disposal of subsidiary; (iii) expenses related to equity-settled awards, including related social taxes; (iv) IPO-related costs; (v) SPO-related costs; (vi) insurance expenses related to the IPO; (vii) (income) from the depositary; (viii) one-off litigation settlement and related legal costs; (ix) share of (profit)/loss of equity-accounted investees; (x) net (gain)/loss on financial assets measured at fair value through profit and loss; (xi) net foreign exchange loss/(gain); (xii) (gain) on remeasurement of previously held interest in equity-accounted investees; (xiii) transaction costs related to the disposal of a subsidiary; (xiv) amortization of intangible assets recognized in business combinations; (xv) tax effect on adjustments; and (xvi) other financing and transactional costs.
(14)
We define Adjusted Net Income Margin as Adjusted Net Income divided by revenue.
(in millions of RUB, except ratios)
As of December 31,
2020
As of March 31,
2021
Net Working Capital(15)
(3,849) (5,269)
Net Debt(16)
4,909 3,356
Net Debt to Adjusted EBITDA Ratio(17)
1.2x 0.7x
(15)
We define Net Working Capital as our trade and other receivables plus prepaid expenses and other current assets, less our contract liabilities, trade and other payables and other liabilities, in all cases, a current portion of a specific asset or liability.
(16)
We define Net Debt as current portion of our loans and borrowings, plus our loans and borrowings, less our cash and cash equivalents.
(17)
We define Net Debt to Adjusted EBITDA Ratio as Net Debt divided by Adjusted EBITDA. For the purposes of calculating this ratio as of March 31, 2021, Adjusted EBITDA is calculated on the last twelve months basis.
EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are used by our management to monitor the underlying performance of the business and the operations. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as reported by us to EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.
 
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EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin or Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,

EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) do not reflect changes in, or cash requirements for, our working capital needs, and

the fact that other companies in our industry may calculate EBITDA, Adjusted EBITDA, Adjusted Net Income, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Net Income Margin and Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) differently than we do, which limits their usefulness as comparative measures.
 
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We have provided a reconciliation below of EBITDA and Adjusted EBITDA to net income, the most directly comparable IFRS financial measure.
For the year ended December 31,
For the three months ended March 31,
(in thousands of RUB)
2017*
2018*
2019*
2020*
2020*
2021
Net income
462,802 1,032,845 1,581,026 1,885,825 411,738 930,346
Add the effect of:
Income tax expense
820,503 509,602 644,422 685,772 231,429 254,207
Net interest expense
635,112 553,724 526,516 350,216 99,675 115,747
Depreciation and
amortization
560,961 586,131 683,317 750,558 184,406 237,973
EBITDA 2,479,378 2,682,302 3,435,281 3,672,371 927,248 1,538,273
Add the effect of:
Gain on the disposal of a subsidiary(a)
(439,115) (6,131)
Transaction costs related to the disposal of a subsidiary(b)
17,244
Equity-settled awards and related social taxes(c)
74,851 68,776 178,953 249,286 52,060 65,106
IPO-related costs(d)
122,907 110,043 190,284
SPO-related costs(e)
151,087 14,920
Transaction costs related to business combinations(f)
51,665 11,119
Other financing and transactional costs(g)
3,656
Insurance cover related to IPO(h)
100,048 54,772 38,832
Income from the depositary(i)
(22,095) (41,617) (8,526) (12,462)
Net foreign exchange
loss/gain(j)
(96,300) 8,742 46,508 (83,030) (75,313) 222
One-off litigation settlement and related legal costs(k)
17,734
(Gain) on remeasurement of previously held interest in equity-accounted investees(l)
(223,308)
(Gain) on financial asset measured at fair value through profit or loss(m)
(34,508)
Share of loss of equity-accounted investees(n)
30,542 49,181 9,544 4,864
Adjusted EBITDA
2,158,965 2,863,732 3,977,255 4,103,715 969,884 1,341,843
*
These periods have been reclassified from prior periods. Please see “— Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” below for more detail.
(a)
On March 29, 2017, we sold our 100% subsidiary, CV Keskus, through which we operated our Estonia, Latvia and Lithuania operations, to a third party and recognized a gain on disposal of 439,115 thousand. In April 2018, we divested our subsidiary HeadHunter LLC (Ukraine), through which we historically conducted operations in Ukraine, and recognized a gain of 6,131 thousand.
(b)
Represents expenses related to tax consulting and audit services related to disposal of CV Keskus.
 
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(c)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(d)
In connection with the IPO, we incurred expenses related to legal, accounting, and other professional fees that are not indicative of our ongoing expenses.
(e)
Reflects personnel, legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(f)
Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(g)
Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
(h)
Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to directors’ and officers’ (“D&O”) insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We renew our D&O policy annually. Due to a decrease in IPO-related risks over time, we believe that our D&O insurance expense from the second 12-month period, which commenced May 9, 2020, mostly relates to our ordinary course of business.
(i)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(j)
Foreign exchange gains or losses do not relate to our operating activities. Please see “— Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” below for more detail.
(k)
Represents one-off litigation settlement and costs related to administrative proceeding with the Federal Antimonopoly Service of Russia.
(l)
Reflects gain on remeasurement of the previously held interest in Skillaz at fair value as at the acquisition date as of March 31, 2021.
(m)
Represents change in fair value of the call option to purchase an additional 40.01% participation interest in Skillaz.
(n)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, Skillaz. We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.
 
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We have provided a reconciliation below of Adjusted Net Income to net income, the most directly comparable IFRS financial measure.
For the year ended December 31,
For the three months ended March 31,
(in thousands of RUB)
2017*
2018*
2019*
2020*
2020*
2021
Net income
462,802 1,032,845 1,581,026 1,885,825 411,738 930,346
Add the effect of:
Gain on the disposal of a subsidiary(a)
(439,115) (6,131)
Transaction costs related to the disposal of a subsidiary(b)
17,244
Equity-settled awards and related
social taxes(c)
74,851 68,776 178,953 249,286 52,060 65,106
IPO-related costs(d)
122,907 110,043 190,284
SPO-related costs(e)
151,087 14,920
Transaction costs related to business combinations(f)
51,665 11,119
Other financing and transactional costs(g)
3,656
Insurance cover related to IPO(h)
100,048 54,772 38,832
Income from the depositary(i)
(22,095) (41,617) (8,526) (12,462)
Net foreign exchange loss/gain(j)
(96,300) 8,742 46,508 (83,030) (75,313) 222
One-off litigation settlement and
related legal costs(k)
17,734
(Gain) on remeasurement of previously held interest in equity-accounted investees(l)
(223,308)
(Gain) on financial asset
measured at fair value through
profit or
loss(m)
(34,508)
Share of loss of equity-accounted investees(n)
30,542 49,181 9,544 4,864
Amortization of intangible assets
recognized in business
combinations(o)
415,787 415,787 415,787 415,787 103,947 144,689
Tax effect of adjustments(p)
(82,696) (81,874) (98,107) (49,709) 22,873 (28,938)
(Gain)/loss related to
remeasurement and expiration
of tax indemnification asset(q)
325,269
Adjusted Net Income
800,749 1,548,188 2,440,680 2,683,247 581,194 849,667
*
These periods have been reclassified from prior periods. Please see “— Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” below for more detail.
(a)
On March 29, 2017, we sold our 100% subsidiary, CV Keskus, through which we operated our Estonia,Latvia and Lithuania operations, to a third party and recognized a gain on disposal of 439,115 thousand. In April 2018, we divested our subsidiary HeadHunter LLC (Ukraine), through which we historically conducted operations in Ukraine and recognized a gain of 6,131 thousand.
(b)
Represents expenses related to tax consulting and audit services related to disposal of CV Keskus.
 
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(c)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(d)
In connection with the IPO, we incurred expenses related to legal, accounting, and other professional fees that are not indicative of our ongoing expenses.
(e)
Reflects personnel, legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(f)
Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(g)
Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
(h)
Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to D&O insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We renew our D&O policy annually. Due to a decrease in IPO-related risks over time, we believe that our D&O insurance expense from the second 12-month period, which commenced May 9, 2020, mostly relates to our ordinary course of business.
(i)
In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(j)
Foreign exchange gains or losses do not relate to our operating activities. Please see “— Modification of the presentation of Adjusted EBITDA and Adjusted Net Income” below for more detail.
(k)
Represents one-off litigation settlement and costs related to administrative proceeding with the Federal Antimonopoly Service of Russia
(l)
Reflects gain on remeasurement of the previously held interest in Skillaz at fair value as at the acquisition date as of March 31, 2021.
(m)
Represents change in fair value of the call option to purchase an additional 40.01% participation interest in Skillaz.
(n)
On May 6, 2019, we acquired a 25.01% equity-accounted investee, Skillaz. We believe that share of profit or loss in equity-accounted investees is not indicative of our core operating performance.
(o)
As a result of the following business combinations: acquisition of 100% ownership interest in HeadHunter in 2016 and acquisition of 100% ownership interest in Zarplata.ru in 2020. We recognized the following intangible assets: (i) trademark and domain names in the amount of 2,010,030 thousand, (ii) non-contractual customer relationships in the amount of 2,646,501 thousand and (iii) CV database in the amount of 720,909 thousand, and (iv) website software in the amount of 82,548 which have a useful life of 10 years, 5-10 years, 2-10 years and 3 years respectively.
(p)
Represents income tax on taxable or deductible adjustments.
(q)
In connection with the Acquisition, Mail.Ru agreed to indemnify us against additional tax amounts that may be due in relation to distributions made from Russia to Cyprus prior to the Acquisition. On August 24, 2017, the indemnity expired. As a result of the expiration, we recorded a loss of 325,269 thousand in our statement of income or loss for the year ended December 31, 2017. See Note 12(a) to our consolidated financial statements included elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2020, incorporated by reference herein.
We have provided a reconciliation below of Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) to operating costs and expenses (exclusive of depreciation and amortization), the most directly comparable IFRS financial measure:
 
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(in thousands of RUB)
For the three months ended March 31, 2021
Personnel
expenses
Marketing
expenses
Other
general
and administrative
expenses
Total
Operating costs and expenses (exclusive of depreciation
and amortization)
(845,709) (441,770) (281,170) (1,568,649)
Add the effect of:
Equity-settled awards, including social taxes(a)
65,106 65,106
Other financing and transactional costs(b)
3,654 3,654
Adjusted amount
(780,603) (441,770) (277,516) (1,499,889)
(in thousands of RUB)
For the three months ended March 31, 2020
Personnel
expenses
Marketing
expenses
Other
general
and administrative
expenses
Total
Operating costs and expenses (exclusive of depreciation
and amortization)
(581,237) (317,866) (239,516) (1,138,619)
Add the effect of:
Equity-settled awards, including social taxes(a)
52,060 52,060
Insurance cover related to IPO(c)
38,832 38,832
Transaction costs related to business
combinations(d)
11,119 11,119
IPO-related costs(e)
14,920 14,920
Adjusted amount
(529,177) (317,866) (174,645) (1,021,688)
(a)
Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity settled share based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(b)
Reflects legal, accounting and other professional fees incurred in connection with potential financing and strategic transactions that are not indicative of our ongoing expenses.
(c)
Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for $2.7 million, of which we allocated $2.4 million to the cover related to our IPO, which we believe does not relate to our ordinary course of business, and $250 thousand to D&O insurance in the ordinary course of business, based on the estimate of our insurance provider. The cost of this insurance policy is expensed over the policy term on a pro-rata time basis and thus recurs in the reporting periods during its term. We renew our D&O policy annually. Due to a decrease in IPO-related risks over time, we believe that our D&O insurance expense from the second 12-month period, which commenced May 9, 2020, mostly relates to our ordinary course of business.
(d)
Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(e)
In connection with the IPO, we incurred expenses related to legal, accounting, and other professional fees that are not indicative of our ongoing expenses.
 
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We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements.
Calculation of our Net Working Capital is presented in the table below:
(in thousands of RUB)
As of December 31,
2020
As of March 31,
2021
Calculation of Net Working Capital:
Trade and other receivables
69,120 95,982
Prepaid expenses and other current assets
179,118 145,040
Contract liabilities
(2,785,402) (3,495,800)
Trade and other payables
(1,273,090) (1,973,102)
Other current liabilities
(38,758) (40,663)
Net Working Capital
(3,849,012) (5,268,543)
We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt.
Calculation of our Net Debt is presented in the table below:
(in thousands of RUB)
As of December 31,
2020
As of March 31,
2021
Calculation of Net Debt:
Loans and borrowings
7,791,326 7,678,085
Loans and borrowings (current portion)
485,100 512,038
Cash and cash equivalents
(3,367,610) (4,833,839)
Net Debt
4,908,816 3,356,284
We calculate our Net Debt to Adjusted EBITDA Ratio by dividing Net Debt by Adjusted EBITDA.
Calculation of Adjusted EBITDA on the last twelve months basis as of March 31, 2021:
(in thousands of RUB)
Adjusted EBITDA for the year ended December 31, 2020
4,103,715
Less Adjusted EBITDA for the three months ended March 31, 2020
(969,884)
Add Adjusted EBITDA for the three months ended March 31, 2021
1,341,841
Adjusted EBITDA on the last twelve months basis as of March 31, 2021
4,475,672
Modification of the presentation of Adjusted EBITDA and Adjusted Net Income
Beginning from the first quarter of 2021, we modified the presentation of Adjusted EBITDA and Adjusted Net Income, our non-IFRS measures, to exclude the impact of foreign exchange gains and losses as the nature of such gains and losses is not operational. We believe this revised presentation will provide a better understanding of our operating performance and a more meaningful comparison of our results between periods.
Prior period amounts have been reclassified to conform to this presentation. These changes have no impact on any of the previously reported IFRS results for any periods presented.
The following table presents the effects of the changes on the presentation of non-IFRS measures as reflected in our previous reports:
 
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(in millions of RUB)
For the three months ended March 31, 2020
Non-IFRS
Prior Presentation
Net foreign exchange
gain and related
income tax effect
Non-IFRS
Revised Presentation
Adjusted EBITDA
1,045 (75) 970
Adjusted EBITDA Margin, %
52.5% (3.8)% 48.7%
Adjusted Net Income
613 (32) 581
Adjusted Net Income Margin, %
30.8% (1.6)% 29.2%
(in millions of RUB)
For the year ended December 31, 2020
Non-IFRS
Prior Presentation
Net foreign exchange
gain and related
income tax effect
Non-IFRS
Revised Presentation
Adjusted EBITDA
4,187 (83) 4,104
Adjusted EBITDA Margin, %
50.6% (1.1)% 49.5%
Adjusted Net Income
2,733 (50) 2,683
Adjusted Net Income Margin, %
33.0% (0.6)% 32.4%
For the year ended December 31, 2019
(in millions of RUB)
Non-IFRS
Prior Presentation
Net foreign exchange
gain and related
income tax effect
Non-IFRS
Revised Presentation
Adjusted EBITDA
3,931 46 3,977
Adjusted EBITDA Margin, %
50.5% 0.6% 51.1%
Adjusted Net Income
2,409 32 2,441
Adjusted Net Income Margin, %
30.9% 0.4% 31.3%
For the year ended December 31, 2018
(in millions of RUB)
Non-IFRS
Prior Presentation
Net foreign exchange
gain and related
income tax effect
Non-IFRS
Revised Presentation
Adjusted EBITDA
2,855 9 2,864
Adjusted EBITDA Margin, %
46.7% 0.1% 46.8%
Adjusted Net Income
1,538 10 1,548
Adjusted Net Income Margin, %
25.1% 0.2% 25.3%
For the year ended December 31, 2017
(in millions of RUB)
Non-IFRS
Prior Presentation
Net foreign exchange
gain and related
income tax effect
Non-IFRS
Revised Presentation
Adjusted EBITDA
2,255 (96) 2,159
Adjusted EBITDA Margin, %
47.7% (2.1)% 45.6%
Adjusted Net Income
897 (96) 801
Adjusted Net Income Margin, %
18.9% (2.0)% 16.9%
 
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RISK FACTORS
You should carefully consider the risks described below and in our Annual Report on Form 20-F for the year ended December 31, 2020 before making an investment decision, together with all of the other information included in or incorporated by reference into this prospectus supplement and the accompanying prospectus, including our Annual Report on Form 20-F for the year ended December 31, 2020, and other information in our consolidated financial statements included and incorporated by reference herein. See “Where You Can Find More Information.” Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of our ADSs could decline due to any of these risks, and you may lose all or part of your investment. This prospectus supplement also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Risks Relating to the Russian Federation and Other Markets in which We Operate
Important information regarding risks related to our business, including risks related to our industry, legal and regulatory risks, among others, is set forth under “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2020, which is incorporated herein by reference. Additional or updated risks include the following:
Deterioration of Russia’s relations with other countries could negatively affect the Russian economy and those of the nearby regions.
Over the past several years, Russia has been involved in conflicts, both economic and military, involving other countries. On several occasions, this has resulted in the deterioration of Russia’s relations with other members of the international community, including the United States and various countries in Europe. Many of these jurisdictions are home to financial institutions and corporations that are significant investors in Russia and whose investment strategies and decisions may be affected by such conflicts and by worsening relations between Russia and its immediate neighbors.
For example, relations between Ukraine and Russia, as well as Georgia and Russia, have recently been strained over a variety of issues. In September 2015, following a formal request from the Syrian government, the Russian Federal Council approved the use of Russian forces in Syria. Operations in Syria commenced in late September 2015. In December 2017, the Russian President ordered the partial removal of operations in Syria, but the Russian military contingent is still involved in operations in Syria. Furthermore, in November 2015, the Turkish Air Force shot down a Russian strike aircraft over Syria that resulted in tensions between Russia and Turkey, and led to the imposition of a wide range of sanctions by Russia against Turkey, which were then partially removed in the second half of 2016 and in 2017.
In January 2018, pursuant to the Countering America’s Adversaries through Sanctions Act of 2017, the U.S. administration presented the U.S. Congress with a report on senior Russian political figures, “oligarchs” and “parastatal” entities. While the identification of any individuals in the report does not automatically lead to the imposition of new sanctions and it is not possible to predict whether any such identification could have a material adverse effect on the Russian economy or our business. Neither our directors nor senior management are included in the report.
In March 2018, more than 140 Russian diplomats were expelled worldwide, and Russia in turn announced the expulsion of 60 American diplomats and the closure of the United States consulate in St. Petersburg, Russia. On April 6, 2018, the United States imposed new sanctions that targeted a number of Russian state officials and prominent Russian businessmen and their businesses. In August 2018, the U.S. Department of State imposed new sanctions on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”). On November 25, 2018, Ukrainian Navy vessels attempted to pass from the Black Sea into the Sea of Azov and were captured by the Russian Federal Security Service in the Kerch Straight, leading to further tensions between Russia and Ukraine. In December 2018, the United States expanded sanctions by designating 15 members of the Russian military intelligence organization, GRU, for their involvement in a wide range of activities, including attempting to interfere with the 2016 U.S. elections. In August 2019, following Russia’s alleged failure to meet certain
 
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conditions under the CBW Act, the U.S. Department of State imposed additional sanctions against Russia, relating to Russian sovereign debt, multilateral lending and export restrictions for dual-use technologies that can be used for chemical and biological warfare. Most recently, on April 15, 2021, President Biden announced an executive order imposing additional sanctions that target 32 entities and officials and, along other measures, prohibiting U.S. financial institutions from buying ruble-denominated bonds issued by the Central Bank of Russia, the Russian Ministry of Finance and the National Fund.
On January 1, 2021, the National Defense Authorization Act for Fiscal Year 2021 (the “Defense Budget 2021”) and the Protecting Europe’s Energy Security Clarification Act of 2020 (the “PEESCA”) as part of the Defense Budget 2021 were enacted into law when the U.S. Congress overrode the U.S. President’s veto of the legislation. The Defense Budget 2021 and PEESCA mandate the imposition of sanctions on persons providing vessels for pipe-laying activities for the construction of the Nord Stream 2 and the TurkStream gas export pipelines, persons who facilitate providing those vessels, and persons who provide underwriting, insurance or reinsurance services for those vessels, various technology upgrades, or tethering of those vessels, or provide testing, inspections or certifications for the Nord Stream 2 pipeline.
Moreover, several additional pieces of proposed legislation directed at increasing U.S. sanctions against Russia remain under consideration. The proposed legislation, if enacted, could further affect, among other things, Russian sovereign debt, Russian energy projects and the Russian energy and financial sectors. Though it is currently uncertain whether or when any of this proposed legislation will be signed into law, such legislation and the potential sanctions imposed pursuant to such legislation may have an adverse impact on the Russian economy in general and thus may negatively affect our operations.
In recent years, relations between Russia, the United States, certain EU members and the United Kingdom have been strained due to a number of issues, including geopolitical confrontations, economic interests and trade wars, as well as internal political and social events, and there can be no assurance that the governments of the United States, EU and United Kingdom or other countries will not impose further sanctions against Russia or specific individuals, entities or economy sectors. The emergence of new or escalated tensions between Russia and other countries, including any escalation of the conflict or renewed fighting, or the imposition of international trade and economic sanctions in response to these tensions, could negatively affect the economies in the regions where we are present, including the Russian economy. This, in turn, may result in a general lack of confidence among international investors in the region’s economic and political stability and in Russian investments generally. Such lack of confidence may result in reduced liquidity, trading volatility and significant declines in the price of listed securities of companies with significant operations in Russia, including our shares, and in our inability to raise debt or equity capital in the international capital markets, which may affect our ability to achieve the level of growth to which we aspire. Additionally, the relationship between the U.S. and Russia is subject to fluctuation and periodic tension. Changes in political conditions in Russia and changes in the state of Russian-U.S. relations are difficult to predict and could adversely affect our operations or cause our company to become less attractive for U.S. investors.
Political and governmental instability in Russia and other countries of our operations could materially adversely affect our business, prospects, financial condition, results of operations and the value of our ADSs.
The determination by the Federal Antimonopoly Service of Russia (the “FAS”) that we hold a dominant position in the market where we operate and that we have abused this dominant position in the past, as well as other FAS’s investigations into our operations or transactions may adversely affect our business, financial condition and results of operations.
The Russian Federal Law No. 135-FZ “On Protection of Competition” dated July 26, 2006, as amended (the “Competition Law”), establishes certain restrictions on activities of companies that occupy a dominant position in any markets of their operation. When determining market dominance, the FAS needs to identify and define the relevant market, in which the entity in question operates. There are numerous aspects to be taken into account when making this determination, including the interchangeability or substitutability of the products and/or services for the consumer, their pricing and intended use, and then calculate market shares of companies operating in this market. Different approaches may be applied in this respect by the FAS and market participants.
 
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In April 2019, after a complaint filed by Stafori LLC the FAS initiated an investigation in relation to us alleging a violation of antitrust legislation by restricting access to our CV database for Stafori LLC’s “Robot Vera” software, which offers automated candidate search services (the “Stafori Case”). In December 2019, the FAS determined that Headhunter LLC, together with SuperJob LLC (operating under the “SuperJob” brand) and RDV-Soft LLC (operating under the “Rabota.ru” brand), were occupying a collective dominant position in the market of internet-based services related to ensuring information coordination between employees, employers and staffing agencies in Russia, and that its actions prohibiting the use of third-party software lead to restriction of competition on the adjacent product markets (app stores). Headhunter LLC was found to have violated Russian antitrust legislation by abusing its collective dominant market position.
On January 23, 2020, the FAS issued its final decision, which concluded that our actions did not limit overall competition in Russia’s online recruitment market. At the same time, the FAS determined that we infringed on Stafori’s interests by creating impediments on Stafori’s ability to access the market of internet-based services for ensuring information coordination between employees, employers and staffing agencies in Russia and ordered us to consider their applications for registration of their products on our system, if Stafori submits such applications. On July 13, 2020, the FAS imposed a fine of 737,500. The FAS did not issue any further rulings or orders in connection with this investigation. We contested judicially the FAS decision on April 22, 2020, and the fine on July 31, 2020. On April 8, 2021, the court of first instance dismissed our claim and refused to revoke the FAS decision. We plan to appeal this court ruling in a higher court. We believe that the mitigation measures prescribed by the FAS will not have a significant impact on our operations, and we intend to maintain our commitment to protecting personal data in the market. In addition, Stafori LLC may choose to claim for damages incurred as a result of infringement of its rights; however, Stafori LLC will have to prove the existence of such damages and that such infringement caused the damages. See also “— Selective or arbitrary government action could have a material adverse effect on our business, financial condition, results of operations and prospects” and Item 8. “Financial Information, A. Consolidated Statements and Other Financial Information” of our Annual Report on Form 20-F for the year ended December 31, 2020, incorporated by reference herein.
In December 2017, we acquired certain assets related to Job.ru from Pronto Media Holding LLC (the “Job.ru Transaction”). As the book value of the acquired assets in connection with the Job.ru Transaction was below the statutory threshold under the antitrust legislation, we did not file an application with the FAS for prior approval. In December 2018, the FAS initiated an investigation that alleged a violation of the relevant antitrust laws by not filing the application for prior approval of the Job.ru Transaction. In January 2019, HeadHunter LLC was found to have violated antitrust laws and was fined in the amount 300,000. In February 2019, we judicially contested the FAS decision in court. During 2019 and 2020, the court of first instance, court of appeal and cassation court issued rulings confirming our position; however, in September 2020, the Supreme Court of the Russian Federation upheld the cassation appeal of the FAS, cancelled the previous judicial rulings of the appeals and cassation courts and remitted the case to the appeal court for re-consideration. During the retrial in December 2020, the appeals court re-examined the case and rejected our claim, in favor of the position of the FAS. This ruling was further upheld by the judgment of a cassation court in May 2021, which we plan to contest in the Supreme Court of the Russian Federation.
Although we believe that the ongoing proceedings related to the Stafori Case or the Job.ru Transaction will not have a significant impact on our operations, to the extent the FAS undertakes any further investigations and/or decides to impose additional penalties or other sanctions on us, including invalidating the Job.ru Transaction, we may incur additional losses and may face negative publicity in connection with such investigations.
The conclusion by the FAS that we hold a collective dominant position in one or more of the markets in which we operate, as well as the ruling that we violated the antitrust legislation in connection with the Job.ru Transaction, could result in heightened scrutiny of our business and industry, and/or limit our ability to complete future acquisitions. In addition, the FAS could require that we seek pre-approval from the FAS for any antitrust compliance policies and programs or substantial changes to our standard agreements with merchants and agents, as well as maintain our current agreements with business partners. Russian legislation prohibits persons holding a dominant position from setting monopolistically high or low prices. We could be prohibited from setting different prices to the same products and services and could be ordered
 
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to pre-agree our tariffs and pricing policies or any changes thereto with the FAS. In addition, if we were to decline to conclude a contract with a third party this could, in certain circumstances, be regarded as abuse of a dominant market position. Any abuse of a dominant market position could lead to administrative penalties and the imposition of fines in amounts linked to our revenue.
Russian legislation provides that the prohibition on the abuse of a dominant market position does not apply to the execution of exclusive rights in relation to intellectual property. There have been multiple discussions of proposed changes to the Russian antimonopoly legislation, including an initiative that would rescind intellectual property immunity; however, no such draft legislation to that effect has been proposed to the lower chamber of the Russian Parliament. Once there is more clarity in connection with this initiative and there is a more developed draft of any such legislation, we will be better placed to identify and assess the potential impacts, if any, on us and our business.
Risks Relating to Russian Taxation
Changes in Russian tax law could adversely affect our Russian operations.
Generally, Russian taxes that we are subject to are substantial and include, inter alia: corporate income tax, value added tax, property tax, employment-related social security contributions; we are also subject to duties and liabilities of a tax agent in terms of withholding taxes with respect to some of our counterparties. Although the Russian tax climate and the quality of tax legislation have generally improved with the introduction of the Russian Tax Code, the possibility exists that the Russian Federation may impose arbitrary and/or onerous taxes and penalties in the future. The Russian Federation’s tax collection system increases the likelihood of such events, and this could adversely affect our business.
Russian tax laws are subject to frequent change and some of the sections of the Russian Tax Code are comparatively new and continue to be redrafted.
Since 2014, several important rules have been introduced into the Russian Tax Code as a part of the Russian Government’s policy focused on curtailing Russian businesses from using foreign companies mostly or only for tax reasons. These rules impose significant limitations on tax planning and are aiming at allowing the Russian tax authorities to tax foreign income attributable to Russian businesses (known as “deoffshorization measures”). These rules include, in particular, (i) rules governing the taxation of “controlled foreign companies” ​(CFC rules) (without limitation of jurisdictions to which this definition applies which residents may fall under); (ii) rules determining the tax residence status of non-Russian legal entities (tax residence rules); (iii) rules defining the “beneficial ownership” ​(actual recipient of income) concept and (iv) taxation of capital gains derived from the sale of shares in “real estate rich” companies (with the value of assets deriving, directly or indirectly, from real estate located in the Russian Federation by more than 50%), all in effect since 2015; and (v) codified general anti-abuse rules (that base on the judicial concept of “unjustified tax benefit”, defined by the Supreme Arbitration Court in 2006, and provide a few tests to support tax reduction or tax base deduction, including the “main purpose test”), in effect since 2017.
Starting 2019, the standard VAT rate increased from 18% to 20%, and the VAT rate applied to e-services rendered by foreign providers increased from 15.25% to 16.67%. Starting 2021, income of Russian tax-resident individuals exceeding 5 million per annum is subject to personal income tax at a rate of 15% instead of 13% previously used.
In addition, in 2020 to 2021, new restrictions have been introduced into Russian tax law that effectively phase out certain tax benefits to non-Russian registered entities that voluntarily recognized themselves as Russian tax residents, such as our business. In particular, a participation exemption regime, a tax benefit that many non-Russian registered entities have relied on in obtaining Russian tax residency on a voluntary basis, will no longer apply to dividend income of such entities starting 2024, which may increase the tax we pay on dividends from our Russian operating entities to Headhunter Group PLC from 0% to 15% starting January 1, 2024, while still requiring a 15% tax withholding from dividends paid by Headhunter Group PLC to our shareholders. We are considering options to prevent such double taxation from occurring.
In addition, in May 2021, it was also announced that the Russian Federation may introduce progressive tax rates on Russian-sourced dividends paid outside of the Russian Federation. It is currently unclear when, how and to what extent this initiative would be introduced into Russian legislation.
 
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These changing conditions create tax risks in the Russian Federation that are more significant than those typically found in jurisdictions with more developed tax systems; they have significant effect on us, complicate our tax planning and related business decisions and may expose us to additional tax and administrative risks, as well as extra costs that are necessary to secure compliance with these new rules. In addition, there can be no assurance that the current tax rates will not be increased and that new taxes will not be introduced.
The interpretation and application of the Russian Tax Code generally and, in particular, the aforementioned new rules have often been unclear or unstable. Differing interpretations may exist both among and within government bodies at the federal, regional and local levels; in some instances, the Russian tax authorities take positions contrary to those set out in clarification letters issued by the Ministry of Finance in response to specific taxpayers’ queries and apply new interpretations of tax laws retroactively. This increases the number of existing uncertainties and leads to inconsistent enforcement of the tax laws in practice. Furthermore, over recent years, the Russian tax authorities have shown a tendency to take more assertive positions in their interpretation of tax legislation, which has led to an increased number of material tax assessments issued by them as a result of tax audits of taxpayers. Taxpayers often have to resort to court proceedings to defend their position against the Russian tax authorities. In the absence of binding precedent or consistent court practice, rulings on tax matters by different courts regarding the same or similar circumstances may be inconsistent or contradictory. In practice, courts may deviate from the interpretations issued by the Russian tax authorities or the Ministry of Finance in a way that is unfavorable for the taxpayer.
The Russian tax system is, therefore, impeded by the fact that, at times, it continues to be characterized by inconsistent judgment of the local tax authorities and the failure of the Russian tax authorities to address many of the existing problems. It is, therefore, possible that our transactions and activities that have not been challenged in the past may be challenged in the future, which may have a material adverse effect on our business, financial condition, results of operations and prospects and the trading price of the ADSs.
Russian transfer pricing rules may adversely affect the business of our Russian operations, financial condition and results of operations.
Transfer pricing legislation has been in force in the Russian Federation since 2012. The rules are technical, detailed and, to a certain extent, aligned with the international transfer pricing principles developed by the Organization for Economic Co-operation and Development (the “OECD”).
Russian transfer pricing rules apply to “controlled transactions” that include transactions with related parties and certain types of cross-border transactions and oblige the taxpayers to notify the tax authorities about “controlled transactions” and to keep specific documentation proving the conformance with the “arm’s length principle.” The rules have considerably increased the compliance burden on taxpayers compared to the previous regime, as currently taxpayers are obliged to prepare not only transfer pricing documentation but also notifications and reports.
Starting in 2019, transactions between related parties are not treated as “controlled transactions,” in case such related parties are the Russian tax residents and/or located in the Russian Federation, and apply the general corporate income tax rate.
HeadHunter Group PLC changed its tax residence from Cyprus to the Russian Federation on June 19, 2019, and HeadHunter FSU Limited changed its tax residence from Cyprus to the Russian Federation on November 8, 2018. Consequently, transactions between the Russian companies in our group applying the general corporate income tax rate and transactions with HeadHunter Group PLC and HeadHunter FSU Limited shall not be treated as “controlled transactions.”
Although transfer pricing rules are supposed to be in line with the international transfer pricing principles developed by the OECD, there are certain significant differences with respect to how these principles are reflected in the local rules. Special transfer pricing rules apply to transactions with securities and derivatives. It is difficult to evaluate and assess beforehand the effect of transfer pricing rules on our business.
 
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In addition, although pricing applied in “controlled transactions” shall be audited by the Federal Tax Service (by its central office), in observance of the transfer pricing methods, in practice, lower-level tax authorities often attempt to scrutinize pricing and other terms in transactions between related parties more broadly, based on the “unjustified tax benefit” concept.
In accordance with the foregoing, due to uncertainties in the interpretation and application of Russian transfer pricing rules, no assurance can be given that the Russian tax authorities will not challenge our transaction prices and make adjustments that could affect our tax position unless we are able to confirm our use of arm’s length prices, supported by appropriate transfer pricing documentation. The imposition of additional tax liabilities as a result of Russian transfer pricing rules may have a material adverse effect on our business, prospects, financial condition, results of operations or the trading price of the ADSs.
Our Cypriot entities may be exposed to taxation in the Russian Federation if they are treated as having a Russian permanent establishment or as being Russian tax residents in the periods before they self-declared their Russian tax residence.
As companies incorporated under the laws of Cyprus, HeadHunter Group PLC and Headhunter FSU Limited self-declared Russian tax residence beginning on June 19, 2019 and November 8, 2018, respectively, pursuant to the provisions stipulated in the Russian Tax Code. At the same time, these companies of the Group can be deemed Russian tax residents in prior periods.
The Russian Tax Code provides for extended taxation and related tax obligations for foreign legal entities that carry on commercial activities in the Russian Federation in such a manner that they create either a permanent establishment or a tax residence (in the first case, the foreign legal entity is subject to Russian corporate income tax with regard to income derived from activities conducted through the permanent establishment; in the second case, the Russian corporate income tax applies to the worldwide income of the foreign legal entity; in addition, in both cases, other taxes may apply depending on the circumstances). Although tax residence rules for legal entities as defined in the Russian Tax Code are broadly similar to the respective concepts known in the international context (including those developed by the OECD for tax treaty purposes), they have not yet been sufficiently tested in the Russian administrative and court practice (since they have been in effect from 2015). The permanent establishment concept has been in effect for a while, but several key elements of this concept (for example, the allocation of income and expenses to the permanent establishment) still lack sufficient application guidelines.
We do not believe that our Cypriot entities will be treated as having a tax residence or a permanent establishment in the Russian Federation in the periods before they self-declared tax residents of the Russian Federation. However, we cannot assure you that our Cypriot entities will not be treated by Russian tax authorities as having permanent establishment or Russian tax residence in those periods. If this occurs, additional Russian taxes (as well as related penalties) would be imposed on us, and our business, prospects, financial condition and results of operations could be materially and adversely affected.
Russian tax residence rules are relatively untested, and our tax residence status may be challenged.
HeadHunter Group PLC and Headhunter FSU Limited, companies incorporated under the laws of Cyprus, self-declared Russian tax residence beginning on June 19, 2019 and November 8, 2018, respectively, pursuant to the provisions stipulated in the Russian Tax Code. Consequently, these companies are to be treated for Russian corporate income tax purposes in the same manner as other Russian taxpayers, and therefore, they are subject to the Russian corporate income tax on worldwide income and are entitled to all tax exemptions and benefits as provided under the Russian Tax Code. However, the relevant tax residence rules have not been sufficiently tested, particularly by publicly traded companies that have migrated to the Russian Federation for tax purposes, and it is possible that the self-declared tax residence status may be challenged in the future and, as a result, the 0% tax rate on incoming dividends may be denied.
In addition, in 2020, new tax laws were passed in the Russian Federation phasing out certain tax benefits available to non-Russian registered but Russian tax resident entities, such as HeadHunter Group PLC and Headhunter FSU Limited. In particular, starting 2024, the 0% tax rate on dividends received will not be available for non-Russian registered but Russian tax resident entities.
 
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The mechanics of withholding tax on Russian-sourced income are not precise.
As a Russian taxpayer, we are now governed by the Russian Tax Code, which provides that dividends paid by us that are made up of Russian-sourced income are subject to Russian taxation. We act in the capacity of a tax agent and pay dividends net of the statutory withholding tax rate of 15% pursuant to Russian tax laws, which could be reduced depending on the tax status of each shareholder and pursuant to the double tax treaties concluded by the Russian Federation with other jurisdictions.
Starting in 2015, the Russian Tax Code explicitly requires that in order to enjoy the benefits under an applicable double tax treaty, the person claiming such benefits must be the beneficial owner of the relevant income. Starting in 2017, in addition to a tax residence certificate, the Russian Tax Code requires the tax agent to obtain confirmation from the recipient of the income that it is the beneficial owner of the income. Russian tax law provides neither the form of such confirmation nor a list of documents that can demonstrate the beneficial owner status of the recipient with respect to the received income. In recent years, the Russian tax authorities started to challenge structures involving the payments outside of the Russian Federation, and in most cases, Russian courts tend to support the tax authorities’ position. Thus, there can be no assurance that treaty relief at source will be available in practice.
The concept of “beneficial ownership” was introduced into the Russian Tax Code in 2015 as a part of the “deoffshorization” measures. In accordance with this concept, if a person serves as an intermediary and has an obligation to transfer part or all of the income received from the company to a third party (i.e., a person that is not able to act independently with respect to the use and disposition of the received income), such person may not be treated as the beneficial owner of income. The result of the denial of beneficial ownership would be the denial of tax treaty benefits (such as the reduced tax on dividends). Although the “beneficial ownership” concept, as it is currently defined in the Russian Tax Code, is in line with the relevant internationally known rules, the application of this concept in the Russian administrative and court practice currently shows rather broad and conflicting interpretations. Given the current conflicting interpretation of the “beneficial ownership” concept, the application of this concept may lead to excessive taxation of our retained earnings on their distribution.
The mechanics of the application of Russian withholding tax on dividends by public companies that have migrated to the Russian Federation for tax purposes have not been tested, and there is a risk that we will not be in the position to apply reduced tax rates as applicable to Russian tax resident Holders or the reduced rates available under double tax treaties, therefore we will have to withhold the tax at the generally applicable 15% tax rate. See “Material Russian Tax Considerations — Taxation of Dividends and Other Distributions (including distributions in kind).”
In addition, in June 2019, the Russian Federation deposited its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”). Starting 2021, the MLI is enforced with jurisdictions in respect of which notifications to the OECD were made confirming the completion of internal procedures for the covered tax agreements by Russia. The implementation of the MLI has introduced a variety of measures designed to update double tax treaties and reduce opportunities for tax optimization. In particular, the MLI sets forth additional requirements that a company must meet in order to avail of reduced withholding tax rates applicable to its passive income.
In general, the countries signing the MLI seek to prevent tax abuse via adoption of, among other options, (i) a general anti-abuse rule on the principal purpose of a transaction (the “PPT”) or (ii) a combination of PPT and the Simplified Limitation of Benefits (the “Simplified LOB”) clause. The PPT seeks to disallow the benefits of a particular double tax treaty where, broadly, the principal purpose of establishing a particular transaction or an arrangement was to obtain the benefits of a double tax treaty. The Simplified LOB provides for a number of objective criteria that restrict most treaty benefits to so-called “qualified persons” specified in the MLI. The Russian Federation selected to apply the Simplified LOB, i.e. the combination of PPT and Simplified LOB. However, most other countries have selected the PPT only. Therefore, unless the Simplified LOB is mutually agreed by the Russian Federation and the contracting jurisdiction, only the PPT shall apply in the majority of cases.
These developments may potentially have an adverse impact on the availability of double taxation treaty benefits to the investors in our ADSs.
 
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In addition, in 2020, the Russian Government was directed to revise Russian double tax treaties, which are often used for tax planning, in order to increase withholding tax rates up to 15% for Russian-sourced dividend and interest income or, if negotiations are unsuccessful, to denunciate such treaties. The Russian Ministry of Finance completed negotiations with the competent authorities of Cyprus, Malta, the Netherlands and Luxembourg, and it is very likely that the number of tax treaties subject to revisions may increase.
As a consequence of aforementioned negotiations, the Russian Federation signed a protocol of the amendments to the Russia-Cyprus double tax treaty in September 2020, a protocol of the amendments to the Russia-Malta double tax treaty in October 2020 and a protocol of the amendments to Russia-Luxembourg double tax treaty in November 2020. In addition, on May 26, 2021, the Russian President signed the law denouncing the double tax treaty with the Netherlands.
In accordance with the protocols of amendments to the Russia-Cyprus and Russia-Malta double tax treaties new tax rates of 15% to both dividend and interest income, subject to certain exceptions, came into force starting from January 1, 2021. The Russia-Luxembourg protocol providing for similar amendments will come into force January 1, 2022.
In certain cases, reduced tax rates will remain in place. In particular, the preferential tax rate of 5% is available for dividend and interest income received by Cypriot, Maltese or Luxembourgish tax resident public companies whose shares are listed on a stock exchange and which have no less than 15% of free float shares, provided that this public company owns at least 15% of the shares in a Russian company paying the income for the period of at least 365 consecutive days. In addition, certain tax benefits are available for income received by Cypriot, Maltese and Luxembourgish pension funds and insurance companies, the Government of the Republic of Cyprus, the Government of the Republic of Malta and the Government of the Grand Duchy of Luxembourg as well as its political subdivisions and the Central Banks of the Republic of Cyprus, the Republic of Malta and the Grand Duchy of Luxembourg.
Revision of the double taxation treaties with Cyprus did not adversely affect us, as our Cypriot entities are tax residents in Russia.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the Securities Act. All statements other than statements of historical facts contained or incorporated by reference in this prospectus supplement and the accompanying prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, these forward-looking statements can be identified by words or phrases such as “believe,” “may,” “will,” “expect,” “estimate,” “could,” “should,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Forward-looking statements contained or incorporated by reference in this prospectus supplement and the accompanying prospectus include, but are not limited to, statements about:

our future financial performance, including our revenue, operating expenses and our ability to achieve and maintain profitability;

our expectations regarding the development of our industry and the competitive environment in which we operate;

the growth in the usage of our mobile platform and our ability to successfully monetize this usage;

the growth of our brand awareness and overall business; and

our ability to improve our user experience, product offerings and technology platform and product offerings to attract and retain job seekers.
These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Risk Factors,” including the following:

a regional or global health pandemic, including COVID-19, potential actions taken to contain a disease, and speed and extent of the recovery could severely affect our business, results of operations and financial condition due to impacts on our customers;

significant competition in our markets;

our ability to maintain and enhance our brand;

our ability to improve our user experience, product offerings and technology platform to attract and retain job seekers;

our ability to respond effectively to technological or industry developments;

our dependence on job seeker traffic to our websites;

our reliance on Russian internet infrastructure, internet access and telecommunication networks;

global political and economic stability;

concerns about computer viruses, undetected software errors and hacking;

privacy and data protection concerns, including government regulation in consumer data privacy;

our ability to maintain an effective system of internal control over financial reporting;

our ability to effectively manage our growth; and

our ability to attract, train and retain key personnel and other qualified employees.
 
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We operate in an evolving environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The forward-looking statements made or incorporated by reference in this prospectus supplement and the accompanying prospectus relate only to events or information as of the date on which the statements are made. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus supplement, the accompanying prospectus, the documents incorporated by reference herein and therein, and the documents that we have filed as exhibits to the registration statement to which this prospectus supplement relates completely and with the understanding that our actual future results or performance may be materially different from what we expect.
 
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USE OF PROCEEDS
The Selling Shareholders are selling all of the ADSs being sold in this offering. Accordingly, we will not receive any proceeds from the sale of ADSs in this offering. We will bear all costs, fees and expenses in connection with this offering, except for the underwriting fees to be paid by the Selling Shareholders on a per ADS basis, which are estimated to be approximately $5.8 million.
In connection with the Acquisition, Highworld Investments Limited entered into a profit sharing arrangement with an affiliate of Ivan Tavrin, and ELQ Investors VIII Limited in turn entered into a pro rata arrangement with Highworld Investments Limited, pursuant to which Mr. Tavrin’s affiliate will receive approximately 9% of any profit that Highworld Investments Limited and ELQ Investors VIII Limited realize with regard to their investment in the Company, including any profit realized upon the sale of its ADSs in this offering. Pursuant to this arrangement, Mr. Tavrin’s affiliate will receive approximately $15.2 million from the sale of ADSs by the Selling Shareholders in this offering (or approximately $17.5 million if the underwriters exercise their option to purchase additional ADSs in full). Neither Mr. Tavrin nor his affiliate provided services in connection with the Acquisition or to the Company. Neither Mr. Tavrin nor his affiliate is a shareholder of the Company and neither has rights in the Company or its shares or with regard to its management. Instead, the profit sharing arrangement with Mr. Tavrin settles the Selling Shareholders’ obligation to Mr. Tavrin arising from his relinquishing a previously existing position as the preferred purchaser in the Acquisition. Mr. Tavrin is a well-known Russian telecom, media and technology entrepreneur who was a founder, shareholder and head of a number of Russian companies. He was CEO of Megafon from 2012 to 2016. Mr. Tavrin previously held a position on the board of directors of Mail.Ru (but did not hold such position at the time of the Acquisition) and affiliates of Highworld Investments Limited have historically had and continue to have joint investment projects with Mr. Tavrin in other businesses that are not related to the Company. Neither Mr. Tavrin nor his affiliate is otherwise affiliated with the Selling Shareholders or the Company, and the Company has no obligations to Mr. Tavrin or his affiliate.
 
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CAPITALIZATION
The table below sets forth our cash and cash equivalents and capitalization as of March 31, 2021, derived from our unaudited condensed consolidated interim financial information and notes thereto included elsewhere in this prospectus supplement.
Investors should read this table in conjunction with our audited financial statements included in our Form 20-F for the year ended December 31, 2020, incorporated by reference herein, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated interim financial information and notes thereto included elsewhere in this prospectus supplement.
( in thousands)
Actual as of
March 31, 2021
Cash and cash equivalents
4,833,839
Loans and borrowing, including current portion
8,190,123
Shareholders’ equity:
Share capital:
Ordinary shares
8,597
Share premium
2,015,613
Foreign currency translation reserve
(84,803)
Retained earnings
2,434,938
Total equity attributable to owners of the Company
4,374,345
Non-controlling interest
156,771
Total capitalization
12,721,239
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes thereto included or incorporated by reference in this prospectus supplement. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Please see “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this prospectus supplement and the accompanying prospectus. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.
Overview
We are the leading online recruitment platform in Russia and the CIS region and focus on connecting job seekers with employers. We offer potential employers and recruiters paid access to our extensive CV database and job postings platform. We also provide job seekers and employers with a value added services portfolio centered around their recruitment needs. Our brand and the strength of our platform allow us to generate significant traffic, over 91% of which was free for us as of December 2020, according to our internal data, and we were the sixth most visited job and employment website globally as of January 1, 2021, according to the latest available data from SimilarWeb. Our CV database contained 36.2 million, 41.8 million and 48.2 million total CVs as of December 31, 2018, 2019 and 2020, respectively, and our platform hosted a daily average of approximately 559,000, 588,000 and 608,000 job postings in the years ended December 31, 2018, 2019 and 2020, respectively. For the years ended December 31, 2018, 2019 and 2020, our platform averaged 20.0 million, 21.9 million and 22.5 million unique visitors per month, respectively, according to LiveInternet.
Our user base consists primarily of job seekers who use our products and services to discover new career opportunities. The majority of the services we provide to job seekers are free. Our customer base consists primarily of businesses using our CV database and job posting service to fill vacancies inside their organizations.
We were founded in 2000 and have successfully established a strong, trusted brand and the leading market position, which have enabled us to achieve significant growth in recent years. We had 252,953, 322,393, 350,599 and 163,891 paying customers on our platform for the years ended December 31, 2018, 2019 and 2020 and the three months ended March 31, 2021, respectively. We have a highly diversified customer base, representing the majority of the industries active in the Russian economy.
Our total revenue was 6,118 million, 7,789 million, 8,282 million and 2,841 million in the years ended December 31, 2018, 2019 and 2020 and the three months ended March 31, 2021, respectively. During the same periods, our net income was 1,033 million, 1,581 million, 1,886 million and 930 million, respectively. In addition to our growth, we have consistently maintained strong profitability.
Impact of COVID-19 Pandemic
The outbreak of the COVID-19 pandemic in the first half of 2020 affected our financial results mostly through the decrease in business activity in Russia on the back of measures taken by authorities to contain the spread of COVID-19 through measures such as shelter-in-place orders, non-working days announcements, mobility and social distancing restrictions and businesses closures. A decrease in business activity led to a decrease in the number of job postings advertised by our customers and the number of CV database subscriptions purchased or renewed, leading to a decrease in our revenues.
 
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The most severe restrictions in Russia were in place from March 30, 2020 to May 11, 2020, when a nation-wide period of non-working days was introduced and shelter-in-place orders were in effect in Moscow. This affected our revenues in the first and second quarter of 2020. A gradual recovery of business activities followed in the second quarter of 2020, resulting in the gradual recovery in our KPIs in subsequent quarters. No such restrictions had been introduced since until recently, when a period of four working days from May 4, 2021 to May 7, 2021 was announced as a period of non-working days.
As a result, we see no measurable impact of COVID-19 on our financial results for the first quarter of 2021 and financial position as at March 31, 2021. The period to period comparison of our financial results for the first quarter of 2021 was affected by the negative impact of COVID-19 on our first quarter results in 2020. Our financial position, results and liquidity may be affected in the future by any further adverse developments related to COVID-19. See “Risk Factors.”
Segments
For management purposes, we are organized into operating segments based on the geography of our operations or other subdivisions as presented in internal reporting to our chief operating decision-maker. Our operating segments include “Russia (hh.ru),” “Russia (Zarplata.ru),” “Belarus,” “Kazakhstan” and other countries. As each segment, other than “Russia (hh.ru)” and “Russia (Zarplata.ru),” individually comprises less than 10% of our revenue, for reporting purposes we combine all segments other than Russia into the “Other segments” category.
In addition, when reviewing our Russia segments, we disaggregate revenue by customer location (including large cities, Moscow and St. Petersburg, and Other regions in Russia) and type of customer account (Key Accounts and Small and Medium Accounts) to review relevant key operating performance measures within each group.
Key Indicators of Operating and Financial Performance
Our management monitors and analyzes certain operating and financial performance indicators. This process ensures timely evaluation of the performance of our business and the effectiveness of our strategies, enabling our management to react promptly to the changing requirements of job seekers and customers and evolving market conditions. We believe that many online businesses monitor similar indicators, however, there are inherent challenges with respect to gathering and assessing the data underlying our performance indicators. See Item 3.D “Risk Factors — Risks Relating to Our Business and Industry — Real or perceived inaccuracies of our internally calculated or third-party sourced user metrics may harm our reputation and adversely affect our business and operating results” of our Annual Report on Form 20-F for the year ended December 31, 2020, incorporated by reference herein.
Key Operating Performance Indicators
We use the following key operating performance indicators to assess the performance of our online recruitment services, from which we generate substantially all of our revenue.
These measures include the number of paying customers, the number of job postings on our websites, ARPC, the average number of UMVs to our website, and the number of CVs and visible CVs in our database.
The following table sets forth our key operating performance indicators as of the dates (number of CVs and number of visible CVs) or for the periods indicated (number of paying customers, ARPC, number of job postings and average UMVs):
 
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As of and for the year ended
December 31,
As of and for the
three months
ended March 31,
2018
2019
2020
2020
2021
Number of paying customers