Yahoo Surpasses Earnings Expectations Yet Struggles To Maintain Its Digital Ad Market Share

Investors and analysts watched Yahoo’s third quarter earnings report with bated breath amidst rumors that Verizon is contemplating pulling back from the deal or possibly pushing for a billion-dollar discount. As speculation swirled, Yahoo disclosed promising financials, proving that the company continues to perform, despite the challenges it has faced.

The earnings report revealed that Yahoo surpassed expectations, posting earnings of 20 cents per share on a $1.31 billion revenue. These encouraging results exceeded its $1.275 billion prediction made in July for the quarter and marked a jump from their earnings of 15 cents per share on a $1.27 billion revenue achieved during the same period last year.

Digging deeper, CNBC’s analysis showed an increase in Search revenue, which stood at $703 million for the third quarter, significantly up from $516 million on a year-over-year basis. This figure beat the consensus expectations from FactSet which had been pegged at $682.2 million. Nevertheless, the number of paid clicks took a dip, with a 22% decrease year over year.

Regrettably, the Display revenue for the quarter painted a somewhat gloomy picture, at $476 million, reflecting a 7 percent decline year over year. This was below the $496.2 million anticipated by analysts surveyed by FactSet, reflecting a downward trend in ads sold.

Looking to the future, Yahoo forecasted its fourth quarter revenue to fall within the range of $ 1.36 billion to $1.4 billion.

While Yahoo Finance and Sports consistently rank among the most visited sites globally, the company’s low market share in digital advertisements remains a hump in the journey. Despite billions of monthly visits, Yahoo only captures a paltry 1.5 percent of the digital ads market, a figure that has fallen from 2.1 percent recorded last year. Meanwhile, Alphabet (Google’s parent company) and Facebook take the lion’s share, controlling 31 percent and 12 percent of the market respectively.

Despite the dip in digital advertisement revenue and the possible derailment of the Verizon deal, Yahoo’s CEO, seems unphased. In a press release, the CEO stated, “In addition to our continued efforts to strengthen our business, we are busy preparing for integration with Verizon.”

Yahoo has had its shares of storms over the past couple of years. In 2014, Yahoo disclosed a breach that saw approximately 500 million user accounts compromised. Additionally, the company allegedly developed software to aid government agencies with surveillance on users. This stirred a global backlash, with threats from numerous clients to shut down their accounts. Amidst these complications, there were murmurs of Verizon reconsidering the deal or demanding a discount.

Despite the trials, Yahoo’s future, particularly the forecasted fourth quarter revenue of $1.36 billion to $1.4 billion, remains promising as the company continues to drive forward.