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Profit almost as large as CEO's bank balance

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Yahoo! cheered investors by blowing past its own estimates for its Q1 2005 period. Profits for the quarter now almost match CEO Terry Semel's annual compensation last year.

Quarterly revenue excluding traffic acquisition costs rose to $821 million, up from $785 million in the preceding quarter and $540 million from the first quarter of FY 2004. Net income rose to $204.6 million, up from the adjusted $187 million Yahoo! recorded in the final quarter of FY2004. Total sales reached $820.8 million, beyond the company's own forecast range of $765 million to $805 million.

However the widely anticipated slow down in ad growth is now becoming apparent. Yahoo!'s earnings statement doesn't record sequential quarters, preferring to offer a comparison against the numbers from a year ago, and this is reflected in the immediate wire reports, which are based on the press release. Operating cash flow in the US fell from $278.2 million to $270.4 million, but this was more than offset by a $25.6 million increase in international sales. Earnings per unique user fell a couple of cents to 76 cents. Yahoo! boasts 372 million users for the quarter, up from 345 million in Q4 2004.

Yahoo! has more diverse revenue sources than its chief rival as an ad broker, Google. The company has 8.9 million fee paying customers, up half a million from Q4 2004 and 5.8 million a year ago.

Yahoo! shares rose over 5 per cent in extended trading, and Google saw a bump too. ®

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