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Yahoo Q4-FY12 Concall: On Business Challenges, Future Plans & Partnerships

Yahoo reported a net profit of $301 million for the quarter ending December 31, 2012, registering a 10% growth from $273.65 million profit in the same quarter last year. It reported a total revenue of $1.35 billion for the quarter, up 2% from $1.32 billion revenue in the same quarter last year. Here are some notes from Yahoo’s Investor conference call:

2012 Was A Growth Year: Yahoo reported a total revenue excluding traffic acquisition costs of $4.47 billion for the fiscal 2012, up 2% from $4.38 billion revenues in 2011. Yahoo CEO Marissa Mayer said that 2012 was the first growth year for the company since 2008.

Focus Areas:  Mayer stated that Yahoo clocked 200 million unique monthly mobile users in 2012 and mobile is incredibly important to their strategy along with “people and products”. Mayer also said that they have identified three key business challenges for the company in 2013, which if addressed, will offer growth opportunities to the company. These include increasing usage, growing Yahoo’s international presence and reach out to a broader user demographic. However, she pointed that achieving the growth they aspire will take a few years.

Employee Initiatives: Yahoo has launched a significant number of employee initiatives in the past months including rigorous hiring protocols, quarterly performance reviews for employees, internal feedback tools for new products, new infrastructure including smartphones and higher-performance laptops, employee-driven systems and a weekly all-hands meeting to talk about important company issues transparently and efficiently. Yahoo is also now apparently seeing a significantly lower attrition rate globally and an increase in both quality and quantity of the number of people applying to join Yahoo. The company ended the year with 11,500 employees, down 18% year-on-year (YoY).

– Acquisitions: Yahoo made three talent acquisitions during the quarter – New York-based mobile recommendation app Stamped, the San Francisco-based video chat broadcasting startup OnTheAir and the content curation startup Snip.it.

– On Sales: Yahoo has increased their focus on Yahoo’s top 1,000 advertisers and simplified their client touch points to offer a single contact point for each customer. They also moved to a full industry category alignment model across the entire North American sales organization.

New products: In December, Yahoo launched a new version of Yahoo email and launched its mail products across four different platforms – desktop, iOS, Android and Windows 8. Mayer claimed that the number of their daily active users has increased by 10% YoY after the launch.

In the same month, Yahoo also launched a new Flickr iOS app. Mayer mentioned that they have seen 25% more photos uploaded, viewed and shared on a daily basis.

Responding to an analyst question, she also pointed out that Yahoo products now has lesser ads but the existing ads have observed increased click-through rates. She cited an example of Yahoo Mail, where they have removed the What’s New page in the new version, which was essentially an advertising page.

Search: Yahoo has added both volume and overall traffic through affiliate-hosted Search and mobile search. Mayer attributed this increase to the improvements in the mobile user interface, strong sales execution and improvements to the Bing ad-serving system. Yahoo had reported search revenues excluding traffic acquisition costs of $427.2 million for the quarter. Yahoo CFO Kenneth Goldman stated that this revenue was the highest quarterly search revenue ex-TAC reported by Yahoo since Q3 2010, which was prior to Yahoo’s 12% revenue share partnership with Microsoft.

Yahoo News: During the quarter, Yahoo partnered with ABC News to launch Election Control Room, which offered live streaming video, maps and coverage of all House, Senate and Governor’s races as well as Presidential race results to the county level. It also offered live blogging, live polling and sentiment analysis among others. Mayer claimed that users spent 1.9 billion minutes watching the coverage, making it the most watched live stream event in Yahoo’s history.

Partnerships: Yahoo signed a partnership with NBC Sports during the quarter to combine NBC’s broadcast expertise with their fantasy products and reach to deliver news, fantasy games, and video coverage of sporting events. Yahoo also signed a similar deal with CBS Television to combine their entertainment site omg! with CBS’s television show ‘The Insider’ to launch a multi-platform entertainment news series called omg! Insider.

Repurchasing shares from Alibaba: Yahoo has repurchased around 79.6 million shares at an average price of $18.24 for $1.45 billion, leaving a remainder of just over $1.5 billion to be returned of the additional $3 billion capital from the Alibaba sale committed in September 2012. He added that Yahoo’s Alibaba stake is now worth $8.1 billion pretax, which is in addition to the $816 million preferred shares owned by the company.

Video Ads: Mayer pointed out that video ads is one of Yahoo’s most popular advertising product and they have observed that some segments of their video advertising units being sold 6 months in advance.

Future Plans: Going forward, Yahoo plans to launch new revamped and innovative products which will drive user adoption, which in turn will drive the advertiser spend and the company revenues. Mayer said that they have currently identified around a dozen products related to user’s daily digital habits and the company is currently working on it. While she didn’t reveal any specific information, Mayer hinted towards a redesigned Yahoo homepage and improved versions of various Yahoo verticals like Finance, Sports and News among others in the future, responding to an analyst question. She also added that the December launch of Yahoo Mail and Flickr iOS app is a start of these efforts.

From an advertising and monetization point of view, Mayer noted that there are huge opportunities in search, display, mobile and video segments. While Yahoo’s display revenues declined for the quarter, Mayer hoped to increase this revenue by combining personalized content with increased product innovation. However, she didn’t mention any specific information on how these ads will work.

Investing in Small and Nimble Teams: Responding to an analyst question, Mayer stated that they are currently investing in fast, nimble and small teams for product development. For instance, they are putting together a small team for iOS development and splitting it to an iPhone team and iPad team, with a different team managing the Android version. Each team is put on very focussed missions in terms of innovation and release dates.

ListenYahoo’s Q4 2012 Conference Call

RelatedYahoo Reports $1.32B Revenue For Q4-FY12; Display Ads Decline 10% YoY

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