Yahoo’s 2012 revenue was up 2 percent from the year before, the first such increase since 2008 for the troubled company. Its share price rose slightly in after-hours trading.
Liveblogged from the earnings call:
Company saw dramatic change of approach, with “a new major initiative almost every other week,” Mayer said.
“Focusing on people and products” = talent and launches.
Mayer’s leadership has boosted employee confidence in the company’s future. Yahoo has also seen attrition diminish and “an increase in quality and volume of people applying to join Yahoo.”
She notes recent acquisitions: Stamped, OntheAir and Snip.it.
Decemeber saw redesigned Yahoo mail, with mobile “top of mind.” Since launch daily active users is up 10 percent year-over-year.
Flickr redesign was featured in App Store. Since then, increase of 20 percent in photos shared.
There is increased oversight on the company’s finances.
Mayer passes the mic to CFO Ken Goldman to talk finances. See the numbers here. Goldman is new.
Search revenue growth grew in Q4 up 14 percent adjusted (minus TAAC) to $427 million. Costs went up in Q4, but they did decrease spending on some line items. Annual numbers, display revenue fell slightly while search ad revenue rose 9 percent.
Click-throughs on ads are also up from some tweaks. Goldman gives a shout out for some Microsoft help here. He’s much more positive about the Microsoft search partnership than Yahoo has been in the past.
Mayer says they may cut ad inventory in the short term, but better user experiences will result in better engagement and more revenue in the long run. This would bring Yahoo more into line with the sleek interfaces of other companies.
Expenses were up 3 percent over the past year. Ended the year with 11,500 employees, down 18 percent over 2011.
Alibaba is doing great, while sale is still planned. Their stake is worth more than $8 billion, in addition to preferred shared Yahoo owns.
Capital expenditures: investments in faster equipment and “a richer data set” which is important part of the company’s long-term plans, Goldman says, sounding like former CEO Scott Thompson.
Mexican lawsuit: Court entered $2.75 billion judgment. We believe claims are without merit and have appealed. They have net set aside money to pay it because they’re sure they’ll win. Don’t ask any questions about this; we won’t say more.
Predict $1.07 billion in revenue for Q1, will see loss from Microsoft search deal and loss of Korean operations.
We expect to invest more in first half of 2013. Second half of the year hope their investments will pay off.
Mayer takes the mic again to talk about how company will grow in 2013.
Three key business opportunities: more users, greater international presence and appealing to a bigger demographic of users. Achieving the growth we aspire to will take years. Fist step to create chain reaction is great products. They’ve identified a dozen “daily digital habits” to drive their products. She won’t say which they are, but they will make their way through the list in each quarter.
“While the road to growth is certain, it will not be immediate.”
In terms of advertising: search, display, mobile video. Another positive mention attention of Microsoft partnership, which is a 180 from previous CEO’s strategy talks.
In 2012, monthly unique visitors on mobile grew to 200 million. “Monetization always follows users, and mobile will be no different.”
Video is a very hot advertising platform. Some types of units are sold six months in advance.
We’re committed to growing the international portion of revenue in the future.
“Yahoo helped define consumer internet as a daily digital habit. We’re returning to these roots.”
She opens up for questions.
Are there too many ads? Overall no. But, she says, the what’s new page was cut from mail with relaunch because it didn’t benefit the user. Product has fewer ads, but now ads have better click-through rates. They haven’t been able to boost the prices yet, but they hope to do that if analytics stay positive.
Goldman hints that there won’t be as many layoffs in 2013 (total staff was down 18 percent in 2012).
How can we track Yahoo’s success on mobile, and how does Yahoo differentiate itself?
They’re not breaking out mobile from desktop. They’ve introduced new metrics this quarter. Volume was down during the whole year, but in Q3, they got a bump in pricing thanks to the Olympics. We’re making key strategic investments in ad technology.
Search is a key area of investment. Mayer: “We’re really excited and happy to be working with Microsoft and the teams are working incredibly well together. All of the innovations in search in my opinion are going to happen at the user interface level moving forward. It’s notable to notice that Siri uses Yahoo’s data. We’ve lost some share over the years, and we’d like to gain some of that back and we have some ideas, but we’ll be very focused.”
Question: Do you have any desktop-first improvements?
Overall I don’t think of them as two platforms. “I would expect in the future that people who use, say Yahoo Finance, heavily use it on both platforms, it’s important for us to be able to lower the switching costs. To me, it’s less about where the innovations happen. I do think there will be innovations on desktop and on the phone, because it’s important not to miss some of the innovate twists and additional functionality you can offer you end user.”
Another analyst wants to know which 12 products will be improved and re-tweaked. “I’d really rather have some internal flexibility about how to operate, because they are just a dozen areas that may not map a dozen products, but there’s no real surprise there if search and mail are primary entries to Yahoo, and there are verticals where Yahoo has always been strong, things like finance, sports, news.”
How can you compete in innovation, when you’ll be outspent by competitors?
Mayer: “We’re looking at fast, nimble, small teams [to acquire]. Yes, we think technology is an area where you need to invest in research and development. But there’s a quote about Don’t think that a small number of people can’t change the world; in truth nothing ever has.” That’s a Margaret Mead quote about political activism, by the way, not profit margins!
Question: What’s driving acceleration of paid clicks, and can you stay at high growth rate. Also, how does Yahoo get the bulk of its search queries on mobile?
Mayer: Part of increased clicks in Q4 had to do with increased commercial activity in that quarter. But in Q1, if we can grow share by having a great user interface by gaining search share. In terms of mobile queries, obviously we have a large mobile presence and apps. Most of our apps have mobile search boxes. And you actually can go on your phone and determine who your default search provider is [LOL]. So I have selected Yahoo, so every time I go to the search bar in Safari, I end up doing a Yahoo search.”
Analysts are talking about the change of style from how Tim Morse and Ken Goldman give guidance for what will happen next year. Overall, Goldman is predicting about 2 percent growth for 2013.
Question: What differentiates Yahoo in terms of ad technology on mobile? Mayer: Mobile monetization is something that’s new for everyone, but when users migrate en masse as they have here there will be monetization opportunities. It’s usually a question of pricing, format and quality controls. For a long time, it was believed that search wasn’t a money-maker, which is almost absurd now in hindsight. Something similar will happen in mobile, it’s just that we have to do a lot of experimenting before we find it.
Final question: What percent of engineers are focused on mobile? Is there a challenge to you in terms of mobile search cannibalizing desktop search?
Mayer: The mobile usage we’ve seen today is incremental on top of desktop, and we’re positioning ourselves to understand that well enough so that won’t be a problem for us.
We’ve started to shift our engineering teams to be more focused on mobile, but we won’t report on total workforce percentages, but if you factor in our acquisitions and the fact that we hired 120 new people with computer science degrees in Q4 and most of those people have been allocated to mobile, we’ve made significant progress.
That’s all folks!