Shares of the global technology company, Yahoo (YHOO, Financial), have risen 24% in the last year. The company managed to beat the Street’s estimate in three out of the last four quarters. It reported its fourth quarter results last month, which too were impressive. More than the numbers, Yahoo’s announcement of the spinoff of Yahoo’s stake in Alibaba resulted in a sharp jump in its share price.
A snapshot of the numbers
Revenue declined 1.6% to $1.25 billion, compared to last year. This was higher than the analysts’ estimate of $1.19 billion. For the full year, top line decreased 1.33% to $4.61 billion, over last year. The company’s revenue was affected by weakness in the Display advertising segment, which dropped 5.3% over last year. Display ad revenue declined mainly because of a decline of 24% in price per ad, which was due to a shift to low cost ads. However, the number of ads sold increased 17% during the same period.
Revenue from core search ad revenue surged 15%, driven by factors such as an increase in price per click, and the number of paid clicks. The company also witnessed a 23% increase in revenue from mobile business, clocking in at $254 million. Thus, mobile now accounts for $1.26 billion in revenue for the year.
Geographically, 77% of the total revenue comes from the Americas, 16% from Asia Pacific and 7% for the EMEA region. The gross margin of the company expanded 4 basis points to 73.2%, over last year’s quarter. Earnings for the quarter inched up to $0.30 per share from $0.29 per share in the prior year. The bottom line too was higher than the analysts’ estimates.
Moving on to the strategies
The total number of mobile unique visitors reached a high of 575 million during the quarter. With the ongoing plans of implementing a strategy of delivering personalized content, there will be an increase in the mobile user base even further. This will result in consumption of higher content at Yahoo’s websites.
The company also plans to put emphasis on MaVeNS, which means mobile, video, native, and social. Revenue from this category surged 95% during the fourth quarter and is expected to offset declines in display advertising.
Yahoo has also entered into a deal with Mozilla to make Yahoo the most preferred search tool on Firefox browsers in both the desktops and mobiles. This should be helpful, especially given the fact that Firefox holds an 11% share in global browsing market.
Yahoo has made a number of acquisitions in the last one year, which should help its business grow. It had acquired Tumblr in May last year for $1.1 billion. Tumblr has been growing pretty fast and has overtaken Instagram as the fastest growing social network. Tumblr’s audience has increased to 460 million from 420 million in the third quarter. With more advertisers for Tumblr platform, it is expected to generate $100 million in revenue in 2015.
Moreover, the company plans to come up with a self-service ad platform which will help in overcoming competition in the mobile market.
Final word
Yahoo is meant to grow in the coming years, especially because of the large number of buyouts made in the last few months, including Luminate, Flurry, and Clarity Ray. Moreover, its emphasis on MaVeNS and the new deal with Firefox should prove to be beneficial. With a bright outlook for the future, the company is worth investing in.
