Q3 Earnings – Yahoo vs Google [Analysis]

We had covered a brief introduction to quarterly earnings and Google’s performance in the last quarter. Keeping up, now we would look at Yahoo!. Yahoo!’s next quarter earning should be definitely worth a watch given their major overhaul and media publicity regarding the same, in the mean time let us look at their last quarter.


At the first glance, Yahoo!’s run of lower revenues like the last two quarters as compared to last year continues. Yahoo! pocketed a revenue of 1575 Million USD in Q3,  and 1573 and 1580 million USD respectively in Q2 and Q1. This amount may look like pocket change in relative terms when compared to Google’s mammoth 5945 Million USD. An
interesting point to note is that the TAC [Traffic Acquisition Cost] for Yahoo! also hovers around the 27-28% mark as that of Google. A change in that percentage in this quarter, whether positive or negative will signify as to how in the short run the “You” campaign of the company has faired for them.

A further point of note when compared to Google’s revenue patterns is that Yahoo! still generates a far greater fraction of its revenue from the home market (a whopping 75%) as compared to a more modest 50-50 distribution of Google. This percentage has practically remained constant since the past year.

So though unlike Google there is sharp YoY decline in revenues (15%) (Google had a both QoQ and a YoY growth), the future still looks positive given the statements by company board members, they are banking heavily on their UI overhaul, and at the first looks I find it very pleasing, an opinion shared by many others on various internet review sites. Also their mobile mail interface is definitely one of the best I have seen till now, all this should convert to higher visitor count and in turn revenues.

The reason for bullish stock performance near the announcement of the Q3 results despite the fall in revenues, was the fact that the results beating the expected and predicted  results by Yahoo! and Wall Street. Though the current quarter was nothing Yahoo! could be very proud of, it was definitely better than expected with a strong positive outlook for the next quarter, so I guess I will end it by saying Yahoo!

Image Courtesy:  http://www.uycw.co.cc

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