Yahoo Beats Third-Quarter Earnings Expectations, Even as Verizon Deal Faces Uncertainty

Mobile gains ground in overall revenue share

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Yahoo's third-quarter earnings were better than expected, giving the ailing tech giant a sliver of good news amid concerns of a data breach and growing doubts about its impending acquisition by Verizon.

Results released today showed revenue in the third quarter rose to $1.31 billion, or 20 cents per share, up from $1.23 billion (15 centers per share) during the same period in 2015. The results beat expectations on an earnings-per-share basis while matching expectations for total revenue. (Analysts polled by Thomson Reuters had expected earnings to come in at $1.31 billion, or 14 cents per share.)

Mobile revenue increased to $396 million from $271 million during the same period last year. Desktop revenue grew more gradually, increasing to $854 million from $844 million. Nontraffic revenue fell, dropping from $111 million in the third quarter of 2015 to $55 million in 2016. 

In terms of paid clicks, the total in the third quarter fell 22 percent, while price per click increased by 9 percent. Total ads sold decreased slightly, falling 5 percent year over year, while the price per ad increased 1 percent.

In a statement, Yahoo CEO Marissa Mayer said she is "pleased" with the company's third-quarter results.

"This quarter, we launched several new products and showed solid financial performance across the board; both are a testimony to the tremendous teamwork, focus, and resilience of our employees," she said. "In addition to our continued efforts to strengthen our business, we are busy preparing for integration with Verizon. We remain very confident, not only in the value of our business, but also in the value Yahoo products bring to our users' lives."

On Friday, Yahoo announced it would not hold a quarterly earnings call with analysts to discuss the results, an unusual move for a public company. 

The Sunnyvale, Calif.-based company highlighted several new products, such as a new mobile experience for sports fans, along with a new "community TV-watching experience" in partnership with Hulu. Yahoo also touted its additional livestreaming offerings, and programmatic and native advertising products. 

The latest earnings arrived just a month after the company revealed that 500 million user accounts were hacked in 2014. While Yahoo didn't disclose where the hacking originated, the company did say it was carried out by a "state-sponsored actor."

The breach could complicate a $4.8 billion deal between Yahoo and Verizon, which in July agreed to acquire the legacy brand. Last week, Verizon's attorneys suggested the company could view Yahoo's data breach as an impetus for legally withdrawing its bid.

Mayer didn't mention the breach specifically, but stressed the seriousness with which the company takes user privacy.

"To that end, we take deep responsibility in protecting our users and the security of their information," she said. "We're working hard to retain their trust and are heartened by their continued loyalty as seen in our user engagement trends."

@martyswant Marty Swant is a former technology staff writer for Adweek.