Yahoo’s shares rose slightly in after-hours trading in the US despite a lacklustre quarter that saw profits fall by 18% to $270m and revenue by 3% to $1.08bn compared with a year ago.
The decline was mostly due to an 8% drop in digital display advertising, but investors appeared happy with news of changes to the share repurchase agreement with Chinese internet firm Alibaba.
Yahoo owns a 24% stake in Alibaba, which is expected to raise at least $15bn for investors when it becomes a publicly listed company later this year.
“We are pleased to announce today that we have entered into an amendment to the share repurchase agreement with Alibaba, reducing the number of shares that Yahoo is required to sell at the IPO from 208 million shares to 140 million shares,” said Yahoo.
The company said it will return to investors at least half the after-tax profit from the Alibaba share sale. The news sent Yahoo shares up more than 2% in after-hours trading, according to the BBC.
But Yahoo chief executive Marissa Mayer was not as upbeat about the Q2 financial results as she was after the first quarter.
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“Our top priority is revenue growth, and by that measure we are not satisfied with our results,” she said.
Mayer highlighted 6% year-on-year growth in Yahoo Search revenue, a 19% growth in search click-driven revenue and a 90% collective gain for Yahoo’s social, mobile and video divisions.
“However, display remains an area of investment and transition,” she said.
Mayer said the decline in display revenue highlighted the need to work faster to “ameliorate” the negative trends.
“I believe we can and will do better moving forward,” she said. “Overall, I remain confident in Yahoo’s future, our strategy, and our return to long-term growth.”
It is nearly two years since Mayer was charged with turning around Yahoo’s fortunes. In that time, she has overseen large investments in Yahoo’s mobile capabilities.