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Yahoo CEO Marissa Mayer, with CFO Ken Goldman, shared the results of the company’s 2013 third quarter on Oct. 15, again via a livestream from Yahoo’s Sunnyvale, Calif., studio.
The primary financial takeaways were that revenue was $1.1 billion, essentially flat from a year ago, while earnings fell to 34 cents a share, from 35 cents a year ago. Search, one of Yahoo’s two core businesses, saw revenue of $435 million (down 8 percent), while in ads, its other core business, the number of ads sold increased 1 percent while the price per ad fell 7 percent.
For those less interested in the figures of the call than Mayer’s strategies for her second year, and the details that she and Goldman chose to share and not share, we’ve summed up the rest of the call below.
1. Yahoo Expects an Alibaba Cash Windfall Soon
Yahoo acquired 17 companies during CEO Mayer’s first year on the job and burned through a good amount of cash—most significantly with its $1.1 billion payout for Tumblr. But Yahoo anticipates that its cash reserves may be replenished soon, when the fabulously successful Chinese e-commerce site Alibaba goes public.
In September 2012, Yahoo sold 40 percent of its stake in Alibaba for $7.1 billion, but it still holds a 24 percent share of the company. Depending on how the IPO goes, Yahoo stands to gain between $18 billion and $30 billion, Bloomberg has reported.
“We do expect at some point that Alibaba will have the IPO and that will provide more cash for us,” Yahoo CFO Ken Goldman said during the call.
“We haven’t made any decision at this time as to how we might utilize those funds,” he added, “but at this point we do believe we certainly have adequate funds to run the business…and to continue to acquire the types of companies that we have been acquiring this past year.”
2. Yahoo Continues to ‘Sprint’ After Revenue Growth
Mayer often speaks of “sprints,” when describing a major effort by her team.
“Our current sprint is deeply focused on product quality and growing traffic and we’ve demonstrated great momentum on both this quarter,” Mayer said during the livestream. “People, products, traffic, revenue—that is the chain reaction we are working to trigger. Great teams build beautiful, engaging products, those products drive increased traffic, and the increased traffic generates greater advertiser interest, which ultimately results in revenue growth.”
3. During Q3, Yahoo Bought Eight Companies
Sounding like the roster of an alien classroom, Yahoo’s eight acquisitions were: Bignoggins, Qwiki, Xobni, Admovate, Ztelic, Lexity, Rockmelt, and IQ Engines.
4. During Q3, Yahoo Rebuilt Seven ‘Daily Habit’ Products
Mayer wants Yahoo and its offerings to be deeply ingrained in user’s everyday habits. During the quarter, the “daily habit” products it redesigned included Yahoo Sports, Weather and entertainment properties including Yahoo Movie, Music, TV and omg!
“These more modern product experiences are now about personalized streams of information,” Mayer said.
5. In September, It Launched Yahoo! Screen, Its New ‘Video Destination’
Yahoo Screen offers original programming, as well as popular shows like Saturday Night Live Archives, NBC Sports, South Park and The Daily Show.
Yahoo’s Q3 Results In 12 Key Takeaways
“Yahoo Screen has quickly emerged as a preferred pastime, our constant partner to drive traffic…It’s a fun, serendipitous way to experience thousands of hours of video content,” said Mayer. “We built the new Yahoo Screen experience especially for mobile and tablets with a new, easy-to-use player and some substantial under-the-hood improvements in their performance.”
Regarding Yahoo’s commitment to video, Mayer said she sees opportunity in original and professional content, as well as in Flickr.
“Flickr has recently added the ability to upload 3-minute video clips,” she said, “We think it will be a way for our users ultimately to participate and upload video clips.”
6. For the First Time in Eight Years, It Majorly Updated My Yahoo
As you may have heard, Yahoo overhauled My Yahoo, a portal that millions of Yahoo users start their days with, according to Mayer. She said Yahoo teamed with celebrities, artists and musicians, who lent Yahoo background imagery; Yahoo sampled the colors in users’ selected themes to match the whole page to their tastes; and it generally made the site “more beautiful, colorful and easier to organize.”
Mayer called it “simply stunning.” (Not all of Yahoo’s users agree.)
7. Yahoo Undid Two Years of Declining User Numbers
In June, Yahoo announced that it had reversed a year-old trend of global traffic decline. In September, it announced during the earnings call, it achieved crossover with its global traffic levels from 2011, “meaning that our product spreads and the resulting increased engagements has effectively erased two years of traffic declines,” said Mayer.
“As I mentioned in Q2,” she added, “this type of reversal in traffic declines [in a company Yahoo’s size] is unprecedented, to my knowledge.”
8. Mobile User Numbers Are Up
During its second quarter, Yahoo had 340 million mobile users; during the third quarter, that rose to 390 million.
9. The Changing Consumer Internet Is Creating New Ad Opportunities
“We believe very strongly that mobile ads designed for the mobile experience may outperform what we’ve seen in traditional display,” Mayer said. “Some early experiments have indicated that, while simply porting traditional display to mobile reduces revenue per page view, showing native ads on mobile can actually increase revenue per page view. There is a big opportunity ahead to monetize mobile.
When we have the right ads in the right place, they are accretive to the user experience. It makes our users tune-in and not tune-out. “
Yahoo’s Q3 Results In 12 Key Takeaways
10. Yahoo Continues to Hire, and People Want to Work at Yahoo
During one particularly crazy week in the third quarter, Yahoo received 17,000 resumes.
The company now has 12,000 employees and no qualms about adding to its ranks. “If we find a great person, we hire them,” Mayer said.
Among the hires Yahoo made during the quarter were Ned Brody, now a senior vice president and head of the Americas; Dawn Airey, a senior vice president and head of EMEA; and Megan Liberman, a New York Times journalist who’s now editor-in-chief of Yahoo News.
11. Yahoo Is Counting on Search in 2014
“Clearly, what’s driving our mobile business today is Search. … Search in mobile is a very large opportunity and that is one of the things we will be counting on to really have the mobile-first kind of company [we want in 2014],” Goldman said.
“I should add that we’re endeavoring to gain share,” Mayer followed up, saying again that Yahoo conducted 100 experiments in Search over the quarter.
“We’re all along providing new functionality, differentiating functionality. And so we’ve been, for example, introducing into our Search results what we call direct display units that actually bring the answer and the content right to the user upfront. So, we’re excited about these because they differentiate us broadly in the Search market, and we will continue to innovate in Search and differentiate ourselves in Search.”
12. Mayer, If Anyone Needs Reminding, Intends to Win
“We will continue to sprint toward the growth and success that our teams are passionately working toward,” she said. “We are in this to win and to win big.”
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