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October 6, 1999

Yahoo! Shines in Q3 With 134% Revenue Growth

By CBR Staff Writer

Yahoo! Inc posted better-than-expected third-quarter results Wednesday, with net income of $14.9m, up from $4.2m in the year- ago quarter. Earnings per share rose to $0.05 from $0.01. Excluding charges of $22.1m related to the acquisition of Inc, pro forma earnings were $0.14, well ahead of the $0.09 analysts surveyed by First Call expected and whisper numbers of about $0.12. Revenue for the quarter soared 134% year-over-year to $155.1m, also ahead of the $139m consensus.

The Santa Clara, California-based company saw record numbers across the board, as average daily page views jumped to 385 million from 310 million in the June quarter and 105 million unique users visited Yahoo properties in September. Registered members hit 80 million during the quarter, leading CEO Tim Koogle to lay claim to the world’s largest user base. Combined reach among home and work users rose to a company-best 63.7% during August, up from 61.9% in July.

Advertisers in the quarter jumped to 3,150 clients from 2,700 in the prior quarter. The average length of advertising contracts rose to 171 days from 166 days last quarter and the average revenue per customer rose from $43,000 to $49,000. Overall gross margins were 85% of revenue, up from 80.9% in the year-ago quarter, while operating margins rose to 35% from just 9% a year ago and 32% in the second quarter.

In addition to its leadership position in the US, the company claims it is now the number one web network in the UK, Germany, France, Italy, Spain, Japan and Korea. With the recent launch of Yahoo! China, the company now has 21 geographic properties worldwide. International markets accounted for 10% of revenue in the third quarter.

For the nine-month period, net income was $16.4m on revenue up 152% at $387.5m, compared to a loss of $16.5m a year ago. Results include one-time acquisition charges of $88.5m, mostly stemming from the purchases of, GeoCities and Online Anywhere. Year-ago results include similar charges of $15.3m to cover the acquisition of Viaweb Inc. Cash reserves grew for the tenth consecutive quarter to $791m, up from $627m as of December 31 last year. The company has no debt. á

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