Yahoo Revenues Off 15 Percent, CEO Mayer Announces Restructuring Plan

Company will cut 15 percent of workers, simplify offerings for users and advertisers.

Greg Sterling on February 2, 2016 at 6:11 pm

Yahoo announced Q4 and full-year revenues. While earnings per share were in line with expectations, revenues (ex-TAC) were down 15 percent. As expected, the company confirmed that it would lay off 15 percent of its workforce and also announced a restructuring.

During her earnings call remarks, CEO Marissa Mayer expressed confidence in the direction of the company while defending it against accusations of mismanagement, especially around spending.

Yahoo Q4 and Full Year Revenues

Source: Yahoo

Mayer said that at the end of 2015, Yahoo had 10,400 employees and that by the end of next year, the number will be 9,000. Contractors will also be cut. She added that would make Yahoo 42 percent smaller than it was in 2012.

Yahoo will also close offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan in Q1. The company will divest some assets that it hopes will generate $1 billion in cash.

Mayer discussed Yahoo’s strategy and announced a restructuring of both the consumer and advertising businesses. Ad groups will now be organized into two divisions: Gemini and BrightRoll. The newly streamlined consumer product strategy revolves around seven offerings: search, mail, tumblr, news, sports, finance and lifestyle content.

Source: Yahoo

The idea is to greatly simplify Yahoo for both advertisers and consumers, with an emphasis on the company’s strengths and growth properties. “Yahoo cannot win the hearts and minds of users and advertisers with a complex and fragmented portfolio,” Mayer explained.

As she has done for the past several quarters, Mayer emphasized “Mavens” growth and revenue. Mavens is mobile, video, native and social. These four areas brought in $1.6 billion in 2015, representing 45 percent annual revenue growth and roughly a third of total Yahoo revenue. She projected that they’ll bring in $1.8 billion next year.

Mobile is the largest revenue driver of this growth segment, generating more than $1 billion in 2015. Mayer emphasized that going forward, much of the company’s focus will be on mobile and the mobile user experience.

She argued the company is “doubling down on areas of strength.” It is also seeking to “stabilize and slow declines in legacy revenue.” Simplifying business lines will also “speed execution.”

Source: Yahoo

Mayer said that 2016 will be a transition year in which revenues and earnings are likely to decline, “with growth returning in 2017.” Investors will not be pleased by this outlook. Indeed, the stock is down in after-hours trading.

“I’ve never believed more in this company,” Mayer said in concluding her prepared remarks. She added that the plan she announced has the full support of the board and “will make Yahoo the best version of itself.” However, without significant growth in user engagement and some in revenues, it’s unlikely that Mayers critics will be quieted.