Revenues - $1,672 Million
Operating Income - $169 Million
Operating Income Before Depreciation, Amortization and Stock-Based
Compensation Expense - $460 Million
Yahoo! Inc. (Nasdaq: YHOO) today reported results for the first quarter ended March 31, 2007.
"We continued to make good progress against the goals we outlined for the company last year and as a
result, delivered a solid financial performance for the first quarter," said Terry Semel, chairman and CEO of Yahoo!. "Yahoo! remains committed to delivering both increased value for advertisers and the highest quality content to the majority of the world?s Internet population. With this powerful combination, we believe that Yahoo! is well positioned to capture the major growth opportunities we see ahead for the future."
First Quarter 2007 Financial Results
? Revenues were $1,672 million for the first quarter of 2007, a 7 percent increase compared to $1,567 million for the same period of 2006.
? Marketing services revenue was $1,469 million for the first quarter of 2007, a 6 percent increase
compared to $1,381 million for the same period of 2006.
? Fees revenue was $203 million for the first quarter of 2007, a 9 percent increase compared to $186
million for the same period of 2006.
? Revenues excluding traffic acquisition costs ("TAC") were $1,183 million for the first quarter of 2007, a 9 percent increase compared to $1,088 million for the same period of 2006.
? Gross profit for the first quarter of 2007 was $958 million, a 5 percent increase compared to $909 million for the same period of 2006.
? Operating income for the first quarter of 2007 was $169 million, a 16 percent decrease compared to
$201 million for the same period of 2006.
? Operating income before depreciation, amortization and stock-based compensation expense for the first quarter of 2007 was $460 million, a 6 percent increase compared to $435 million for the same period of 2006.
? Cash flow from operating activities for the first quarter of 2007 was $441 million, a 15 percent increase compared to $385 million for the same period of 2006.
? Free cash flow for the first quarter of 2007 was $369 million, an 8 percent increase compared to $343 million for the same period of 2006.
? Net income for the first quarter of 2007 was $142 million or $0.10 per diluted share compared to $160 million or $0.11 per diluted share for the same period of 2006.
? Non-GAAP net income for the first quarter of 2007 was $234 million or $0.17 per diluted share,
compared to non-GAAP net income of $233 million or $0.16 per diluted share for the same period of
2006.
? The provision for income taxes for the first quarter of 2007 was $92 million and yielded an effective tax rate of 45 percent. The provision for income taxes for the first quarter of 2006 was $103 million and yielded an effective tax rate of 43 percent.
? Explanations of the Company?s non-GAAP financial measures and the related reconciliations to the
GAAP financial measures the Company considers most comparable are included in the accompanying
"Note to Unaudited Condensed Consolidated Statements of Income," "Reconciliations to Unaudited
Condensed Consolidated Statements of Income," and "Reconciliation of GAAP Net Income and GAAP
Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share."
"Our first quarter financial results reflect solid execution against our plan. We maintained strong profitability and cash flow, while remaining focused on building innovative products and services for our large and growing base of users, advertisers and publishers," said Susan Decker, chief financial officer, Yahoo!. "As we look ahead, we are very excited about the transformational changes taking place on the Internet, creating great opportunities for both users and marketers, and we are confident that Yahoo! has the right combination of assets to help lead this evolution."
Segment Financial Results
? United States segment revenues for the first quarter of 2007 were $1,101 million compared to $1,097 million for the same period of 2006.
? International segment revenues for the first quarter of 2007 were $571 million, a 22 percent increase compared to $470 million for the same period of 2006.
? United States segment operating income before depreciation, amortization and stock-based compensation expense for the first quarter of 2007 was $342 million, a 2 percent increase compared to $335 million for the same period of 2006.
? International segment operating income before depreciation, amortization and stock-based compensation expense for the first quarter of 2007 was $119 million, a 19 percent increase compared to $100 million for the same period of 2006.
Cash Flow Information
Free cash flow was $369 million for the first quarter of 2007 compared to $343 million for the same period of 2006. In addition to free cash flow, Yahoo! generated $72 million from the issuance of common stock as a result of the exercise of employee stock options. This was offset by $595 million used for direct stock repurchases, $250 million used in a structured stock repurchase transaction, and $12 million used for acquisitions. Cash, cash equivalents and investments in marketable debt securities were $3,128 million at March 31, 2007 as compared to $3,537 million at December 31, 2006, a decrease of $409 million.
Quarterly Conference Call
Yahoo! will host a conference call to discuss first quarter results at 5:00 p.m. Eastern Time today. A live webcast of the conference call, together with supplemental financial information, can be accessed through the Company's Investor Relations website at http://yhoo.client.shareholder.com/earnings.cfm. In addition, an archive of the webcast can be accessed through the same link. An audio replay of the call will be available following the conference call by calling 888-286-8010 or 617-801-6888, reservation number: 80414581
About Yahoo!
Yahoo! Inc. is a leading global Internet brand and one of the most trafficked Internet destinations
worldwide. Yahoo!?s mission is to connect people to their passions, their communities, and the world?s knowledge. Yahoo! is headquartered in Sunnyvale, California.
This press release and its attachments include the following financial measures defined as non-GAAP
financial measures by the Securities and Exchange Commission: revenues excluding traffic acquisition costs or TAC, operating income before depreciation, amortization and stock-based compensation expense, free cash flow, and non-GAAP net income and non-GAAP net income per share.
These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles ("GAAP"). See "Note to Unaudited Condensed Consolidated Statements of Income," "Reconciliations to Unaudited Condensed Consolidated Statements of Income," and "Reconciliation of GAAP Net Income and GAAP Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share" included in this press release for further information regarding these non-GAAP financial measures.
This press release and its attachments contain forward-looking statements that involve risks and
uncertainties concerning Yahoo!'s expected financial performance (including without limitation the statements and information in the Business Outlook section and the quotations from management in this press release), as well as Yahoo!'s strategic and operational plans. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the successful implementation, and acceptance by advertisers, of the Company?s new search advertising system; the Company?s ability to compete with new or existing competitors; the implementation and results of the Company's announced reorganization; reduction in spending by, or loss of, marketing services customers; the demand by customers for Yahoo!'s premium services; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to the Company?s international operations; failure to manage growth and diversification; adverse results in litigation, including intellectual property infringement claims; the Company?s ability to protect its intellectual property and the value of its brands; dependence on key personnel; dependence on third parties for technology, services, content and distribution; and general economic conditions. All information set forth in this press release and its attachments is as of April 17, 2007.
Yahoo! does not intend, and undertakes no duty, to update this information to reflect future events or circumstances. More information about potential factors that could affect the Company's business and financial results is included under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's Annual Report on Form 10-K for the year ended December 31, 2006, which is on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo!?s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, which will be filed with the SEC in the second quarter of 2007.
Yahoo! and the Yahoo! logos are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.
