Yahoo Q1 Beats Expectations, Search Stronger Than Display

Today, Yahoo posted quarterly revenues of $1.13 billion. That’s down 1 percent year over year but still modestly beat financial analysts’ consensus estimates. Revenue ex-TAC was up 1 percent. Non Non-GAAP net earnings per share were $0.38, which was flat but also beat expectations.

The company has about $4.6 billion in cash on hand.

Yahoo Revenues Q1 2014

Some are celebrating these results and others see them as mediocre.

Both search and display revenue were up year over year. Display revenue was up slightly (ex-TAC) but price per display ad was down. While display was somewhat soft, search was a stronger performer.

According to the release, search revenue (ex-TAC) was up 9 percent vs. last year. Paid search clicks increased and PPC prices increased vs. last year. All of this is good news for Marissa Mayer and her renewed focus on search.


  • GAAP search revenue was $445 million for the first quarter of 2014, a 5 percent increase compared to $425 million for the first quarter of 2013.
  • Search revenue ex-TAC was $444 million for the first quarter of 2014, a 9 percent increase compared to $409 million for the first quarter of 2013.
  • Paid Clicks increased approximately 6 percent compared to the first quarter of 2013.
  • Price-per-Click increased approximately 8 percent compared to the first quarter of 2013.


  • GAAP display revenue was $453 million for the first quarter of 2014, flat compared to the first quarter of 2013.
  • Display revenue ex-TAC was $409 million for the first quarter of 2014, a 2 percent increase compared to $402 million for the first quarter of 2013.
  • The Number of Ads Sold increased approximately 7 percent compared to the first quarter of 2013.
  • Price-per-Ad decreased approximately 5 percent compared to the first quarter of 2013.

Yahoo Q1 revenues

The stock is up after hours on the relatively positive financial news. We’ll be listening in on the earnings call (coming up at 5 Eastern) and provide any highlights — so check back.

Analysts had been arguing that Yahoo’s market cap and stock were being propped up by the company’s Asian assets (specifically shares in Alibaba). These modestly positive results may start to argue otherwise.

As Alibaba goes public Yahoo stands to make billions when it cashes out. However investors worry that the core business has still not shown sufficient vigor and vitality.

Yahoo’s problem is that the display market is now much more competitive (read: Google + Facebook + programmatic) than when Yahoo was the display king. And notwithstanding Yahoo Gemini, the company doesn’t really control its own search platform.

Earnings call remarks: 

CEO Marissa Mayer, in a live video stream suffering from technical glitches, rattled off a range of improving metrics for the company, including the growth of mobile usage. She said that Yahoo now had 430 million daily active users.

Mayer said the business now was organized around four areas: search, display, communications and digital magazines. She touted high profile editorial hires to lead Yahoo’s digital magazine coverage. She also spoke extensively about Yahoo’s video content.

Mayer talked about Yahoo Gemini as a “one stop shop” for mobile search and display. She repeated that it offers “the ease and performance of search with the scale of display.” Mayer discussed the company’s improving ad tech. She said that AdManager offers opportunities to grow the Yahoo display and video ad businesses.

Mayer says that Yahoo is bringing “great technical talent” to the company through hiring and acquisitions. She said this has translated directly into new products, services and ad tech.

Yahoo CFO Ken Goldman discussed the financials from an investor and accounting perspective.

He cited both strengths and weaknesses in key areas of the business. For example, search revenue in mobile doubled in Q1 vs. last year. Display metrics showed “improving trends.” Display revenue for mobile also doubled. Daily active users were up 5X over last year.

Yahoo is de-prioritizing “lower-monetizing properties.” There was some discussion of Alibaba and the fact that the company is going forward with a US IPO. He wouldn’t say more because the former is in a quiet period.

Goldman: “We still have a lot of work to do but we’re confident we’re on the right track.” Guidance was roughly flat.

CEO Marissa Mayer is back talking about growth drivers: mobile, social, native and video. These businesses are still small but seeing accelerating growth — 98 percent YoY growth.

We continue to see growing user metrics on Tumblr and especially on mobile. More than 60 percent of active users access the site on mobile devices. The average Tumblr sponsor post is reblogged/shared over 10,000 times.

Video: our investment in building views/streams is addressing “inventory constraints.” Mayer spoke about original web programming and acquiring third party content to generate more video traffic.


Will Yahoo be acquiring more professional video content? Mayer: we’ll pursue a mix of content sources and spending will be consistent with past expenditures.

Contextual search and mobile: how will it impact the Microsoft deal/relationship? There’s a huge opportunity to be industry leading. We were excited to roll out Gemini because it simplifies buying search and display.

Yahoo is well positioned to capture brand advertising dollars as AdAge 100 shift more budgets into digital. Native and display markets will grow significantly.

How should we value your cash? Ken Goldman said that “We will work with our board” re how to deploy our cash, alluding to Alibaba and the coming cash infusion.

Regarding the coming Alibaba cash and future acquisitions: Mayer said there will continue to be some strategic acquisitions mixed with some “tuck in” acquisitions. But she said they would consult with the board.

Mayer further discussed stream ads and the expansion of native ads across properties.

Goldman: in the future TAC will probably go up. This quarter was the “low point” of where TAC will be.

Mayer on core Yahoo growth: “We’re seeing some of that today.” Mobile and social are key areas for growth. International is another growth area for Yahoo. “A key focus of ours,” explains Goldman. He added that these growth areas will “offset” the basic flatness of the PC ad business.

How is AdManager doing? Mayer: we’re still migrating campaigns onto the platform. It will help us syndicate ads off network. We want to grow our off network business and that’s one reason that you’ll see TAC go up (from revenue sharing).

Goldman about acquisitions: one way to increase scale overseas. We’re going to be more aggressive internationally.

Native formats will be the way that Yahoo monetizes mobile, social and video, says Mayer. Mobile is the most important area in terms of overall growth — but still not material to the company’s overall results.

Related Topics: Channel: Industry | Top News | Yahoo | Yahoo: Business Issues | Yahoo: Search


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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