AABA Altaba Inc

Yahoo Inc. on Tuesday posted a 14% drop in its core revenue, reflecting the continued deterioration of its advertising business and raising more questions about the future of Verizon Communications Inc.'s deal to buy Yahoo.

The revenue drop to $857.7 million, which excludes commissions paid to partners for web traffic, marks the seventh decline in the past eight periods for this key metric. Revenue from "Mavens"—a grouping Yahoo introduced to track mobile, video, native and social ads—rose 24% to $524 million.

Yahoo reported quarterly earnings of $162.8 million, or 17 cents a share, and 20 cents a share excluding certain expenses. Analysts, on average, expected the company to post adjusted earnings per share of 14 cents, according to Thomson Reuters. A year ago, the company posted adjusted earnings of 15 cents a share.

Shares of Yahoo rose 1.3% in after-hours trading.

Overall revenue rose 6.5% in the third quarter to $1.23 billion, helped by a recent change in how the company reports revenue.

The earnings report comes as clouds gather around Verizon's $4.8 billion deal following Yahoo's disclosure last month of a data breach affecting more than 500 million accounts, one of the largest thefts of personal data to date. The internet company said "state-sponsored" hackers penetrated its network in late 2014 and stole personal data including names, dates of birth and encrypted passwords.

Yahoo has said the breach was discovered after the merger deal was signed in July.

Both sides are grappling with the fallout of the news. Last week, Verizon's general counsel suggested the breach might allow the company to renegotiate the deal's terms; Yahoo responded by saying it was confident in its value. Analysts expect the deal will go through but may require further concessions from Yahoo.

Yahoo decided to skip its third-quarter analysts' call because of its sale to Verizon, allowing it to sidestep any thorny questions about the deal and the data breach, as well as prospects for its core business.

Yahoo CEO Marissa Mayer's attempt to focus the company on video and search hasn't generated meaningful revenue growth. Dissatisfaction in her performance prompted activist investor Starboard Value LP to pressure the company into a sale.

Those weaknesses persist today, analysts say. Yahoo will command 1.8% of the world-wide digital ad revenue this year, down from 2.4% in 2015, according to eMarketer. The data firm also believes Yahoo's ad revenue will drop 10.2% in 2016 after a 3.5% decline last year.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

October 18, 2016 16:45 ET (20:45 GMT)

Altaba (NASDAQ:AABA)
Historical Stock Chart
From Mar 2024 to Apr 2024

Altaba (NASDAQ:AABA)
Historical Stock Chart
From Apr 2023 to Apr 2024