Yahoo revenues up but profits down

Yahoo CEO Marissa Mayer says she is “extremely pleased” with the 15% revenue growth in the second quarter despite a $22m loss

Despite growing second quarter revenues by 15% to $1.24bn, Yahoo posted a loss of $22m compared with a profit of $270m for the same period in 2014.

But chief executive Marissa Mayer said she was “extremely pleased” with the revenue growth, which she described as the “most substantial” growth in almost nine years.

Yahoo also posted adjusted revenue for the quarter of $1.04bn, which saw no change from the previous quarter or quarter a year ago, but this was still slightly greater than analyst forecasts of $1.03bn, according to Time.

Mayer said Yahoo’s Mavens – what the company calls its mobile, video, native and social group of businesses – grew to nearly $400m in the quarter, up 60% compared with the same quarter in 2014.

This so-called Mavens revenue accounted for 35% of Yahoo’s traffic-driven income in the quarter.

Mayer also highlighted that Yahoo’s display business saw the most substantial revenue growth since 2010, adding that “Yahoo’s transformation continues to make great progress”.

Display revenue for the quarter was $500m, up 15% compared with the second quarter of 2014.

Chief financial officer Ken Goldman said Yahoo had reduced operating expenses by $30m through strategic staff cuts and tight management of discretionary costs.

“As we continued to reduce our workforce to fewer than 11,000 full-time employees over the past quarter, we have also continued to realign our resources as we become a more efficient business,” he said.

According to Yahoo, the company’s search presence has grown steadily through innovation and partnerships with industry leaders.

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Search revenue for the second quarter was $920m, up 15% compared with the second quarter of 2014.

Analysts said Yahoo has been struggling in recent years since losing its internet search lead to Google, and has been aiming for different niches under Mayer’s leadership.

Mayer has overseen several acquisitions since taking the helm in July 2012, mainly aimed at bolstering Yahoo’s video, mobile, social and native advertising capabilities.

But she still faces the challenge of the spin-off of Yahoo’s stake in Chinese online giant Alibaba expected later in 2015.

On July 17 2015, Yahoo filed a legal document to the US Securities and Exchange Commission (SEC) as the first step to the spin-off. If the move is approved by US tax authorities, the new entity will be a freestanding public company expected to be worth around $30bn.

However, analysts say spin-off will likely impact much of Yahoo’s cashflow due to tax on the move, which Mayer will have to make up for in the post-Alibaba era.

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