Yahoo CEO Marissa Mayer has been clear since she became the company's CEO in July 2012 that turning around the aging portal is a multi-year project. Two-and-a-half years into that turnaround, the company issued its quarterly progress report on Tuesday.
So how's the turnaround going so far? Better, actually.
The company's overall revenue totaled $1.23 billion in the first quarter of 2015, up 8% year-over-year. The company reported net income of $21 million for the quarter, a 93% drop from a year earlier.
The first quarter of 2015 marked the third time Yahoo has grown its total quarterly revenue year-over-year under Ms. Mayer and the first time its display advertising revenue has grown year-over-year since the third quarter of 2012. The company also stretched out the one positive revenue streak it had going, increasing its search revenue year-over-year for the fifth straight quarter. Here's a chart showing why that matters:
Yahoo has never grown its overall, display and search revenues year-over-year in the same quarter under Ms. Mayer.
Of course it should have been all-but-inevitable that Yahoo's revenues would eventually grow after shrinking for so long. For some context, Yahoo is just getting back to where it was in the first quarter of 2012 revenue-wise.
- Overall revenue: $1.22 billion in Q1 2012 vs. $1.23 billion in Q1 2015.
- Display revenue: $511.2 million in Q1 2012 vs. $464 million in Q1 2015.
- Search revenue: $470.4 million in Q1 2012 vs. $532 million in Q1 2015.
But the underpinnings of Yahoo's ad revenue have shifted since 2012. For example, the company says it had virtually no mobile revenue when Ms. Mayer took over. Now it has $234 million in mobile revenue, up 61% year-over-year in Q1 2015.
Search has also become a bigger business under Ms. Mayer, a former Google exec. In the first full quarter since Yahoo replaced Google as the default search engine for Mozilla's Firefox web browser, search has once again contributed more revenue to Yahoo than display advertising, which had historically been the company's biggest revenue stream. In Q1, Yahoo's search revenue grew 20% year-over-year to $532 million, thanks to people clicking on more search ads and advertisers paying more per click.
Yahoo's display advertising business finally had a good quarter, but it remains on shaky ground. In the first quarter, Yahoo made $464 million from display advertising, which is up 2% from last year and ends a nine-straight-quarter trend of year-over-year declines. However, one negative display-related trend persists. For each of that past seven quarters including Q1, Yahoo has sold more ads than it did the year before, but it sold them for less money than the prior year.
During the company's earnings call on Tuesday, Ms. Mayer said that the company's revenue from premium ads -- such as home-page takeovers -- had declined 40% year-over-year. And its audience ads, which are standard banners bought programmatically and targeted using Yahoo data, declined 19% because programmatic buying had lowered prices, she said.