Today following the bell, Yahoo reported its third quarter financial performance. Not discounting traffic acquisition costs (ex-TAC), Yahoo’s revenue for the period totaled $1.23 billion. The company earned $0.15 per share during the quarter, using adjusted metrics (non-GAAP).
Investors had expected Yahoo to earn $0.17 off $1.26 billion in top line. Down 2 percent in regular trading, shares in Yahoo initially fell in after-hours trading following its earnings miss. However, news that Yahoo has a new agreement with Google that could bolster its search incomes helped to stabilize its share price. Microsoft will remain a partner to the company’s search efforts.
Yahoo’s aggregate revenue grew 7 percent from $1.15 billion in its year-ago quarter. Discounting for traffic acquisition costs, Yahoo’s revenue fell from $1.09 billion a year ago to $1.00 billion in its most recent quarter.
The company’s quarterly profit shrinks to $0.08 per share when normal accounting techniques (GAAP) are employed. On a GAAP basis, Yahoo’s profit totaled a slim $76 million.
Yahoo segments its revenue into two core buckets: search and display. In its third quarter, Yahoo’s GAAP search revenue totaled $509 million, up 2 percent from the comparable year-ago quarter. The company saw a 5 percent increase in paid clicks, and a 2 percent decline in its average price per click.
The company’s GAAP display revenue was also $509 million during the third quarter. That figure is up 14 percent from the year-ago period. Yahoo sold 8 percent more ads, and managed to charge 8 percent more for them to boot.
However, Yahoo’s display revenue comes at a cost. The company’s traffic acquisition costs were sharply higher during the period. In the third quarter, Yahoo spent $223.22 million acquiring traffic. That figure is up from a far-smaller $54.18 million in the third quarter of 2014.
Yahoo’s initial financial release did not discuss the potential tax status of its planned spinoff of its Alibaba stake. Concerns on the matter have weighed on the company’s plans and value.
Yahoo’s quarter came in under expectations, but investors may find some comfort in its new search deal. We’ll know more after the coming investor call.