Yahoo! Reports Fourth Quarter and Full Year 2012 Results
Yahoo! Reports Fourth Quarter and Full Year 2012 Results
|Q4 2012||Full Year 2012|
|GAAP revenue||$1,346 million||$4,987 million|
|Revenue ex-TAC||$1,221 million||$4,468 million|
|GAAP income from operations|
|Non-GAAP income from operations||$283 million||$825 million|
|GAAP net earnings per diluted share||$0.23||$3.28|
|Non-GAAP net earnings per diluted share||$0.32||$1.17|
"I'm proud of Yahoo!'s 2012 and fourth quarter results. In 2012, Yahoo! exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year," said Yahoo! CEO Marissa Mayer. "During the quarter we made progress by growing our executive team, signing key partnerships including those with NBC Sports and CBS Television, and launching terrific mobile experiences for Yahoo! Mail and Flickr. At the same time, we achieved tremendous internal transformation in the culture, energy and execution of the Company."
GAAP revenue was $1,346 million for the fourth quarter of 2012, a 2 percent increase from the fourth quarter of 2011. Revenue excluding traffic acquisition costs ("revenue ex-TAC") was $1,221 million for the fourth quarter of 2012, a 4 percent increase compared to the fourth quarter of 2011. GAAP revenue was $4,987 million for the full year of 2012, flat compared to the prior year. Revenue ex-TAC was $4,468 million for the full year of 2012, a 2 percent increase from the prior year.
Adjusted EBITDA for the fourth quarter of 2012 was $509 million, an 8 percent increase from the same period of 2011. Adjusted EBITDA was $1,699 million for the full year of 2012, a 3 percent increase from the prior year.
GAAP income from operations decreased 22 percent to $190 million in the fourth quarter of 2012, compared to $242 million in the fourth quarter of 2011. Non-GAAP income from operations was $283 million in the fourth quarter of 2012 compared to $259 million in the fourth quarter of 2011. GAAP income from operations for the full year of 2012 was $566 million, compared to $800 million for the prior year. Non-GAAP income from operations was $825 million in both years.
GAAP net earnings for the fourth quarter of 2012 was $272 million, an 8 percent decrease from the same period of 2011. Non-GAAP net earnings for the fourth quarter of 2012 was $370 million, a 20 percent increase from the same period of 2011. GAAP net earnings for the full year of 2012 was $3,945 million, compared to $1,049 million for the prior year. For the full year of 2012, GAAP net earnings included a net gain of $2,755 million related to the sale of Alibaba shares. Non-GAAP net earnings for the full year of 2012 was $1,407 million, a 35 percent increase from the prior year.
GAAP net earnings per diluted share was $0.23 in the fourth quarter of 2012, compared to $0.24 in the fourth quarter of 2011. Non-GAAP net earnings per diluted share was $0.32 in the fourth quarter of 2012, compared to $0.25 in the fourth quarter of 2011. GAAP net earnings per diluted share was $3.28 for the full year of 2012, compared to $0.82 for the prior year. For the full year of 2012, GAAP net earnings included a net gain of $2,755 million, or $2.29 per diluted share, related to the sale of Alibaba shares. Non-GAAP net earnings per diluted share was $1.17 for the full year of 2012, compared to $0.81 for the prior year.
- Yahoo! further strengthened its board of directors, appointing Max Levchin, a computer scientist, serial entrepreneur and angel investor with extensive experience building enduring Internet companies.
- The Company made significant improvements to two of its core products, Yahoo! Mail and Flickr. The new Yahoo! Mail is faster, easier to use and available across the Web and on Windows 8, iPhone/iPod touch and Android. Yahoo!'s redesigned Flickr app for iPhone and iPod touch makes it easier to capture, share and discover photos. The new app allows users to share photos by email, with the Flickr community or via Facebook, Twitter or Tumblr.
- Yahoo! signed distribution and branding deals to strengthen two of its leading media properties.
- Yahoo! Sports and NBC Sports announced a partnership to deliver news, fantasy games, and video coverage of sporting events - combining two of the most trusted names in sports.
- Yahoo! and CBS Television Distribution launched omg! Insider, a multiplatform entertainment news series that combines the popularity of CBS Television Distribution's The Insider with the online reach of omg!.
- The Company also announced a deal with Wenner Media to further enhance the content and reach of omg! and Yahoo! Music by joining forces with the Us Weekly, Rolling Stone, and Men's Journal franchises.
- Yahoo! acquired mobile app developers Stamped and OnTheAir, accelerating the Company's efforts to build a world-class team of mobile engineers, product managers and designers.
- Yahoo! expanded its partnership with Samsung, enabling Samsung SmartTV users to engage more with their favorite shows and commercials. With the touch of a remote, connected tablet or phone, Samsung SmartTV viewers who use Yahoo!'s Connected TV technologies, can easily access content or offers related to their favorite TV shows or commercials.
Fourth Quarter and Full Year 2012 Financial Highlights
- GAAP display revenue was $591 million for the fourth quarter of 2012, a 3 percent decrease compared to $612 million for the fourth quarter of 2011. GAAP display revenue was $2,143 million for the full year of 2012, a 1 percent decrease compared to $2,160 million for the prior year.
- Display revenue ex-TAC was $520 million for the fourth quarter of 2012, a 5 percent decrease compared to $546 million for the fourth quarter of 2011. Display revenue ex-TAC was $1,899 million for the full year of 2012, a 2 percent decrease compared to $1,932 million for the prior year.
- The number of ads sold on core Yahoo! Properties decreased approximately 10 percent compared to the fourth quarter of 2011 and increased approximately 3 percent compared to the third quarter of 2012.
- Price-per-ad on core Yahoo! Properties increased approximately 7 percent compared to the fourth quarter of 2011 and increased approximately 15 percent compared to the third quarter of 2012.
- GAAP search revenue was $482 million for the fourth quarter of 2012, a 4 percent increase compared to $465 million for the fourth quarter of 2011. GAAP search revenue was $1,886 million for the full year of 2012, a 2 percent increase compared to $1,853 million for the prior year.
- Search revenue ex-TAC was $427 million for the fourth quarter of 2012, a 14 percent increase compared to $376 million for the fourth quarter of 2011. Search revenue ex-TAC was $1,611 million for the full year of 2012, a 9 percent increase compared to $1,478 million for the prior year.
- Paid clicks, or the number of clicks on sponsored listings on Yahoo! Properties and Affiliate sites, increased approximately 11 percent compared to the fourth quarter of 2011 and increased approximately 8 percent compared to the third quarter of 2012.
- Price-per-click increased approximately 1 percent compared to the fourth quarter of 2011 and decreased approximately 2 percent compared to the third quarter of 2012.
- Cash, cash equivalents, and investments in marketable debt securities were $6 billion at December 31, 2012 compared to $2.5 billion at December 31, 2011, an increase of $3.5 billion.
- During the fourth quarter of 2012, Yahoo! repurchased 80 million shares for $1.5 billion. During the year ended December 31, 2012, Yahoo! repurchased 126 million shares for $2.2 billion.
Yahoo! will host a conference call to discuss fourth quarter and full year 2012 results at 5 p.m. Eastern Time today. On the conference call, Yahoo! will also provide its business outlook for the first quarter and full year of 2013. A live Webcast of the conference call, together with supplemental financial information, can be accessed through the Company's Investor Relations Website at http://investor.yahoo.com/results.cfm. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available for one week following the conference call by calling (888) 286-8010 or (617) 801-6888, reservation number: 30622830.
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"): revenue ex-TAC; adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per diluted share; and free cash flow.
Revenue ex-TAC is GAAP revenue less traffic acquisition costs. Adjusted EBITDA, non-GAAP income from operations, non-GAAP net earnings and non-GAAP earnings per diluted share exclude certain gains, losses, and expenses that we do not believe are indicative of ongoing results. Adjusted EBITDA also excludes taxes, depreciation, amortization of intangible assets, stock-based compensation expense, other income, 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 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," "Supplemental Financial Data and GAAP to Non-GAAP Reconciliations," and "GAAP to Non-GAAP Reconciliations."
Yahoo! is focused on making the world's daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the globe. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo! is headquartered in Sunnyvale, Calif., 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 blog (yodel.yahoo.com).
"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" means Alibaba Group Holding Limited.
"Search Agreement" refers to the Search and Advertising Services and Sales Agreement between Yahoo! and Microsoft Corporation, as amended.
"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! Properties" refers to the online properties and services that Yahoo! provides to users.
This press release contains forward-looking statements concerning Yahoo!'s expected financial performance and Yahoo!'s strategic and operational plans (including, without limitation, the quotation 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, the impact of changes to our management, organizational structure and strategic business plan; Yahoo!'s ability to compete with new or existing competitors; reduction in spending by, or loss of, advertising customers; risks associated with the Search Agreement with Microsoft Corporation; risks related to Yahoo!'s regulatory environment; interruptions or delays in the provision of Yahoo!'s services; security breaches; acceptance by users of new products and services; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!'s international operations; adverse results in litigation; Yahoo!'s ability to protect its intellectual property and the value of its brands; dependence on third parties for technology, services, content, and distribution; and general economic conditions. All information set forth in this press release and its attachments is as of January 28, 2013. 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, 2011, as amended, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, which are on file with the SEC and available on the SEC's website atwww.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, 2012, which will be filed with the SEC in the first quarter of 2013.
Yahoo!, the Yahoo! logos, omg! and Flickr are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.
Unaudited Condensed Consolidated Balance Sheets
|December 31,||December 31,|
|Cash and cash equivalents||$||1,562,390||$||2,667,778|
|Short-term marketable debt securities||493,189||1,516,175|
|Accounts receivable, net||1,037,474||1,008,448|
|Prepaid expenses and other current assets||359,483||460,312|
|Total current assets||3,452,536||5,652,713|
|Long-term marketable debt securities||474,338||1,838,425|
|Alibaba Group Preference Shares||-||816,261|
|Property and equipment, net||1,730,888||1,685,845|
|Intangible assets, net||254,600||153,973|
|Other long-term assets||220,628||289,130|
|Investments in equity interests||4,749,044||2,840,157|
|LIABILITIES AND EQUITY|
|Accrued expenses and other current liabilities||846,044||808,475|
|Total current liabilities||1,207,361||1,290,232|
|Long-term deferred revenue||43,639||407,560|
|Capital lease and other long-term liabilities||134,905||124,587|
|Deferred and other long-term tax liabilities, net||815,534||675,271|
|Total Yahoo! Inc. stockholders' equity||12,541,067||14,560,200|
|Total liabilities and equity||$||14,782,786||$||17,103,253|
|Unaudited Condensed Consolidated Statements of Income|
|(in thousands, except per share amounts)|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Cost of revenue - Traffic acquisition costs||155,453|
|Cost of revenue - Other||263,609|
|Sales and marketing||289,366||274,122||1,122,193||1,101,572|
|General and administrative||112,614||144,610||497,288||540,247|
|Amortization of intangibles||8,525||7,926||33,592||35,819|
|Restructuring charges, net||16,329||76,634||24,420||236,170|
|Total operating expenses||1,081,706||1,155,817||4,183,858||4,420,198|
|Income from operations||242,447||189,990||800,341||566,368|
|Other income, net||9,768||17,730||27,175||4,647,839|
|Income before income taxes and earnings in equity interests||252,215||207,720||827,516||5,214,207|
|Provision for income taxes||(78,287||)||(83,007||)||(241,767||)||(1,940,043||)|
|Earnings in equity interests||127,063||148,939||476,920||676,438|
|Less: Net income attributable to noncontrolling interests||(5,419||)||(1,385||)||(13,842||)||(5,123||)|
|Net income attributable to Yahoo! Inc.||$||295,572||$||272,267||$||1,048,827||$||3,945,479|
|Net income attributable to Yahoo! Inc. common stockholders per share - diluted||$||0.24||$||0.23||$||0.82||$||3.28||
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