Yahoo has just reported its Q1 earnings, with ex-TAC revenues of $1.087 billion and earnings per share of $0.38, and net income of $314 million.
That just about beat analysts’ expectations on revenue: they were expecting ex-TAC sales of $1.08 billion (First Call estimates were $1,076.9 million).
Yahoo had provided adjusted earnings guidance earlier this year of between $290 million and $330 million.
[Yahoo defines "revenue ex-TAC" as "a non-GAAP financial measure defined as GAAP revenue less TAC. TAC consists of payments made to third-party entities that have integrated our advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”) and payments made to companies that direct consumer and business traffic to Yahoo’s online properties and services (“Yahoo Properties”)."]
This quarter last year, Yahoo reported revenues of $1.07 billion and earnings of $0.38 per share.
“I am really pleased by our first quarter performance, marking our best Q1 revenue ex-TAC since 2010,” CEO Marissa Mayer said in a statement. The company says that it now has 430 million mobile users — a “pivotal” part of the company’s growth plan.
Mobile may be the future, but today for Yahoo the mainstay of the company remains how well it is doing in advertising. On that front, it was a a mixed picture.
GAAP display revenue, the company said, was $453 million for the first quarter of 2014, flat compared to the first quarter of 2013. But display revenue ex-TAC was $409 million for the first quarter of 2014, up 2% increase on the $402 million it made in Q1 last year. The number of ads sold was up 7% compared to a year ago, but the price per ad was down by 5%.
GAAP search revenues were $445 million, up 5% on a year ago, while ex-TAC search revenues were $444 million, up 9%. Paid clicks were up 6% and price per click was also up by 8%. Yahoo continues to partner with Microsoft on search but there have been reports that the company may be looking to reconsider that relationship. As part of the search agreement, Yahoo notes that Microsoft takes 12% of the net (after TAC) on search revenue that’s generated on Yahoo properties and affiliate sites.
To forge ahead, Yahoo’s tried to break new ground in advertising with new product launches. Yahoo Advertising is its cross-platform, integrated ad buying platform covering web, mobile, and video ad products across native, audience, and premium display ads. Yahoo Gemini is is marketplace for mobile search and native advertising. And it also started to power sponsored posts on Tumblr.
It’s also now working with Yelp and cross-referencing content from the local reviews and local search company across Yahoo properties.
More to come.