Online destination leader Yahoo! Inc. issued its Q1 06 earnings report this afternoon showing strong growth across the board — including steep rises in stock option and tax expenses. But for the latter two developments, Yahoo! would have also posted steady growth in profits. (More later on Yahoo!’s Q1 06 financial performance.)
The company offered less-than-usual commentary on its business or growth strategies; CEO Terry Semel advised investors during Yahoo!’s earnings call to stay tuned for more explanations during Yahoo!’s analyst day slated for May 17th. He did offer a sneak-peak into the company’s upcoming new search marketing product, which Semel claims will be rolled out in three phases: foundation and core data platform construction (already completed), new management application for advertisers and market-based public web design.
On the video front, user-generated video continues to play an increasingly important role in the company’s plans. “We continue to spend more and more of our energies, and you’ll see a lot more of it coming upfront, in user-generated video,” Semel said.
That’s not to say that Yahoo! will steer clear of traditional video suppliers. Semel said that he hopes that companies, such as ABC, which are streaming their own video over their own web sites also include Yahoo into their plans. “There’s no doubt in my mind that when [broadcast networks are] monetizing their own TV shows they have an awfully small audience relevant to the Internet. If they want to make it available to their own screens exclusively, that would not be a good business,” he said.
In terms of Q1 06 financial results, Yahoo! reported revenues of $1.57 bil., up 34% year-over-year and 4% sequentially. However, a new accounting requirement regarding the expensing of stock options drove Yahoo!’s operating expenses up by 50% year-over-year. Morever, an accounting change affecting tax treatment, plus a shift in international revenues that had the effect of raising overall tax percentages, further raised costs for Yahoo!.
The impact of these two changes drove Yahoo!’s net income down by 22% year-over-year and 77% sequentially to $159.9 mil. in Q1 06.
Growth in traffic and users, however, remained strong, surprisingly so given how big Yahoo already is, with a particularly strong growth surge in the premium customer category.
| Yahoo Customer Metrics | |||
| Q105 | Q405 | Q1 06 | |
| Unique Users (mil.) | 372 | 365 | 402 |
| Active Registered Users (mil.) | 176 | 193 | 208 |
| Premium Users (mil.) | 8.9 | 12.6 | 13.3 |
| Ending Daily Avg. Page Views (bil.) | 3.2 | 3.3 | 3.8 |
| Revenue ex-TAC per Average Unique User Per Month | $ 0.88 | $ 0.99 | $ 0.95 |
The number of unique users grew 8% year-over-year and 10% sequentially to end Q1 06 at 402 million. Semel said during the earnings call that Yahoo! now reaches around 500 million unique users, or about one of every two Internet users in the world.
The number of premium users soared 49% year-over-year and 6% sequentially to reach 13.3 million by the end of Q1 06 (a lot of this growth presumably flowed from the rising DSL subscriptions at AT&T, Verizon and BellSouth, all of which have co-branded portal deals with Yahoo!). Average daily page views jumped 19% year-over-year and 15% sequentially to 3.8 billion.
However, revenue per average unique user (exclusive of traffic acquisition costs - TAC) dropped by 4% to $.95 from Q4 05 to Q1 06 due to adjustments that Yahoo! had to make with Yahoo! Japan. Year-over-year, however, revenue per user without TAC rose 8%.
Cynthia Brumfield at 6:16 PM|Comments(0)
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