Yahoo Profit Tops Street, Ad Revenue Rebounds; Stock Up

(RTTNews) - Yahoo Inc (YHOO) Tuesday reported a 20 percent decline in first-quarter profit, hurt mainly by increased operating expenses, even as its ad business rebounded for the first time in about three years and search revenue maintained the momentum. Yahoo's results for the first quarter topped Wall Street estimates.

Following the announcement, Yahoo shares rallied 8 percent in after-hours trade on the Nasdaq.

The recent quarter saw growth in ad revenue for the first time since 2011, said CEO Marissa Mayer in a statement, adding that Yahoo products were increasingly accessed by mobile customers.

Though the ad revenue growth was modest, it offers some relief for Mayer who has been under pressure to revive growth. During the quarter, the Internet giant introduced a suite of web, mobile, and video ad products across native, audience, and premium display.

Yahoo also had announced a partnership with Yelp to showcase user reviews, business information, and star ratings.

Sunnyvale, California-based Yahoo posted quarterly net income of $312 million or $0.29 cents per share, compared with $390 million or $0.35 per share last year.

Excluding items, adjusted earnings for the quarter were $402 million or $0.38 per share.

On average, 27 analysts polled by Thomson Reuters estimated earnings of $0.37 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the first quarter edged down to $1.13 billion from $1.14 billion in the prior year.

Revenues, excluding traffic acquisition costs (TAC), marginally climbed to $1.09 billion from $1.07 billion last year year. Thirty analysts had a consensus revenue estimate of $1.08 billion for the quarter.

Display revenue ex-TAC was $409 million for the quarter, up 2 percent from last year, and Search revenue ex-TAC was up 9 percent at $444 million.

The company reported earnings in equity interests of $301 million for the quarter, compared with $217.6 million last year.

Results were mainly offset by operating expenses that climbed to $1.1 billion from $954 million a year ago, as it expended on product development and sales.

In March, Yahoo was reported to be in preliminary talks to buy online-video service News Distribution Network Inc or NDN for about $300 million. A wrap-up of NDN would enable Yahoo to compete with Google Inc's (GOOG) YouTube.

Meanwhile, investors will be seeing as to how Alibaba, in which Yahoo has a 24 percent stake, will fare in its much-awaited IPO later this year.

A Chinese online commerce company, Alibaba has been one of Yahoo's best investments. Alibaba is valued at about $140 billion. As per a pact, Yahoo will sell 10 percent of its stake in the Alibaba IPO, and after that, it can dispose of its remaining shares at any time.

Yahoo stock closed Tuesday at $34.21, up $0.76 or 2.29%, on a volume of 38.5 million shares. In after hours, the stock gained $2.74 or 8.01% at $36.95. In the past year, the stock has traded in the range of $22.70 - $41.72.