Yahoo Reports 1Q Beat as Display Sales Hold Steady

Yahoo (NASDAQ:YHOO) reported a 20.2% drop in its first-quarter earnings but beat Wall Street expectations, as the Internet giant’s efforts to attract advertisers begin to take hold.

Continue Reading Below

The company also said revenue from Alibaba, the Chinese e-commerce giant, jumped 66% year-over-year in the December quarter, and net income was up 110%. Yahoo owns a stake of roughly 24% in Alibaba, which plans to go public in the U.S.

Yahoo shares rallied 7.9% to $36.90 in after-hours trading on Tuesday.

Sunnyvale, Calif.-based Yahoo booked a profit of $311.6 million, or 29 cents a share, from $390.3 million, or 35 cents a share, in the same period a year ago. Excluding one-time costs, adjusted earnings were flat at 38 cents.

Revenue slipped 1% to $1.13 billion. However, stripping out the commissions Yahoo pays its partners for web traffic, revenue was up 1% year-over-year after four consecutive periods in the red.

Analysts projected an adjusted profit of 37 cents a share and total revenue of $1.08 billion.

Under chief executive Marissa Mayer, Yahoo has aggressively expanded and updated its digital portfolio to generate more advertising revenue. Last year, Yahoo acquired blog site Tumblr for $1.1 billion, and more recently, the company has refreshed sites photo-sharing service Flickr.

In the first quarter, revenue generated by display ads remained at $453 million. The number of ads sold increased about 7%, while price-per-ad dropped 5%.

The latest period “was an early and important sign of growth in our core business,” Mayer said in a statement. “And, with mobile pivotal to our future growth, we’re delighted to now see more than 430 million monthly mobile users accessing Yahoo’s new products.”