Q3 Results Suggest Yahoo Still In Transition Phase

Portal's Ad Revenue Grew by 7% to $1.2 Billion

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Yahoo's overall revenue in the third quarter increased 7% from the quarter a year earlier to $1.2 billion, the company said Tuesday.

Yahoo continues its efforts in trying to make itself more attractive to advertisers, but those efforts, thus far, appear to be stagnant.

It's no secret CEO Marissa Mayer has been pushing mobile as a potential source of revenue since taking the helm of the storied internet company in 2012. On paper, mobile revenue looks good; it's up to $271 million from $207 million during the same time a year ago. However, it still trails behind the $844 million that desktop brought in.

The Sunnyvale, Calif.-based company separates its revenue from banners and desktop search ads from money it makes from mobile, video, native and Tumblr ads, or as Yahoo calls them, Mavens. The company has been growing Mavens while its historical revenue generator -- selling desktop banner ads -- has been struggling.

Revenue generated from Mavens was up $422 million, or 43% year-over-year. Mavens is the fastest growing core in Yahoo's digital advertising portfolio. In the previous quarter, Mavens generated about $399 million.

And while Yahoo is continuing to show growth in search, the cost of acquiring traffic is proving to be costly.

Revenue from search increased by about 2% to $870 million in the third quarter of 2015. Still, Yahoo pays Mozilla and Oracle to provide search results and the company dished out some $223 million in traffic-acquisition costs, up from $54 million during the same time a year ago.

According to ComScore, Yahoo has a search market share of about 12.8% and ranks behind Microsoft (19.8%) and Google (64.5%).

Meanwhile, display revenue hit $509 million, an increase of 14% year-over-year.

Additionally, the company said it would aim to spin off its 15% stake in e-commerce giant Alibaba in January.

Ms. Mayer chimes in on key departures

On Monday, it was announced that development chief Jackie Reses left Yahoo to join Square Capital. Soon after, Re/Code reported Lisa Licht, senior VP of marketing partnerships and platforms, had departed as well.

Ms. Mayer, meanwhile, said during Tuesday's earnings call that Lisa Utzschneider has been appointed to chief revenue officer to lead Yahoo's global sales organization. "The design and changes in Yahoo leadership are the result of careful planning," Ms. Mayer said. "This leadership team is unequivocally the strongest it's been during my tenure."

Yahoo strikes a deal with Google

News broke moments before Yahoo's Q3 earnings about a deal it had made with Google. Through the partnership, Google AdSense Ads will now appear on Yahoo, a likely stream of revenue for Yahoo as Google will pay Yahoo an undisclosed percentage for the service.

Last April, Ms. Mayer renegotiated a nonexclusive deal with Microsoft, meaning Yahoo could reach out to the likes of Facebook or Google to also source its results within its search pages. Additionally,Yahoo can still use Microsoft's Bing or its own technology to provide search ads.

That deal is set to expire October of 2018 and is still subject to regulatory review.

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