Yahoo!’s (YHOO) CEO Marissa Mayer on Q2 2014 Results – Earnings Call Transcript

Source: Seeking Alpha


Yahoo! Inc. (NASDAQ:YHOO)

Q2 2014 Earnings Conference Call

July 15, 2014 17:00 ET


Mike Santoli – Business Reporter, Yahoo! Finance

Marissa Mayer – Chief Executive Officer

Ken Goldman – Chief Financial Officer


Eric Sheridan – UBS

Sachin Khattar – Jefferies

Carlos Kirjner – Sanford Bernstein

Ron Josey – JMP Securities

Justin Post – Merrill Lynch

Peter Stabler – Wells Fargo Securities

Youssef Squali – Cantor Fitzgerald


Good afternoon and welcome to Yahoo!’s Second Quarter 2014 Earnings Video Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. The webcast today will be moderated by our business reporter from Yahoo! Finance, Mike Santoli.

Before getting started, I’d like to remind you that today’s presentation will contain forward-looking statements about our expected financial and operational performance including business and financial strategies, revenue growth, products and ad sales. Actual results might differ materially from our projections. Potential risks factors that could cause these differences are described in our Form 10-Q filed with the SEC on May 8, 2014. All information in this video is as of today, July 15, 2014 and we undertake no duty to update it for subsequent events.

Today’s discussion will include non-GAAP financial measures. Reconciliations of our non-GAAP results to the GAAP results we consider most comparable can be found in our earnings slides, which also contain full versions of the financial charts and graphs you will see in today’s video. We encourage you to review the complete earnings slides in our Investor Relations website at under the Earnings tab.

And with that, let me turn the program over to Mike.

Mike Santoli – Business Reporter, Yahoo! Finance

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Welcome to Yahoo!’s second quarter 2014 earnings video webcast. I am Mike Santoli and I will be moderating today’s earnings event. Here with me are Marissa Mayer, Yahoo!’s Chief Executive Officer; and Ken Goldman, Yahoo!’s Chief Financial Officer.

Today, we bring you prepared remarks from both Marissa and Ken around Yahoo!’s second quarter performance. Later, they will be answering your questions submitted via email. Institutional investors were encouraged to submit questions and we have selected a few questions that were representative of the group.

I’d like to now turn it over to Marissa to discuss Yahoo!’s second quarter business update. Marissa?

Marissa Mayer – Chief Executive Officer

Thanks, Mike and good afternoon everyone. Thank you for joining our Q2 earnings live stream. I want to begin today’s call with some perspective on where we stand in the overall transformation of our business. We have transformed our culture by focusing on our strategy on speed and execution. We have transformed our products divesting in those that are non-strategic and investing in those that can drive long-term growth. Along the way, we have reinvented every single major consumer product at Yahoo! And now we are transforming the ways in which we generate revenue, countering declines with investments in new products, platforms and businesses.

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.

In Q2, we delivered $1.04 billion in revenue ex-TAC, which is down approximately 3% year-over-year. Looking at the core of our business, search hit $428 million in revenue ex-TAC representing 6% growth year-over-year. On the display side, we saw some specific challenges with $394 million in revenue ex-TAC or roughly 7% decline year-over-year. I will return to the specific revenue analysis around the challenges after our quarterly product update.

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In the past, we have consistently talked about our products in terms of four areas: search, communications, digital magazines and video, all powered by two tremendous platforms, Flickr and Tumblr. We have also discussed our strategy of speed, quick decisions, quick execution, quick implementation. And I want to walk through our progress in Q2 and help connect this strategy to real-time progress in our business.

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