Q2 2016 – Yahoo Earnings Call Summary

Yahoo

Below are my key takeaways from the Yahoo Q2 2016 Earnings Call on July 18:

Summary:

Search is more than half of all revenue. Net income was negatively affected by a high Traffic Acquisition Costs (TAC), or payments made to affiliates and online firms for traffic sent to Yahoo sites.

Launched experiments in conversational interfaces, personal assistants and real-time answers.

CEO, Marissa Mayer, touted the rebuilt Yahoo Mail as being ‘incredibly stable, reliable, with great spam protection’ and said there were over 7MM additional mailboxes now connected through IMAP-in.

The death of Prince created the highest load on the site in 7 years.  Thanks to the Brexit vote, Yahoo Finance saw their highest number of users in 4 years and hosted the first global live stream of the Berkshire Hathaway annual meeting that generated 1.8MM live streams and over 8MM views on demand.   And Yahoo Sports started live streaming MLB’s game of the day.

Active headcount of 8,800 employees (down 2,100 YoY) and 700 contractors, a 45% reduction since Marissa started in 2012.  Closed offices in Buenos Aires, Burbank, Dubai, Madrid, Mexico and Milan.  Completed $250MM sale of Santa Clara real estate.

Key Financial Metrics: 

  • Total Revenue: $1,308MM / $841MM ex-TAC revenue
  • Search Revenue: $711MM (54% of total)
  • Display Revenue: $470MM (36% of total)
  • Adjusted EBITDA: $172MM
  • Operating Income: $39MM
  • Free Cash Flow: $426MM, inc net cash proceeds of $246MM from a land sale
  • Balance Sheet: Near $7,665MM in cash and marketable securities, up $800MM YoY

Search and Display Metrics:

  • Global Search
    • # of Paid Clicks: -24%
    • Price Per Click: +8%
    • Search Click-Driven Revenue: -18%
  • Global Display
    • # of Ads Sold: +9%
    • Price Per Ad: -15%

List of Key Properties:

  • Yahoo Sports, Yahoo Mail, Yahoo Finance
  • Yahoo Storytellers – full service content marketing studio
  • Tumblr – microblogging site
  • Flickr – image and video hosting site
  • BrightRoll – programmatic video ad platform
  • Gemini – search and native advertising solution
  • Polyvore – Community powered social commerce site

Forward Thinking:

  • Verizon will spend $4.8B to buy Yahoo – more to come in a later post
  • Grow user engagement in Search, Mail and Tumblr and 4 core verticals in News, Sports, Finance and Lifestyles
  • Belief that innovation in Search will be centered around mobile assistance
  • To develop way of better leveraging of their 4,000+ patents in search, advertising, cloud, mobile, web and more

Links to Company Website:

Please comment below if there are data points from Yahoo you’d like me to include in their next Earnings Call Summary.

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