Yahoo just released its second quarter 2013 financial results, with GAAP revenue down 7% year-over-year at $1,13 billion for the quarter. Revenue excluding traffic acquisition costs (ex-TAC) was 1,07 billion for the second quarter, down 1% year-over-year.
Non-GAAP earnings per share was $0.35, up from $0.30 for the same period last year.
Yahoo CEO Marissa Mayer said, “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 Yahoo! CEO Marissa Mayer. “From the new Yahoo! News, the new Yahoo! Sports app, the redesigned Yahoo! search, the new Flickr, the new Yahoo! Mail for tablet, the Yahoo! Weather app, our new Yahoo! app with Summly – this quarter drove tremendous improvements in our product line and our users responded with increased usage and engagement.”
Here’s a look at page view growth (doesn’t include Tumblr, iMap or infinite scroll):
“These measures are conservative,” says Mayer.
She said Yahoo is launching new products about every week.
Daily uploads have increased by a factor of three since Flickr refresh.
Search: 130 experiments this past quarter (in addition to work Microsoft is doing on their end).
A quarter of a million new blogs are being set up each day on Tumblr, Mayer says. She also hints at Tumblr integrations into Yahoo products in the future.
The company’s investor slides are available here.
Daily active users are up 120% across mail applications, Mayer says. This is a positive stat considering how much backlash the Yahoo Mail redesign has seen.
You can watch the webcast video live here.
Here’s the release in its entirety:
Yahoo! Reports Second Quarter 2013 Results
SUNNYVALE, Calif.–(BUSINESS WIRE)– Yahoo! Inc. (NASDAQ: YHOO) today reported results for the quarter ended June 30, 2013.
Q2 2012
Q2 2013
Percent
Change
GAAP revenue
$1,218 million
$1,135 million
(7)%
Revenue ex-TAC
$1,081 million
$1,071 million
(1)%
GAAP income from operations
$55 million
$137 million
150%
Non-GAAP income from operations
$240 million
$209 million
(13)%
GAAP net earnings per diluted share
$0.18
$0.30
68%
Non-GAAP net earnings per diluted share
$0.30
$0.35
19%
“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 Yahoo! CEO Marissa Mayer. “From the new Yahoo! News, the new Yahoo! Sports app, the redesigned Yahoo! search, the new Flickr, the new Yahoo! Mail for tablet, the Yahoo! Weather app, our newYahoo! app with Summly – this quarter drove tremendous improvements in our product line and our users responded with increased usage and engagement.”
GAAP revenue was $1,135 million for the second quarter of 2013, a 7 percent decrease from the second quarter of 2012. Revenue excluding traffic acquisition costs (“revenue ex-TAC”) was $1,071 million for the second quarter of 2013, a 1 percent decrease compared to the second quarter of 2012.
Adjusted EBITDA for the second quarter of 2013 was $369 million, a 7 percent decrease compared to the same period of 2012.
GAAP income from operations was $137 million for the second quarter of 2013, a 150 percent increase from the second quarter of 2012 (which reflected a restructuring charge of $129 million). Non-GAAP income from operations was $209 million for the second quarter of 2013, a 13 percent decrease from the second quarter of 2012.
GAAP net earnings for the second quarter of 2013 was $331 million, a 46 percent increase from the same period of 2012. Non-GAAP net earnings for the second quarter of 2013 was $386 million, a 6 percent increase from the same period of 2012.
GAAP net earnings per diluted share was $0.30 in the second quarter of 2013, compared to $0.18 in the second quarter of 2012. Non-GAAP net earnings per diluted share was $0.35 in the second quarter of 2013, compared to $0.30 in the second quarter of 2012.
Business Highlights
Yahoo! accelerated its pace of innovation in the second quarter, launching nearly a dozen new product experiences for its core daily habits — including re-imagined desktop, mobile and tablet versions of Mail, Weather, Flickr, Search, Sports, News, and Yahoo! for iPhone and Android.
The Company announced two new advertising formats designed to enhance the content experience in a more intuitive and immersive way. Yahoo! Stream Ads offer unobtrusive native ads that are part of a user’s Yahoo! news stream. The Company also unveiled a newYahoo.com Billboard ad, designed to deliver richer content interactions to users and increased effectiveness to advertisers.
Yahoo! is offering additional content as part of its partnerships with leading news and entertainment brands such as ABC News,CNBC, and Condé Nast Entertainment, adding breadth to its existing portfolio of partner content and enhancing Yahoo!’s cross-screen experiences. The Company also announced a partnership between Yahoo! and Broadway Video Entertainment, along with NBC Entertainment, to bring the “Saturday Night Live” archive clips from 1975 to 2013 exclusively to Yahoo!.
During the second quarter, Yahoo! made nine acquisitions to strengthen its products, content offerings, core technology and talent — including Summly, Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software and Tumblr. Tumblr is one of the fastest-growing media networks in the world. Its tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant community of users to the Yahoo! network. The combination of Tumblr and Yahoo! is expected to growYahoo!’s audience to more than one billion monthly visitors.
Second Quarter 2013 Financial Highlights
Display:
GAAP display revenue was $472 million for the second quarter of 2013, a 12 percent decrease compared to $535 million for the second quarter of 2012.
Display revenue ex-TAC was $423 million for the second quarter of 2013, an 11 percent decrease compared to $473 million for the second quarter of 2012.
The Number of Ads Sold (excluding Korea) decreased approximately 2 percent compared to the second quarter of 2012.
Price-per-Ad (excluding Korea) decreased approximately 12 percent compared to the second quarter of 2012.
Search:
GAAP search revenue was $418 million for the second quarter of 2013, a 9 percent decrease compared to $461 million for the second quarter of 2012.
Search revenue ex-TAC was $403 million for the second quarter of 2013, a 5 percent increase compared to $385 million for the second quarter of 2012.
Paid Clicks (excluding Korea) increased approximately 21 percent compared to the second quarter of 2012.
Price-per-Click (excluding Korea) decreased approximately 8 percent compared to the second quarter of 2012.
Cash Balance:
Cash, cash equivalents, and investments in marketable securities were $4.8 billion as of June 30, 2013 compared to $6 billion as ofDecember 31, 2012, a decrease of $1.2 billion.
During the second quarter of 2013, Yahoo! repurchased 25 million shares for $653 million and used a net $1 billion in cash for acquisitions (including a net $970 million to acquire Tumblr). These outflows were offset by $846 million in cash from Alibaba Group to redeem the Alibaba Group Preference Shares. The cash received represents the redemption value and includes the stated value of$800 million plus dividends of $46 million.
“We are happy to announce that as of today we have essentially completed our commitment to return $3.65 billion from our Alibaba Groupproceeds to shareholders, repurchasing a total of 190 million shares,” said Yahoo! CFO Ken Goldman. “As part of our ongoing commitment to shareholders, we plan to continue to execute against the $5 billion share buyback that was authorized last year, of which approximately $1.9 billion remains. We plan to repurchase shares in open market or privately negotiated transactions.”
Live Stream
Yahoo! will live stream a video broadcast of the Company’s second quarter 2013 financial results at 2 p.m. Pacific Time/5 p.m. Eastern Timetoday. The live stream will be broadcast from Yahoo!’s Sunnyvale studio and will be available exclusively on Yahoo! Finance athttp://finance.yahoo.com. The Company will provide its business outlook for the third quarter and full year during the presentation. Supplemental financial information can be accessed through the Company’s Investor Relations website at http://investor.yahoo.com. The video webcast will be archived after the event at http://investor.yahoo.com and will be available for 90 days following the broadcast.
Non-GAAP Financial Measures
This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): revenue ex-TAC; adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per share – diluted; and free cash flow.
Revenue ex-TAC is GAAP revenue less traffic acquisition costs. Adjusted EBITDA, non-GAAP income from operations, non-GAAP net earnings and non-GAAP net earnings per share – diluted, exclude from the most comparable GAAP financial measures certain gains, losses, and expenses that we do not believe are indicative of ongoing results, and exclude stock-based compensation expense. Adjusted EBITDA also excludes taxes, depreciation, amortization of intangible assets, other income, net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests. Free cash flow is GAAP net cash provided by operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net and dividends received from equity investees.
These measures may be different than non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). Explanations of the Company’s non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Financial Statements,” “Supplemental Financial Data and GAAP to Non-GAAP Reconciliations,” and “GAAP to Non-GAAP Reconciliations.”
About Yahoo!
Yahoo! is focused on making the world’s daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo! is headquartered in Sunnyvale, California, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom (pressroom.yahoo.net) or the Company’s blog (yahoo.tumblr.com).
“Affiliates” refers to the third-party entities that have integrated Yahoo!’s advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”).
“Alibaba Group” means Alibaba Group Holding Limited.
“Net earnings” means net income attributable to Yahoo! Inc., and “net earnings per diluted share” means net income attributable to Yahoo! Inc. common stockholders per share — diluted.
“Number of Ads Sold” is defined as the total number of ads displayed, or impressions, for paying advertisers on Yahoo! Properties.
“Paid Clicks” are defined as the total number of times an end-user clicks on a sponsored listing on Yahoo! Properties and Affiliate sites for which an advertiser pays on a per click basis.
“Price-per-Ad” is defined as display revenue from Yahoo! Properties divided by our Number of Ads Sold.
“Price-per-Click” is defined as search revenue divided by our Paid Clicks.
Additional information about how “Number of Ads Sold,” “Paid Clicks,” “Price-per-Ad,” and “Price-per-Click” are defined and calculated is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, which is on file with the SEC and available on the SEC’s website atwww.sec.gov. Due to the closure of the Korea business in the fourth quarter of 2012, “Number of Ads Sold”, “Paid Clicks”, “Price-per-Ad”, and “Price-per-Click,” as presented above, exclude the Korea market for all periods.
“Search Agreement” refers to the Search and Advertising Services and Sales Agreement between Yahoo! and Microsoft Corporation, as amended.
“TAC” refers to traffic acquisition costs. TAC consists of payments to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo! Properties.
“Yahoo! Properties” refers to the online properties and services that Yahoo! provides to users.
This press release contains forward-looking statements concerning Yahoo!’s expected financial performance and Yahoo!’s strategic and operational plans (including, without limitation, the quotation from management). Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, acceptance by users of new products and services (including, without limitation, products and services for mobile devices and alternative platforms); Yahoo!’s ability to compete with new or existing competitors; reduction in spending by, or loss of, advertising customers; risks associated with the Search Agreement with Microsoft Corporation; risks related to Yahoo!’s regulatory environment; interruptions or delays in the provision of Yahoo!’s services; security breaches; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!’s international operations; adverse results in litigation; Yahoo!’s ability to protect its intellectual property and the value of its brands; dependence on third parties for technology, services, content, and distribution; and general economic conditions. All information set forth in this press release and its attachments is as of July 16, 2013. Yahoo! does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances. More information about potential factors that could affect the Company’s business and financial results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, which are on file with the SEC and available on the SEC’s website atwww.sec.gov. Additional information will also be set forth in those sections in Yahoo!’s Quarterly Report on Form 10-Q for the quarter endedJune 30, 2013, which will be filed with the SEC in the third quarter of 2013.
Yahoo!, Flickr and the Yahoo! logos are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.
Yahoo! Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
December 31,
June 30,
2012
2013
ASSETS
Current assets:
Cash and cash equivalents
$
2,667,778
$
1,142,223
Short-term marketable securities
1,516,175
1,486,591
Accounts receivable, net
1,008,448
941,811
Prepaid expenses and other current assets
460,312
887,677
Total current assets
5,652,713
4,458,302
Long-term marketable securities
1,838,425
2,161,814
Alibaba Group Preference Shares
816,261
-
Property and equipment, net
1,685,845
1,579,822
Goodwill
3,826,749
4,582,588
Intangible assets, net
153,973
398,300
Other long-term assets
289,130
171,210
Investments in equity interests
2,840,157
2,874,387
Total assets
$
17,103,253
$
16,226,423
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
184,831
$
120,028
Accrued expenses and other current liabilities
808,475
763,117
Deferred revenue
296,926
294,968
Total current liabilities
1,290,232
1,178,113
Long-term deferred revenue
407,560
333,229
Capital lease and other long-term liabilities
124,587
125,639
Deferred and other long-term tax liabilities, net
675,271
730,708
Total liabilities
2,497,650
2,367,689
Total Yahoo! Inc. stockholders’ equity
14,560,200
13,808,864
Noncontrolling interests
45,403
49,870
Total equity
14,605,603
13,858,734
Total liabilities and equity
$
17,103,253
$
16,226,423
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2012
2013
2012
2013
Revenue
$
1,217,794
$
1,135,244
$
2,439,027
$
2,275,612
Operating expenses:
Cost of revenue – traffic acquisition costs
137,025
64,316
281,116
130,384
Cost of revenue – other
278,453
271,262
532,432
549,269
Sales and marketing
272,910
279,738
558,178
536,757
Product development
199,628
236,248
428,106
455,828
General and administrative
136,117
135,039
260,388
268,460
Amortization of intangibles
9,756
8,084
19,809
15,449
Restructuring charges, net
129,092
3,578
134,809
(3,484
)
Total operating expenses
1,162,981
998,265
2,214,838
1,952,663
Income from operations
54,813
136,979
224,189
322,949
Other income, net
20,175
23,606
22,453
40,678
Income before income taxes and earnings in equity interests
74,988
160,585
246,642
363,627
Provision for income taxes
(26,523
)
(50,267
)
(82,942
)
(80,003
)
Earnings in equity interests
179,991
224,690
352,234
442,278
Net income
228,456
335,008
515,934
725,902
Less: Net income attributable to noncontrolling interests
(1,825
)
(3,858
)
(2,960
)
(4,467
)
Net income attributable to Yahoo! Inc.
$
226,631
$
331,150
$
512,974
$
721,435
Net income attributable to Yahoo! Inc. common stockholders per share – diluted (1)
$
0.18
$
0.30
$
0.42
$
0.65
Shares used in per share calculation – diluted
1,221,719
1,094,694
1,224,102
1,101,395
Stock-based compensation expense by function:
Cost of revenue – other
$
2,614
$
3,029
$
5,508
$
6,607
Sales and marketing
18,981
23,775
40,078
39,820
Product development
17,808
20,537
37,279
28,800
General and administrative
10,168
20,795
22,672
37,514
Restructuring expense reversals, net
(3,429
)
-
(3,429
)
-
Supplemental Financial Data:
Revenue ex-TAC
$
1,080,769
$
1,070,928
$
2,157,911
$
2,145,228
Adjusted EBITDA
$
397,715
$
369,182
$
782,022
$
754,787
Free cash flow
$
93,390
$
131,400
$
289,213
$
281,308
(1)
The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company’s diluted earnings per share by $0.01 for the three months ended June 30, 2012 and the six months ended June 30, 2013.
Yahoo! Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2012
2013
2012
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
228,456
$
335,008
$
515,934
$
725,902
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
131,789
141,426
254,539
285,290
Amortization of intangible assets
28,864
19,067
60,209
37,477
Stock-based compensation expense
46,142
68,136
102,108
112,741
Non-cash restructuring charges
38,638
-
38,638
547
Dividend income related to Alibaba Group Preference Shares
-
(15,475
)
-
(35,726
)
Dividends received from equity investees
83,648
123,058
83,648
135,058
Tax benefits from stock-based awards
(4,949
)
188
(3,935
)
9,725
Excess tax benefits from stock-based awards
(8,609
)
(5,706
)
(16,770
)
(18,513
)
Deferred income taxes
(14,075
)
(7,839
)
(18,474
)
(27,997
)
Earnings in equity interests
(179,991
)
(224,690
)
(352,234
)
(442,278
)
(Gain) loss from sale of investments, assets, and other, net
(15,105
)
1,270
(18,962
)
13,175
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net
(112,549
)
657
(9,908
)
58,510
Prepaid expenses and other
20,448
(119,275
)
11,018
(99,568
)
Accounts payable
6,728
11,381
(35,714
)
(59,754
)
Accrued expenses and other liabilities
28,233
53,711
(15,755
)
(69,761
)
Deferred revenue
(3,108
)
(50,089
)
(22,329
)
(75,318
)
Net cash provided by operating activities
274,560
330,828
572,013
549,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment, net
(106,131
)
(82,076
)
(215,922
)
(151,657
)
Purchases of marketable securities
(469,046
)
(763,009
)
(645,266
)
(2,244,302
)
Proceeds from sales of marketable securities
414,478
1,034,246
548,439
1,458,593
Proceeds from maturities of marketable securities
120,798
279,306
198,498
462,406
Proceeds related to the redemption of Alibaba Group Preference Shares
-
800,000
-
800,000
Purchases of intangible assets
(1,286
)
(924
)
(3,088
)
(2,052
)
Proceeds from the sale of investments
26,132
-
26,132
-
Acquisitions, net of cash acquired
-
(1,014,010
)
-
(1,024,157
)
Other investing activities, net
(2,141
)
(6,961
)
(9,421
)
(3,139
)
Net cash (used in) provided by investing activities
(17,196
)
246,572
(100,628
)
(704,308
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net
66,248
61,984
77,871
123,092
Repurchases of common stock
(455,507
)
(652,750
)
(526,007
)
(1,427,825
)
Excess tax benefits from stock-based awards
8,609
5,706
16,770
18,513
Tax withholdings related to net share settlements of restricted stock units
(6,990
)
(7,448
)
(38,494
)
(51,137
)
Other financing activities, net
(1,209
)
(1,373
)
(2,222
)
(2,778
)
Net cash used in financing activities
(388,849
)
(593,881
)
(472,082
)
(1,340,135
)
Effect of exchange rate changes on cash and cash equivalents
(49,214
)
(15,929
)
(22,424
)
(30,622
)
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