Yahoo! Inc. (NASDAQ: YHOO) today reported results for the
quarter ended June 30, 2015.
“I’m extremely pleased with our achievements in Q2, with revenue
growing 15% year-over-year, marking our most substantial GAAP
revenue growth in almost 9 years,” said Marissa Mayer, CEO of
Yahoo. “Our Mavens investment businesses across mobile, video,
native and social grew to nearly $400 million in revenue this
quarter, delivering 60% GAAP growth year-over-year. Further, our
display business saw the most substantial revenue growth since
2010. Yahoo’s transformation continues to make great progress.”
Q2 2014 Q2 2015 GAAP
revenue $1,084 million $1,243 million Cost of revenue - TAC $44
million $200 million Income (loss) from operations $38 million
$(45) million Non-GAAP income from operations $194 million $108
million Adjusted EBITDA $340 million $262 million Net earnings
(loss) $270 million $(22) million GAAP net earnings (loss) per
diluted share $0.26 ($0.02) Non-GAAP net earnings per diluted share
$0.37 $0.16
Business Highlights
- Search:
- Over the past year, Yahoo’s search
presence has steadily grown through innovation and partnerships
with industry leaders. In Q2, Yahoo introduced a new mobile search
experience in the U.S. that connects users immediately to the
people, places and things they care about by using context and
location cues to deliver the most relevant search results.
- Communications:
- In Q2, Yahoo delivered several new
features in Mail including Yahoo Mail on Firefox Share which allows
users to instantly share web pages when using Firefox; integration
of Twitter and LinkedIn information in Contacts; and the addition
of breaking news notifications to the Mail news feed tab.
- Digital Content:
- In July, the Company launched Daily
Fantasy, now available in the Yahoo Fantasy app, giving users the
chance to win money every day with new fantasy lineups.
- Yahoo announced a partnership with the
NFL to live stream an International Series Game between the Buffalo
Bills and the Jacksonville Jaguars from London this fall.
- Yahoo launched new daily live finance,
news and entertainment programming including Ultimate DJ, a global
Electronic Music competition-style live series that is executive
produced by Simon Cowell. The Company also announced 14 new shows
across Yahoo’s digital magazine channels including Riding Shotgun
with Michelle Rodriguez.
- In Q2, Live Nation and Yahoo continued
their partnership by kicking off a music festival live stream
series to bring artists’ performances from this year’s most
anticipated music festivals to our global audience.
- Ad Technology:
- Yahoo announced the availability of
independent viewability and fraud measurement for display and video
advertising across the Company’s programmatic buying platform,
including Yahoo Properties. Advertisers can now choose from leading
accredited, third-party measurement solutions to independently
validate for viewability and fraud across display and video at
every stage of the campaign lifecycle.
- Yahoo introduced new powerful formats
to help advertisers reach their audiences: native video and video
app-install ads. With native video ads, brand content can be as
compelling as video while beautifully integrated into other
experiences on Yahoo’s homepage, digital magazines and apps. For
marketers and developers looking to drive installs, the Company now
offers a format that combines the engagement of video and the
performance of install ads.
Second Quarter 2015 Financial Highlights
Mavens Revenue:
Q2 2014 Q2 2015 Mavens
revenue $ 249 million $ 399 million Non-Mavens revenue 742 million
725 million Total traffic-driven revenue $ 991 million $1,124
million Non-traffic-driven revenue 93 million 119 million GAAP
revenue $1,084 million $1,243 million
Mavens revenue represented 25 percent of traffic-driven revenue
in the second quarter of 2014, and increased to 35 percent in the
second quarter of 2015.
Mobile Revenue:
Q2 2014 Q2 2015 Mobile
revenue $ 163 million $ 252 million PC revenue 828 million 872
million Total traffic-driven revenue $ 991 million $1,124 million
Non-traffic-driven revenue 93 million 119 million GAAP revenue
$1,084 million $1,243 million
Mobile revenue represented 16 percent of traffic-driven revenue
in the second quarter of 2014, and increased to 22 percent in the
second quarter of 2015.
Gross mobile revenue for the second quarter of 2014 and 2015 was
approximately $272 million and $415 million, respectively.
Search Revenue:
- Gross search revenue was $920 million
for the second quarter of 2015, an increase of 15 percent compared
to the second quarter of 2014.
- GAAP search revenue was $521 million
for the second quarter of 2015, an increase of 22 percent compared
to the second quarter of 2014.
- Cost of revenue -TAC paid to search
partners was $106 million for the second quarter of 2015 compared
to less than $1 million in the second quarter of 2014.
- The number of Paid Clicks increased
approximately 13 percent compared to the second quarter of
2014.
- Price-per-Click increased approximately
4 percent compared to the second quarter of 2014.
Display Revenue:
- GAAP display revenue was $500 million
for the second quarter of 2015, a 15 percent increase compared to
the second quarter of 2014.
- Cost of revenue - TAC paid to display
partners was $94 million for the second quarter of 2015 compared to
$42 million in the second quarter of 2014.
- The number of Ads Sold increased
approximately 9 percent compared to the second quarter of
2014.
- Price-per-Ad increased approximately 10
percent compared to the second quarter of 2014.
Cash, Cash Equivalents, and Marketable Securities:
- Cash, cash equivalents, and marketable
securities were $7.0 billion as of June 30, 2015 compared to $10.2
billion as of December 31, 2014, a decrease of $3.2 billion. In the
first quarter of 2015, the Company satisfied the $3.3 billion
income tax liability related to the sale of Alibaba Group ADSs in
2014.
"In addition to revenue outperformance, we reduced $30 million
in sequential cash operating expenses driven by strategic headcount
and footprint reductions, tight management of our discretionary
costs and the benefit from IP monetization," said CFO Ken Goldman.
"As we continued to reduce our workforce to fewer than 11,000
full-time employees over the last quarter, we have also continued
to realign our resources as we become a more efficient
business."
Live Stream
Yahoo will live stream a video broadcast of the Company's second
quarter 2015 financial results at 2 p.m. Pacific Time/5 p.m.
Eastern Time today. The live stream will be broadcast from Yahoo’s
Sunnyvale studio and will be available exclusively on Yahoo Finance
at finance.yahoo.com. The Company will provide its business outlook
for the third quarter during the presentation. Supplemental
financial information can be accessed through the Company’s
Investor Relations website at investor.yahoo.net. The video will be
archived after the event at investor.yahoo.net and will be
available for 90 days following the broadcast.
Non-GAAP Financial Measures
This press release and its attachments include the
following financial measures defined as non-GAAP financial
measures by the Securities and Exchange Commission (“SEC”): gross
mobile revenue; gross search revenue; revenue ex-TAC; adjusted
EBITDA; non-GAAP income from operations; non-GAAP net earnings;
non-GAAP net earnings per share - diluted; and free cash flow.
Gross mobile revenue is GAAP mobile revenue plus the related
revenue share with third parties. Gross search revenue is GAAP
search revenue plus the related revenue share with third parties.
Revenue ex-TAC is GAAP revenue less cost of revenue — TAC. Adjusted
EBITDA, non-GAAP income from operations, non-GAAP net earnings, and
non-GAAP net earnings per share - diluted, exclude from the most
comparable GAAP financial measures certain gains, losses, and
expenses that we do not believe are indicative of ongoing results,
and exclude stock-based compensation expense. Adjusted EBITDA
also excludes taxes, depreciation, amortization of intangible
assets, other income, net (which includes interest), earnings in
equity interests, and net income attributable to noncontrolling
interests. Free cash flow is GAAP net cash provided by (used in)
operating activities (adjusted to include excess tax benefits from
stock-based awards), less acquisition of property and equipment,
net and dividends received from equity investees.
These measures may be different than 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”).
Explanations of the Company’s non-GAAP financial measures and
reconciliations of these financial measures to the GAAP financial
measures the Company considers most comparable are included in the
accompanying “Note to Unaudited Condensed Consolidated Financial
Statements,” “Supplemental Financial Data and GAAP to Non-GAAP
Reconciliations,” and “GAAP to Non-GAAP Reconciliations.”
About Yahoo
Yahoo is a guide focused on informing, connecting, and
entertaining our users. By creating highly personalized experiences
for our users, we keep people connected to what matters most to
them, across devices and around the world. In turn, we create value
for advertisers by connecting them with the audiences that build
their businesses. Yahoo is headquartered in Sunnyvale, California,
and has offices located throughout the Americas, Asia Pacific
(APAC) and the Europe, Middle East and Africa (EMEA) regions. For
more information, visit the pressroom (pressroom.yahoo.net) or the
Company's blog (yahoo.tumblr.com).
“Ads Sold” consist of display ad impressions for paying
advertisers on Yahoo Properties and Affiliate sites.
“Affiliates” refers to the third-party entities that have
integrated Yahoo’s advertising offerings into their Websites or
other offerings (those Websites and other offerings, “Affiliate
sites”).
“Alibaba Group” means Alibaba Group Holding Limited.
“Gross mobile revenue” is GAAP mobile revenue plus the related
revenue share with third parties.
“Gross search revenue” is GAAP search revenue plus the related
revenue share with third parties.
“Mavens revenue” is revenue generated from, without duplication:
(i) mobile (as defined below), (ii) video ads and video ad
packages, (iii) native ads, and (iv) Tumblr ads and fees.
“Mobile revenue” is revenue generated in connection with user
activity on mobile devices, including smartphones and tablets,
regardless of whether the device is accessing a mobile-optimized
service. Mobile revenue is generated primarily from search and
display ads. Mobile revenue also includes leads, listings and fees
revenue and ecommerce revenue allocated to user activity on mobile
devices.
“Net earnings” means net income attributable to Yahoo! Inc., and
“net earnings per diluted share” means net income attributable to
Yahoo! Inc. common stockholders per share – diluted.
“Non-Mavens revenue” is revenue generated from search ads and
traditional (i.e., non-native, non-video, non-Tumblr) display ads
served on PCs and also includes leads, listings and fees revenue
and ecommerce revenue allocated to user activity on PCs.
“Non-traffic-driven revenue” is revenue not arising from user
activity on Yahoo Properties or Affiliate sites, and includes
royalty revenue, license fee revenue, amortization under the
technology and intellectual property license agreement with Alibaba
Group, and all other revenue that is not traffic-driven.
“Paid Clicks” are clicks by end-users on sponsored search
listings (excluding native ads) on Yahoo Properties and Affiliate
sites.
“PC” means a desktop computer, and “PC revenue” is revenue
generated from search and display ads served on PCs and also
includes leads, listings and fees revenue and ecommerce revenue
allocated to user activity on PCs.
“Price-per-Ad” is defined as display revenue divided by our
total number of Ads Sold.
“Price-per-Click” is defined as Search click-driven revenue
divided by our total number of Paid Clicks.
“Search Agreement” refers to the Search and Advertising Services
and Sales Agreement between Yahoo and Microsoft Corporation, as
amended.
“Search click-driven revenue” is gross search revenue excluding
the Microsoft RPS guarantee and search revenue from Yahoo
Japan.
“TAC” refers to traffic acquisition costs. TAC consists of
payments to Affiliates and payments made to companies that direct
consumer and business traffic to Yahoo Properties.
“Yahoo,” “Company,” and “we” refer to Yahoo! Inc. and its
consolidated subsidiaries.
“Yahoo Properties” refers to the online properties and services
that Yahoo provides to users.
We periodically review, refine and update our methodologies for
monitoring, gathering, and counting number of Ads Sold and Paid
Clicks, and for calculating Search click-driven revenue,
Price-per-Ad, and Price-per-Click.
Additional information about how “Ads Sold,” “Paid Clicks,”
“Price-per-Ad,” “Price-per-Click,” and “Search click-driven
revenue” are defined and calculated is included under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2015, which is on file with
the SEC and available on the SEC's website at www.sec.gov.
This press release contains forward-looking statements
concerning Yahoo's expected financial performance and Yahoo's
strategic and operational plans (including, without limitation, the
quotations from management). Risks and uncertainties may cause
actual results to 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, possible delays or failure in satisfying conditions
to completion of our proposed spin-off of our remaining stake in
Alibaba Group into a newly-formed registered investment company;
other factors related to the spin-off, including adverse regulatory
developments or determinations or adverse changes in, or
interpretations of, U.S. or foreign tax laws, rules or regulations,
that could delay or prevent completion of the proposed spin-off or
cause the terms of the proposed spin-off to be modified; risks
related to realization of the expected benefits of the spin-off to
Yahoo and its shareholders; risks related to acceptance by users of
new products and services (including, without limitation, products
and services for mobile devices and alternative platforms); risks
related to Yahoo's ability to compete with new or existing
competitors; reduction in spending by, or loss of, advertising
customers; risks associated with the Search Agreement with
Microsoft Corporation; risks related to acquiring or developing
compelling content; risks related to joint ventures and the
integration of acquisitions; risks related to possible impairment
of goodwill or other assets; risks related to Yahoo’s ability to
protect its intellectual property and the value of its brands;
adverse results in litigation; security breaches; interruptions or
delays in the provision of Yahoo’s services; risks related to
Yahoo’s regulatory environment; risks related to fluctuations in
foreign currency exchange rates; risks related to Yahoo's
international operations; dependence on third parties for
technology, services, content, and distribution; risks related to
the calculation of our key operational metrics; and general
economic conditions. All information set forth in this press
release and its attachments is as of July 21, 2015. Yahoo does not
intend, and undertakes no duty, to update this information to
reflect subsequent 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, 2014 and Quarterly Report on Form
10-Q for the quarter ended March 31, 2015, which are on file with
the SEC and available on 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 June
30, 2015, which will be filed with the SEC in the third quarter of
2015.
Yahoo!, the Yahoo family of marks, and the associated logos are
trademarks and/or registered trademarks of Yahoo! Inc. Tumblr is a
registered trademark of Tumblr, Inc. Other names are trademarks
and/or registered trademarks of their respective owners.
Yahoo! Inc. Unaudited
Condensed Consolidated Balance Sheets (in thousands)
December 31, June 30,
2014
2015
ASSETS Current assets: Cash and cash
equivalents $ 2,664,098 $ 1,188,169
Short-term marketable securities 5,327,412
4,636,152 Accounts receivable, net 1,032,704
999,646 Prepaid expenses and other current assets
671,075 756,965 Total current assets
9,695,289 7,580,932 Long-term marketable
securities 2,230,892 1,169,671 Property and
equipment, net 1,487,684 1,524,539
Goodwill 5,163,654 5,146,579 Intangible
assets, net 470,842 412,235 Other long-term
assets and investments 554,616 475,497
Investments in Alibaba Group 39,867,789
31,555,927 Investments in equity interests
2,489,578 2,326,436 Total assets
$ 61,960,344 $ 50,191,816
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 238,018 $
301,433 Income taxes payable related to sale of Alibaba
Group ADSs 3,282,293 - Other accrued expenses
and current liabilities 671,307 903,005
Deferred revenue 336,963 202,246 Total
current liabilities 4,528,581 1,406,684
Convertible notes 1,170,423 1,201,540
Long-term deferred revenue 20,774 23,442
Other long-term liabilities 143,095 126,138
Deferred tax liabilities related to investment in Alibaba
Group 16,154,906 12,768,155 Deferred and other
long-term tax liabilities 1,156,973 1,102,007
Total liabilities 23,174,752 16,627,966
Total Yahoo! Inc. stockholders' equity 38,741,837
33,532,602 Noncontrolling interests 43,755
31,248 Total equity 38,785,592
33,563,850 Total liabilities and equity
$ 61,960,344 $ 50,191,816
Yahoo! Inc. Unaudited
Condensed Consolidated Statements of Operations (in
thousands, except per share amounts)
Three Months Ended Six Months Ended June
30, June 30, 2014 2015 2014
2015 Revenue $ 1,084,191
$ 1,243,265 $ 2,216,921 $
2,469,235 Operating expenses: Cost of
revenue - traffic acquisition costs 43,826
200,230 89,735 383,369 Cost of revenue -
other 295,786 295,932 589,389
581,195 Sales and marketing 253,198
274,304 555,523 549,661 Product
development 291,778 306,428 560,042
633,175 General and administrative 154,881
180,595 319,504 354,108 Amortization of
intangibles 15,164 19,982 33,504
40,055 Gain on sale of patents (61,500
) (9,100 ) (61,500 )
(11,100 ) Restructuring charges, net
52,621 19,688 62,108
70,920 Total operating expenses
1,045,754 1,288,059 2,148,305
2,601,383 Income (loss) from
operations 38,437 (44,794 ) 68,616
(132,148 ) Other expense, net
(13,589 ) (11,741 ) (27,042
) (42,804 ) Income (loss) before
income taxes and earnings in equity interests 24,848
(56,535 ) 41,574 (174,952 )
Provision for income taxes (8,143 )
(58,495 ) (12,360 ) (17,595
) Earnings in equity interests 255,852
95,841 557,254 195,531
Net income (loss) 272,557 (19,189
) 586,468 2,984 Less: Net income
attributable to noncontrolling interests (2,850 )
(2,365 ) (5,183 ) (3,340
) Net income (loss) attributable to Yahoo!
Inc. $ 269,707 $ (21,554
) $ 581,285 $ (356
) Net income (loss) attributable to Yahoo! Inc.
common stockholders per share - diluted (1) $
0.26 $ (0.02 ) $
0.55 $ (0.00 ) Shares
used in per share calculation - diluted 1,014,692
937,569 1,023,056 936,159
Stock-based compensation expense by function: Cost
of revenue - other $ 5,356 $ 7,200
$ 30,007 $ 13,209 Sales and
marketing 31,233 39,978 81,907
78,099 Product development 39,507
50,762 53,434 98,983 General and
administrative 26,349 27,190 46,278
50,535 Restructuring charges, net - -
- 2,705
Supplemental
Financial Data:
Revenue ex-TAC $ 1,040,365 $
1,043,035 $ 2,127,186 $
2,085,866 Adjusted EBITDA $ 340,363
$ 261,703 $ 646,744 $
492,816 Free cash flow(2) $
185,915 $ (24,780 )
$ 299,877 $
(3,059,702 ) (1) The impact
of outstanding stock awards of entities in which the Company holds
equity interests that are accounted for using the equity method
reduced the Company's diluted earnings per share by $0.01 for the
three months ended June 30, 2014, and by $0.02 for the six months
ended June 30, 2014. (2)
During the six months ended June 30, 2015, the Company satisfied
the $3.3 billion income tax liability related to the sale of
Alibaba Group ADSs in September 2014. Yahoo! Inc.
Unaudited Condensed Consolidated
Statements of Cash Flows (in thousands)
Three Months Ended Six Months Ended
June 30, June 30, 2014 2015 2014
2015 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 272,557 $
(19,189 ) $ 586,468 $
2,984
Adjustments to reconcile net income
(loss) to net cash provided by (used in) operating
activities:
Depreciation 116,446 119,633 239,631
236,694 Amortization of intangible assets
30,414 34,046 64,763 68,524
Accretion of convertible notes discount 14,860
15,660 29,526 31,117 Stock-based
compensation expense 102,445 125,130
211,626 243,531 Non-cash restructuring (credits)
charges (7,031 ) (74 )
(7,031 ) (933 ) Losses from sale of
investments, assets, and other, net 15,117 10,539
18,667 44,847 Gain on sale of patents
(61,500 ) (9,100 ) (61,500
) (11,100 ) (Gain) loss on Hortonworks
warrants - (5,449 ) - 6,460
Earnings in equity interests (255,852 )
(95,841 ) (557,254 ) (195,531
) Tax benefits (detriments) from stock-based awards
19,161 (36,439 ) 76,828 (3,617
) Excess tax benefits from stock-based awards
(19,544 ) 35,620 (79,100 )
(1,850 ) Deferred income taxes (303
) (30,227 ) 14,185 (13,218
) Dividends received from equity investee
83,685 141,670 83,685 141,670
Changes in assets and liabilities, net of effects of
acquisitions: Accounts receivable 55,725
(71,583 ) 154,129 18,340 Prepaid
expenses and other assets 22,803 (11,292 )
13,592 (75,537 ) Accounts payable
(29,567 ) 6,892 (10,075 )
37,505 Accrued expenses and other liabilities
38,033 165,744 (202,142 )
255,678 Income taxes payable related to sale of Alibaba
Group ADSs - - - (3,282,293
) Deferred revenue (40,035 )
(67,788 ) (79,523 ) (132,790
) Net cash provided by (used in) operating activities
357,414 307,952 496,475
(2,629,519 ) CASH FLOWS FROM INVESTING
ACTIVITIES: Acquisition of property and equipment, net
(107,358 ) (155,442 ) (192,013
) (290,363 ) Purchases of marketable
securities (451,739 ) (1,614,068 )
(1,363,836 ) (2,326,886 ) Proceeds
from sales of marketable securities 212,028
301,423 380,954 473,775 Proceeds from
maturities of marketable securities 408,356
1,224,829 690,018 3,584,596 Purchases of
intangible assets (984 ) (3,451 )
(2,174 ) (4,611 ) Proceeds from
sales of patents 1,500 - 1,500
20,000 Proceeds from the settlement of derivative hedge
contracts 170,457 45,140 173,258
64,767 Payments for the settlement of derivative hedge
contracts (4,016 ) (1,731 )
(4,616 ) (3,882 ) Acquisitions, net
of cash acquired - 1,782 (21,661 )
(21,291 ) Payments for equity investments in
privately held companies - - (10,399
) - Other investing activities, net (74
) (115 ) (640 ) (153
) Net cash provided by (used in) investing activities
228,170 (201,633 ) (349,609
) 1,495,952 CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from issuance of common
stock 84,760 10,588 163,737 46,777
Repurchases of common stock (718,628 )
- (1,168,206 ) (203,771 )
Excess tax benefits from stock-based awards 19,544
(35,620 ) 79,100 1,850 Tax
withholdings related to net share settlements of restricted stock
units (34,178 ) (52,534 )
(159,581 ) (149,960 ) Distributions
to noncontrolling interests (22,344 )
(15,847 ) (22,344 ) (15,847
) Other financing activities, net (3,037
) (4,442 ) (6,130 )
(9,015 ) Net cash used in financing activities
(673,883 ) (97,855 ) (1,113,424
) (329,966 ) Effect of exchange rate
changes on cash and cash equivalents 4,869 5,048
3,554 (12,396 ) Net change in cash
and cash equivalents (83,430 ) 13,512
(963,004 ) (1,475,929 ) Cash and
cash equivalents, beginning of period 1,198,016
1,174,657 2,077,590 2,664,098
Cash and cash equivalents, end of period
$ 1,114,586 $ 1,188,169
$ 1,114,586 $ 1,188,169
Yahoo! Inc.Note to Unaudited
Condensed Consolidated Financial Statements
This press release and its attachments include the non-GAAP
financial measures of revenue excluding traffic acquisition costs
(“revenue ex-TAC”); gross mobile revenue; gross search revenue;
adjusted EBITDA; non-GAAP income from operations; non-GAAP net
earnings; non-GAAP net earnings per diluted share; and free cash
flow, which are reconciled to revenue (in the case of revenue
ex-TAC, gross mobile revenue, and gross search revenue); net income
(loss) attributable to Yahoo! Inc. (in the case of adjusted EBITDA
and non-GAAP net earnings); income (loss) from operations; net
income (loss) attributable to Yahoo! Inc. common stockholders per
share – diluted; and net cash provided by (used in) operating
activities, which we believe are the most comparable GAAP measures.
Yahoo! Inc. (together with its consolidated subsidiaries, “Yahoo,”
the “Company,” or “we”) uses these non-GAAP financial measures for
internal managerial purposes and to facilitate period-to-period
comparisons. We describe limitations specific to each non-GAAP
financial measure below. Management generally compensates for
limitations in the use of non-GAAP financial measures by relying on
comparable GAAP financial measures and providing investors with a
reconciliation of the non-GAAP financial measure to the most
directly comparable GAAP financial measure or measures. Further,
management uses non-GAAP financial measures only in addition to and
in conjunction with results presented in accordance with GAAP. We
believe that these non-GAAP financial measures reflect additional
ways of viewing aspects of our operations that, when viewed with
our GAAP results, provide a more complete understanding of factors
and trends affecting our business. These non-GAAP measures should
be considered as a supplement to, and not as a substitute for, or
superior to, revenue, net income (loss) attributable to Yahoo!
Inc., income (loss) from operations, net income (loss) attributable
to Yahoo! Inc. common stockholders per share – diluted, and net
cash provided by (used in) operating activities calculated in
accordance with GAAP.
Revenue ex-TAC is a non-GAAP financial measure defined as GAAP
revenue less TAC that has been recorded as a cost of revenue. TAC
consists of payments made to Affiliates, and payments made to
companies that direct consumer and business traffic to Yahoo
Properties. Based on applicable accounting principles,
TAC is recorded either as a cost of revenue or as a reduction of
revenue. We present revenue ex-TAC to provide investors
a metric used by the Company for evaluation and decision-making
purposes and to provide investors with comparable revenue numbers
when comparing to our historical reported financial information. A
limitation of revenue ex-TAC is that it is a measure we defined for
internal and investor purposes that may be unique to the Company,
and therefore it may not enhance the comparability of our results
to those of other companies in our industry who have similar
business arrangements but address the impact of TAC
differently. Management compensates for these
limitations by also relying on the comparable GAAP financial
measures of revenue and cost of revenue—TAC.
Each of gross mobile revenue and gross search revenue is a
non-GAAP financial measure. Gross mobile revenue is defined as GAAP
mobile revenue plus the related revenue share with third parties.
Gross search revenue is defined as GAAP search revenue plus the
related revenue share with third parties. We present these amounts
to provide investors with additional metrics used by the Company
for evaluation and decision-making purposes and as an indicator of
the size of our presence in the relevant business. To this end,
gross mobile revenue and gross search revenue report the total
receipts generated on Yahoo Properties and Affiliate sites by the
specified relevant Yahoo business (i.e., mobile or search), before
any TAC or other revenue share is paid to the Affiliates and before
any revenue share is allocated to Microsoft or other parties. A
limitation of these non-GAAP measures is that they include revenue
that is recognized by one or more third parties and not by Yahoo;
furthermore, they are measures we defined for internal and investor
purposes that may be unique to us, and therefore may not enhance
the comparability of our results to those of other companies in our
industry who have similar business arrangements but address the
impact of TAC and revenue sharing differently. Management
compensates for these limitations by also relying on the comparable
financial measure GAAP revenue.
Adjusted EBITDA is defined as net income (loss) attributable to
Yahoo! Inc. before taxes, depreciation, amortization of intangible
assets, stock-based compensation expense, other income, net (which
includes interest), earnings in equity interests, net income
attributable to noncontrolling interests and other gains, losses,
and expenses that we do not believe are indicative of our ongoing
results. We present adjusted EBITDA because the exclusion of
certain gains, losses, and expenses facilitates comparisons of the
operating performance of the Company on a period to period basis.
Adjusted EBITDA has limitations as an analytical tool and should
not be considered in isolation or as a substitute for results
reported under GAAP. These limitations include: adjusted EBITDA
does not reflect tax payments and such payments reflect a reduction
in cash available to us; adjusted EBITDA does not reflect the
periodic costs of certain capitalized tangible and intangible
assets used in generating revenues in our businesses; adjusted
EBITDA does not include stock-based compensation expense related to
the Company’s workforce; adjusted EBITDA also excludes other
income, net (which includes interest), earnings in equity
interests, net income attributable to noncontrolling interests and
other gains, losses, and expenses that we do not believe are
indicative of our ongoing results, and these items may represent a
reduction or increase in cash available to us; and adjusted EBITDA
is a measure that may be unique to the Company, and therefore it
may not enhance the comparability of our results to other companies
in our industry. Management compensates for these limitations by
also relying on the comparable GAAP financial measure of net income
(loss) attributable to Yahoo! Inc., which includes taxes,
depreciation, amortization, stock-based compensation expense, other
income, net (which includes interest), earnings in equity
interests, net income attributable to noncontrolling interests and
the other gains, losses and expenses that are excluded from
adjusted EBITDA.
Non-GAAP income from operations is defined as income from
operations excluding certain gains, losses, and expenses that we do
not believe are indicative of our ongoing operating results and
further adjusted to exclude stock-based compensation
expense. Because of the variety of equity awards used by
companies, the varying methodologies for determining stock-based
compensation expense, and the subjective assumptions involved in
those determinations, we believe excluding stock-based compensation
expense enhances the ability of management and investors to
understand the impact of stock-based compensation expense on income
from operations. We consider non-GAAP income from operations to be
a profitability measure which facilitates the forecasting of our
operating results for future periods and allows for the comparison
of our results to historical periods. A limitation of non-GAAP
income from operations is that it does not include all items that
impact our income from operations for the period. Management
compensates for this limitation by also relying on the comparable
GAAP financial measure of income from operations which includes the
gains, losses, and expenses that are excluded from non-GAAP income
from operations.
Non-GAAP net earnings is defined as net income (loss)
attributable to Yahoo! Inc. (which we sometimes refer to as net
earnings) excluding certain gains, losses, expenses, and their
related tax effects that we do not believe are indicative of our
ongoing results and further adjusted to exclude stock-based
compensation expense and its related tax effects. Because of the
variety of equity awards used by companies, the varying
methodologies for determining stock-based compensation expense, and
the subjective assumptions involved in those determinations, we
believe excluding stock-based compensation expense enhances the
ability of management and investors to understand the impact of
stock-based compensation expense on net income and net income per
share. We consider non-GAAP net earnings and non-GAAP net earnings
per diluted share to be profitability measures which facilitate the
forecasting of our results for future periods and allow for the
comparison of our results to historical periods. A limitation of
non-GAAP net earnings and non-GAAP net earnings per diluted share
is that they do not include all items that impact our net income
and net income per diluted share for the period. Management
compensates for this limitation by also relying on the comparable
GAAP financial measures of net income (loss) attributable to Yahoo!
Inc. and net income attributable to Yahoo! Inc. common stockholders
per share - diluted, both of which include the gains, losses,
expenses and related tax effects that are excluded from non-GAAP
net earnings and non-GAAP net earnings per diluted share.
Free cash flow is a non-GAAP financial measure defined as net
cash provided by (used in) operating activities (adjusted to
include excess tax benefits from stock-based awards), less
acquisition of property and equipment, net and dividends received
from equity investees. We consider free cash flow to be a liquidity
measure which provides useful information to management and
investors about the amount of cash generated by the business after
the acquisition of property and equipment, which can then be used
for strategic opportunities including, among others, investing in
the Company's business, making strategic acquisitions,
strengthening the balance sheet, and repurchasing stock. A
limitation of free cash flow is that it does not represent the
total increase or decrease in the cash balance for the period.
Management compensates for this limitation by also relying on the
net change in cash and cash equivalents as presented in the
Company’s unaudited condensed consolidated statements of cash flows
prepared in accordance with GAAP which incorporates all cash
movements during the period.
Yahoo! Inc.
Supplemental Financial Data and GAAP to Non-GAAP
Reconciliations (in thousands)
Three Months Ended Six Months Ended June 30,
June 30, 2014 2015 2014 2015
Revenue for groups of similar services: Search
$ 428,418 $ 521,126 $
873,185 $ 1,052,792 Display
436,053 500,376 889,277 964,109
Other 219,720 221,763
454,459 452,334 Total revenue
$ 1,084,191 $ 1,243,265
$ 2,216,921 $ 2,469,235
Revenue excluding traffic acquisition
costs recorded as cost of revenue ("revenue ex-TAC") for groups of
similar services:
GAAP search revenue $ 428,418 $
521,126 $ 873,185 $ 1,052,792
TAC associated with search revenue (784 )
(105,876 ) (1,470 ) (205,885
) Search revenue ex-TAC $ 427,634
$ 415,250 $ 871,715
$ 846,907 GAAP display
revenue $ 436,053 $ 500,376
$ 889,277 $ 964,109 TAC associated
with display revenue (42,217 ) (93,682
) (86,579 ) (176,116 )
Display revenue ex-TAC $ 393,836
$ 406,694 $ 802,698
$ 787,993 Other GAAP revenue
$ 219,720 $ 221,763 $
454,459 $ 452,334 TAC associated with other
GAAP revenue (825 ) (672 )
(1,686 ) (1,368 ) Other revenue
ex-TAC $ 218,895 $ 221,091
$ 452,773 $ 450,966
Revenue ex-TAC: GAAP revenue $
1,084,191 $ 1,243,265 $
2,216,921 $ 2,469,235 TAC
(43,826 ) (200,230 ) (89,735
) (383,369 ) Revenue ex-TAC $
1,040,365 $ 1,043,035 $
2,127,186 $ 2,085,866
Revenue ex-TAC by segment: Americas: GAAP
revenue $ 805,535 $ 992,210
$ 1,672,463 $ 1,976,931 TAC
(30,296 ) (180,822 ) (64,390
) (347,477 ) Revenue ex-TAC $
775,239 $ 811,388 $
1,608,073 $ 1,629,454
EMEA: GAAP revenue $ 97,847 $
85,830 $ 189,417 $ 166,916
TAC (10,212 ) (12,950 )
(19,405 ) (24,654 ) Revenue
ex-TAC $ 87,635 $ 72,880
$ 170,012 $ 142,262
Asia Pacific: GAAP revenue $
180,809 $ 165,225 $ 355,041
$ 325,388 TAC (3,318 )
(6,458 ) (5,940 ) (11,238
) Revenue ex-TAC $ 177,491
$ 158,767 $ 349,101
$ 314,150 Total
revenue ex-TAC $ 1,040,365 $
1,043,035 $ 2,127,186 $
2,085,866 Direct costs by segment
(3): Americas $ 60,167 $
76,148 $ 120,977 $ 134,892
EMEA 21,395 20,551 43,339 40,702
Asia Pacific 48,139 51,818 94,967
102,550 Global operating costs (4)
631,801 649,915 1,282,659 1,334,006
Gain on sale of patents (61,500 )
(9,100 ) (61,500 ) (11,100
) Restructuring charges, net 52,621
19,688 62,108 70,920 Depreciation and
amortization 146,860 153,679 304,394
305,218 Stock-based compensation expense
102,445 125,130 211,626
240,826 Income (loss) from operations $
38,437 $ (44,794 ) $
68,616 $ (132,148 )
(3) Direct costs for each segment include certain
cost of revenue-other and costs associated with the local sales
teams. Prior to the fourth quarter of 2014, marketing, media, costs
associated with Yahoo Properties and ad operation costs were
managed locally and included as direct costs for each segment.
Prior period amounts have been revised to conform to the current
presentation. (4) Global
operating costs include product development, marketing, real estate
workplace, general and administrative, and other corporate expenses
that are managed on a global basis and that are not directly
attributable to any particular segment. Beginning in the fourth
quarter of 2014, marketing, media, costs associated with Yahoo
Properties and other ad operation costs are managed globally and
included as global costs. Prior period amounts have been revised to
conform to the current presentation. Yahoo! Inc.
Supplemental Financial Data and GAAP
to Non-GAAP Reconciliations (continued) (in thousands)
Three Months Ended Six Months
Ended June 30, June 30, 2014 2015
2014 2015 Reconciliation of net income (loss)
attributable to Yahoo! Inc. to adjusted EBITDA: Net income
(loss) attributable to Yahoo! Inc. $ 269,707
$ (21,554 ) $ 581,285 $
(356 ) Advisory fees - 8,000
- 8,000 Depreciation and amortization
146,860 153,679 304,394 305,218
Stock-based compensation expense 102,445
125,130 211,626 240,826 Restructuring
charges, net 52,621 19,688 62,108
70,920 Other expense, net 13,589 11,741
27,042 42,804 Provision for income taxes
8,143 58,495 12,360 17,595 Earnings
in equity interests (255,852 ) (95,841
) (557,254 ) (195,531 ) Net
income attributable to noncontrolling interests 2,850
2,365 5,183 3,340
Adjusted EBITDA $ 340,363 $
261,703 $ 646,744 $
492,816 Reconciliation of net cash provided
by (used in) operating activities to free cash flow: Net
cash provided by (used in) operating activities $
357,414 $ 307,952 $ 496,475
$ (2,629,519 ) Acquisition of property and
equipment, net (107,358 ) (155,442
) (192,013 ) (290,363 )
Dividends received from equity
investee
(83,685 ) (141,670 ) (83,685
) (141,670 ) Excess tax benefits from
stock-based awards 19,544 (35,620 )
79,100 1,850 Free cash
flow(2) $ 185,915 $
(24,780 ) $ 299,877 $
(3,059,702 ) Three Months Ended Six
Months Ended June 30, June 30, 2014
2015 2014 2015 Reconciliation of GAAP
mobile revenue to gross mobile revenue: GAAP mobile
revenue $ 163,007 $ 251,846
$ 307,679 $ 485,439 Revenue share
with third parties 108,634 162,801
195,352 320,678 Gross mobile
revenue $ 271,641 $ 414,647
$ 503,031 $ 806,117
Reconciliation of GAAP search revenue to gross
search revenue: GAAP search revenue $
428,418 $ 521,126 $ 873,185
$ 1,052,792 Revenue share with third parties
368,592 398,710 722,978
822,809 Gross search revenue $
797,010 $ 919,836 $
1,596,163 $ 1,875,601
(2) During the six months ended June 30, 2015, the
Company satisfied the $3.3 billion income tax liability related to
the sale of Alibaba Group ADSs in September 2014.
Yahoo! Inc.
GAAP to Non-GAAP Reconciliations (in thousands, except
per share amounts) Three Months
Ended June 30, 2014 2015 GAAP
income (loss) from operations $ 38,437 $
(44,794 ) (a) Restructuring charges,
net 52,621 19,688 (b)
Stock-based compensation expense 102,445
125,130 (c) Advisory fees -
8,000 Non-GAAP income (loss) from
operations $ 193,503 $
108,024 GAAP net income (loss)
attributable to Yahoo! Inc. $ 269,707 $
(21,554 ) (a) Restructuring charges,
net 52,621 19,688 (b)
Stock-based compensation expense 102,445
125,130 (c) Advisory fees -
8,000 (d) Gain on Hortonworks warrants
- (5,449 ) (e) To adjust the
provision for income taxes to reflect an effective tax rate of 35%
for the three months ended June 30, 2015 and to exclude the tax
impact of items (a) through (d) above for the three months ended
June 30, 2014 (43,032 ) 26,703
Non-GAAP net earnings $ 381,741
$ 152,518
GAAP net income (loss) attributable to
Yahoo! Inc. common stockholders per share - diluted
(1)
$ 0.26 $ (0.02 )
Non-GAAP net earnings per share - diluted (5)
$ 0.37 $ 0.16
Shares used in non-GAAP per share
calculation - diluted
1,014,692
947,775
Six Months Ended June 30, 2014
2015 GAAP income (loss) from operations
$ 68,616 $ (132,148 )
(a) Restructuring charges, net 62,108
70,920 (b) Stock-based compensation
211,626 240,826 (c) Advisory
fees - 8,000 Non-GAAP income
from operations $ 342,350 $
187,598 GAAP net income attributable
to Yahoo! Inc. $ 581,285 $ (356
) (a) Restructuring charges, net
62,108 70,920 (b) Stock-based
compensation 211,626 240,826 (c)
Advisory fees - 8,000 (d)
Loss on Hortonworks warrants - 6,460
(e) To adjust the provision for income taxes to reflect
an effective tax rate of 35% in the six months ended June 30, 2015
and to exclude the tax impact of items (a) through (d) above for
the six months ended June 30, 2014 (71,654 )
(35,344 ) Non-GAAP net
earnings $ 783,365 $ 290,506
GAAP net income attributable to Yahoo! Inc. common
stockholders per share - diluted (1) $
0.55 $ (0.00 )
Non-GAAP net earnings per share - diluted (5)
$ 0.74 $ 0.31
Shares used in non-GAAP per share
calculation - diluted
1,023,056
947,877
(1) The impact of outstanding stock
awards of entities in which the Company holds equity interests that
are accounted for using the equity method reduced the Company's
diluted earnings per share by $0.01 for the three months ended June
30, 2014, and by $0.02 for the six months ended June 30, 2014.
(5) The impact of outstanding
stock awards of entities in which the Company holds equity
interests that are accounted for using the equity method reduced
the Company's non-GAAP diluted earnings per share by $0.01 for the
three months ended June 30, 2014, and by $0.02 for the six months
ended June 30, 2014.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150721006511/en/
Media Relations Contact:Yahoo! Inc.Sarah Meron,
408-349-4040media@yahoo-inc.comorInvestor Relations
Contact:Yahoo! Inc.Joon Huh, 408-349-3382investorrelations@yahoo-inc.com
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Apr 2023 to Apr 2024