Search and Ads Drive Blockbuster Yahoo! Earnings

  |  October 8, 2003   |  Comments

Revenues from paid search and branded advertising increase nearly 50 percent, as Yahoo! easily beats analyst expectations.

Yahoo reported big demand for its branded advertising, combined with continued strong growth in paid search, helped it achieve healthy profits in the third quarter.

Marketing services, which encompass both search and regular online advertising, grew 48 percent from the same period a year ago, accounting for $245.1 million in revenue. The company credited strong demand for its ad products from Fortune 500 advertisers running large-scale campaigns and from tens of thousands of smaller advertisers who run keyword campaigns through recently acquired Overture Services. Branded advertising grew 20 percent. Yahoo did not break out search's contribution.

The strong demand drove blockbuster results for the Sunnyvale, Calif.-based company. Revenue for the quarter was $356.8 million, a 43 percent increase from a year ago. Net income was $65.3 million, or 10 cents a share, more than double the profits from the year before.

The results blew past analyst expectations. Those polled by Thomson/First Call expected $337.8 million in revenue and 9 cents in earnings per share.

"We believe Yahoo, with its large and loyal audience and our ability to offer services along the marketing continuum, is well-positioned to capitalize," on growth in online advertising, said Terry Semel, Yahoo's chief executive.

Semel said Yahoo's online advertising was helped by strong demand from traditional advertisers in industries like pharmaceuticals, automotive and entertainment.

"Many of our large clients are spending more money with Yahoo as they experience how online advertising can contribute to the effectiveness of their campaigns," he said.

The company's non-marketing areas also performed well. Sales in its fees business, which includes premium services and its broadband deal with SBC Communications, rose 38 percent to $79.4 million. Yahoo added 700,000 paying customers in the quarter, reaching 4.2 million. The co-branded broadband offering with SBC was the largest contributor, Semel said.

Sales in Yahoo's listings business, which includes HotJobs, rose 26 percent to $32.4 million.

Looking ahead, Yahoo upped its earnings guidance. The company re-jiggered its revenue reporting to take into account Overture's traffic acquisition costs (TAC), which are the amount it pays to sites for distributing its paid listings. Yahoo expects revenue without TAC to be between $462 million and $502 million.

ClickZ Live Chicago Join the Industry's Leading eCommerce & Direct Marketing Experts in Chicago
ClickZ Live Chicago (Nov 3-6) will deliver over 50 sessions across 4 days and 10 individual tracks, including Data-Driven Marketing, Social, Mobile, Display, Search and Email. Check out the full agenda and register by Friday, Sept 5 to take advantage of Super Saver Rates!

ABOUT THE AUTHOR

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

Featured White Papers

IBM: Social Analytics - The Science Behind Social Media Marketing

IBM Social Analytics: The Science Behind Social Media Marketing
80% of internet users say they prefer to connect with brands via Facebook. 65% of social media users say they use it to learn more about brands, products and services. Learn about how to find more about customers' attitudes, preferences and buying habits from what they say on social media channels.

Marin Software: The Multiplier Effect of Integrating Search & Social Advertising

The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.

Resources

Jobs

    • Digital Marketing Analyst
      Digital Marketing Analyst (GovLoop) - Washington D.C.Are you passionate about audience acquisition? Love effective copy and amazingly effective...
    • Product Specialist
      Product Specialist (Agora Inc. ) - BaltimoreDescription: The Product Specialist is hyper-focused on the customer experience and ensures that our...
    • Partnerships Senior Coordinator
      Partnerships Senior Coordinator (Zappos.com, Inc.) - Las VegasZappos IP, Inc. is looking for a Partnerships Senior Coordinator! Why join us? Our...