Marissa Mayer is finally seeing some growth at Yahoo Inc.—but it
is coming at a cost.
The company on Tuesday reported its revenue, minus commissions
paid to partners for Web traffic, edged higher in the second
quarter, only the second time sales have grown in the past five
periods. Revenue from display ads, excluding the traffic costs,
rose 3.3% to $406.7 million.
But the company posted a loss for its most recent quarter, as
the cost of acquiring traffic jumped sharply to $200.2 million from
$43.8 million in the year-earlier period.
Yahoo shares fell 2% in after-hours trading to $38.95.
Total revenue rose 15%. Yahoo reported its highest quarterly
revenue increase in almost nine years and display advertising saw
the "most substantial" revenue increase since 2010, Ms. Mayer
said.
Ms. Mayer, three years into her tenure as chief executive of the
aging Internet portal, is betting heavily on emerging areas
including mobile and video ads. Those new steams of revenue are now
starting to offset the declines in Yahoo's legacy business of
desktop display advertising.
Revenue growth from "Mavens" – a financial metric the company
introduced earlier this year to track mobile, video, native and
social ads – is growing. Mavens revenue makes up about 32% of the
company's total, growing 60% to $399 million in the second quarter.
That was up from 58% growth in the previous quarter.
Ms. Mayer has made some of her boldest bets on new mobile and
video offerings this year. In May, Yahoo announced it had won the
exclusive rights to the National Football League's first
streaming-only broadcast of a football game, a deal costing the
company more than $20 million, a person familiar with the matter
said at the time.
Earlier this month, Yahoo unveiled a new foray into legal online
gambling with a retooled version of its fantasy-sports mobile app
that lets users wager real money daily and weekly against their
friends and in bigger online tournaments.
Yahoo continues to lose ground to Internet ad rivals Google and
Facebook. This year, Yahoo will claim 4.6% of the $27 billion
market for online ads in the U.S., down from a 5.5% share last
year, estimates eMarketer Inc. Facebook will grow its share to
25.2%, up from 23.8% last year. Google will drop slightly to 13%
this year, down from 13.7% in 2014.
Yahoo posted a loss of $21.6 million, or 2 cents a share, from a
year-earlier profit of $269.7 million, or 26 cents a share. On an
adjusted basis, earnings were 16 cents, falling just below analyst
estimates of 18 cents a share.
Investors continue to look for signs that Yahoo's planned
tax-free spin-off of its shares in Alibaba Group Holding Ltd. will
happen later this year as planned. Ms. Mayer and finance chief Ken
Goldman will likely face questions about the status of that deal on
a call with analysts Tuesday.
Write to Douglas MacMillan at douglas.macmillan@wsj.com
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