Yahoo! posted better-than-expected results in the latest quarter, but it has a ways to go in delivering on a promised turnaround plan.
The ailing Internet giant reported an uptick in revenue in its first full quarter under CEO Marissa Mayer. The results also capped the first annual revenue growth in four years.
Revenue was up a modest 2 percent to $1.35 billion in the fourth quarter, topping Wall Street’s expectations. The growth was driven by a 14 percent jump in search revenue, to $427 million.
Overall profit was $272.3 million, or 23 cents a share, down from $295.6 million, or 24 cents a year ago. Excluding one-time items, per-share profit of 32 cents beat forecasts and helped push the stock higher.
Shares jumped more than 4 percent before paring some of those gains, ending up about 1.5 percent in after-hours trading. Yahoo! closed at $20.31 in regular trading.
While the search business has been up double digits since Mayer took over six months ago, the core display ad business brought in less money last quarter.
Display ad revenue fell 5 percent year over year to $520 million. The number of ads was down 10 percent, while the price per ad was up 7 percent.
Mayer has been overseeing an advertising business in transition. The sales force has been downsized and so has the amount of ad inventory.
Mayer said the company — with an eye toward a better user experience — is cutting the ad clutter and hopes to make it up with more meaningful ads.
“Still, display was weaker than thought,” said analyst Colin Gillis with BGC Partners.
The forecast for next quarter and the year was slightly below expectations. Yahoo! projected first-quarter revenue of $1.1 billion, while Wall Street was hoping for $1.2 billion.