Like an Olympic gymnast, Yahoo CEO Marissa Mayer nailed the landing perfectly, it seems.
She delivered exactly what analysts expected: EPS: of 34 cents, a beat by 1 cent, and revenues (ex-TAC) of $US1.08 billion, a decline of 1%, right on expectations.
Analysts were predicting earnings-per-share of 33 cents on revenues of $US1.08 billion. The stock was largely unmoved at $US33.45 on the news.
Flat is the new up for Yahoo, which is struggling to find growth as it updates and replaces older products.
The takeaway is that it could have been worse: There are a few areas of the business that appear poised for growth, and Yahoo isn’t tanking any faster than everyone thought it might be.
We didn’t get any more specific visibility on the contribution of the $US1.1 billion Tumblr acquisition, however. As the quarters go by, people will want to know where the growth is going to come from and whether CEO David Karp and his bloggers will be providing any of that. Tumblr remains conspicuous by its absence from Yahoo’s numbers right now, though.
Numbers and charts
EPS: 34 cents, it’s a beat.
Revenues (ex-TAC): $US1.08 billion, a decline of 1%, right on expectations.
Analysts were expecting earnings-per-share of 33 cents on revenues of $US1.08 billion. The stock is largely unmoved at $US33.45 on the news.
For Q4 and full year 2013, here’s the guidance:
- Q4 Revenue ex-TAC: $US1,180 – $US1,220
- 2013 Revenue ex-TAC: $US4,400 – $US4,450
The revenue highlights from the statement show Yahoo is basically still in turnaround mode, as expected. Here’s what that looks like in a chart:
Basically, display ad revenue is down but search ad revenue is a little more healthy. This chart shows how Yahoo’s display ad business is basically going in the opposite direction to its search ad business:
Mayer has warned us not to expect growthuntil next year.
Some other highlights:
- Revenue from the Americas is up 2%. But it’s flat in Europe and down in Asia.
- Margins are down all over: EBITDA, GAAP operating income, non-GAAP operating income. Mayer is spending a lot of money to right this ship, it seems.
- Yahoo is still cashflow positive, but even that is down.
There’s also news on the company’s stake in Alibaba, the big Yahoo investment in Asia that is really driving the stock right now:
Yahoo also announced today that it has entered into an amendment to the share repurchase and preference sale agreement with Alibaba Group. The amendment reduces the maximum number of shares of Alibaba Group that Yahoo is required to sell in connection with a qualified initial public offering of Alibaba, from 261.5 million shares to 208 million shares.
We’ve got a better explanation of why that’s important here.
Mayer has concentrated fiercely on getting Yahoo’s product lineup right, with a focus on mobile and apps.
Advertising revenue has taken a back seat to that effort because she believes that only once the user base is happy will meaningful ad dollars flow into the company.
Yahoo stuck with the video presentation format it introduced last quarter. We note that Mayer has ditched the over-sized coffee cup she was drinking from in the last call. But she added a water glass and jug to her desk.
From the call
CEO Marissa Mayer is doing her video conference call with analysts once again — and this time she’s taking questions via email and Twitter!
First, Mayer talks up Yahoo’s media content offerings, such as Yahoo Screen, which houses the complete Saturday Night Live archive.
She’s also talking about Yahoo’s various apps, which do look a lot better. Yahoo Weather is a sterling example.
“We’ve affectively erased two years of traffic decline”:
Tumblr is also ahead of its own traffic projections, Mayer says.
Yahoo is now getting 17,000 revenue per week from people seeking jobs.
Now CFO Ken Goldman is speaking. It’s his one-year anniversary on the job.
Mayer is making a huge pitch that Yahoo is now a mobile first company. “There is a big opportunity ahead to monetise mobile.”
Now … questions!
Twitter question: When will Tumblr hit the numbers?
Mayer: “They have been outperforming their projections.”
Goldman: “The metrics there have been quite good.”
No details yet though.
Question about programmatic (auction-based advertising that tends to drive prices down):
Mayer: “We have been doing a lot around programmatic. There’s a real movement inside display to programmatic. We’ve seen some pricing pressure … but ultimately stabilizing revenue by improving the yield.”
15 major product launches. Traffic up. 800 million users on the core network.
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