Yahoo Slips 2% On Lower-Than-Expected Q1 Net Revenue, Adjusted Profit

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After the bell, Yahoo reported its first-quarter financial performance, including $1.04 billion in revenue after discounting for traffic costs (ex-TAC) and adjusted earnings per share of $0.15. The street had expected Yahoo to earn $0.18 per share on revenue of $1.06 billion.

Yahoo’s ex-TAC revenue shrunk from the year-ago period by around 4 percent. The company’s adjusted profit fell, as well, easing sharply from a year-ago $0.38 per share, using adjusted metrics. Employing normal accounting techniques, Yahoo had a more modest $0.02 in profit during the quarter.

The company’s gross revenue, before discounting for traffic acquisition costs, came to $1.23 billion in the quarter. That figure was up from the year-ago period while net revenue fell. The implication there is that Yahoo’s revenue is becoming more expensive over time.

Yahoo is currently working toward a mobile-first future. As such, it breaks out mobile-sourced revenues to provide investors with a functional barometer of how that effort is going — the sequentially preceding quarter, for example, included $254 million in mobile revenue. This time around, Yahoo reported a slightly weaker $234 million figure. Yahoo noted in its release that that figure is up 61 percent on a year-over-year basis.

Yahoo generated $464 million from its display business in the first quarter — up 2 percent — and $432 million on an ex-TAC basis from its search efforts. The search revenue figure fell 3 percent from the year-ago period. The company recently renegotiated its search deal with Microsoft to allow itself more flexibility in how ads are displayed alongside search results. Yahoo has long had slipping search marketshare.

Not all is gloomy in search for Yahoo, however, as the company reported a 21 percent increase in clicks compared to the first quarter of 2014, and an uptick of 3 percent in the price that it can charge per click.

At the end of its first quarter, Yahoo had $6.9 billion in cash and equivalents. That’s down from $10.2 billion at the end of 2014.

We’ll have more after Yahoo’s leadership tries to explain in the company’s earnings call yet another revenue decrease.