Yahoo reported its Q1 2014 quarterly earnings:
- Earnings per share: $US0.38 (analysts expected $US0.37). That’s a beat.
- Revenue: $US1.13 billion with ex-TAC revenue of $US1.09 billion (analysts expected $US1.08 billion ex-TAC). That’s a beat.
The stock leaped 9% after hours. A big part of that was Yahoo’s earnings in equity, which was up 39% to $US301 million. Yahoo has a big stake in Alibaba, which will soon file for an IPO. Its stake in Yahoo Japan actually declined.
The top and bottom lines are small but healthy beats for Yahoo — and that will be welcome news inside the purple palace.
GAAP revenue was actually down 1%, but ex-traffic acquisition revenue (the dollars Yahoo actually gets to keep) were up 1%.
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The pre-call revenue estimates were almost exactly flat from the year before. Going into the call, that’s the main issue with Yahoo — where is the growth? CEO Marissa Mayer has yet to announce any additional revenue from its acquisition of Tumblr.
But now she can point to some signs of life! Here are the main points from the investor slides:
Revenue ex-TAC of $US1,087 million increased 1% in the quarter on a
Display revenue ex-TAC of $US409 million increased 2% in the quarter on
a YOY basis.
Search revenue ex-TAC of $US444 million increased 9% in the quarter on
a YOY basis.
We repurchased 12 million shares of stock at an average price of
$37.65 for $US450 million in the first quarter.
But here’s the big picture — Mayer’s biggest problem. The company is basically going sideways:
And now some numbers.
Note that the growth is after traffic acquisition costs — the overall billings are still slightly in decline:
You can also see in there the Alibaba numbers — a big leap to $US301 million.
Here’s something positive from the underlying ad business. Search is up in both price and volume — it’s hard to make both those metrics go up at once, and that’s a sign of relatively strong demand:
There was also increased demand (but not prices) on the display side:
Here is the guidance:
There are general worries about the long term health of both the search and display ad businesses that are at the core of Yahoo.
On the upside, Mayer has made several moves in mobile apps and online magazine and news content. So any sign of those paying off will be a big boost.
Lastly, Alibaba will file for an IPO in the U.S. Yahoo owns a 24% stake in the company. The offering could raise $US15 billion, and Yahoo would see a chunk of that.
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