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Yahoo (ticker: YHOO) released Q1 earnings results that beat consensus estimates for both revenue and EPS. The upside came from search, which rose sequentially by about 29% internationally and 15% in the US (taking traffic acquisition costs as a proxy). The stock rose on the results: after closing at $33.22 Tuesday night before the announcement, the stock opened this morning at $34.96. Details of the quarter and guidance:


is Q1 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Revenue was $821 million versus consensus of $705 million; organic growth was 44% (up from Q4's 42%) and 5% sequentially.

  • Revenue breakdown: search $410 milllion up 17% sequentially, fee revenue $150 million.
  • International revenue up 105% to 25% of total revenue.
  • Traffic acquisition cost (proxy for search) was up 20% sequentially, with international up 29% sequentially and U.S. up 15% sequentially.
  • Fee-paying subscribers up 500,000 sequentially to 8.9 million.
  • Active registered users up 25% to 176 million, unique users up 36% to 372 million.
  • Page views up 34% to 3.2 billion.
  • EBITDA was $345 million versus consensus of $345 million.
  • EBITDA margin of 42.0% up 370 bp and 30 bp sequentially.
  • Incremental year over year EBITDA margin was 49.6%.
  • Net income of $205 million, up from $101 million.
  • EPS was $0.13, versus consensus of $0.11.

Q2 Guidance

  • Mid-point of revenue guidance is $875 million, versus prior consensus of $842 million.
  • Mid-point of EBITDA guidance is $350 million, versus prior consensus of $342 million.

Full Year 2005 Guidance

  • Mid-point of revenue guidance is $3.64 billion, versus prior consensus of $3.52 billion.
  • Mid-point of EBITDA guidance is $1.538 billion, versus prior consensus of $1.464 billion.
  • 12 million paid subscribers by year end.

Quick comment:

So all that talk about a slowing search market proved to be completely wrong. And Yahoo's growth, contrary to the company's spin about diversified revenue streams and branded advertising, was once again driven by search. Total revenue was up 5% sequentially; but traffic acquisition costs (a proxy for search revenue) were up 20%.

Full press release in PDF.

YHOO chart below.
Yhoo_3

Source: YHOO growth again powered by search (1Q05 earnings results)