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January 29, 2013

Yahoo Q4 Results Top Analysts’ Estimates

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Yahoo’s fourth-quarter earnings surpassed analysts’ projections thanks to higher ad prices and increased earnings from its international investments.

Yahoo reported non-GAAP earnings of $272.27 million or 32 cents per share, on sales of $1.35 billion.

The results surpassed analysts’ expectations of 28 cents per share, according to a poll by Thomson Reuters.

Generally accepted accounting principles (GAAP) revenue was $1.346 million for the fourth quarter of 2012, a two percent increase from the fourth quarter the previous year. Revenue, excluding traffic acquisition costs, was $1.221 million for the fourth quarter, a four percent increase compared to the same period in 2011.

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Marissa Mayer

For the full year of 2012, GAAP net earnings included a net gain of $2.755  million due to the sale of Alibaba shares. Non-GAAP net earnings for the full year of 2012 was $1.407 million, a 35 percent increase from 2011.

This is the first full quarter CEO Marissa Mayer has had the reins of the floundering search engine firm. And investors are obviously happy with her progress — Yahoo shares rose in after-hours trading following the earnings report.

“I’m proud of Yahoo!’s 2012 and fourth quarter results. In 2012,Yahoo! exhibited revenue growth for the first time in four years, with revenue up two percent year-over-year,” Mayer said in a statement. “During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo Mail and Flickr. At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the company.”

Yahoo’s new CEO has charmed investors with her plans to bring the floundering search engine into the future. Despite her warnings that change won’t happen over night, Mayer, of Google fame, seems to have won Wall Street’s confidence.

Mayer, who took over as CEO last July, has said she will focus on devising a comprehensive mobile strategy for the search engine. She is also determined to work her magic on Yahoo by focusing on users’ “daily habits” such as e-mail, the home page and Internet search as well as mobile devices.

Small acquisitions to acquire talented staff members is also a part of Mayer’s plan to bolster Yahoo’s mobile and social offerings.

Yahoo, in recent months, acquired OnTheAir, a small startup specializing in broadcasting video chats or interviews to online audiences and earlier this month snapped up Snip.it, a social platform for collecting, organizing and sharing articles, videos and images on the Web.

The following is an in-depth breakdown of Yahoo’s fourth quarter results:

Fourth Quarter and Full Year 2012 Financial Highlights

Display

• GAAP display revenue was $591 million for the fourth quarter of 2012, a three percent decrease compared to $612 million for the fourth quarter of 2011. GAAP display revenue was $2,143 million for the full year of 2012, a 1 percent decrease compared to $2,160 million for the prior year.

• Display revenue ex-TAC was $520 million for the fourth quarter of 2012, a five percent decrease compared to $546 million for the fourth quarter of 2011. Display revenue ex-TAC was $1,899 million for the full year of 2012, a two percent decrease compared to $1,932 million for the prior year.

• The number of ads sold on core Yahoo! Properties decreased approximately 10 percent compared to the fourth quarter of 2011 and increased approximately 3 percent compared to the third quarter of 2012.

• Price-per-ad on core Yahoo! Properties increased approximately seven percent compared to the fourth quarter of 2011 and increased approximately 15 percent compared to the third quarter of 2012.

Search

• GAAP search revenue was $482 million for the fourth quarter of 2012, a four percent increase compared to $465 million for the fourth quarter of 2011. GAAP search revenue was $1,886 million for the full year of 2012, a two percent increase compared to $1,853 million for the prior year.

• Search revenue ex-TAC was $427 million for the fourth quarter of 2012, a 14 percent increase compared to $376 million for the fourth quarter of 2011. Search revenue ex-TAC was $1,611 million for the full year of 2012, a nine percent increase compared to $1,478 million for the prior year.

• Paid clicks, or the number of clicks on sponsored listings on Yahoo! Properties and Affiliate sites, increased approximately 11 percent compared to the fourth quarter of 2011 and increased approximately eight percent compared to the third quarter of 2012.

• Price-per-click increased approximately one percent compared to the fourth quarter of 2011 and decreased approximately two percent compared to the third quarter of 2012.

Cash Balance

• Cash, cash equivalents, and investments in marketable debt securities were $6 billion at Dec. 31, 2012 compared to $2.5 billion at Dec. 31, 2011, an increase of $3.5 billion.

• During the fourth quarter of 2012, Yahoo! repurchased 80 million shares for $1.5 billion. During the year ended Dec. 31, 2012, Yahoo! repurchased 126 million shares for $2.2 billion.

 

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