updated 07:49 pm EDT, Wed July 16, 2014
Company is 'not satisfied,' with results, declining display ad revenue to blame
Yahoo posted its second quarter 2014 results yesterday, indicating shrinking revenues from the same quarter in the previous year. The quarter, which ended on March 31, saw a decline in revenue due to disappointing results from display ad revenue. CEO Marissa Mayer realizes that there is still work to do in some areas, as the company looks toward a "unified approach" to advertising.
"Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results. While several areas showed strength, their growth was offset by declines," said CEO Marissa Mayer. "Overall, I remain confident in Yahoo's future, our strategy and our return to long-term growth."
Results for the second quarter of 2014 saw revenues hitting $1.08 billion, or $1.04 billion if traffic acquisition costs (TAC) are excluded. Compared to the same quarter in 2013, revenues are down four percent from $1.13 billion (or down three percent from $1.07 billion, excluding TAC).
Compared to the first quarter of 2014, the revenues for the second quarter signal a greater, more recent decline. The first quarter reported revenues of $1.13 billion, or $1.08 billion excluding TAC. This puts the second quarter results at a decline of 4.4 percent for GAAP revenue, and revenue excluding TAC.
Second quarter display ad revenues were down to $436 million from $472 million, an eight percent decrease year-on-year. While the company sold 24 percent more ads in 2014, the price per ad fell 24 percent, leading to the lower revenue figures. Display revenues excluding TAC dropped seven percent from $423 million to $394 million.
Not all ad revenues were down, as search was up six percent over the second quarter of 2013. Revenues hit $428 million, excluding TAC, while second quarter 2013 hit only $403 million. GAAP revenues for search were only up two percent to $428 million from $418 the previous year. Paid clicks increased three percent, while price per click was up 15 percent. Search revenues are down from the previous quarter figures of $445 million, or $444 excluding TAC.
Chief Financial Officer of Yahoo Ken Goldman said in the report that the company amended its share repurchase agreement with Alibaba, a company it is closely tied to due to its 24 percent stake ownership. Alibaba is expected to go public in the near future, requiring Yahoo to sell shares at that time. Yahoo was originally expected to sell 208 million shares, but will now sell off 140 million.
During an analyst call, Mayer indicated that while she wasn't satisfied with the quarterly results, turning the company around from the state it was in before her tenure isn't going to be quick. She restated that "a transformation of this size and scale" is something that can take a few years to accomplish.