Yahoo revenue increases 8%
The tech giant recorded revenue of $1.2 billion, with gains in mobile revenue, a key metric indicating future growth.
Yahoo Inc. Chief Executive Marissa Mayer may be trying to “return an iconic company to greatness,” but she still has a long way to go.
The Sunnyvale, Calif., company’s first-quarter revenue was up from the same period last year, but so were operational costs, which took a big bite out of profit.
The company recorded revenue of $1.2 billion, up 8% from the same period last year, with big gains in mobile revenue, a key metric indicating future growth.
But traffic acquisition costs were nearly four times larger, at $183.1 million. An increase in total expenses forced net income down to $22.1 million from $313.9 million a year earlier.
Still, it appears that Mayer has put some promising wheels in motion for future earnings. After she announced Yahoo’s focus on its mobile, video, native advertising and social platforms last year, revenue from those areas was up 33% to $363 million this quarter.
Mobile revenue on its own was up 61% year over year.
“Our mobile, video and native strategy is core to our growth because it counters the decline in our legacy business,” Mayer said is a conference call with analysts Tuesday.
Last week Mayer announced that Yahoo had renegotiated a 2009 search contract deal with Microsoft Corp. Under the new terms, Yahoo will no longer exclusively provide Microsoft Bing ads and search results for its desktop traffic, which could allow it to sell some of its desktop traffic to another party. The new terms also allow either party to terminate the agreement “at will” after Oct. 1.
Analysts described the move as a win for Yahoo, giving it the freedom and flexibility to serve its own ads off desktop search results.
The results were revealed after markets closed. Yahoo shares closed at $44.49, down 16 cents.