Earnings: Yahoo Nets $252 Million In 3Q05 On 47-Percent Revenue Increase

Updated to include earnings call: Yahoo made $252 million in 3Q05, or 17 cents a share, on revenues of $1.33 billion that were up 47 percent over 3Q04. Marketing services revenue was $1.16 billion — up 46 percent over 3Q04, while fees revenue rose to $170 million, up 55 percent over $110 million last year. Traffic acquisition costs — the part of revenues that goes to search partners — made up $397.8 million of that, up from $251 million in 3Q04; other revenue costs pushed the total to $520 million.
Yahoo’s expected per share rate was 14 cents per share so I can’t wait to see the rationale used to punish Yahoo this time … profit essentially was flat compared to operating profit in 3Q04, which could be the Achilles heel,

mp3logo1.gif Updated: You can dowload the audio of the conference call from here.

From the call: Lots of detail so if you’re really interested in Yahoo, you’ll probably want to listen to the call — q&a starts midway — or track down a transcript. (Will link if I find one.)

– With the second anniversary of the Overture acquisition, the search marketingsales team now will be operating under the same management as brand sales. CEO Terry Semel said the move is important because the company is seeing more overlap between the two with 50 of the top 200 brand advertisers already in the top 200 of search advertisers.

– Yahoo ended the quarter with 411 million unique users, up 26 percent from 325 million in the same quarter last year. Active registered users: 191 million, up 22 percent from 157 million in 3Q04. Paid subscribers: 11.4 million unique paying relationships by the end of 3Q05, up 1.3 million from 2Q05 and up 50 percent from 3Q05. Yahoo Music: over 6 billion ratings posted since the beta launched.

– Yahoo Music Unlimted: “We’re very pleased with the gorwth rate of our subscription service and believe that as more devices come into the marketplace we are well positioned …” Looking for details? Keep looking.

– Not to be picky but some 4Q events were conflated with the list of achievements for the past quarter. For instance, the YHOO-MSFT IM agreement is 4Q. Ditto for Blog Search within Yahoo News and Yahoo Podcasting.

– Semel said the addition of high-quality PC-PC voice and interactive photo sharing to Yahoo Messenger “was the next step in our voice strategy, which you’ll see unfold further over the coming months.”

– Predictably, Semel declined to answer a question about Yahoo’s possible interest in AOL.

– Asked about ROI on content investment and whether investments were too large or too small, Semel said he considered the investments to “totally appropriate” and went on with a longish answer. “This is not a sprint. This is an ability for Yahoo to take the leadership position and start to evolve a whole new industry as it relates to media and media content. Don’t look for any one thing that’s either going to be wildly expensive or any one thing that’s going to change the whole direction but look to a series of things, some of which will be generated by Yahoo, some of which will be licensed and or partners with others, as we’ve been doing in the past, and a large portion of it will be user-generated content that Yahoo will totally enable and give users an opportunity to use our tools, post them, move them around our network from either their buddy lists or their families or attach advertising links to it and give them an ability to create businesses if you will. I think we have a very exciting roadmap that includes some things that we’re going to do on our own and many things we’re going to do with many others.”

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