As filed with the Securities and Exchange Commission on November 20, 2020.

Registration No. 333-249810

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2 to Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Ozon Holdings PLC

(Exact Name of Registrant as Specified in its Charter)

Not Applicable

(Translation of Registrant’s Name into English)

Cyprus	5961	N/A
(State or other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Arch. Makariou III, 2-4

Capital Center, 9^th floor

1065, Nicosia

Cyprus

Telephone: +357 22 360 000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Puglisi & Associates

850 Library Avenue, Suite 204

Newark, DE 19711

+1 302 738 6680

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

James C. Scoville
Debevoise & Plimpton LLP
65 Gresham Street
London, EC2V 7NQ
United Kingdom
+44 20 7786 9000 Alan Kartashkin
Debevoise & Plimpton LLP
OKO Tower
21/1 First Krasnogvardeisky Proezd
Floor 41
Moscow, 123112
Russia
+7 495 139 4000 J. David Stewart
Latham & Watkins LLP
Ul. Gasheka 6
Ducat III, Office 510
Moscow, 125047
Russia
+7 495 785 1234

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered(1)	Amount to be Registered(2)	Proposed Maximum Offering Price per Share	Proposed Maximum Aggregate Offering Price(3)	Amount of Registration Fee(4)
Ordinary shares, nominal value of $0.001 per share	34,500,000	$27.50	$948,750,000	$103,509

⁽¹⁾ American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-250104). Each American depositary share represents one ordinary share.

⁽²⁾  Includes additional ordinary shares represented by American depositary shares that the underwriters have an option to purchase.

⁽³⁾  Estimated solely for purpose of calculating the amount of registration fee pursuant to Rule 457(a) of the Securities Act of 1933, as amended.

⁽⁴⁾  Registration fees totaling $10,910 were previously paid in connection with the initial filing of this registration statement.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction or state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2020

American Depositary Shares

Ozon Holdings PLC

30,000,000 American Depositary Shares Representing

30,000,000 Ordinary Shares

$                per ADS

This is the initial public offering of American Depositary Shares (“ADSs”) representing ordinary shares of Ozon Holdings PLC, a public limited company organized under the laws of Cyprus. Each ADS will represent one ordinary share. Prior to this offering, there has been no public market for the ADSs or our shares. We currently expect the initial public offering price to be between $22.50 and $27.50 per ADS.

Baring Vostok Fund V Nominees Limited (“BVFVNL”), an existing shareholder, and BV Special Investments Limited (“BVSIL”), an affiliate of existing shareholders, which are indirectly advised by Baring Vostok Capital Partners Group Limited, have entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs, and Sistema PJSFC (“Sistema”), an existing shareholder, has entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs in concurrent private placements at a price per share equal to the initial public offering price per ADS, for a total of $135 million.

The underwriters may also exercise their option to purchase up to 4,500,000 additional ADSs from us at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus.

We have been approved to list the ADSs on The Nasdaq Global Select Market under the symbol “OZON.”

We are both an “emerging growth company” and a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. See “Prospectus Summary—Implications of Being an ‘Emerging Growth Company’ and a ‘Foreign Private Issuer.’”

Investing in the ADSs involves risks. See “Risk Factors” beginning on page 24.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per ADS	Total
Initial public offering price	$	$
Underwriting discount(1)	$	$
Proceeds, before expenses, to us	$	$

⁽¹⁾  We refer you to “Underwriting” for additional information regarding underwriting compensation.

The underwriters expect to deliver the ADSs to purchasers on or about                 , 2020 through the book-entry facilities of The Depository Trust Company.

Morgan Stanley Goldman Sachs & Co. LLC Citigroup UBS Investment Bank

Sber CIB VTB Capital

RenCap

Prospectus dated                , 2020

TABLE OF CONTENTS

	Page
ABOUT THIS PROSPECTUS		ii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION		iii
MARKET AND INDUSTRY DATA		v
TRADEMARKS, SERVICE MARKS AND TRADENAMES		vi
PROSPECTUS SUMMARY		1
THE OFFERING		17
RISK FACTORS		24
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		68
USE OF PROCEEDS		70
DIVIDEND POLICY		71
CAPITALIZATION		72
DILUTION		73
SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OTHER DATA		75
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		80
OUR INDUSTRY		103
BUSINESS		115
REGULATION		143
MANAGEMENT		151
PRINCIPAL SHAREHOLDERS		160
RELATED PARTY TRANSACTIONS		163
DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF ASSOCIATION		166
SHARES AND ADSs ELIGIBLE FOR FUTURE SALE		184
DESCRIPTION OF AMERICAN DEPOSITARY SHARES		186
MATERIAL TAX CONSIDERATIONS		195
UNDERWRITING		213
CONCURRENT PRIVATE PLACEMENTS		218
EXPENSES OF THE OFFERING		219
LEGAL MATTERS		220
EXPERTS		221
ENFORCEMENT OF CIVIL LIABILITIES		222
WHERE YOU CAN FIND MORE INFORMATION		223
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1

For investors outside the United States: Neither we nor the underwriters have taken any action that would permit this offering or possession or distribution of this 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 the ADSs and the distribution of this prospectus outside the United States.

We are incorporated in Cyprus, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission (“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”).

We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information and do not take responsibility for any other information others may give you. We 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 is accurate as of any date other than its date regardless of the time of delivery of this prospectus or of any sale of the ADSs.

i

ABOUT THIS PROSPECTUS

Except where the context otherwise requires or where otherwise indicated, the terms “OZON,” the “Company,” “Group,” “we,” “us,” “our,” “our company” and “our business” refer to Ozon Holdings PLC, together with its consolidated subsidiaries as a consolidated entity.

All references in this prospectus to “rubles,” “RUB” or “P” 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.

ii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We report under International Financial Reporting Standards (“IFRS”) as adopted 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.

Use of Non-IFRS Financial Measures

Certain parts of this prospectus contain non-IFRS financial measures, including, among others, Contribution Profit/(Loss), Adjusted EBITDA and Free Cash Flow. We define:

• Contribution Profit/(Loss) as loss for the period before income tax benefit/(expense), total non-operating (expense)/income, general and administrative expenses, technology and content expenses and sales and marketing expenses.

• Adjusted EBITDA as loss for the period before income tax benefit/(expense), total non-operating (expense)/income, depreciation and amortization and share-based compensation expense.

• Free Cash Flow as net cash provided by/(used in) operating activities less payments for purchase of property, plant and equipment and intangible assets, and the payment of the principal portion of lease liabilities.

Contribution Profit/(Loss), Adjusted EBITDA and Free Cash Flow are used by our management to monitor the underlying performance of the business and its operations. These measures 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 these measures as reported by us to the same or similar measures as reported by other companies. Contribution Profit/(Loss), Adjusted EBITDA and Free Cash Flow may not be comparable to similarly titled metrics of other companies. These measures are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.

Contribution Profit/(Loss), Adjusted EBITDA and Free Cash Flow are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider them as an alternative to loss for the period, operating loss or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. These measures have limitations as analytical tools, and you should not consider them in isolation. See “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures” for more detail on these limitations of Contribution Profit/(Loss), Adjusted EBITDA and Free Cash Flow. Accordingly, prospective investors should not place undue reliance on these non-IFRS financial measures contained in this prospectus.

Other Key Operating Measures

Certain parts of this prospectus contain our key operating measures, including, among others, gross merchandise value including revenue from services (“GMV incl. services”), share of our online marketplace (our “Marketplace”) GMV (“Share of Marketplace GMV”), number of orders, number of active buyers and number of active sellers. We define:

• GMV incl. services as the total value of orders processed through our platform, as well as revenue from services to our buyers and sellers, such as delivery, advertising and other services rendered by our Ozon.ru operating segment. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. GMV incl. services does not represent revenue earned by us. GMV incl. services does not include travel ticketing commissions, other service revenues or value of orders processed through our Ozon.travel operating segment.

iii

• Share of Marketplace GMV as the total value of orders processed through our Marketplace, inclusive of value added taxes, net of discounts, returns and cancellations, divided by GMV incl. services in a given period. Share of Marketplace GMV includes only the value of goods processed through our platform and does not include services revenue.

• Number of orders as the total number of orders delivered in a given period, net of returns and cancellations.

• Number of active buyers as the number of unique buyers who placed an order on our platform within the 12 month period preceding the relevant date, net of returns and cancellations.

• Number of active sellers as the number of unique sellers who sold an item on our Marketplace within the 12 month period preceding the relevant date, net of returns and cancellations.

iv

MARKET AND INDUSTRY DATA

We obtained the industry, market and competitive position data in this prospectus from our own internal estimates and research, as well as from publicly available information, including information of the Russian Federal State Statistics Service (“Rosstat”), industry and general publications and research, surveys and studies conducted by third parties, including INFOLine, Euromonitor International Limited (“Euromonitor”), AppAnnie and BrandScience.

There are a number of studies that address either specific market segments, or regional markets, within our industry. However, given the rapid changes in our industry and the markets in which we operate, no industry research that is generally available covers some of the e-commerce market trends we view as key to understanding our industry and our place in it worldwide and in Russia, in particular. We believe that it is important that we maintain as broad a view on industry developments as possible. To assist us in formulating our business plan and in anticipation of this offering, we commissioned INFOLine in 2020 to provide an independent view of the online e-commerce landscape in Russia, including an overview of recent macroeconomic and market dynamics, the evolution of the retail and e-commerce market over time and analysis of its underlying trends and potential growth factors, an assessment of the current competitive landscape and other relevant topics, including the report called “Retail and E-Commerce Markets in Russia.” In connection with the preparation of this report, we furnished to INFOLine certain historical information about our company and some data available on the competitive environment. INFOLine conducted research in preparation of the report, including 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 INFOLine’s report to assist us in describing the nature of our industry and our position in it. Such information is included in this prospectus in reliance on INFOLine authority as an expert in such matters. See “Experts.”

Some of the industry information in this prospectus has been derived from independent market research carried out by Euromonitor, which includes research estimates based on various official published sources and trade opinion surveys conducted by Euromonitor, and has been prepared primarily as a research tool. Euromonitor makes no warranties about the fitness of this intelligence for investment decisions. We have not commissioned any of the data prepared by Euromonitor, AppAnnie or BrandScience.

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 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.

v

TRADEMARKS, SERVICE MARKS AND TRADENAMES

We have proprietary rights to trademarks used in this prospectus 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 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 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.

vi

PROSPECTUS SUMMARY

This summary highlights information contained in more detail elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our audited consolidated financial statements and unaudited interim condensed consolidated financial statements, including the notes thereto, included in this prospectus, before deciding to invest in the ADSs.

Overview

We are a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market. Over the years, we have become the most trusted and respected online retailer in the country, according to INFOLine, and our brand has become synonymous with online shopping for our approximately 11.4 million active buyers in Russia in the twelve months ended September 30, 2020. Our mission is to transform the Russian consumer economy by offering the widest selection of products, best value and maximum online shopping convenience among Russian e-commerce companies, while empowering sellers to achieve greater commercial success. We attribute our success to our focus on enhancing the buyer and seller experience, our nationwide logistics infrastructure, which is one of the largest among Russian e-commerce companies, according to INFOLine, and our cutting-edge technology and strong culture of innovation.

We connect and facilitate transactions between buyers and sellers on our Marketplace (our “third-party” business), which represented 45% of our gross merchandise value including services (“GMV incl. services”) and 15% of our total revenue in the nine months ended September 30, 2020. We also sell products directly to our buyers (our “Direct Sales or “first-party” business), which represented 51% of our GMV incl. services and 79% of our revenue in the nine months ended September 30, 2020. We believe that this globally proven business model of an online marketplace for third-party sellers, complemented by a first-party business, allows us to offer Russian consumers the largest multi-category assortment of products, according to INFOLine, with approximately 9 million stock keeping units (“SKUs”), as of September 30, 2020, in categories ranging from electronics, home and decor and children’s goods to fast moving consumer goods (“FMCG”), fresh food and car parts, at competitive prices and with a wide range of delivery options. This business model also enables us to better manage our inventory and enhance the online shopping experience of our buyers for certain product categories and geographical regions through our Direct Sales business. In the nine months ended September 30, 2020, 8% of our SKUs were offered through our Direct Sales business, while 92% of our SKUs were offered by our sellers through our Marketplace. Our growing base of approximately 18,100 active sellers, as of September 30, 2020, plays a key role in the expansion of our platform’s product catalog. We attract sellers to our platform with a strong value proposition that combines access to millions of our active buyers with a comprehensive set of tools and services for our sellers, such as sales management solutions with access to data analytics and advertising services, financial products and fulfillment and delivery services through our nationwide logistics infrastructure through our Fulfilled-by-OZON (“FBO”) and Fulfilled-by-Seller (“FBS”) logistics models. These seller-facing tools and services equip our sellers to attract more buyers, grow their sales and provide a seamless transaction and buyer experience.

We believe that we are one of the pioneers of e-commerce and the most recognized e-commerce brand in Russia, with a top-of-mind brand awareness of 32%, compared to 18% for our nearest competitor in June 2020, according to INFOLine and BrandScience. In the twelve months ended September 30, 2020, our platform served approximately 11.4 million active buyers who placed an average of 5.0 orders during that period, an increase from approximately 6.6 million active buyers who placed an average of 3.8 orders in the twelve months ended September 30, 2019. The selected periods of 2020 include the period from April 2020 until June 2020, during which we experienced increased demand for our products and services as a result of the COVID-19 pandemic

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and the related government-imposed social-distancing measures. The combination of our wide assortment of products (the largest selection in the Russian e-commerce market, according to INFOLine), competitive prices and seamless shopping experience, coupled with our brand reputation, enable us to attract more buyers to our platform, which, in turn, draws more sellers to our Marketplace, resulting in the expansion of our product catalog, and bolsters the retention and order frequency of our buyers.

We believe that this powerful network effect has allowed us to achieve faster growth than the Russian e-commerce market, which grew by 41% in the nine months ended September 30, 2020 as compared to the same period in 2019, and compared to 29% in the year ended December 31, 2019 and 22% in the year ended December 31, 2018. Our GMV incl. services grew by 142% in the nine months ended September 30, 2020, as compared to in the same period in 2019, supported, to some extent, by the government imposed social-distancing measures related to the COVID-19 pandemic, compared to 93% in the year ended December 31, 2019 and 74% in the same period in 2018. Our GMV incl. services grew by 46% and 20% in the years ended December 31, 2017 and 2016, respectively. We reported a loss of P12,857 million in the nine months ended September 30, 2020, compared to a loss of P13,033 million in the nine months ended September 30, 2019. Due to significant investments in our growth, we incurred losses of P19,363 million and P5,661 million in the years ended December 31, 2019 and 2018, respectively.

Our nationwide logistics infrastructure facilitates the fulfillment of products and delivery of parcels sold through both our Marketplace and our Direct Sales businesses in an efficient and reliable way. We have developed one of the largest and most sophisticated logistics infrastructures in the Russian e-commerce market, according to INFOLine, with nine fulfillment centers, including one of the largest fulfillment centers in Russia among e-commerce businesses, and our delivery infrastructure, consisting of approximately 43 sorting hubs, 7,500 parcel lockers, 4,600 pick-up points and 2,700 couriers, allowing us to provide what we believe to be one of the best online shopping experiences for our buyers in terms of cost, speed and convenience. We offer same-day delivery services in Moscow and in parts of the Moscow region and Saint Petersburg and next-day delivery coverage for over 40% of the Russian population as of September 30, 2020.

We are a technology-driven company with a strong culture of innovation. Our secure and scalable technology infrastructure, developed by our in-house research and development team, provides the foundation for seamless buyer and seller experiences on our platform, as well as for our supply chain operations, business intelligence,

2

traffic and search optimization, customer relations managements (“CRM”) operations and payments. We collect and analyze data to optimize our operations, personalize the shopping experience of our buyers and enable us, our buyers, our sellers and our logistics partners to make informed real-time decisions on our platform.

We believe our mobile-first approach makes shopping more convenient for our buyers, increases buyer retention, improves the efficiency and conversion rate of our marketing programs and accelerates the growth of our business. According to INFOLine, our mobile app for buyers (our “Shopping App”) is one of the leading shopping apps in Russia by number of average monthly users, with approximately 10 million monthly average users (“MAU”) (which we define as unique visitors within a particular period) on our Shopping App in the six months ended June 30, 2020, according to AppAnnie. The orders made through our Shopping App accounted for 70% of orders on our platform in the nine months ended September 30, 2020, an increase from 51% of orders in the nine months ended September 30, 2019. In the year ended December 31, 2019, 56% of orders on our platform were made through our Shopping App, an increase from 35% of orders in the year ended December 31, 2018 and 15% of orders in the year ended December 31, 2017.

We believe that developing complementary products and services will help us to grow our core business and our market share. We have developed and successfully launched financial products and services for buyers and sellers, advertising and logistics services for sellers and an online travel booking service through our OZON.Travel business. We will continue to develop and enhance our existing products and services as well as expand our range of service offerings to our buyers and sellers, which will help us achieve our mission to contribute to the transformation of the Russian consumer economy. For example, one of our buyer-facing financial products, OZON.Card, our branded debit card, offers benefits to our buyers when it is used to make purchases. OZON.Card holders made an average of approximately three orders per month in the nine months ended September 30, 2020, which is approximately 1.6 times more than the average monthly order frequency of our buyers who placed at least one order each month in the same period in 2020. As of September 30, 2020, approximately 260,000 OZON.Cards were activated, compared to approximately 57,000 OZON.Cards as of December 31, 2019 and fewer than 10,000 OZON.Cards as of September 30, 2019.

Our Industry

Russia has the eleventh largest economy in the world, with strong economic fundamentals, including a total gross domestic product (“GDP”) of approximately $1.7 trillion in 2019 and the highest GDP per capita based on purchasing power parity (“PPP”) among Brazil, Russia, India and China (the “BRIC countries”) in 2019, according to INFOLine based on Euromonitor data. Russia is the ninth most populous country, with a population of 147 million as of December 31, 2019, according to Rosstat.

Russia has the largest number of internet users among European countries and the seventh largest number of Internet users in the world, with approximately 113 million users, an internet penetration rate of 83% and a possession of smartphones rate (defined as the proportion of households that own a smartphone within a particular period) of 75%, on average, for the year ended December 31, 2019, according to INFOLine based on Euromonitor data. The country’s telecommunications infrastructure, which provides nationwide internet coverage, has facilitated the online migration of Russia’s consumer economy. The internet has become an integral part of the Russian consumer’s lifestyle. The rate at which the offline to online migration of commerce is taking place, combined with a large population and strong macroeconomic fundamentals, are key pillars of the growth drivers for the Russian e-commerce market.

Impact of COVID-19 and Projected Recovery of the Russian Economy

According to the Ministry of Economics Developent, Russia experienced growth in real GDP from 2016 to 2019, with a compound annual growth rate (“CAGR”) of 1.9%. Russia’s real GDP growth in 2020 is expected to be

3

adversely impacted by the COVID-19 pandemic. Recent macroeconomic forecasts by the Ministry of Economic Development suggest that the Russian economy will contract by approximately 3.9% in 2020, although its projections also indicate a strong and rapid recovery as soon as in 2021, followed by real GDP growth with a CAGR of 3.1% from 2021 to 2025. According to the Central Bank of Russia (“CBR”), the Russian government and the CBR aim to provide the necessary liquidity to support the Russian economy during the pandemic, with international reserves at an all-time high of approximately $592 billion as of July 31, 2020.

Russian Retail Market

We define our market opportunity by reference to the total addressable market (“TAM”) that we believe we can address over the long term. Our core addressable market is the Russian retail market, which was the fourth largest retail market in Europe, totaling P33.6 trillion in 2019 and projected to total P46.2 trillion in 2025, according to INFOLine.

According to INFOLine, the Russian retail market grew at an average CAGR of 6% from 2016 to 2019, but is expected to contract by approximately 1% in 2020 due to the economic impact of the COVID-19 pandemic. INFOLine projects that the Russian retail market will recover in 2021, and grow at a CAGR of approximately 6% from 2021 to 2025, driven primarily by the growth of real disposable income and consumer lending.

The Russian retail market is highly fragmented, with the top ten retail businesses, including both online and offline, accounting for 25% of the total retail sales in the country in 2019, according to INFOLine. This figure compares to 42%, 40% and 35% in 2019 in the United Kingdom, Germany and the United States, respectively, according to INFOLine based on Euromonitor data. According to INFOLine, the highly fragmented state of the Russian retail market places leading multi-category e-commerce businesses in a strong position to gain market share from small online and offline businesses. Small businesses generally have a relatively limited assortment of products, less attractive value proposition and generally do not provide a convenient shopping experience, compared to multi-category businesses that generally have a broader assortment of products and stronger value proposition for consumers, which gives online multi-category businesses a competitive advantage over smaller businesses, according to INFOLine.

Domestic Multi-category Businesses are Well Positioned to Gain Market Share in Russia

The size of Russia’s domestic e-commerce market, excluding cross-border e-commerce (the sale of products through e-commerce into the domestic market from sellers in other countries), was P1.4 trillion in 2019 and is expected to reach P2.1 trillion in 2020, according to INFOLine. Russia’s domestic e-commerce market grew at a CAGR of approximately 26% from 2016 to 2019, which was higher than the CAGR of cross-border e-commerce in Russia of approximately 20% in the same period. Driven by an expanding range of products available to consumers, shorter delivery times and more comprehensive customer support, domestic e-commerce businesses have been continuously growing their respective shares of Russia’s total e-commerce market since 2017 according to INFOLine. The share of cross-border e-commerce in Russia’s total e-commerce market has historically been higher than in other countries, primarily due to the historically underdeveloped logistics infrastructure and limited assortment of, and relatively high prices for, products of many domestic e-commerce businesses. INFOLine projects the domestic e-commerce market in Russia to grow at a CAGR of 30%, from P1.4 trillion in 2019 to P6.8 trillion by 2025, compared to a CAGR of only 6% for cross-border e-commerce in Russia by 2025. As a result, INFOLine projects that the share of the total e-commerce market in Russia, held by Russia’s domestic e-commerce businesses, will increase from 71% in 2019 to 89% by 2025.

Russian Domestic E-commerce Market is Fragmented

The Russian domestic e-commerce market is highly fragmented compared to other international markets, with the top three domestic e-commerce companies accounting for only 18% of the total e-commerce market and 25%

4

of the domestic e-commerce market in terms of GMV incl. services as of the year ended December 31, 2019, which is significantly lower compared to the market share of the top three e-commerce companies in some other countries, according to INFOLine.

In the six months ended June 30, 2020, we represented approximately 6.6% of the overall domestic Russian e-commerce market and were the leading multi-category e-commerce business in terms of offering the widest assortment of products and selection of delivery options, according to INFOLine. We also held strong positions across many product categories in the Russian e-commerce market in the same period.

COVID-19 Impact on the Russian E-commerce Market

During the six months ending June 30, 2020, the lockdown measures implemented by governments around the world to stem the spread of the COVID-19 pandemic accelerated the already occurring shift in consumer behavior towards an increasing reliance on online shopping. In the six months ended June 30, 2020, the COVID-19 pandemic contributed to the growth of the Russian e-commerce market, which grew by 51% compared to the six months ended June 30, 2019, and there was a 3.4% increase in e-commerce penetration in Russia compared to the same period in 2019. In 2020, the Russian e-commerce market is expected to grow by 34%, accompanied by an increase in e-commerce penetration to 8.1%, compared to 6.0% in the year ended December 31, 2019, according to INFOLine.

INFOLine believes that the COVID-19 pandemic will have a sustained and long-term impact on e-commerce penetration in Russia, fueled by an increase in the number of active buyers and growth in purchasing frequency. INFOLine expects the approximately P13.3 trillion in e-commerce sales in Russia, cumulatively over the six-year period from 2020 to 2025, to be attributable to the impact of the COVID-19 pandemic.

Our Strengths

We believe the following strengths have contributed, and will continue to contribute, to our success.

Leading e-commerce platform in Russia

We are a leading online shopping destination for buyers in Russia, according to INFOLine. Our business model, which is based on a globally proven e-commerce model that complements a marketplace of third-party sellers with a direct sales online retail business, enables us to offer our buyers the widest multi-category assortment of goods on the Russian e-commerce market, according to INFOLine, at competitive prices, and an extensive range of delivery options. Our Marketplace allows sellers to complement their product offerings with our high quality buyer support services, including flexible delivery options and our 24-hour contact center service.

We believe that we are well positioned to continue to benefit from the ongoing shift, from offline to online, of retail in Russia. According to INFOLine, the Russian e-commerce market is still significantly underpenetrated compared to other more developed e-commerce markets. E-commerce penetration in Russia was 6.0% in the year ended December 31, 2019, compared to 4.3% and 3.7% in the years ended December 31, 2017 and 2016, respectively.

In the nine months ended September 30, 2020, we grew by 142% in terms of GMV incl. services compared to the nine months ended September 30, 2019, which is approximately three times faster than the growth of the e-commerce market in Russia, which grew by 41% in the nine months ended September 30, 2020, compared to the same period in 2019, according to INFOLine. We believe our growth was due to various factors, including our reputation as the “go-to” destination for online shopping in Russia. According to INFOLine and BrandScience, for the month of June 2020, OZON was the most recognized e-commerce brand in Russia with a top-of-mind brand awareness of 32%, compared to 18% for our closest competitor.

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Value proposition for buyers

Offering the widest assortment of quality products is one of the key pillars of our value proposition to buyers. On our platform, buyers have access to approximately 9 million SKUs, as of September 30, 2020, comprising of both every day and upmarket products across one of the broadest product category ranges of all e-commerce companies in Russia, according to INFOLine, which includes electronics, home and decor, children’s goods, health and beauty, apparel, pharmacy, packaged food, FMCG, pet care, books and sport. Our sellers range from large retailers to small and medium-sized enterprises (“SME”), which collectively offer on our Marketplace the widest selection of goods in the Russian e-commerce market at competitive prices, according to INFOLine. We are regularly expanding the variety of products available to our buyers by attracting more sellers to our Marketplace.

We also seek to provide the best value for our buyers by offering products at competitive prices on our platform. Our proprietary pricing algorithm allows us to price our Direct Sales products competitively, as well as provide real-time pricing recommendations to our Marketplace sellers. We believe the growth of our seller base will intensify competition on our platform and lead to competitive pricing for the products across our many product categories, which will help us attract and retain more buyers and increase order frequency.

We aim to provide our buyers with one of the most convenient online shopping experiences in Russia with a combination of fast and reliable delivery services, high quality buyer support services and financial products. According to INFOLine, we offer a wider variety of delivery options than any other e-commerce company in Russia, which includes courier delivery, collection from pick-up points and OZON.Box parcel lockers and delivery by Russian Post and other third-party delivery providers, providing our buyers with greater convenience when shopping on our platform. We offer same-day delivery services in Moscow and in parts of the Moscow region and Saint Petersburg, and next-day delivery coverage for over 40% of the Russian population as of September 30, 2020. Our commitment to high quality buyer services includes ensuring that buyers receive their parcels on time. Our “On-Time ratio” (which we define as an average ratio over a particular period of time, calculated by dividing the number of parcels that we delivered to buyers on their chosen date by the total number of parcels to be delivered on that particular date) was more than 95% in the nine months ended September 30, 2020, and reached 97% in the month of September, 2020. Our ability to provide high quality services has led to high customer satisfaction. In the three months ended September 30, 2020, we received a Net Promoter Score (“NPS”), an index of buyer satisfaction with our products and services and their loyalty to our brand, of 79 points, compared to 67 points for the three months ended September 30, 2019, based on our internal surveys provided to our buyers after they make a purchase, which demonstrates our ability to provide high quality services. We have also developed a suite of financial services, such as our OZON.Card, OZON.Account e-wallet and OZON.Installment buyer lending options. We believe that these offerings increase shopping convenience, payment flexibility and buyer loyalty, which we believe will lead to higher purchasing frequency on our platform.

Value proposition to sellers

We aim for our Marketplace to become the most attractive online gateway for sellers to access the estimated 40 million online shoppers in Russia in 2020, according to INFOLine. We have developed a sophisticated and intuitive seller-facing interface, “OZON.Seller,” which gives our sellers access to a broad set of tools to manage their sales on our Marketplace, including tools for inventory management, assortment management, product pricing and marketing and financial performance monitoring. We provide our sellers with access to our nationwide logistics infrastructure, which enables them to sell products to buyers across the country. Our FBO and FBS logistics models give our sellers the flexibility to choose a fulfillment and delivery method that best suits their business. We also offer our sellers access to advanced data analytics, marketing tools, advertising services, performance monitoring tools, as well as financing options and other services. This allows us to attract new sellers to our platform and equip our existing sellers to improve their operational performance.

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Powerful network effects from superior buyer and seller value propositions

We believe that our e-commerce platform creates a powerful network effect that benefits both our buyers and our sellers. Our combined offering of the widest e-commerce product catalog in Russia, according to INFOLine, at competitive prices and convenient shopping experience for our buyers, as well as our brand power, allows us to attract more buyers to our platform, which, coupled with our sophisticated seller services, also makes it a more attractive platform for sellers. This further increases the selection of products on our platform, which in turn attracts more buyers and improves buyer retention and order frequency. We believe this powerful network effect fuels our growth, increases our scale and improves our financial performance. This network effect is further catalyzed by our culture of innovation and our focus on improving the experience of our buyers and sellers on our platform, with the use of technology and the introduction of new buyer- and seller-facing features, such as machine learning-based product recommendations and personalized shopping experiences, analytical and marketing tools for our sellers, increased delivery speeds and reliability, innovations to further increase the convenience of our delivery services for our buyers and a range of financial services.

This network effect has resulted in a large, growing and loyal active buyer base, as demonstrated by the increase in order frequency and retention. In the twelve months ended September 30, 2020, approximately 11.4 million active buyers used OZON for online shopping, an increase of approximately 4.8 million active buyers from approximately 6.6 million active buyers in the twelve months ended September 30, 2019. The number of active buyers grew to approximately 7.9 million active buyers in the year ended December 31, 2019, from approximately 4.8 million active buyers in the year ended December 31, 2018 and 3.2 million active buyers in the year ended December 31, 2017. There has also been an increase in the frequency of orders placed on our platform to 5.0 orders per buyer on average in the twelve months ended September 30, 2020, from 3.8 orders per buyer on average in the twelve months ended September 30, 2019. In the year ended December 31, 2019, the frequency of orders placed on our platform increased to 4.0 orders per buyer on average, from 3.2 orders per buyer on average in the year ended December 31, 2018 and 2.6 orders per buyer on average in the year ended December 31, 2017.

The favorable dynamics of our buyer base, including size, brand loyalty and order frequency, have led to positive developments in relation to our seller base as well. The number of sellers on our Marketplace grew to approximately 18,100 active sellers as of September 30, 2020, an increase from approximately 4,400 active sellers as of September 30, 2019, and consists of a dynamic mix of sellers that we categorize into large, medium-sized and smaller sellers, based on their relative contribution to our sales and assortment, and who contributed 2%, 25% and 72%, respectively, to the total value of goods processed through our Marketplace, and 1%, 49% and 50%, respectively, to the total number of SKUs offered on our Marketplace as of September 30, 2020. We categorize our sellers based on a weighted combination of selected metrics, including the total value of goods sold (for the purposes of this prospectus, references to “value of goods sold” is inclusive of value added taxes, net of discounts, returns and cancellations) by the seller on our Marketplace, the breadth of the assortment of SKUs offered by the seller on our Marketplace and the range of product categories offered by the seller on our Marketplace. Each of these individual metrics is graded on a scale from 0 to 100 and assigned weighted values of approximately 80%, 10% and 10%, respectively, which, when added together, yield a maximum score of 100. As of September 2020, our sellers who scored 67 and above are classified as large sellers, those who scored 55 to 67 are classified as medium-sized, those that scored less than 55 are classified as smaller sellers. In September 2020, our large, medium-sized and smaller sellers had an average total value of goods sold on our Marketplace of approximately P70 million, P5 million and P250,000 respectively. Share of Marketplace GMV accounted for 45% of our total GMV incl. services in the nine months ended September 30, 2020, an increase of 33 percentage points from 12% of our total GMV incl. services in the nine months ended September 30, 2019, while the value of goods sold through our Direct Sales accounted for 51% of our total GMV incl. services in the nine months ended September 30, 2020, a 31 percentage point decrease from 82% of our total GMV incl. services in the same period in 2019. We believe that we have become the e-commerce platform of choice for sellers to access online shoppers in Russia, due to our large, growing and loyal buyer base and because of the distinctive value proposition that we offer to them through our fulfillment, delivery, marketing and financial services.

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Most recognized e-commerce brand in Russia

We believe that our brand gives us a distinct competitive advantage. Since our founding in 1998, we have been synonymous with e-commerce among consumers in Russia. We were one of the pioneers of online retail in Russia, first as an online book retailer, and now as the largest multi-category e-commerce company in Russia based on assortment of products, offering the widest assortment of SKUs across numerous product categories on our platform, according to INFOLine. We are the most recognized e-commerce brand in the country with a top-of-mind brand awareness of 32%, compared to 18% for our closest competitor, for the month of June 2020, according to INFOLine and BrandScience. The strength of our brand facilitates the organic growth of buyer traffic on our platform, enhances buyer loyalty and attracts more sellers to our platform.

One of the largest logistics infrastructures in Russia

We have one of the largest nationwide logistics infrastructures among Russian e-commerce players, according to INFOLine, including multiple fulfillment centers and sorting hubs in strategic locations throughout the country, a nationwide network of parcel lockers, pick-up points and delivery couriers, and a technology infrastructure that enables seamless logistics operations, which we believe gives our buyers the most diverse variety of delivery options available among e-commerce companies in Russia, including same-day delivery services in Moscow and in parts of the Moscow region and Saint Petersburg, and next-day delivery coverage for over 40% of the Russian population as of September 30, 2020. We currently operate one of the largest networks of fulfillment centers (based on building footprint in square meters) among Russian e-commerce companies, which constitutes approximately one-third of all fulfillment space utilized by major Russian online marketplaces, according to INFOLine, with high levels of automation and our proprietary warehouse management system. In 2019, we became the largest parcel locker network operator in Russia.

Our last-mile logistics infrastructure includes a wide network of physical outlets in the form of parcel lockers and pick-up points, with our offline presence only behind the top three offline retailers in Russia when compared against their number of stores, according to INFOLine. We believe that our multichannel delivery offering is one of our key competitive advantages and allows our buyers to choose a delivery method that is more suitable to their needs. Partnering with third-party logistics providers allow products purchased on our platform to reach buyers in some of the most remote regions and cities in Russia. Our nationwide logistics infrastructure has helped accelerate the growth of our platform. We have seen an increase in sales in regions where we invested into expanding and upgrading our logistics infrastructure, and we believe this trend will continue going forward.

We believe that our nationwide logistics infrastructure gives us a significant competitive edge and will drive our growth and enhance our service offerings to buyers and sellers, because it positions us beyond the logistical and infrastructural limitations relating to the lack of available large-scale fulfillment facilities and high quality independent fulfillment and logistics operators in Russia.

Scalable business model enabled by third-party partners

We have invested in the development of our own infrastructure, and intend to continue expanding our infrastructure according to our operational needs. We constantly seek opportunities to engage with third-party service providers to complement or substitute certain businesses processes, including logistics, to ensure that our fulfillment and delivery capacities match our business needs, which also helps us to avoid becoming overly reliant on our own logistics infrastructure or any one service provider.

With the help of our third-party partners across various aspects of our business, we are able to significantly increase our scale with relatively small capital investment. We believe that the continuing growth of our seller base will result in our expansion into product categories in which we had a historically limited presence, such as

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apparel or furniture. Expanding our product catalog through the growth of our seller base does not require additional investments in inventory, as these sellers maintain ownership of their products, and therefore facilitates our ongoing transition to an increasingly asset-light business.

As more of our sellers adopt the FBS model, we will require less capital investment into the capacity of our fulfillment centers, as these sellers use their own logistics infrastructure to fulfill orders. In the nine months ended September 30, 2020, 24% of all parcels were fulfilled through our FBS model, an increase from 4%

in the same period in 2019.

Our partnerships towards expanding our last-mile delivery infrastructure include the development of a network of pick-up points through a franchise model, installment of parcel lockers at our partners’ premises and the “uberization” of our approach to engaging couriers. The uberization of our engagement of couriers refers to our shift from employing couriers directly or through courier agencies towards directly engaging self-employed couriers through our dedicated mobile application in order to deliver orders to buyers. As of September 30, 2020, more than 95% of our couriers were self-employed. To the extent that any self-employed individuals providing courier services are predominantly engaged by us for a long period of time, their status as “self-employed” might be reclassified by the courts upon the demand of the Russian authorities or the relevant self-employed individual as having a labor relationship with us (see “Risk Factors—Risks Relating to Our Business and Industry—Our business may be adversely affected if counterparties that we contract with who are registered as individual entrepreneurs or self-employed persons, which includes couriers, are classified as our employees”). In line with our asset-light strategy, the adoption of the franchise model for our pick-up points allows us to expand our delivery infrastructure without purchasing or obtaining long-term leases for real estate to set up our pick-up points or parcel lockers and, as of September 30, 2020, approximately 67% of all our OZON branded pick-up points were franchised to third parties. Our franchise agreements are typically for one year on an automatically renewable basis, and our franchisees receive variable service fees based on the value of parcels delivered to the respective pick-up points.

Our IT infrastructure ensures the seamless integration of services between our partners and our platform, through application programming interfaces (“API”) or dedicated mobile apps such as apps for couriers or pick-up points, and monitors the service quality of our partners.

Adapting to consumer trends with our mobile-first approach

The possession of smartphone rate in Russia was 75% in the year ended December 31, 2019, and is expected to increase to 92% by 2025, according to INFOLine based on Euromonitor data. We have adopted a “mobile-first” approach in our product development and marketing efforts. This allows us to capture the generation of online shoppers whose online activities occur almost entirely on their mobile devices, and to benefit from the proliferation of smartphones by expanding our buyer base. Our platform experiences a high level of user traffic through mobile devices, with an average of approximately 10 million MAU on our Shopping App in the six months ended June 30, 2020, according to AppAnnie, which was higher than most other domestic e-commerce companies in the same period in 2020, according to INFOLine. We believe that we have a deep understanding of the shopping habits of buyers who make purchases on their mobile devices in Russia and aim to deliver a buyer mobile experience that increases engagement and sales conversion while reducing our buyer acquisition costs. In the nine months ended September 30, 2020, 70% of orders placed on our platform were made on our Shopping App, compared to 51% in the nine months ended September 30, 2019. We expect the advantages of our mobile-first approach to increase over time as more people in Russia use smartphones and tablets as their primary devices to access the internet.

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Strong technology foundation and scalable infrastructure to support future growth

Technology is at the core of our business, and our research and development team is essential to our ability to implement our business strategy. We have built a reliable and scalable technology infrastructure that can handle the large transaction volumes generated on our platform. As of September 30, 2020, our IT systems were able to process more than 270,000 parcels per day and were tracking approximately 27 million items stored at our fulfillment centers. We continually invest in technology to support the growth of our business and the ongoing evolution of our services that we offer to our buyers and sellers. In pursuit of our goal to provide an outstanding selection of products, value and online shopping convenience to our buyers, we use technology, such as artificial intelligence (“AI”) and machine learning, across different parts of our platform, including our search engine and recommendations functions to inventory management and product pricing. Our technology also serves as a backbone of our seller experience, allowing them to effortlessly integrate into our Marketplace and to achieve maximum value by using our price matching and comparison algorithms, data analytics and other tools.

Proactive culture fostered and supported by experienced management team

Our business is led by an experienced and motivated management team with proven track record of driving a transformational agenda, as evidenced by our operating and financial results. Under the leadership of our current management team, we have consistently delivered year-on-year GMV incl. services growth of over 75% since 2018. In September 2018, our management team decided to launch our Marketplace business, which we believe has become a leading Russian marketplace platform in less than two years and accounted for 45% of our GMV incl. services and 15% of our revenue in the nine months ended September 30, 2020. Our Direct Sales business represented 51% of our GMV incl. services and 79% of our revenue in the nine months ended September 30, 2020.

Our management team has a complementary and diversified skill set, with experience in leading Russian and international technology companies. By combining their global expertise and knowledge of the local consumer landscape, our management team has built a differentiated platform that is well regarded by our buyers and sellers.

We believe that the skills, industry knowledge and operating expertise of our management team provide us with a distinct competitive advantage as we continue to grow.

Our Strategy

Our strategy is based on developing existing and launching new products and services that are complementary to our platform to further improve the experience of our buyers and sellers and enhance loyalty to our brand. We believe this will help us maintain a higher growth rate than the Russian e-commerce market, increase our market share, as well as improve our operating metrics and achieve profitability. Our strategy is based on the following key pillars:

Enhance buyer loyalty through increasing the assortment and number of product categories on our platform, providing outstanding value and services, and improving our technology

We believe that having an outstanding selection of products, at competitive prices and providing a high level of online shopping convenience, are the most critical drivers of buyer acquisition and retention in the e-commerce industry. Although we offer an assortment of approximately 9 million SKUs on our platform, as of September 30, 2020, we believe that this is a small fraction of the potential number of products that could be offered online in Russia. In the year ended December 31, 2019, e-commerce penetration in Russia was only 6.0%, compared to 27.1%, 18.3%, and 15.2% in China, the United Kingdom, and the United States, respectively,

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according to INFOLine based on Euromonitor data. We believe that the under-penetration of e-commerce in Russia is partly due to the perception by Russian consumers that the prices of certain products sold online, such as FMCGs, are relatively high after factoring in delivery costs, and the process of purchasing products online is cumbersome. We believe there is also a perception that e-commerce retailers provide substandard customer service. For a broad segment of Russian consumers, these perceptions hinder the shift of their shopping habits from offline to online. We are working to address issues related to the under-penetration of the Russian e-commerce market by optimizing our sourcing of products, adding new products to our catalog and broadening the number of product categories, as well as by optimizing online search and purchasing processes, minimizing click-to-delivery times and generally enhancing our buyer service experience. We believe that these efforts have contributed, and will continue to contribute, to the growth of our buyer base and increase the purchasing frequency of buyers on our platform.

Attract more sellers to our Marketplace by enhancing their experience on our platform

Since its launch in September 2018, approximately 18,100 active sellers have joined our Marketplace as of September 30, 2020. We believe this number is a small fraction of the pool of hundreds of thousands of sellers in Russia that could potentially become sellers on our Marketplace. We believe that the business operational flexibility offered by our FBO and FBS logistics models, the expansion of our product catalog into new categories of products and the opening of new fulfillment centers in various regions in Russia, such as our newly launched fulfillment center in the Rostov-on-Don region, are just a few of the numerous features that attract new sellers to our Marketplace. We have developed a suite of advertising, fulfillment, delivery, analytics and process management tools, accessible through our OZON.Seller interface, as well as seller-facing financial services and an education platform for our sellers. We are dedicated to further developing these seller support tools and services to increase operational performance of our sellers. We believe these services will enhance the experience of our sellers, give them the tools to improve their operational performance, and increase their reliance on our platform, while providing us with increased monetization opportunities for our developing range of seller services.

Further expand our logistics footprint with focus on regional development

We consider the development of our business in the Russian regions an integral part of our growth strategy. As the Russian regions are underpenetrated by e-commerce companies, according to INFOLine, we see untapped potential in attracting buyers and sellers in the Russian regions to our platform. To achieve this goal, we intend to expand our logistics infrastructure across Russia, including for both fulfillment and delivery. We also aim to develop our network of sorting centers, pick-up points, OZON.Box parcel lockers and couriers, and regularly engage delivery partners to increase our fulfillment and delivery capacities to stay ahead of the growing number of transactions on our platform. While pursuing the expansion of our logistics infrastructure, we aim to commit to our “asset-light” strategy by leasing, rather than acquiring, our premises and equipment where feasible. Furthermore, each of our new fulfillment centers will also be equipped with our proprietary new warehouse management system, which will allow us to automate a number of processes at our fulfillment centers, including the acceptance, placement, selection, consolidation, sorting and packaging of products.

Build a diversified ecosystem of complementary services around our primary e-commerce business

We aim to further develop our core e-commerce operations by offering a range of complementary services to our buyers, sellers and logistical partners. Our key initiatives include:

Continue to create and enhance financial services offerings

Our financial service offerings provide quick and seamless access to lending and payment assistance to our buyers and sellers, and constitute additional revenue streams for us. We aim to continue developing and

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enhancing our financial service offerings to our buyers and sellers. We believe that our seller-facing financial services will strengthen the loyalty of our sellers to us and attract new sellers to our platform, and consequently, expand our platform’s product catalog. Similarly, we believe that our buyer-facing financial services strengthens buyer loyalty to us and increase their purchase frequency and average order value on our platform.

We offer special services to our buyers, such as our OZON.Card, our branded debit card; OZON.Account, our e-wallet in which buyers may store funds for later purchases; and OZON.Installment, our point of sale buyer loans. Additionally, costs related to the processing of payments for orders are reduced when purchases are made with our financial products.

Develop our advertising service offering

We currently offer a variety of advertising services to sellers and our suppliers on our platform, which generates additional revenue for us. As a leading online marketplace in Russia, we believe that our advertising services have large potential for further growth. Our advertising service helps our sellers to increase their sales on our Marketplace by providing them with a venue to actively market their products to our buyers on promotional shelves and advertising banners on our Shopping App and buyer website (“Buyer Website”), or by making their products appear at the top of search results on our platform. Advertising space on our platform is sold to our sellers through a real time bidding system, which we believe ensures that the fees we receive from sellers using our advertising platform is responsive to demand for advertising space on our platform.

Leverage our growing scale and increasing efficiency to improve unit economics and profitability

We aim to secure a leading position across existing product categories and services in terms of number of SKUs on our platform, while we continue to scale our business in order to improve our margins and achieve profitability. The following five pillars are key drivers of our growth and profitability:

• Gross profit: We continue to benefit from improved purchasing terms due to the increase in the scale of our business and our growing share of Marketplace GMV. Gross profit as a percentage of GMV incl. services in the nine months ended September 30, 2020 increased to 16.3%, compared to 14.5% in the nine months ended September 30, 2019.

• Advertising revenue: Our advertising revenue from our Marketplace advertising platform has increased, primarily due to the organic growth of our seller base, while our advertising revenue from Direct Sales has increased, primarily due to the increasing number of suppliers seeking to advertise their products through our various marketing channels. Advertising revenue as percentage of GMV incl. services in the nine months ended September 30, 2020 increased to 1.9%, compared to 1.4% in the nine months ended September 30, 2019.

• Fulfillment and delivery expenses: Our business enjoys increased cost efficiencies in our provision of fulfillment and delivery services from optimizing the mix of delivery channels we offer, as well as from leveraging higher geographical order density. The increased costs efficiencies were also attributable to additional efficiency gains following the launch of new, and the expansion of existing, fulfillment facilities and our adoption of the FBS model. Fulfillment and delivery expenses as a percentage of GMV incl. services in the nine months ended September 30, 2020 decreased to 16.2%, compared to 21.2% in the nine months ended September 30, 2019.

• Sales and marketing: Sales and marketing costs have decreased as a percentage of GMV incl. services due to the higher volume of repeat orders, increased buyer retention and higher brand awareness. Sales and marketing expenses as a percentage of GMV incl. services in the nine months ended September 30, 2020 decreased to 5.4%, compared to 9.6% in the nine months ended September 30, 2019.

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• General and administrative: Our business continued to benefit from economies of scale on our fixed general and administrative cost base, due to the growth profile of our business. General and administrative expenses as a percentage of GMV incl. services in the nine months ended September 30, 2020 decreased to 2.0%, compared to 3.4% in the nine months ended September 30, 2019.

As we continue to scale up our business, we believe that these trends will continue to positively impact our business and drive improvement in profitability and unit economics.

Risks Associated with Our Business

The success of our business and our ability to grow is dependent on a number of factors that may be beyond our control. Our business faces a number of challenges that may limit our growth opportunities and is subject to a number of risks that you should be aware of before making an investment decision. Among these important challenges and risks are the following:

• any significant fluctuations in our results of operations and growth rate;

• our lack of historical profitability and risks in achieving profitability in the future;

• our ability to effectively promote our business and attract new and retain current buyers and sellers;

• any failure to retain our market position in a competitive e-commerce market or switch of our buyers to offline retail stores or our online or offline competitors;

• our reliance on counterparties and third-party providers;

• our reliance on the Russian internet infrastructure, and the risks that disruptions may impair our customers’ experiences and our business operations;

• any failure to attract or retain our qualified employees and IT specialists;

• global political and economic stability, and the risks they pose for the Russian economy;

• imposition of further economic sanctions on Russian companies and businesses and the impact of current sanctions;

• ongoing development of the Russian legal system and developing legal framework governing e-commerce in Russia;

• further widespread impacts of the COVID-19 pandemic or other health crises restricting the level of business activity, travel, transportation and otherwise affecting our customers, as well as any governmental or international response measures;

• privacy, personal data and data protection concerns, and the risk of fines and other sanctions on us if we fail to comply with applicable regulations;

• our ability to successfully remediate the existing material weakness and significant deficiency in our internal control over financial reporting and our ability to establish and maintain an effective system of internal control over financial reporting;

• provisions in our articles of association that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests or limit the ability of our shareholders to remove management; and

• as a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance rules and are permitted to file less information with the SEC than U.S. companies, which may limit the information available to holders of the ADSs.

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We also face other challenges, risks and uncertainties that may materially and adversely affect our business, prospects, financial condition and results of operations. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth in the “Risk Factors” section of this prospectus in deciding whether to invest in our securities.

Concurrent Private Placements

BVFVNL, an existing shareholder, and BVSIL, an affiliate of existing shareholders, which are indirectly advised by Baring Vostok Capital Partners Group Limited, have entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs, and Sistema, an existing shareholder, has entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs in concurrent private placements at a price per share equal to the initial public offering price per ADS, for a total of $135 million (the “Concurrent Private Placements”). Based on an assumed initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, this would be an aggregate of 5,400,000 ADSs. We will receive the net proceeds from these Concurrent Private Placements. BVSIL, BVFVNL and Sistema have each agreed to enter into a lock-up agreement with the underwriters for a period of 180 days after the date of this prospectus.

Corporate Information and Ownership Structure

We were incorporated in Cyprus on August 26, 1999 under the Cyprus Companies Law, Cap. 113 as Jolistone Enterprises Limited (registration number HE 104496) and changed our name to Ozon Holdings Limited on November 8, 2007. On October 22, 2020, Ozon Holdings Limited was converted from a private limited liability company incorporated in Cyprus into a public limited company incorporated in Cyprus, and our name changed pursuant to a special resolution at a general meeting of our shareholders to Ozon Holdings PLC. Our registered office is located at Arch. Makariou III, 2-4, Capital Center, 9^th floor, 1065, Nicosia, Cyprus. The principal executive office of our key operating subsidiary, Internet Solutions LLC, is located at 10 Presnenskaya Embankment, “Naberezhnaya Tower,” Tower C, 123112, Moscow, Russia. The telephone number at this address is +7 495 232 1000. Our website address is www.ozon.ru. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus. We have included our website address as an inactive textual reference only.

Immediately prior to this offering and the Concurrent Private Placements, our principal shareholders, Sistema, a large Russian portfolio investor, and fund entities indirectly advised by Baring Vostok Capital Partners Group Limited, a large equity firm focused on investments in Russia and the CIS (the “Baring Vostok Private Equity Funds”), beneficially owned, directly or through their investment vehicles, 45.2% and 45.1%, respectively, of our issued and outstanding ordinary shares. See “Principal Shareholders.” Upon the completion of this offering and the Concurrent Private Placements, the shares beneficially owned by these principal shareholders will amount to 37.9% and 37.9%, respectively, of our issued and outstanding ordinary shares (assuming no exercise of the underwriters’ option to purchase additional ADSs from us). Each of our principal shareholders holds one Class A share, which confers the right to appoint and remove (i) two directors so long as such Class A shareholder holds at least 15% of voting power of the ordinary shares or (ii) one director so long as such Class A shareholder holds less than 15% but at least 7.5% of voting power of the ordinary shares. As a result, our principal shareholders may have the ability to determine the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. The interests of our principal shareholders might not coincide with the interests of the other holders of the ADSs or our ordinary shares. See “Risk Factors—Risks Relating to Our Organizational Structure—Because of their significant voting power and special rights granted to Class A shares, our principal shareholders will be able to exert control over us and our significant corporate decisions.”

Potential investors should take into account that they invest in the ADSs representing ordinary shares of an entity incorporated in Cyprus, which is acting as a holding company for all of our operating subsidiaries. As a holding

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company, we rely on profit and other cash distributions paid by our subsidiaries for our cash and financing requirements. See “Risk Factors—Risks Relating to Our Initial Public Offering and Ownership of the ADSs—We are a holding company with no operations of its own and, as such, we depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments, if any.”

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:

• the ability to present more limited financial data, including presenting only two years of audited financial statements and only two years of selected financial data in the registration statement on Form F-1 of which this prospectus is a part;

• 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 comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”), regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

• 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 this offering 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 the ADSs less attractive. The result may be a less active trading market for the ADSs, and the price of the 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 this offering occurs; (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 the 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.

Upon completion of this offering, we will 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

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• 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 us 30,000,000 ADSs, each representing one ordinary share.

Ordinary shares to be outstanding after this offering and the Concurrent Private Placements 177,130,154 ordinary shares, or 181,630,154 ordinary shares if the underwriters fully exercise their option to purchase additional ADSs.

Option to purchase additional ADSs We have granted the underwriters an option to purchase up to              4,500,000 additional ADSs within 30 days of the date of this prospectus.

American Depositary Shares The underwriters will deliver the ADSs representing our ordinary shares. Each ADS represents an ownership interest in one our ordinary share. As an ADS holder, we will not treat you as one of our shareholders. The depositary, The Bank of New York Mellon, will be the holder of the ordinary shares underlying your ADSs.

You will have ADS holder rights as provided in the deposit agreement. Under the deposit agreement, you may only vote the ordinary shares underlying your ADSs by giving voting instructions to the depositary. 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 is attached as an exhibit to the registration statement of which this prospectus forms a part. We are offering ADSs so that our company can be quoted on Nasdaq and investors will be able to trade our securities and receive dividends on them in U.S. dollars.

Depositary The Bank of New York Mellon.

Concurrent Private Placements BVFVNL, an existing shareholder, and BVSIL, an affiliate of existing shareholders, which are indirectly advised by Baring Vostok Capital Partners Group Limited, have entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs, and Sistema has entered into a private placement agreement to purchase $67,500,000 of ordinary shares or ADSs in concurrent private placements at a price per share equal to the initial public offering price per ADS, for a total of $135 million. Assuming an initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, this would be an aggregate of 5,400,000 ADSs. BVSIL, BVFVNL and

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Sistema have each agreed to enter into a lock-up agreement with the underwriters for a period of 180 days after the date of this prospectus. See “Underwriting” for additional information regarding such restrictions.

Use of proceeds We estimate that we will receive net proceeds from this offering of $693 million, or $798 million if the underwriters exercise their option to acquire additional ADSs from us in full and $135 million from the Concurrent Private Placements, based upon an assumed initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds from this offering and the Concurrent Private Placements for general corporate purposes. See “Use of Proceeds.”

Dividend policy Historically, we have not declared or paid cash dividends on our ordinary shares, and we do not anticipate declaring or paying any cash dividends in the foreseeable future. We intend to retain all available liquidity sources and future earnings, if any, to fund the development and expansion of our business. See “Dividend Policy.”

Risk factors See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ordinary shares.

Lock-up agreements We have agreed with Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters, subject to certain exceptions, not to sell or dispose of any of the ADSs or securities convertible into or exchangeable or exercisable for the ADSs until 180 days after the date of this prospectus. Our executive officers, directors and holders of substantially all of our ordinary shares have agreed to similar lockup restrictions for a period of 180 days. See “Underwriting.”

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 this offering, and have provided a general disapplication for issuances in connection with our equity incentive plans and certain other purposes. See “Description of Share Capital and Articles of Association—Pre-emptive Rights.”

Listing We have been approved to list the ADSs on Nasdaq under the symbol “OZON.” On November 19, 2020, we also obtained the approval of the Moscow Exchange (“MOEX”) in relation to the listing and admission of the ADSs to trading on MOEX under the symbol “OZON.” The ADSs may not start trading on MOEX earlier than time

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at which the ADSs start trading on Nasdaq. No assurance can be given that we will be able to maintain such listing.

Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to:

• no exercise by the underwriters of their option to purchase additional ADSs in this offering; and

• an initial public offering price of $25.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

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Corporate and Capital Structure

We are an entity incorporated in Cyprus and are acting as a holding company for all of our operating subsidiaries. On October 22, 2020, Ozon Holdings Limited was converted from a private limited liability company incorporated in Cyprus into a public limited company incorporated in Cyprus, and our name changed pursuant to a special resolution at a general meeting of our shareholders to Ozon Holdings PLC.

The following diagram illustrates our corporate structure following the completion of this offering and the Concurrent Private Placements:

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Summary Consolidated Historical Financial and Other Data

The summary consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows for the years ended December 31, 2019 and 2018 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows as of September 30, 2020 and for the nine months ended September 30, 2020 and 2019 are derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared using the same accounting principles and on the same basis as the year-end financial statements and include all adjustments that management considers necessary for the fair presentation of the financial information set forth in those statements. The results for any interim period are not necessarily indicative of the results that may be expected for the full year, and our historical unaudited 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, “Selected Consolidated Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus.

Consolidated Statement of Profit or Loss and Other Comprehensive Income

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Revenue:
Sales of goods		52,845			35,160			53,487			33,920
Service revenue		13,754			3,999			6,617			3,300
Total revenue		66,599			39,159			60,104			37,220
Operating expenses:
Cost of sales		(46,726	)		(31,884	)		(48,845	)		(27,662	)
Fulfillment and delivery		(19,705	)		(10,641	)		(16,808	)		(8,232	)
Sales and marketing		(6,542	)		(4,798	)		(7,153	)		(3,335	)
Technology and content		(3,013	)		(2,576	)		(3,520	)		(2,123	)
General and administrative		(2,420	)		(1,688	)		(2,390	)		(1,742	)
Total operating expenses		(78,406	)		(51,587	)		(78,716	)		(43,094	)
Operating loss		(11,807	)		(12,428	)		(18,612	)		(5,874	)
Loss on disposal of non-current assets, net		(13	)		(3	)		(7	)		(3	)
Interest income/(expense), net		(1,252	)		(490	)		(801	)		129
Share of profit of an associate		69			53			54			82
Foreign currency exchange gain/(loss), net		52			(188	)		(213	)		78
Total non-operating (expense)/income		(1,144	)		(628	)		(967	)		286
Loss before income tax		(12,951	)		(13,056	)		(19,579	)		(5,588	)
Income tax benefit/(expense)		94			23			216			(73	)
Loss for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Total comprehensive income for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Loss per share, in RUB
Basic and diluted loss per share attributable to ordinary equity holders of the parent		(84.4	)		(104.3	)		(150.4	)		(60.6	)

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Consolidated Statement of Financial Position

(P in millions)	As at September 30,					As at December 31,
	2020			2019		2019(1)		2018
Total non-current assets		27,892			16,337		19,568		6,468
Total current assets		21,161			14,218		18,867		11,612
Total assets		49,053			30,555		38,435		18,080
Total equity		(5,579	)		3,605		817		3,236
Total non-current liabilities		11,952			6,794		8,112		584
Total current liabilities		42,680			20,156		29,506		14,260
Total liabilities		54,632			26,950		37,618		14,844

⁽¹⁾  We adopted IFRS 16 using the modified retrospective approach with the date of initial application of January 1, 2019. Under this method, the standard was applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. Please refer to note 2.3 of our consolidated financial statements for the year ended December 31, 2019 included elsewhere in this prospectus.

Consolidated Statement of Cash Flows

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Net cash used in operating activities		(4,074	)		(11,590	)		(14,312	)		(3,599	)
Net cash used in investing activities		(4,614	)		(2,949	)		(4,539	)		(2,863	)
Net cash generated from financing activities		10,721			14,346			19,335			5,270
Net increase/(decrease) in cash and cash equivalents		2,033			(193	)		484			(1,192	)
Cash and cash equivalents at the beginning of the period		2,994			2,684			2,684			3,803
Cash and cash equivalents at the end of the period		5,126			2,306			2,994			2,684

Non-IFRS Measures⁽¹⁾

(P in millions)	As at September 30,						As at December 31,
	2020			2019			2019			2018
Contribution Profit/(Loss)		168			(3,366	)		(5,549	)		1,326
Adjusted EBITDA		(8,140	)		(10,569	)		(15,832	)		(5,305	)
Free Cash Flow		(10,353	)		(15,207	)		(19,947	)		(6,203	)

⁽¹⁾  See the definitions and reconciliations of the non-IFRS measures to the applicable IFRS measures in “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures.” Also see the discussions in “Presentation of Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Indicators of Operating and Financial Performance.”

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Other Data

(P in millions, unless indicated otherwise)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
GMV incl. services(1)		121,566			50,131			80,815			41,888
Share of Marketplace GMV, %(1)		45.0			12.4			17.4			0.9
Gross profit		19,873			7,275			11,259			9,558
Gross profit as a percentage of GMV incl. services, %		16.3			14.5			13.9			22.8
Contribution Profit/(Loss) as a percentage of GMV incl. services, %		0.1			(6.7	)		(6.9	)		3.2
Adjusted EBITDA as a percentage of GMV incl. services, %		(6.7	)		(21.1	)		(19.6	)		(12.7	)
Number of orders, million(1)		44.3			19.3			31.8			15.3
Number of active buyers, million(1)		11.4			6.6			7.9			4.8
Number of active sellers(1)		18,152			4,378			6,418			602

⁽¹⁾  See the definitions of GMV incl. services, Share of Marketplace GMV, number of orders, number of active buyers and number of active sellers in “Presentation of Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Indicators of Operating and Financial Performance.”

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RISK FACTORS

You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, prospects, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of the ADSs could decline due to any of these risks, and you may lose all or part of your investment. This prospectus 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, including the risks faced by us described below and elsewhere in this prospectus.

Risks Relating to Our Business and Industry

We may experience significant fluctuations in our results of operations and growth rate.

We have grown significantly in recent years, and we intend to continue to expand the scope and geographic reach of the services we provide. Our anticipated future growth will likely place significant demands on our management and operations. Our success in managing our growth will depend, to a significant degree, on the ability of our executive officers and other members of senior management to operate effectively and on our ability to further improve and develop our financial and management information systems, controls and procedures. In addition, we expect to have to adapt our existing systems and introduce new systems, train and manage our employees and improve and expand our sales and marketing capabilities.

Revenue growth may slow down or decline for any number of reasons, including our inability to attract and retain sellers and buyers, decreased buyer spending, increased competition, slowing overall growth of the e-commerce market, the emergence of alternative business models, changes in government policies and general economic conditions. We may also lose buyers and sellers for other reasons, such as a failure to deliver satisfactory customer or transaction experience or high-quality services. If we are unable to properly and prudently manage our operations as they continue to grow, or if the quality of our services deteriorates due to mismanagement, our brand name and reputation could be significantly harmed, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, a disproportionate amount of sales on our platform historically take place during our fourth quarter, and we expect this to continue. As a result of peak seasonal sales, as of December 31 of each year, our cash and cash equivalents balances typically reach an elevated level (other than as a result of cash flows provided by or used in investing and financing activities). This operating cycle results in a corresponding increase in accounts payable, combined with a decrease in inventories, as of December 31. Our accounts payable balance generally declines during the first month of each year, resulting in a corresponding decline in our cash and cash equivalents balances.

Our results of operations may fluctuate significantly as a result of a variety of factors, including those described above. As a result, historical period-to-period comparisons of our results of operations are not necessarily indicative of future period-to-period results. You should not rely on the results of a single fiscal quarter as an indication of our annual results or our future performance.

We have incurred significant losses in the past and are likely to continue to incur losses as we continue to invest in order to grow, and we may not achieve profitability going forward.

We incurred total losses of P19,363 million and P5,661 million in the years ended December 31, 2019 and 2018. We will need to generate and sustain increased revenue levels and decrease the proportionate amount of expenses in future periods to achieve profitability in our markets, and even if we do, we may not be able to maintain or increase profitability. We anticipate that we will continue to incur losses in the near term as a result of expected

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increases in our operating expenses as we continue to invest in our business in order to grow and retain our buyer base, expand our logistics and fulfillment capabilities, as well as continue developing and improving our platform and offering new products and services. These efforts may prove more expensive than we anticipate, and many of our efforts to generate revenue are new and unproven (for example, our recent financial technology initiatives, see “Business—Financial Services Offerings”). As a result, any failure to adequately increase our revenue or contain the costs related to our expansion could prevent us from attaining or increasing profitability. In addition, we regularly introduce new services, such as our Marketplace, which we added in September 2018, and a number of financial services that we started to actively develop in recent years, such as our OZON.Card and OZON.Installment (see “Business—Financial Services Offerings—Fintech – B2C”), and which we expect to add value to our overall business and network, but could result in an unexpected increase in costs or divert our senior management’s attention, which could negatively impact our goal of achieving profitability. As we expand our services to additional sellers and buyers in various regions and add new categories of products, our offerings in these markets may be less profitable than the markets in which we currently operate, which may not offset the costs required to expand into these markets and could impact our ability to achieve or sustain profitability. We may also fail to improve the purchase terms with our suppliers and improve our marketing efficiency and utilization of infrastructure, which could increase our costs and limit our ability to reinvest into other areas of our business. As a result of the preceding factors, in addition to various other factors that may arise, we may not be able to achieve, maintain or increase profitability in the near term or at all.

We may need to raise additional funds to finance our future capital needs, which may dilute the value of the outstanding ADSs or prevent us from growing our business.

We may need to raise additional funds to finance our existing and future capital needs, including developing new services and technologies and ongoing operating expenses. If we raise additional funds through the sale of equity securities, these transactions may dilute the value of the outstanding ADSs. We may also decide to issue securities, including debt securities that have rights, preferences and privileges senior to the ADSs. Any debt financing would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations, including increasing our vulnerability to general economic and industry conditions, limit our ability to plan and react to changes in our business and industry and place us at a disadvantage compared to competitors that have less indebtedness. We also can provide no assurance that the funds we raise will be sufficient to finance our existing indebtedness. We have entered into short and long-term financing arrangements with several banks, including Sberbank (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowings—Bank loans”), some of which contain covenants requiring us to meet certain financial parameters and non-monetary obligations, such as regular reporting. Any breach of our financing arrangements or the inability to service our debt through internally generated cash flow or other sources of liquidity would lead to default, which could have a material adverse effect on our business. In addition, our failure to comply with covenants under a facility agreement may trigger cross-default provisions contained in the credit facilities with another bank.

We may be unable to raise additional funds on terms favorable to us or at all, and if financing is not available or is not available on terms acceptable to us, we may be unable to finance our future needs. This may prevent us from increasing our market share, capitalizing on new business opportunities or remaining competitive in our industry, any of which would have a material adverse effect on our business, prospects, financial condition and results of operations.

If we fail to effectively promote our business and attract new and retain current buyers and sellers, our business, results of operations and prospects may be materially and adversely affected.

We believe that the effective promotion of our business is of significant importance to our success. Enhancing our brand recognition in the e-commerce market is critical to increasing the quantity and depth of engagement of sellers and buyers with our platform, which, in turn, enhances the appeal and assortment of products and services to buyers. We have conducted and will continue to conduct various marketing and promotional activities,

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including through both digital channels and offline media, aimed at increasing the visibility of our business, the attractiveness of our platform for our sellers and buyers and the growth of buyer traffic on our websites and mobile apps. We cannot assure you, however, that these activities will be effective in achieving the intended promotional impact on our business. In addition, our buyers and sellers may have conflicting views regarding some of the new initiatives we introduce to improve our platform, which can diminish our attempts to maintain a positive network effect and negatively affect our buyer and seller base. Further, any negative publicity relating to our products or services, regardless of its veracity, could harm our reputation and cause buyers and sellers to leave our platform, which would have a material adverse effect on our business, financial condition and results of operations. If our marketing efforts are not successful in attracting new and retaining current buyers, our business, prospects, financial condition and results of operations could be materially and adversely affected.

If we fail to maintain and enhance our brand, our business, prospects and results of operations may be materially and adversely affected.

We believe that maintaining and enhancing our OZON brand is significantly important to the success of our business. A well-recognized brand is critical to increasing the number of buyers and sellers and the level of their engagement and, in turn, enhancing the attractiveness of our products and services to them. Despite conducting a number of brand promotion and recognition activities from time to time, we cannot assure you that these activities will be successful in the future or that we will be able to achieve the brand promotion effects that we expect. In addition, our competitors may increase the intensity of their marketing campaigns, which may force us to increase our advertising spend to maintain our brand awareness. If our brand is harmed or we are forced to increase our marketing expenses, our business, prospects, financial condition and results of operations could be materially and adversely affected.

We operate in a competitive market. If we fail to retain our current market position, our business and results of operations could be materially and adversely affected.

The markets for our products and services are competitive and rapidly evolving. The successful execution of our strategy depends on our ability to continuously attract and retain sellers and buyers, expand the market for our products and services, continue technological innovation and offer new capabilities to sellers and buyers. We have many competitors not only among other e-commerce companies, but also physical stores and a large and fragmented group of other offline retailers. We compete with these current and potential competitors for both sellers and buyers. From time to time, our buyers may decide not to continue purchasing products on our platform for various reasons, including choosing to shop in offline retail stores once more. Our sellers may also decide to switch to our competitors’ services. Some of our existing or potential competitors may have greater resources, capabilities and expertise in management, technology, finance, product development, sales, marketing and other areas. Further, the internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller or lesser known businesses, including businesses from outside Russia, to compete against us. As a result of these various types of current and potential competitors, we may fail to retain or may lose our current market position, we may fail to continue to attract new and maintain our existing buyers and sellers, and we may be required to increase our spending or maintain lower prices, which could materially and adversely affect our business, prospects, financial condition and results of operations.

If we fail to improve our customer experience, product offerings and IT platform, we may not be able to attract and retain sellers and buyers, which may have a material adverse effect on our business, financial condition and results of operations.

Our success depends upon our ability to attract and retain both sellers and buyers. A key factor in attracting and retaining sellers and buyers is our ability to expand the variety of products and services offered by our platform, which, in turn, requires us to attract and retain a large number of sellers. Achieving these objectives requires the maintenance and continual improvement of our products and services, including the customer experience from both the seller and buyer perspective, the accessibility of buyer and seller support services and the reliability of transaction processing services, including reliable and fast delivery options.

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To build and maintain our brand reputation and customer loyalty, we need to continue to improve our products and services, as well as innovate and introduce new products and services to enhance the customer experience of our sellers and buyers. This includes improving our platform to optimize product search results, introducing new ways to pay for products bought on our platform (including through OZON.Installment or using our OZON.Card), improving data analytics for sellers and continuing to assess and enhance the customer experience on our websites and mobile apps generally. In addition, we need to adapt and improve customer interfaces on our platform to keep up with evolving buyer preferences. For example, in light of the growing propensity of customers to use smartphones to conduct transactions, we will continue to focus on optimizing our mobile apps to successfully manage access to our platform on mobile devices. Further, it is difficult to predict the problems that we may encounter in innovating and introducing new products and services, and we may need to devote significant resources to the creation, support and maintenance of our platform. We cannot provide any assurances that our innovative technological initiatives to improve our customer experience will be successful, including whether our new products or service offerings and delivery methods will be well-received by sellers and buyers or improve our operational cost efficiencies. If we are unable to increase and retain the number of sellers and buyers on our platform, or increase the quantity and quality of products and services offered, our business, prospects, financial condition and results of operations could be materially and adversely affected.

If we are not able to respond successfully to technological or industry developments, including changes to the business models deployed in our industry, our business may be materially and adversely affected.

The e-commerce market is characterized by rapid technological developments, frequent launches of new products and services, changes in buyer needs and behavior and evolving industry standards. As a result, participants in the e-commerce industry constantly change their product offerings and business models and adopt new technologies to, among other things, increase cost efficiency and adapt to buyer preferences. There can be no assurances that our key competitors will not adopt a more effective business strategy than us or that our competitors will not be able to more quickly adapt to industry changes than we will. If we fail to successfully and timely respond to technological or industry developments, it could result in a loss of sellers and buyers, and our brand, business, prospects, financial condition and results of operations could be materially and adversely affected.

Our expansion into new products, services, technologies and geographic regions subjects us to additional risks.

Our growth strategy depends, in part, on our expansion into new product or service offerings, such as the new financial technology services we offer. Our new initiatives may not be as profitable as expected, and we may be unable to recover our investments in them. In addition, we may be subject to claims if these product or service offerings suffer from service disruptions or failures or other quality issues. Failure to realize the expected returns of any of our investments in new technologies, products or services could result in our inability to cover the costs we incurred to develop these technologies, which may adversely affect our financial condition or results of operations. Expansion of the categories of products we are offering, such as pharmaceuticals or alcoholic beverages, may result in increased regulatory scrutiny and compliance requirements as a result of the uncertain application of laws, regulations and changing enforcement practices. If we or our sellers fail to comply with laws and regulations applicable to regulated products, our Buyer Website and Shopping App may be blocked or restricted, which may adversely affect our business, financial condition and results of operations.

We may be required to obtain permits or licenses with respect to our existing and new financial technology solutions in the future.

We are actively developing a number of financial technology (“Fintech”) initiatives, which we believe should be complementary to the creation of an integral ecosystem around our primary e-commerce business and are aimed at increasing our average order value, the retention of our buyers and the loyalty of our sellers, as well as at lowering acquisition costs while processing payments. In the recent years, we have already introduced a number

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of Fintech solutions, such as OZON.Card, OZON.Account and OZON.Installment. See “Business—Financial Services Offerings.” The regulation of Fintech solutions in Russia is currently being developed. Although we do not believe we are required to hold, and do not currently hold, any licenses in order to offer our Fintech solutions, since legislation around these offerings is continuing to evolve and may be subject to different interpretation by the Russian regulatory authorities in the future, there can be no assurance that we will not be required to obtain any such permits or licenses in the future with respect to any of our current or future Fintech solutions. If we fail to obtain such permits or licenses in the future, our business, prospects, financial condition and results of operations could be materially and adversely affected.

We rely on many counterparties and third-party providers in our business, and the nonperformance or loss of a significant third-party provider through bankruptcy, consolidation, or otherwise, could adversely affect our operations.

We are party to agreements with third-party companies in various aspects of our business model, including the lessors of our fulfillment centers and various logistics providers. If we are unable to maintain or renew leases, or lease other suitable premises on acceptable terms, or if our existing leases are terminated for any reason (including in connection with a lessor’s loss of its ownership rights to such premises), or if a lease’s terms (including rental charges) are revised to our detriment, such matters could have a material adverse effect on our business, financial condition and results of operations. If these third parties do not comply with applicable legal or administrative requirements, were to default on their obligations, or if we lose a significant provider through bankruptcy, consolidation or otherwise, we may be subject to litigation with these third-party providers, fail to renew the respective agreements on commercially acceptable terms and, therefore, face the need of switching to new third-party providers, who may provide services to us at higher prices, and any of the following of which could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our business may be adversely affected if counterparties that we contract with who are registered as individual entrepreneurs or self-employed persons, which includes couriers, are classified as our employees.

A number of counterparties that we contract with are individuals registered either as individual entrepreneurs or self-employed persons. As a result of being registered as either an individual entrepreneur or self-employed person, we are not obliged to withhold personal income tax and pay social contributions when paying these counterparties for the services that they provide to us.

Persons registered as individual entrepreneurs pay personal income tax and social insurance contributions themselves.

Recently, a special tax regime for taxation of professional income was established, which allows individuals to register under a simplified “self-employed” regime. This special tax regime, which was developed and promoted by the Russian tax authorities to formalize relationships between legal entities and freelance individuals, provides for taxation of individuals who sell goods, perform work or provide services without having an established labor relationship and who are working as freelancers; for example, couriers, taxi drivers, IT specialists, translators and tutors. A self-employed person’s annual income cannot exceed P2.4 million in order for this special tax regime to apply. Individuals who obtain self-employed status are exempt from paying personal income tax and obligatory social insurance contributions and instead pay 4% or 6% tax through a mobile application on the receipt of their income. Provisions regulating this new “self-employed” special tax regime, however, remain untested by the Russian administrative and court practice due to insufficient period of implementation.

One of our key Russian operating subsidiaries contracts with some individuals who are registered as self-employed and individual entrepreneurs (for example, couriers that help with our fulfillment and logistics). As such, based on current legislation, we do not consider these individuals to be members of our staff, and we are not obliged to pay or withhold any taxes or contributions when making payments to them.

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As a result, there is a risk that the courts may, upon the demand of the Russian authorities or the relevant individual entrepreneurs or self-employed individuals, reclassify our relationships with such individuals as labor relationships if such individuals are regularly and predominantly working for the benefit of our Russian subsidiaries, which could result in the assessment of additional taxes, penalties and other liabilities on our Russian subsidiaries and could adversely affect our business, prospects, financial condition and results of operations.

We may have difficulties with sourcing the products we sell through our Direct Sales business.

Besides connecting, and facilitating transactions between, buyers and sellers on our Marketplace, we sell products directly to our buyers through our Direct Sales business. In our Direct Sales business, we purchase and hold inventory of a selection of products in our fulfillment centers to be sold directly to buyers, and therefore are dependent on our suppliers we source the products from. There can be no assurance that we will be able to timely replace any of our suppliers in case their products are no longer available to us or otherwise procure the supply of products to our facilities to be sold through the Direct Sales business, which may adversely affect our business, prospects, financial condition and results of operations.

Failed deliveries, excessive returns and other logistics issues may adversely affect our business and prospects.

We offer our buyers a selection of delivery options, including delivery by courier, collection from our offline network of pick-up points and OZON.Box parcel lockers, as well as Russian Post and other third-party delivery service providers. If a delivery fails to reach the buyer, we may continue bearing the inventory costs or be required to engage with the seller for the return of the undelivered product. Even if the product is successfully delivered to the buyer and delivery is verified, we and our sellers are required, in most cases, to allow buyers to return products within a certain period of time after delivery. We also face the risk that third-party logistics providers and couriers might misappropriate inventory or mishandle packages, and we may struggle to verify delivery if the packages are delivered without obtaining buyer signatures or otherwise duly identifying the buyer. When products are delivered without verification, we may be required to deliver a duplicate product. A significant increase in failed deliveries, excessive or mistaken returns or other logistics issues may force us to allocate additional resources to mitigating these issues and may adversely affect our business, prospects, financial condition and results of operations.

A significant disruption in internet access, telecommunications networks or our IT platform may cause slow response times or otherwise impair our customers’ experience, which may in turn reduce traffic to our mobile apps and websites and significantly harm our business, financial condition and results of operations.

Our e-commerce business is critically dependent on the performance and reliability of Russia’s internet infrastructure, accessibility of bandwidth and servers to our service providers’ networks and the continuing performance, reliability and availability of our platform. Telecommunications capacity constraints in Russia may impede the development of our business and may limit internet usage more generally.

As our data centers and all of our backup centers are located in Moscow, we are heavily reliant on Russia’s internet infrastructure to operate our business. Since these centers are located, along with the office of our key operating subsidiary, in Moscow, our operations may also be negatively impacted by disruptions to the power grid, natural disasters or other events affecting the Moscow region. Similarly, if there were any system outages due to any internet delays, disruptions, natural disasters or any other issues with the infrastructure in Russia more generally, this would have a material adverse impact on our business and results of operations depending on the length and severity of the issue.

We have in the past and may continue to experience mobile app and website disruptions, outages and other website performance problems for a variety of reasons, including infrastructure changes, human or software errors, capacity constraints due to an overwhelming number of buyers accessing our websites simultaneously and

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denial of service or fraud or security attacks. In addition, we may experience slow response times or system failures due to a failure of our information storage, retrieval, processing and management capabilities. Slow response times or system failures may make our platform less attractive to sellers or buyers. If we experience technical problems in delivering our services over the internet, we could experience reduced demand for our services and lower revenue.

Significant disruptions in internet access or in the internet generally mentioned above could significantly harm our business, prospects, financial condition and results of operations.

Computer viruses, undetected software errors and hacking may cause delays or interruptions on our systems and may reduce the use of our services and damage our brand reputation.

Our online systems, including our websites, mobile apps and our other software applications, products and systems, could contain undetected errors, or “bugs,” that could adversely affect their performance. While we regularly update and enhance our websites and IT platform and introduce new versions of our mobile apps, the occurrence of errors in any such updates or enhancements may cause disruptions in the provision of our services and may, as a result, cause us to lose market share, and our reputation and brand, business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, computer viruses and cyber security compromises have in the past, which to date have not been material, and may in the future cause delays or other service interruptions on our systems. However, we may be subject to hacking attempts by malicious actors who seek to gain unauthorized access to our information or systems or to cause intentional malfunctions, loss or corruption of data or leakages of our buyers’ and sellers’ personal data. While we employ various antivirus and computer protection software in our operations, we cannot provide any assurance that such protections will successfully prevent all hacking attempts (whether through the use of “denial of service” attacks or otherwise) or the transmission of any computer viruses which, if not prevented, could significantly damage our software systems and databases, cause disruptions to our business activities (including to our e-mail and other communications systems), result in security breaches and the inadvertent disclosure of confidential and/or sensitive information and hinder access to our platform.

We may incur significant costs to protect our systems and equipment against the threat of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus or other compromise of our systems becomes highly publicized, our reputation could be materially damaged, resulting in a decrease in the use of our products and services. The inadvertent transmission of computer viruses could also expose us to liability and legal action, which may adversely affect our business, financial condition and results of operations.

Privacy and data protection concerns and related claims, including evolving government regulation in the area of consumer data privacy or data protection, could adversely affect our business and results of operations.

We collect, process, store and transmit large amounts of data, including confidential, sensitive, proprietary, business and personal information. The effectiveness of our technology, including our artificial intelligence (“AI”) systems, and our ability to offer our products and services to sellers and buyers depends on the collection, storage and use of data concerning customer activity, including personally identifying or other sensitive data. Our collection and use of this data for targeted advertisements, product recommendations, data analytics and outreach communications might raise privacy and data protection concerns that could negatively impact the demand for our products and services. We use third-party technology and systems for encryption, employee email, content delivery to buyers and other functions. Although we have developed systems and processes designed to protect seller and buyer information and prevent and mitigate the impact of data breaches and other fraudulent activities (whether directly through us or indirectly through our sellers or buyers), such measures cannot guarantee the security of such data and may be circumvented or fail to operate as intended.

We may also be subject to claims or regulatory sanctions for actions of third parties that are beyond our control, such as the misrepresentation of information or other inappropriate or unlawful actions with respect to use and

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processing of buyer and seller data. In our seller agreements and buyer contracts, we have specific clauses where we explicitly deny any responsibility for actions by third parties or for the accuracy of information they provide to us, and such actions are violations of our terms and conditions to misuse our services. Nevertheless, there can be no assurance that these preventative measures will fully protect us from such actions, which, regardless of merit, may force us to participate in time-consuming and costly litigation or investigations, divert significant management and staff attention, and damage our reputation.

The Russian Parliament and Government enacted consumer data privacy and data protection laws and regulations on, among other things, the solicitation, collection, transfer, processing and use of personal data. Regulation of this nature could reduce demand for our products and services if we fail to design or develop our operations in a way to be compliant with the applicable regulations. The failure to prevent or mitigate data loss, theft, misuse or other security breaches or vulnerabilities affecting our or our sellers’ and buyers’ systems, could expose us or our customers to the risk of loss, disclosure or misuse of such information, could result in liability and expose us to litigation and regulatory action (including under privacy or data protection laws), deter buyers or sellers from using our platform and services, and otherwise harm our business and reputation.

In Russia, in order to process an individual’s personal data, we must obtain the individual’s consent. This consent may be revoked at any time and, if revoked, the relevant personal data must be deleted. We do not collect or perform any operations on our customers’ personal data, except when such collection or processing is in accordance with our terms of services and privacy policies which are available on our websites. Subject to several exemptions, processors of personal data, including ourselves, must register as personal data operators with Roskomnadzor, the Russian regulatory authority for data protection. Roskomnadzor, among its other functions, ensures compliance with the data protection legislation and conducts scheduled and unscheduled audits to ensure such compliance, maintains the registers of personal data operators, infringers of personal data processing requirements and blocked websites, and initiates legal proceedings in case of violations and if required, the imposition of fines or other penalties. The trans-border transfer of personal data is allowed, subject to consent of the individual.

Under Russian law, processors of personal data are obliged to record, systematize, accumulate, store, clarify (update, modify) and retrieve Russian citizens’ personal data using databases located only within Russia (subject to a limited number of exceptions), as well as to provide, upon request, Roskomnadzor with information regarding the location of databases containing the personal data of Russian citizens. A failure to comply with these legal requirements may result in restrictions on our operations, including restricting access to our Buyer Website and including OZON in the special register for infringers of personal data processing requirements, as well as significant fines (up to P6 million or P18 million for repeat violations). Roskomnadzor also conducts scheduled and unscheduled audits to ensure compliance with the personal data legislation and may initiate legal proceedings in case of violations.

Some of the legal restrictions may be subject to broad interpretation. For example, no standard definition of a “database” exists within the law and, under definitions contained in the Russian Civil Code (the “Civil Code”), a variety of documents and virtual objects (for example, Microsoft Office files) may be referred to as a database. Our information resources, including personal data, may be stored in a virtual environment (as part of our own cloud computing), which may significantly hinder the determination of the exact location of each virtual object and make it more difficult for us to provide the required information on the location within the required period.

In addition, Russia continues to develop its legal framework, including with respect to data privacy and data protection. See “—The legal framework governing e-commerce, data protection and related internet services in Russia is not well developed, and we may be subject to the newly adopted legislation, as well as the changes to the existing legislation, which may be costly to comply with or may limit our flexibility to run our business.” Any uncertainties in the current Russian legislation on data privacy and data protection may be interpreted adversely to us by the Russian regulatory authorities and courts, and we may face liability for collection, processing, storage and transmission of personal data as a result, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

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Although we believe we are in compliance with these regulations, any change in the regulations or in their interpretation could make it costly, difficult or impossible for us to comply with them and may require us to incur significant efforts and resources.

If we were found in violation of any privacy or data protection laws or regulations, this could lead to legal liability, and our business may be materially and adversely affected, and we may have to change our business practices or potentially our products and services. In addition, such laws and regulations could impose significant costs on us and could make it more difficult for us to use our current technology. If a data breach were to occur, or if a violation of privacy or data protection laws and regulations were to be alleged, our platform may be perceived as less desirable, and our reputation, business, prospects, financial condition and results of operations could be materially and adversely affected.

We may be unable to effectively communicate with our buyers and sellers through email, other messages or social media.

We rely on newsletters in the form of emails and other messaging services in order to promote our platform and inform our buyers of our product offerings and/or the status of their orders, or inform our sellers of any updates on the terms and conditions of the sale of their products on our Marketplace. Changes in how webmail services organize and prioritize emails could reduce the number of buyers and sellers opening our emails. For example, some webmail services offer tools and features that could result in our emails and other messages being shown as “spam” or as lower priority to our consumers, which could reduce the likelihood of consumers opening or responding positively to them. Actions by third parties to block, impose restrictions on, or charge for the delivery of emails and other messages, as well as legal or regulatory changes with respect to “permission-based marketing” or generally limiting our right to send such messages or imposing additional requirements on our ability to conduct email marketing or send other messages, could impair our ability to communicate with our buyers and sellers. If we are unable to send emails or other messages to our buyers and sellers, if such messages are delayed or if buyers and sellers do not receive or decline to open them, we would no longer be able to use this free marketing channel. This could impair our marketing efforts or make them more expensive if we have to increase spending on paid marketing channels to compensate and as a result, our business could be adversely affected.

Additionally, malfunctions of our email and messaging services could result in erroneous messages being sent and buyers and sellers no longer wanting to receive any messages from us. Furthermore, our process of obtaining consent from our buyers to receive newsletters and other messages from us and to allow us to use their data may be insufficient or invalid. As a result, such individuals or third parties may accuse us of sending unsolicited advertisements and other messages, and our use of email and other messaging services could result in claims against us.

Since we also rely on social media to communicate with our buyers, changes to the terms and conditions of relevant providers could limit our ability to communicate through social media. These services may change their algorithms or interfaces without notifying us, which may reduce our visibility. In addition, there could be a decline in the use of such social media by our buyers, in which case we may be required to find other, potentially more expensive, communication channels.

An inability to communicate through emails, other messages or social media could have a material adverse effect on our business, prospects, financial condition and results of operations.

Real or perceived inaccuracies of our internally calculated operating metrics or industry and competitive information provided by third parties may harm our reputation.

Most of our operating metrics included in this prospectus and which we regularly communicate to the market are calculated by us internally. We also provide industry, market and competitive information in this prospectus based on studies and reports of third parties (see “Market and Industry Data”).

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There may be inherent challenges in calculating some of these measures, for example, the number of active buyers, active sellers and number of orders. In addition, our measures of calculating operating metrics may differ from estimates published by third parties or from similarly titled metrics used by our competitors or other parties due to differences in methodology. For instance, we calculate GMV incl. services in this prospectus as the total value of orders processed through our platform, as well as revenue from services to our buyers and sellers, such as delivery, advertising and other services rendered by our Ozon.ru operating segment. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. Other companies may calculate GMV differently, and we have historically calculated and presented to market participants GMV incl. services both inclusive and net of value added tax. We believe our calculation of GMV incl. services in this prospectus provides investors with a useful tool to understand the value of orders processed through our platform and services rendered to our buyers and sellers. However, if buyers, sellers or investors do not perceive our operating metrics or information on our competitive position in the market to be accurate, or if we discover material inaccuracies in our operating metrics, our reputation could be materially and adversely affected.

We may use open source code in a manner that could be harmful to our business.

We use open source code, which is subject to licensing, in connection with our technology and services. Original developers of open source code do not provide warranties for the use of their source code. The use of such open source code may ultimately require us to replace certain code used in our platform, pay a royalty to use certain open source code or discontinue certain aspects of our platform. As a result, the use of open source code could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be subject to product liability claims when people or property are harmed or damaged by the products that are sold on our platform.

We are exposed to product liability or food safety claims relating to personal injury or illness, death or environmental or property damage caused by the products that are sold by us or through our Marketplace, and we do not maintain any insurance with respect to such product liability. As the products offered by us or through our Marketplace are manufactured by third parties, we have only limited control over the quality of these products. In addition, we cannot always effectively prevent our sellers from selling harmful or defective products on our Marketplace, which could cause death, disease or injury to our buyers or damage their property. We may be seen as having facilitated the sale of such products and may be forced to recall such products. Under our Direct Sales model, where we act directly as seller, we may also have to recall harmful products.

Although we require that our sellers only offer products that comply with the existing product safety rules and monitor such compliance, we may not be able to detect, enforce or collect sufficient damages for breaches of such agreements. In addition, any negative publicity resulting from product recalls or the assertion that we sold defective products could damage our brand and reputation. Any material product liability, food safety or other claim could have an adverse effect on our business, prospects, results of operations and financial condition.

We may be subject to material litigation.

We have been involved in litigation relating principally to contract disputes, third-party intellectual property infringement claims, employment and tax-related cases and other matters in the ordinary course of our business. For instance, on September 4, 2020, we terminated a term sheet that was entered into in June 2020 between ourselves, our principal shareholders and Sberbank of Russia, the parent company of one of our underwriters, Sberbank CIB (UK) Limited. The term sheet provided for, among other things, the payment of a break-up fee equal to P1 billion from us to Sberbank of Russia in the event that we breached an exclusivity undertaking contained in the term sheet. On November 12, 2020, we and Sberbank of Russia agreed to resolve all of our disagreements related to this term sheet by entering into a settlement agreement in which we and Sberbank of Russia agreed to: (i) release and waive, to the fullest extent permitted by law, any and all claims against each other relating to the term sheet, and (ii) confirm the absence of any known non-contractual claims that could arise

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in relation to any other relationship between us and Sberbank of Russia. While we and Sberbank of Russia did not admit any breach nor concede any liability under the term sheet in the settlement agreement, we agreed under the settlement agreement to pay Sberbank of Russia P1 billion. As our business expands, we may face an increasing number of such claims, including those involving high amounts of damages. After we become a publicly listed company with a higher profile, we may face additional exposure to claims and lawsuits inside and outside Russia.

The outcome of any claims, investigations and proceedings is inherently uncertain, and regardless of the outcome, defending against these claims could be both costly and time consuming, and could significantly divert the efforts and resources of our management and other personnel. An adverse determination in any such litigation or proceedings could result in damages as well as legal and other costs, limit our ability to conduct business or require us to change the manner in which we operate, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

We are subject to payments-related risks.

We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift cards, direct debit from a buyer’s bank account, consumer invoicing and card and cash payment upon delivery (which has temporarily been suspended in light of the COVID-19 pandemic). We are currently subject to, and may become subject to additional, regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in significant costs and reduce the ease of use of our payments products). For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs.

We rely on third parties to provide certain payment methods and payment processing services, including the processing of credit cards, debit cards and promotional financing. In each case, it could disrupt our business if these processing services become unwilling or unable to provide these services to us, or if the services are offered on less favorable terms in the future.

We have experienced in the past fraudulent payment activities on our platform, which to date have not been material to us, and may continue to experience these fraudulent activities in the future. Although we have implemented various measures to detect and reduce the occurrence of fraudulent payment activities on our platform, there can be no assurance that such measures will be effective in combating fraudulent transactions or improving overall satisfaction among our buyers and sellers.

We are also subject to payment card association operating rules, such as PCI DSS, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it costly, difficult or impossible for us to comply. Failure to comply with these rules or requirements, as well as any breach, compromise or failure to otherwise detect or prevent fraudulent activity involving our data security systems, could result in our being liable for card issuing banks’ costs, subject to fines and higher transaction fees and the loss of the ability to accept credit and debit card payments from our buyers, process electronic funds transfers or facilitate other types of online payments, and our business and results of operations could be adversely affected.

We may be impacted by fraudulent or unlawful activities of sellers, which could have a material adverse effect on our reputation and business and may result in civil or criminal liability.

The law relating to the liability of online service providers is currently unsettled in Russia, and governmental agencies have in the past and could in the future require changes in the way online businesses are conducted. Our standard agreement with the sellers on our Marketplace provides for monthly payments to sellers for the products sold rather than immediate payment after the sale of a product. Our standard form agreement with our sellers provides that we will directly compensate the buyer for the purchase price if a buyer makes a return and the seller

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must refund us the price of the returned product. These provisions are designed to prevent sellers from collecting payments, fraudulently or otherwise, in the event that a buyer does not receive the products they ordered or when the products received are materially different from the seller’s descriptions, and to prevent sellers on our Marketplace from selling unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of others or otherwise violating our product requirements. If our sellers circumvent or otherwise fail to comply with these provisions, it could harm our business or damage our reputation, and we could face civil or criminal liability for unlawful activities by our sellers.

If we fail to adequately protect our intellectual property rights, our business, prospects, financial condition and results of operations could be adversely affected.

We rely on registered trademarks and confidentiality agreements to protect our intellectual property rights. However, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or diminish the value of our trademarks and other proprietary rights.

We are not always able to discover or determine the extent of any unauthorized use of our proprietary rights. Actions taken by third parties that license our proprietary rights may materially diminish the value of our proprietary rights or reputation. The protection of our intellectual property may require the expenditure of significant financial and managerial resources. Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights.

The Russian legal system and courts do not have a reputation for protecting intellectual property rights as vigorously as jurisdictions such as the United States. Companies operating in Russia thus face a higher risk of intellectual property infringement compared to companies operating in certain other jurisdictions. Furthermore, the validity, application, enforceability and scope of protection of intellectual property rights for many internet-related activities, such as internet commercial methods patents, are uncertain and still evolving, which may make it more difficult for us to protect our intellectual property, and our business, prospects, financial condition and results of operations could be adversely affected.

We may be subject to intellectual property infringement claims brought against us by others, which are costly to defend and could result in significant damage awards.

We rely, to some extent, on third-party intellectual property, such as licenses to use software to operate our business and certain other copyrighted works. Due to the nature of our business operations, we may from time to time be subject to material intellectual property claims connected with violations of the exclusive rights of third parties. We also expect to be exposed to a greater risk of being subject to such claims in light of growing competition in the market and an increasingly litigious business environment in Russia. A number of internet, technology, media and patent-holding companies own or are actively developing patents covering e-commerce and other internet-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection in certain jurisdictions. As a result, disputes regarding the ownership of technologies and rights associated with e-commerce and other online activities are likely to arise in the future. In addition, we use certain open source code, and the use of open source code is often subject to compliance with certain license terms, which we may inadvertently breach. See “—We may use open source code in a manner that could be harmful to our business.”

Although our employees are instructed to avoid acts that would infringe the intellectual property of others, we cannot be certain that our products, services and brand identifiers do not or will not infringe on valid patents, trademarks, copyrights or other intellectual property rights held by third parties. We may incur substantial expenses in responding to and defending against infringement claims, regardless of their veracity. Such diversion

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of management time and expenses, and the potential liability associated with any lawsuit, may cause significant harm to our business, prospects, financial condition and operations. A successful infringement claim against us could result in significant monetary liability, such as being liable for license fees, royalty payments, lost profits or other damages, or material disruption of our business. Similarly, the owner of the intellectual property may obtain injunctive relief to prevent us from making further use of certain technology, software or brand identifiers. If the amount of such payments is significant or if we are prevented from incorporating certain technology or software into our products or services or using our brand identifiers without hindrance, our business, prospects, financial condition and results of operations could be materially and adversely affected.

We are exposed to the risk of inadvertently violating anti-corruption laws, anti-money laundering laws and other similar laws and regulations.

We operate and conduct business across the entirety of Russia, where instances of fraud, money laundering, bribery and corruption have been reported to have taken place. We have policies and procedures designed to assist with compliance with applicable laws and regulations, and upon becoming a public company in the United States, we will be subject to the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”). The FCPA prohibits providing, offering, promising or authorizing, directly or indirectly, anything of value to government officials, political parties or political candidates for the purposes of obtaining or retaining business or securing any improper business advantage.

We maintain internal compliance policies and procedures, but we cannot provide any assurance that these policies and procedures will be strictly followed at all times and that they will effectively detect and prevent all violations of the applicable laws and every instance of fraud, money laundering, bribery and corruption. We also cannot provide any assurance that potential violations of our internal compliance procedures will be uncovered through our procedures or that violations of the applicable anti-bribery or money laundering laws, including the FCPA, will not occur. We have internal audit, security and other procedures in place, which are designed to prevent instances of fraud, money laundering, bribery and corruption. However, despite these controls and procedures, there can be no assurance that through these and other procedures we use we will timely and effectively catch any violations of our internal compliance procedures or any violations of laws, including those related to fraud, money laundering, bribery and corruption. Moreover, we have adopted our internal anti-money laundering and sanctions compliance policies only recently, and there could be no assurance that there were no violations prior to that or that our employees will yet to have sufficient experience to follow such policies properly. We are thus exposed to potential civil or criminal penalties or associated investigations under the relevant applicable laws which may, if not successfully avoided or defended, have an adverse impact on our business, prospects, financial condition or results of operations. Similarly, actual findings or mere allegations of such violations could negatively impact our reputation and limit our future business opportunities, which may cause our reputation, financial condition and results of operations to be materially and adversely affected.

We engage in de minimis activities relating to Crimea, and these activities could potentially impede our ability to raise funding in international capital markets and subject us to liability for noncompliance relating to various trade and economic sanctions laws and regulations.

In response to certain geopolitical tensions, a number of countries, including the United States, EU countries and Canada, imposed a variety of trade and economic sanctions aimed at Russia as well as certain individuals and entities within Russia and Ukraine. In December 2014, the President of the United States issued Executive Order Number 13685, which established a region-specific embargo under U.S. law for the Crimea region. Among other things, this embargo generally prohibits U.S. persons and U.S. companies from engaging in investments in the Crimea region and most import or export trade in goods and services with parties in the Crimea region. Pursuant to Executive Order Number 13685, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”), designate parties operating in the Crimea region on the OFAC list of Specially Designated Nationals and Blocked Persons (“SDN List”). As a result of these restrictions, we are unable to establish and grow any on-the-ground operations in Crimea and to provide the same services in Crimea that we provide to our buyers and

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sellers in Russia generally. U.S. persons and U.S. companies are generally prohibited from engaging in most transactions or dealings with parties on the SDN List. Non-U.S. persons and companies may be designated on the SDN List if they engage in significant transactions with persons designated on the SDN List under U.S. sanctions programs with respect to Russia. Although we do not operate on the ground in the Crimea region and have no facilities, assets nor employees located in the region subject to the embargo, third-party services deliver products ordered on our site to buyers located in the region and third-party independent agents operate a limited number of pick-up points in the region, which distribute packages ordered through our websites and mobile apps along with packages ordered though other providers. In the event sanctions are imposed on the third-party independent agents operating our pick-up points in Crimea or the logistics operators involved in delivering shipments to Crimea, we may be unable to satisfy all or a substantial part of the orders placed by customers in the embargoed region. Since the imposition of embargo, less than one percent of our revenue has been generated from orders delivered to the Crimea region. While we believe that current United States and EU sanctions programs do not preclude us from conducting our current business and do not create a material risk of application of any sanctions to us, new sanctions imposed by the United States and certain EU member states or changes in the interpretation of the existing sanctions, including the scope of embargo in place with respect to the Crimea region and the application of secondary sanctions on persons operating in the embargoed region, may restrict certain of our operations in the future.

We conduct the customary “know-your-customer” (“KYC”) and onboarding procedures for our sellers and suppliers in accordance with our internal policies. See also “—We are exposed to the risk of inadvertently violating anti-corruption laws, anti-money laundering laws and other similar laws and regulations.” However, we face the risks of receiving incorrect, inaccurate or misleading information in the course of these procedures. If, notwithstanding our onboarding procedures, we transact with a person or entity subject to the U.S., EU or other sanctions, our reputation and results of operations may be materially and adversely affected.

To the extent applicable, existing and new or expanded future sanctions may negatively impact our revenue and profitability, and could impede our ability to effectively manage our legal entities and operations both in and outside of Russia or raise funding from international financial institutions or the international capital markets. Although we take steps to comply with applicable laws and regulations, our failure to successfully comply with applicable sanctions may expose us to negative legal and business consequences, including penalties, government investigations and reputational harm.

We depend upon talented employees, including our senior management and IT specialists, to grow, operate and improve our business, and if we are unable to retain and motivate our personnel and attract new talent, we may not be able to grow effectively.

Our success depends on our continued ability to identify, hire, develop, motivate and retain talented employees. Our ability to execute and manage our operations efficiently is dependent upon contributions from all of our employees. Competition for senior management and key IT personnel is intense, and the pool of qualified candidates is relatively limited. From time to time, some of our key personnel may choose to leave our company for various reasons, including personal career development plans or alternative compensation packages. An inability to retain the services of our key personnel or properly manage the working relationship among our management and employees may expose us to legal or administrative action or adverse publicity, which could adversely affect our reputation, business, prospects, financial condition and results of operations.

Training new employees with no prior relevant experience could be time consuming and requires a significant amount of resources. We may also need to increase the compensation we pay to our employees from time to time in order to retain them. If competition in our industry intensifies, it may be increasingly difficult for us to hire, motivate and retain highly skilled personnel due to significant market demand. If we fail to attract additional highly skilled personnel or retain or motivate our existing personnel, we may be unable to pursue growth, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

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Employee misconduct is difficult to determine and detect and could harm our reputation and business.

We face a risk that may arise out of our employees’ lack of knowledge or willful, negligent or involuntary violations of laws, rules and regulations or other misconduct. Misconduct by employees could involve, among other things, the improper use or disclosure of confidential information (including trade secrets), embezzlement or fraud, any of which could result in regulatory sanctions or fines imposed on us, as well as cause us serious reputational or financial harm. We have experienced fraudulent misconduct by employees in the past, which to date has not caused any material harm to our business. However, any such further misconduct in the future may result in unknown and unmanaged risks and losses. We have internal audit, security and other procedures in place that are designed to monitor our employees’ conduct. However, despite these controls and procedures there can be no assurance that we will discover employee misconduct in a timely and effective manner, if at all. It is not always possible to guard against employee misconduct and ensure full compliance with our risk management and information policies. The direct and indirect costs of employee misconduct can be substantial, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

We do not have and may be unable to obtain sufficient insurance to protect ourselves from business risks.

The insurance industry in Russia relative to that in other jurisdictions is not as mature, and accessibility to many forms of insurance coverage common in other jurisdictions is limited. We currently maintain insurance coverage for our fulfillment centers and service centers but do not maintain insurance coverage for our servers, pick-up points, business interruption risks, product liability or third-party liability in respect of most of environmental damage arising from accidents on our property or relating to our operations. Until we obtain adequate insurance coverage, there is a risk of irrecoverable loss or destruction of certain assets, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our business may be materially adversely affected by the COVID-19 pandemic.

In December 2019, a novel strain of coronavirus was reported in Wuhan, China, which spread throughout the world, including Russia, Cyprus and the United States, and the highly contagious disease caused by the novel coronavirus was classified as the global pandemic. The COVID-19 pandemic has had a significant impact on the economies of most countries, including Russia, and has led to the closure of borders, restrictions on movement, the suspension of manufacturing and production and the cancellation of mass events. In order to prevent the spread of infection, on March 28, 2020, the Russian Government introduced a number of recommendations and restrictions, including restrictions on the movement of citizens and a limitation on most commercial activities in the country. These restrictions differ in scope across various regions of Russia and are also subject to continuous updating, resulting in both the strengthening and loosening of such restrictions in different regions on a near daily basis. In the second week of June 2020, a gradual loosening of these restrictions in Russia commenced, including in Moscow. As a result of these mobility restrictions imposed by the Russian Government, in March and April 2020, we experienced increased demand for our products and services. In April 2020, we were included in the list of systemically important companies by the special decree of the Russian Government, which will allow us to be considered for special government support during the COVID-19 pandemic. As a result of these support measures, our operations were not subject to the mobility restrictions imposed on businesses and the general public. We also benefited from a 1.0% online payment processing fee limit introduced by the CBR for retailers of certain essential products from April 2020 to September 2020. The online payment processing fee limit was imposed on Russian banks and other financial institutions, which were required to limit their fees to accept online debit and credit card payments for such retailers to 1.0%. This reduction of the online payment processing fee had the effect of decreasing our fees for cash collection expenses as a percentage of GMV incl. services in the six months ended September 30, 2020, which was partially offset by the increase of the share of online payments on our platform during that period. As a result, an overall decrease in our fees for cash collection expenses as a percentage of GMV incl. services amounted to 0.5 percentage points in the six months ended September 30, 2020 compared to the three months ended March 31, 2020. While we benefitted from the 1.0% online payment processing fee limit, which has since been terminated, we do not believe that there will be any material impact as

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a result of its termination. The measures mentioned above are the only material support that we received as a result of our inclusion in the list of systemically important companies. However, since the full impact of the COVID-19 outbreak continues to evolve, it is uncertain what effect the pandemic will have on our business in future periods.

The extent to which COVID-19 and the actions taken by governments to limit the spread of COVID-19 may impact our business and the businesses of our sellers and suppliers depends on future developments, which are highly uncertain and cannot be predicted. For example, these events could cause a temporary closure of the facilities we use for our operations, interrupt our fulfillment, delivery or logistics systems, or severely impact consumer behaviors and the operations of our sellers, buyers, suppliers and other users of our products and services. Our operations could also be disrupted if any of our employees or employees of our suppliers or sellers are suspected of contracting COVID-19, as this could require us or our suppliers or sellers to quarantine some or all of these employees and implement disinfection measures to the facilities and premises used for our operations. It is not possible to determine the ultimate impact that the COVID-19 pandemic may have on our business operations and financial results, which is dependent upon numerous factors, including the duration and spread of the pandemic and any resurgence of COVID-19 in Russia or elsewhere, actions taken by governments, domestically and internationally, the response of businesses and individuals to the pandemic, the impact of the pandemic on business and economic conditions in Russia and globally, consumer demand, our ability and the ability of sellers, logistics service providers and other users of our products and services to continue operations in areas affected by the pandemic and our efforts and expenditures to support our buyers, sellers and partners and ensure the safety of our employees. Due to uncertainties that will be dictated by the length of time that the COVID-19 pandemic and related disruptions continue, there can be no assurances that our business will not be adversely impacted going forward.

An increase in the share of international e-commerce companies in the Russian market or changes in measures aimed at restricting international e-commerce may adversely affect our business and results of operations.

According to INFOLine, cross-border sales (the sale of products through e-commerce into the domestic market from sellers in other countries) accounted for 29% of the e-commerce market in Russia in 2019, and the domestic market share of e-commerce in Russia increased in 2019, compared to 2018. However, there is no assurance that in the future we will not face increased competition from companies engaged in international e-commerce. If such companies were to substantially increase their market share in Russia, our business and results of operations could be adversely affected.

In addition, in recent years, Russia has imposed a number of measures aimed at supporting the development of domestic e-commerce businesses. For example, in 2019 and 2020, the cost of products being sent to Russia from abroad that may be imported free of customs duty was reduced from €1,000 to €200 per mailing pack. See “Regulation—Customs Regulation.” This and any other changes aimed at incentivizing buyers to shop on Russian e-commerce platforms appear beneficial for our growing business. However, if such regulations are abolished or the threshold for the cost of goods that may be imported free of customs duty is changed to earlier or higher levels, we may face an increased level of competition from a large number of foreign competitors.

If we were treated as a passive foreign investment company, investors in the ADSs subject to U.S. federal income tax could have material adverse tax consequences.

Special U.S. federal income tax rules apply to U.S. investors owning shares of a passive foreign investment company (“PFIC”). If we were treated as a PFIC for any taxable year during which a U.S. Holder (as defined in “Material Tax Considerations—U.S. Federal Income Tax Considerations for U.S. Holders”) holds the ADSs, the U.S. Holder could be subject to certain material adverse tax consequences upon a sale, exchange, or other disposition of the ADSs, or upon certain distributions by us. Based on the current and anticipated profile of our income, assets and operations, we believe that we were not in 2019, and we do not currently expect to become, a

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PFIC for U.S. federal income tax purposes. However, because this determination is made annually at the end of each taxable year and is dependent upon a number of factors, some of which are beyond our control, there can be no assurance that we will not be a PFIC in any taxable year or that the U.S. Internal Revenue Service will agree with our conclusion regarding our PFIC status in any taxable year. U.S. Holders should consult their own tax advisors about the potential application of the PFIC rules to their investment in the ADSs. For a more detailed discussion of PFIC tax consequences, see “Material Tax Considerations—U.S. Federal Income Tax Considerations for U.S. Holders—Passive Foreign Investment Company Considerations.”

Risks Relating to Russia

Investing in securities of issuers in emerging markets, such as Russia, generally involves a higher degree of risk than investments in securities of issuers from more developed countries and carries risks that are not typically associated with investing in more mature markets.

Emerging markets such as Russia are subject to greater risks than more developed markets, including significant legal, economic, tax and political risks. Investors in emerging markets should be aware that these markets are subject to greater risk and should note that emerging economies such as the economy of Russia are subject to rapid change and that the information set out herein may become outdated relatively quickly.

The Russian economy was adversely affected by the global financial and economic crisis and could be adversely affected by market downturns and economic crises or slowdowns elsewhere in the world in the future. In particular, the disruptions in the global financial markets have had a severe impact on the liquidity of Russian entities, the availability of credit and the terms and cost of domestic and external funding for Russian entities. This could adversely influence the level of buyer demand for various products and services, including those sold or provided by and through us. As has happened in the past, financial events such as significant depreciation of the ruble, capital outflows and a deterioration in other leading economic indicators or an increase in the perceived risks associated with investing in emerging economies due to, among other things, geopolitical disputes, such as the crisis in Ukraine, and imposition of certain trade and economic sanctions in connection therewith, could dampen foreign investment in Russia and adversely affect the Russian economy. In addition, during such times, businesses that operate in emerging markets can face severe liquidity constraints as funding. These developments, as well as adverse changes arising from systemic risks in global financial systems, including any tightening of the credit environment or a decline in oil, gas or other commodities prices could slow or disrupt the Russian economy and adversely affect our business, prospects, financial condition and results of operations. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved. Potential investors are urged to consult with their own legal and financial advisers before making an investment in the ADSs.

Economic instability in Russia could adversely affect our business.

Our primary operation market is Russia. As a result, our business and results of operations are dependent on the economic conditions in Russia. Over the last two decades, the Russian economy has experienced or continues to experience at various times:

• significant volatility in its GDP;

• the impact of international sanctions;

• high levels of inflation;

• increases in, or high, interest rates;

• sudden price declines in oil and other natural resources;

• instability in the local currency market;

• lack of reform in the banking sector and a weak banking system providing limited liquidity to Russian enterprises;

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• budget deficits;

• the continued operation of loss-making enterprises due to the lack of effective bankruptcy proceedings;

• capital flight; and

• significant increases in poverty rates, unemployment and underemployment.

The Russian economy has been subject to abrupt downturns in the past. Furthermore, following the imposition of economic sanctions by the United States and the EU and the decline of oil prices, in 2015, Russia’s GDP declined by 2.0% in real terms. In 2019, 2018 and 2017, Russia’s GDP grew by 1.3%, 2.5% and 1.8% in real terms, respectively, according to INFOLine. However, there is a risk that Russia’s recent growth or expected growth in the future will not continue or be achieved due to generally unfavorable economic conditions or geopolitical factors, and this consequently may materially and adversely affect our business, prospects, financial condition and results of operations.

Further, the recent outbreak of COVID-19 across the world has and could continue to adversely affect business activity and trade, resulting in an overall deterioration of spending power and general willingness to spend in the Russian economy and thus, a decreased demand for our products and services. See “—Our business may be materially adversely affected by the COVID-19 pandemic.” There can be no guarantee that, despite any national or international responses to COVID-19 or any other diseases, such outbreaks would not cause material and sustained disruptions to global and domestic economic activity and our business. Any deterioration in the general economic conditions in Russia (whether or not as a result of the events mentioned above) could have a material adverse effect on the Russian economy and our business, prospects, financial condition and results of operations.

The legal framework governing e-commerce, data protection and related internet services in Russia is not well developed, and we may be subject to the newly adopted legislation, as well as the changes to the existing legislation, which may be costly to comply with or may limit our flexibility to run our business.

As e-commerce and the internet continue to develop on a global scale and, in particular, in Russia, new laws and regulations relating to the use of the internet in general and the e-commerce sector in particular may be adopted. These laws and regulations may further govern the collection, use and protection of data, buyer protection, online payments, pricing, anti-bribery, tax, website contents and other aspects relevant to our business. The adoption or modification of laws or regulations relating to our operations could adversely affect our business by increasing compliance costs, including as a result of confidentiality or security breaches in case of non-compliance and administrative burdens. We must comply with applicable regulations in Russia, and any non-compliance could lead to fines and other sanctions imposed by the Russian government authorities.

Over the recent years, a number of legislative initiatives related to the internet were submitted to the Russian State Duma, the lower house of the Russian Parliament, and a few of them were further signed into laws. For example, in December 2018, a draft law aimed at ensuring the safe and sustainable functioning of the internet in Russia was submitted for consideration to the Russian State Duma and, in April 2019, the draft law was adopted. The law requires Russian telecommunications operators to install new equipment to ensure that the Russian internet functions autonomously in case the global internet is not operating in Russia, and introduces the notion of the Russian national domain zone. It is currently unclear how this law might affect our operations, and there can be no assurances that this may not negatively affect our business or operations. Furthermore, we may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure our websites are accessible within an acceptable load time, which may adversely affect our business.

In addition, a number of legislative initiatives, including a draft law regulating big data, are reportedly under consideration. If any such initiatives applicable to the use of the internet and the e-commerce sector are adopted, we may be required to comply with the new requirements, and such compliance may require us to introduce further security protection measures or make further costly investments in our IT infrastructure, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

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The adoption, maintenance and expansion of international embargo, economic or other sanctions against Russia may have a material adverse effect on our business, financial condition and results of operations.

The United States, the European Union and certain other countries have imposed economic sanctions on certain Russian government officials, private individuals and Russian companies, as well as “sectoral” sanctions affecting specified types of transactions with named participants in certain industries, including named Russian financial state-owned institutions, and sanctions that prohibit most commercial activities of U.S. and EU persons in Crimea and Sevastopol. See “—We engage in de minimis activities relating to Crimea, and these activities could potentially impede our ability to raise funding in international capital markets and subject us to liability for noncompliance relating to various trade and economic sanctions laws and regulations.” We raise financings and engage in routine transactions with Russian state owned financial institutions, including Sberbank (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Borrowings—Bank Loans”), that have been designated under U.S. and EU sectoral sanctions. Although such transactions are not currently prohibited by U.S. and EU sanctions, in the event the scope of these sanctions is expanded or if these entities become subject to blocking sanctions, our ability to raise financing and to transact with such parties may be hindered, which would adversely affect our business. In 2019 and 2020, these sanctions were prolonged and extended. Political and economic sanctions may impede our ability to effectively manage our legal entities and operations in and outside of Russia. Although neither our parent company nor our principal operating subsidiary or other subsidiaries are targets of U.S. or EU sanctions, our business has been adversely affected from time to time by the impact of sanctions on the broader economy in Russia. Although we do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that we would be targeted by any sanctions in the future, further expansion of sanctions on Russia and Russian entities may have an adverse effect on our ability to expand and grow our business and raise financings to fund the development of our business.

Since March 2019, several Russian book publishers, including Litres Holding Limited (“Litres”), in which we hold a 42.27% interest, and our former controlling shareholder, have been subject to sanctions imposed by Ukraine, which have blocked Ukrainian users from accessing our services and websites and those of Litres.

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. The list included the 96 wealthiest Russian businessmen, including Mr. Vladimir Evtushenkov, who beneficially owns more than 59% in Sistema, one of our principal shareholders. Although we are not aware of any intention on the part of the U.S. government to impose sanctions on Mr. Evtushenkov, if he were to become a target of sanctions, it could have a material adverse effect on our ability to access financing in the U.S. debt and equity markets.

The U.S. Congress is considering several bills to expand sanctions against Russia, Russian companies and individuals, including:

• new sanctions on Russian officials and wealthy individuals;

• blocking sanctions against Russian state-owned financial institutions;

• sanctions against Russian energy sectors and export pipelines for Russian oil and gas; and

• restrictions on Russian sovereign debt and debt of Russian state-owned companies.

New tensions in relations between Russia and U.S., including as result of new allegations of interference in the U.S. Presidential elections, could result in adoption and implementation of these and other new sanctions, which could have a material adverse effect on the Russian economy and on our business, financial condition and results of operations.

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Political risks could adversely affect the value of investments in Russia.

The Russian economy has often been impacted by actions taken by governments outside of Russia and by political risk within Russia, including the economic sanctions imposed by the United States and the EU. See “—The adoption, maintenance and expansion of international embargo, economic or other sanctions against Russia may have a material adverse effect on our business, financial condition and results of operations.” Moreover, in December 2011 and in 2012, there were public protests alleging voting irregularities in federal parliamentary and presidential elections and demanding political reform. In 2018, there were public protests against the increase of the retirement age. In January 2020, a series of political reforms were proposed purporting to reallocate powers and responsibilities among the Russian governmental authorities, including those of the Russian Parliament and the Government. In addition, further amendments were proposed in March 2020, under which the previous and current Presidents of Russia are allowed to participate in presidential elections for two additional terms following the amendment of the Constitution. In July 2020, following a public vote, the changes to the Russian Constitution necessary to implement proposed political reforms were enacted, however, further reforms would have to be administered and other laws would be necessary for the political decisions to become effective. The implementation of such political steps and actions could take time, and eventually the political and constitutional structure of Russia may change, subject to the completion of the relevant implementation procedures.

In the past, Russian authorities have prosecuted some Russian companies, their executive officers and their shareholders on tax evasion, fraud and related charges. In some cases, the result of these prosecutions has been the prolonged prison detention or imposition of prison sentences for individuals and significant fines or claims for unpaid taxes. Any similar actions by governmental authorities could lead to further negative impact on investor confidence in Russia’s business and legal environment. The risks associated with these events or potential events could materially and adversely affect the investment environment and overall consumer and entrepreneurial confidence in Russia, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Inflation in Russia may increase our costs and exert downward pressure on our operating margins.

The Russian economy has experienced high levels of inflation since the early 1990s. The consumer price index, which is a key measure representing inflation in Russia, grew year-on-year by 4.5% in 2019, 2.9% in 2018 and 3.7% in 2017, according to INFOLine, and there can be no assurance that it will not increase in the future. We tend to experience inflation-driven increases in some of the costs of our operations, such as salaries that are linked to, or impacted by, the general price level in Russia. In the event that we experience cost increases resulting from inflation, our operating margins may decrease if we are unable to pass these increases on to our buyers. In such circumstances, our business, prospects, financial condition and results of operations could be materially adversely affected.

Potential political or social conflicts could create an uncertain operating environment that could hinder our ability to plan for the long-term.

Russia is a federation of sub-federal political units, consisting of republics, territories, regions, cities of federal importance and autonomous regions and districts, some of which have the right to manage their internal affairs pursuant to agreements with the federal government and in accordance with applicable laws. The decentralization of authority and jurisdiction among the Russian constituent entities and the federal government is, in some instances, unclear. In practice, the division of authority and uncertainty could hinder our long-term planning efforts and may create uncertainties in our operating environment, which may prevent us from effectively carrying out our business strategy.

In addition, ethnic, religious, historical and other divisions have, on occasion, given rise to tensions and, in certain cases, acts of terrorism and military conflict. If existing conflicts, tensions or terrorist activities, or threats

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thereof, remain unresolved, or new disturbances or hostilities arise, this could have significant political and economic consequences, and we may be unable to access capital, or access capital on terms reasonably acceptable to us, and the use of and access to our products and services in particular areas may be impacted, which may have a material adverse effect on our business, prospects, financial condition and results of operations.

Crime and corruption could disrupt our ability to conduct our business and thus materially adversely affect our operations.

Organized criminal activity in Russia has reportedly increased significantly since the dissolution of the Soviet Union in 1991, particularly in large metropolitan centers. In addition, the Russian and international press have reported high levels of official corruption in Russia, including the bribery of officials for the purpose of initiating investigations by state agencies, obtaining licenses or other permissions or in order to obtain the right to supply products or services to state agencies. Press reports have also described instances in which state officials have engaged in selective investigations and prosecutions to further interests of the state and individual officials. Additionally, published reports indicate that a significant number of Russian media regularly publish slanted articles in return for payment. The proliferation of organized or other crime, corruption and other illegal activities that disrupt our ability to conduct its business effectively or any claims that we have been involved in corruption, or illegal activities (even if false) that generate negative publicity could have a material adverse effect on our business, prospects, financial condition and results of operations.

The ongoing development of the Russian legal system and Russian legislation creates an uncertain environment for investment and for business activity.

Russia continues to develop its legal framework in accordance with international standards and the requirements of a market economy. Since 1991, new Russian domestic legislation has been put into place. Currently, this system includes the Constitution of the Russian Federation of 1993, the Civil Code and other federal laws, decrees, orders and regulations issued by the President, the Russian Government and federal ministries, which can be complemented by regional and local rules and regulations, adopted in certain spheres of regulation. Several fundamental Russian laws have only recently become effective and many are still evolving. Consequently, certain areas of judicial practice are not yet fully settled and are therefore sometimes difficult to predict.

The current regulatory environment of Russia may result in inconsistent interpretations, applications and enforcement of the law. Among the possible risks of the current Russian legal system are:

• inconsistencies among: (i) federal laws, (ii) decrees, orders and regulations issued by the President, the Russian Government, federal ministries and regulatory authorities and (iii) regional and local laws, rules and regulations;

• limited judicial and administrative guidance on interpreting Russian legislation;

• the relative inexperience of judges, courts and arbitration tribunals in interpreting new principles of Russian legislation, particularly business and corporate law;

• substantial gaps in the regulatory structure due to the delay or absence of implementing legislation; and

• a high degree of unchecked discretion on the part of governmental and regulatory authorities.

There are also legal uncertainties relating to property rights in Russia. During Russia’s transformation to a market economy, the Russian Government has enacted legislation to protect property against expropriation and nationalization, and, if property is expropriated or nationalized, legislation provides for fair compensation. There is, however, no assurance that such protections would be enforced.

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Notwithstanding recent reforms of the Russian court system, the continued evolution of the Russian legal system could affect our ability to enforce our contractual rights or to defend ourselves against legal action, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

Findings of failure to comply with existing laws or regulations, unlawful, arbitrary or selective government action or increased governmental regulation could have a material adverse effect on our business, prospects, financial condition and results of operations.

Our operations are subject to regulation by various government entities and agencies at both the federal and regional levels. Russian regulatory authorities often exercise considerable discretion in matters of enforcement and interpretation of applicable laws, regulations and standards, the issuance and renewal of licenses and permits and in monitoring licensees’ compliance with license terms, which may lead to inconsistencies in enforcement. Russian authorities have the right to, and frequently do, conduct periodic inspections of operations and properties of Russian companies throughout the year. Any such future inspections may conclude that we have violated applicable laws, decrees or regulations. In addition, we are subject to the Russian consumer protection legislation (see “Regulation—Consumer Protection and Commerce Regulation”) and may face potential claims of our buyers under these rules. Findings that we failed to comply with existing laws, regulations or directions resulting from government inspections may result in the imposition of fines, penalties or more severe sanctions, including the suspension, amendment or termination of our licenses or permits or in requirements that we suspend or cease certain business activities, or in criminal and administrative penalties being imposed on our officers, any of which would have a material adverse effect on our reputation, business, prospects, results of operations and financial condition.

In addition, the Russian tax authorities have been reported to have aggressively brought tax evasion claims relating to Russian companies’ use of tax-optimization schemes, and press reports have speculated that these enforcement actions have been selective. Selective or arbitrary government action could be directed at us, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

If existing limitations on foreign ownership were to be extended to our business, or if new limitations were to be adopted, it could materially adversely affect our business and prospects.

Russian law restricts foreign (non-Russian) ownership or control of companies involved in certain important activities in Russia. Currently, e-commerce technology, the internet and online advertising are not industries specifically covered by this legislation, but proposals have from time to time been considered by the Russian Government and the Russian Parliament, which, if adopted, would impose foreign ownership or control restrictions on certain large technology or internet companies. A draft law which was proposed in mid-2019, for example, was aimed at restricting foreign ownership of “significant” internet companies. A number of parties, including representatives of the Russian Government, identified concerns with the draft law, and the proposal was withdrawn in November 2019. If any similar legislation imposing limitations on e-commerce businesses were to be adopted and were applicable to us, it could have a material adverse effect on our business and prospects.

Participant liability under Russian corporate law could cause us to become liable for the obligations of our subsidiaries.

Our principal operating subsidiary, Internet Solutions LLC, is a limited liability company organized in Russia. Russian law generally provides that participants in a limited liability company are not liable for that company’s obligations and risk only the loss of their investment. This rule does not apply, however, when one legal entity is capable of determining decisions made by another entity. The legal entity capable of determining such decisions is called the effective parent entity (osnovnoye obshchestvo), and the legal entity whose decisions are capable of

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being so determined is called the effective subsidiary entity (docherneye obshchestvo). The effective parent bears joint and several liability for transactions concluded by the effective subsidiary in carrying out business decisions if:

• the effective parent gives binding directions to the effective subsidiary or provides consent to the relevant transactions entered into by the subsidiary; and

• the right of the effective parent to give binding instructions is based on its share in the subsidiary’s capital, or is set out in a contract between such entities or stems from other circumstances.

In addition, under Russian law, an effective parent is secondarily liable for an effective subsidiary’s debts if an effective subsidiary becomes insolvent or bankrupt as a result of the action of an effective parent. In these instances, the other participants of the effective subsidiary may claim compensation for the effective subsidiary’s losses from the effective parent that causes the effective subsidiary to take action or fail to take action knowing that such action or failure to take action would result in losses. We could be found to be the effective parent of our subsidiaries, in which case we would become liable for their debts, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

The Russian banking system remains underdeveloped, the number of creditworthy banks in Russia is limited and another banking crisis could place severe liquidity constraints on our business.

Instability in the Russian banking sector may also adversely affect the Russian general economy. An increase in the level of underperforming loans generally weakens the level of capital for banks, which, in turn, may lead them to shrink their loan portfolios and cause debt funding to become less available for businesses outside the financial sector. Several major Russian banks, such as Trust Bank, PJSC Otkritie Financial Corporation, PJSC B&N Bank and JSCB Moscow Industrial Bank PC, were recently subject of a government bailout. Risk management, corporate governance and transparency and disclosure practices of Russian banks often remain below international best practices.

Bankruptcy, revocation of banking licenses, failure to meet financial soundness requirements, the impact of the U.S. and EU sanctions resulting from the Ukrainian crisis or the impact of other material adverse developments on any of such banks could lead to forfeiture of, or delays in accessing, our cash reserves or withdrawal/transactional limits or restrictions being imposed on our business, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

A listing on MOEX could impose additional administrative burdens on us and decrease the liquidity of trading in the ADSs on Nasdaq.

On November 19, 2020, we obtained the approval of MOEX in relation to the listing and admission of the ADSs to trading on MOEX under the symbol “OZON.” The ADSs may not start trading on MOEX earlier than time at which the ADSs start trading on Nasdaq. No assurance can be given that we will be able to maintain such listing. Any such listing may impose additional administrative burdens on us and may result in a reduction of the liquidity of trading in the ADSs on Nasdaq.

Regulatory authorities in Russia could determine that we hold a dominant position in our markets, which would result in limitations on our operational flexibility and may adversely affect our business, financial condition and results of operations.

The Russian Law on Protection of Competition, dated July 26, 2006 (as amended, the “Competition Law”), generally prohibits any concerted action or agreement between competitors or coordination of business activities of competitors that results or may result in the fixing or maintenance of prices and various other types of anti-

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competitive behaviors. There is no uniform court practice on what concerted actions or coordination of business activity are, and the regulator and courts have interpreted these concepts inconsistently. As a result, there is significant uncertainty as to what actions would be viewed as a violation of the Competition Law. In a number of court cases, Russian courts have found concerted actions where competitors acted in a similar way within the same period of time, although, arguably, there have been legitimate economic reasons for such behavior and the behavior was not aimed at restriction of competition. Therefore, there is a risk that we may be found in violation of the Competition Law if our market behavior vis-à-vis our sellers or buyers is viewed as being similar to behavior of our competitors and perceived by the Federal Antimonopoly Service (the “FAS”) as a purported restriction of competition. See “Regulation—Antimonopoly Regulation.”

The Competition Law also prohibits any form of unfair competition, including, among other things, through defamation or otherwise. Such broad interpretations of the Competition Law may result in the imposition of behavioral limitations on our activities by the FAS, may limit our operational flexibility and may result in civil liability, administrative liability for us and our management and even criminal liability for our management.

Although to date we have only received what we consider to be routine inquiries from the FAS, we have not engaged with the FAS to define our market position. At some point in the future, the FAS may conclude that we hold a dominant position in one or more of our markets in Russia. If the FAS were to do so, this could result in heightened scrutiny for review and possible limitations on our future acquisitions and the FAS may demand that we obtain clearance from them prior to contractually agreeing to make any substantial changes to our standard agreements with sellers and agents. Further, under certain circumstances, we may be deemed to be abusing a dominant market position simply by refusing to conclude a contract with certain third parties. Any abuse of a dominant market position could lead to administrative penalties and the imposition of fines calculated by reference to our revenue.

In addition, some legislative initiatives under discussion may be applicable to us as an e-commerce business. For example, the draft law known as the “5^th Antimonopoly Pack,” if adopted as currently drafted, may apply to us, and we may potentially fall under the new rules of determination of dominant position in respect of digital platforms and may be subject to an enhanced level of scrutiny by the FAS towards our business in Russia. See “Regulation—Antimonopoly Regulation.”

We believe that our operations are in compliance with Russian antimonopoly regulations. However, investigations that may be conducted by the FAS in the future, into our operations or transactions, and the imposition of related penalties, sanctions or conditions on us, could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may be subject to existing or new advertising legislation that could restrict the types of advertisements we serve, which could result in a loss of advertising revenue.

Russian law prohibits advertising of certain products, such as uncertified products or tobacco products, and heavily regulates advertising of certain other products and services, such as alcohol, pharmaceuticals and children food. Advertisements for certain products and services, such as financial services, as well as advertisements aimed at minors and some others, must comply with specific rules and must in certain cases contain particular disclaimers.

Further amendments to advertising regulations may impact our ability to provide some of our services or limit the type of advertising services we may offer. However, the application of these laws to parties that merely facilitate or distribute advertisements (as opposed to marketing or selling the relevant product or service) can be unclear. Pursuant to our terms of service, we require that our advertisers have all required licenses or authorizations. If parties engaging our advertising services do not comply with these requirements, and these laws were to be interpreted to apply to us, or if our advertising serving system failed to include the necessary disclaimers, we may be exposed to administrative fines or other sanctions and may have to limit the types of advertisers we serve.

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The regulatory framework in Russia governing the use of behavioral targeting in online advertising is unclear. If new legislation were to be adopted or the current legislation were to be interpreted to restrict the use of behavioral targeting in online advertising, our ability to enhance the targeting of our advertising could be significantly limited, which could impact the relevance of the advertisements distributed by us, reduce the number of parties engaging our services and ultimately decrease our advertising revenue, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

One or more of our subsidiaries may be forced into liquidation due to formal non-compliance with certain requirements of Russian law, which could have a material adverse effect on our business, financial condition and results of operations.

Certain provisions of Russian law may allow a court to order liquidation of a Russian legal entity on the basis of its formal non-compliance with certain requirements in connection with its formation or reorganization or during its operation. There have been cases in the past in which formal deficiencies in the establishment process of a Russian legal entity or non-compliance with provisions of Russian law have been used by Russian courts as a basis for liquidation of a legal entity. For example, in Russian corporate law, negative net assets calculated on the basis of the Russian Accounting Standards as of the end of the financial year following the second or any subsequent financial year of a company’s operation can serve as a basis for a court to order the liquidation of the company, upon a claim by governmental authorities (if no decision is taken to liquidate the company). Many Russian companies have negative net assets due to very low historical asset values reflected on their Russian balance sheets. However, their solvency (i.e., their ability to pay debts as they come due) is not otherwise adversely affected by such negative net assets. In addition, according to Russian court practice, formal non-compliance with certain requirements that may be remediated by a non-compliant legal entity should not itself serve as a basis for liquidation of such legal entity.

Although Internet Solutions LLC, our key operating subsidiary, had negative net assets as of December 31, 2019, its net assets as of December 31, 2018 were positive. Under the relevant legislative requirement, a company may be forced into liquidation only after having negative net assets for two consecutive years, and as this requirement is temporarily not applicable in 2020 due to the COVID-19 pandemic, we believe that we and our subsidiaries are currently fully compliant with the applicable legal requirements and neither we nor Internet Solutions LLC or any of our other subsidiaries should be subject to liquidation on such grounds. If the legislative requirement is reinstated in 2021, we expect to take all necessary measures aimed at ensuring that Internet Solutions LLC has positive net assets by the required time in order to continue to be in compliance with all applicable requirements. However, weaknesses in the Russian legal system create an uncertain legal environment, which makes the decisions of Russian courts or governmental authorities difficult, if not impossible, to predict. If involuntary liquidation were to occur, then we may be forced to reorganize the operations we currently conduct through the affected subsidiaries. Any such liquidation could lead to additional costs, which could materially adversely affect our business, financial condition and results of operations.

Risks Relating to Our Organizational Structure

The rights of our shareholders are governed by Cyprus law and our articles of association and differ in some important respects from the typical rights of shareholders under U.S. state laws.

Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in Cyprus. The rights of our shareholders and the responsibilities of members of our board of directors under Cyprus law and our articles of association are different than under the laws of some U.S. state laws. For example, existing holders of shares in Cypriot public companies are entitled as a matter of law to pre-emptive rights on the issue of new shares in that company (if shares are issued for cash consideration). The pre-emptive rights, however, may be disapplied by our shareholders at a general meeting for a period of five years.

In addition, our articles of association include other provisions, which differ from provisions typically included in the governing documents of most companies organized in the U.S., including that our shareholders are able to

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convene an extraordinary general meeting and vote upon the matters which by law are reserved to the shareholders or are provided in the articles of association. As a result of the differences described above, our shareholders may have rights different to those generally available to shareholders of companies organized under U.S. state laws, and our board of directors may find it more difficult to approve certain actions.

Under Cyprus law, generally the company, rather than its shareholders, is the proper claimant in an action in respect of wrongdoing done to the company or where there is an irregularity in the company’s internal management.

Notwithstanding this general position, Cyprus law provides that a court may, in a limited set of circumstances, allow a shareholder to bring a derivative claim (an action in respect of and on behalf of the company) against the wrongdoers, which may include include a complaint that the company’s affairs are being conducted in an oppressive manner to some of the company’s shareholders (including the complainant), the ultra vires and illegal use of control in decision-making by the board of directors or a shareholder majority, violation of the voting procedures of the company that require a special majority, violation of personal rights of a shareholder under the company’s constitution and/or the applicable law, and fraud on the minority by the controlling majority. Remedies commonly sought by a derivative action include, among other things, the cancellation of the illegal or ultra vires acts or decisions taken by the company, damages for breach of duties by the directors owed to the company or negligence by the company’s officers or breaches of the company’s constitutional documents and/or applicable law, and tracing and recovery of property misappropriated by the persons in control of the company’s management or third parties. In certain circumstances, such as when fraud on the minority is alleged, the derivative action will be based on the principles of equity; therefore, the court will need to be satisfied that the claimant has come to court with “clean hands” (without fault), and that the action has been bona fide filed and serves the company’s interests, that there is no alternative means to remedy the wrongdoing. As such, the above would need to be met in order for the court to allow the action to proceed and determine which remedy, if any, is more appropriate to be granted, depending on the individual circumstances of each case.

In addition to a derivative action, where there is a complaint that the company’s affairs are being conducted in an oppressive manner to some of the company’s shareholders, a complainant may file a petition to the Cypriot court pursuant to section 202 of the Companies Law, Cap. 113. Commonly sought orders in such a case include an order to regulate how the company’s affairs are run in the future, an order for the purchase of the shares of any members by other members or by the company (and in the latter case, out of a reduction of the company’s capital), and an order for the winding-up of the company on the ground that it is just and equitable.

As a holder of the ADSs, you may not be able to exercise pre-emptive rights in relation to future issuances of ordinary shares.

To raise funding in the future, we may issue additional ordinary shares, including ordinary shares represented by ADSs. Generally, existing holders of shares in Cypriot public companies are entitled by law to pre-emptive rights on the issue of new shares in that company (provided that such shares are paid in cash and the pre-emption rights have not been disapplied by our shareholders at a general meeting for a specific period). You may not be able to exercise pre-emptive rights for ordinary shares where there is an issue of shares for non-cash consideration or where pre-emptive rights are disapplied. You may also not be able to exercise pre-emption rights directly (but possibly only by instructing the depositary as the registered holder of shares) as only holders of shares and not of ADSs have such rights in Cyprus. In the United States, we may be required to file a registration statement under the Securities Act to implement pre-emptive rights. We can give no assurances that an exemption from the registration requirements of the Securities Act would be available to enable U.S. holders of ordinary shares to exercise such pre-emptive rights and, if such exemption is available, we may not take the steps necessary to enable U.S. holders of ordinary shares to rely on it. Accordingly, you may not be able to exercise pre-emptive rights on future issuances of ordinary shares, and, as a result, your percentage ownership interest in us would be diluted. As our shareholders authorized the disapplication of pre-emptive rights for a period of five years from the date of the consummation of this offering, any issuances of shares after the five-year period will be subject to

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pre-emptive rights unless those rights are additionally disapplied. Furthermore, rights offerings are difficult to implement effectively under the current U.S. securities laws, and our ability to raise capital in the future may be compromised if we need to do so through a rights offering in the United States.

Because of their significant voting power and special rights granted to Class A shares, our principal shareholders will be able to exert control over us and our significant corporate decisions.

Immediately prior to this offering, our principal shareholders, Sistema and the Baring Vostok Private Equity Funds, beneficially owned, directly or through their investment vehicles, 45.2% and 45.1%, respectively, of our issued and outstanding ordinary shares. See “Principal Shareholders.” Upon the completion of this offering and the Concurrent Private Placements, the shares benificially owned by these principal shareholders will amount to 37.9% and 37.9%, respectively, of our issued and outstanding ordinary shares (assuming no exercise of the underwriters’ option to purchase additional ADSs from us).

Each of our principal shareholders holds one Class A share, which confers the right to appoint and remove (i) two directors so long as such Class A shareholder holds at least 15% of voting power of the ordinary shares or (ii) one director so long as such Class A shareholder holds less than 15% but at least 7.5% of voting power of the ordinary shares. Each Class A share is convertible into one ordinary share at any time by its holder, while ordinary shares are not convertible into Class A shares under any circumstances. Upon any transfer of a Class A share by a holder to any person that is not an affiliate or otherwise under control of such holder, such Class A share will be automatically converted into one ordinary share.

As a result, our principal shareholders may have the ability to determine the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. The interests of our principal shareholders might not coincide with the interests of the other holders of the ADSs or our ordinary shares. This concentration of ownership may harm the value of the ADSs by, among other things:

• delaying, deferring or preventing a change in control of us;

• impeding a merger, consolidation, takeover or other business combination involving us; or

• causing us to enter into transactions or agreements that are not in the best interests of all shareholders.

Furthermore, from time to time the press and non-traditional media may speculate about a wide variety of matters relating to the Group, including our principal shareholders. For example, in February 2019, Russian investigative authorities initiated a case against a number of senior employees of Baring Vostok Capital Partners Group Limited, relating to the performance of their respective roles as directors for another portfolio company of private equity funds advised by Baring Vostok Capital Partners Group Limited and resulting in their pre-trial detention, which continues as of the date hereof. The accusations have been strongly denied. None of these individuals has been engaged in our day-to-day operations by participating in the operational decision making process or otherwise, and their ongoing detention has not affected and is not expected to affect our business and operations, but these events, as well as any future actions or claims involving either of our principal shareholders or their investments, which are extensive and varied, may generate adverse press coverage with respect to our business. Any reports in the media and other public statements regarding the activities of our principal shareholders, irrespective of whether such statements have any basis in fact, may adversely affect our reputation and business.

We may be subject to defense tax in Cyprus.

Cypriot companies must pay a Special Contribution for the Defense Fund of the Republic of Cyprus, or the defense tax, at a rate of 17% on deemed dividend distributions to the extent that their shareholders are Cypriot tax residents or in case of individuals, also Cyprus domiciled. A Cypriot company that does not distribute at least 70% of its after tax profits within two years from the end of the year in which the profits arose, is deemed to have

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distributed this amount as a dividend two years after that year end. The amount of this deemed dividend distribution, subject to the defense tax, is reduced by any actual dividend paid out of the profits of the relevant year at any time up to the date of the deemed distribution and the resulting balance of profits will be subject to the defense tax to the extent of the appropriation of shares held in the company at that time by Cyprus tax residents. The profits to be taken into account in determining the deemed dividend do not include fair value adjustments to any movable or immovable property.

The defense tax payable as a result of a deemed dividend distribution is paid in the first instance by the Company which may recover such payment from its Cypriot shareholders by deducting the amount from an actual dividend paid to such shareholders from the relevant profits. To the extent that we are unable to recover this amount due to a change in shareholders or no actual dividend is ever paid out of the relevant profits, we will suffer the cost of this defense tax. Imposition of this tax could have a material adverse effect on our business, prospects, financial condition and results of operations if we are unable to recover the tax from shareholders as described above.

In September 2011, the Commissioner of the Inland Revenue Department of Cyprus issued Circular 2011/10, which exempted from the defense tax any profits of a company that is tax resident in Cyprus imputed indirectly to shareholders that are themselves tax residents in Cyprus to the extent that these profits are indirectly apportioned to shareholders who are ultimately not Cyprus tax residents.

Risks Relating to Russian Taxation

Changes in Russian tax law could adversely affect our Russian operations.

Generally, Russian taxes that we are subject to include, among others, corporate income tax, value added tax, property tax and 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 Russia may impose arbitrary and/or onerous taxes and penalties in the future. Russia’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 new 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 aiming at allowing the Russian tax authorities to tax foreign income attributable to Russian businesses (known as “de-offshorization measures”). These new rules include, in particular, (i) rules governing the taxation of “controlled foreign companies” (“CFC rules”) (without limitation of jurisdictions to which this definition applies and which residents may fall under the regime); (ii) rules determining the tax residence status of non-Russian legal entities based on place of effective management (tax residence rules); (iii) rules defining the “beneficial ownership” (actual recipient of income) concept for application of double tax treaties 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 Russia by more than 50%), all in effect since January 1, 2015; and (v) codified general anti-abuse rules (these are based on the judicial concept of “unjustified tax benefit,” and provide a few tests to support tax reduction or tax base deduction, including the “main purpose test”), in effect since August 18, 2017.

Starting from January 1, 2019, standard VAT rate rose from 18% to 20%, and the VAT rate applied to e-services rendered by foreign providers increased from 15.25% to 16.67%. In addition, VAT on e-services rendered by foreign suppliers and deemed supplied in Russia will have to be accounted for and paid by the foreign e-service providers.

Starting from January 1, 2021, income exceeding P5 million per annum will be subject to personal income tax at a rate of 15% rather than the current 13%.

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These changing conditions create tax risks in Russia 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 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, prospects, financial condition, results of operations and the trading price of the ADSs.

Changes to Russia-Cyprus double tax treaty could increase our tax burden.

In 2020, the Russian President announced significant changes to Russian tax laws, and the Russian Government was directed to revise Russian double tax treaties which are often used for tax planning so as to increase withholding tax rates up to 15% for Russian-sourced dividend and interest income or, if negotiations are unsuccessful, to terminate them. Consequently, the Russian Ministry of Finance initiated negotiations with the competent authorities of Cyprus and certain other jurisdictions.

In accordance to the latest statements of the Russian and Cypriot Ministries of Finance with respect to the negotiations over the Protocol to the double tax treaty, new tax rates of 15% will be applied to both dividend and interest income starting from January 1, 2021. Reduced tax rates will be presumably available to a very limited list of investors and instruments. Pursuant to the publicly available information, public companies which hold directly more than 15% in Russian companies paying dividends may be subject to reduced tax rates under the double tax treaty. Availability of any reduced tax rates will depend on the provisions included in the amended Russia-Cyprus double tax treaty and is subject to its adoption, ratification and implementation.

The amendments to the Russia-Cyprus double tax treaty or its renunciation by Russia may adversely affect the taxation of dividend distributions from our Russian subsidiaries and, consequently, our business and financial condition.

Our Cypriot entities may be exposed to taxation in Russia if they are treated as having a Russian permanent establishment or as being Russian tax residents.

The Russian Tax Code provides for extended taxation and related tax obligations for foreign legal entities that carry on commercial activities in Russia in such a manner that they create either a permanent establishment or result in migration of a tax residence due to place of management and control being in Russia (in the first case,

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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 tax residence of which is migrated to Russia; 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 Organization for Economic Co-operation and Development (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 only from January 1, 2015. Thus, the Russian tax authorities may claim our Cypriot entities as being managed from Russia and, consequently, being Russian resident for tax purposes.

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 a permanent establishment, still lack sufficient application guidelines.

Whilst we do not believe that our Cypriot entities will be treated as having a tax residence or a permanent establishment in Russia, we cannot assure that Russian tax authorities will not attempt to claim our Cypriot entities as having permanent establishment or Russian tax residence. If any of these occurs, additional Russian taxes, as well as related penalties, may be imposed on us and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our Russian entities are subject to tax audits by the Russian tax authorities, which may result in additional tax liabilities.

Generally, tax returns, together with related documentation, are subject to audit by the tax authorities, which are authorized by Russian law to impose severe fines and penalties. As a rule, the tax authorities may audit tax periods within three years immediately preceding the year when the tax audit is initiated. Tax audits may be repeated (within the same general three-year limit) in a few specifically defined circumstances, such as the taxpayer’s reorganization or liquidation, or upon the re-filing of a tax return (amended to decrease the tax payable), or if a tax audit is conducted by a higher-level tax authority as a measure of control over the activities of a lower-level tax authority. Therefore, previous tax audits may not preclude subsequent tax claims relating to the audited period.

The Russian Tax Code provides for a three-year statute of limitations for imposition of tax penalties. The statute of limitation extends however if the taxpayer obstructed the performance of the tax audit (such that it created an insurmountable obstacle for the performance and completion of the tax audit). However, the terms “obstructed” and “insurmountable obstacles” are not specifically defined in the Russian law; therefore, the tax authorities may interpret these terms broadly, effectively linking any difficulty experienced by them in the course of the tax audit with obstruction by the taxpayer and use that as a basis to seek additional tax adjustments and penalties beyond the three-year limitation term. As a result, the statute of limitations is not entirely effective.

Tax audits may result in additional costs if the tax authorities conclude that we did not satisfy our tax obligations in any given tax period. Such audits may also impose additional burdens on us by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on our business, prospects, financial condition, results of operations 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.

The Russian transfer pricing legislation has been in force from January 1, 2012. The rules are technically elaborate, detailed and, to a certain extent, aligned with the international transfer pricing principles developed by the OECD.

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The rules allow the Russian tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of transactions which are considered “controlled” for Russian transfer pricing purposes if prices in such transactions are not arm’s length. Both domestic and cross-border transactions can be treated as “controlled.” In order for the domestic transaction to be “controlled” it should be concluded between related parties which apply different corporate income tax rates and turnover between these parties should exceed P1 billion per year. All cross-border transactions with related parties and certain unrelated party transactions (for example, transactions with residents of blacklisted low tax jurisdictions) will be subject to transfer pricing control if the volume of such transactions exceed P160 million per year.

The rules have considerably increased the compliance burden on the taxpayers compared to the previous regime as now taxpayers are obliged to prepare not only transfer pricing documentation but also notifications and reports.

Although the transfer pricing rules are supposed to be in line with 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 involving securities and derivatives.

The Russian Tax Code stipulates that transfer pricing audit shall be performed by the transfer pricing unit of the Russian Federal Tax Service and not by regional tax authorities. However, regional tax authorities can try to challenge prices of “non-controlled” transactions between related parties through the “unjustified tax benefit” concept.

Accordingly, due to the complexity in the interpretation of Russian transfer pricing legislation, no assurance can be given that the Russian tax authorities will not challenge our transfer prices and/or make adjustments which could affect our tax position unless we are able to prove the use of arm’s length prices in related-party transactions and other controlled unrelated-party transactions.

The imposition of additional tax liabilities under the Russian transfer pricing rules may have a material adverse effect on our business, financial condition and results of operations.

Our Russian entities may be exposed to additional value added tax and corporate income tax obligations if the tax authorities consider some of our suppliers as “bad faith” suppliers.

The vast majority of Russian taxpayers regularly encounter claims regarding transactions with “bad-faith” suppliers by Russian tax authorities arguing that such suppliers could not fulfill their contractual obligations, leading to challenges of VAT recovery and corporate income tax deduction.

Until 2017, the Russian tax authorities used the concept of an unjustified tax benefit in order to challenge the deductibility of expenses and deduction of the respective input VAT incurred on purchase of goods, work, or services from “bad-faith” suppliers. This judicial general anti-avoidance rule was defined by the Plenum of the Supreme Arbitrazh Court of Russia in 2006.

In 2017, this concept in the form of the statutory general anti-abuse rule was incorporated in the Russian Tax Code. The Russian Tax Code defines unjustified tax benefit as an understatement of tax base or tax payable as a result of a misrepresentation of business operations or taxable assets by a taxpayer. The new provision of the Tax Code and developing administrative and court practice require that a taxpayer collect evidence that (i) a particular transaction is not carried out primarily for the purpose of achieving a non-payment or a refund of a tax amount and (ii) contractual obligations are discharged by the contracted counterparty. Thus, a taxpayer must check reputation and capabilities (for example, available resources and assets) of its suppliers as well as confirm whether they fulfill their tax liabilities to be able to support recovery of input value added tax or deduction of expenses for corporate income tax purposes.

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Russian administrative and court practice on the concept of unjustified tax benefit is developing and contains broad and conflicting interpretations; moreover, there is still no unified approach for determination of actual amount of tax liabilities in case of a tax offence detection. While we have established internal procedures to monitor and control this risk, our Russian subsidiaries may still be affected by this risk due to ambiguity of criteria used by the tax authorities and subjective nature of the risk. It is therefore possible that our transactions with suppliers may be challenged by the Russian tax authorities, which may have a material adverse effect on our business, prospects, financial condition, results of operations and the trading price of the ADSs.

The Russian tax authorities may challenge the application of a reduced social security contributions rate by one of our companies which qualifies as an IT company.

One of our Russian subsidiaries applies a reduced social security contributions rate (14% instead of general rate at 30%) in relation to payments to its employees. The Russian Tax Code establishes the respective reduced rate for companies who carry out IT activities, develop and sell own-developed computer programs and databases, and/or render services involving development, adaptation, modification and support of computer programs and databases. In order to apply the reduced rate, a taxpayer should be officially accredited to perform activity in IT sphere, the share of its income related to these activities should comprise 90% of total income and the average headcount should be at least seven employees. We believe our subsidiary meets all of the above requirements and effectively operates as a shared service center rendering services to our subsidiaries with respect to development, adaptation of IT products which are being used primarily within the Group. Such practice is widely used by IT companies in Russia.

The Russian Tax Code provision regarding application of the reduced rate of social security contributions is relatively untested. Given the absence of substantial administrative and court practice, the tax authorities may challenge the application of 14% social security contributions rate. This may have an adverse effect on our business, financial condition and results of operations.

Russian thin capitalization rules and general interest deductibility rules allow different interpretations, which may affect our business.

The Russian Tax Code provides for three main restrictions that limit the deductibility of expense for interest accruing on indebtedness: first, that a loan is obtained (indebtedness is incurred) with a proper economic reasoning (for a business purpose or justification); second, that the interest rate, if paid on controlled transactions, fits within certain interest rate (safe-harbor) ranges; and third, the thin capitalization rules (that apply to “foreign controlled debt” (i.e., indebtedness where a foreign direct or indirect shareholder or its affiliate act as a lender or a guarantor) and operate with at least a 3:1 debt-to-equity ratio). Interest on excess debt is non-deductible and treated as a dividend subject to withholding tax. The whole amount of nondeductible interest accrued on foreign controlled debt would be treated for tax purposes as a dividend if the balance-sheet equity (the net asset value) of the indebted taxpayer is negative. The statutorily defined scope of the foreign controlled debt was amended recently such that loans obtained from banks or Russian affiliates are, under certain conditions, excluded; at the same time, loans obtained from foreign affiliates are explicitly included.

Our Russian intragroup operations may be affected by requalification of interest into a dividend (including by our inability to deduct interest) based on Russian thin capitalization rules if at any time the respective indebtedness qualifies as foreign controlled debt, or by the inability to deduct interest based on other reasons.

We may encounter difficulties in obtaining lower rates of Russian withholding income tax for dividends distributed from our Russian subsidiaries.

Dividends paid by Russian subsidiaries to their foreign corporate shareholders are generally subject to Russian withholding income tax at a rate of 15%; although this tax rate may be reduced under an applicable double tax

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treaty if certain conditions defined in the tax treaty are met. Consequently, if our Cypriot headquarters receives dividend distributions from Russian subsidiaries, it may be subject to Russian withholding income tax at a rate of 15% with a possibility to reduce the tax rate pursuant to the Russia-Cyprus double tax treaty (see “—Changes to Russia-Cyprus double tax treaty could increase our tax burden.”). However, use of the reduced tax rates under the double tax treaty is available only subject to meeting certain conditions described below.

Starting from January 1, 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 from January 1, 2017, in addition to a tax residence certificate, the Russian Tax Code requires 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 Russia, 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. In addition, on June 18, 2019, Russia deposited the instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). The MLI came into force for Russia with effect from October 1, 2019. The implementation of MLI will lead to introduction of a variety of measures designed to update double tax treaties and reduce opportunities for tax avoidance. In particular, the MLI sets forth additional requirements for the purposes of application of the reduced tax rates. Currently, it is not entirely clear to what extent each individual double tax treaty to which Russia is a party would be affected by the MLI. These developments may potentially have adverse impact on the availability of double taxation treaty benefits to the investors in securities of Russian companies.

A person participating in a company’s capital or a person who has a right of use and disposal of a company’s income may be treated as beneficial owner of that income. If, however, a person acts 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), the person may not be treated as beneficial owner of income. In addition, the uncoordinated application of the MLI provisions by different countries should be considered. The intention of the countries signing the MLI to prevent tax abuse will be implemented through either an adoption of a general anti-abuse rule on the principal purpose of a transaction (“PPT”), a combination of PPT and Simplified Limitation of Benefits (the “simplified LOB”) clause, or a detailed LOB rule. Simplified LOB was the option selected by Russia and when determining the potential for a treaty abuse, and Russia will not only use the PPT rule, but also a number of defined criteria (for example, a minimum holding period) which would restrict treaty benefits. However, the majority of countries which have treaties with Russia have selected PPT, but not the simplified LOB. Therefore, unless otherwise mutually agreed by Russia and the contracting jurisdiction, simplified LOB will not be applied and, instead, only the PPT will apply. The PPT seeks to disallow the benefits of a particular double tax treaty where, broadly, the principal purpose of establishing a particular transaction was to obtain the benefits of a double tax treaty.

The result of either the denial to us of beneficial owner’s treatment with respect to our Russian subsidiaries or failure to pass the PPT test would be the denial of double tax treaty benefits (zero rate taxation or reduced taxation of certain types of income distributed). The distribution of income would attract the taxation which would have applied had the income been distributed directly to the ultimate beneficial owners of such income (whether foreign or Russian) or attract a withholding tax at the rate of 15% on dividends or 20% on other types of income.

The Russian double tax treaty with Cyprus is currently being revised, which could result in the increase of withholding tax rate on dividends distribution from our Russian subsidiaries up to 15%. See “—Changes to Russia-Cyprus double tax treaty could increase our tax burden.”

See “Material Tax Considerations—Material Russian Tax Considerations” for further discussion of important Russian tax considerations.

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Risks Relating to Our Initial Public Offering and Ownership of the ADSs

As a foreign private issuer within the meaning of the Nasdaq corporate governance rules, we are permitted to, and we will, rely on exemptions from certain of the Nasdaq corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. Our reliance on such exemptions may afford less protection to holders of the ADSs.

As a company not listed on the regulated market of the Cyprus Stock Exchange, we are not required to comply with any corporate governance code requirements applicable to Cypriot public companies.

The Nasdaq corporate governance rules require listed companies to have, among other things, a majority of independent board members and independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, we are permitted to, and we will, follow home country practice in lieu of the above requirements. As long as we rely on the foreign private issuer exemption to certain of the Nasdaq corporate governance standards, a majority of the directors on our board of directors are not required to be independent directors, our compensation committee is not required to be comprised entirely of independent directors and we will not be required to have a nominating committee. Therefore, our board of directors’ approach to governance may be different from that of a board of directors consisting of a majority of independent directors, and, as a result, our management oversight may be more limited than if we were subject to all of the Nasdaq corporate governance standards.

Accordingly, our shareholders will not have the same protection afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance standards, and the ability of our independent directors to influence our business policies and affairs may be reduced.

We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the ADSs less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. We cannot predict if investors will find the ADSs less attractive because we will rely on these exemptions. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and the price of the ADSs may be more volatile.

While we currently qualify as an “emerging growth company” under the JOBS Act, if we cease to be an emerging growth company, our costs and the demands placed upon our management will increase.

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 the 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. Once we lose emerging growth company status, we expect the costs and demands placed upon our management to increase, as we will be required to comply with additional disclosure and accounting requirements. In addition, management time and attention, as well as the engagement of our auditors and/or other consultants, will be required in order for us to prepare to comply with the increased disclosure and accounting standards required of companies who are not emerging growth companies, most notably compliance with Section 404 of the Sarbanes-Oxley Act and related auditor attestation requirements.

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As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all the Nasdaq corporate governance requirements.

As a foreign private issuer, we have the option to follow certain Cypriot corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to the requirements to have the audit committee appoint our Independent Registered Public Accountants, the Nasdaq rules for shareholder meeting quorums and record dates and the Nasdaq rules requiring shareholders to approve equity compensation plans and material revisions thereto. We may in the future elect to follow home country practices in Cyprus with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all the Nasdaq corporate governance requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2021. If we lose our foreign private issuer status on this date, we would be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We would also have to mandatorily comply with U.S. federal proxy requirements, and our executive officers, directors and principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we would incur significant additional legal, accounting and other expenses that we would not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange. These expenses would relate to, among other things, the obligation to present our financial information in accordance with U.S. GAAP or reconcile our financial statements to U.S. GAAP should we lose our status as a foreign private issuer.

We have identified a material weakness and a significant deficiency in our internal control over financial reporting, and if our remediation of such material weakness and significant deficiency is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

Prior to this offering, we have been a private company with limited relevant resources with which to address our internal controls and procedures. Although we are not yet subject to the certification or attestation requirements of Section 404 of the Sarbanes-Oxley Act, in the course of preparing our financial statements for the years ended December 31, 2019 and 2018, we identified control deficiencies that we concluded represented a material weakness and a significant deficiency in our internal control over financial reporting. SEC guidance defines a material weakness as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. SEC guidance defines a significant deficiency as a deficiency, or a combination of deficiencies, in internal control over financial reporting, that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.

The material weakness identified for the years ended December 31, 2019 and 2018 relates to information technology general controls, specifically (i) insufficient controls over user access rights and segregation of duties

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within our information systems and (ii) insufficient controls over change management of our information systems. To address our material weakness, in 2020, we developed and have begun a remediation plan that includes the following activities: (i) hiring additional personnel dedicated to carrying out regular independent monitoring of information technology general controls, (ii) establishing an access policy for our information systems, (iii) improving controls over access rights management, including reviews of current access rights, user roles and access management procedures, and (iv) implementing change management control procedures for our information systems. We will not be able to fully remediate this material weakness until these steps have been completed and have been operating effectively for a sufficient period of time. There can be no assurance that we will be successful in pursuing these measures, or that these measures will significantly improve or remediate the material weakness described above.

In addition, in the course of preparing our financial statements for the year ended December 31, 2019, we identified a control deficiency related to the stock taking procedure in our new fulfillment center that we concluded represented a significant deficiency in our internal control over financial reporting. To address our significant deficiency, we developed and have begun a remediation plan to make necessary changes to our warehouse management software to support full-scale stock taking procedure. There can be no assurance that we will be successful in pursuing this measure, or that this measure will significantly improve or remediate the significant deficiency described above.

We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness and significant deficiency in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses or significant deficiencies. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, material weaknesses or significant deficiencies in internal control over financial reporting may be discovered in the future. If we fail to remediate our current or future material weaknesses or significant deficiencies or to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results, or report them within the timeframes required by law, our consolidated financial statements may be restated, investors may lose confidence in the accuracy and completeness of our financial reports the market price of the ADSs could be materially and adversely affected, the ADSs may be suspended or delisted from Nasdaq, and our reputation, results of operations and financial condition may be adversely affected. Failure to comply with Section 404 could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.

If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Section 404(a) of the Sarbanes-Oxley Act (“Section 404(a)”) requires that beginning with our second annual report following our initial public offering, management assess and report annually on the effectiveness of our internal control over financial reporting and identify any material weaknesses in our internal control over financial reporting. Although Section 404(b) of the Sarbanes-Oxley Act (“Section 404(b)”) requires our Independent Registered Public Accounting Firm to issue a report that addresses the effectiveness of our internal control over financial reporting, we have opted to rely on the exemptions provided in the JOBS Act, and consequently will not be required to comply with SEC rules that implement Section 404(b) until such time as we are no longer an “emerging growth company.”

We expect our first Section 404(a) assessment will take place for our annual report for the fiscal year ending December 31, 2021. As discussed above in “—We have identified a material weakness and a significant deficiency in our internal control over financial reporting, and if our remediation of such material weakness and significant deficiency is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired,” we identified a material

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weakness and a significant deficiency in the course of preparing our financial statements for the years ended December 31, 2019 and 2018. The continued presence of this or other material weaknesses and/or significant deficiencies in any future financial reporting periods could result in financial statement errors that, in turn, could lead to errors in our financial reports, delays in our financial reporting, and that could require us to restate our operating results, or our auditors may be required to issue a qualified audit report, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the ADSs could be materially and adversely affected. We might also not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404(a). In order to improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, and maintain satisfactory controls once achieved, we will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management’s attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal controls.

If either we are unable to conclude that we have effective internal control over financial reporting or, at the appropriate time, our Independent Registered Public Accounting Firm is unwilling or unable to provide us with an unqualified report on the effectiveness of our internal control over financial reporting as required by Section 404(b), investors may lose confidence in our results of operations, the price of the ADSs could decline, and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404, we may not be able to remain listed on Nasdaq.

The obligations associated with being a public company will require significant resources and management attention.

As a public company in the United States, we will incur legal, accounting and other expenses that we did not previously incur. We will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase the demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires that we file annual and current reports with respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time

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and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

For as long as we are an “emerging growth company” under the JOBS Act, our Independent Registered Public Accounting Firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We could be an emerging growth company for up to five years. See “Prospectus Summary—Implications of Being an ‘Emerging Growth Company’ and a ‘Foreign Private Issuer.’” Furthermore, after the date we are no longer an emerging growth company, our Independent Registered Public Accounting Firm will only be required to attest to the effectiveness of our internal control over financial reporting depending on our market capitalization. Even if our management concludes that our internal controls over financial reporting are effective, our Independent Registered Public Accounting Firm may still decline to attest to our management’s assessment or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, in connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. Failure to comply with Section 404 could subject us to regulatory scrutiny and sanctions, impair our ability to raise revenue, cause investors to lose confidence in the accuracy and completeness of our financial reports and negatively affect the price of the ADSs.

There is no existing market for the ADSs, and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has been no public market for the ADSs. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market on Nasdaq or otherwise or how liquid that market might become. If an active trading market does not develop or is not sustained, you may have difficulty selling the ADSs that you purchase, and the value of such ADSs might be materially impaired. The initial public offering price for the ADSs will be determined by negotiations between us and the representatives of the several underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell your ADSs at prices equal to or greater than the price you paid in this offering.

We do not expect to pay any dividends in the foreseeable future.

We have never declared or paid cash dividends on our ordinary shares. We intend to retain all available liquidity sources and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the foreseeable future.

Any future final determination regarding the declaration and payment of dividends, if any, will be at the discretion of our shareholders at a general meeting and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our shareholders at a general meeting may deem relevant.

In addition, the terms of certain of our outstanding borrowings restrict our ability to pay dividends or make distributions on our ordinary shares without consent of a lender, and we may enter into credit agreements or other borrowing arrangements in the future that may further restrict our ability to declare or pay cash dividends or make distributions on our ordinary shares.

Consequently, we may not pay dividends in the foreseeable future, or at all, and any return on investment in the ADSs is solely dependent upon the appreciation of the price of the ADSs on the open market, which may not occur. See “Dividend Policy.”

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We are a holding company with no operations of its own and, as such, we depend on our subsidiaries for cash to fund our operations and expenses, including future dividend payments, if any.

As a holding company, our principal source of cash flow will be distributions from our operating subsidiaries. Therefore, our ability to fund and conduct our business, service our debt and pay dividends, if any, in the future will depend on the ability of our subsidiary to generate sufficient cash flow to make upstream cash distributions to us. Our operating subsidiaries are separate legal entities, and although they are directly or indirectly wholly owned and controlled by us, they have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. The ability of our subsidiaries to distribute cash to us will also be subject to, among other things, restrictions that may be contained in our subsidiary agreements (as entered into from time to time), availability of sufficient funds in such subsidiary and applicable laws and regulatory restrictions. Claims of any creditors of our subsidiary generally will have priority as to the assets of such subsidiary over our claims and claims of our creditors and shareholders. In addition, as our key operating subsidiary generates profits in rubles and any dividends paid to holders of the ADSs in the future would be paid in U.S. dollars, any significant fluctuation of the value of the ruble against the U.S. dollar and other currencies may materially and adversely affect the dividend amounts received by holders of the ADSs. To the extent the ability of our subsidiary to distribute dividends or other payments to us is limited in any way, our ability to fund and conduct our business, service our debt and pay dividends, if any, could be harmed.

Anti-takeover provisions in our organizational documents and Cyprus law may discourage or prevent a change of control, even if an acquisition would be beneficial to our shareholders, which could depress the price of the ADSs and prevent attempts by our shareholders to replace or remove our current management.

As we are incorporated in Cyprus, we are subject to Cyprus law. Our articles of association contain provisions that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests or limit the ability of our shareholders to remove management, including the following:

• our articles of association require that any person who is not affiliated with our principal shareholders and is an acquiror of 30% or more of the voting power of our ordinary shares must make a mandatory tender offer that is subject to recommendation of two-thirds of directors, an acceptance by 75% of the shareholders to whom the offer is made and certain other terms and conditions that are more restrictive than those that would apply under statutory provisions of the Cypriot laws to a Cypriot company with a listing on an EU regulated market, and in the event of breach of these provisions, the voting rights of such acquiror and its persons acting in concert will be limited to 30% for the duration of such breach;

• our articles of association require that if a principal shareholder holding a Class A share or its affiliates acquire 43% or more of the voting power of our ordinary shares, it must make a mandatory tender offer that is subject to recommendation by two-thirds of our board of directors, an acceptance by 75% of the shareholders to whom the offer is made and certain other terms and conditions that are more restrictive than those that would apply under statutory provisions of Cyprus law to a Cypriot company with a listing on an EU regulated market, and in the event of breach of these provisions, the voting rights of such acquiror and its persons acting in concert will be limited to 43% for the duration of such breach;

• any merger, consolidation or amalgamation of the Company would require the approval of our shareholders and board of directors;

• each of our principal shareholders holds one Class A share, which confers the right to appoint and remove (i) two directors so long as such Class A shareholder holds at least 15% of voting power of the ordinary shares or (ii) one director so long as such Class A shareholder holds less than 15% but at least 7.5% of voting power of the ordinary shares. We are not authorized to issue additional Class A shares unless such issue is approved by holders of all issued Class A shares and a special resolution of the general meeting of our shareholders;

• our board of directors may be appointed and removed by the holders of the majority of the voting power of the ordinary shares (which, upon completion of this offering and the Concurrent Private Placements, will be controlled by our principal shareholders); and

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• preference shares may, with the sanction of an ordinary resolution, be issued on the terms and conditions and under circumstances that could have an effect of discouraging a takeover or other transaction.

Together these provisions may make the removal of management more difficult and may discourage or prevent a change of control, which could depress the price of the ADSs.

Neither Cyprus nor the broader EU takeover laws apply to us and our minority shareholders do not benefit from the same protections that the minority shareholders of a Cypriot company that is listed on an EU regulated market would have at their disposal.

As of the date of this prospectus, Cyprus law does not contain any requirement for a mandatory offer to be made by a person acquiring control in a Cypriot company if such company’s shares are not listed on an EU regulated market. Neither our shares nor the ADSs are listed on an EU regulated market. Our articles of association contain a mandatory tender offer provision that requires any third-party acquiror that acquires, together with parties acting in concert, 30% or more of the voting rights in our shares to make a mandatory tender offer to all of our other shareholders at the price not lower than the highest price per ordinary share paid by acquiror and parties acting in concert and the highest market price per ordinary share quoted on a stock exchange, in each case in the preceding 12 months. Since each of our principal shareholders who holds a Class A share already holds more than 30% of the voting rights in our shares, the requirement to make a mandatory tender offer is triggered by a principal shareholder and its affiliates only if they acquire, together with concert parties, 43% or more of the voting rights in our shares. Following the completion of this offering and the Concurrent Private Placements, each of our principal shareholders holding Class A shares is expected to hold less than 43% of the voting rights in our shares since upon conversion of all convertible instruments convertible at this offering and prior to dilution as a result of the issuance of additional shares for this offering, our principal shareholders will hold less than 42% of the voting rights. Our articles of association do not prohibit the holders of our Class A shares to combine their holdings to trigger the mandatory tender offer. Although our articles of association provide for the obligation by an acquiror to make a mandatory tender offer in certain cases, in the absence of applicable statutory provisions our shareholders may not get the same opportunity to sell their shares in the event an acquiror obtains a significant stake or even control in the company as would shareholders in a Cypriot company that is listed on an EU regulated market.

The price of the ADSs might fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of the ADSs may prevent you from being able to sell your ADSs at or above the price you paid for such shares. The trading price of the ADSs may be volatile and subject to wide price fluctuations in response to various factors, including:

• the overall performance of the equity markets;

• fluctuations in our actual or projected results of operations;

• changes in our projected earnings or failure to meet securities’ analysts’ earnings expectations;

• the absence of analyst coverage;

• changes in trading volumes of the ADSs;

• issuance of new or changed securities analysts’ reports or recommendations;

• additions or departures of key personnel;

• sale of the ADSs by us, our principal shareholders or members of our management;

• general economic conditions;

• the activities of our competitors, suppliers and sellers;

• changes in the market valuations of comparable companies;

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• changes in investor and analyst perception with respect to our business and the e-commerce industry in general;

• changes in interest rates;

• availability of capital; and

• changes in the statutory framework applicable to our business.

These and other factors might cause the market price of the ADSs to fluctuate substantially, which might limit or prevent investors from readily selling their ADSs and may otherwise negatively affect the liquidity of the ADSs. In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies across many industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Furthermore, investors in the secondary market may view our business more critically than investors in this offering, which could adversely affect the market price of the ADSs in the secondary market. Prices for e-commerce or technology companies have traditionally been more volatile compared to share prices for companies from other industries.

Accordingly, the price of the ADSs could fluctuate based upon factors that have little or nothing to do with us, and these fluctuations could materially reduce our share price. Securities class action litigation has often been instituted against companies in periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in substantial costs, divert our management’s attention and resources, and our business, prospects, financial condition and results of operations could be materially and adversely affected.

Future sales of the ADSs, or the perception in the public markets that these sales may occur, may depress our stock price.

Sales of substantial amounts of the ADSs in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of the ADSs and could impair our ability to raise capital through the sale of additional shares. Upon completion of this offering and the Concurrent Private Placements, we will have 177,130,154 ordinary shares outstanding, or 181,630,154 ordinary shares outstanding if the underwriters fully exercise their option to purchase additional ADSs. Outstanding shares may be deposited for delivery of ADSs, and all of the ordinary shares outstanding as of the date of this prospectus may be sold in the public market by existing shareholders 180 days after the date of this prospectus, subject to applicable limitations imposed under federal securities laws. See “Shares and ADSs Eligible for Future Sale” for a more detailed description of the restrictions on selling ordinary shares after this offering. The ADSs offered in this offering will be freely tradable without restriction under the Securities Act, except for any of the ADSs that may be held or acquired by our directors, executive officers, major shareholders and other affiliates, as that term is defined in the Securities Act, which will be subject to restrictions on resale under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available.

We, our executive officers, directors and holders of substantially all of our ordinary shares have agreed, subject to specified exceptions, with the underwriters not to directly or indirectly sell, offer, contract or grant any option to sell (including any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-l(h) under the Exchange Act; or otherwise dispose of any shares, options or warrants to acquire shares, or securities exchangeable or exercisable for or convertible into shares currently or hereafter owned either of record or beneficially; or publicly announce an intention to do any of the foregoing for a period of 180 days after the date of this prospectus without the prior written consent of the representatives of the underwriters. See “Underwriting.”

In the future, we may also issue additional ordinary shares, ADSs or debt securities with conversion rights if we need to raise capital in connection with a capital raise or acquisition. The amount of ordinary shares issued in

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connection with a capital raise or acquisition could constitute a material portion of the then-outstanding ordinary shares. An issuance of additional ordinary shares, ADSs or debt securities with conversion rights could potentially reduce the market price of the ADSs. In addition, if we raise additional funds through the sale of equity securities, these transactions may dilute the value of the outstanding ADSs. See “—Risks Relating to Our Business and Industry—We may need to raise additional funds to finance our future capital needs, which may dilute the value of the outstanding ADSs or prevent us from growing our business.”

If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, or we fail to meet the expectations of industry analysts, our stock price and trading volume could decline.

The trading market for the ADSs will depend in part on the research and reports that securities or industry analysts publish about us, our business or our industry. We may have limited, and may never obtain significant, research coverage by securities and industry analysts. If no additional securities or industry analysts commence coverage of us, the trading price for the ADSs could be negatively affected. In the event we obtain additional securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, the price of the ADSs will likely decline. If one or more of these analysts, or those who currently cover us, ceases to cover us or fails to publish regular reports on us, interest in the purchase of the ADSs could decrease, which could cause the price of the ADSs or trading volume to decline.

You may not be able to exercise your right to vote the ordinary shares underlying your ADSs.

Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by their ADSs only in accordance with the provisions of the deposit agreement. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, including any general meeting of our shareholders, the depositary will, as soon as practicable thereafter, fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of a request from us, the depositary shall distribute to the holders as of the record date:

• the notice of the meeting or solicitation of consent or proxy sent by us; and

• a statement as to the manner in which instructions may be given by the holders.

You may instruct the depositary to vote the ordinary shares underlying your ADSs. Otherwise, you will not be able to exercise your right to vote unless you surrender your ADSs for cancellation and withdraw our ordinary shares. However, you may not know about the meeting far enough in advance to withdraw those ordinary shares. Under our articles of association, the minimum notice required for convening a shareholders’ meeting is 30 days. The depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out a holder’s voting instructions in a timely manner. The depositary, upon timely request from us, will notify you of the upcoming vote and arrange to deliver voting materials to you. We cannot guarantee that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the ordinary shares underlying your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and may lack recourse if the ordinary shares underlying your ADSs are not voted as you requested.

You may be subject to limitations on the transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason.

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It may be difficult to enforce a U.S. judgment against us, our directors and officers named in this prospectus outside the United States, or to assert U.S. securities law claims outside of the United States.

We are incorporated in the Republic of Cyprus and conduct substantially all of our operations in Russia through subsidiaries. The majority of our current directors and senior officers reside outside the United States, principally in Russia. Substantially all of our assets and the assets of our current directors and executive officers are located outside the United States, principally in Russia. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. See “Enforcement of Civil Liabilities.” Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.

In particular, investors should be aware that there is uncertainty as to whether the Russian courts would recognize and enforce judgments of the U.S. courts obtained against us or our directors or management predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or entertain original actions brought in the Russian courts against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. There is no treaty between the United States and the Republic of Cyprus, or between the United States and Russia, providing for reciprocal recognition and enforcement of foreign court judgments in civil and commercial matters. As a result of the difficulty associated with enforcing a judgment against us, you may not be able to collect any damages awarded by either a U.S. or foreign court. In addition, there are doubts as to whether a Cypriot court would impose civil liability on us, our directors and officers in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Cyprus against us or such directors and officers, respectively.

ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by applicable law, holders and beneficial owners of ADSs irrevocably waive the right to a jury trial of any claim that they may have against us or the depositary arising from or relating to our ordinary shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.

However, ADS holders will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, ADS holders cannot waive our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. If we or the depositary opposed a demand for jury trial relying on jury trial waiver mentioned above, it is up to the court to determine whether such waiver was enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York. In determining whether to enforce a jury trial waiver provision, New York courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has

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knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim, none of which we believe are applicable in the case of the deposit agreement or the ADSs. If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary relating to the matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not have the right to a jury trial regarding such claims, which may limit and discourage lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary according to the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may have different outcomes compared to that of a jury trial, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if the jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” 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 in this 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 of our brand awareness and overall business; and

• our ability to improve our product offerings and technology platform and product offerings to attract and retain sellers and customers.

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” and the following:

• any significant fluctuations in our results of operations and growth rate;

• our lack of historical profitability and risks in achieving profitability in the future;

• our ability to effectively promote our business and attract new and retain current buyers and sellers;

• any failure to retain our market position in a competitive e-commerce market or switch of our buyers to offline retail stores or our online or offline competitors;

• our reliance on counterparties and third-party providers;

• our reliance on the Russian internet infrastructure, and the risks that disruptions may impair our customers’ experiences and our business operations;

• any failure to attract or retain our qualified employees and IT specialists;

• global political and economic stability, and the risks they pose for the Russian economy;

• imposition of further economic sanctions on Russian companies and businesses and the impact of current sanctions;

• ongoing development of the Russian legal system and developing legal framework governing ecommerce in Russia;

• further widespread impacts of the COVID-19 pandemic or other health crises restricting the level of business activity, travel, transportation and otherwise affecting our customers, as well as any governmental or international response measures;

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• privacy, personal data and data protection concerns, and the risk of fines and other sanctions on us if we fail to comply with applicable regulations;

• our ability to successfully remediate the existing material weakness and significant deficiency in our internal control over financial reporting and our ability to establish and maintain an effective system of internal control over financial reporting;

• provisions in our articles of association that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests or limit the ability of our shareholders to remove management; and

• as a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and Nasdaq corporate governance rules and are permitted to file less information with the SEC than U.S. companies, which may limit the information available to holders of the ADSs.

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 in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. 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 and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, 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

We estimate that we will receive net proceeds from this offering of $693 million, or $798 million if the underwriters exercise their option to acquire additional ADSs from us in full, and $135 million from the Concurrent Private Placements, based upon an assumed initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discount and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price per ADS would increase (decrease) our net proceeds, after deducting the estimated underwriting discounts and commissions and expenses, by $28 million, in each case assuming that the number of ADSs offered by us, as set forth on the cover of this prospectus, remains the same. Each increase (decrease) of 1,000,000 ADSs in the number of ADSs offered by us would increase (decrease) our net proceeds, after deducting the estimated underwriting discounts and commissions and expenses, by approximately $23 million, assuming no change in the assumed initial public offering price per ADS. Expenses of this offering will be paid by us.

The principal purposes of this offering are to create a public market for the ADSs and obtain additional capital. We intend to use the net proceeds from this offering and the Concurrent Private Placements for general corporate purposes.

The amount of what, and timing of when, we actually spend for these purposes may vary significantly and will depend on a number of factors, including our future revenue and cash generated by operations and the other factors described in “Risk Factors.” Accordingly, our board of directors will have broad discretion in deploying the net proceeds of this offering and the Concurrent Private Placements.

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DIVIDEND POLICY

We have never declared or paid cash dividends on our ordinary shares. We intend to retain all available liquidity sources and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash dividends in the foreseeable future.

The terms of certain of our outstanding borrowings restrict our ability to pay dividends or make distributions on our ordinary shares without consent of a lender, and we may enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends or make distributions on our ordinary shares.

Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our shareholders at a general meeting and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our shareholders at a general meeting may deem relevant.

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CAPITALIZATION

The table below sets forth our cash and cash equivalents and capitalization as of September 30, 2020 on (1) an actual basis and (2) on an as adjusted basis to give effect to the sale of 35,400,000 ADSs in this offering and the Concurrent Private Placements (assuming no exercise of the underwriters’ option) assuming an initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts in this offering and estimated offering expenses payable by us.

Investors should read this table in conjunction with our unaudited condensed consolidated financial statements included in this prospectus as well as “Selected Consolidated Historical Financial and Other Data,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	As of September 30, 2020
( in millions)	Actual			As Adjusted(1)
Cash and cash equivalents		5,126			68,804
Borrowings, current portion		10,262			10,262
Borrowings, non-current portion		391			391
Total borrowings		10,653			10,653
Equity:
Share capital		6			9
Share premium		32,086			95,762
Equity-settled employee benefits reserves		773			773
Other capital reserves		7,498			7,498
Accumulated deficit		(45,942	)		(45,942	)
Total equity		(5,579	)		58,100
Total capitalization		5,074			68,753

⁽¹⁾  A $1.00 increase or decrease in the assumed initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the as adjusted amount of each of cash and cash equivalents, share capital, share premium, total equity and total capitalization by approximately P2,146 million, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. An increase or decrease of 1,000,000 shares in the number of ADSs offered by us, as set forth on the cover page of this prospectus, would increase or decrease the as adjusted amount of each of cash and cash equivalents, share capital, share premium, total equity and total capitalization by approximately P1,788 million, assuming no change in the assumed initial public offering price per ADS and after deducting the estimated underwriting discounts and commissions.

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DILUTION

If you invest in the ADSs, the book value of your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per ADS and the net tangible book value per ADS immediately after this offering and the Concurrent Private Placements translated into U.S. dollars at P76.9197 per U.S. dollar.

Our net tangible book value as of September 30, 2020 was negative P5,789 million or negative $75 million and net tangible book value per ordinary share was negative P40.85 or negative $0.53 per share and per ADS. Net tangible book value per ordinary share before the offering and the Concurrent Private Placements has been determined by dividing net tangible book value (total book value of tangible assets less total liabilities) by the number of ordinary shares outstanding at September 30, 2020, adjusted by 3,934,379 ordinary shares issued to our existing shareholders in October 2020 under convertible loan agreements. See “Related Party Transactions—Loans from Shareholders.”

After giving effect to the sale of ADSs in this offering and the Concurrent Private Placements at an assumed initial public offering price of $25.00 per ADS (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting the estimated underwriting discounts and estimated offering expenses payable by us, our net tangible book value at September 30, 2020 would have been P57,904 million ($753 million), or P327 ($4.25) per ordinary share and per ADS. This represents an immediate increase in net tangible book value per share and per ADS of P368 ($4.78), to our existing shareholders and dilution in net tangible book value per share and per ADS of P1,596 ($20.75), to new investors who purchase ADSs in this offering and the investors in the Concurrent Private Placements.

The following table illustrates the dilution to new investors purchasing ADSs in the offering and the Concurrent Private Placements, assuming no exercise of the underwriters’ option to purchase additional ADSs (amounts are presented on a per ADS basis):

	No exercise amount
Assumed initial public offering price		P1,923		$25.00
Net tangible book value as of September 30, 2020		P(41	)	$(0.53	)
Increase in net tangible book value attributable to investors purchasing ADSs in this offering and the Concurrent Private Placements		P368		$4.78
Adjusted net tangible book value as of September 30, 2020		P327		$4.25
Dilution to new investors		P1,596		$20.75

The following table illustrates the dilution to new investors purchasing ADSs in the offering and the Concurrent Private Placements, assuming full exercise of the underwriters’ option to purchase additional ADSs (amounts are presented on a per ADS basis):

	Full exercise amount
Assumed initial public offering price		P1,923		$25.00
Net tangible book value as of September 30, 2020		P(41	)	$(0.53	)
Increase in net tangible book value attributable to investors purchasing ADSs in this offering and the Concurrent Private Placements		P404		$5.25
Adjusted net tangible book value as of September 30, 2020		P363		$4.72
Dilution to new investors		P1,560		$20.28

A $1.00 increase or decrease in the assumed initial public offering price of $25.00 per ADS would increase or decrease our adjusted net tangible book value after this offering by $0.16 per ADS, and the dilution in net tangible book value to new investors by $0.84 per ADS, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us. Each increase or decrease of 1,000,000 ADSs in the number of ADSs offered by us would increase or decrease our adjusted net tangible book value after this offering

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and the Concurrent Private Placements by $0.11 per ADS and decrease or increase the dilution to investors participating in this offering by approximately $0.11 per ADS, assuming that the assumed initial public offering price remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.

The following table presents, as of September 30, 2020, the issuance and sale of the ADSs in this offering and the Concurrent Private Placements at an assumed initial public offering price of $25.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, the differences between the shareholders as of September 30, 2020, and the new investors with respect to the number of ordinary shares and ADSs purchased from us, the total consideration paid (for existing shareholders, translated into U.S. dollars at P76.9197 per U.S. dollar) and the average price per ordinary share paid by existing shareholders (translated into U.S. dollars at P76.9197 per U.S. dollar) and by investors participating in this offering at an assumed initial public offering price of $25.00 per ADS before deducting the estimated underwriting discounts and estimated offering expenses payable by us and excluding the underwriters’ option to purchase additional ADSs:

	ADSs purchased (equal to Ordinary Shares purchased)					Total Consideration							Average Price Per ADS and per Share
	Number		Percent			Amount (P, in millions)		Amount ($, in millions)		Percent
Existing shareholders		5,400,000		15.3	%		10,384		135.0		15.3	%	$	25.00
New investors		30,000,000		84.7	%		57,690		750.0		84.7	%	$	25.00
Total		35,400,000		100.0	%		68,074		885.0		100.0	%

A $1.00 increase or decrease in the assumed initial public offering price would increase or decrease total consideration paid by new investors by $30 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional ADSs in full, our existing shareholders would own 147,130,154 ordinary shares, or 81.0% in the aggregate, and our new investors would own 34,500,000 ordinary shares, or 19.0% in the aggregate.

The discussion and tables above assumes no exercise of any share-based awards for ordinary shares as of the date of this prospectus. As of the date of this prospectus, there are 4,452,721 ordinary shares issuable upon exercise of outstanding vested share-based awards and 19,549,804 ordinary shares issuable upon convertible loan arrangements at a weighted average exercise price of P475 ($6.17) per share. To the extent that any of these share-based awards or arrangements are exercised, there will be further dilution to new investors.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OTHER DATA

The selected consolidated statements of profit or loss and other comprehensive income, selected consolidated statements of financial position data and selected consolidated statements of cash flows data as of and for the years ended December 31, 2019 and 2018 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statements of profit or loss and other comprehensive income, selected consolidated statements of financial position data and selected consolidated statements of cash flows data as of and for the nine months ended September 30, 2020 and 2019 are derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared using the same accounting principles and on the same basis as the year-end financial statements and include all adjustments that management considers necessary for the fair presentation of the financial information set forth in those statements. The results for any interim period are not necessarily indicative of the results that may be expected for the full year, and our historical unaudited 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, “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus.

Consolidated Statements of Profit or Loss and Other Comprehensive Income

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Revenue:
Sales of goods		52,845			35,160			53,487			33,920
Service revenue		13,754			3,999			6,617			3,300
Total revenue		66,599			39,159			60,104			37,220
Operating expenses:
Cost of sales		(46,726	)		(31,884	)		(48,845	)		(27,662	)
Fulfillment and delivery		(19,705	)		(10,641	)		(16,808	)		(8,232	)
Sales and marketing		(6,542	)		(4,798	)		(7,153	)		(3,335	)
Technology and content		(3,013	)		(2,576	)		(3,520	)		(2,123	)
General and administrative		(2,420	)		(1,688	)		(2,390	)		(1,742	)
Total operating expenses		(78,406	)		(51,587	)		(78,716	)		(43,094	)
Operating loss		(11,807	)		(12,428	)		(18,612	)		(5,874	)
Loss on disposal of non-current assets, net		(13	)		(3	)		(7	)		(3	)
Interest income/(expense), net		(1,252	)		(490	)		(801	)		129
Share of profit of an associate		69			53			54			82
Foreign currency exchange gain/(loss), net		52			(188	)		(213	)		78
Total non-operating (expense)/income		(1,144	)		(628	)		(967	)		286
Loss before income tax		(12,951	)		(13,056	)		(19,579	)		(5,588	)
Income tax benefit/(expense)		94			23			216			(73	)
Loss for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Total comprehensive income for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Loss per share, in RUB
Basic and diluted loss per share attributable to ordinary equity holders of the parent		(84.4	)		(104.3	)		(150.4	)		(60.6	)

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Selected Consolidated Statements of Financial Position Data

(P in millions)	As at September 30,				As at December 31,
	2020		2019		2019(1)		2018
Total non-current assets		27,892		16,337		19,568		6,468
Total current assets		21,161		14,218		18,867		11,612
Total assets		49,053		30,555		38,435		18,080
Total equity		(5,579)		3,605		817		3,236
Total non-current liabilities		11,952		6,794		8,112		584
Total current liabilities		42,680		20,156		29,506		14,260
Total liabilities		54,632		26,950		37,618		14,844

⁽¹⁾  We adopted IFRS 16 using the modified retrospective approach with the date of initial application of January 1, 2019. Under this method, the standard was applied retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application. Please refer to note 2.3 of our consolidated financial statements for the year ended December 31, 2019 included elsewhere in this prospectus.

Selected Consolidated Statements of Cash Flows Data

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Net cash used in operating activities		(4,074	)		(11,590	)		(14,312	)		(3,599	)
Net cash used in investing activities		(4,614	)		(2,949	)		(4,539	)		(2,863	)
Net cash generated from financing activities		10,721			14,346			19,335			5,270
Net increase/(decrease) in cash and cash equivalents		2,033			(193	)		484			(1,192	)
Cash and cash equivalents at the beginning of the period		2,994			2,684			2,684			3,803
Cash and cash equivalents at the end of the period		5,126			2,306			2,994			2,684

Non-IFRS Measures

(P in millions)	As at September 30,						As at December 31,
	2020			2019			2019			2018
Contribution Profit/(Loss)(1)		168			(3,366	)		(5,549	)		1,326
Adjusted EBITDA(2)		(8,140	)		(10,569	)		(15,832	)		(5,305	)
Free Cash Flow(3)		(10,353	)		(15,207	)		(19,947	)		(6,203	)

⁽¹⁾  To provide investors with additional information regarding our results of operations, we have disclosed here and elsewhere in this prospectus Contribution Profit/(Loss), a non-IFRS financial measure that we calculate as loss for the period before income tax benefit/(expense), total non-operating (expense)/income, general and administrative expenses, technology and content expenses and sales and marketing expenses.

Contribution Profit/(Loss) is a supplemental non-IFRS measure of our operating performance that is not required by, or presented in accordance with, IFRS. We have included Contribution Profit/(Loss) in this prospectus because it is an important metric used by our management to measure our operating performance as it shows the result of our operations less expense items that represent the majority of our variable expenses.

Contribution Profit/(Loss) is an indicator of our operational profitability as it reflects direct costs to fulfill and deliver orders to our buyers. Accordingly, we believe that Contribution Profit/(Loss) provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.

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Contribution Profit/(Loss) excludes significant expense items, including sales and marketing expenses, technology and content expenses, general and administrative expenses and other expense items that are not a direct function of sales. These expense items are an integral part of our business. Given these and other limitations, Contribution Profit/(Loss) should not be considered in isolation, or as an alternative to, or a substitute for, an analysis of our results reported in accordance with IFRS, including operating loss and loss for the period.

The following tables present a reconciliation of total revenue to Contribution Profit/(Loss) for each of the periods indicated:

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Loss for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Income tax expense/(benefit)		(94	)		(23	)		(216	)		73
Total non-operating expense/(income)		1,144			628			967			(286	)
General and administrative expenses		2,420			1,688			2,390			1,742
Technology and content expenses		3,013			2,576			3,520			2,123
Sales and marketing expenses		6,542			4,798			7,153			3,335
Contribution Profit/(Loss)		168			(3,366	)		(5,549	)		1,326

	2019												2020
P in millions)	First quarter			Second quarter			Third quarter			Fourth quarter			First quarter			Second quarter			Third quarter
Loss for the period		(4,138	)		(4,325	)		(4,570	)		(6,330	)		(5,690	)		(3,288	)		(3,879	)
Income tax benefit		—			(16	)		(7	)		(193	)		(7	)		(69	)		(18	)
Total non-operating expense		268			119			241			339			177			403			564
General and administrative expenses		550			569			569			702			773			774			873
Technology and content expenses		893			873			810			944			940			1,022			1,051
Sales and marketing expenses		1,398			1,548			1,852			2,355			2,084			2,066			2,392
Contribution Profit/(Loss)		(1,029	)		(1,232	)		(1,105	)		(2,183	)		(1,723	)		908			983

⁽²⁾  To provide investors with additional information regarding our results of operations, we have disclosed here and elsewhere in this prospectus Adjusted EBITDA, a non-IFRS financial measure that we calculate as loss for the period before income tax benefit/(expense), total non-operating (expense)/income, depreciation and amortization and share-based compensation expense.

Adjusted EBITDA is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included Adjusted EBITDA in this prospectus because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and non-operating expense/(income). Accordingly, we believe that Adjusted EBITDA provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as depreciation and amortization and share-based compensation expense, from our Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax benefit/(expense) and non-operating expense/(income) as these items are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure, and

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you should not consider it in isolation or as a substitute for loss for the period as a profit measure or other analysis of our results as reported under IFRS. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;

• Adjusted EBITDA does not reflect share-based compensation, which has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy; and

• other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, operating loss, loss for the period and our other IFRS results.

The following tables present a reconciliation of loss for the period to Adjusted EBITDA for each of the periods indicated:

	For the nine months ended September 30,						For the year ended December 31,
(P in millions)	2020			2019			2019			2018
Loss for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Income tax expense/(benefit)		(94	)		(23	)		(216	)		73
Total non-operating expense/(income)		1,144			628			967			(286	)
Depreciation and amortization		3,402			1,713			2,590			487
Share-based compensation expense		265			146			190			82
Adjusted EBITDA		(8,140	)		(10,569	)		(15,832	)		(5,305	)

	2019												2020
(P in millions)	First quarter			Second quarter			Third quarter			Fourth quarter			First quarter			Second quarter			Third quarter
Loss for the period		(4,138	)		(4,325	)		(4,570	)		(6,330	)		(5,690	)		(3,288	)		(3,879	)
Income tax benefit		—			(16	)		(7	)		(193	)		(7	)		(69	)		(18	)
Total non-operating expense		268			119			241			339			177			403			564
Depreciation and amortization		507			559			647			877			957			1,091			1,354
Share-based compensation expense		66			21			58			45			77			67			121
Adjusted EBITDA		(3,297	)		(3,642	)		(3,631	)		(5,262	)		(4,486	)		(1,796	)		(1,858	)

⁽³⁾ To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this prospectus Free Cash Flow, a non-IFRS financial measure that we calculate as net cash provided by/(used in) operating activities less payments for purchase of property, plant and equipment and intangible assets, and the payment of the principal portion of lease liabilities.

Free Cash Flow is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included Free Cash Flow in this prospectus because it is an important indicator of our liquidity as it measures the amount of cash we generate/(use) and provide additional perspective on impact of our cash capital expenditures and assets used by us through lease obligations. Accordingly, we believe that Free Cash Flow provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.

Free Cash Flow has limitations as a financial measure, and you should not consider it in isolation or as substitutes for net cash used in operating activities as a measure of our liquidity or other analysis of our

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results as reported under IFRS. There are limitations to using non-IFRS financial measures, including that other companies, including companies in our industry, may calculate Free Cash Flow differently. Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash used in operating activities, capital expenditures and our other IFRS results.

The following tables present a reconciliation of net cash used in operating activities to Free Cash Flow for each of the periods indicated:

	For the nine months ended September 30,						For the year ended December 31,
(P in millions)	2020			2019			2019			2018
Net cash used in operating activities		(4,074	)		(11,590	)		(14,312	)		(3,599	)
Purchase of property, plant and equipment		(4,708	)		(3,123	)		(4,742	)		(2,472	)
Purchase of intangible assets		(73	)		(23	)		(26	)		(93	)
Payment of the principal portion of lease liabilities		(1,498	)		(471	)		(867	)		(39	)
Free Cash Flow		(10,353	)		(15,207	)		(19,947	)		(6,203	)

	2019												2020
(P in millions)	First quarter			Second quarter			Third quarter			Fourth quarter			First quarter			Second quarter			Third quarter
Net cash used in operating activities		(3,282	)		(6,935	)		(1,373	)		(2,722	)		(2,410	)		(2,107	)		443
incl. movements in working capital		23			(3,277	)		2,402			1,867			2,092			(449	)		2,590
Purchase of property, plant and equipment		(401	)		(1,244	)		(1,478	)		(1,619	)		(1,099	)		(1,983	)		(1,626	)
Purchase of intangible assets		(7	)		(13	)		(3	)		(3	)		(10	)		(15	)		(48	)
Payment of the principal portion of lease liabilities		(161	)		(112	)		(198	)		(396	)		(472	)		(392	)		(634	)
Free Cash Flow		(3,851	)		(8,304	)		(3,052	)		(4,740	)		(3,991	)		(4,497	)		(1,865	)

Other Data

	For the nine months ended September 30,						For the year ended December 31,
(P in millions, unless indicated otherwise)	2020			2019			2019			2018
GMV incl. services(1)		121,566			50,131			80,815			41,888
Share of Marketplace GMV, %(1)		45.0			12.4			17.4			0.9
Gross profit		19,873			7,275			11,259			9,558
Gross profit as a percentage of GMV incl. services, %		16.3			14.5			13.9			22.8
Contribution Profit/(Loss) as a percentage of GMV incl. services, %		0.1			(6.7	)		(6.9	)		3.2
Adjusted EBITDA as a percentage of GMV incl. services, %		(6.7	)		(21.1	)		(19.6	)		(12.7	)
Number of orders, million(1)		44.3			19.3			31.8			15.3
Number of active buyers, million(1)		11.4			6.6			7.9			4.8
Number of active sellers(1)		18,152			4,378			6,418			602

⁽¹⁾  See the definitions of GMV incl. services, Share of Marketplace GMV, number of orders, number of active buyers and number of active sellers in “Presentation of Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Indicators of Operating and Financial Performance.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Historical Financial Data,” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Actual results could differ materially from those contained in any forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” for more information.

Overview

We are a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market. Over the years, we have become the most trusted and respected online retailer in the country, according to INFOLine and BrandScience, and our brand has become synonymous with online shopping for our approximately 11.4 million active buyers in Russia in the twelve months ended September 30, 2020. Our mission is to transform the Russian consumer economy by offering the widest selection of products, best value and maximum online shopping convenience among Russian e-commerce companies, while empowering sellers to achieve greater commercial success. We attribute our success to our focus on enhancing the buyer and seller experience, our nationwide logistics infrastructure, which is one of the largest among Russian e-commerce companies, according to INFOLine, and our cutting-edge technology and strong culture of innovation.

We connect and facilitate transactions between buyers and sellers on our Marketplace, which represented 45% of our GMV incl. services and 15% of our total revenue in the nine months ended September 30, 2020. We also sell products directly to our buyers through our Direct Sales business, which represented 51% of our GMV incl. services and 79% of our total revenue in the nine months ended September 30, 2020. We believe that this globally proven business model of an online marketplace for third-party sellers, complemented by a first-party business, allows us to offer Russian consumers the largest multi-category assortment of products, according to INFOLine, with almost 9 million SKUs, as of September 30, 2020, in categories ranging from electronics, home and decor and children’s goods to FMCG, fresh food and car parts, at competitive prices and with a wide range of delivery options. This business model also enables us to better manage our inventory and enhance the online shopping experience of our buyers for certain product categories and geographical regions through our Direct Sales business. Our growing base of approximately 18,100 active sellers, as of September 30, 2020, plays a key role in the expansion of our platform’s product catalog, providing approximately 92% of our total product assortment. We attract sellers to our platform with a strong value proposition that combines access to millions of our active buyers with a comprehensive set of tools and services for our sellers, such as sales management solutions with access to data analytics and advertising services, financial products and fulfillment and delivery services through our nationwide logistics infrastructure through our FBO and FBS logistics models. These seller-facing tools and services equip our sellers to attract more buyers, grow their sales and provide a seamless transaction and buyer experience.

In the twelve months ended September 30, 2020, our platform served approximately 11.4 million active buyers who placed an average of 5.0 orders during that period, an increase from approximately 6.6 million active buyers who placed an average of 3.8 orders in the twelve months ended September 30, 2019. We believe we have achieved significant scale and are continuing to rapidly grow our business, while also focusing on achieving profitability in the future. For the nine months ended September 30, 2020, our GMV incl. services increased to P121,566 million, from P50,131 million in the nine months ended September 30, 2019, an increase of 142%. Our GMV incl. services in the year ended December 31, 2019 increased to P80,815 million from P41,888 million in the year ended December 31, 2018, an increase of 93%. The selected periods of 2020 include the period from April 2020 until June 2020, during which we experienced increased demand for our products and services as a result of the COVID-19 pandemic and the related government-imposed social-distancing measures. See “—Factors Affecting Our Financial Condition and Results of Operations—COVID-19.”

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We reported a loss of P12,857 million in the nine months ended September 30, 2020, compared to a loss of P13,033 million in the nine months ended September 30, 2019. Due to significant expenses required to finance our growth, we incurred a loss of P19,363 million and P5,661 million in the years ended December 31, 2019 and 2018, respectively. Despite reporting losses since 2018, we have demonstrated improving profitability, and in the nine months ended September 30, 2020, we had a Contribution Profit of P168 million (with Contribution Profit as a percentage of GMV incl. services of 0.1%), compared to a Contribution Loss of P3,366 million (with Contribution Loss as a percentage of GMV incl. services of negative 6.7%) in the nine months ended September 30, 2019. The significant improvement in our Contribution Profit was driven by the growth of GMV incl. services and reduction of fulfillment and delivery expenses as a percentage of GMV incl. services as result of increased demand for our products and services during the COVID-19 pandemic in the second quarter of 2020. We achieved Contribution Profit of P908 million (with Contribution Profit as a percentage of GMV incl. services of 2.0%) in the three months ended June 30, 2020 and generated Contribution Profit of P983 million (with Contribution Profit as a percentage of GMV incl. services of 2.2%) in the three months ended September 30, 2020 after the mobility restrictions and other measures implemented by the Russian Government were lifted. We believe that as our business continues to grow, we will benefit from our operating leverage, improving our Contribution Profit/(Loss).

Factors Affecting Our Financial Condition and Results of Operations

Our financial condition and results of operations are driven by our success in attracting and retaining buyers to our platform and increasing the frequency of the purchases they make, as well as our ability to enhance the efficiency of our operations as we continue to grow. In 2020, our results of operations were also affected by the COVID-19 pandemic and related response measures.

Loyalty and engagement of our buyers

Our financial results have benefited from increased buyer retention and higher order frequency in recent years. We review performance of our active buyers on an annual cohort basis. Each buyer cohort is defined as buyers who placed their first order during a specific year. We track the repeat orders made by buyers in each cohort.

We have experienced increased loyalty of our buyers. Second-year buyer retention, calculated by the number of active buyers who placed an order in the year following their first order, as a percentage of the applicable cohort of buyers in that year, has been increasing in the past five years, compared to the previous year’s buyer cohort, rising from 28% for the cohort of buyers who placed their first order in 2014 (our “2014 cohort”) to 45% for the cohort of buyers who first purchased in 2018.

We believe that over time, as our platform becomes more important to our repeat active buyers, we benefit from their higher average order frequency. For example, repeat buyers in our 2014 cohort placed on average 6.5 orders in 2019, compared to 4.8 orders in 2018 and 3.5 orders in 2017.

The following charts show the retention for our cohorts from 2014 to 2018 and the number of annual orders placed per buyer (net of returns and cancellations) for our cohorts from 2014 to 2019.

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As shown in the following charts, growth in active buyers was further augmented by the increasing value of goods sold per buyer, with each new cohort of active buyers performing better than previous ones and with each new cohort making a material contribution to total company GMV incl. services. Our 2018 and 2019 cohorts accounted for more than 50% of our value of goods sold in 2019.

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Going forward, we expect that increasing the loyalty and engagement of our active buyers, through improving the breadth of our assortment, further strengthening our brand awareness and introducing new product categories, will increase our cohort retention and purchase frequency, which we expect to drive improvements in our GMV incl. services and revenue.

Number of our buyers, sellers and the assortment offered on our platform

The combination of our wide selection of products, competitive prices and convenient buyer shopping experience, coupled with our strong brand awareness and seller support tools and services, enable us to attract more buyers to our platform, which, in turn, draws more sellers to our Marketplace, resulting in an expansion of our product catalog and increased buyer retention. We have seen significant increases in both the number of active buyers on our platform and active sellers on our Marketplace in recent periods. As of September 30, 2020, we had 11.4 million active buyers, compared to 7.9 million and 4.8 million active buyers as of December 31, 2019 and 2018, respectively, and approximately 18,100 active sellers on our Marketplace, compared to approximately 6,400 and 600 active sellers as of December 31, 2019 and 2018, respectively. We believe that some of the sellers who joined our platform in 2020 joined as a result of mobility restrictions and the temporary closure of offline retail businesses in connection with the COVID-19 pandemic, although the exact number of such sellers is difficult to quantify. However, we continued to experience a growing number of active sellers after the restrictions were lifted and offline retail businesses reopened. In particular, the total number of our new active sellers increased by approximately 4,700 in the three months ended September 30, 2020 compared to approximately 4,300 new active sellers in the three months ended June 30, 2020. The powerful network effect has allowed us to grow significantly faster than the Russian e-commerce market, with our GMV incl. services increasing by 142% for the nine months ended September 30, 2020 to P121,566 million from P50,131 million for the nine months ended September 30, 2019.

We actively focus on increasing the range of features we offer to sellers to enhance the attractiveness of our Marketplace to our current and potential sellers. We have developed a number of initiatives, including the OZON.Seller platform, which gives our sellers access to a broad set of advanced tools for stock management, assortment management, product pricing and marketing, including analytical and financial performance reports on their sales and expenses such as storage, returns or fulfillment expenses, as well as a suite of promotional and profit management tools. We believe that the increase in the number of active sellers on our Marketplace and continuing growth of our active buyers and assortment of products created demand for our high-margin advertising services, which has led to strong growth in our advertising revenue.

In addition to our Marketplace, we also operate our Direct Sales business, where we purchase stock of products in our fulfillment centers to be sold directly to our buyers. The successful operation of our Direct Sales business depends on a number of factors, including our ability to increase the range of products sold by us directly, achieve competitive prices for such products and ensure the necessary amount of stock in our fulfillment centers for the timely delivery of products to our buyers. Notwithstanding the launch of our Marketplace in September 2018, we have chosen to retain the Direct Sales business for certain products. We believe that the Direct Sales business allows us to optimize revenue from goods sold on our platform and allows us to manage our working capital in a more efficient manner. In particular, we sell products through Direct Sales that are in high demand, such as “bestsellers”, and have predictable purchasing trends. The high demand for these products ensures a high turnover of inventory, minimizing the amount of unsold inventory held at our fulfillment centers, and the predictable purchasing trends enable us to effectively manage the restocking of inventory to avoid purchasing excess inventory. The products that we sell through Direct Sales will vary depending on shifts in demand and purchasing trends. We have dedicated sales teams that identify and track the demand for products in each product category on our platform, and once buyer demand for certain products increases to a certain level and a predictable purchasing trend for those products emerge, we consider stocking and selling such products on a Direct Sales basis. The same products may be sold by us on a Direct Sales basis and by our sellers on our Marketplace at the same time.

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In any particular period, changes in the volume of products sold through our Marketplace or our Direct Sales business will impact our revenue, cost of sales and our gross profit as sales through our Marketplace generate higher gross margins. As we continue to increase our focus on expanding our Marketplace and growing our Share of Marketplace GMV, we expect our gross profit and our Contribution Profit/(Loss) to improve. In long-term, we expect to have equal gross profit as a percentage of GMV incl. services for our Marketplace and Direct Sales businesses as we continue to achieve economies of scale and improve our purchasing power.

Efficiency of our fulfillment and delivery operations

We have built a comprehensive logistics and fulfillment service, which is one of the leading e-commerce fulfillment and delivery services in Russia, according to INFOLine, that is structured to maximize the revenue we generate from fulfillment and delivery services while minimizing fulfillment and delivery expenses. We generate revenue from our fulfillment services mainly through delivery charges to our buyers and as a part of Marketplace commission from our sellers. We incur fulfillment expenses primarily from our network of fulfillment centers, where we store products sold by us directly and provide storage services to our sellers using the FBO model. Delivery expenses are incurred for our delivery network comprising sorting centers, couriers, pick-up points and box lockers.

Our fulfillment and delivery expenses are highly dependent on a number of factors, such as volume of orders and level of utilization for fulfillment and sorting centers, as well as for pick-up points and box lockers, density of orders, delivery distance and method. We believe our business will further gain efficiency and improvement in expenses as a percentage of GMV incl. services in fulfillment infrastructure as a result of an increased share of sellers selecting our FBS model, in which we do not incur fulfillment costs, and long term normalization of operating costs at our recently launched fulfillment centers and those we plan to launch in the near future as they reach long-term normalized levels of utilization. We also expect to see improvement in the efficiency of our delivery network following the establishment of our new fulfillment centers in a number of Russian regions to decrease the delivery distance, future growth in density of courier orders and growth in utilization of box lockers and pick-up points over the long term.

Our ability to leverage our growing scale

We have a relentless focus on maintaining a leading position across existing product categories while continuing to scale our business in order to improve our margins. In addition to efficiency gains in fulfillment and delivery expenses, the factors mentioned below are the key drivers of this trend:

• Sales and marketing: marketing costs have benefited from growth of organic traffic and increase in buyers’ orders frequency, with repeat orders and increased buyer loyalty requiring less marketing engagement and expenses to support.

• Technology and content: as a percentage of GMV incl. services, our technology and content expense have declined, even as we heavily invested in improving our seller and buyer experience and our technology and data capabilities in 2018 and 2019.

• General and administrative: our business has continued to enjoy economies of scale on a fixed cost base due to the growth profile of our business across our Marketplace and Direct Sales.

While we expect our operating expenses to increase as we continue to expand our business, we expect such expenses to decrease as a percentage of GMV incl. services and revenue over time as we continue to achieve economies of scale and benefit from operating leverage.

COVID-19

The COVID-19 pandemic has led to significant global disruptions, which affected our business, as well as our buyers, sellers and suppliers. See “Risk Factors—Risks Relating to Our Business and Industry—Our business

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may be materially adversely affected by the COVID-19 pandemic.” As a result of the COVID-19 pandemic and the mobility restrictions and other measures implemented by the Russian Government from the end of March 2020 until June 2020, which included social distancing, stay-at-home orders and limited quarantine measures, we experienced a significant increase in the number of new active buyers, higher demand for products on our platform and an inflow of third-party sellers to our Marketplace. We believe the mobility restrictions led more sellers and suppliers to increase their online presence, as we believe that increasing their sales through our Marketplace and Direct Sales businesses are some of the key drivers of their sales growth. The mobility restrictions also increased e-commerce adoption by our buyers as we saw increased order frequency and spend on our platform during this time.

As a result of the COVID-19 pandemic, we also introduced a number of changes to our fulfillment, delivery and other services, including a temporary suspension of our pay-on-delivery service, and we made numerous process updates across our operations to implement employee and buyer safety measures, such as enhanced cleaning, social distancing and protocols to support personal protection. We also implemented procedures to keep pricing of certain essential products by the sellers on our Marketplace at affordable levels following increased demand.

Although the increase in our revenue in the nine months ended September 30, 2020, compared to the same period in 2019, resulted from an increase in demand for products sold through our platform, the increase in revenue also reflects the impact of measures that we implemented in 2018 and 2019, such as focusing on driving higher sales through our Marketplace, our marketing efforts undertaken in 2019 and our expansion into a broad range of product categories.

As the lockdown in the most regions of Russia was lifted in June 2020, we believe that our results of operations for the three months ended September 30, 2020 reflect the results of our operations without the direct impact of the COVID-19 lockdown measures.

In recognition of our important role during the COVID-19 pandemic, in April 2020, we were included in the list of systemically important companies by the special decree of the Russian Government, which allows us to be considered for special government support during the COVID-19 pandemic. As a result of these support measures, our operations were not subject to the mobility restrictions imposed on businesses and the general public. We also benefited from a 1.0% online payment processing fee limit introduced by the CBR for retailers of certain essential products from April 2020 to September 2020. The online payment processing fee limit was imposed on Russian banks and other financial institutions, which were required to limit their fees to accept online debit and credit card payments for such retailers to 1.0%. This reduction of the online payment processing fee had the effect of decreasing our fees for cash collection expenses as a percentage of GMV incl. services in the six months ended September 30, 2020, which was partially offset by the increase of the share of online payments on our platform during that period. As a result, an overall decrease in our fees for cash collection expenses as a percentage of GMV incl. services amounted to 0.5 percentage points in the six months ended September 30, 2020 compared to the three months ended March 31, 2020. While we benefitted from the 1.0% online payment processing fee limit, which has since been terminated, we do not believe that there will be any material impact as a result of its termination. The measures mentioned above are the only material support that we received as a result of our inclusion in the list of systemically important companies.

We continue to closely monitor the impact of the COVID-19 pandemic on our business. The pandemic and related actions taken by governments to limit its spread could cause a temporary closure of our operational facilities, interrupt our fulfillment, delivery or logistics systems or severely impact the behavior and operations of our sellers, buyers, suppliers and other users of our products and services. Our operations could also be disrupted if any of our employees or employees of our suppliers or sellers are suspected of contracting COVID-19, as this could require us or our suppliers or sellers to quarantine some or all of these employees and implement disinfection measures to the facilities and premises used for our operations. As the COVID-19 pandemic continues to evolve, the extent of its impact on our business in future periods remains uncertain.

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Other Factors

Our business is affected by seasonality, which historically has resulted in higher sales volume during the second half of the year compared to the first half. Higher sales during the second half of the year are mainly attributable to the increased demand for products during the peak New Year season in December, as well as Black Friday sales in November. We recognized 58% and 59% of our annual revenue during the second half of 2019 and 2018, respectively. We believe that our business will continue to demonstrate seasonal patterns in the future. For further information on our quarterly data, please refer to “—Quarterly Data.”

Our business is also affected by macroeconomic conditions and the political environment in Russia, where our buyers and sellers are primarily located. The purchase capabilities of our buyers may be significantly influenced by political and economic developments in Russia and the effects of these factors on demand for products and services.

Segments

For management purposes, our business is organized into two operating segments:

• Ozon.ru, which is comprised of sales of multi-category consumer products through our Shopping App and our Ozon website; and

• Ozon.travel, which includes sales of airline and train tickets through our Ozon.Travel mobile app and our Ozon.Travel website.

Ozon.ru represents over 97% of our revenue for the year ended December 31, 2019 and over 99% of our revenue for the nine months ended September 30, 2020; therefore, we present Ozon.ru as the only reportable operating segment, as this reflects the consolidated view of our operating segments noted above.

Key Indicators of Operating and Financial Performance

Our management monitors our financial and operational performance on the basis of the following measures.

(P in millions, unless indicated otherwise)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
GMV incl. services(1)		121,566			50,131			80,815			41,888
Share of Marketplace GMV, %(2)		45.0			12.4			17.4			0.9
Total revenue		66,599			39,159			60,104			37,220
Gross profit(3)		19,873			7,275			11,259			9,558
Gross profit as a percentage of GMV incl. services, %		16.3			14.5			13.9			22.8
Contribution Profit/(Loss)(4)		168			(3,366	)		(5,549	)		1,326
Contribution Profit/(Loss) as a percentage of GMV incl. services, %		0.1			(6.7	)		(6.9	)		3.2
Adjusted EBITDA(5)		(8,140	)		(10,569	)		(15,832	)		(5,305	)
Adjusted EBITDA as a percentage of GMV incl. services, %		(6.7	)		(21.1	)		(19.6	)		(12.7	)
Free Cash Flow(6)		(10,353	)		(15,207	)		(19,947	)		(6,203	)
Number of orders, million(7)		44.3			19.3			31.8			15.3
Number of active buyers, million(8)		11.4			6.6			7.9			4.8
Number of active sellers(9)		18,152			4,378			6,418			602

⁽¹⁾  GMV incl. services (gross merchandise value including revenue from services) comprises the total value of orders processed through our platform, as well as revenue from services to our buyers and sellers, such as delivery, advertising and other services rendered by our Ozon.ru operating segment. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. GMV incl. services does not represent revenue earned by us. GMV incl. services does not include travel ticketing commissions, other service revenues or value of orders processed through our Ozon.travel operating segment.

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⁽²⁾  Share of Marketplace GMV represents the total value of orders processed through our Marketplace, inclusive of value added taxes, net of discounts, returns and cancellations, divided by GMV incl. services in a given period. Share of Marketplace GMV includes only the value of goods processed through our platform and does not include services revenue.

⁽³⁾  Gross profit represents revenue less cost of sales in a given period.

⁽⁴⁾  Contribution Profit/(Loss) is loss for the period before income tax benefit/(expense), total non-operating (expense)/income, general and administrative expenses, technology and content expenses and sales and marketing expenses. Please see “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures” for a reconciliation of Contribution Profit/(Loss), which is a non-IFRS measure, to the most directly comparable IFRS financial performance measure and an explanation of why we consider Contribution Profit/(Loss) useful.

⁽⁵⁾  Adjusted EBITDA is loss for the period before income tax benefit/(expense), total non-operating (expense)/income, depreciation and amortization and share-based compensation expense. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies. Please see “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures” for a reconciliation of Adjusted EBITDA, which is a non-IFRS measure, to the most directly comparable IFRS financial performance measure and an explanation of why we consider Adjusted EBITDA useful.

⁽⁶⁾  Free Cash Flow is net cash provided by/(used in) operating activities less payments for purchase of property, plant and equipment and intangible assets, and the payment of the principal portion of lease liabilities. Please see “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures” for a reconciliation of Free Cash Flow which is a non-IFRS measure, to the most directly comparable IFRS financial performance measure and an explanation of why we consider Free Cash Flow useful.

⁽⁷⁾  Number of orders is the total number of orders delivered in a given period, net of returns and cancellations.

⁽⁸⁾  Number of active buyers is the number of unique buyers who placed an order on our platform within the 12 month period preceding the relevant date, net of returns and cancellations.

⁽⁹⁾  Number of active sellers is the number of unique sellers who sold an item on our Marketplace within the 12 month period preceding the relevant date, net of returns and cancellations.

Please see “Selected Consolidated Historical Financial and Other Data—Non-IFRS Measures,” “Selected Consolidated Historical Financial and Other Data—Other Data” and “Presentation of Financial and Other Information” for more information on the above.

Components of Our Results of Operations

GMV including services

GMV incl. services is the key driver of our revenue, as the majority of our revenue is a function of our GMV incl. services. Our primary sources of revenue are sales of goods by us under the Direct Sales model and Marketplace commission from sales of goods by third-party sellers on our Marketplace. From time to time, we may change the mix between the sales through our Direct Sales and Marketplace businesses, which does not impact our GMV incl. services. However, these variations may impact our revenue, as we recognize gross sales of goods net of returns and cancellations as revenue for our Direct Sales business and only Marketplace commission as revenue for Marketplace sales. Accordingly, we measure the volume of our operations not on the basis of revenue, but rather on the basis of our GMV incl. services, which also includes revenues from services rendered to our sellers and buyers, such as advertising and delivery services processed through our platform. Revenues from these services are also correlated with the volumes of goods sold on our platform.

Revenue

Sales of goods

Sales of goods relate to transactions where we act directly as the seller of goods we purchase from our suppliers. We recognize revenue from sales of goods on a gross basis, net of return and cancellation allowances when the goods are delivered to our buyers.

Service revenue

Service revenue includes Marketplace commissions, charges for delivery services and advertising services and travel ticketing commissions.

Marketplace commission represents commission fees charged to third-party sellers for selling their products through our Marketplace. Upon a sale, we charge the third-party sellers a commission fee, which consists of the

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base fee and variable fee component. The base fee is charged based on the product category for the given product. The variable fee component of the commission is paid by the sellers based on the additional services we render to the sellers, such as storage fees for products stored at our fulfillment centers and delivery fees. Marketplace commission is recognized on a net basis at the point of delivery of products to the buyers.

Delivery services represent charges for delivery of products to our buyers who place their orders through our mobile apps and website.

Advertising services allow our suppliers and sellers to place advertisements or show their products in particular areas of our websites and mobile apps at fixed or variable fees. Advertising revenue is recognized evenly over the period in which the advertisement is displayed or based on the number of views or clicks.

Travel ticketing commission consists of commission fees and ticketing fees charged from the travel supplier and/or traveler for the sale of airline and railway tickets, as applicable. Ticketing commission fees are recognized upon booking of airline and railway tickets.

Operating Expenses

Our primary categories of operating expenses are cost of sales and fulfillment and delivery expenses, as well as sales and marketing, technology and content and general and administrative expenses. As our business continues to grow, we expect our operating expenses to increase in absolute terms and further decline, as a percentage of GMV incl. services, as we continue to benefit from our operating leverage.

Cost of sales consists of the purchase price of consumer products, including supplier rebates and subsidies, write-downs and losses of inventories, cost of travel ticketing and costs of obtaining and supporting contracts with sellers on our Marketplace.

Fulfillment and delivery expenses primarily consist of costs incurred in operating and staffing our fulfillment centers, sorting centers, buyer service centers and pick-up points, outbound shipping costs, packaging material costs, expenses related to payment processing and costs associated with the use of the facilities and equipment by these functions, such as depreciation expenses and other related costs. Fulfillment and delivery expenses also include amounts paid to third parties that assist us with fulfillment, sorting, delivery and buyer service operations, as well as write-offs and losses of sellers’ inventory. Fulfillment and delivery costs are expensed as incurred.

Sales and marketing expenses consist primarily of advertising costs and payroll, including related expenses for employees involved in marketing and sales activities. We carry out the majority of our digital and performance marketing efforts through search engines and sites in order to attract buyers and sellers to our platform. Additionally, we invest a portion of our marketing budget in offline media in order to improve our brand awareness and to complement our online efforts. Sales and marketing expenses are expensed as incurred.

Technology and content expenses include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design and maintenance of our mobile apps and websites and technology infrastructure costs. We do not capitalize our labor costs related to our mobile apps, website and software development, and other technology and content expenses, but instead these costs are expensed as incurred.

General and administrative expenses consist of payroll and related expenses for employees involved in general corporate functions, including accounting, finance, tax, legal and human resources, and costs associated with the use of the facilities and equipment by these functions, such as depreciation expenses, premises maintenance expenses and other general corporate related expenses. General and administrative expenses are expensed as incurred.

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Results of Operations

Below are our results of operations for the nine months ended September 30, 2020 and 2019 and the years ended December 31, 2019 and 2018:

(P in millions)	For the nine months ended September 30,						For the year ended December 31,
	2020			2019			2019			2018
Revenue:
Sales of goods		52,845			35,160			53,487			33,920
Service revenue		13,754			3,999			6,617			3,300
Total revenue		66,599			39,159			60,104			37,220
Operating expenses:
Cost of sales		(46,726	)		(31,884	)		(48,845	)		(27,662	)
Fulfillment and delivery		(19,705	)		(10,641	)		(16,808	)		(8,232	)
Sales and marketing		(6,542	)		(4,798	)		(7,153	)		(3,335	)
Technology and content		(3,013	)		(2,576	)		(3,520	)		(2,123	)
General and administrative		(2,420	)		(1,688	)		(2,390	)		(1,742	)
Total operating expenses		(78,406	)		(51,587	)		(78,716	)		(43,094	)
Operating loss		(11,807	)		(12,428	)		(18,612	)		(5,874	)
Loss on disposal of non-current assets, net		(13	)		(3	)		(7	)		(3	)
Interest income/(expense), net		(1,252	)		(490	)		(801	)		129
Share of profit of an associate		69			53			54			82
Foreign currency exchange gain/(loss), net		52			(188	)		(213	)		78
Total non-operating (expense)/income		(1,144	)		(628	)		(967	)		286
Loss before income tax		(12,951	)		(13,056	)		(19,579	)		(5,588	)
Income tax benefit / (expense)		94			23			216			(73	)
Loss for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)
Total comprehensive income for the period		(12,857	)		(13,033	)		(19,363	)		(5,661	)

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Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

Revenue

Below is our revenue, broken down by source, for the nine months ended September 30, 2020 and 2019 and as a percentage of total revenue:

	For the nine months ended September 30,
	2020		2020		2019		2019
	(P in millions)		(% of revenue)		(P in millions)		(% of revenue)		Change, P in millions			% Change
Revenue
Sales of goods		52,845		79		35,160		90		17,685			50
Service revenue		13,754		21		3,999		10		9,755			244
Marketplace commission		9,667		15		852		2		8,815			1,035
Advertising services		2,289		3		677		2		1,612			238
Delivery services		1,251		2		1,429		4		(178	)		(12	)
Travel ticketing commission		375		1		970		2		(595	)		(61	)
Other revenue		172		—		71		—		101			142
Total revenue		66,599		100		39,159		100		27,440			70

Our total revenue increased by 70% compared to the nine months ended September 30, 2019, as a result of an increase from both sales of goods and service revenue. We attribute this increase to the growth in the number of our active buyers and sellers, our expansion into new product categories and the impact of our marketing efforts undertaken in 2019 and ongoing initiatives across our business aimed at further improving customer service and experience. Our total revenue growth was also supported by an increase in demand for our products as a result of the COVID-19 pandemic, particularly in the period from April 2020 until June 2020.

Sales of goods. The increase in our sales of goods in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 is primarily the result of growth in the number of our active buyers to 11.4 million as of September 30, 2020 from 6.6 million as of September 30, 2019, an increase in their purchase frequency on our platform by 32% and an increase in average GMV incl. services per order by 6% for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019.

In the nine months ended September 30, 2020, we experienced significant growth of sales across all major product categories. Electronics contributed 35%, food contributed 13%, pharmacy contributed 10%, health and beauty contributed 10% and FMCG contributed 8% to the overall increase in sales of goods of P17,685 million in the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019.

Service revenue. The increase in our service revenue was mainly due to the growth in revenue from Marketplace commissions and revenue from advertising services.

The increase in our Marketplace commission revenue was driven by an increase in both the total value of orders processed through our Marketplace, which contributed P6,645 million to the total increase, and the effective Marketplace commission fee rate, which contributed P2,170 million to the total increase. The total value of orders processed through our Marketplace increased by almost 9 times to P54,743 million for the nine months ended September 30, 2020 from P6,222 million for the nine months ended September 30, 2019, primarily due to an increase in the number of active sellers on our Marketplace by more than four times to approximately 18,100 as of September 30, 2020 from approximately 4,400 as of September 30, 2019 and due to an expansion of SKUs offered by the sellers on the Marketplace. The effective Marketplace commission fee rate (calculated as Marketplace commission revenue as a percentage of the total value of orders processed through our Marketplace)

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increased to 17.7% for the nine months ended September 30, 2020 from 13.7% for the nine months ended September 30, 2019, as we were offering discounted commission to attract sellers to our Marketplace in the beginning of 2019.

The following product categories contributed to the total of P8,815 million increase in Marketplace commission revenue for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019: home and decor contributed 20%, electronics contributed 13%, children’s goods contributed 12%, apparel contributed 12% and health and beauty contributed 9%.

Operating expenses

Below are our operating expenses, broken down by source, for the nine months ended September 30, 2020 and 2019 and as a percentage of total operating expenses and of GMV incl. services:

	For the nine months ended September 30,
	2020			2020		2020		2019			2019		2019
	(P in millions)			(% of operating expenses)		(% of GMV incl. services)		(P in millions)			(% of operating expenses)		(% of GMV incl. services)		Change, P in millions			% Change
Operating expenses
Cost of sales		(46,726	)		60		—		(31,884	)		62		—		(14,842	)		47
Fulfillment and delivery		(19,705	)		25		16		(10,641	)		21		21		(9,064	)		85
Sales and marketing		(6,542	)		8		5		(4,798	)		9		10		(1,744	)		36
Technology and content		(3,013	)		4		2		(2,576	)		5		5		(437	)		17
General and administrative		(2,420	)		3		2		(1,688	)		3		3		(732	)		43
Total operating expenses		(78,406	)		100		—		(51,587	)		100		—		(26,819	)		52

Cost of sales. The increase in our cost of sales in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was a function of 50% increase in sales of goods we purchase and sell directly to our buyers and primarily reflected the growth in the number of orders, driven by a 73% increase in the number of our active buyers and for the twelve months ended September 30, 2020, a 32% increase in their purchase frequency on our platform, all of which were partly offset by the higher volume of goods purchased through our Marketplace.

Fulfillment and delivery. The increase in our fulfillment and delivery costs in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was driven by the increase in the volume of orders processed through our logistics infrastructure to 44.3 million for the nine months ended September 30, 2020 from 19.3 million for the nine months ended September 30, 2019, an increase in the average number of our employees and outsourced personnel in fulfillment centers and last-mile delivery activities by 50%, resulting in a P4,041 million increase in employee-related and outsourcing costs, a P2,015 million increase in third-party expenses related to fulfillment and delivery activities and a P1,477 million increase in depreciation charges mainly relating to our new fulfillment facilities in Rostov-on-Don, Saint Petersburg, Kazan and Novosibirsk put into operation in 2020. However, as a percentage of GMV incl. services, our fulfillment and delivery expenses decreased to approximately 16% in the nine months ended September 30, 2020 from approximately 21% in the nine months ended September 30, 2019.

Sales and marketing. The increase in our sales and marketing expenses in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily due to a 110% increase in the

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average number of sales and marketing employees, resulting in an P852 million increase in employee-related costs and a P592 million, or 20%, increase in online marketing expenditure. Additional demand for our products and services due to mobility restrictions during the COVID-19 pandemic was accompanied by an increase in the share of organic traffic of buyers to our platform. Our marketing efforts, together with the increased share of organic traffic, led to a 73% increase in the number of our active buyers to 11.4 million as of September 30, 2020 from 6.6 million as of September 30, 2019. As a result, we significantly decreased our sales and marketing expenses as a percentage of GMV incl. services to approximately 5% in the nine months ended September 30, 2020 from approximately 10% in the nine months ended September 30, 2019.

Technology and content. The increase in our technology and content expenses was primarily attributable to an increase in the average number of our research and development employees by 38% leading to a P240 million increase in employee-related costs.

General and administrative. The increase in our general and administrative expenses was driven by an 84% increase in the average number of employees in general corporate functions leading to a P438 million increase in employee-related costs and a P212 million, or 31%, increase in depreciation charges due to additional office space rented.

Interest expense, net

Our net interest expense increased by 156% to P1,252 million for the nine months ended September 30, 2020 from P490 million for the nine months ended September 30, 2019, due to the increase in the outstanding amount of our borrowings and additional interest expense on new lease liabilities.

Year ended December 31, 2019 compared to year ended December 31, 2018

Revenue

Below is our revenue, broken down by source, for the years ended December 31, 2019 and 2018 and as a percentage of total revenue:

	For the year ended December 31,
	2019		2019		2018		2018
	(P in millions)		(% of revenue)		(P in millions)		(% of revenue)		Change, P in millions			% Change
Revenue
Sales of goods		53,487		89		33,920		91		19,567			58
Service revenue		6,617		11		3,300		9		3,317			101
Marketplace commission		2,132		4		45		—		2,087			4,638
Advertising services		1,421		2		282		1		1,139			404
Delivery services		1,758		3		1,595		4		163			10
Travel ticketing commission		1,187		2		1,274		3		(87	)		(7	)
Other revenue		119		—		104		—		15			14
Total revenue		60,104		100		37,220		100		22,884			61

Our total revenue increased by 61% compared to the year ended December 31, 2018, driven by an increase from both sales of goods and service revenue.

Sales of goods. The increase in our sales of goods for the year ended December 31, 2019 compared to the year ended December 31, 2018 was attributable to the growth in the number of active buyers to 7.9 million as of

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December 31, 2019 from 4.8 million as of December 31, 2018 and the increase in their purchase frequency to 4.0 orders for the year ended December 31, 2019 from 3.2 orders for the year ended December 31, 2018, offset in part by the decrease in average GMV incl. services per order by 7% in the year ended December 31, 2019.

In the year ended December 31, 2019, we experienced significant growth across all major product categories. Electronics contributed 30%, food contributed 13%, FMCG contributed 12%, pharmacy contributed 9% and petcare contributed 8% to the overall increase in sales of goods in the year ended December 31, 2019, compared to the year ended December 31, 2018.

Service revenue. The increase in our service revenue was primarily driven by our Marketplace launch in September 2018, which led to an increase in revenues from Marketplace commission and advertising services.

The increase in our Marketplace commission revenue was attributable to the growth in the total value of orders processed through our Marketplace and the increase of the effective Marketplace commission fee rate. The first factor contributed P1,687 million to our Marketplace commission revenue increase and was driven by an increase in the number of active sellers on our Marketplace by almost 11 times for the year ended December 31, 2019 compared to the year ended December 31, 2018. The second factor contributed P400 million to the total increase of our Marketplace commission revenue as the effective Marketplace commission fee rate increased to 15.2% of the total value of orders processed through our Marketplace for the year ended December 31, 2019 from 12.3% of the total value of orders processed through our Marketplace for the year ended December 31, 2018. Our effective Marketplace commission fee rate was increased in the year ended December 31, 2019 compared to a substantially discounted commission fee rate offered to attract sellers to our Marketplace in the year ended December 31, 2018.

The following product categories contributed to the total of P2,087 million increase in Marketplace commission for the year ended December 31, 2019, compared to the year ended December 31, 2018: home and decor contributed 22%, children’s goods contributed 16%, electronics contributed 14%, apparel contributed 13% and health and beauty contributed 11%.

Operating expenses

Below are our operating expenses, broken down by source, for the years ended December 31, 2019 and 2018 and as a percentage of total operating expenses and of GMV incl. services:

	For the year ended December 31,
	2019			2019		2019		2018			2018		2018
	(P in millions)			(% of operating expenses)		(% of GMV incl. services)		(P in millions)			(% of operating expenses)		(% of GMV incl. services)		Change, P in millions			% Change
Operating expenses
Cost of sales		(48,845	)		62		—		(27,662	)		64		—		(21,183	)		77
Fulfillment and delivery		(16,808	)		21		21		(8,232	)		19		20		(8,576	)		104
Sales and marketing		(7,153	)		9		9		(3,335	)		8		8		(3,818	)		114
Technology and content		(3,520	)		4		4		(2,123	)		5		5		(1,397	)		66
General and administrative		(2,390	)		4		3		(1,742	)		4		4		(648	)		37
Total operating expenses		(78,716	)		100		—		(43,094	)		100		—		(35,622	)		83

Cost of sales. The increase in our cost of sales in the year ended December 31, 2019 compared to the year ended December 31, 2018 reflected a growth in the total number of orders sold through our platform, driven by a 65%

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increase in the number of our active buyers and a 26% increase in their purchase frequency for the year ended December 31, 2019 compared to the year ended December 31, 2018, offset in part by the higher volume of goods purchased through our Marketplace.

Fulfillment and delivery. The increase in our fulfillment and delivery costs in the year ended December 31, 2019 compared to the year ended December 31, 2018 was driven by the increase in the number of orders processed through our logistics infrastructure to 31.8 million for the year ended December 31, 2019 from 15.3 million for the year ended December 31, 2018 and an increase in the average number of our employees and outsourced personnel in fulfillment centers and last-mile delivery activities by 89%, resulting in a P3,751 million increase in employee-related and outsourcing costs and a P2,139 million increase in third-party expenses related to fulfillment and delivery activities as we launched our major fulfillment center in the Moscow region.

Sales and marketing. The increase in our sales and marketing expenses in the year ended December 31, 2019 compared to the year ended December 31, 2018 was mainly due to an increase in the cost of digital advertising and offline media campaigns by 129%, or 3,205 million, leading to an increase in the number of our active buyers to 7.9 million for the year ended December 31, 2019 from 4.8 million for the year ended December 31, 2018.

Technology and content. The increase in our technology and content expenses in the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily attributable to the increase in the average number of our research and development employees by 49% as we invested in improving our seller and buyer experience and our technology and data capabilities in order to accelerate our platform development.

General and administrative. The increase in our general and administrative expenses in the year ended December 31, 2019 compared to the year ended December 31, 2018 was mainly due to an increase in the average number of employees in general and corporate functions by 39%.

Interest income/(expense), net

For the year ended December 31, 2019, our net interest expense was P801 million, compared to net interest income of P129 million for the year ended December 31, 2018. This increase in expense was primarily due to the interest expense on lease liabilities recognized from January 1, 2019 as a result of the IFRS 16 adoption from January 1, 2019. Please also refer to note 2.3 of our consolidated financial statements for the year ended December 31, 2019 included elsewhere in this prospectus.

94

Quarterly Data

The following table sets forth certain unaudited financial data for each fiscal quarter for the periods indicated. The unaudited quarterly information includes all normal recurring adjustments that we consider necessary for a fair statement of the information shown. This information should be read in conjunction with the our consolidated financial statements for the year ended December 31, 2019 and interim condensed consolidated financial statements for the three and nine months ended September 30, 2020 and related notes thereto appearing elsewhere in this prospectus. Our quarterly results are not necessarily indicative of future operating results.

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	2019												2020
(P in millions)	First quarter			Second quarter			Third quarter			Fourth quarter			First quarter			Second quarter			Third quarter
Revenue:
Sales of goods		10,898			11,592			12,670			18,327			17,132			19,028			16,685
Service revenue		1,324			1,135			1,540			2,618			2,815			5,187			5,752
Total revenue		12,222			12,727			14,210			20,945			19,947			24,215			22,437
Operating expenses:
Cost of sales		(10,122	)		(10,622	)		(11,140	)		(16,961	)		(15,264	)		(16,519	)		(14,943	)
Fulfillment and delivery		(3,129	)		(3,337	)		(4,175	)		(6,167	)		(6,406	)		(6,788	)		(6,511	)
Sales and marketing		(1,398	)		(1,548	)		(1,852	)		(2,355	)		(2,084	)		(2,066	)		(2,392	)
Technology and content		(893	)		(873	)		(810	)		(944	)		(940	)		(1,022	)		(1,051	)
General and administrative		(550	)		(569	)		(569	)		(702	)		(773	)		(774	)		(873	)
Total operating expenses		(16,092	)		(16,949	)		(18,546	)		(27,129	)		(25,467	)		(27,169	)		(25,770	)
Operating loss		(3,870	)		(4,222	)		(4,336	)		(6,184	)		(5,520	)		(2,954	)		(3,333	)
Total non-operating (expense)/income		(268	)		(119	)		(241	)