Yahoo's Q2: Slight miss on revenue target but surpasses EPS goal

Yahoo's Q2: Slight miss on revenue target but surpasses EPS goal

Summary: UPDATED: Yahoo has certainly been spending a lot of money lately. But how much has it been bringing in?

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(Image: Yahoo Investor Relations)

Yahoo has been racking up a serious credit card bill, so to speak, over the last few months, with the acquisition of several social and mobile startups.

But what analysts and investors really want to know is how much the Sunnyvale, California-based corporation brought in on its second-quarter earnings report, published after the bell on Tuesday.

The self-described "technology company" reported a net income of $331 million, or 30 cents per share (statement).

Non-GAAP earnings were 35 cents per share on a revenue of $1.135 billion, including traffic acquisition costs (TAC).

Excluding TAC, Yahoo posted revenue of $1.071 billion.

Wall Street was looking for earnings of 30 cents per share on a revenue of $1.08 billion.

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(Image: Yahoo Investor Relations)

Focusing on nearly a dozen new product upgrades and revamps instead, CEO Marissa Mayer made an initial reflection on the quarter in prepared remarks.

I'm encouraged by Yahoo's performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week. From the new Yahoo News, the new Yahoo Sports app, the redesigned Yahoo search, the new Flickr, the new Yahoo Mail for tablet, the Yahoo Weather app, our new Yahoo app with Summly — this quarter drove tremendous improvements in our product line, and our users responded with increased usage and engagement.

Mayer only called out one acquisition in her statement, but the full list consists of Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software, and (most notably) Tumblr.

Yahoo paid $1.1 billion for Tumblr in May, shortly followed by some controversy among the core user base when the news was revealed.

Such a major deal prompted speculation that Yahoo would go after Hulu next, which at the time was at the center of a rumor-filled bidding war.

But as of last week, Hulu's current ownership coalition of 21st Century Fox, NBC Universal, and The Walt Disney Company is staying put.

For the outlook, Wall Street is expecting Yahoo to deliver a third-quarter revenue of $1.12 billion with earnings of at least 34 cents per share.

Yahoo offered Q3 guidance of $1.06 billion to $1.1 billion in revenue. For the year, Yahoo is projecting revenue to fall between $4.45 billion and $4.55 billion.

More numbers to know from Yahoo's Q2:

  • Yahoo repurchased 25 million shares for $653 million and used a $1 billion in cash for acquisitions (including a $970 million to acquire Tumblr).

  • Yahoo has now completed promise to return $3.65 billion from Alibaba Group proceeds to shareholders.

  • Number of Ads sold (excluding Korea) decreased by roughly 2 percent on an annual basis.

  • Price per ad (excluding Korea) decreased by 12 percent annually.

  • In search, paid clicks (excluding Korea) increased 21 percent annually. Price per click (excluding Korea) decreased by nearly 8 percent.

zdnet-yahoo-q2-2013-earnings-2
(Image: Yahoo Investor Relations)

Mayer and Co are expected to follow up with further comments during the quarterly conference call later today at 2pm PT/5pm ET.

UPDATE: Following an update on Q2 financials during the video webcast, Mayer outlined that Yahoo's growth hinges on the following four pillars: Search, mobile, display, and video.

Mayer was frank on some notes, acknowledging that the mobile strategy at Yahoo was "seriously fragmented" ahead of her arrival last year, as well as that search revenues need to grow faster.

She also suggested that analysts can't expect more significant revenue numbers yet, specifying that the fourth quarter is typically Yahoo's strongest.

To back that up, Mayer said Yahoo has eliminated more than 30 products and features to "reinvest" company talent and resources.

Without diving into specifics, Mayer singled out Tumblr as the new asset that has "significant opportunities" across the board.

She asserted, "Yahoo's future is mobile, and we're delivering our products mobile first."

Related article:

Topics: Mobility, Apps, Software, Enterprise 2.0, Tech Industry

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6 comments
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  • Looking like a good deal

    Maybe MS should buy them. ;)
    x I'm tc
    • @ x I'm tc

      You must be kidding!

      Yahoo delayed its eventual death.

      The question should be asked is when will it die. Marissa's charm is not enough to stop a dying patient.

      Yahoo is Blackberry or Aol. Companies with no growth but with investors and shareholders who bought into a pumped up story back in mid-90s and 2000s. And these investors are left holding worthless pieces of paper.
      calahan
    • MS already "controls" a big piece of Yahoo,

      and that's the search via Bing.

      If Bing dies, Yahoo dies, and if Yahoo dies, a big piece of Bing dies. Basically, they're connected, and dependent. Yahoo could go it alone with their own search engine, but that would just accelerate their demise.
      adornoe@...
      • @ adornoe

        Are you sure about that?

        If Yahoo dies, then Bing will replace Yahoo's marketshare. Or it may divide it equal parts or even lesser with Google's search engine.

        Death of Yahoo is good for Bing since it is one less Internet brand for Microsoft in desktop/mobile areas.

        Yahoo has been nothing but a money sucker for Microsoft getting $250 million for free every quarter for the last 4 years.
        calahan
        • You might be right, BUT...

          Yahoo is still a mighty big internet presence, and when it comes to number of eyes, Yahoo has them, big time!, and when there are hundreds of millions of eyes on an internet property, there is a much bigger chance for someone to want to use Bing via that property, than just through the MSN property. Yeah, MSN is pretty big on its own, but two big properties stand a better chance than just one.
          adornoe@...
  • They can release 10 new products every day. I'll never

    see them because I haven't been to a Yahoo site in the last 5 years, probably closer to 10. It's one of those things, once they get so bad you move on and there's no going back unless you're new replacement also stops meeting your needs. Yahoo would have to financially invent me to get me back at this point.
    Johnny Vegas