Yahoo topped financial analysts' earnings and revenue forecasts for its first quarter of 2005, the provider of online content and services said this week.
Revenue excluding traffic acquisition costs (TAC) came in at US$821 million (NZ$1.129 billion), up 49% from 2004's first quarter and above the US$796.8 million consensus estimate from financial analysts polled by Thomson First Call. Yahoo generated revenue of US$1.174 billion, up 55% from 2004's first quarter. TAC is the portion of revenue that Yahoo pays to the third party affiliates of its Overture online ad network.
Net income was US$205 million, including US$15 million related to the sale of certain investments and settlements, up from US$101 million in 2004's first quarter.
During a conference call with analysts to discuss the quarterly results, Yahoo executives said they were extremely pleased with the results of the quarter, which ended March 31, 2005.
"Yahoo is off to a terrific start in 2005. We have raised the bar even higher in the first quarter. The pace of innovation and the appeal of our services has translated into deeper relationships with our users and continued growth for Yahoo," says Terry Semel, Yahoo's chairman and chief executive officer.
"Our intention is to continue capitalising on our industry leading assets to deliver consistent and powerful growth over the long term," he adds.
The strong results were driven primarily by Yahoo's sales of online advertising, which continued to grow, with a particular bright spot in the text ads that are triggered by search engine queries, executives say.
"We are in an excellent position to take advantage of all forms of advertising opportunities on the web. We appeal to a strong and diverse range of customers including hundreds of blue chip traditional marketers, hundreds of thousands of small and medium size businesses and hundreds of millions of consumers and we can extend these opportunities very rapidly on a global scale," Semel says.
The executives are so optimistic about the rest of the year that they raised their financial forecast for revenue excluding TAC, which for the entire 2005 fiscal year is now expected to fall between US$3.565 billion and US$3.715 billion, up from a previous range of between US$3.365 billion and US$3.565 billion.
Yahoo ended the quarter with 372 million unique users, up 36% from 2004's first quarter. Of the 372 million, 176 million were active registered users, up 25%. Active registered users are those who have signed up for at least one Yahoo service, such as email, and who visit the Yahoo network at least once per month. Among the active registered users, 8.9 million were fee-paying users — defined as those who pay for at least one Yahoo service — up 53%.
Meanwhile, Yahoo's workforce increased by 36% from 2004's first quarter to 8,023 employees.