Yahoo Surges After Strong Q1: Has Mayer Righted the Ship?

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Source: Thinkstock

Source: Thinkstock

Shares of Yahoo (NASDAQ:YHOO) closed Tuesday’s regular session up 2.29 percent at $34.21 and jumped as much as 7 percent higher in post-market trading after the technology and Internet company reported first-quarter results that beat analyst expectations. Revenue of $1.13 billion, down 1 percent on the year, beat the mean analyst estimate of $1.08 billion, and revenue excluding traffic acquisition costs (TAC) increased 1 percent to $1.09 billion. Adjusted net earnings of 38 cents per share were flat on the year and beat the mean analyst estimate by a penny.

“I am really pleased by our first quarter performance, marking our best Q1 revenue ex-TAC since 2010,” commented Chief Executive Officer Marissa Mayer. “Buoyed by our 9th consecutive quarter of year-over-year growth in Search revenue ex-TAC and our first quarter of Q1 year-over-year growth in display revenue ex-TAC since 2011, Q1 was an early and important sign of growth in our core business.”

Catalyzed in part by the launch of a new advertising suite and Yahoo Gemini, a digital ad marketplace, in the first quarter, ex-TAC display ad revenue increased 2 percent on the year to $409 million. Ads sold increased 7 percent on the year while the price-per-ad declined by about 5 percent. Ex-TAC search revenue increased 9 percent to $444 million, while paid clicks increased by about 6 percent. Price-per-click increased by about 8 percent.

Fueling the market’s positive reaction to the earnings is evidence that Alibaba — a Chinese Internet company that Yahoo owns a 24 percent stake in — is continuing to grow rapidly. Yahoo reported a 66 percent increase in revenues at Alibaba.

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