Yahoo Search Improves, But Misses Analysts' Estimates

Yahoo reported Tuesday that search volume rose in Q1 2015, ended March 31, with searches reaching a five-year high. The company attributed the partnership with Mozilla as the key to the volume increase, the company said in its earnings report.

However, other revenue from media like video and display declined, causing the company to miss analysts' estimates. 

Yahoo reported adjusted earnings at 15 cents per share on $1.04 billion in revenue. Analysts had expected a bit more, about 18 cents per share on $1.06 billion in revenue, according to a consensus estimate from Thomson Reuters.

"Yahoo is amidst a multi-year transformation to return an iconic company to greatness," stated Marissa Mayer, Yahoo CEO. "For the next phase of the transformation, we will focus on accelerating our GAAP revenue growth while managing our margins and costs."

Search saw revenue growth. Gross search revenue came in at $956 million for the first quarter of 2015, up 20% compared with the first quarter of 2014. Yahoo reported GAAP search revenue of $532 million, up 20% compared with the first quarter of 2014.

Search revenue from the Mozilla traffic is being recognized on a gross basis as a result of the terms of the agreement, therefore increasing GAAP revenue and also increasing TAC, the company said.

Search revenue ex-TAC was $432 million for the first quarter of 2015, a decrease of 3% compared to the first quarter of 2014. The number of paid clicks rose 21%, compared with the first quarter of 2014. The price per click rose 3%, compared with the year-ago quarter.

The amended search partnership with Microsoft Bing to improve the search experience creates value for advertisers and establish ongoing stability for partners now is nonexclusive for both desktop and mobile. Yahoo will continue to serve Bing ads and search results for at least 51% of its desktop search traffic.

Display advertising revenue, excluding traffic acquisition costs, fell 7% from the year ago to $381 million. Total GAAP display revenue saw a 2% gain.

During the quarter, Yahoo inked video, display, native and social ad deals with brands like Old Navy, Honda and the City of Las Vegas on Yahoo Properties, including Tumblr and Tourney Pick'Em, as well as the Yahoo Screen series Community, the company reported.

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