Yahoo 2Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Transformation is a long process

“What we know is this transformation is not a singular event. It is a series of events and quarters, some more challenging than others and some more successful than others and it will take time. In the case of Yahoo!, I have stated in the past that we believe a transformation of this size and scale will take multiple years and we continue to believe that is the case today. Even so given our top priority of long-term sustainable growth, we are not satisfied with our results this past quarter.”

Two issues led to weak revenue. Both were in display

“In Q2, we saw two key issues specific to our business both were in traditional PC display. While traditional PC display is an area that is in decline across the industry, the two issues we saw were unrelated to this trend.”

Delayed transition to yahoo ad manager plus

“The first issue concerned our delayed execution of our audience transition to Yahoo Ad Manager Plus. We took extra time to ensure the product was delivering for our advertisers. During that period buying, on Genome, our existing audience platform slowed and we were left with a revenue shortfall.

Fundamentally, Yahoo Ad Manager Plus is an important driver in growing our display business long-term, especially as programmatic buying continues to evolve and grow. ”

Shortfall in premium ad sales

“The second issue we saw in Q2 was the lower-than-expected contribution from premium advertising, resulting in an unfavorable mix shift. Premium exclusive high-quality content is best monetized through premium direct sales. Premium offers great opportunities to advertisers and it also captures more favorable pricing. As such, we recognized the premium as an important part of our business that merits investment, especially in content. This is why we have been investing in editorial to increase the quality of our media offering, improve engagement across our verticals and ensure we have premium inventory to attract advertiser demand. Across premium, we will also continue to experiment with new ad units, better targeting and tools to improve the performance and contribution from this segment.”

More user engagement

“In Q2 2012 our mobile user base was hovering just above the 200 million monthly active users. Today I am happy to report that Yahoo! saw 450 million monthly active users for the very first time in Q2 2014 representing more than 100% growth in just two years. In addition to driving user growth, mobile has also delivered step changes in engagement with the time spent on mobile growing 79% in the last year alone.”

Thanks to Jerry Yang and Jack Ma for Alibaba

“this is likely the last earnings call before the IPO. Take a moment and offer a word of thanks. Thanks to both our Founder, Jerry Yang who identified Alibaba as an investment opportunity and really championed it here at Yahoo! And I also want to thank Jack Ma and Joe Tsai for having us participate through the journey that has been Alibaba as shareholders. We really have appreciated our relationship with the company and the value that they have delivered to us and the relationship between the company continues to get better and better, which is one of the results of which is what you saw in the share sale reduction that you saw today”

Advertisers want to advertise on beautiful products

” in small groups I met with about 500 different people representing about 350 different brands. And it’s been a bit of listening, it’s been a bit of also talking about how our products are different both on the consumer side and on the advertiser side. And I think that what we have generally heard is one a lot of respect for how quickly we have moved the consumer perception the way our products, our advertisers always want to advertise on beautiful products. And the fact that we have done a lot to improve the usability, the beauty and the value proposition to our end users is something that they really respect.”

Ad manager modernizes the ad platform

“Yahoo! Ad Manager is something that is a big step forward in terms of modernizing our ad platform. Prior to this we didn’t have things like real-time bidding, we didn’t have cost per engagement, cost per install. We didn’t have the ability sometimes to seamlessly mix first party data and third party data into your buy creating custom segments more easily. All of these things are things that advertisers really want and so we have been focused on that is how we designed Yahoo! Ad Manager Plus to basically bring in these more modern aspects and ultimately make them available to the market.”