January 28, 2014 Last Updated 3:35 pm

Yahoo! earnings report shows revenue down 6% for the quarter and for the full year

The Yahoo! renaissance will have to wait for 2014 as the company reported earnings with its performance through 2013. Revenue for the quarter came in at $1.266 billion, down 6 percent from the same quarter in 2012. For the full year, revenue was also down 6 percent against 2012.

“I’m encouraged by Yahoo’s performance in Q4 and 2013 overall. We saw continued stability in the business, and our investments allowed us to bring beautiful products to our users and establish a strong foundation for revenue growth,” said Yahoo CEO Marissa Mayer in the company’s earnings statement.

Here is the full press release:

SUNNYVALE, Calif. – January 28, 2014 — Yahoo! Inc. today reported results for the fourth quarter and full year ended December 31, 2013.

Yahoo-earnings-chart

“I’m encouraged by Yahoo’s performance in Q4 and 2013 overall. We saw continued stability in the business, and our investments allowed us to bring beautiful products to our users and establish a strong foundation for revenue growth,” said Yahoo CEO Marissa Mayer. “In Q4, we launched the new Yahoo Mail, Yahoo Finance, and our new Flickr photo books, while quickening our pace of experimentation. We are extremely heartened by the year-over-year traffic increase we experienced in 2013, an early sign of return on our investments and the acquisitions we’ve made.”

GAAP revenue was $1,266 million for the fourth quarter of 2013, a 6 percent decrease from the fourth quarter of 2012. Revenue excluding traffic acquisition costs (“revenue ex-TAC”) was $1,200 million for the fourth quarter of 2013, a 2 percent decrease compared to the fourth quarter of 2012. GAAP revenue was $4,680 million for the full year of 2013, a 6 percent decrease compared to the prior year. Revenue ex-TAC was $4,426 million for the full year of 2013, a 1 percent decrease compared to the prior year.

Adjusted EBITDA for the fourth quarter of 2013 was $478 million, a 6 percent decrease compared to the fourth quarter of 2012. Adjusted EBITDA was $1,564 million for the full year of 2013, an 8 percent decrease compared to the prior year.

GAAP income from operations was $174 million for the fourth quarter of 2013 (which includes a $70 million pre-tax gain from the sale of patents to an operating company), an 8 percent decrease from the fourth quarter of 2012. Non-GAAP income from operations was $330 million for the fourth quarter of 2013 compared to $340 million in the fourth quarter of 2012. GAAP income from operations was $590 million for the full year of 2013, a 4 percent increase compared to the prior year. Non-GAAP income from operations was $935 million for the full year of 2013 compared to $1,049 million for the prior year.

GAAP net earnings for the fourth quarter of 2013 was $348 million (which includes a $49 million net gain from the sale of patents), a 28 percent increase compared to $272 million in the fourth quarter of 2012. Non-GAAP net earnings for the fourth quarter of 2013 was $482 million, a 17 percent increase from the same period of 2012. GAAP net earnings for the full year of 2013 was $1,366 million, a 65 percent decrease compared to $3,945 million for the prior year (which included a net gain related to the sale of Alibaba Group shares of $2,755 million). Non-GAAP net earnings for the full year of 2013 was $1,646 million, a 4 percent increase compared to the prior year.

GAAP net earnings per diluted share was $0.33 in the fourth quarter of 2013 (which includes a net gain of $0.05 per diluted share related to the sale of patents), compared to $0.23 in the fourth quarter of 2012. Non-GAAP net earnings per diluted share was $0.46 in the fourth quarter of 2013, compared to $0.35 in the fourth quarter of 2012. GAAP net earnings per diluted share was $1.26 for the full year of 2013, compared to $3.28 for the prior year (which included a net gain of $2.29 per diluted share related to the sale of Alibaba Group shares). Non-GAAP net earnings per diluted share was $1.52 for the full year of 2013, compared to $1.31 for the prior year.

Business Highlights

  • Yahoo continued to launch new products and improve existing properties in the fourth quarter, addressing the daily habits of users around the world. The Company introduced an improved and expanded Yahoo Finance experience across web, mobile and tablet, as well as a major update to Yahoo Mail. In addition, Yahoo Screen was extended to Apple TV, Flickr rolled out Photo Books, and Yahoo Weather expanded to iPad.
  • During the fourth quarter, Yahoo acquired Aviate (ThumbsUp Labs), PeerCDN (Instant IO), Evntlive, Ptch, SkyPhrase, LookFlow, Bread Labs and Hitpost to strengthen its products, content offerings, core technology and talent.
  • The Company continued to strengthen its content offerings by investing in world class talent. During the fourth quarter, Yahoo hired David Pogue to lead consumer tech coverage and Matt Bai as national political columnist, both formerly with the New York Times. In addition, Katie Couric joined the Company as Global Anchor in January 2014.

Fourth Quarter and Full Year 2013 Financial Highlights
Display:

  • GAAP display revenue was $553 million for the fourth quarter of 2013, a 6 percent decrease compared to $591 million for the fourth quarter of 2012. GAAP display revenue was $1,950 million for the full year of 2013, a 9 percent decrease compared to $2,143 million for the prior year.
  • Display revenue ex-TAC was $491 million for the fourth quarter of 2013, a 6 percent decrease compared to $520 million for the fourth quarter of 2012. Display revenue ex-TAC was $1,737 million for the full year of 2013, a 9 percent decrease compared to $1,899 million for the prior year.
  • The Number of Ads Sold (excluding Korea) increased approximately 3 percent compared to the fourth quarter of 2012.
  • Price-per-Ad (excluding Korea) decreased approximately 7 percent compared to the fourth quarter of 2012.

Search:

  • GAAP search revenue was $464 million for the fourth quarter of 2013, a 4 percent decrease compared to $482 million for the fourth quarter of 2012. GAAP search revenue was $1,742 million for the full year of 2013, an 8 percent decrease compared to $1,886 million for the prior year.
  • Search revenue ex-TAC was $461 million for the fourth quarter of 2013, an 8 percent increase compared to $427 million for the fourth quarter of 2012. Search revenue ex-TAC was $1,699 million for the full year of 2013, a 6 percent increase compared to $1,611 million for the prior year.
  • Paid Clicks (excluding Korea) increased approximately 17 percent compared to the fourth quarter of 2012.
  • Price-per-Click (excluding Korea) decreased approximately 3 percent compared to the fourth quarter of 2012.

Cash Balance:

  • Cash, cash equivalents, and investments in marketable securities were $5 billion as of December 31, 2013 compared to $6 billion as of December 31, 2012, a decrease of $1 billion.
  • During the fourth quarter of 2013, Yahoo repurchased 6 million shares for $231 million and used a net $60 million for acquisitions. During the year ended December 31, 2013, Yahoo repurchased 129 million shares for $3.3 billion and used a net $1.2 billion for acquisitions.
  • During the fourth quarter of 2013, Yahoo received net proceeds of $1.3 billion, which is net of the call spread, from the issuance of 0.00% Convertible Senior Notes due 2018 and net proceeds of $295 million from the settlement of derivative hedge contracts.

“In 2013, we improved our capital structure by raising $1.3 billion of convertible debt, net of the call spread, at attractive rates and further strengthened our balance sheet by generating $786 million in free cash flow and realizing $304 million through Japanese Yen hedges,” said Ken Goldman, CFO of Yahoo. “We continue to return capital to shareholders as we repurchased 129 million shares at an average cost of $25.95 per share for a total of $3.3 billion during the year and increased our share buyback authorization by $5 billion.”

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