Image source: Yahoo!

Tech investors have impatiently waited for Yahoo! (NASDAQ: YHOO) to find a way to live up to its potential. Yet ongoing challenges have kept the company's core business from taking off, and now, many investors focus almost entirely on its stake in China's Alibaba in determining their views on the value of Yahoo! stock. Coming into Monday's second-quarter financial report, Yahoo! investors had hoped that the company would defy their downbeat expectations and find a way to recapture some growth, but the results that the internet company posted didn't even match the modest consensus forecasts among those following the stock. Let's take a closer look to see what Yahoo! had to say about its quarter and whether the company is likely to find a path forward in the near future.

Another tough quarter for Yahoo!

Yahoo!'s second-quarter results showed its ongoing challenges in trying to find growth. The only way that Yahoo! was able to post a revenue increase was by changing the ways that it presents revenue related to its search agreement with Microsoft, and without that change, adjusted revenue of $1.055 billion was down 15% from the year-ago quarter. That was even worse than the 13% drop investors were expecting, and adjusted EBITDA fell by more than a third. That resulted in adjusted net earnings of $0.09 per share, missing the consensus forecast by a penny but also glossing over a $440 million net loss on a GAAP basis.

Looking at Yahoo!'s financials, weakness showed up across the board. The company's Mavens revenue held up reasonably well, with revenue falling 4% after adjusting for the revenue-presentation change. Mavens by Yahoo!'s definition include mobile, video, native advertising, and social media businesses. By contrast, adjusted non-Mavens sales dropped at a steeper 15% pace from the year-ago quarter. The steady move away from desktops toward mobile devices also continued to make itself felt at Yahoo!, with mobile revenue managing to rise even after accounting for the sales adjustment. That looked especially good compared to the 15% drop in desktop revenue on an adjusted basis. The share of mobile revenue rose to about 30%, confirming the trend that other tech companies have seen recently.

The search-related business in particular got hit hard. Sales fell 13% on an adjusted basis, and costs of revenue paid to affiliates to generate search volume climbed by 32% after taking definitional changes into account. Price per click rose 8%, and paid clicks fell by 24% compared to the year-ago quarter. Display revenue fell a more modest 7%.

Yahoo! CEO Marissa Mayer also tried to emphasize the progress that the company has made. "We continue to make solid progress against our 2016 plan," Mayer said, and "in addition to our efforts to improve the operating business, our board has made great progress on strategic alternatives." The CEO argued that the results met or exceeded the company's own guidance and that the company is "relentlessly focused on delivering shareholder value."

Can Yahoo! gain altitude?

Yahoo! did celebrate some of the notable events it held during the quarter. The company hosted the first-ever live streaming video of a Berkshire Hathaway annual shareholder meeting, and it also added coverage of the NBA draft. Both events drew substantial audiences and made a name for Yahoo! in a high-profile setting.

However, Yahoo! also faced its share of challenges. The company took a $395 million goodwill impairment charge and an $87 million intangibles impairment charge related to its Tumblr unit, determining that the fair value of the division is less than the amount indicated on Yahoo!'s balance sheet. The company cited decreased projected operating results for Tumblr as well as estimated future cash flows.

The key question for Yahoo! remains how the auction of its search and advertising business will go. With a variety of potential buyers including both publicly traded companies and private institutional investors, what Yahoo! is able to receive will give an interesting indication about third-party perception of what the business is worth.

Because of the importance of the auction, Yahoo! share prices didn't change much after the announcement, climbing by just over a tenth of a percent in early after-hours trading. Given the difficulty that Yahoo! has had in making visible progress in improving its core business, anything that points to a viable way out for the internet company could prove encouraging for shareholders who've held out this long.