Marissa Mayer Says Improving Flat Revenue at Yahoo Will Be a “Series of Sprints”
Yahoo turned in a first-quarter report that showed continued flat revenue, although earnings were up.
Here’s the liveblog of the conference call following the report, which starred Yahoo CEO Marissa Mayer, who tried to explain how she planned to remake the Silicon Valley Internet giant to increase that weak revenue in its key display advertising and search units:
2:00 pm: I like that Mayer started on time, which many a Yahoo CEO did not in the past.
Still, there is no way she could easily explain away the revenue miss at the company in the quarter, which is due in large part to its ever-declining display advertising sales.
Thus, she used the metaphor of running to clarify the situation.
“Getting the company going at the rate we would like will take several years,” she said, describing turning Yahoo around as a “series of sprints,” including making it a great place to work.
The next sprint will be to create “beautiful products.” After that, the next one will be to improve user engagement. And then, presumably, “ultimately growth.”
2:08 pm: Mayer touted better employee collaboration, which she said has made Yahoo a more attractive place to work than ever before.
She also noted that Yahoo has gotten a lot of ex-Yahoos — which she called “boomerangs” — to return to the fold.
Mayer deftly did not mention the better earnings — largely due to cost and tax savings, as well as other financial manipulations and not sales efforts — since managing the business well is not the same as growing it.
But, let it be said: She and CFO Ken Goldman seem to be managing Yahoo very well, although Wall Street and others are expecting them to goose revenues.
2:13 pm: It is on to Goldman, who goes through the numbers, which Yahoo has already released.
Here’s a quick synopsis: Yahoo’s display advertising business is down 11 percent in the first quarter to $455 million, with the number of ads sold declining seven percent and the price per ad falling two percent.
As it did last quarter, search revenue did not save the day. It also declined 10 percent to $425 million, although it was up six percent when traffic acquisition costs were not counted in. While paid clicks were up 16 percent, price per click was down seven percent.
Employee count was down 19 percent, another expense savings.
Goldman is clearly a smart cookie, but there is a long road here from this to true revenue growth.
2:26 pm: Mayer underscored that immediately, noting that Yahoo has to meet the growth rates of competitors, such as Google and Facebook, behind which Yahoo badly lags.
“Make no mistake,” she said about that need, noting that improvements in its core properties, as well as mobile products, are key focuses for her to improve sales.
She said there was a respectable mobile growth in users in the quarter, although she declined to say just how much revenue Yahoo makes in mobile. (It’s not much yet, so that explains that.)
Partnering is also important to her, she said, working with companies all over the Internet space.
All will lead to better user engagement, and “with user engagement comes monetization,” she added.
We are on course, she concluded — presumably on what will likely be an exhausting sprint.
2:30 pm: Then, it was onto questions from analysts.
The first was about why there were declines in ad sales — via a plan to de-load pages of them or just not selling enough and declining page views.
It is a complex issue, due to various elements, from the move to mobile to waiting for product improvements to kick in with users.
There was then a question about partnering — which Yahoo has indeed been good at. That said, I sometimes wonder if the company were a bit less cooperative and more selfish, as its rivals always are, that it might be more successful.
Mayer still said she thinks partnering is a good thing.
The next question was whether Microsoft will continue to pay its revenue per search guarantees to Yahoo, as it has in the past when their search deal did not meet expectations.
From a “conservative point of view, there will be no renewal,” said Goldman, although he notes that Yahoo talks to Microsoft daily.
I’d like to hear that conversation!
2:38 pm: An obvious question then came about when the heck Yahoo will get its display business moving.
“It’s a sprint and it’s a chain reaction,” said Mayer, not precisely answering the question and using comparative metaphorical terms that were perhaps more awkward to hear today given the tragedy in Boston.
The next question was about adding more of a Google advertising relationship, a deal which would certainly up Yahoo’s revenue, although there have always been potential regulatory issues related to it.
Mayer pointed to a recent smaller ad partnership with the search giant, and “we occasionally explore new opportunities.”
What ho? (Hey, Nikesh, that’ll be me calling, so pick up!)
2:42 pm: Another question came about whether Yahoo could improve its search share, which has been declining.
Mayer, who is an expert in this area, said that search interface improvements will matter, although there are other ways of adding share too, such as closer relationships with browsers.
She was animated here, which was probably a good idea, given her COO Henrique De Castro seems to be swinging and missing in the display advertising arena.
Thus, the follow-up question was perfect, about the sales realignment that De Castro initiated that has caused a lot of internal distress at Yahoo.
Mayer said she thought that “this is the right thing to do,” although it’s not as clear if she really knows how jarring the change has been for the sales troops. Display ad sales are not her area of expertise, so she probably needs to get more up to speed on this critical issue.
2:48 pm: The usually tepid analysts kept pounding away on that issue, which Mayer answered by saying the decline is less of a decline than is had been previously. It’s faint praise, of course, but it’s a fair point.
Also of interest is whether Yahoo could create a mobile layer on top of Google’s Android as Facebook just did with its innovative Home software.
If you have been around as long as I have, you know that Yahoo once had an immersive app called Yahoo Go that came too soon and was ultimately executed badly, despite being a great concept.
Mayer did compliment Facebook on the good idea of Home, though, which was classy, since it is.
2:51 pm: There was then a question about Yahoo’s golden ticket of an asset — its large share of China’s Alibaba, which is kicking it in all aspects, especially related to revenue.
Would that Yahoo could inject some of that energy into its own core business.
Then came another important question: Does Yahoo have the assets to keep up in ad sales and technology?
“This will be an area of continued focus for us,” said Mayer.
The questions continued about mobile and pricing issues in search.
Mayer noted that although the company has no “direct monetization” from its weather and stock quote defaults on the Apple iPhone, it does provide leads to other parts of Yahoo’s offerings and is valuable for that.
As to increasing cost per clicks, she said that the gap has still not been closed with Microsoft on improving search monetization.
Which has to happen, obviously.
2:59 pm: Mayer was asked about the “next sprint,” which she said will be the fun part.
There will be version updates and more of a “cadence” that is presumably not glacial. She has certainly got to run faster, given how quickly Facebook, Google and many others are moving in comparison.
It would be fun if Yahoo could keep up the pace.
The last question was about Mayer’s strategy in search, including how to grow Web and mobile search.
Again, the search expert has a lot of good ideas.
Then, cleverly, Mayer summarized her Q1 earnings report in 140 words, via the engine it acquired from its recent $30 million purchase of Summly, versus her prepared script of 2,000 words.
I’m pleased with the continued execution I see every day — our teams have been working very hard, especially in Q1. As a result of these initiatives and many others, the talent is undeniable — today, more applicants want to work at Yahoo, and more employees are staying. These teams bring an incredible mix of engineering and technical talent, which will help us accelerate our efforts in mobile development and content personalization.
The teams are already moving quickly to amplify the entrepreneurial spirit that’s so prevalent at Yahoo right now. Designed to be more intuitive and personal, the new Yahoo experience is all about users’ interests and preferences. Yahoo is a consumer Internet company, and the consumer Internet is a growth industry. We’re on course to do what we said we would do — stabilize, and grow with the market.
But to summarize in even fewer words, using only my limited, non-$30 million, Twitter-schooled mental faculties: Yahoo is trying to race as fast as it can to keep up, but the results are still not in.