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Yahoo Net Profit, Display Ad Revenue Up; Search Ad Revenue Declines

Yahoo has reported a net profit of $213 million for the quarter ending June 30th 2010, up 141.37 million reported during the corresponding period last year. Year-on-year, revenues for Yahoo were up 2% at $1.601 billion, from $1.573 billion. Yahoo CEO Carol Bartz said in a statement that display advertising grew for the company. Yahoo expects revenue for the third quarter of 2010 to be between $1.57-1.65 billion, and profit to be around $160-200 million.

– Advertising: Search advertising revenue continued to decline for the company, down 8% year on year, but was helped by a 19% increase in Display advertising revenue from Yahoo’s owned and operated sites, which grew by 19% year on year, and 5% sequentially. Search Query volume grew 7%, while revenue per search declined on an overall basis, even through it grew 4% in the US
– APAC Region: In terms of geographical contribution to revenue, the APAC market contributed $327.7 million to Yahoo’s income, compared with $236.6 for the same quarter last year. The Segment Contribution margin for the region was 46% for the region, compared with 48% for the same quarter last year.
– Americas: The Americas contributed $1.133 billion to revenues, down 4% from $1.186 billion a year ago. A 100 basis points reduction in segment margin to 62% comes in spite of a 5% reduction in costs for the segment.
– Search Deal Related Income From Microsoft: Yahoo earned $86 million in search operating cost reimbursements from Microsoft during the quarter; a source of income which is going to remain until Yahoo has fully transitioned to Bing. Yahoo also received $18 million in transition cost reimbursements from Microsoft under the Search Agreement. Transition costs include sales training, customer migration,consulting, legal and retention, among others.
– Traffic Acquisition Cost (TAC) grew to 30% of revenue, compared to 29% last quarter and 28% for the same quarter last year.
– Marketing services revenue from Affiliate sites was $557 million, a 7% increase compared to $520 million for the same period of 2009. Marketing services revenue from Owned and Operated sites was $881 million, up 3% compared to $858 million for the same period of 2009.

Partnerships & Deals during the quarter

– Yahoo deepened its integration with Facebook through Yahoo Pulse, which allows users to link their Yahoo and Facebook accounts, and share across networks.
– Yahoo launched new Mail and Messenger apps for the Android platform, as well as HTML-5-based Mail and News sites for the iPhone.
– Samsung and Yahoo extended their partnership to include distribution of Yahoo services on Bada and Android platforms.
– Yahoo acquired Associated Content.
– Nokia and Yahoo announced a worldwide strategic alliance.
– Yahoo announced that it will bring games from Zynga to the Yahoo network.
– Yahoo acquired Koprol, Indonesia’s popular location-based social network.
– Yahoo expanded its partnership with Sony to increase the number of countries where Yahoo TV Widgets are available.

Details: Presentation | Release | Conference Call

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