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Yahoo! Inc. Turns a Profit Just Before Joining Verizon

By Anders Bylund - Apr 18, 2017 at 5:44PM

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The buyout is now expected to close in June.

Tuesday night, online information portal Yahoo! (NASDAQ: YHOO) reported results for the first quarter of fiscal year 2017. Here's what you need to know.

Yahoo!'s first-quarter results: The raw numbers

Metric

Q1 2017

Q1 2016

Year-Over-Year Change

Revenue

$1.33 billion

$1.09 billion

22%

Net income

$99 million

($99 million)

N/A

GAAP earnings per share (diluted)

$0.10

($0.10)

N/A

Data source: Yahoo! Finance.

What happened with Yahoo! this quarter?

Data for the first quarter of 2017 in the table above includes changes to Yahoo!'s accounting presentation of the Microsoft (NASDAQ: MSFT) search agreement. Traffic acquisition costs for this contract are now treated as a reduction to revenue rather than a cost of sales. These changes have been in place since the second quarter of 2016, but they played no part in calculating results in the year-ago period used here.

Without the presentation change, Yahoo!'s first-quarter sales would have fallen 6% to $1.02 billion. The new policy does not affect results below the gross income line of the income statement.

Highlights from the quarter include:

  • Sales under the high-growth Mavens banner (mobile and video sales plus native ads, Tumblr blogs, and Polyvore fashion search operations) held steady year over year at $391 million, excluding accounting policy effects.
  • On the same basis, non-Mavens sales decreased 10.6% to land at $576 million.
  • Gross search revenue decreased 3% to $799 million, amid a 10% increase in price-per-click but 12% fewer search ad clicks.

With the pending buyout by Verizon Communications (VZ 0.32%) due to close in June, management declined to provide any forward-looking guidance targets. The company also skipped the traditional earnings call with Wall Street analysts.

Woman sketching on a wall that contains a drawing of a big fish about to swallow little fish.

Image source: Getty Images.

What management had to say

In its press release, Yahoo! noted business updates including doubling the number of users enrolled in Yahoo Account Key, which lets users sign in more easily from their mobile phone; launching a newly designed Yahoo Homepage; and launching Captain, a "mobile bot assistant to help users manage lists and reminders, and coordinate family or group activities."

In a prepared statement, Yahoo! CEO Marissa Mayer celebrated a "solid" quarter before turning her sights on the soon-to-close Verizon deal.

"As we enter our final quarter as an independent company, we are committed to finishing strong and planning for the best possible integration with Verizon," Mayer said.

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