Yahoo Q1 Revenue Flat, Profit Rises

Yahoo's revenue grew slightly in the first quarter of 2010 but profits rose more strongly, as the company's display advertising business performed to management's satisfaction.

Yahoo had revenue of US$1.59 billion in the first quarter of 2010, ended March 31, up 1 percent compared with the first quarter of 2009, the company said Tuesday. Subtracting commissions and other fees paid to partners, revenue was $1.13 billion, below the $1.17 billion consensus expectation from analysts polled by Thomson Financial.

Net income came in at $310 million, or $0.22 per share, up from $118 million, or $0.08 per share. In the first quarter of 2010, Yahoo got a $0.05-per-share benefit from the sale of Zimbra and a $0.02-per-share benefit from reimbursements made by Microsoft related to the companies' search deal.

On a pro forma basis, which excludes certain items, net income was $218.84 million, or $0.15 per share, six cents more than analysts expected and up from $123.11 million, or $0.09 per share, one year ago.

In a statement, Yahoo CEO Carol Bartz called the quarter "good" and highlighted a 20 percent revenue growth in display advertising, including a 24 percent increase in "guaranteed" display ad revenue, which are pricier ad units for which marketers pay a premium.

Yahoo ended the quarter with free cash flow of $64 million, down 70 percent from 2009's first quarter, and with cash, cash equivalents, and investments in marketable debt securities of $4.24 billion, down $274 million from 2009's fourth quarter.

Yahoo expects revenue in the second quarter of 2010 to be between $1.60 billion and $1.68 billion.

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