HeadHunter Group PLC (HHR) Q3 2020 Earnings Call Transcript

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HeadHunter Group PLC (NASDAQ:HHR)
Q3 2020 Earnings Call
Nov 20, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2020 Financial Results Conference Call. [Operator Instructions]. And I would now like to hand to your first speaker today, Roman Safiyulin. Please go ahead.

Roman SafiyulinHead of Investor Relations

Thank you. Hello, everyone, and welcome to Headhunter Group third quarter 2020 earnings call. On the call today, we have Mikhail Zhukov, our Chief Executive Officer; Grigorii Moiseev, our Chief Financial Officer; and Dmitry Sergienkov, our Chief Strategy Officer. A press release containing our third quarter 2020 results was issued earlier today and the copy may be obtained through our website at investor.hh.ru.

Now, I will briefly walk you through the safe harbor statements. Today’s discussion will contain forward-looking statements. Actual results may differ materially from the results predicted or implied by such statements, and the forward-looking statements made today speak only to our expectations as of today.

We undertake no obligation to publicly update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ, please see the risk factor section in our annual report on the Form 20-F for the year ended December 31st, 2019 and our final prospectus in connection with our public offering that was filed with the U.S. Securities and Exchange Commission on June 16th, 2020.

During this call, we will be referring to some non-IFRS financial measures. A reconciliation of the non-IFRS financial measures to the most directly comparable IFRS measures is provided in the earnings release we issued today and the slide presentation, each of which is available on our website at investor.hh.ru.

Now, I’ll turn the call over to Mikhail to make a quick opening remark. Please go ahead.

Mikhail ZhukovChief Executive Officer

Thank you, Roman and good afternoon everyone. Welcome to today’s call. We believe that our performance in the third quarter confirmed the statement that efficient remote solutions in such an important function as recruitment are vital for any enterprise. During this challenging year, we managed to grow our customer base, serving almost 290,000 companies all over Russia and the CIS since the beginning of the year.

Many of our clients have adopted to remote operations and now conduct hiring entirely online. Importantly, our timely recovery measures helped us to gain market momentum and accelerate growth even despite the impact from the second wave of COVID-19. We are glad to see all customer segments return to expansion and keep improving week after week. This gives us confidence that once we are finally out of routes [Phonetic] and businesses regain confidence in future, we may reach our strategic targets even faster than we thought before the crisis hit the market in March.

Now, I will turn the word to Dmitry to walk you through the key highlights of the third quarter. Thank you.

Dmitry SergienkovChief Strategy Officer

Thank you, and hello everyone. As Mikhail said, in the third quarter, we continue demonstrating a steady recovery across all major operating and financial measures, and it was done against the backdrop of continuous economic volatility, and specifically in terms of new CVs inflow with — for the improvements with double-digit year-on-year growth.

Total number of CVs on the platform reached 48 million, indicating net acquisition of circa 6 million CVs since the beginning of the year. And this new active audience acquisition coupled with certain product improvements resulted in a growing number of application occupancy, which is one of the main efficiency criteria for our clients and so called enabler for our monetization improvement.

Audience growth is vital especially if put in the context of rapid recovering employer activity and since the beginning of September, the average daily number of job postings on the platform hold a historical high range of circa 720,000, 740,000 vacancies. And again, that was despite the kind of worsening COVID-19 situation in autumn. We believe that we are actually one of very few job platforms globally that have reached and even exceeded the pre-crisis inventory level, because many of our peers are globally struggling with inventory in this time.

Due to our constantly improving social recommendation algorithms, we have managed to sustain high conversions from application to invitations, particularly without compromising on client efficiency during this scale expansion. That encouraging dynamics and operating metrics during third quarter translated into a sound set of financial results.

Revenue grew 7.7% year-on-year, and our core Russian segment revenue grew even higher, 9.1% year-on-year. And the difference is predominantly explained by the continuous political turbulence in Belarus. Our adjusted EBITDA margin was up to 56.1% from 53.5% in ’19 mainly due to a relocation of part of the marketing expenses later the year and some ongoing anti-crisis measures that were eventually lifted in the fourth quarter of 2020.

Capex adjusted office renovation costs was around 2% and we put most of our capital expenditure initiatives on hold during this period as you know. A solid performance by product type, please turn to page 5. As expected, the most rapidly recovering product was Job Postings growing 11% year-on-year as our Key Accounts resumed their hiring post lock down and then most importantly, small and medium business category bounced back after a sharp fall in Q2. These dynamics were also supported by our aggressive promos targeted most affected market areas.

Bundled Subscriptions another time proved to be highly stable and predictable part of our business, despite we are currently absorbing significant growth in new long-term contracts activations, it will take certain time before to find reflection [Phonetic] revenue numbers. So you don’t see it in these numbers, yet. Our CV Database Access being exposed more to small and medium segment buying one in seven days duration, finally returned to growth as well and we expect it to accelerate in Q4.

Of course, there can be no impact from recent transition to a new subscriptions model yet, although we see first clients migrating to paper contracts and so far we don’t see a visible [Indecipherable] caused by this transition. Strong performance in value added services, mainly explained by higher share of subscription-based, long-term revenue and predominantly from key accounts acquiring various branding products.

We also saw uplift in the retail demand for our price of performance product, virtual recruiter that is driving vast revenue share in total. Turning now to Q2 results by customer segment, which you can find on page 6, 7 and 8. We saw revenue recovering to growth across all customer segments. Our customers in region of Russia were evidently less impacted by the pandemic and keep growing faster than Moscow and St. Petersburg.

Importantly, revenue growth was mostly driven by the increase in number of paying customers across all client categories and that explained by intake of both new customers and customers joining post-crisis. Total number of customers grew more than 10% year-on-year. For Key Accounts ARPC was affected by growing customer base as I said especially in the regions and therefore diluting average check. For small and medium businesses apart from intake of new smaller customers, ARPC was affected by aggressive post lock down promo, and we are actually convinced that this push for new customer acquisition will positively impact our revenue share going forward.

And now, Grigorii will talk about other financial metrics.

Grigorii MoiseevChief Financial Officer

Thank you, Dima, and hello everyone. Let me give you some detail on the expenses and margins. In the third quarter of 2020, total operating expenses grew 8% year-on-year. This was primarily due to expenses related to our SPO which occurred in July 2020. Our total adjusted operating expense which excludes IPO, SPO related expenses equity-settled awards and other non-ordinary items were actually flat in the third quarter of 2020 compared to the third quarter 2019. For convenience we actually added — we adjusted operating expense reconciliation table in our press release from this quarter and I will refer to the adjusted operating expenses in the discussion overall.

So as I said, total adjusted operating expenses were flat year-on-year and this was the combination of several multi directional factors. First, our personnel expenses adjusted for equity settled awards and one-off was purely an expense of RUB561 million, which was an increase by a circa 9% year-on-year, mostly due to indexation of wages in the beginning of 2020 and an increase in headcount to 800 employees in the third quarter 2020 compared to circa 760 people in the third quarter of 2019.

In 2020, in the third quarter, as we saw operating and financial performance turning back on track, we have resumed usual bonuses for our employees as well as lifted our hiring spend. However, some personnel expenses such as corporate events and training or education are still on hold partially for natural reasons.

And now moving to marketing expense as you saw from the release in the third quarter of 2020, marketing was RUB235 million, which was a decrease by a circa 20% versus marketing in the third quarter in 2019. Now this decrease was due to — purely due to different allocation of our TV campaign, as we have allocated significantly more ads to the second quarter and less to the third quarter in this year compared to 2019.

In the fourth quarter, we intend to spend more than we did in the third quarter and as I think we discussed on the previous call, we stick to our plan that marketing expenses will be relatively flat in the second half of 2020 compared to the second half of 2019. And lastly, our other general and administrative expenses adjusted for SPO-related professional services and other financing and transactional costs were up RUB208 million, flat compared to RUB203 million in the third quarter 2019. And this percentage of revenue adjusted to other G&A were 9% relatively flat compared to 9.5% in the third quarter of 2019.

So as a result, our adjusted EBITDA for the third quarter of 2020 reached circa RUB1.3 billion, which is an increase by 13% compared to the third quarter of 2019. And our adjusted EBITDA margin has also expanded by circa 3 percentage points to 56.1% in the third quarter of 2020. Now moving to capex, as Dima, I think said before in the second quarter of 2020, we have substantially completed our large project on our Moscow office fit out. And as a result, our capex in the third quarter 2020 was RUB70 million, which is down by 29% versus previous year same quarter.

And as a percentage of revenue, it was a historically a usual level of circa 2%, 3% of revenue, which was the usual level for us over the years. Our income tax expense increased by RUB73 million or by circa 38% compared to the third quarter of 2019, which was primarily due to increasingly effective tax rate to 31% and this was mainly because of the non-deductible SPO-related professional services and also the reversal of the provision for uncertain tax positions in the third quarter of 2019. Excluding these effects, the effective tax rate for the third quarter of 2020 would have been 28%.

Now turning to cash generation metrics, which are on Page 11 in our supplementary slide deck. In the nine month 2020, we generated circa RUB2 billion from operating activities compared to approximately RUB1.7 billion in the nine month 2019. This increase was mostly due to a decrease in interest paid on the back of the decrease in the Key Rate of Central Bank of Russia to which our bank loan and interest expense is tied to, and also a decrease in income tax paid and other changes in the working capital. Net cash used in investing activities was RUB181 million in the nine months 2020 compared to RUB494 million used in same period last year.

And this was mostly driven by the acquisition of interest in Skilaz, which we completed in 2019. Net cash used in financing activities in the third quarter — sorry, over the nine months 2020 was RUB2.7 billion compared to RUB2.3 billion in the nine months 2019. This change of RUB401 million was mainly due to an increase in annual dividend, which we paid in September 2020 and this increase was partly offset by a repayment of the loan to an associate of the non-controlling shareholder in May — sorry in March 2019.

As a result of these changes in cash, our net debt was RUB3.1 billion as of September 30, 2020, flat compared to RUB3 billion as of December 31st, 2019. And the leverage also remained flat, and is currently 0.8 times EBITDA. Additionally, in the third quarter of 2020, we have agreed with B2B Bank to extend the ultimate maturity of our debt from October 2022 to June 2025, as well as we agreed on temporarily relaxation of some performance covenants to account for COVID-19 impact on our performance, while interest rates on our credit facility remained unchanged.

Thank you. And now, I’d like to open the floor for the Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. Your first question comes from Ivan Kim from Xtellus Capital. Please go ahead.

Ivan KimXtellus Capital Partners — Analyst

Yes, good afternoon. Two questions from my side, please. Firstly, on the revenue growth trends lately, so can you please talk about the revenue growth trends on October and November, what you’re seeing? And then secondly on the IT, industry taxation changes, is there more clarity how these changes will reflect on your business and maybe also your business vis-a-vis your rivals? Thank you very much.

Mikhail ZhukovChief Executive Officer

Thank you, Ivan. I’ll take the first one, I think Grigorii will deal with the second. On the revenue trends, looking at our quarter-to-date numbers, we can kind of reaffirm our previous guidance given in the last call for the fourth quarter. We expect a solid double-digit growth of revenues and we actually expect this — double-digit growth across all market segments. We actually see a very strong trend in recovery and growth in our key accounts both in regions, especially in the regions [Indecipherable] and Moscow, growing already over 20% year-on-year.

And also quite pleased that our kind of lagging most probably marketing area of our business was kind of hit the most during crisis Moscow and St. Petersburg small and medium businesses, they also started growing pretty nicely already, almost reached a double-digit growth. So, we’ve kind of reforming the guidance and believe that yes, we kind of tracking our regional expectations pretty comfortably.

And I hand over to Grigorii to answer the second question.

Grigorii MoiseevChief Financial Officer

Yes. Hello, Ivan. Yeah, as you know the — these initiatives were actually enacted and they are effective from January 1st, 2021. This includes reduction in the income tax and social taxes as well as elimination of the 0% VAT rate on software unless some criteria are met. I think what’s important kind of for our industry is that the legislation actually contains a specific provision in relation to the VAT rate, which says that in case the software is used for effectively for kind of riding the platform, all right, two-sided business such as ourselves then this effectively is not the kind of activity which is subject to 0% VAT. So we believe that the legislation actually clarifies that online recruitment is not entitled to a 0% VAT.

So from this position, we think that the competitors will need to adjust for this new legislation from January 1st, but honestly speaking we do not have the kind of confirmation or some definite information that the companies like SuperJob, for instance, who are using the 0% VAT exemption will move to 20% VAT rate from January.

We’ll have to wait and see how their prices will change. Also, as you probably heard and we know that, that there are ongoing discussions between the community and the government on expanding the 0% VAT rate on, effectively on platforms such as ourselves I think as well. And probably, we will have to see how this process also ultimately turns out.

Ivan KimXtellus Capital Partners — Analyst

All right, thank you very much. Nice to see a recovery in fourth quarter.

Operator

And your next question comes from Vyacheslav Degtyarev from Goldman Sachs. Please go ahead.

Vyacheslav DegtyarevGoldman Sachs — Analyst

Yes, thank you very much for the presentation.

How do you directionally think about the trade-off on revenue growth and margins going into 2021? So basically, next year should be good in theory from the growth standpoint of the very low base of 2020. Now are you looking to support that growth with high marketing and potentially product investments, just any thoughts directionally would be helpful how to think about the margin set for the next year. And obviously appreciate there is no guidance and lots of moving parts here.

And also, secondly, can you highlight the new recruitment trends, you see emerging on the back of the pandemic, if any. And how are you positioned for them technologically or simply, do you think that COVID is having a net positive or a net negative effect on the business over the long run? Thank you.

Grigorii MoiseevChief Financial Officer

Yes, Vyacheslav, this is Grigorii, I probably or maybe Dima will add to me later. We are currently in the budgeting process for 2021 and I think it’s kind of bit earlier to give any even directionally, any kind of information on this topic. Also I think you’re right about the revenue goal for the 2021. But at the same time, there’s also an effect of the kind of low cost base for 2020 when as you know we have the some cost savings right, and apparently this will give some pressure on 2021 growth as well.

Dmitry SergienkovChief Strategy Officer

Hi, Vyacheslav, this is Dima. On your second question, look, I don’t think we really noticed any incremental trends that we have noticed before during the first wave of the pandemic. And I think we kind of — to some extent, we are reaping the rewards from our investment into the technology and product and platform diversification that we effectively started three, four years ago, right, when we kind of redirect our product and marketing efforts toward this newly emerging blue collar segment, which accelerated during the crisis.

And now we’re are seeing our effective job postings in blue collar area growing 40% [Phonetic] year-on-year and already reaching nearly 50% of total content items. So obviously, the pandemic helped this market actually transit faster to online. And hopefully, once they adopt to the new kind of — new services, they will kind of remain in online, right, because the efficiency of online services are way higher than offline.

So from that perspective, that’s kind of the most tangible influence from the pandemic in a positive way, right. In the negative way, we all know, right, because obviously the virtual can grow faster if business had kind of higher confidence in tomorrow. And also, there are certain kind of patterns from our clients that we are still digesting how sustainable they will be in the longer run. First of all, remote work, right — the arrangements because we see that now many clients they either decided or considering remaining partly kind of hybrid, partly remote forever, right.

And that’s completely different, I’ll say the pattern, and that requires certain product solutions on our end as well. And that’s why we decided to push ahead with the video interviews, we decided that we really need to pay higher attention to contemporary workers, especially considering legislation changes, right. And we also see our competitors moving in this area, we believe that that’s a big opportunity that will be also spurred by the pandemic, and also legislation development.

So, so far we really see kind of more benefits for the longer run development. And this is why Mikhail mentioned in the beginning remark that we may actually reach our kind of penetration targets faster than we had thought a year ago.

Vyacheslav DegtyarevGoldman Sachs — Analyst

Okay, thank you very much. All clear.

Operator

And your next question comes from Kirill Panarin from Renaissance Capital. Please go ahead.

Kirill PanarinRenaissance Capital — Analyst

Yeah, hi, everyone. Thanks for taking my questions. Two from me, please. Firstly, on competition, it looks like some competitors have caught up with HeadHunter in terms of listings and have been showing materially higher growth rates. So could you comment on the competitive dynamics? What’s happening with your market share? And do you see any implications for growth and margin outlook? That’s the first one.

And then secondly, just a quick follow-up on your comment around marketing costs in Q3. Could you talk a bit more why did you decide to spend less on marketing? I thought you were previously talking about the plus to be quite aggressive during the market recovery in order to catch some extra market share gains. So just trying to understand why it wasn’t the case in the third quarter. That’s it. Thanks.

Mikhail ZhukovChief Executive Officer

Thank you, Kirill. I’ll answer the first one. On competition, well, first of all, as you know, listing numbers there, they are good indications, but they don’t really provide the full picture, right. Because they are much more volatile and easier to kind of influence in the shorter-term, than for example, revenues.

But talking particular, in terms of listing dynamic and vacancies, first of all, as you saw, we kind of reached a historic high number of inventories on our platform, right. And we already kind of beyond the levels we saw pre-crisis. So that’s good. And that was held by, as I said, by blue collar acquisitions.

In terms of kind of relative performance, we don’t really think that, any of our competitors are catching up in terms of listings for the longer run, because — and I’ll try to explain it. Obviously, you may actually be referring to other names, but I think, first of all, we’re talking Avita and then Superjob here, right?

I think on Avita, it’s — to some extent it’s actually two factors as we understand, they definitely demonstrate a pretty strong dynamics over last say three months, four months. And the first reason why was that they dropped — they collapsed during crisis. As you know, their business is hugely skewed toward blue collars. This affects 100% blue collar skewed. And their inventory in that area actually dropped by more than 50% during crisis. So it was a hugely global base. And obviously there was a kind of faster recovery, right. And we see this in the blue collar area as well, right. But our numbers are kind of average, including, every white collars who were kind of proved to be much more resilient during crisis.

And that was the first thing. And second, Avita historically and always will last three or four years when we basically launched the monetization in jobs, they always have a big numbers during summer season, right, just because they present quite strongly in Engro and HoReCa. So effectively there are two factors, a low base and the kind of rebound in just the summer season.

And we expected them to kind of normalize overtime, and even if you cut the last month’s dynamics was already kind of declining somehow around 10% and we expect it to go further down. So that’s on Avita and we don’t really think that they are gaining market share. In terms of blue collars, they’re probably on par with us, but they are not present in white-collars at all.

In terms of Superjob, that’s a kind of traditional — quite traditional trick. We sold this last year. If you remember, end of last year, circa half of our Superjob content is really generated by a few dozens of clients, right? 20 top clients. If you look at our vacancy base, top 20 clients contribute 10% to maximum 15%. And so it’s much more robust, diversified and sustainable in the long run because once you kind of loss [Phonetic] this content, Superjob always show the kind of plummeted dynamics.

We saw this in January and February, right, and we expect it to go further down from today’s level as well. And we already see this trend actually, there was already kind of off-peak. And also we don’t think actually this dynamic is somehow linked to the revenue performance because there are definitely some monetization as the past things involved.

I don’t know if I answered your question sufficiently. Otherwise I’ll handle over to Grigorii.

Kirill PanarinRenaissance Capital — Analyst

Yeah, you definitely did. Yeah, no, you did. Thanks, so yeah just to comment on marketing spend in Q3 would be helpful as well. Thanks.

Grigorii MoiseevChief Financial Officer

Yes. Thank you. It’s Grigorii. Well, basically we are definitely not kind of reducing or stopping our marketing activities. For instance, in September, specifically we are already comparable with the last year level in terms of the TV ads spending. I think it’s — to some extent it’s kind of optical, we’re seeing here in the third quarter.

As you remember, we’ve told you that the — we would like to invest more immediately after the lockdown ended in May and we’ve done it. So in Q2, we spent more on TV specifically in May, when we usually spent virtually nothing just because it’s a very sleepy holiday month. And in this year, it was the opposite. We spent a lot more than usually per month in this specific month of May.

And, therefore it just turned out that kind of first half of the year expense is rather high. The question is how we kind of allocate around the subsequent months, right? And the decision is that, we will probably slightly reduce August and then go back on track from September. And, we now are going to spend, I think well significantly more, I don’t think I have to disclose how many, how much specifically, but we are going to spend more in Q4 on TV than we did in the third quarter.

And I think as we disclosed in the release, as a result, total spend in the second quarter will be comparable to the last year. And we will have some growth for the full year results as well.

Kirill PanarinRenaissance Capital — Analyst

Okay, that’s clear. Thanks a lot.

Operator

Your next question comes from Dmitry Vlasov from WOOD & Company. Please go ahead.

Dmitry VlasovWOOD & Company — Analyst

Hi, thank you. I have two questions. So the first one is, just taking into account your large user-base, are you actually looking to expanding to other complimentary segments like freelancing or online courses to further monetize the base? And the second question is a follow-up on Kirill’s question on competitors. Basically, maybe if you could provide some color on Robota market share because we’ve noticed they specifically increased their marketing budgets during 2020, especially on the TV. Just interested if there was some success there, are they gaining or not? Thank you very much.

Mikhail ZhukovChief Executive Officer

Yeah. Thank you, Dmitry. I’ll answer both questions. First, yeah, you’re totally right. Kind of expansion beyond our traditional markets been always an important part of our growth strategy, right. Maybe not in terms of revenue in the shorter-term, but in terms of longer-term growth runaway and we are all on a kind of constant lookout for opportunities, specifically on freelance, we look at this few years ago, we decided the market is not really sizable in Russia and you can’t really kind of be — kind of build there up anything sizable on our kind of grand scheme of things.

And in terms of education, clearly it’s a kind of strategic area for us, and we have been discussing with number of potential partners and targets for a certain time. And I can’t really give you the timing, but you can kind of put an extra five years have quite high confidence that we may actually be present in the space because it’s also quite synergetic to the employment and it’s growing, that’s quite potential, quite sizable.

In other areas as well, like automation for example, with temporary workers, as I mentioned onboarding in other areas, they definitely will be paying high attention to these areas and deal with that either via acquisitions or internal in-house development. Both our share, similar to other players shares to be honest, the last report that we commissioned kind of assessing market share was the time of IPO. And since then, I don’t think there is a really good financial numbers from any of the players.

Therefore we kind of try and find any proxies that could be good indicating the revenue market share dynamics are — first of all, we’re looking at traffic and content. On Robota, we obviously are seeing them as the most active spender in the market for certain time, with certain breaks by the way, but, I think they probably spend the most this year. And we see them quite active both in all channels, effectively offline, in digital options. We see them invested quite a lot on mobile app downloads, right and accumulating for certain installation base.

But what we also see that the majority of this installation they’re kind of incentive based, they’re paid and are — we quite expect that actual results and quite low audience engagement afterwards, right, because clients are not buying installation piece, right?

Well, it could be used as a marketing argument of course, but in the end, clients are buying the delivery of relevant candidates. And if you look at our both kind of active audience dynamic, you’ll see that kind of level of engagement of their audience compared to their installation base is extremely hard — well compared to HeadHunter, because we effectually — half of our installation base translates to active audience monthly, right?

And that actually delivers and generates efficiency for clients. And we don’t see the same dynamics by far neither from — where both are now working also invested quite a lot of installations. Before we were not seeing them catching up and that’s why we’re not seeing them kind of grabbing revenue market share, it’s all, at least now. We all understand that these operating KPIs could be a leading indicator for future. That’s why we’re tracking them, right. We are making conclusions and also responding in terms of marketing and products. But so far, there’s no reason actually to see that.

In terms of kind of candidate delivery metrics, that they are gaining market share from us. That — This is our comprehension.

Dmitry VlasovWOOD & Company — Analyst

Thank you very much. Very useful.

Operator

And your next question comes from Anna Kurbatova from Alfa Bank. Please go ahead.

Anna KurbatovaAlfa Bank — Analyst

Good afternoon everyone. Thank you very much. My question is on your pricing policy efforts, could you make some comments, do you feel comfortable or not so comfortable with some [Indecipherable] efforts in the beginning of the next year or in general, what’s your expectations and [Indecipherable] with regard to coming months and so on? Thank you.

Mikhail ZhukovChief Executive Officer

Thank you, Anna. Well, I hope I got the question, right, because the connection was not perfect. But I understood that you were kind of asking about the pricing strategy, especially in the beginning of next year, right?

Our plans, as we had mentioned in the last call, actually grow prices across literally all products next year. Despite the recent introduction of newer subscription monetization model, we’ll most likely not grow subscription prices, I mean, pure access, not bundles. But for other products, we plan to raise prices. And we’re going to discuss this with our Board of Directors, end of this month as a part of our budgeting process. And most likely given we already announced significant pricing initiative few months ago, we don’t want to be kind of heard too often on the — from this perspective by our clients. So most likely we will do those price raises starting from Q2, probably from April.

And obviously that will be subject to the economic situation, because now we’re kind of all gaining more confidence, right about the vaccine and overall economic recovery. And if, actually it continues this way, then we’ll get higher confidence that we actually can push ahead with and kind of put higher prices, significant higher prices, but if not, obviously we are — first of all, we are targeting in this environment when we see a lot of new clients in the market, we’re targeting kind of our share in total client base and the four network we’re selling for. But considering today’s dynamics, we feel comfortable about the price raises from April next year.

Anna KurbatovaAlfa Bank — Analyst

Yes, thank you. This is really clear, thanks.

Operator

Your next question comes from Yulia Kazakovtseva from UBS. Please go ahead.

Yulia KazakovtsevaUBS — Analyst

Hi, everyone. I have a question on average revenue per customer, especially in SMA [Phonetic] segment. Could you please comment on where you see it in the fourth quarter? Is it correct to say that you expect that it will result in growth? And the next question would be on regions, could you please comment a bit on it, what we see there, which regions performed best and so on.

Thank you.

Mikhail ZhukovChief Executive Officer

Thank you, Yulia. On average, it’s always this — this check dynamics is always impacted by our customer base growth right, because we — like in many occasions, we are acquiring clients who are having kind of lower average check, all right, so you may see similar to this quarter, you may see kind of total dilution of average check in especially in small and medium category, but that’s going to be well compensated by customer base expansion.

And what we see now, that’s quite a strong growth in customer base, and therefore, I wouldn’t like to give any guidance for the fourth quarter in terms of ARPC. You may actually see similar numbers that you already seen in the third quarter, and the — but revenue growth will be higher. And we believe that both on kind of the accounts front and on small and medium businesses front we will see revenue expansion.

But I would kind of not to comment on the ARPC trajectory now. And in terms of growth in the certain areas, we are — we actually see pretty strong growth in all the regions, Russia nationwide [Phonetic] with certain regions were kind of were hit harder by the economic restrictions which they are kind of underperforming. For example in Siberia [Phonetic]. But those regions came out earlier from the — from lock down or there was never any lock down in the regions we saw stronger dynamics.

But generally, across the board, our regional clients they’re performing stronger, both Key Accounts and small and medium businesses in regions outside of metropolitan areas.

Yulia KazakovtsevaUBS — Analyst

Thank you.

Operator

And there are no further questions at the moment. [Operator Instructions]. And we’ve received no more questions request.

Mikhail ZhukovChief Executive Officer

Thanks everyone.

Dmitry SergienkovChief Strategy Officer

Thank you.

Grigorii MoiseevChief Financial Officer

Thank you, Mik.

Roman SafiyulinHead of Investor Relations

Thank you for the call.

Operator

[Operator Closing Remarks].

Duration: 46 minutes

Call participants:

Roman SafiyulinHead of Investor Relations

Mikhail ZhukovChief Executive Officer

Dmitry SergienkovChief Strategy Officer

Grigorii MoiseevChief Financial Officer

Ivan KimXtellus Capital Partners — Analyst

Vyacheslav DegtyarevGoldman Sachs — Analyst

Kirill PanarinRenaissance Capital — Analyst

Dmitry VlasovWOOD & Company — Analyst

Anna KurbatovaAlfa Bank — Analyst

Yulia KazakovtsevaUBS — Analyst

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