Yahoo exceeded financial analysts' expectations for revenue and earnings in its fourth quarter, ended Dec. 31, 2004, the provider of Web content and Internet services said Tuesday.
Yahoo, in Sunnyvale, California, attributed the strong results to a continued increase in use of its Web site network, which in turn boosted the company's ability to sell advertising and fee-based services.
Revenue grew 62 percent to US$1.078 billion compared with 2003's fourth quarter. Excluding traffic acquisition costs (TAC), Yahoo's revenue rose 54 percent to US$785 million, exceeding the consensus expectation of US$756 million from analysts polled by Thomson First Call. TAC is the portion of revenue that Yahoo pays to the third-party affiliates of its Overture online ad network.
Meanwhile, net income came in at US$372.52 million, or US$0.25 per share, up from US$75.02 million, or US$0.05 per share, in 2003's fourth quarter. Excluding an investment gain of US$185 million, or US$0.13 per share from the sale of Google shares, Yahoo's net income was US$187 million, or US$0.13 per share, exceeding analysts' consensus expectations by US$0.02.
For the full year, Yahoo's revenue grew 120 percent to US$3.58 billion. Excluding TAC, annual revenue grew 77 percent to US$2.60 billion. Meanwhile, net income for the year was US$840 million, or US$0.58 per share, including the positive impact of an investment gain and related tax benefit of US$314 million from the sale of Google shares. Excluding this gain, net income for 2004 came in at US$526 million, or US$0.36 per share. In 2003, Yahoo had net income of US$238 million, or US$0.18 per share.
"Yahoo has delivered a terrific fourth quarter to cap off a remarkable year," said Terry Semel, Yahoo's chairman and chief executive officer, during a conference call to discuss the results. "It was a year in which we relentlessly focused on our consumers, increased the rate of innovation and product development and continued to invest in advanced technologies throughout the world."
Unique users totaled 345 million in the quarter, compared with 263 million in 2003's fourth quarter. Of the 345 million, 165 million were active registered users, or users who have signed up for at least one Yahoo service, such as e-mail, and who visit the Yahoo network at least once per month. Active registered users were up from 133 million in the fourth quarter of 2003.
Among the active registered users, 8.4 million were fee-paying users, defined as those who pay for at least one Yahoo service. This was up from 4.9 million in 2003's fourth quarter.
Meanwhile, Yahoo finished the quarter with 7,631 employees, up from 5,493 in 2003's fourth quarter.
Revenue, excluding TAC, per average unique user per month increased to US$0.78, up from US$0.67 in 2003's fourth quarter.
U.S. revenue in the fourth quarter grew 42 percent to US$775 million, while international revenue rose 156 percent to US$303 million.
Yahoo expects revenue, excluding TAC, to be in the range of US$765 million to US$805 million in 2005's first quarter, and in the range of US$3.37 billion and 3.57 billion for the full year 2005.