Meh Is the New Up: Yahoo Meets Lackluster Q2 Expectations and Lowers Guidance
Yahoo reported unimpressive second-quarter earnings that were in line with the low expectations of investors.
For the quarter, Yahoo said it earned 30 cents a share, on a GAAP basis, compared to 27 cents last year (without including a major restructuring charge). Adjusted profit came in at 35 cents a share, which was higher than Wall Street investors had expected.
Yahoo said adjusted EBITDA decreased seven percent to $369 million, while operating income was down 13 percent to $209 million.
More problematic, given intense growth by Yahoo peers, is that revenue slipped slightly again — one percent, this time — to $1.07 billion from $1.08 billion.
Yahoo also lowered its full-year earnings and revenue forecast, and said that the outlook for the third quarter would be lower than expected.
In other words, the company is still not growing at all in terms of the core metrics of its actual business, even after a year of free food, smartphones, frantic acquisitions and trendy fitness bands for all under the tenure of new CEO Marissa Mayer.
“I’m encouraged by Yahoo!’s performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week,” said Mayer in a statement.
That said, display revenue plummeted 11 percent, with the number of ads sold declining two percent and the price per ad dropping 12 percent. (Translation: COO and sales head Henrique De Castro is finding it harder to push around advertisers than when he had Google’s massive muscle behind him!)
Overall search revenue was also down nine percent, but up five percent when traffic acquisition costs were removed. Paid clicks were up 21 percent, which was encouraging, but the price per click was down eight percent.
Yahoo said that during the second quarter, it “repurchased 25 million shares for $653 million and used a net $1 billion in cash for acquisitions (including a net $970 million to acquire blogging site Tumblr).” The average purchase price was $25.76 per share. The company added that it had completed its commitment to return $3.65 billion from the proceeds of its stake in China’s Alibaba Group to shareholders.
The company said employees now totaled 11,500, down from 12,600 a year ago.
Yahoo’s shares, which already declined earlier today, were down 1.8 percent in after-hours trading, to $26.88. That said, the current stock price is up more than 70 percent from a year ago when Mayer took over.
Here is the official press release, and there will be a live video stream of the call with analysts at 2 pm PT, which I will be liveblogging:
And here are Yahoo’s Q2 deck slides too, if you want to dig deeper: