Yahoo’s Q2: Revenue Down 5 Percent To $1.08B; Net Income Up 11 Percent

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Yahoo just reported second quarter earnings today. The company reported that GAAP revenue(excluding traffic acquisition costs) was $1.08 billion for the second quarter of 2011, a 5 percent decrease from the second quarter of 2010. Yahoo says that this decrease was primarily due to the change in revenue from the Search Agreement and the associated revenue share with Microsoft.

But net earnings per diluted share increased 18 percent to $0.18 in the second quarter of 2011, compared to $0.15 in the second quarter of 2010. Net Income came in at $237 million, which is up 11 percent from the same quarter in 2010. Analysts expected $0.18 per share and $1.1 billion in revenue in the second quarter.

Revenue of $1.2 billion for the second quarter, down 23 percent from $1.6 billion in the second quarter of 2010. Yahoo says that this decrease was primarily due to the change in revenue from the Search Agreement and the associated revenue share with Microsoft. Income from operations increased 9 percent to $191 million in the second quarter of 2011, compared to $175 million in the second quarter of 2010.

Excluding the impact of Microsoft revenue share, the impact of the divestiture of HotJobs, broadband deferred revenue amortization, and certain fee rate reductions, revenue for the second quarter of 2011 decreased 9 percent compared to the second quarter of 2010.

From the release: Yahoo’s results for the second quarter of 2011 reflect $55 million in search operating cost reimbursements and $12 million in transition cost reimbursements from Microsoft under the Search Agreement, which amounts are equal to the search operating costs and the transition costs incurred by Yahoo! in the second quarter. Transition cost reimbursements are subject to a $150 million cap, and through the second quarter aggregate transition costs of $146 million had been incurred.

Yahoo CEO Carol Bartz said this in a statement: “For the quarter, earnings per share was up by 18% year over year. We made clear progress in search, and saw strong growth in engagement on our media properties…We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future.”

Other notes from the earnings release:

Display revenue ex-TAC increased 5 percent to $467 million, compared to $445 million for the second quarter of 2010. Search revenue ex-TAC was $371 million, a 15 percent decrease compared to $438 million for the second quarter of 2010. Cash flow from operating activities for the second quarter of 2011 was $331 million, a 5 percent decrease compared to $347 million for the same period of 2010. Free cash flow was $96 million for the second quarter of 2011, a 25 percent decrease compared to $127 million for the same period of 2010.