Yahoo Q3 2013 Earnings Just Beat Expectations, Ad Sales Rise But Prices Fall

Yahoo reported its Q1 2013 earnings today, with GAAP revenue of $1.4 billion and $1.08 billion excluding traffic acquisition costs and earnings per share of $0.34 for the quarter. All earnings stats were off  from Q3 2012. Still, earnings per share came in just above analyst expectations of $0.33 and revenue hit the target of $1.08. A full snapshot is below.

“I’m very pleased with our execution, especially as we’ve continued to invest in and strengthen our core business,” said Yahoo CEO Marissa Mayer. “In Q3, we launched new user experiences across many of our digital daily habits — Yahoo Screen, My Yahoo, Fantasy Sports, and more.  Now with more than 800 million monthly users on Yahoo — up 20 percent over the past 15 months — we’re achieving meaningful increases in user engagement and traffic.”

Yahoo also touted the expansion of native stream ads in the third quarter to Yahoo Mail and its mobile media properties among its accomplishments for the quarter.

However, translating the value of its ad inventory appears to remain a problem for Yahoo. Display revenue (excluding traffic acquisition costs) was $421 million, down 7 percent from last year. The number of ads (excluding Korea) rose roughly 1 percent, while the price-per-ad fell approximately 7 percent compared to Q2 2012.

Search revenue (minus TAC) was off to a lesser extent than display at 3 percent. The trends were similar though: Paid clicks rose roughly 21 percent, but cost-per-click was down approximately 4 percent compared to the third quarter of 2012.

Yahoo also announced today that it is increasing its stake in Alibaba, the Chinese ecommerce company, with an amended stock repurchasing agreement that lowers the number of Alibaba shares it is required to sell from 261.5 million shares to 208 million shares when it goes public.

“Yahoo has always believed in the long-term potential and value of Alibaba, and we are pleased to maintain a larger stake in the company’s future,” said Jacqueline D. Reses, Chief Development Officer of Yahoo and Alibaba board member.