Yahoo 2Q Earnings Top Estimates

Earnings HQ: FBN's Jo Ling Kent breaks down YHOO's second-quarter earnings report.

Yahoo 2Q Profits Beat Street View, Sales Slightly Shy

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Yahoo (YHOO) celebrated its one-year anniversary of hiring Marissa Mayer on Tuesday by revealing a stronger-than-expected 46% surge in second-quarter earnings amid tumbling expenses, but revenue that narrowly trailed forecasts.

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Shares of the Internet company, which have been on a tear throughout Mayer’s tenure, retreated 2% in the wake of the mixed results and cautious guidance.

Yahoo said it earned $331.15 million, or 30 cents a share, last quarter, compared with a profit of $226.63 million, or 18 cents a share, a year earlier.

On a non-GAAP basis, it earned 35 cents a share, surpassing the Street’s view of 30 cents.

Net revenue dropped 7% to $1.14 billion. Excluding traffic acquisition costs, or TAC, revenue dipped 1% to $1.07 billion, narrowly missing consensus calls from analysts for $1.08 billion.

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Yahoo overcame the sluggish revenue by cutting costs as expenses dropped 14% year-over-year to $998.3 million.

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"I'm encouraged by Yahoo`s performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week," Mayer said in a statement.

On the search front, Yahoo's price per click dropped 8% year-over-year, while paid clicks jumped 21%, excluding Korea. Ex-TAC search revenue increased 5% to $403 million.

From a display advertising standpoint, Yahoo said its ex-TAC sales slid 11% to $423 million as the number of ads sold dipped 2% and the price-per-ad fell 12%. 

Looking ahead, Yahoo forecasted non-GAAP revenue of $1.06 billion to $1.1 billion in the third quarter, which is below the Street’s view of $1.12 billion. The company sees full-year, ex-TAC revenue of $4.45 billion to $4.55 billion, compared with consensus calls from analysts for $4.53 billion.

Yahoo also forecasted adjusted earnings before interest, depreciation and amortization, or EBITDA, of $330 million to $350 million in the third quarter and $1.55 billion to $1.65 billion in 2013.

Yahoo said it has $1.9 billion of its $5 billion stock buyback authorization remaining.  

Since Mayer took the helm on July 17 of last year, the company has not been shy about making moves, unveiling 17 acquisitions over that span, including a $1.1 billion buyout of social blogging site Tumblr in May.

Investors who bought shares of Yahoo when Mayer was lured from Google (GOOG) profited handsomely as the company’s stock has skyrocketed 72% over the past 12 months.

However, shares of Sunnyvale, Calif.-based Yahoo fell 1.97% to $26.36 in extended trading on Tuesday following the report.

Buoyed by the stock-price bounce and a rejuvenated atmosphere at the company, Mayer sported a lofty approval rating of 85% during her first year on the job, according to employee review site Glassdoor.

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