Yahoo Inc. reported a modest uptick in first-quarter revenue, its first growth in three years, as new Chief Executive Scott Thompson spearheads the latest attempt to revamp the struggling Web company.
Finance chief Tim Morse told Reuters in an interview that better-than-expected pricing for its search ads helped the company increase its quarterly net revenue year-on-year for the first time since the third quarter of 2008.
But its core display advertising business declined 4 per cent during the first quarter.
Also, much of the increase in quarterly profit came from its earnings in equity interests, which more than doubled year-on-year. Yahoo has a roughly 40 per cent stake in major Chinese Internet player Alibaba Group.
“Their minority stake in their investments is generating more profit than their core business,” said BGC Partners analyst Colin Gillis. “Here is the one piece that is always sad about Yahoo. Their income from operations was about $169-million and their earning and equity interest was about $172-million.”
Shares of Yahoo, which closed Tuesday’s regular trading session at $15.01, were trading up at $15.30 in after-hours trading on Tuesday.
Yahoo said it earned net income of $286-million, or 23 cents per share, in the three months ended March 31, versus $223-million, or 17 cents per share, in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for EPS of 17 cents.
It forecast net revenue in the second quarter of between $1.03-billion and $1.14-billion.
Once one of the Web industry’s pioneering companies, Yahoo has seen its growth stunted in recent years amid competition from Google Inc. and Facebook Inc.
Mr. Thompson, the former president of PayPal who took the reins in January, announced plans this month to lay off 14 per cent of Yahoo’s staff and reorganize the management structure.
Investors are looking for more details of Mr. Thompson’s strategic plans during Yahoo’s conference call with analysts Tuesday afternoon.
“We know we have work to do. We aspire to being a higher growth and more profitable company, but it was a solid quarter,” said Mr. Morse.
Mr. Morse said that the broader online advertising market is affected by economic uncertainty in Europe and parts of Asia and that industry growth rates will be more moderate than the past couple of years.
The company’s net revenue, which excludes payments to partners, totalled $1.077-billion in the first quarter, compared to $1.064-billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for net revenue of $1.06-billion.