Yahoo Beats The Street: Revenues Up, But Earnings Down

Here’s the earnings release. They slightly beat the street. Revenues were up, but earnings were down. Search monetization and traffic are improving. Henry Blodget live blogged the earnings call with some good detail and quick analysis. Yahoo shares are up about 10 percent in after-hours trading. Below are the top-level numbers from the release:

Third Quarter 2007 Financial Results

* Revenues were $1,768 million for the third quarter of 2007, a 12 percent increase compared to $1,580 million for the same period of 2006.
* Marketing services revenues were $1,544 million for the third quarter of 2007, a 13 percent increase compared to $1,370 million for the same period of 2006.
* Marketing services revenues from Owned and Operated sites were $922 million for the third quarter of 2007, a 24 percent increase compared to $742 million for the same period of 2006.
* Marketing services revenues from Affiliate sites were $622 million for the third quarter of 2007, a 1 percent decrease compared to $628 million for the same period of 2006.
* Fees revenues were $224 million for the third quarter of 2007, a 7 percent increase compared to $210 million for the same period of 2006.
* Revenues excluding traffic acquisition costs (“TAC”) were $1,283 million for the third quarter of 2007, a 14 percent increase compared to $1,121 million for the same period of 2006.
* Gross profit for the third quarter of 2007 was $1,027 million, a 14 percent increase compared to $899 million for the same period of 2006.
* Operating income for the third quarter of 2007 was $150 million, a 26 percent decrease compared to $202 million for the same period of 2006.
* Operating income before depreciation, amortization, and stock-based compensation expense for the third quarter of 2007 was $466 million, a 2 percent decrease compared to $474 million for the same period of 2006.
* Cash flow from operating activities for the third quarter of 2007 was $457 million, a 17 percent increase compared to $390 million for the same period of 2006.
* Free cash flow for the third quarter of 2007 was $310 million, an 8 percent increase compared to $288 million for the same period of 2006.
* Net income for the third quarter of 2007 was $151 million (or $0.11 per diluted share) compared to $159 million (or $0.11 per diluted share) for the same period of 2006.
* Non-GAAP net income for the third quarter of 2007 was $238 million (or $0.17 per diluted share) compared to non-GAAP net income of $240 million or ($0.17 per diluted share) for the same period of 2006.
* The provision for income taxes for the third quarter of 2007 was $79 million and yielded an effective tax rate of 41 percent. The provision for income taxes for the third quarter of 2006 was $124 million and yielded an effective tax rate of 49 percent.
* Explanations of the Company’s non-GAAP financial measures and the related reconciliations to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Statements of Income,” “Reconciliations to Unaudited Condensed Consolidated Statements of Income,” and “Reconciliation of GAAP Net Income and GAAP Net Income Per Share to Non-GAAP Net Income and Non-GAAP Net Income Per Share.”

The message on the call was that there was good, double digit growth across key metrics and indicators and the company is on the right path. That needs to be sustained, however, for a couple of quarters. It’s still too early to tell if Yahoo is out of the woods.

Here’s Yahoo CEO Jerry Yang’s remarks from yesterday on Yodel Anecdotal about the company’s strategy and direction. And here’s more discussion on the numbers from the NY Times. Google reports earnings this Thursday.