Yahoo! Inc. (NASDAQ: YHOO) today reported results for the
quarter and full year ended December 31, 2015.
Q4 2014 Q4 2015 Full Year 2014 Full
Year 2015 GAAP revenue $1,253 million $1,273 million $4,618 million
$4,968 million Cost of revenue – TAC $74 million $271 million $218
million $878 million
Goodwill impairment*
$88 million $4,461 million $88 million $4,461 million Income (loss)
from operations $32 million ($4,530) million $143 million ($4,748)
million Non-GAAP income from operations $256 million $63 million
$755 million $342 million Adjusted EBITDA $409 million $215 million
$1,362 million $952 million Net earnings $166 million ($4,435)
million $7,522 million ($4,359) million GAAP net earnings per
diluted share $0.17 ($4.70) $7.45 ($4.64) Non-GAAP net earnings per
diluted share $0.30 $0.13 $1.57 $0.59
*See further discussion related to
goodwill impairment below
"I’m pleased to report that our Q4 performance exceeded guidance
across GAAP revenue, revenue ex-TAC, adjusted EBITDA, and non-GAAP
Operating Income,” said Marissa Mayer, CEO of Yahoo. “We continue
to be encouraged by the performance of our Mavens investments,
which in 2015 alone, grew to about a third of our GAAP revenue --
$1.6 billion dollars.”
Business Highlights
Search
- As part of Yahoo’s efforts to move
search toward a more contextual, anticipatory and assistive
experience, the Company made the first in a series of ongoing
updates to the Yahoo Search app. For iOS in the U.S., the Yahoo
Search app experience is now more actionable and guides users to
the information they need whether it’s from the Web or their
inboxes. Logged in users can now see Web and email results in one
place, as the app can now search across email, contacts and
calendar to help them find things like package delivery
notifications, hotel reservation details and upcoming events, while
partnerships with companies like Yelp and OpenTable allow users to
take action directly from the search results page.
Communications
- Yahoo unveiled the next generation of
Yahoo Messenger on mobile for both iOS and Android, the Web and
Yahoo Mail on desktop. Built from the ground up, the powerful new
platform integrates technology and features from Flickr, Tumblr and
Xobni. Built for group and 1:1 messaging, Yahoo Messenger now
allows users to unsend and like messages, photos and animated GIFs
quickly and easily.
Digital Content
- Tumblr further strengthened the way
that users communicate and connect over the things they love
through threaded instant Messaging available across iOS and Android
apps, and on the Web.
- Yahoo presented the first free, global
live stream of an NFL game to more than 15 million viewers across
the globe. This was the first time users were able to enjoy the
NFL’s premium content globally without cable, authentication or TV
across both Yahoo and Tumblr. More than 30 top brands partnered
with Yahoo to kick off this new era of sports programming. The
Company delivered the live stream with a rebuffering ratio of less
than one percent.
- Yahoo, together with launch sponsor
Fidelity Investments, introduced “The Final Round,” a live weekday
show on Yahoo Finance that offers insight into the most important
business news of the day and what’s driving markets, and features
interviews with bold-faced names like premiere guest Charles Koch
from the field and in the New York studio.
- Yahoo debuted Adrian Wojnarowski’s new
weekly NBA podcast, The Vertical, with an interview with NBA
Commissioner Adam Silver. The podcast debuted in advance of the
January launch of Wojnarowski’s new basketball site “The Vertical”
on Yahoo Sports. “The Vertical” will feature content from an elite
and talented group of reporters and industry insiders.
Fourth Quarter and Full Year 2015 Financial
Highlights
Mavens Revenue:
Q4 2014
Q4 2015 Full Year 2014 Full Year 2015 Mavens revenue
$
375 million
$
472 million
$
1,148 million
$
1,660 million
Non-Mavens revenue 751 million 750 million
3,022 million 2,908 million Total
traffic-driven revenue
$
1,126 million
$
1,222 million
$
4,170 million
$
4,568 million
Non-traffic-driven revenue
127 million 51 million 448 million
400 million GAAP revenue
$
1,253 million
$
1,273 million
$
4,618 million
$
4,968 million
Mavens revenue represented 33 percent and 28 percent of
traffic-driven revenue in the fourth quarter and full year of 2014,
respectively, and increased to 39 percent and 36 percent in the
fourth quarter and full year of 2015, respectively.
Mobile Revenue:
Q4 2014 Q4 2015 Full Year 2014 Full
Year 2015 Mobile revenue
$
254 million
$
291 million
$
768 million
$
1,048 million
PC revenue 872 million 931 million
3,402 million 3,520 million Total
traffic-driven revenue
$
1,126 million
$
1,222 million
$
4,170 million
$
4,568 million
Non-traffic-driven revenue 127 million 51
million 448 million 400 million GAAP
revenue
$
1,253 million
$
1,273 million
$
4,618 million
$
4,968 million
Mobile revenue represented 23 percent and 18 percent of
traffic-driven revenue in the fourth quarter and full year of 2014,
respectively, and increased to 24 percent and 23 percent in the
fourth quarter and full year of 2015, respectively.
Gross mobile revenue for the fourth quarter of 2014 and 2015 was
$413 million and $449 million, respectively. Gross mobile revenue
for the full year of 2014 and 2015 was $1,261 million and $1,679
million, respectively.
Search Revenue:
- Gross search revenue was $866 million
for the fourth quarter of 2015, a decrease of 7 percent compared to
the fourth quarter of 2014. Gross search revenue was $3,612 million
for the full year of 2015, an increase of 7 percent compared to the
prior year.
- GAAP search revenue was $522 million
for the fourth quarter of 2015, an increase of 12 percent compared
to the fourth quarter of 2014. GAAP search revenue was $2,084
million for the full year of 2015, an increase of 16 percent
compared to the prior year.
- Cost of revenue - TAC paid to search
partners was $141 million for the fourth quarter of 2015, which
includes TAC from the Mozilla agreement, compared to $5 million in
the fourth quarter of 2014. Cost of revenue - TAC paid to search
partners was $465 million for the full year of 2015, which includes
TAC from the Mozilla agreement, compared to $9 million in the prior
year.
- The number of Paid Clicks decreased 10
percent compared to the fourth quarter of 2014.
- Price-per-Click increased 3 percent
compared to the fourth quarter of 2014.
Display Revenue:
- GAAP display revenue was $601 million
for the fourth quarter of 2015, a 13 percent increase compared to
the fourth quarter of 2014. GAAP display revenue was $2,074 million
for the full year of 2015, an 11 percent increase compared to the
prior year.
- Cost of revenue - TAC paid to display
partners was $130 million for the fourth quarter of 2015 compared
to $68 million in the fourth quarter of 2014. Cost of revenue - TAC
paid to display partners was $410 million for the full year of 2015
compared to $205 million in the prior year.
- The number of Ads Sold increased 8
percent compared to the fourth quarter of 2014.
- Price-per-Ad increased 6 percent
compared to the fourth quarter of 2014.
Goodwill Impairment:
We recorded a $4,461 million non-cash goodwill impairment charge
as a result of our annual goodwill impairment test conducted in the
fourth quarter of 2015. We concluded that the carrying value of
our U.S. & Canada, Europe, Latin America and Tumblr
reporting units exceeded their respective estimated fair values.
The goodwill impairment resulted from a combination of factors,
including decreases in our market capitalization, projected
operating results and estimated future cash flows.
Cash, Cash Equivalents, and Marketable Securities:
- Cash, cash equivalents, and marketable
securities were $6.8 billion as of December 31, 2015 compared to
$10.2 billion as of December 31, 2014, a decrease of $3.4 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 September 2014.
"We're encouraged that our fourth quarter results exceeded
expectations in all core metrics," said Ken Goldman, CFO of Yahoo.
"As we look forward to executing a more focused strategy for the
Company, this is a solid baseline for the actions we're taking to
improve performance in 2016 and beyond."
Live Stream
Yahoo will live stream a video broadcast of the Company's fourth
quarter and full year 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 first quarter
of 2016 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 (expense), 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 (i.e., acquisition of property and equipment less
proceeds received from disposition of property and equipment) 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,” and “Supplemental Financial Data 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. In
September 2014, Alibaba Group completed its initial public offering
of American Depositary Shares (“ADS”), in which Yahoo was a selling
shareholder.
“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 (loss) attributable to Yahoo!
Inc., and “net earnings per diluted share” means net income (loss)
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 through the third quarter of 2015, 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 September 30, 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, risks related to acceptance by users of new products
and services; risks related to Yahoo's ability to compete with new
or existing competitors; reduction in spending by, or loss of,
advertising customers; risks related to Yahoo’s ability to continue
to grow its mobile users and revenue; risks related to Yahoo’s
ability to continue to grow Mavens revenue; risks related to
Yahoo’s ability to provide innovative search experiences and other
products and services that differentiate its services and generate
significant traffic; 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 manage its operating expenses effectively; 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; risks related to
Yahoo’s ability to recruit and retain key personnel; 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 February 2, 2016. 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, as amended, and
Quarterly Report on Form 10-Q for the quarter ended September 30,
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 Annual Report on Form 10-K for
the year ended December 31, 2015, which will be filed with the SEC
in the first quarter of 2016.
Yahoo!, the Yahoo family of marks, Flickr, Xobni, 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,
December 31,
2014
2015
ASSETS Current assets: Cash and cash
equivalents $ 2,664,098 $ 1,631,911
Short-term marketable securities 5,327,412
4,225,112 Accounts receivable, net 1,032,704
1,047,504 Prepaid expenses and other current assets
420,207 602,792 Total current assets
9,444,421 7,507,319 Long-term marketable
securities 2,230,892 975,961 Property and
equipment, net 1,487,684 1,547,323
Goodwill 5,152,570 808,114 Intangible
assets, net 470,842 347,269 Other long-term
assets and investments 563,560 342,390
Investments in Alibaba Group 39,867,789
31,172,361 Investments in equity interests
2,489,578 2,503,229 Total assets
$ 61,707,336 $ 45,203,966
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 238,018 $
208,691 Income taxes payable related to sale of Alibaba
Group ADSs 3,282,293 - Other accrued expenses
and current liabilities 657,709 934,658
Deferred revenue 336,963 134,031 Total
current liabilities 4,514,983 1,277,380
Convertible notes 1,170,423 1,233,485
Long-term deferred revenue 20,774 27,801
Other long-term liabilities 143,095 118,689
Deferred tax liabilities related to investment in Alibaba
Group 16,154,906 12,611,867 Deferred and other
long-term tax liabilities 917,563 855,324
Total liabilities 22,921,744 16,124,546
Total Yahoo! Inc. stockholders' equity 38,741,837
29,043,537 Noncontrolling interests 43,755
35,883 Total equity 38,785,592
29,079,420 Total liabilities and equity
$ 61,707,336 $ 45,203,966
Yahoo! Inc. Unaudited Condensed Consolidated Statements
of Operations (in thousands, except per share amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2014
2015
2014
2015
Revenue $ 1,253,072 $
1,273,393 $ 4,618,133 $
4,968,301 Operating expenses: Cost of
revenue - traffic acquisition costs 73,616
270,916 217,531 877,514 Cost of revenue -
other 287,808 316,193 1,169,844
1,200,234
Sales and marketing
261,040 256,728 1,084,438 1,080,718
Product development 304,287 272,463
1,156,386 1,177,923 General and administrative
190,051 181,733 686,272 687,804
Amortization of intangibles 17,924 19,365
66,750 79,042 Gain on sale of patents
(35,094 ) - (97,894 )
(11,100 ) Asset impairment charge -
2,682 - 44,381 Goodwill impairment
charge 88,414 4,460,837 88,414
4,460,837 Intangibles impairment charge -
15,423 - 15,423 Restructuring charges,
net 32,872 7,087 103,450
104,019 Total operating expenses
1,220,918
5,803,427 4,475,191
9,716,795 Income (loss) from operations
32,154 (4,530,034 ) 142,942
(4,748,494 ) Other income (expense),
net 87,550 (9,023 )
10,369,439 (75,782 ) Income
(loss) before income taxes and earnings in equity interests
119,704 (4,539,057 ) 10,512,381
(4,824,276 ) (Provision) benefit for income
taxes (52,340 ) 13,985 (4,038,102
) 89,598 Earnings in equity interests
101,917 92,845 1,057,863
383,571 Net income (loss)
169,281 (4,432,227 ) 7,532,142
(4,351,107 ) Less: Net income attributable
to noncontrolling interests (2,937 )
(2,760 ) (10,411 ) (7,975
) Net income (loss) attributable to Yahoo!
Inc. $ 166,344 $ (4,434,987
) $ 7,521,731 $
(4,359,082 ) Net income (loss) attributable
to Yahoo! Inc. common stockholders per share - diluted
(1) $ 0.17 $ (4.70
) $ 7.45 $ (4.64 )
Shares used in per share calculation - diluted
962,626 943,425 1,004,108
939,141 Stock-based compensation expense by
function: Cost of revenue - other $ 6,331
$ 9,053 $ 42,155 $ 32,010
Sales and marketing 32,209 30,002
145,777 141,418 Product development
44,839 45,010 139,056 190,454
General and administrative 19,373 21,836
93,186 93,271 Restructuring charges, net
- - - 2,705
Supplemental
Financial Data:
Revenue ex-TAC $ 1,179,456 $
1,002,477 $ 4,400,602 $
4,090,787 Adjusted EBITDA $ 409,222
$ 214,687 $ 1,361,548 $
951,740 Free cash flow(2) $
74,525 $ 31,502
$ 586,632 $
(3,010,172 ) (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 $0.04 for the
year ended December 31, 2014. (2) During the year
ended December 31, 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
Year Ended December 31, December 31,
2014 2015 2014
2015 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 169,281 $
(4,432,227 ) $ 7,532,142 $
(4,351,107 )
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 118,454 117,354 475,031
472,894 Amortization of intangible assets
34,576 34,629 131,537 136,719
Accretion of convertible notes discount 15,255
16,077 59,838 63,061 Stock-based
compensation expense 102,752 105,901
420,174 459,858 Non-cash asset impairment
charge - 2,682 - 44,381 Non-cash
goodwill impairment charge 88,414 4,460,837
88,414 4,460,837 Non-cash intangibles impairment
charge - 15,423 - 15,423
Non-cash restructuring (credits) charges 3,637
3,181 (3,394 ) 3,150 Non-cash
accretion (amortization) on marketable securities 5,763
8,890 30,878 47,218 Foreign exchange (gain)
loss 3,271 (5,961 ) 15,978
4,376 (Gain) loss on sale of assets and other
(1,411 ) 180 (11,383 )
(2,878 ) Gain on sale of Alibaba Group ADSs
- - (10,319,437 ) - Gain on
sale of patents (35,094 ) - (97,894
) (11,100 ) (Gain) loss on Hortonworks
warrants (98,062 ) (42 )
(98,062 ) 19,199 Earnings in equity
interests (101,917 ) (92,845 )
(1,057,863 ) (383,571 ) Tax benefits
from stock-based awards 34,649 18,739
145,711 41,729 Excess tax benefits from
stock-based awards (35,190 ) (24,923
) (149,582 ) (58,282 )
Deferred income taxes 68,458 10,264
465,873 (42,341 ) Dividends received from
equity investees - - 83,685 142,045
Changes in assets and liabilities, net of effects of
acquisitions: Accounts receivable (113,370
) (73,368 ) 29,278 (39,065
) Prepaid expenses and other assets (103,477
) 85,954 (82,419 ) 21,842
Accounts payable 14,475 (30,323 )
14,165 (59,965 ) Accrued expenses and other
liabilities 12,821 (84,793 )
132,839 133,244 Income taxes payable related to
sale of Alibaba Group ADSs - - 3,282,293
(3,282,293 ) Deferred revenue (76,070
) (3,339 ) (194,920 )
(195,328 ) Net cash provided by (used in)
operating activities 107,215 132,290
892,882 (2,359,954 )
CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of
property and equipment (70,276 ) (125,818
) (389,551 ) (577,631 )
Proceeds from sales of property and equipment 2,396
107 17,404 11,176 Purchases of marketable
securities (6,327,504 ) (1,733,658
) (7,890,092 ) (5,206,245 )
Proceeds from sales of marketable securities 587,924
256,676 2,269,659 822,997 Proceeds from
maturities of marketable securities 76,740
1,802,208 945,696 6,691,645 Proceeds from
sale of Alibaba Group ADSs, net of underwriting discounts,
commissions, and fees - - 9,404,974
- Purchases of intangible assets (178 )
(78 ) (2,658 ) (4,811 )
Proceeds from sales of patents 23,500 -
86,300 29,100 Proceeds from the settlement of
derivative hedge contracts 68,417 26,497
254,496 147,179 Payments for the settlement of
derivative hedge contracts (236 ) (2,223
) (5,454 ) (8,817 )
Acquisitions, net of cash acquired (545,199 )
(1,063 ) (859,036 ) (175,693
) Payments for equity investments in privately held
companies (14,000 ) - (74,399
) - Other investing activities, net
3,391 (53 ) 4,630
(256 ) Net cash provided by (used in) investing
activities (6,195,025 ) 222,595
3,761,969 1,728,644 CASH
FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of
common stock 60,461 6,833 308,029
59,130 Repurchases of common stock (1,612,995
) - (4,163,227 ) (203,771
) Excess tax benefits from stock-based awards
35,190 24,923 149,582 58,282 Tax
withholdings related to net share settlements of restricted stock
units (54,454 ) (41,670 )
(280,879 ) (257,731 ) Distributions
to noncontrolling interests - - (22,344
) (15,847 ) Other financing activities,
net (4,387 ) (3,767 )
(13,627 ) (17,321 ) Net cash used in
financing activities (1,576,185 ) (13,681
) (4,022,466 ) (377,258 )
Effect of exchange rate changes on cash and cash equivalents
(17,192 ) 9,547 (45,877 )
(23,619 ) Net change in cash and cash
equivalents (7,681,187 ) 350,751
586,508 (1,032,187 ) Cash and cash
equivalents, beginning of period 10,345,285
1,281,160 2,077,590 2,664,098
Cash and cash equivalents, end of period
$ 2,664,098 $ 1,631,911
$ 2,664,098 $ 1,631,911
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. TAC is recorded either as a reduction of revenue or as
cost 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 (loss) 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
(loss) 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 (loss) 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 (loss) 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 (i.e., acquisition of
property and equipment less proceeds received from disposition of
property and equipment) 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 business operations, after
deducting our net payments for acquisitions and dispositions of
property and equipment, which cash can then be used for strategic
opportunities or other business purposes 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 Year Ended
December 31, December 31, 2014
2015 2014 2015 Revenue for groups of
similar services: Search $ 467,321
$ 521,869 $ 1,792,861 $
2,084,139 Display 531,778 601,435
1,868,035 2,074,161 Other 253,973
150,089 957,237 810,001
Total revenue $ 1,253,072
$ 1,273,393 $ 4,618,133
$ 4,968,301 Revenue excluding
traffic acquisition costs recorded as cost of revenue ("revenue
ex-TAC") for groups of similar services: GAAP search
revenue $ 467,321 $ 521,869
$ 1,792,861 $ 2,084,139 TAC
associated with search revenue (5,096 )
(140,596 ) (9,279 ) (465,484
) Search revenue ex-TAC $ 462,225
$ 381,273 $ 1,783,582
$ 1,618,655 GAAP display
revenue $ 531,778 $ 601,435
$ 1,868,035 $ 2,074,161 TAC
associated with display revenue (67,772 )
(129,756 ) (204,928 ) (409,590
) Display revenue ex-TAC $ 464,006
$ 471,679 $ 1,663,107
$ 1,664,571 Other GAAP
revenue $ 253,973 $ 150,089
$ 957,237 $ 810,001 TAC associated
with other GAAP revenue (748 ) (564
) (3,324 ) (2,440 ) Other
revenue ex-TAC $ 253,225 $
149,525 $ 953,913 $
807,561 Revenue ex-TAC: GAAP
revenue $ 1,253,072 $ 1,273,393
$ 4,618,133 $ 4,968,301 TAC
(73,616 ) (270,916 ) (217,531
) (877,514 ) Revenue ex-TAC $
1,179,456 $ 1,002,477 $
4,400,602 $ 4,090,787
Revenue ex-TAC by segment: Americas: GAAP
revenue $ 972,092 $ 1,012,465
$ 3,517,861 $ 3,976,770 TAC
(59,548 ) (239,393 ) (166,545
) (788,725 ) Revenue ex-TAC $
912,544 $ 773,072 $
3,351,316 $ 3,188,045
EMEA: GAAP revenue $ 96,358 $
97,116 $ 374,833 $ 343,646
TAC (9,482 ) (19,885 )
(36,867 ) (57,284 ) Revenue
ex-TAC $ 86,876 $ 77,231
$ 337,966 $ 286,362
Asia Pacific: GAAP revenue $
184,622 $ 163,812 $ 725,439
$ 647,885 TAC (4,586 )
(11,638 ) (14,119 ) (31,505
) Revenue ex-TAC $ 180,036
$ 152,174 $ 711,320
$ 616,380 Total
revenue ex-TAC $ 1,179,456 $
1,002,477 $ 4,400,602 $
4,090,787 Direct costs by segment
(3): Americas $ 70,594 $
79,338 $ 283,594 $ 319,744
EMEA 20,985 31,842 87,490 95,789
Asia Pacific 49,989 46,290 198,910
196,054 Global operating costs (4)
663,760 631,128 2,566,954 2,547,368
Gain on sale of patents (35,094 ) -
(97,894 ) (11,100 ) Asset impairment
charge - 2,682 - 44,381 Goodwill
impairment charge 88,414 4,460,837 88,414
4,460,837
Intangibles impairment charge
-
15,423
-
15,423
Restructuring charges, net 32,872 7,087
103,450 104,019 Depreciation and amortization
153,030 151,983 606,568 609,613
Stock-based compensation expense 102,752
105,901 420,174 457,153
Income (loss) from operations $ 32,154
$ (4,530,034 ) $ 142,942
$ (4,748,494 ) (3) Direct
costs for each segment include costs associated with the local
sales teams and other cost of revenue. (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. Yahoo!
Inc. Supplemental Financial Data and GAAP to Non-GAAP
Reconciliations (continued) (in thousands)
Three Months Ended Year Ended
December 31, December 31, 2014
2015 2014 2015 Reconciliation of net
income (loss) attributable to Yahoo! Inc. to adjusted EBITDA:
Net income (loss) attributable to Yahoo! Inc. $
166,344 $ (4,434,987 ) $
7,521,731 $ (4,359,082 ) Advisory
fees - 808 - 8,808 Depreciation
and amortization 153,030 151,983 606,568
609,613 Stock-based compensation expense
102,752 105,901 420,174 457,153
Asset impairment charge - 2,682 -
44,381 Goodwill impairment charge 88,414
4,460,837 88,414 4,460,837 Intangibles
impairment charge - 15,423 - 15,423
Restructuring charges, net 32,872 7,087
103,450 104,019 Other (expense) income, net
(87,550 ) 9,023 (10,369,439 )
75,782 (Provision) benefit for income taxes
52,340 (13,985 ) 4,038,102
(89,598 ) Earnings in equity interests
(101,917 ) (92,845 ) (1,057,863
) (383,571 ) Net income attributable to
noncontrolling interests 2,937 2,760
10,411 7,975 Adjusted
EBITDA $ 409,222 $ 214,687
$ 1,361,548 $ 951,740
Reconciliation of net cash provided by (used in)
operating activities to free cash flow: Net cash provided by
(used in) operating activities $ 107,215 $
132,290 $ 892,882 $ (2,359,954
) Acquisition of property and equipment, net
(67,880 ) (125,711 ) (372,147
) (566,455 ) Dividends received from equity
investees - - (83,685 )
(142,045 ) Excess tax benefits from stock-based
awards 35,190 24,923 149,582
58,282 Free cash flow(2)
$ 74,525 $ 31,502
$ 586,632 $ (3,010,172 )
Three Months Ended Year Ended December
31, December 31, 2014 2015 2014
2015 Reconciliation of GAAP mobile revenue to gross
mobile revenue: GAAP mobile revenue $
253,755 $ 290,756 $ 767,998
$ 1,047,539 Revenue share with third parties
158,840 158,338 492,919
631,744 Gross mobile revenue $
412,595 $ 449,094 $
1,260,917 $ 1,679,283
Reconciliation of GAAP search revenue to gross search
revenue: GAAP search revenue $ 467,321
$ 521,869 $ 1,792,861 $
2,084,139 Revenue share with third parties
464,758 344,345 1,588,754
1,527,624 Gross search revenue $
932,079 $ 866,214 $
3,381,615 $ 3,611,763
(2) During the year ended December 31, 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 (continued) (in
thousands, except per share amounts)
Three Months Ended
December 31, 2014 2015
GAAP income (loss) from operations $ 32,154
$ (4,530,034 ) (a)
Restructuring charges, net 32,872 7,087
(b) Stock-based compensation expense 102,752
105,901 (c) Asset impairment charge
- 2,682 (d) Goodwill impairment
charge 88,414 4,460,837 (e)
Intangibles impairment charge - 15,423
(f) Advisory fees - 808
Non-GAAP income from operations $ 256,192
$ 62,704 GAAP net
income (loss) attributable to Yahoo! Inc. $
166,344 $ (4,434,987 )
(a) Restructuring charges, net 32,872
7,087 (b) Stock-based compensation
expense 102,752 105,901 (c) Gain
on Hortonworks warrants (98,062 ) (42
) (d) Asset impairment charge -
2,682 (e) Goodwill impairment charge
88,414 4,460,837 (f) Intangibles
impairment charge - 15,423 (g)
Advisory fees - 808 (h) To
adjust the provision for income taxes to reflect an effective tax
rate of 35% for the three months ended December 31, 2015 and to
exclude the tax impact of items (a) through (g) above for the three
months ended December 31, 2014 1,124 (32,759
) Non-GAAP net earnings $
293,444 $ 124,950 GAAP
net income (loss) attributable to Yahoo! Inc. common stockholders
per share - diluted $ 0.17 $
(4.70 ) Non-GAAP net earnings per share -
diluted $ 0.30 $ 0.13
Shares used in non-GAAP per share calculation -
diluted 962,626 949,758
Year Ended December 31, 2014 2015
GAAP income (loss) from operations $
142,942 $ (4,748,494 )
(a) Restructuring charges, net 103,450
104,019 (b) Stock-based compensation
420,174 457,153 (c) Advisory
fees - 8,808 (d) Asset
impairment charge - 44,381 (e)
Goodwill impairment charge 88,414 4,460,837
(f) Intangibles impairment charge -
15,423 Non-GAAP income from operations
$ 754,980 $ 342,127
GAAP net income (loss) attributable to Yahoo!
Inc. $ 7,521,731 $ (4,359,082
) (a) Restructuring charges, net
103,450 104,019 (b) Stock-based
compensation 420,174 457,153 (c)
Advisory fees - 8,808 (d)
(Gain) loss on Hortonworks warrants (98,062 )
19,199 (e) Asset impairment charge
- 44,381 (f) Goodwill impairment
charge 88,414 4,460,837 (g)
Intangibles impairment charge - 15,423
(h) Gain related to sale of Alibaba Group ADSs
(10,319,437 ) - (i) To adjust
the provision for income taxes to reflect an effective tax rate of
35% in the year ended December 31, 2015 and to exclude the tax
impact of items (a) through (h) above for the year ended December
31, 2014 3,903,951 (189,538 )
Non-GAAP net earnings $
1,620,221 $ 561,200
GAAP net income (loss) attributable to Yahoo! Inc. common
stockholders per share - diluted (1) $
7.45 $ (4.64 )
Non-GAAP net earnings per share - diluted (5)
$ 1.57 $ 0.59
Shares used in non-GAAP per share calculation - diluted
1,004,108 948,111 (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
$0.04 for the year ended December 31, 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
$0.04 for the year ended December 31, 2014.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160202006602/en/
Yahoo! Inc.Media Relations Contact:Sarah Meron,
408-349-4040media@yahoo-inc.comInvestor Relations
Contact:Joon Huh, 408-349-3382investorrelations@yahoo-inc.com
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