Yahoo Q3 results exceed analyst projections

Yahoo ushered in Marissa Mayer as its new CEO with a third-quarter earnings report that topped analyst estimates. The results announced Monday show Yahoo’s net revenue barely grew at a time when advertisers are spending more money marketing their products and services online. Nevertheless, the numbers were slightly better than analysts projected. Yahoo hired Mayer […]

Yahoo ushered in Marissa Mayer as its new CEO with a third-quarter earnings report that topped analyst estimates.

The results announced Monday show Yahoo’s net revenue barely grew at a time when advertisers are spending more money marketing their products and services online.

Nevertheless, the numbers were slightly better than analysts projected. Yahoo hired Mayer away from rival Google Inc. to orchestrate its latest turnaround attempt in mid-July, shortly after the quarter started.

Investors applauded the early progress reflected in Monday’s report. Yahoo shares gained 48 cents, or 3%, to $16.25 in extended trading.

The company earned $3.2 billion, or $2.64 per share, in during the three months ending in September. Most of that profit stemmed from a one-time gain of $2.8 billion that Yahoo pocketed by selling half its stake in Alibaba Group, one of China’s most successful internet companies. Yahoo earned $293 million, or 23 cents per share, at the same time last year.

If not for the Alibaba windfall and a restructuring charge, Yahoo said it would have earned 35 cents per share. On that basis, the company topped the average earnings estimate of 26 cents per share among analysts surveyed by FactSet.

Yahoo’s revenue for the quarter totalled $1.2 billion, a 1% decrease from last year. But that comparison is misleading because last year’s revenue included revenue that Yahoo no longer books because of an Internet search advertising partnership that diverts some of its ad sales to Microsoft Corp.

Wall Street focuses on net revenue – the amount of money Yahoo keeps after paying its commission to Microsoft and other sites that run its ads.

Net revenue in the latest quarter rose 2% to $1.09 billion – about $10 million more than analysts had predicted.

Although it wasn’t substantially above the analyst target, the net revenue figure came as a relief after years of letdown under the previous five full-time and interim CEOs that have run Yahoo since the company turned down an opportunity to sell itself to Microsoft for $33 per share in May 2008.

The meagre revenue growth illustrates the challenges facing Mayer as she tries to come up with a strategy that will persuade advertisers to rely more on Yahoo’s website instead of Google’s extensive marketing network and Facebook’s popular social networking service.

“We’re taking important steps to position Yahoo for long-term success, and we’re confident that our focus on quality and improving the user experience will drive increased value for our advertisers, partners and shareholders,” Mayer said in a statement.

Mayer, 37, is expected to elaborate on her plans during a Monday conference call with analysts.

Media Articles

Facebook discloses error on instant articles

comScore finds that iPhone traffic went under-reported for approximately two months

Yahoo faces possible Canadian class action suit

$50-million filing made Friday over compromised user info

The List: Maxus Canada makes a winning change

How a new structure helped propel the media agency to 18% growth in 2016

The biggest stories in Canadian marketing: 2016

A look back at the most read and shared news items from MarketingMag.ca

Amazon brings its video streaming service to Canada

Prime members get access to 'Transparent', 'The Grand Tour' and more

How we can close advertising’s biggest gap

AOL's David Shing on how companies can bring more empathy to advertising

The List: Wattpad’s evolving influence

The first of our selections for the biggest newsmakers of 2016

The case for companies staying off social media

It takes real commitment and, for many, it's just not worth the trouble

KitchenAid’s gingerbread social spectacle

A social media strategy for the holiday season pops up in Toronto