Business

Friday 25 July 2014

Yahoo! profits rise but revenue falls in second quarter

Katherine Rushton

Published 17/07/2013|09:17

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Yahoo! boss Marissa Mayer battled to reassure investors its turnaround was still on track on Tuesday, after a mixed set of half-year results stoked fears that it is not making as much progress as hoped.

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Second-quarter profits rose from $228m to $335m while earnings per share – another measure of profitability used widely in the US – stood at 35 cents. Analysts had been forecasting 30 cents. However, revenues fell 7pc year on year to $1.14bn, just shy of expectations.

Ms Mayer, who arrived at Yahoo! from Google exactly a year ago on Wednesday, said that the she would award the business an “A” grade for its progress in mobile during that time, and that the company’s culture had changed considerably.

“[We have] created a new, supercharged Yahoo!. The energy and excitement on campus is unbelievable,” she said.

Kenneth Goldman, Yahoo!'s chief financial officer, added: “We have a lot of confidence in our business but that has yet to translate to revenue growth.”

However, shares in the internet company dropped as much as 2.4pc in after-hours trading, as the lukewarm results made it clear that there is no silver bullet solution to fix the ailing business.

Revenues from display advertising fell 11pc to $423m, but Yahoo!'s search engine showed a return to health. The number of paid-for clicks rose by more than a fifth, fuelling a 5pc increase in search revenue to $403m.

Shares in Yahoo! have risen by more than 75pc since she arrived at the company, while a crackdown on costs and a series of acquisitions have bolstered investor confidence.

In March, it bought Summly, a content sorting website founded by Nick D’Aloisio, a 17-year-old schoolboy from Wimbledon, and in May it paid $1.1bn for the video-based blogging website Tumblr.

Ms Mayer said Yahoo! was likely to make more, “smaller” acquisitions. However, Yahoo! is still under pressure to demonstrate how the 17 deals she has already sealed will transform the fortunes of a company which has spent the past five years falling behind its competitors. Tumblr was unlikely to deliver any “meaningful” revenues this year.

Ms Mayer said she was “pleased” with Yahoo!'s performance, and that the changes made in the past 12 months would “set up the company for long-term growth”.

“We saw continued stability in our business, strengthened our team, and started the year with fast execution against our products and partnerships. We are moving quickly to roll out beautifully designed, more intuitive experiences for our users,” she said.

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