Yahoo Q1 Earnings Fall as Price-per-Ad Decreases 17 Percent

CEO Marissa Mayer reiterates that company is “amidst a multi-year transformation”

Last Updated: April 22, 2015 @ 10:33 AM

Marissa Mayer and co. are probably not screaming “Yahoo!” right now — at least not gleefully.

Yahoo released its first quarter 2015 financials on Tuesday afternoon just after the U.S. stock markets closed, reporting earnings per share (EPS) of $0.15 on net income of $21 million. GAAP EPS was $0.02 apiece.

The company showed $1.23 billion in GAAP revenue, but just $1.04 billion in ex-TAC (Traffic Acquisition Cost) revenue, missing analyst estimates by the latter figure, which is the one most people care about.

Wall Street had forecast earnings per share of $0.18 on $1.06 billion in revenue, according to numbers compiled by Yahoo Finance. Zacks saw the EPS coming in at just $0.07; however, that prediction was based on a mere seven estimates. Per the more robust prediction, Yahoo didn’t score by that measurement either.

Yahoo’s GAAP revenue rose from year-to-year, though ex-TAC was down and its earnings slipped. Lower display ad pricing — and thus, revenue, which was down 17 percent — assisted to the decline. Search revenues also dipped.

“Yahoo is amidst a multi-year transformation to return an iconic company to greatness,” CEO Mayer said. “This quarter, we saw encouraging revenue growth of 8 percent, with display revenue growing a modest 2 percent and search growing 20 percent on a GAAP basis. Our mobile GAAP revenue reached $234 million in Q1, growing 61 percent year-over-year.”

“We anticipated that we would grow GAAP revenue ahead of revenue ex-TAC and EBITDA, and that’s precisely what we saw this quarter,” she added. “For the next phase of the transformation, we will focus on accelerating our GAAP revenue growth while managing our margins and costs.”

Yahoo stock (YHOO) slipped during the domestic trading day on Tuesday, closing at $44.49 per share — down $0.16 apiece, or 37 percent. After the negative news came out, the stock fell further in the post-day trading — but it would recover.

“We are tightly managing our overall cost structure as EBITDA remains a key measurement for the Company,” CFO Ken Goldman said. “In Q1 2015, we took actions to optimize functions, remove inefficiencies and align resources to help focus our organizations on top priorities. We plan to continue to actively manage our cost base to grow profitability and EBITDA over time.”

Yahoo didn’t just have a rough quarter financially — it also has suffered an organizational shakeup. A week or so ago, Simon Khalaf was named Mike Kerns’s replacement as Yahoo home page boss, part of the company’s latest reorg. Additionally, Tumblr chief executive David Karp will no longer report directly to Mayer; he is now under Khalaf’s watch.

Plus, Adam Cahan will now oversee the company’s video efforts, while Jeff Bonforte will supervise their related mobile apps, including acquired photo-sharing service Flickr.

Earlier in the quarter, Yahoo’s Board of Directors announced that it plans to spin off its Alibaba Group holdings, which Mayer said will pay off in the future.

Yahoo launched three new digital magazines this quarter: Yahoo Politics, Yahoo TV, and Yahoo Autos.

Later, on Tuesday’s conference call, Mayer announced Yahoo’s new daily fantasy sports platform, which will be coming soon.

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