Yahoo reported a 26% jump in non-GAAP net earnings of about $420 million for the first quarter of 2013 compared to a year earlier. That amounted to 38 cents a share for the first quarter of 2013.
Analysts had been expecting a 2% increase in revenue compared to the previous year and were predicting that earnings would increase by 9% to 25 cents a share, the Associated Press reported prior to the announcement.
The earnings were released after the close of U.S. markets. Shares were down slightly by 0.79% in afterhours trading at 6:10 p.m. ET.
In the earnings call, CEO Marissa Mayer stressed the progress they'd made in turning around their business by talking about the new talent that had joined the company, some recent acquisitions that had brought in new
technologies and people and the roll-out of new products.
She also stressed that mobile would be a crucial part of the company's turnaround and expressed confidence that the recent acquisitions and hires would allow them to capitalize on the trend.
Mayer said that by 2015 they expected to see more traffic through mobile than PCs by 2015. "Mobile growth is accelerating" to about 300 million monthly mobile users and "early results in mobile are very promising," she added.
She also noted that they would be releasing improvements to products much faster and that product improvements would increase usage and engagement, which would allow Yahoo to speed up growth.
"We have made improvements that will lead to more engagement and more monetization over the long run," that would allow Yahoo to outpace the fast growing Internet sector, she said.
But the earnings report also highlighted the challenges the company continues to face. While Internet advertising continues to grow rapidly, Yahoo's revenue based on generally accepted accounting principles (GAAP
revenue) fell 7% to $1,140 million.
Revenue excluding the traffic acquisition costs (revenue ex-TAC)- the metric Yahoo prefers to use- was virtually flat.
On a GAAP basis, revenue for both display and search, which are Yahoo's two largest businesses, were also down. GAAP display revenue declined by 11% to $455 million for the first quarter of 2013 compared to a year earlier.
Ex-TAC display revenue also declined by 11%.
GAAP search revenue slumped by 10% to $425 million for the first quarter of 2013, compared to $470 million for the first quarter of 2012, but ex-TAC display revenue grew by 6% to $409 million.
The number of ads sold (excluding Korea) fell by 7 percent compared to the first quarter of 2012. The price-per-ad (excluding Korea) slipped by 2% compared to the first quarter of 2012, the company reported.
On a more positive note, paid clicks (excluding Korea) increased approximately 16 percent compared to the first quarter of 2012.
In terms of its guidance, the company predicted faster growth in revenue and earnings in the second half of the year.