Yahoo Releases Q2 Earnings

Yahoo has just released its second quarter earnings report. The company is reporting a net income of $0.15 per share, besting Street expectations by a cent. Operating income was $175 million, up from $76 million a year ago; Revenue was $1.6 billion, up 2% year over year. Yahoo’s press release highlights growth in the company’s display advertising, which is up 19%.

The release also highlights Yahoo’s recent moves to integrate Facebook, its acquisition of Associated Content, and its social gaming partnership with Zynga, among other news. We’ll have more during the company’s conference call, which begins at 2PM PST.

Yahoo’s product strategy is still vague, but we’ve heard that recently appointed Chief Product Officer Blake Irving will soon be releasing a series of increasingly detailed roadmaps to Yahoo employees (which will probably look soon thereafter).

From the call:
Bartz: How do we measure success? There’s no one metric; we concern ourselves most with users and their engagement on our network. Mail, Flickr, search, content sites. How we’re driving engagement: on content side, having interesting content. Users want to go beyond that, with social, any device. Big content move was AC. 380k contributors. Also invest in existing media sites. Yahoo News building out a voice, identity. Political blog, The Upshot.

Importance of social: Acquisition of Citizen Sports paying off here. Users will be able to ‘Like’ fantasy teams on Yahoo and get personalized updates in FB and Yahoo. Partnership with FB leads to more engagement on Yahoo. Q4 going to start hosting Zynga games like Farmville on Yahoo (will integrate Yahoo ID into Zynga games before that).

Mobile has deal with Nokia, new apps on platforms like the iPhone. Video also increasingly important, being featured on Yahoo home page.

During the call, Bartz noted that advertisers pulled back for a week in early June, but that the company believes that things are back to normal.

Search volume is up, revenue from searching is down.

Yahoo has transitioned 125 employees to Microsoft for its search deal with Bing, but won’t make the switch before the all-important holiday season if the integration isn’t up to par.

Q: When you talked about that dropoff back in June…
A: We believe our customers are doing expense management. Marketing is one area for these companies that is easy to dial on and off. First weeks of July it’s like it never happened, same run-rate we’ve had. Also we got to look at the exchange, and it wasn’t a Yahoo anomaly.

Q: Why did pageview growth decline 4% y/y. Also is MS search deal going live Q4?
A: Paid search, it’s important that advertisers are ready, that Ad Center is ready. We’re not going to pull the trigger til we’re ready. Re: page views. They’re a measure of engagement on static websites. But web has evolved with video streams etc. where engagement doesn’t necessarily increase page views. That said, we are diving into it. It is a little bit of a surprise.

Bartz says that advanced targeting will be key. Also more engaging, “beautiful” ads on sites like the login page.