But chief executive Marissa Mayer said she was pleased with the revenue growth, saying, “Yahoo’s transformation continues to make great progress.”
Total revenues jumped nearly 15 percent to $1.24 billion (roughly Rs. 7,888 crores), led by what Mayer has dubbed the new emerging areas for Yahoo of “Mavens,” or mobile, video, native advertising and social.
“Our Mavens investment businesses across mobile, video, native and social grew to nearly $400 million (roughly Rs. 2,544 crores) in revenue this quarter, delivering 60 percent… growth year-over-year,” she said in a statement.
For overall revenues, it was the best top-line growth in nearly nine years, Mayer said.
Yahoo has been struggling in recent years since losing its lead in Internet search toGoogle, and has been aiming for new niches under Mayer’s leadership.
A key asset for Yahoo is its stake in Chinese online giant Alibaba. That stake is to be spun off into a separate company later this year.
Yahoo made no comment about its awaited ruling by the US Internal Revenue Service on whether the transaction will be tax-free but said the spinoff was on track to be completed by the end of the year.
Yahoo has warned in the filing that there could be tax implications, potentially in the billions of dollars.
The Alibaba stake is worth some $30 billion (roughly Rs. 1,90,849 crores), and the spinoff is expected to add to pressure on Mayer and Yahoo to show growth in the core business.
Inform, connect, entertain
Mayer said she sees Yahoo’s focus on “search, communications and digital content that inform, connect and entertain our users.”
She especially expressed optimism about mobile search, where Yahoo has a better opportunity to gain market share.
“Mobile has fundamentally changed the search landscape,” she said.
With its own mobile search engine dubbed Gemini, Mayer said “we believe we can deliver a better, more intuitive experience… we will continue to innovate and we are very excited about the future.”
She said search remains a key area for Yahoo and that mobile search “is fertile ground for innovation.”
Mayer said Yahoo also sees potential gains from video, digital magazines and its Tumblr blogging platform, acquired in 2013 to help Yahoo connect with younger online users.
But she said the coming quarter may see “pressure” on revenues because of investment in new products, and that it may be difficult to match the totals from a year ago when it saw some one-time gains.
Yahoo last week formally notified US regulators that it is spinning off its stake in Alibaba to an independent new company called Aabaco Holdings.
Aabaco will wind up owning approximately 384 million shares of Alibaba Group, representing an interest of about 15 percent, according to a filing with the US Securities and Exchange Commission.
The move was designed to sidestep taxes and appease investors eager to tap into Yahoo’s multibillion-dollar stake in Alibaba.