Yahoo's most important business stopped growing --  and now Yahoo admits it will shrink even more

Photo: Stephen Lam/Getty Images.

One of the biggest letdowns in Yahoo’s second quarter earnings was the negative growth in the so-called Mavens, short for “mobile, video, native, and social.”

It’s because CEO Marissa Mayer has long-touted Mavens growth as one of her biggest accomplishments at Yahoo and the company’s future revenue driver. To her credit, Mavens revenue went from nearly zero in 2012 to $1.6 billion in 2015.

The problem is Mavens growth has continued to decelerate over the past year, going from 60% year-over-year growth in the second quarter of last year to 7% in the first quarter of this year — before seeing a 4% drop in the second quarter of this year, the first negative growth ever.

Now Yahoo says it expects Mavens business to decline for the full year, according to its 10-Q filed Monday:

“Excluding the impact of the change in revenue presentation related to the Microsoft Search Agreement, Mavens revenue is expected to decline from the amount reported in 2015 based on trends observed during the first six months of 2016.”

This is a bit surprising given how Yahoo wrote in first quarter’s 10-Q that it expects Mavens revenue to increase in 2016. Yahoo made some changes to its accounting method in the second quarter due to its deal with Microsoft, and Mavens revenue actually grew under the new accounting method. But as Yahoo disclosed, it declined 4% based on the old accounting method.

The disclosure is all the more disappointing because Mayer said in her most recent earnings call that she expected to bring Mavens back to growth over the rest of the year.

“Mavens is a key part of our strategy, our growth and our turnaround story, and we will work very hard to get the Mavens collectively back to growth in the second half of the year,” Mayer said during the call in July.

Yahoo blamed the decline on pricing pressure and lower demand, as well as the uncertainty around the company’s future due to its sale to Verizon. Whatever the case is, it’s another huge blow to Mayer’s legacy as Yahoo CEO.

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