Yahoo! Doubles Profits

Yahoo doubled its profits in the first quarter, while seeing growth across all advertising areas.

Yahoo reported earnings of $205 million today, on revenues of $1.17 billion for the first quarter of 2005, compared with net income of $101 million on revenues of $758 million in the year-ago quarter. Marketing services revenue rose 54 percent to $1,025 million for the quarter, representing all but $149 million of total revenue.

According to Terry Semel, Yahoo’s chairman and CEO, the company’s financial success, and its appeal to advertisers, are both driven by its ability to extend its reach to new users while deepening its relationship with existing ones.

“While early Internet success was driven by sheer numbers, the next generation will be driven by depth of relationships,” Semel said. “We are the industry leader because of our reach and our relationships with advertisers’ key audiences, our unique targeting capabilities, vertical industry expertise, and the ability to provide effective consumer insight that can be turned into actionable marketing campaigns.”

Semel attributes much of the company’s revenue growth to increased online advertising from large offline brand advertisers, especially those in the consumer packaged goods and financial services categories. He also noted an increase in demand for rich media ads.

“We continue to earn deeper participation in brand marketers’ budgets. Those that have already made real investments in online advertising with Yahoo are renewing and expanding. We see that same pattern from those marketers that are just starting out,” Semel said.

Earlier this week, the company completed the rebranding of its Overture division as Yahoo Search Marketing. Yahoo’s recently rebranded sponsored search business saw broader and wider adoption as well, Semel said.

Semel also alluded to rumors the company is developing plans to include smaller publishers in its network, saying new opportunities around Content Match and publisher-focused offerings are currently being tested, and will be introduced “very shortly.”

Shares of Yahoo closed at $33.22 on Tuesday, up 67 cents before the news.

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