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The company reported revenues of USD248.8 million, a 50 percent increase on the USD166.1 million for the same quarter in 2001. The results represent a strong turnaround from this time last year, when it had reported its fourth consecutive quarterly loss.
This time round, the company's net income was USD28.9 million or USD0.05 per diluted share in the third quarter, compared with a loss of USD24.1 million or USD0.04 per diluted share in the same period last year. The profit announced on Wednesday is a penny higher than average analyst estimates reported by Thomson Financial / First Call.
Much of the turnaround can be attributed to Yahoo's focus on getting more users to pay for services like job listings and premium e-mail. The company also agreed a deal with Overture Services earlier this year to include paid listings in its search results, which proved attractive to smaller advertisers.
It also introduced other paid services such as access, extra e-mail storage, and personal ads. Adding these fee-based services did much to offset the continuing advertising slump. Marketing services, including advertising, accounted for 59 percent of revenues during the quarter, down from more than 70 percent of revenues this time last year.
Yahoo collected USD83.1 million in fees and listings during the third quarter, which is more than double the figure from a year ago. The company also said it extended its partnership with Google, which powers its search engine.
Yahoo chief executive Terry Semel, who took on the top job in May of last year, said in a conference call on Wednesday night that the third quarter results were a strong validation of its current strategy.
Semel said that Yahoo had become a "stickier site" for consumers, with an increase of 50 percent on the average time spent on the Yahoo network over the last six months. The company has also increased its attractiveness as a cost-effective advertising platform for small and medium sized businesses.
"We believe this is a terrific business and it's an area we are going to pursue more vigorously," he said.
Yahoo also raised its guidance for the current year, saying it expects 2002 revenues of between USD930 million and USD955 million, and full year EBITDA (earnings before interest, taxes, depreciation and amortisation) of between USD190 million and USD200 million.
For 2003 Yahoo now says it expects revenues of between USD1.08 billion and USD1.18 billion and EBITDA earnings of between USD250 million and USD300 million.
During the most recent quarter EBITDA was USD60.2 million or 24 percent of net revenues, compared to USD6.8 million, or 4 percent of net revenues, for the same period last year.
Despite the signs of turnaround, Yahoo's share price continues to languish and is trading below the USD10 mark, off its 52-week high of USD21.35. The company's shares closed at USD9.98 on Wednesday.
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