Video Remains a Focus for Yahoo, Which Beat Q3 Earnings Expectations

/ Oct 21, 2014


Yahoo beat Q3 2014 earnings expectations with $1.09 billion in revenue during the last quarter, up 1% year over year. Earnings, excluding the Alibaba sale, which netted Yahoo more than $5 billion in cash, hit 52 cents per share.

Both numbers beat Wall Street expectations, which pegged Yahoo’s revenue to hit $1.04 billion on earnings of 30 cents per share.

“We had a good, solid third quarter,” said Yahoo CEO Marissa Mayer in a statement. “We achieved this revenue growth through strong growth in our new areas of investment — mobile, social, native, and video — despite industry headwinds in some of our large, legacy businesses.”

Revenues from display ads were down, while search went up — unsurprising as Yahoo hopes to pivot away from display advertising toward mobile and formats like video and native advertising. For example, in Q3, revenues from native ads across mobile and desktop topped $65 million, according to Mayer.

Mobile has become a “material” part of Yahoo’s business, Mayer continued. In Q3, mobile revenues exceeded $200 million on a GAAP basis. She estimated that gross revenues in mobile will surpass $1.2 billion this year. “We have invested deeply in mobile and we are seeing those investments pay off. Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo,” said the CEO.

So there’s your gentle recap of how Yahoo as a company did during the last quarter. But let’s now turn our attention to video, which Mayer covered (slightly) during the company’s earnings call. Highlights include:

  • In Q3, Yahoo broadcast more than 90 live concerts to “millions of viewers” via Live Nation partnership. Millions! Mayer later added that Yahoo is happy with this partnership, and is likely “to do more” there.
  • Tumblr, which could play a pivotal role in Yahoo’s video play, has grown from 300 million monthly uniques to 420 million since the acquisition 15 months ago. The platform is also starting to generate revenue, Mayer said, with the company “anticipating” more than $100 million in revenue in 2015.
  • Yahoo’s video strategy has two areas of focus: Getting video viewers to come to Yahoo, which requires premium video content, and then leveraging that audience into a video ad network play. Right now, the latter hinges on Yahoo Ad Manager Plus, said Mayer. Yahoo could acquire a video-ad tech company like BrightRoll, which it’s currently rumored to. But Mayer did not confirm details on that; she just said video ad tech is an area where Yahoo is “very bullish” on.
  • Mayer confirmed that “Community” is currently filming its sixth season, which will air in “early 2015.”
  • While overall very positive about video, Mayer did note that she wants to see how the three half-hours Yahoo has already commissioned perform before making “additional investments.” “We think we will make additional investments,” she said, but she wants to see what the response is like first.
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