Yahoo Beats Expectations, but Pushes Back Verizon Deal

Yahoo reported better-than-expected revenues and profits during Q4 2016, surpassing Wall Street estimates to grow revenues 15 per cent year-on-year, but the spectre of two large-scale data breaches continues to hang over the firm, which has pushed back the sale of its core internet business to Verizon to Q2.

“With our 2016 and Q4 financial results ahead of plan, and the continued stability in our user engagement trends, the opportunities ahead with Verizon look bright,” said Marissa Mayer, CEO of Yahoo. “Im very pleased with our Q4 results and incredibly proud of the teams execution on our 2016 strategic plan, particularly given the uniquely eventful past year for Yahoo.”

Yahoo saw Q4 revenues grow from $1.27bn (£1bn) to $1.47bn year-on-year, with full year results up around four per cent, from $4.97bn to $5.17bn. Net income was $162m for the quarter, compared to a loss of $4.43bn last year. Mobile, native and video proved to be major drivers, and were singled out by Mayer as crucial to the firms success.

Mobile revenue grew from $291m to $459m year-on-year in Q4, and totalled $1.49bn overall for the year. Desktop revenue was $955m in Q4, but only grew 2.6 per cent year on year, compared to mobiles 57.8 per cent increase.

“We continued to build our mobile and native businesses delivering nearly $1.5bn in mobile revenue and over $750m in native revenue while operating the company at the lowest cost structure in a decade,” said Mayer. “In addition to integration planning, our top priority continues to be enhancing security for our users.

“With security protocols and password changes in place, approximately 90 per cent of our daily active users have already taken or do not need to take remedial action to protect their accounts, and were aggressively continuing to drive this number up.”

Yahoos BrightRoll DSP saw 485 per cent year-on-year growth in the platform display business, thanks to the launches of native on third party supply and improvements in both forecasting and  reporting capabilities, while Yahoos Mobile Developer Suite reach a footprint of over 940,000 applications, over 2bn devices.

Originally expected to close in Q1, Yahoos sale of its core business to Verizon has been pushed back to Q2, although the company is “working expeditiously” to complete the sale as soon as possible. Yahoo did not elaborate on the cause of the delay, but its thought that the two data breaches, which saw 1.5bn member details hacked, may have delayed the transaction.

Yahoo did not hold a customary earnings call with investors, citing the pending Verizon deal as the reason for not doing so. It is the second quarter in a row it has failed to hold a post-earnings call.