Press Release
Yahoo Reports First Quarter 2017 Results
"Our Q1 performance reflects solid financial and operational execution
in the new year, with more than
Q1 2016 | Q1 2017 | ||||
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Non-GAAP income from operations |
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Net earnings |
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Adjusted EBITDA |
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GAAP net earnings per diluted share |
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Non-GAAP net earnings per diluted share |
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Cash, cash equivalents, and marketable securities |
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Net cash provided by operating activities |
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As previously announced, beginning in the second quarter of 2016, GAAP
revenue and cost of revenue - TAC are impacted by a required change in
revenue presentation related to the Eleventh Amendment to the Microsoft
Search Agreement ("Change in Revenue Presentation," as discussed below).
For the first quarter of 2017, the Change in Revenue Presentation
contributed
Business Updates
-
Doubled the number of users enrolled in Yahoo Account Key in Q1
2017, allowing users to more easily sign in to their
Yahoo account using their mobile phone. - Updated Yahoo Answers Now with new engagement features like social sharing, question of the day, and notification controls.
- Launched Captain, a mobile bot assistant to help users manage lists and reminders, and coordinate family or group activities.
- Introduced new features on Yahoo Mail including Caller ID to integrate contact information from emails, and improved email search to surface most relevant "Top Results".
- Launched a newly designed Yahoo Homepage featuring News, Sports, and Finance alignment to make content more easily discoverable and personalized for users.
-
Livestreamed coverage of the Presidential Inauguration on
Yahoo News , the NBA Trade Deadline on Yahoo Sports' The Vertical, and Yahoo's inaugural All Markets Summit on Yahoo Finance. -
Yahoo Sports launched Tourney Pick'em game with brand partnerships from Lexus andPizza Hut , Yahoo Fantasy Baseball with rich data and featured MLB "Game of the Day" video content, andYahoo Daily Fantasy in theUK .
Transaction Update
First Quarter 2017 Financial Highlights
Mavens Revenue*:
Q1 2016 | Q1 2017 | |||||
Mavens revenue |
$ |
390 million |
$ |
529 million |
||
Non-Mavens revenue | 644 million | 742 million | ||||
Total traffic-driven revenue |
$ |
1,034 million |
$ |
1,271 million |
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Non-traffic-driven revenue | 53 million | 56 million | ||||
GAAP revenue |
$ |
1,087 million |
$ |
1,327 million |
||
* The Change in Revenue Presentation contributed
Mavens revenue represented 38 percent of traffic-driven revenue in the
first quarter of 2016, and increased to 42 percent in the first quarter
of 2017. Excluding the impact of the Change in Revenue Presentation,
Mavens revenue would have been
Mobile Revenue*:
Q1 2016 | Q1 2017 | |||||
Mobile revenue |
$ |
260 million |
$ |
412 million |
||
Desktop revenue | 774 million | 859 million | ||||
Total traffic-driven revenue |
$ |
1,034 million |
$ |
1,271 million |
||
Non-traffic-driven revenue | 53 million | 56 million | ||||
GAAP revenue |
$ |
1,087 million |
$ |
1,327 million |
||
* The Change in Revenue Presentation contributed
GAAP mobile revenue for the first quarter of 2016 and 2017 was
Mobile revenue represented 25 percent of traffic-driven revenue in the
first quarter of 2016, and increased to 32 percent in the first quarter
of 2017. Excluding the impact of the Change in Revenue Presentation,
mobile revenue would have been
Gross mobile revenue for the first quarter of 2016 and 2017 was
Search Revenue:
-
GAAP search revenue was
$745 million for the first quarter of 2017 compared to$492 million for the first quarter of 2016. Excluding the impact of the Change in Revenue Presentation, which contributed$304 million to search revenue in the first quarter of 2017, search revenue decreased by 10 percent compared to the first quarter of 2016. -
Gross search revenue was
$799 million for the first quarter of 2017, a decrease of 3 percent compared to the first quarter of 2016. The Change in Revenue Presentation does not impact gross search revenue. -
Cost of revenue - TAC associated with search revenue was
$435 million for the first quarter of 2017. Excluding the impact of the Change in Revenue Presentation, which contributed$304 million to cost of revenue - TAC in the first quarter of 2017, cost of revenue - TAC associated with search revenue decreased by 9 percent compared to the first quarter of 2016. - The number of Paid Clicks decreased 12 percent compared to the first quarter of 2016.
- Price-per-Click increased 10 percent compared to the first quarter of 2016.
Display Revenue:
-
GAAP display revenue was
$456 million for the first quarter of 2017, a 2 percent decrease compared to the first quarter of 2016. -
Cost of revenue - TAC associated with display revenue was
$58 million for the first quarter of 2017, a 30 percent decrease compared to the first quarter of 2016. - The number of Ads Sold increased 2 percent compared to the first quarter of 2016.
- Price-per-Ad remained the same as the first quarter of 2016.
Cash, Cash Equivalents, and
Cash, cash equivalents, and marketable securities were
"We feel incredibly proud that we executed so well against our 2016 plan
and kicked off 2017 on a positive note by achieving our internal
operating goals," said
Change in Revenue Presentation
As previously announced, pursuant to the Eleventh Amendment to the
Microsoft Search Agreement, the Company completed the transition of its
exclusive sales responsibilities to Microsoft for Microsoft's paid
search services to premium advertisers in
Supplemental Financial and Other Information
Supplemental financial and other information can be accessed through the Company's Investor Relations website at www.altaba.com.
Non-GAAP Financial Measures
This press release includes adjusted GAAP revenue and cost of revenue - TAC amounts that exclude the effect of the Change in Revenue Presentation related to the Eleventh Amendment that took place in the second quarter of 2016. We believe providing this additional information to investors is useful because it provides investors with comparable revenue and cost of revenue - TAC measures for comparison to our historical reported financial information.
This press release and its attachments also include the
following additional financial measures defined as non-GAAP financial
measures by the
Gross mobile revenue is GAAP mobile revenue plus the related revenue share with third parties. Gross search revenue is GAAP search revenue plus the related revenue share with third parties. Revenue ex-TAC is GAAP revenue less cost of revenue - TAC. Adjusted EBITDA, non-GAAP income from operations, non-GAAP net earnings, and non-GAAP net earnings per share - diluted, exclude from the most comparable GAAP financial measures certain gains, losses, and expenses that we do not believe are indicative of ongoing results, and exclude stock-based compensation expense. Adjusted EBITDA also excludes taxes, depreciation, amortization of intangible assets, other (expense) income, net (which includes interest, among other items), earnings in equity interests, and net income attributable to noncontrolling interests. Free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities (adjusted for periods prior to the first quarter of 2017 to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net (i.e., acquisition of property and equipment less proceeds received from disposition of property and equipment) and dividends received from equity investees.
These measures may be different than non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles ("GAAP"). Explanations of the Company's non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying "Note to Supplemental Financial Data and GAAP to Non-GAAP Reconciliations," "Supplemental Financial Data and GAAP to Non-GAAP Reconciliations," and "GAAP to Non-GAAP Reconciliations."
About
"Ads Sold" consist of display ad impressions for paying advertisers
on
"Affiliates" are third-party entities that have integrated Yahoo's advertising offerings into their websites or other offerings (those websites and other offerings, "Affiliate sites").
"Alibaba Group" means Alibaba Group Holding Limited.
"Desktop computer" means a desktop or laptop computer, and "desktop revenue" is revenue generated from search and display ads served on Desktop computers and also includes leads, listings, and fees revenue and ecommerce revenue allocated to user activity on Desktop computers.
"Gross mobile revenue," a non-GAAP measure, is GAAP mobile revenue plus the related revenue share with third parties.
"Gross search revenue," a non-GAAP measure, is GAAP search revenue plus the related revenue share with third parties.
"Mavens revenue" is revenue generated from, without duplication: (i)
mobile (as defined below), (ii) video ads and video ad packages, (iii)
native ads, and (iv)
"Microsoft Search Agreement" refers to the Search and Advertising
Services and Sales Agreement between
"Mobile revenue" is revenue generated in connection with user activity on mobile devices, including smartphones and tablets, regardless of whether the device is accessing a mobile-optimized service. Mobile revenue is generated primarily from search and display ads. Mobile revenue also includes leads, listings, and fees revenue and ecommerce revenue allocated to user activity on mobile devices.
"Native revenue" is revenue generated from native ads (search
and display) on
"Net earnings" means net income (loss) attributable to
"Non-Mavens revenue" is revenue generated from search ads and
traditional (i.e., non-native, non-video, non-
"Non-traffic-driven revenue" is revenue not arising from user
activity on
"Paid Clicks" are clicks by end-users on sponsored search listings
(excluding native ads) on
"Price-per-Ad" is defined as display revenue divided by our total number of Ads Sold.
"Price-per-Click" is defined as Search click-driven revenue divided by our total number of Paid Clicks.
"Search click-driven revenue" is gross search revenue excluding search revenue from Yahoo Japan.
"TAC" refers to traffic acquisition costs. TAC consists of
payments to Affiliates and payments made to companies that direct
consumer and business traffic to
"Yahoo," "Company," and "we" refer to
"Yahoo Properties" refers to the online properties and services that
We periodically review, refine, and update our methodologies for monitoring, gathering, and counting number of Ads Sold and Paid Clicks, and for calculating Search click-driven revenue, Price-per-Ad, and Price-per-Click. Methodology changes are applied consistently to all periods presented. No changes were made in the currently reported period.
Additional information about how "Ads Sold," "Paid Clicks,"
"Price-per-Ad," "Price-per-Click," and "Search click-driven revenue" are
defined and calculated is included under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for the year
ended
This press release (including, without limitation, the quotations
from management) contains forward-looking statements concerning
Important Additional Information and Where to Find It.
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Unaudited Condensed Consolidated Balance Sheets | ||||||
(in thousands) | ||||||
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2016 |
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2017 |
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ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 1,119,469 | $ | 1,328,913 | ||
Short-term marketable securities | 5,700,925 | 5,582,149 | ||||
Accounts receivable, net | 1,084,267 | 940,311 | ||||
Prepaid expenses and other current assets | 221,499 | 176,351 | ||||
Total current assets | 8,126,160 | 8,027,724 | ||||
Long-term marketable securities | 1,089,707 | 1,110,166 | ||||
Property and equipment, net | 1,209,937 | 1,177,723 | ||||
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415,809 | 430,463 | ||||
Intangible assets, net | 161,644 | 142,424 | ||||
Other long-term assets and investments | 206,059 | 279,267 | ||||
Investments in |
33,680,879 | 41,359,859 | ||||
Investments in equity interests | 3,192,884 | 2,841,100 | ||||
Total assets | $ | 48,083,079 | $ |
55,368,726 |
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LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 171,520 | $ | 180,368 | ||
Other accrued expenses and current liabilities | 1,006,676 | 884,000 | ||||
Deferred revenue | 109,228 | 103,543 | ||||
Total current liabilities | 1,287,424 | 1,167,911 | ||||
Convertible notes | 1,299,945 | 1,317,112 | ||||
Long-term deferred revenue | 39,583 | 42,669 | ||||
Other long-term liabilities | 95,597 | 91,026 | ||||
Deferred tax liabilities related to investment in |
13,633,988 | 16,762,865 | ||||
Deferred and other long-term tax liabilities | 642,466 | 519,950 | ||||
Total liabilities | 16,999,003 | 19,901,533 | ||||
Total |
31,049,283 | 35,435,717 | ||||
Noncontrolling interests | 34,793 | 31,476 | ||||
Total equity | 31,084,076 | 35,467,193 | ||||
Total liabilities and equity | $ | 48,083,079 | $ | 55,368,726 | ||
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Unaudited Condensed Consolidated Statements of Operations | ||||||||
(in thousands, except per share amounts) | ||||||||
Three Months Ended | ||||||||
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2016 | 2017 | |||||||
Revenue (1) | $ | 1,087,152 | $ |
1,327,270 |
||||
Operating expenses: | ||||||||
Cost of revenue - traffic acquisition costs (1) | 227,763 | 493,502 | ||||||
Cost of revenue - other | 282,587 | 256,774 | ||||||
Sales and marketing | 236,033 | 209,366 | ||||||
Product development | 278,029 | 252,220 | ||||||
General and administrative | 155,451 | 156,837 | ||||||
Amortization of intangibles | 18,773 | 11,506 | ||||||
Gain on sale of patents | (1,500 | ) | - | |||||
Restructuring charges, net | 57,230 | 5,812 | ||||||
Total operating expenses | 1,254,366 | 1,386,017 | ||||||
Loss from operations | (167,214 | ) | (58,747 | ) | ||||
Other (expense) income, net | (47,416 | ) | 18,822 | |||||
Loss before income taxes and earnings in equity interests | (214,630 | ) | (39,925 | ) | ||||
Benefit for income taxes | 34,766 | 26,177 | ||||||
Earnings in equity interests, net of tax | 81,574 | 113,688 | ||||||
Net (loss) income | (98,290 | ) | 99,940 | |||||
Less: Net income attributable to noncontrolling interests | (942 | ) | (506 | ) | ||||
Net (loss) income attributable to |
$ | (99,232 | ) | $ | 99,434 | |||
Net (loss) income attributable to |
$ | (0.10 | ) | $ | 0.10 | |||
Shares used in per share calculation - diluted | 945,719 | 963,169 | ||||||
Stock-based compensation expense by function: | ||||||||
Cost of revenue - other | $ | 8,526 | $ | 8,415 | ||||
Sales and marketing | 32,887 | 31,409 | ||||||
Product development | 47,988 | 48,366 | ||||||
General and administrative | 19,006 | 20,586 | ||||||
Restructuring charges, net | 7,374 | - | ||||||
Supplemental Financial Data: |
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Revenue ex-TAC | $ | 859,389 | $ | 833,768 | ||||
Adjusted EBITDA | $ | 147,072 | $ | 188,297 | ||||
Free cash flow(2) | $ | 297,195 | $ | 154,245 | ||||
(1) | Commencing in the second quarter of 2016, TAC payments related to the Microsoft Search Agreement, which previously would have been recorded as a reduction to revenue, began to be recorded as a cost of revenue due to a required change in revenue presentation. See "Change in Revenue Presentation" in the accompanying press release. | |
(2) |
During the three months ended |
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Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
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2016 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (loss) income | $ | (98,290 | ) | $ | 99,940 | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||||||||
Depreciation | 107,377 | 95,703 | ||||||
Amortization of intangible assets | 32,288 | 19,396 | ||||||
Accretion of convertible notes discount | 16,290 | 17,167 | ||||||
Stock-based compensation expense | 115,781 | 108,776 | ||||||
Non-cash restructuring charges | 362 | - | ||||||
Non-cash accretion on marketable debt securities | 12,354 | 899 | ||||||
Foreign exchange gain | (6,524 | ) | (12,546 | ) | ||||
Gain on sale of assets and other | (190 | ) | (9 | ) | ||||
Gain on sale of patents and land | (1,500 | ) | - | |||||
Loss (gain) on Hortonworks warrants | 39,150 | (5,385 | ) | |||||
Earnings in equity interests | (81,574 | ) | (113,688 | ) | ||||
Tax benefits from stock-based awards | 1,192 | - | ||||||
Excess tax benefits from stock-based awards(3) | (7,526 | ) | - | |||||
Deferred income taxes | (37,794 | ) | (44,296 | ) | ||||
Changes in assets and liabilities, net of effects of acquisitions: | ||||||||
Accounts receivable | 172,677 | 151,772 | ||||||
Prepaid expenses and other | 232,783 | 24,281 | ||||||
Accounts payable | 2,844 | (5,099 | ) | |||||
Accrued expenses and other liabilities | (142,308 | ) | (118,622 | ) | ||||
Deferred revenue | 8,376 | (3,834 | ) | |||||
Net cash provided by operating activities | 365,768 | 214,455 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Acquisition of property and equipment | (76,399 | ) | (61,147 | ) | ||||
Proceeds from sales of property and equipment | 300 | 937 | ||||||
Purchases of marketable securities | (1,871,316 | ) | (1,457,036 | ) | ||||
Proceeds from sales of marketable securities | 47,374 | 52,436 | ||||||
Proceeds from maturities of marketable securities | 1,369,836 |
1,503,562 |
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Proceeds from sales of patents | 1,500 | - | ||||||
Purchases of intangible assets | (1,177 | ) | (52 | ) | ||||
Proceeds from the settlement of derivative hedge contracts | 36,028 | 8,223 | ||||||
Payments for settlement of derivative hedge contracts | (3,024 | ) | (1,078 | ) | ||||
Other investing activities, net | (58 | ) | 156 | |||||
Net cash (used in) provided by investing activities | (496,936 | ) | 46,001 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common stock | 4,754 | 3,095 | ||||||
Excess tax benefits from stock-based awards(3) | 7,526 | - | ||||||
Tax withholdings related to net share settlements of restricted stock awards and restricted stock units | (42,139 | ) | (67,901 | ) | ||||
Distributions to noncontrolling interests | - | (3,823 | ) | |||||
Other financing activities, net | (3,637 | ) | (3,126 | ) | ||||
Net cash used in financing activities | (33,496 | ) | (71,755 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 12,357 | 20,743 | ||||||
Net change in cash and cash equivalents | (152,307 | ) | 209,444 | |||||
Cash and cash equivalents, beginning of period | 1,631,911 | 1,119,469 | ||||||
Cash and cash equivalents, end of period | $ | 1,479,604 | $ |
1,328,913 |
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(3) |
Commencing in the first quarter of 2017, the Company has prospectively adopted changes to the statement of cash flows prescribed by Accounting Standards Update (ASU) 2016-09, "Improvements to Employee Share-Based Payment Accounting," which require the Company to classify excess tax benefits along with other income tax cash flows as an operating activity in the statement of cash flows. As a result, the Company no longer presents excess tax benefits from stock-based awards as an outflow in operating activities and as an inflow in financing activities on the statement of cash flows. |
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Note to Supplemental Financial Data and GAAP to Non-GAAP Reconciliations
This press release includes adjusted revenue and cost of revenue - TAC amounts that exclude the effect of the Change in Revenue Presentation that occurred during the second quarter of 2016. We believe providing this additional information to investors is useful because it provides investors with comparable revenue and cost of revenue - TAC measures for comparison to our historical reported financial information. See "Change in Revenue Presentation" in the accompanying press release.
This press release and its attachments also include the non-GAAP
financial measures of revenue excluding traffic acquisition costs
("revenue ex-TAC"); gross mobile revenue; gross search revenue; adjusted
EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP
net earnings per diluted share; and free cash flow, which are reconciled
to revenue (in the case of revenue ex-TAC, gross mobile revenue, and
gross search revenue); net (loss) income attributable to
Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue
less TAC that has been recorded as a cost of revenue. TAC consists of
payments made to Affiliates, and payments made to companies that direct
consumer and business traffic to
Each of gross mobile revenue and gross search revenue is a non-GAAP
financial measure. Gross mobile revenue is defined as GAAP mobile
revenue plus the related revenue share with third parties. Gross search
revenue is defined as GAAP search revenue plus the related revenue share
with third parties. We present these amounts to provide investors with
additional metrics used by the Company for evaluation and
decision-making purposes and as an indicator of the size of our presence
in the relevant business. To this end, gross mobile revenue and gross
search revenue report the total receipts generated on
Adjusted EBITDA is defined as net (loss) income attributable to
Non-GAAP income from operations is defined as loss from operations excluding certain gains, losses, and expenses that we do not believe are indicative of our ongoing operating results and further adjusted to exclude stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on loss from operations. We consider non-GAAP income from operations to be a profitability measure which facilitates the forecasting of our operating results for future periods and allows for the comparison of our results to historical periods. A limitation of non-GAAP income from operations is that it does not include all items that impact our income from operations for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measure of loss from operations which includes the gains, losses, and expenses that are excluded from non-GAAP income from operations.
Non-GAAP net earnings is defined as net (loss) income attributable to
Free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities (adjusted for periods prior to the first quarter of 2017 to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net (i.e., acquisition of property and equipment less proceeds received from disposition of property and equipment) and dividends received from equity investees. We consider free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by business operations, after deducting our net payments for acquisitions and dispositions of property and equipment, which cash can then be used for strategic opportunities or other business purposes including, among others, investing in the Company's business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in the Company's unaudited condensed consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.
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Supplemental Financial Data and GAAP to Non-GAAP Reconciliations | ||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
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2016 | 2017 | |||||||
Revenue for groups of similar services: | ||||||||
Search (1) | $ | 491,881 | $ | 744,738 | ||||
Display | 463,019 | 455,882 | ||||||
Other | 132,252 | 126,650 | ||||||
Total revenue | $ | 1,087,152 | $ | 1,327,270 | ||||
Revenue excluding traffic acquisition costs recorded as cost of revenue ("revenue ex-TAC") for groups of similar services: | ||||||||
GAAP search revenue (1) | $ | 491,881 | $ | 744,738 | ||||
TAC associated with search revenue (1) | (144,160 | ) | (435,442 | ) | ||||
Search revenue ex-TAC | $ | 347,721 | $ | 309,296 | ||||
GAAP display revenue | $ | 463,019 | $ | 455,882 | ||||
TAC associated with display revenue | (83,067 | ) | (57,737 | ) | ||||
Display revenue ex-TAC | $ | 379,952 | $ | 398,145 | ||||
GAAP other revenue | $ | 132,252 | $ | 126,650 | ||||
TAC associated with GAAP other revenue | (536 | ) | (323 | ) | ||||
Other revenue ex-TAC | $ | 131,716 | $ | 126,327 | ||||
Revenue ex-TAC: | ||||||||
GAAP revenue (1) | $ | 1,087,152 | $ | 1,327,270 | ||||
TAC (1) | (227,763 | ) | (493,502 | ) | ||||
Revenue ex-TAC | $ | 859,389 | $ | 833,768 | ||||
Revenue ex-TAC by segment: | ||||||||
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GAAP revenue (1) | $ | 861,539 | $ | 1,083,458 | ||||
TAC (1) | (204,871 | ) | (432,684 | ) | ||||
Revenue ex-TAC | $ | 656,668 | $ | 650,774 | ||||
EMEA: | ||||||||
GAAP revenue (1) | $ | 76,923 | $ | 107,782 | ||||
TAC (1) | (12,509 | ) | (51,914 | ) | ||||
Revenue ex-TAC | $ | 64,414 | $ | 55,868 | ||||
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GAAP revenue (1) | $ | 148,690 | $ | 136,030 | ||||
TAC (1) | (10,383 | ) | (8,904 | ) | ||||
Revenue ex-TAC | $ | 138,307 | $ | 127,126 | ||||
Total revenue ex-TAC | $ | 859,389 | $ | 833,768 | ||||
Direct costs by segment (2): | ||||||||
|
$ | 72,508 | $ | 59,313 | ||||
EMEA | 20,609 | 12,702 | ||||||
|
44,648 | 47,688 | ||||||
Global operating costs (4) | 585,036 | 543,125 | ||||||
Gain on sale of patents | (1,500 | ) | - | |||||
Restructuring charges, net | 57,230 | 5,812 | ||||||
Depreciation and amortization | 139,665 | 115,099 | ||||||
Stock-based compensation expense | 108,407 | 108,776 | ||||||
Loss from operations | $ | (167,214 | ) | $ | (58,747 | ) | ||
(1) | Commencing in the second quarter of 2016, TAC payments related to the Microsoft Search Agreement, which previously would have been recorded as a reduction to revenue, began to be recorded as cost of revenue - TAC due to a required change in revenue presentation. See "Change in Revenue Presentation" in the accompanying press release. | |
(2) |
Direct costs for each segment include certain cost of revenue -
other and costs associated with the local sales teams. Prior to the
second quarter of 2016, certain account management costs associated
with |
|
(4) |
Global operating costs include product development, marketing,
real estate workplace, general and administrative, account
management costs and other corporate expenses that are managed on a
global basis and that are not directly attributable to any
particular segment. Beginning in the second quarter of 2016, certain
account management costs associated with |
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Supplemental Financial Data and GAAP to Non-GAAP Reconciliations (continued) | ||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
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2016 | 2017 | |||||||
Reconciliation of net (loss) income attributable to |
||||||||
Net (loss) income attributable to |
$ | (99,232 | ) | $ | 99,434 | |||
Advisory fees | 8,984 | 6,077 | ||||||
Security incidents costs | - | 11,280 | ||||||
Depreciation and amortization | 139,665 | 115,099 | ||||||
Stock-based compensation expense | 108,407 | 108,776 | ||||||
Restructuring charges, net | 57,230 | 5,812 | ||||||
Other expense (income), net | 47,416 | (18,822 | ) | |||||
Benefit for income taxes | (34,766 | ) | (26,177 | ) | ||||
Earnings in equity interests | (81,574 | ) | (113,688 | ) | ||||
Net income attributable to noncontrolling interests | 942 | 506 | ||||||
Adjusted EBITDA | $ | 147,072 | $ | 188,297 | ||||
Reconciliation of net cash provided by operating activities to free cash flow: | ||||||||
Net cash provided by operating activities | $ | 365,768 | $ | 214,455 | ||||
Acquisition of property and equipment, net | (76,099 | ) | (60,210 | ) | ||||
Excess tax benefits from stock-based awards(5) | 7,526 | - | ||||||
Free cash flow(2) | $ | 297,195 | $ | 154,245 | ||||
Reconciliation of GAAP mobile revenue to gross mobile revenue: | ||||||||
GAAP mobile revenue (1) | $ | 260,193 | $ |
412,485 |
||||
Revenue share with third parties (1) | 151,578 |
34,092 |
||||||
Gross mobile revenue | $ | 411,771 | $ | 446,577 | ||||
Reconciliation of GAAP search revenue to gross search revenue: | ||||||||
GAAP search revenue (1) | $ | 491,881 | $ | 744,738 | ||||
Revenue share with third parties (1) | 328,516 | 54,193 | ||||||
Gross search revenue | $ | 820,397 | $ | 798,931 | ||||
(1) | Commencing in the second quarter of 2016, TAC payments related to the Microsoft Search Agreement, which previously would have been recorded as a reduction to revenue, began to be recorded as cost of revenue - TAC due to a required change in revenue presentation. See "Change in Revenue Presentation" in the accompanying press release. | |
(2) |
During the three months ended |
|
(5) |
As a result of the prospective adoption of aspects of ASU 2016-09
relating to the statement of cash flows, as described in note (3)
above, there is no adjustment for excess tax benefits from
stock-based awards in the calculation of free cash flow for the
three months ended |
|
|
||||||||||
GAAP to Non-GAAP Reconciliations | ||||||||||
(in thousands, except per share amounts) | ||||||||||
Three Months Ended | ||||||||||
|
||||||||||
2016 | 2017 | |||||||||
GAAP loss from operations | $ | (167,214 | ) | $ | (58,747 | ) | ||||
(a) | Restructuring charges, net | 57,230 | 5,812 | |||||||
(b) | Stock-based compensation expense | 108,407 | 108,776 | |||||||
(c) | Advisory fees | 8,984 | 6,077 | |||||||
(d) | Security incidents costs | - | 11,280 | |||||||
Non-GAAP income from operations | $ | 7,407 | $ | 73,198 | ||||||
GAAP net (loss) income attributable to |
$ | (99,232 | ) | $ | 99,434 | |||||
(a) | Restructuring charges, net | 57,230 | 5,812 | |||||||
(b) | Stock-based compensation expense | 108,407 | 108,776 | |||||||
(c) | Advisory fees | 8,984 | 6,077 | |||||||
(d) | Security incidents costs | - | 11,280 | |||||||
(e) | Loss (gain) on Hortonworks warrants | 39,150 | (5,385 | ) | ||||||
(f) |
To adjust the provision for income taxes to reflect an effective
tax rate of 35% for both the three months ended |
(34,465 | ) | (56,500 | ) | |||||
Non-GAAP net earnings | $ | 80,074 | $ | 169,494 | ||||||
GAAP net (loss) income attributable to |
$ | (0.10 | ) | $ | 0.10 | |||||
Non-GAAP net earnings per share - diluted | $ | 0.08 | $ | 0.18 | ||||||
Shares used in non-GAAP per share calculation - diluted | 951,338 | 963,169 |
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