Yahoo! reported net income of $28.9m (£18.5m) and revenue of $248.8m (£159m) for the quarter ending 30 September, compared with a revenue of $166.1m for the same period last year.
The results trumped earning predictions made by analysts surveyed by Thomson Financial/First Call, who forecast revenue of $238.4m.
Yahoo! reported free cash flow of $57.3m (£36.6m) for the quarter, compared with $6.3m during the same period last year. This jump in free cash flow is an important sign of the company's health, Yahoo! said, given that it reflects the funds it has available to invest in the business.
Yahoo! defined free cash flow as earnings before interest, taxes, depreciation and amortisation (EBITDA) plus non-operating cash income, less taxes paid, investments in working capital and capital expenditures.
In addition to targeting small and medium-sized businesses with its marketing offerings, Yahoo! has worked to raise its revenue in recent quarters by introducing premium services, such as search, Web hosting and broadband offerings.
Additionally, Yahoo! has inched further into the corporate market, introducing its enterprise instant messaging (IM) product earlier this week.