Yahoo results offer little surprise ahead of sale to Verizon

Yahoo marked what is likely to be its final quarterly earnings report as an independent company on Tuesday with news that its net revenues had slipped by 3 per cent.

However, the results reflected a stronger performance than expected and Marissa Mayer, chief financial officer, claimed they represent the company’s “strong financial and operational performance” ahead of its acquisition by Verizon.

The internet media company’s final months have been overshadowed by revelations about two giant security breaches that affected hundreds of millions of accounts. News of the hacks, which date from before Verizon’s takeover offer, led to a renegotiation of the purchase price that shaved $350m from the price tag. The timing of Yahoo’s disclosure of the hacks has also been the subject of an investigation by the Securities and Exchange Commission.

The internet company’s last earnings report comes 21 years almost to the day since its IPO, an event which triggered a eurphoric response on Wall Street and foreshadowed a wave of dotcom IPOs to follow.

Yahoo said its reported revenues for the three months to end of March had grown by 22 per cent to $1.37bn, thanks to a change in accounting that took effect over the last year. That was higher than the $1.23bn that analysts had expected.

Yahoo changed its accounting to reflect a change in its search partnership with Microsoft. This led to it including more of search advertising in its revenue line, while also reporting higher traffic acquisition costs that it paid Microsoft for this business.

On an apples-to-apples basis, its net revenue fell to $822m in the latest period, from $859m the year before. The latest decline was still a considerable improvement after 2016, when the company’s net revenue fell by 14 per cent.

Yahoo bowed out with pro-forma earnings of 18 cents a share in the latest period, ahead of the 14 cents that had been expected. Based on formal accounting principles, it reported net income of $99m, or 10 cents a share, compared to a $99m loss a year ago.