Yahoo reports higher revenue while maintaining strong share of online ads
Yahoo continues to be the behemoth of Internet marketing. In the wake of Yahoo’s earning report last week, researchers eMarketer Inc. reports that Yahoo controls 20% of online advertising revenue and 35% of paid search.
Yahoo Inc. reported its sixth consecutive quarter of record revenues during its fiscal third quarter which ended Sept. 30. Revenue reached $907 million for the quarter, up 154% over the $357 million during the same period of 2003.
The biggest gains were noted in marketing services revenue which was up more than 200%. Marketing revenues totaled $765 million during the quarter, up from $245 million in the same period the year earlier. Fee revenue gains were a little more modest as fee revenue of $104 million was up 31% from the $79 million reported in the third quarter of 2003. Listings revenue for the quarter totaled $37 million, up 15% from $32 million the year earlier. Executives attribute the gains in marketing services and listing revenue to growth in organic revenue as well as incremental revenue associated with acquisitions completed during the past year. Fee revenue growth was driven by the gain in the number of paying relationships for Yahoo’s premium services, executives say. There were 7.6 million companies paying for those services at the end of the third quarter compared to 4.2 million during the same period last year.
Revenue gains from outside the U.S. were particularly strong as international revenues of $252 million showed a 341% gain while U.S. revenues of $655 million showed a 118% gain.
The strong sales gains helped the firm’s bottom line as it posted a gross profit for the quarter of $574 million, up 86% from the year earlier. The firm reported a quarterly net income of $253 million when a net impact of $129 million related to the sale of an investment and the associated tax benefits were factored in. Excluding this gain, the firm had a net income for the quarter of $124 million, compared to $65 million for the same period in 2003.
Yahoo’s revenue gains come at a time when U.S. advertising spending is expected to show healthy gains. eMarketer projects that spending of online ads in the U.S. will hit $9.4 billion this year, up nearly 29% from last year. Furthermore, eMarketer expects advertising to climb another 20% to $11.3 billion in 2005.
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