[January 23, 2017] |
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Yahoo Reports Fourth Quarter and Full Year 2016 Results
Yahoo! Inc. (NASDAQ: YHOO) today reported results for the quarter and
full year ended December 31, 2016.
"I'm very pleased with our Q4 results and incredibly proud of the team's
execution on our 2016 strategic plan, particularly given the uniquely
eventful past year for Yahoo. What we have achieved reflects some of the
most impressive teamwork, focus, and resilience I've seen throughout my
career. We continued to build our mobile and native businesses --
delivering nearly $1.5 billion in mobile revenue and over $750 million
in native revenue -- while operating the company at the lowest cost
structure in a decade. With our 2016 and Q4 financial results ahead of
plan, and the continued stability in our user engagement trends, the
opportunities ahead with Verizon look bright," said Marissa Mayer, CEO
of Yahoo. "In addition to integration planning, our top priority
continues to be enhancing security for our users. With security
protocols and password changes in place, approximately 90% of our daily
active users have already taken or do not need to take remedial action
to protect their accounts, and we're aggressively continuing to drive
this number up. Our commitment to our users is unwavering, and we
continue to be encouraged by their loyalty to us and their ongoing
patronage of our products."
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Q4 2015
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Q4 2016
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Full Year 2015
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Full Year 2016
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GAAP revenue
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$1,273 million
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$1,469 million
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$4,968 million
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$5,169 million
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Cost of revenue - TAC
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$271 million
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$509 million
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$878 million
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$1,651 million
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Goodwill impairment charge
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$4,461 million
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-
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$4,461 million
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$395 million
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(Loss) income from operations
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$(4,530) million
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$64 million
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$(4,748) million
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$(645) million
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Non-GAAP income from operations
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$63 million
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$205 million
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$342 million
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$365 million
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Net earnings
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$(4,435) million
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$162 million
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$(4,359) million
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$(214) million
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Adjusted EBITDA
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$215 million
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$324 million
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$952 million
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$873 million
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GAAP net earnings per diluted share
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$(4.70)
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$0.17
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$(4.64)
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$(0.23)
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Non-GAAP net earnings per diluted share
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$0.13
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$0.25
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$0.59
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$0.62
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As previously announced, beginning in the second quarter of 2016, GAAP
revenue and cost of revenue - TAC are impacted by a required change in
revenue presentation related to the Eleventh Amendment to the Microsoft
Search Agreement ("Change in Revenue Presentation," as discussed below).
For the fourth quarter of 2016, the Change in Revenue Presentation
contributed $302 million to each of GAAP revenue and cost of revenue -
TAC. Excluding the impact of this change, GAAP revenue would have been
$1,167 million, an 8 percent decline from the fourth quarter of 2015,
and cost of revenue - TAC would have been $207 million, a 24 percent
decline from the fourth quarter of 2015. For the full year of 2016, the
Change in Revenue Presentation contributed $812 million to each of GAAP
revenue and cost of revenue - TAC. Excluding the impact of this change,
GAAP revenue would have been $4,357 million, a 12 percent decline from
2015, and cost of revenue - TAC would have been $839 million, a 4
percent decline from 2015.
Business Updates
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Continued to launch features and improvements across Yahoo Mail mobile
apps, achieving an industry-leading 4+ star average rating on both iOS
and Android throughout the past year.
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Added a number of new features to the Yahoo App, including top
contributor highlights, an "explore" feature that groups topics into
categories, and curated lists from our editorial team to showcase the
best of Yahoo.
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Launched Yahoo Sports "Game of the Day" for the 2016-17 season of NHL,
connecting fans with free live games and in-game highlights; partnered
with Twitter to host the live stream of Thursday night NFL games.
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Launched curated watchlists created by industry experts on Yahoo
Finance to help users discover trending topics and new investment
opportunities.
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Launched Yahoo View on Android, expanding free access to Hulu TV show
clips and movie trailers.
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Launched Yahoo Answers Now, a new community-focused app which helps
users pose questions and receive answers quickly from members who have
relevant experiences and expertise.
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Launched new advertiser features for Yahoo Gemini including native bid
alerts and a new native ad format on Yahoo Mail.
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The BrightRoll DSP saw 485% YoY growth in the Platform display
business, through the launches of native on 3rd party supply as well
as forecasting and reporting improvements.
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The Yahoo Mobile Developer Suite reached a footprint of over 940,000
applications, over 2 billion devices.
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Over 10M users have now adopted Yahoo Account Key to make signing into
Yahoo products easier than ever before.
Transaction Update
Yahoo has continued to work with Verizon on integration planning for the
sale of its core business. In terms of timing, Yahoo had previously
stated that it expected to close the transaction in Q1. However, given
work required to meet closing conditions, the transaction is now
expected to close in Q2 of 2017. The company is working expeditiously to
close the transaction as soon as practicable in Q2.
Fourth Quarter and Full Year 2016 Financial Highlights
Mavens Revenue*:
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Q4 2015
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Q4 2016
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Full Year 2015
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Full Year 2016
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Mavens revenue
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$
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472 million
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$
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590 million
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$
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1,660 million
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$
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2,010 million
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Non-Mavens revenue
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750 million
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824 million
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2,908 million
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2,941 million
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Total traffic-driven revenue
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$
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1,222 million
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$
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1,414 million
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$
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4,568 million
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$
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4,951 million
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Non-traffic-driven revenue
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51 million
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55 million
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400 million
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218 million
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GAAP revenue
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$
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1,273 million
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$
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1,469 million
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$
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4,968 million
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$
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5,169 million
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* The Change in Revenue Presentation contributed $140 million and $386
million to Mavens revenue, $162 million and $426 million to Non-Mavens
revenue, and $302 million and $812 million to traffic-driven revenue in
the fourth quarter and full year of 2016, respectively.
Mavens revenue represented 39 percent and 36 percent of traffic-driven
revenue in the fourth quarter and full year of 2015, respectively, and
increased to 42 percent and 41 percent in the fourth quarter and full
year of 2016, respectively. Excluding the impact of the Change in
Revenue Presentation, Mavens revenue would have been $450 million and
$1,624 million, and represented 40 percent and 39 percent of
traffic-driven revenue, in the fourth quarter and full year of 2016,
respectively.
Mobile Revenue*:
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Q4 2015
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Q4 2016
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Full Year 2015
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Full Year 2016
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Mobile revenue
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$
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291 million
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$
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459 million
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$
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1,048 million
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$
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1,494 million
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Desktop revenue
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931 million
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955 million
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3,520 million
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3,457 million
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Total traffic-driven revenue
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$
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1,222 million
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$
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1,414 million
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$
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4,568 million
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$
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4,951 million
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Non-traffic-driven revenue
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51 million
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55 million
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400 million
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218 million
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GAAP revenue
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$
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1,273 million
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$
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1,469 million
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$
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4,968 million
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$
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5,169 million
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* The Change in Revenue Presentation contributed $140 million and $386
million to mobile revenue, $162 million and $426 million to desktop
revenue, and $302 million and $812 million to traffic-driven revenue in
the fourth quarter and full year of 2016, respectively.
GAAP mobile revenue for the fourth quarter of 2015 and 2016 was $291
million and $459 million, respectively. GAAP mobile revenue for the full
year of 2015 and 2016 was $1,048 million and $1,494 million,
respectively.
Mobile revenue represented 24 percent and 23 percent of traffic-driven
revenue in the fourth quarter and full year of 2015, respectively, and
increased to 32 percent and 30 percent in the fourth quarter and full
year of 2016. Excluding the impact of the Change in Revenue
Presentation, mobile revenue would have been $318 million and $1,107
million, and represented 29 percent and 27 percent of traffic-driven
revenue, in the fourth quarter and full year of 2016, respectively.
Gross mobile revenue for the fourth quarter of 2015 and 2016 was $449
million and $495 million, respectively. Gross mobile revenue for the
full year of 2015 and 2016 was $1,679 million and $1,754 million,
respectively. The Change in Revenue Presentation does not impact gross
mobile revenue.
Search Revenue:
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GAAP search revenue was $767 million for the fourth quarter of 2016
compared to $528 million for the fourth quarter of 2015. Excluding the
impact of the Change in Revenue Presentation, which contributed $302
million to search revenue in the fourth quarter of 2016, search
revenue decreased by 12 percent compared to the fourth quarter of
2015. GAAP search revenue was $2,673 million for the full year of 2016
compared to $2,114 million for the full year of 2015. Excluding the
impact of the Change in Revenue Presentation, which contributed $812
million to search revenue for the full year of 2016, search revenue
decreased by 12 percent compared to the full year of 2015.
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Gross search revenue was $821 million for the fourth quarter of 2016,
a decrease of 6 percent compared to the fourth quarter of 2015. Gross
search revenue was $3,159 million for the full year of 2016, a
decrease of 13 percent compared to the prior year. The Change in
Revenue Presentation does not impact gross search revenue.
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Cost of revenue - TAC associated with search revenue was $433 million
for the fourth quarter of 2016. Excluding the impact of the Change in
Revenue Presentation, which contributed $302 million to cost of
revenue - TAC in the fourth quarter of 2016, cost of revenue - TAC
associated with search revenue decreased by 7 percent compared to the
fourth quarter of 2015. Cost of revenue - TAC associated with search
revenue was $1,353 million for the full year of 2016. Excluding the
impact of the Change in Revenue Presentation, which contributed $812
million to cost of revenue - TAC in the full year of 2016, cost of
revenue - TAC associated with search revenue increased by 16 percent
compared to the full year of 2015.
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The number of Paid Clicks decreased 21 percent compared to the fourth
quarter of 2015.
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Price-per-Click increased 18 percent compared to the fourth quarter of
2015.
Display Revenue:
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GAAP display revenue was $573 million for the fourth quarter of 2016,
a 5 percent decrease compared to the fourth quarter of 2015. GAAP
display revenue was $1,982 million for the full year of 2016, a 5
percent decrease compared to the prior year.
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Cost of revenue - TAC associated with display revenue was $76 million
for the fourth quarter of 2016, a 41 percent decrease compared to the
fourth quarter of 2015. Cost of revenue - TAC associated with display
revenue was $296 million for the full year of 2016, a 28 percent
decrease compared to the full year of 2015.
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The number of Ads Sold increased 4 percent compared to the fourth
quarter of 2015.
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Price-per-Ad decreased 10 percent compared to the fourth quarter of
2015.
Cash, Cash Equivalents, and Marketable Securities:
Cash, cash equivalents, and marketable securities were $7,910 million as
of December 31, 2016 compared to $6,833 million as of December 31, 2015,
an increase of $1,077 million. The increase is primarily attributable to
$1,249 million of cash from operating activities, which includes $157
million in cash dividends received from an equity investee during the
second quarter of 2016 and a cash tax refund of $190 million received
during the first quarter of 2016. The Company also received net cash
proceeds of $246 million from the sale of land in Santa Clara during the
second quarter of 2016 and incurred capital expenditures of $235 million
in 2016.
"I am very pleased with how we executed against our 2016 plan, achieving
GAAP revenue of nearly $5.2 billion, and revenue ex-TAC within our
original guidance range at $3.5 billion. We achieved adjusted EBITDA of
$873 million (and recorded a GAAP net loss of $214 million for the
year), which is well above the high end of our original guidance range
for adjusted EBITDA," said Ken Goldman, CFO of Yahoo. "We're especially
proud of attaining GAAP operating cash flow of $1.25 billion. Through
excellent cost and capital expenditure management, we increased our
year-end cash and marketable securities in 2016 by $1.1 billion to $7.9
billion. Our ability to manage our short term cash expenses contributed
to delivering a very strong second half of 2016, with GAAP net earnings
of $325 million and adjusted EBITDA of $553 million, above the high end
of our guidance range for those quarters."
Change in Revenue Presentation
As previously announced, pursuant to the Eleventh Amendment to the
Microsoft Search Agreement, the Company completed the transition of its
exclusive sales responsibilities to Microsoft for Microsoft's paid
search services to premium advertisers in the United States, Canada, and
Europe on April 1, 2016 and in its remaining markets (other than Taiwan
and Hong Kong) on June 1, 2016. Following the transition in each
respective market, Yahoo is considered the principal in the sale of
traffic to Microsoft and other customers because Yahoo is the primary
obligor in its arrangements with Microsoft and has discretion in how
search queries from Affiliate sites will be fulfilled and monetized. As
a result, beginning in the second quarter of 2016, amounts paid to
Affiliates under the Microsoft Search Agreement in the transitioned
markets are recorded as cost of revenue - TAC rather than as a reduction
to GAAP revenue, resulting in GAAP revenue from the Microsoft Search
Agreement being reported on a gross rather than net basis. Taiwan and
Hong Kong are not being transitioned, and TAC in those markets continues
to be reported as a reduction to revenue.
Supplemental Financial and Other Information
Supplemental financial and other information, including user engagement
trends before and after the December 14, 2016 notification of our
security incident, can be accessed through the Company's Investor
Relations website at investor.yahoo.net.
Non-GAAP Financial Measures
This press release includes adjusted GAAP revenue and cost of revenue -
TAC amounts that exclude the effect of the Change in Revenue
Presentation related to the Eleventh Amendment that took place in the
second quarter of 2016. We believe providing this additional information
to investors is useful because it provides investors with comparable
revenue and cost of revenue - TAC measures for comparison to our
historical reported financial information.
This press release and its attachments also include the
following additional financial measures defined as non-GAAP financial
measures by the Securities and Exchange Commission ("SEC"): gross mobile
revenue; gross search revenue; revenue ex-TAC; adjusted EBITDA; non-GAAP
income from operations; non-GAAP net earnings; non-GAAP net earnings per
share - diluted; and free cash flow.
Gross mobile revenue is GAAP mobile revenue plus the related revenue
share with third parties. Gross search revenue is GAAP search revenue
plus the related revenue share with third parties. Revenue ex-TAC is
GAAP revenue less cost of revenue - TAC. Adjusted EBITDA, non-GAAP
income from operations, non-GAAP net earnings, and non-GAAP net earnings
per share - diluted, exclude from the most comparable GAAP financial
measures certain gains, losses, and expenses that we do not believe are
indicative of ongoing results, and exclude stock-based compensation
expense. Adjusted EBITDA also excludes taxes, depreciation, amortization
of intangible assets, other (expense) income, net (which includes
interest, among other items), earnings in equity interests, and net
income attributable to noncontrolling interests. Free cash flow is GAAP
net cash provided by operating activities (adjusted to include excess
tax benefits from stock-based awards), less acquisition of property and
equipment, net (i.e., acquisition of property and equipment less
proceeds received from disposition of property and equipment) and
dividends received from equity investees.
These measures may be different than non-GAAP financial measures used by
other companies. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
generally accepted accounting principles ("GAAP"). Explanations of the
Company's non-GAAP financial measures and reconciliations of these
financial measures to the GAAP financial measures the Company considers
most comparable are included in the accompanying "Note to Supplemental
Financial Data and GAAP to Non-GAAP Reconciliations," "Supplemental
Financial Data and GAAP to Non-GAAP Reconciliations" and "GAAP to
Non-GAAP Reconciliations."
About Yahoo
Yahoo is a guide to digital information discovery, focused on informing,
connecting, and entertaining users through its search, communications,
and digital content products. By creating highly personalized
experiences, Yahoo helps users discover the information that matters
most to them around the world -- on mobile or desktop. Yahoo creates
value for advertisers with a streamlined, simple advertising technology
stack that leverages Yahoo's data, content, and technology to connect
advertisers with their target audiences. Yahoo is headquartered in
Sunnyvale, California, and has offices located throughout the Americas,
Asia Pacific (APAC), and the Europe, Middle East and Africa (EMEA)
regions. For more information, visit the pressroom (pressroom.yahoo.net)
or the Company's blog (yahoo.tumblr.com).
"Ads Sold" consist of display ad impressions for paying advertisers
on Yahoo Properties and Affiliate sites.
"Affiliates" are third-party entities that have integrated Yahoo's
advertising offerings into their websites or other offerings (those
websites and other offerings, "Affiliate sites").
"Alibaba Group" means Alibaba Group Holding Limited. In September
2014, Alibaba Group completed its initial public offering of American
Depositary Shares ("ADS"), in which Yahoo was a selling shareholder.
"Desktop computer" means a desktop or laptop computer, and "desktop
revenue" is revenue generated from search and display ads served on
Desktop computers and also includes leads, listings, and fees revenue
and ecommerce revenue allocated to user activity on Desktop computers.
"Gross mobile revenue," a non-GAAP measure, is GAAP mobile revenue
plus the related revenue share with third parties.
"Gross search revenue," a non-GAAP measure, is GAAP search revenue
plus the related revenue share with third parties.
"Mavens revenue" is revenue generated from, without duplication: (i)
mobile (as defined below), (ii) video ads and video ad packages, (iii)
native ads, and (iv) Tumblr and Polyvore ads and fees.
"Microsoft Search Agreement" refers to the Search and Advertising
Services and Sales Agreement between Yahoo and Microsoft Corporation, as
amended.
"Mobile revenue" is revenue generated in connection with user
activity on mobile devices, including smartphones and tablets,
regardless of whether the device is accessing a mobile-optimized
service. Mobile revenue is generated primarily from search and display
ads. Mobile revenue also includes leads, listings, and fees revenue and
ecommerce revenue allocated to user activity on mobile devices.
"Native revenue" is revenue generated from native ads (search
and display) on Yahoo Properties as well as third-party partner
publisher sites and mobile apps. Native ads are visually rich,
are positioned as a seamless part of the users' experience, and come in
a variety of formats, like text, image, and video. Yahoo offers native
ads through Yahoo Gemini and BrightRoll.
"Net earnings" means net income (loss) attributable to Yahoo! Inc.,
and "net earnings per diluted share" means net income (loss)
attributable to Yahoo! Inc. common stockholders per share - diluted.
"Non-Mavens revenue" is revenue generated from search ads and
traditional (i.e., non-native, non-video, non-Tumblr, non-Polyvore)
display ads served on Desktop computers and also includes leads,
listings, and fees revenue and ecommerce revenue allocated to user
activity on Desktop computers.
"Non-traffic-driven revenue" is revenue not arising from user
activity on Yahoo Properties or Affiliate sites, and includes royalty
revenue, license fee revenue, amortization under the technology and
intellectual property license agreement with Alibaba Group through the
third quarter of 2015, and all other revenue that is not traffic-driven.
"Paid Clicks" are clicks by end-users on sponsored search listings
(excluding native ads) on Yahoo Properties and Affiliate sites.
"Price-per-Ad" is defined as display revenue divided by our total
number of Ads Sold.
"Price-per-Click" is defined as Search click-driven revenue divided
by our total number of Paid Clicks.
"Search click-driven revenue" is gross search revenue excluding
search revenue from Yahoo Japan.
"TAC" refers to traffic acquisition costs. TAC consists of
payments to Affiliates and payments made to companies that direct
consumer and business traffic to Yahoo Properties.
"Yahoo," "Company," and "we" refer to Yahoo! Inc. and its
consolidated subsidiaries.
"Yahoo Properties" refers to the online properties and services that
Yahoo provides to users.
We periodically review, refine, and update our methodologies for
monitoring, gathering, and counting number of Ads Sold and Paid Clicks,
and for calculating Search click-driven revenue, Price-per-Ad, and
Price-per-Click. Methodology changes are applied consistently to all
periods presented. No changes were made in the currently reported
period.
Additional information about how "Ads Sold," "Paid Clicks,"
"Price-per-Ad," "Price-per-Click," and "Search click-driven revenue" are
defined and calculated is included under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2015, as amended, which is on file with the SEC and
available on the SEC's website at www.sec.gov.
This press release (including, without limitation, the quotations
from management) contains forward-looking statements concerning Yahoo's
expected financial performance and Yahoo's strategic and operational
plans and their projected impact, as well as, Yahoo's announced
transaction with Verizon Communications Inc. ("Verizon") and security
incidents. Risks and uncertainties may cause actual results to differ
materially from the results predicted, and reported results should not
be considered as an indication of future performance. With
respect to the proposed sale of Yahoo's operating business to Verizon
(the "Sale Transaction"), risks and uncertainties include, among others,
(i) the inability to consummate the transaction in a timely manner or at
all, due to the inability to obtain or delays in obtaining approval of
Yahoo's stockholders, the necessary regulatory approvals, or
satisfaction of other conditions to the closing of the Sale Transaction;
(ii) the existence or occurrence of any event, change or other
circumstance that could give rise to the termination of the Stock
Purchase Agreement, which, in addition to other adverse consequences,
could result in the Company incurring substantial fees, including, in
certain circumstances, the payment of a termination fee to Verizon under
the Stock Purchase Agreement; (iii) risks that Verizon may assert, or
threaten to assert, rights or claims with respect to the Stock Purchase
Agreement as a result of facts relating to the security incidents
disclosed on September 22, 2016 and December 14, 2016 and may seek to
terminate the Stock Purchase Agreement or renegotiate the terms of the
Sale Transaction on that basis; (iv) potential adverse effects on
Yahoo's relationships with its existing and potential advertisers,
suppliers, customers, vendors, distributors, landlords, licensors,
licensees, joint venture partners and other business partners; (v) the
implementation of the Sale Transaction will require significant time,
attention and resources of Yahoo's senior management and others within
Yahoo, potentially diverting their attention from the conduct of Yahoo's
business; (vi) costs, fees, expenses and charges related to or triggered
by the Sale Transaction; (vii) the net proceeds that the Company will
receive from Verizon is subject to uncertainties as a result of the
purchase price adjustments in the Stock Purchase Agreement; (viii)
restrictions on the conduct of Yahoo's business, including the ability
to make certain acquisitions and divestitures, enter into certain
contracts, and incur certain indebtedness and expenditures until the
earlier of the completion of the Sale Transaction or the termination of
the Stock Purchase Agreement; (ix) potential adverse effects on Yahoo's
business, properties or operations caused by Yahoo implementing the Sale
Transaction or foregoing opportunities that Yahoo might otherwise
pursue absent the pending Sale Transaction; (x) the initiation or
outcome of any legal proceedings or regulatory proceedings that may be
instituted against Yahoo and its directors and/or officers relating to
the Sale Transaction; and (xi) following the closing of the Sale
Transaction, Yahoo will be required to register and be regulated as an
investment company under the Investment Company Act of 1940, which will
result in, among other things, Yahoo having to comply with the
regulations thereunder, certain stockholders potentially being
prohibited from holding or acquiring shares of the Company, and the
Company likely being removed from the Standard and Poor's 500 Index and
other indices which could have an adverse impact on the Company's share
price following the Sale Transaction. With respect to security incidents
such as the security incidents announced by Yahoo on September 22, 2016
and December 14, 2016, risks include the unauthorized access to or theft
of user data, regulatory actions, litigation, investigations,
remediation costs, costs of increased security measures, damage to our
reputation and brand, loss of user and partner confidence in the
security of our products and services, and resulting fees, costs and
expenses. Additional potential risks and uncertainties include,
among others, risks related to Yahoo's ability to continue to attract
and maintain mobile users and grow its mobile revenue; risks related to
Yahoo's ability to continue to grow Mavens revenue; risks related to
Yahoo's ability to grow users, user engagement and pageviews; risks
related to growing advertiser engagement; risk of potential reduction in
spending by, or loss of, advertising customers; risks associated with
the Microsoft Search Agreement and the Services Agreement with Google
Inc.; risks related to Yahoo's ability to provide innovative search
experiences and other products and services that differentiate its
services and generate significant traffic; risks associated with Yahoo's
ability to manage its operating expenses effectively and improve
profitability; risks related to acceptance by users of new products and
services; risks related to Yahoo's ability to compete with new or
existing competitors; dependence on third parties for technology,
services, content, and distribution; risks related to acquiring or
developing compelling content; interruptions or delays in the provision
of Yahoo's services; adverse results in litigation; risks related to
Yahoo's ability to recruit and retain key personnel; risks related to
possible impairment of goodwill or other assets; risks related to
Yahoo's ability to protect its intellectual property and the value of
its brands; risks related to fluctuations in foreign currency exchange
rates; risks related to joint ventures and the integration of
acquisitions; risks related to Yahoo's regulatory environment; risks
related to Yahoo's international operations; risks related to the
calculation of our key operational metrics; and general economic
conditions. All information set forth in this press release and its
attachments is as of January 23, 2017. Yahoo does not intend, and
undertakes no duty, to update this information to reflect subsequent
events or circumstances. More information about potential factors that
could affect the Company's business and financial results is included
under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K, for the year ended December 31,
2015, as amended, and Quarterly Report on Form 10-Q for the quarter
ended September 30, 2016, which are on file with the SEC and available
on the SEC's website at www.sec.gov.
Additional information will also be set forth in those sections in
Yahoo's Annual Report on Form 10-K for the year ended December 31, 2016,
which will be filed with the SEC in the first quarter of 2017.
Important Additional Information and Where to Find It.
On September 9, 2016, Yahoo filed with the SEC a preliminary proxy
statement regarding the proposed sale of Yahoo's operating business to
Verizon. Yahoo will file with the SEC a definitive version of the proxy
statement, which will be sent or provided to Yahoo stockholders when
available. The information contained in the preliminary proxy statement
is not complete and may be changed. BEFORE MAKING ANY VOTING
DECISION, YAHOO'S STOCKHOLDERS ARE STRONGLY ADVISED TO READ YAHOO'S
PRELIMINARY PROXY STATEMENT IN ITS ENTIRETY (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND, WHEN IT BECOMES AVAILABLE, YAHOO'S DEFINITIVE
PROXY STATEMENT IN ITS ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH
THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors
and stockholders may obtain a free copy of Yahoo's preliminary proxy
statement and any amendments or supplements to the preliminary proxy
statement, Yahoo's definitive proxy statement (when available) and any
amendments or supplements to the definitive proxy statement (when
available), and other documents filed by Yahoo with the SEC (when
available) in connection with the proposed transaction for no charge at
the SEC's website at www.sec.gov, on the
Investor Relations page of Yahoo's website investor.yahoo.net or by
writing to Investor Relations, Yahoo! Inc., 701 First Avenue, Sunnyvale,
CA 94089.
Yahoo and its directors and executive officers, as well as Verizon and
its directors and executive officers, may be deemed participants in the
solicitation of proxies from Yahoo's investors and stockholders in
connection with the proposed transaction. Information concerning the
ownership of Yahoo securities by Yahoo's directors and executive
officers is included in their SEC filings on Forms 3, 4 and 5, and
additional information is also available in Yahoo's annual report on
Form 10-K for the year ended December 31, 2015, as amended, and Yahoo's
proxy statement for its 2016 annual meeting of stockholders filed with
the SEC on May 23, 2016. Information about Verizon's directors and
executive officers is set forth in Verizon's annual report on Form 10-K
for the year ended December 31, 2015 and Verizon's proxy statement for
its 2016 annual meeting of stockholders filed with the SEC on March 21,
2016. Information regarding Yahoo's directors, executive officers, and
other persons who may, under the rules of the SEC, be considered
participants in the solicitation of proxies in connection with the
proposed transaction, including their respective interests by security
holdings or otherwise, also is set forth in the preliminary proxy
statement described above and will be set forth in the definitive proxy
statement relating to the proposed transaction when it is filed with the
SEC. These documents may be obtained free of charge from the sources
indicated above.
Yahoo!, the Yahoo family of marks, BrightRoll, Flurry, Polyvore, and the
associated logos are trademarks and/or registered trademarks of Yahoo!
Inc. Tumblr is a registered trademark of Tumblr, Inc. Other names are
trademarks and/or registered trademarks of their respective owners.
|
Yahoo! Inc.
|
Unaudited Condensed Consolidated Balance Sheets
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,631,911
|
|
$
|
1,119,469
|
Short-term marketable securities
|
|
|
4,225,112
|
|
|
5,700,925
|
Accounts receivable, net
|
|
|
1,047,504
|
|
|
1,084,267
|
Prepaid expenses and other current assets
|
|
|
602,792
|
|
|
221,499
|
Total current assets
|
|
|
7,507,319
|
|
|
8,126,160
|
|
|
|
|
|
|
|
Long-term marketable securities
|
|
|
975,961
|
|
|
1,089,707
|
Property and equipment, net
|
|
|
1,547,323
|
|
|
1,209,937
|
Goodwill
|
|
|
808,114
|
|
|
415,809
|
Intangible assets, net
|
|
|
347,269
|
|
|
161,644
|
Other long-term assets and investments
|
|
|
342,390
|
|
|
206,059
|
Investments in Alibaba Group
|
|
|
31,172,361
|
|
|
33,680,879
|
Investments in equity interests
|
|
|
2,503,229
|
|
|
3,192,884
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
45,203,966
|
|
$
|
48,083,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
208,691
|
|
$
|
171,520
|
Other accrued expenses and current liabilities
|
|
|
934,658
|
|
|
1,006,676
|
Deferred revenue
|
|
|
134,031
|
|
|
109,228
|
Total current liabilities
|
|
|
1,277,380
|
|
|
1,287,424
|
|
|
|
|
|
|
|
Convertible notes
|
|
|
1,233,485
|
|
|
1,299,945
|
Long-term deferred revenue
|
|
|
27,801
|
|
|
39,583
|
Other long-term liabilities
|
|
|
118,689
|
|
|
95,597
|
Deferred tax liabilities related to investment in Alibaba Group
|
|
|
12,611,867
|
|
|
13,633,988
|
Deferred and other long-term tax liabilities
|
|
|
855,324
|
|
|
642,466
|
Total liabilities
|
|
|
16,124,546
|
|
|
16,999,003
|
|
|
|
|
|
|
|
Total Yahoo! Inc. stockholders' equity
|
|
|
29,043,537
|
|
|
31,049,283
|
Noncontrolling interests
|
|
|
35,883
|
|
|
34,793
|
Total equity
|
|
|
29,079,420
|
|
|
31,084,076
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
45,203,966
|
|
$
|
48,083,079
|
|
|
|
|
|
|
|
Yahoo! Inc.
|
Unaudited Condensed Consolidated Statements of Operations
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (1)
|
|
$
|
1,273,393
|
|
|
$
|
1,469,140
|
|
|
$
|
4,968,301
|
|
|
$
|
5,169,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue - traffic acquisition costs (1)
|
|
|
270,916
|
|
|
|
509,000
|
|
|
|
877,514
|
|
|
|
1,650,786
|
|
Cost of revenue - other
|
|
|
316,193
|
|
|
|
261,617
|
|
|
|
1,200,234
|
|
|
|
1,068,108
|
|
Sales and marketing
|
|
|
256,728
|
|
|
|
206,810
|
|
|
|
1,080,718
|
|
|
|
881,521
|
|
Product development
|
|
|
272,463
|
|
|
|
253,754
|
|
|
|
1,177,923
|
|
|
|
1,055,462
|
|
General and administrative
|
|
|
181,733
|
|
|
|
160,189
|
|
|
|
687,804
|
|
|
|
650,708
|
|
Amortization of intangibles
|
|
|
19,365
|
|
|
|
11,566
|
|
|
|
79,042
|
|
|
|
58,302
|
|
Asset impairment charge
|
|
|
2,682
|
|
|
|
-
|
|
|
|
44,381
|
|
|
|
-
|
|
Goodwill impairment charge
|
|
|
4,460,837
|
|
|
|
-
|
|
|
|
4,460,837
|
|
|
|
394,901
|
|
Intangible assets impairment charge
|
|
|
15,423
|
|
|
|
-
|
|
|
|
15,423
|
|
|
|
87,335
|
|
Gain on sale of patents and land
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,100
|
)
|
|
|
(121,559
|
)
|
Restructuring charges, net
|
|
|
7,087
|
|
|
|
2,053
|
|
|
|
104,019
|
|
|
|
88,629
|
|
Total operating expenses
|
|
|
5,803,427
|
|
|
|
1,404,989
|
|
|
|
9,716,795
|
|
|
|
5,814,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations
|
|
|
(4,530,034
|
)
|
|
|
64,151
|
|
|
|
(4,748,494
|
)
|
|
|
(645,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net
|
|
|
(9,023
|
)
|
|
|
(15,440
|
)
|
|
|
(75,782
|
)
|
|
|
(53,916
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes and earnings in equity interests
|
|
|
(4,539,057
|
)
|
|
|
48,711
|
|
|
|
(4,824,276
|
)
|
|
|
(698,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit for income taxes
|
|
|
13,985
|
|
|
|
1,492
|
|
|
|
89,598
|
|
|
|
126,228
|
|
Earnings in equity interests, net of tax
|
|
|
92,845
|
|
|
|
113,704
|
|
|
|
383,571
|
|
|
|
363,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(4,432,227
|
)
|
|
|
163,907
|
|
|
|
(4,351,107
|
)
|
|
|
(209,463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(2,760
|
)
|
|
|
(1,909
|
)
|
|
|
(7,975
|
)
|
|
|
(4,858
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Yahoo! Inc.
|
|
$
|
(4,434,987
|
)
|
|
$
|
161,998
|
|
|
$
|
(4,359,082
|
)
|
|
$
|
(214,321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Yahoo! Inc. common stockholders
per share - diluted
|
|
$
|
(4.70
|
)
|
|
$
|
0.17
|
|
|
$
|
(4.64
|
)
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation - diluted
|
|
|
943,425
|
|
|
|
958,624
|
|
|
|
939,141
|
|
|
|
949,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense by function:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue - other
|
|
$
|
9,053
|
|
|
$
|
8,866
|
|
|
$
|
32,010
|
|
|
$
|
34,742
|
|
Sales and marketing
|
|
|
30,002
|
|
|
|
34,042
|
|
|
|
141,418
|
|
|
|
142,301
|
|
Product development
|
|
|
45,010
|
|
|
|
52,269
|
|
|
|
190,454
|
|
|
|
213,451
|
|
General and administrative
|
|
|
21,836
|
|
|
|
27,462
|
|
|
|
93,271
|
|
|
|
101,408
|
|
Restructuring charges, net
|
|
|
-
|
|
|
|
-
|
|
|
|
2,705
|
|
|
|
7,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue ex-TAC
|
|
$
|
1,002,477
|
|
|
$
|
960,140
|
|
|
$
|
4,090,787
|
|
|
$
|
3,518,349
|
|
Adjusted EBITDA
|
|
$
|
214,687
|
|
|
$
|
324,078
|
|
|
$
|
951,740
|
|
|
$
|
872,672
|
|
Free cash flow(2)(3)
|
|
$
|
31,502
|
|
|
$
|
230,620
|
|
|
$
|
(3,010,172
|
)
|
|
$
|
1,120,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Commencing in the second quarter of 2016, TAC payments related to
the Microsoft Search Agreement, which previously would have been
recorded as a reduction to revenue, began to be recorded as a cost
of revenue due to a required change in revenue presentation. See
"Change in Revenue Presentation" in the accompanying press release.
|
(2)
|
|
During the year ended December 31, 2015, the Company satisfied
the $3.3 billion income tax liability related to the sale of Alibaba
Group ADSs in September 2014.
|
(3)
|
|
During the year ended December 31, 2016, the Company received net
cash proceeds from a sale of land of $246 million and received a
cash tax refund of $190 million associated with the Company's claim
to carry back its 2015 losses and tax attributes to earlier taxable
years.
|
|
|
|
Yahoo! Inc.
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(4,432,227
|
)
|
|
$
|
163,907
|
|
|
$
|
(4,351,107
|
)
|
|
$
|
(209,463
|
)
|
Adjustments to reconcile net (loss) income to net cash provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
117,354
|
|
|
|
99,017
|
|
|
|
472,894
|
|
|
|
407,341
|
|
Amortization of intangible assets
|
|
|
34,629
|
|
|
|
20,178
|
|
|
|
136,719
|
|
|
|
100,214
|
|
Accretion of convertible notes discount
|
|
|
16,077
|
|
|
|
16,944
|
|
|
|
63,061
|
|
|
|
66,461
|
|
Stock-based compensation expense
|
|
|
105,901
|
|
|
|
122,639
|
|
|
|
459,858
|
|
|
|
499,276
|
|
Non-cash asset impairment charge
|
|
|
2,682
|
|
|
|
-
|
|
|
|
44,381
|
|
|
|
-
|
|
Non-cash goodwill impairment charge
|
|
|
4,460,837
|
|
|
|
-
|
|
|
|
4,460,837
|
|
|
|
394,901
|
|
Non-cash intangible assets impairment charge
|
|
|
15,423
|
|
|
|
-
|
|
|
|
15,423
|
|
|
|
87,335
|
|
Non-cash restructuring charges (reversals)
|
|
|
3,181
|
|
|
|
-
|
|
|
|
3,150
|
|
|
|
1,227
|
|
Non-cash accretion on marketable debt securities
|
|
|
8,890
|
|
|
|
2,220
|
|
|
|
47,218
|
|
|
|
25,280
|
|
Foreign exchange (gain) loss
|
|
|
(5,961
|
)
|
|
|
18,618
|
|
|
|
4,376
|
|
|
|
(27,428
|
)
|
Loss (gain) on sale of assets and other
|
|
|
180
|
|
|
|
(597
|
)
|
|
|
(2,878
|
)
|
|
|
(3,316
|
)
|
Gain on sale of patents and land
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,100
|
)
|
|
|
(121,559
|
)
|
(Gain) loss on Hortonworks warrants
|
|
|
(42
|
)
|
|
|
116
|
|
|
|
19,199
|
|
|
|
50,046
|
|
Earnings in equity interests
|
|
|
(92,845
|
)
|
|
|
(113,704
|
)
|
|
|
(383,571
|
)
|
|
|
(363,283
|
)
|
Tax benefits (detriments) from stock-based awards
|
|
|
18,739
|
|
|
|
14,854
|
|
|
|
41,729
|
|
|
|
6,256
|
|
Excess tax benefits from stock-based awards
|
|
|
(24,923
|
)
|
|
|
(16,264
|
)
|
|
|
(58,282
|
)
|
|
|
(18,007
|
)
|
Deferred income taxes
|
|
|
10,264
|
|
|
|
(48,753
|
)
|
|
|
(42,341
|
)
|
|
|
(224,737
|
)
|
Dividends received from equity investee
|
|
|
-
|
|
|
|
-
|
|
|
|
142,045
|
|
|
|
156,968
|
|
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(73,368
|
)
|
|
|
(149,290
|
)
|
|
|
(39,065
|
)
|
|
|
(43,029
|
)
|
Prepaid expenses and other
|
|
|
85,954
|
|
|
|
30,248
|
|
|
|
21,842
|
|
|
|
376,351
|
|
Accounts payable
|
|
|
(30,323
|
)
|
|
|
5,533
|
|
|
|
(59,965
|
)
|
|
|
(4,550
|
)
|
Accrued expenses and other liabilities
|
|
|
(84,793
|
)
|
|
|
92,703
|
|
|
|
109,776
|
|
|
|
105,677
|
|
Income taxes payable related to sale of Alibaba Group ADSs
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,282,293
|
)
|
|
|
-
|
|
Deferred revenue
|
|
|
(3,339
|
)
|
|
|
(3,110
|
)
|
|
|
(195,328
|
)
|
|
|
(13,098
|
)
|
Net cash provided by (used in) operating activities
|
|
|
132,290
|
|
|
|
255,259
|
|
|
|
(2,383,422
|
)
|
|
|
1,248,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
(125,818
|
)
|
|
|
(41,601
|
)
|
|
|
(554,163
|
)
|
|
|
(239,109
|
)
|
Proceeds from sales of property and equipment
|
|
|
107
|
|
|
|
698
|
|
|
|
11,176
|
|
|
|
249,787
|
|
Purchases of marketable securities
|
|
|
(1,733,658
|
)
|
|
|
(2,137,201
|
)
|
|
|
(5,206,245
|
)
|
|
|
(7,817,485
|
)
|
Proceeds from sales of marketable securities
|
|
|
256,676
|
|
|
|
105,861
|
|
|
|
822,997
|
|
|
|
387,254
|
|
Proceeds from maturities of marketable securities
|
|
|
1,802,208
|
|
|
|
1,592,978
|
|
|
|
6,691,645
|
|
|
|
5,816,713
|
|
Acquisitions, net of cash acquired
|
|
|
(1,063
|
)
|
|
|
-
|
|
|
|
(175,693
|
)
|
|
|
-
|
|
Proceeds from sales of patents
|
|
|
-
|
|
|
|
-
|
|
|
|
29,100
|
|
|
|
1,500
|
|
Purchases of intangible assets
|
|
|
(78
|
)
|
|
|
(44
|
)
|
|
|
(4,811
|
)
|
|
|
(2,045
|
)
|
Proceeds from the settlement of derivative hedge contracts
|
|
|
26,497
|
|
|
|
-
|
|
|
|
147,179
|
|
|
|
39,007
|
|
Payments for settlement of derivative hedge contracts
|
|
|
(2,223
|
)
|
|
|
(2,705
|
)
|
|
|
(8,817
|
)
|
|
|
(9,717
|
)
|
Payments for equity investments in privately held companies
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9
|
)
|
Other investing activities, net
|
|
|
(53
|
)
|
|
|
(34
|
)
|
|
|
(256
|
)
|
|
|
(161
|
)
|
Net cash provided by (used in) investing activities
|
|
|
222,595
|
|
|
|
(482,048
|
)
|
|
|
1,752,112
|
|
|
|
(1,574,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
6,833
|
|
|
|
2,005
|
|
|
|
59,130
|
|
|
|
17,517
|
|
Repurchases of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(203,771
|
)
|
|
|
-
|
|
Excess tax benefits from stock-based awards
|
|
|
24,923
|
|
|
|
16,264
|
|
|
|
58,282
|
|
|
|
18,007
|
|
Tax withholdings related to net share settlements of restricted
stock awards and restricted stock units
|
|
|
(41,670
|
)
|
|
|
(51,611
|
)
|
|
|
(257,731
|
)
|
|
|
(209,053
|
)
|
Distributions to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,847
|
)
|
|
|
(5,948
|
)
|
Other financing activities, net
|
|
|
(3,767
|
)
|
|
|
(3,791
|
)
|
|
|
(17,321
|
)
|
|
|
(14,205
|
)
|
Net cash used in financing activities
|
|
|
(13,681
|
)
|
|
|
(37,133
|
)
|
|
|
(377,258
|
)
|
|
|
(193,682
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
9,547
|
|
|
|
(27,917
|
)
|
|
|
(23,619
|
)
|
|
|
6,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
350,751
|
|
|
|
(291,839
|
)
|
|
|
(1,032,187
|
)
|
|
|
(512,442
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
1,281,160
|
|
|
|
1,411,308
|
|
|
|
2,664,098
|
|
|
|
1,631,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,631,911
|
|
|
$
|
1,119,469
|
|
|
$
|
1,631,911
|
|
|
$
|
1,119,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yahoo! Inc. Note to Supplemental Financial Data and GAAP
to Non-GAAP Reconciliations
This press release includes adjusted revenue and cost of revenue - TAC
amounts that exclude the effect of the Change in Revenue Presentation
that occurred during the second quarter of 2016. We believe providing
this additional information to investors is useful because it provides
investors with comparable revenue and cost of revenue - TAC measures for
comparison to our historical reported financial information. See "Change
in Revenue Presentation" in the accompanying press release.
This press release and its attachments also include the non-GAAP
financial measures of revenue excluding traffic acquisition costs
("revenue ex-TAC"); gross mobile revenue; gross search revenue; adjusted
EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP
net earnings per diluted share; and free cash flow, which are reconciled
to revenue (in the case of revenue ex-TAC, gross mobile revenue, and
gross search revenue); net loss attributable to Yahoo! Inc. (in the case
of adjusted EBITDA and non-GAAP net earnings); loss from operations; net
loss attributable to Yahoo! Inc. common stockholders per share -
diluted; and net cash provided by (used in) operating activities, which
we believe are the most comparable GAAP measures. Yahoo! Inc. (together
with its consolidated subsidiaries, "Yahoo," the "Company," or "we")
uses these non-GAAP financial measures for internal managerial purposes
and to facilitate period-to-period comparisons. We describe limitations
specific to each non-GAAP financial measure below. Management generally
compensates for limitations in the use of non-GAAP financial measures by
relying on comparable GAAP financial measures and providing investors
with a reconciliation of the non-GAAP financial measure to the most
directly comparable GAAP financial measure or measures. Further,
management uses non-GAAP financial measures only in addition to and in
conjunction with results presented in accordance with GAAP. We believe
that these non-GAAP financial measures reflect additional ways of
viewing aspects of our operations that, when viewed with our GAAP
results, provide a more complete understanding of factors and trends
affecting our business. These non-GAAP measures should be considered as
a supplement to, and not as a substitute for, or superior to, revenue,
net loss attributable to Yahoo! Inc., loss from operations, net loss
attributable to Yahoo! Inc. common stockholders per share - diluted, and
net cash provided by (used in) operating activities calculated in
accordance with GAAP.
Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue
less TAC that has been recorded as a cost of revenue. TAC consists of
payments made to Affiliates, and payments made to companies that direct
consumer and business traffic to Yahoo Properties. TAC is recorded
either as a reduction of revenue or as cost of revenue. We present
revenue ex-TAC to provide investors a metric used by the Company for
evaluation and decision-making purposes and to provide investors with
comparable revenue numbers when comparing to our historical reported
financial information. A limitation of revenue ex-TAC is that it is a
measure we defined for internal and investor purposes that may be unique
to the Company, and therefore it may not enhance the comparability of
our results to those of other companies in our industry who have similar
business arrangements but address the impact of TAC differently.
Management compensates for these limitations by also relying on the
comparable GAAP financial measures of revenue and cost of revenue - TAC.
Each of gross mobile revenue and gross search revenue is a non-GAAP
financial measure. Gross mobile revenue is defined as GAAP mobile
revenue plus the related revenue share with third parties. Gross search
revenue is defined as GAAP search revenue plus the related revenue share
with third parties. We present these amounts to provide investors with
additional metrics used by the Company for evaluation and
decision-making purposes and as an indicator of the size of our presence
in the relevant business. To this end, gross mobile revenue and gross
search revenue report the total receipts generated on Yahoo Properties
and Affiliate sites by the specified relevant Yahoo business (i.e.,
mobile or search), before any TAC or other revenue share is paid to the
Affiliates and before any revenue share is allocated to Microsoft or
other parties. A limitation of these non-GAAP measures is that they
include revenue that is recognized by one or more third parties and not
by Yahoo; furthermore, they are measures we defined for internal and
investor purposes that may be unique to us, and therefore may not
enhance the comparability of our results to those of other companies in
our industry who have similar business arrangements but address the
impact of TAC and revenue sharing differently. Management compensates
for these limitations by also relying on the comparable financial
measure GAAP revenue.
Adjusted EBITDA is defined as net income (loss) attributable to Yahoo!
Inc. before taxes, depreciation, amortization of intangible assets,
stock-based compensation expense, other (expense) income, net (which
includes interest, among other items), earnings in equity interests, net
income attributable to noncontrolling interests and other gains, losses,
and expenses that we do not believe are indicative of our ongoing
results. We present adjusted EBITDA because the exclusion of certain
gains, losses, and expenses facilitates comparisons of the operating
performance of the Company on a period to period basis. Adjusted EBITDA
has limitations as an analytical tool and should not be considered in
isolation or as a substitute for results reported under GAAP. These
limitations include: adjusted EBITDA does not reflect tax payments and
such payments reflect a reduction in cash available to us; adjusted
EBITDA does not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in our
businesses; adjusted EBITDA does not include stock-based compensation
expense related to the Company's workforce; adjusted EBITDA also
excludes other (expense) income, net (which includes interest, among
other items), earnings in equity interests, net income attributable to
noncontrolling interests and other gains, losses, and expenses that we
do not believe are indicative of our ongoing results, and these items
may represent a reduction or increase in cash available to us; and
adjusted EBITDA is a measure that may be unique to the Company, and
therefore it may not enhance the comparability of our results to other
companies in our industry. Management compensates for these limitations
by also relying on the comparable GAAP financial measure of net income
(loss) attributable to Yahoo! Inc., which includes taxes, depreciation,
amortization, stock-based compensation expense, other (expense) income,
net (which includes interest, among other items), earnings in equity
interests, net income attributable to noncontrolling interests and the
other gains, losses and expenses that are excluded from adjusted EBITDA.
Non-GAAP income from operations is defined as income (loss) from
operations excluding certain gains, losses, and expenses that we do not
believe are indicative of our ongoing operating results and further
adjusted to exclude stock-based compensation expense. Because of the
variety of equity awards used by companies, the varying methodologies
for determining stock-based compensation expense, and the subjective
assumptions involved in those determinations, we believe excluding
stock-based compensation expense enhances the ability of management and
investors to understand the impact of stock-based compensation expense
on income (loss) from operations. We consider non-GAAP income from
operations to be a profitability measure which facilitates the
forecasting of our operating results for future periods and allows for
the comparison of our results to historical periods. A limitation of
non-GAAP income from operations is that it does not include all items
that impact our income from operations for the period. Management
compensates for this limitation by also relying on the comparable GAAP
financial measure of income (loss) from operations which includes the
gains, losses, and expenses that are excluded from non-GAAP income from
operations.
Non-GAAP net earnings is defined as net income (loss) attributable to
Yahoo! Inc. (which we sometimes refer to as net earnings) excluding
certain gains, losses, expenses, and their related tax effects that we
do not believe are indicative of our ongoing results and further
adjusted to exclude stock-based compensation expense and its related tax
effects. Because of the variety of equity awards used by companies, the
varying methodologies for determining stock-based compensation expense,
and the subjective assumptions involved in those determinations, we
believe excluding stock-based compensation expense enhances the ability
of management and investors to understand the impact of stock-based
compensation expense on net income and net income per share. We consider
non-GAAP net earnings and non-GAAP net earnings per diluted share to be
profitability measures which facilitate the forecasting of our results
for future periods and allow for the comparison of our results to
historical periods. A limitation of non-GAAP net earnings and non-GAAP
net earnings per diluted share is that they do not include all items
that impact our net income and net income per diluted share for the
period. Management compensates for this limitation by also relying on
the comparable GAAP financial measures of net income (loss) attributable
to Yahoo! Inc. and net income (loss) attributable to Yahoo! Inc. common
stockholders per share - diluted, both of which include the gains,
losses, expenses and related tax effects that are excluded from non-GAAP
net earnings and non-GAAP net earnings per diluted share.
Free cash flow is a non-GAAP financial measure defined as net cash
provided by (used in) operating activities (adjusted to include excess
tax benefits from stock-based awards), less acquisition of property and
equipment, net (i.e., acquisition of property and equipment less
proceeds received from disposition of property and equipment) and
dividends received from equity investees. We consider free cash flow to
be a liquidity measure which provides useful information to management
and investors about the amount of cash generated by business operations,
after deducting our net payments for acquisitions and dispositions of
property and equipment, which cash can then be used for strategic
opportunities or other business purposes including, among others,
investing in the Company's business, making strategic acquisitions,
strengthening the balance sheet, and repurchasing stock. A limitation of
free cash flow is that it does not represent the total increase or
decrease in the cash balance for the period. Management compensates for
this limitation by also relying on the net change in cash and cash
equivalents as presented in the Company's unaudited condensed
consolidated statements of cash flows prepared in accordance with GAAP
which incorporates all cash movements during the period.
|
Yahoo! Inc.
|
Supplemental Financial Data and GAAP to Non-GAAP Reconciliations
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
Revenue for groups of similar services:
|
|
|
|
|
|
|
|
|
|
|
|
|
Search (1)(4)
|
|
$
|
527,700
|
|
|
$
|
766,593
|
|
|
$
|
2,113,848
|
|
|
$
|
2,673,100
|
|
Display (4)
|
|
|
604,132
|
|
|
|
572,716
|
|
|
|
2,085,754
|
|
|
|
1,981,535
|
|
Other (4)
|
|
|
141,561
|
|
|
|
129,831
|
|
|
|
768,699
|
|
|
|
514,500
|
|
Total revenue
|
|
$
|
1,273,393
|
|
|
$
|
1,469,140
|
|
|
$
|
4,968,301
|
|
|
$
|
5,169,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue excluding traffic acquisition costs recorded as cost of
revenue ("revenue ex-TAC") for groups of similar services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP search revenue (1)
|
|
$
|
527,700
|
|
|
$
|
766,593
|
|
|
$
|
2,113,848
|
|
|
$
|
2,673,100
|
|
TAC associated with search revenue (1)
|
|
|
(140,596
|
)
|
|
|
(432,761
|
)
|
|
|
(465,485
|
)
|
|
|
(1,352,923
|
)
|
Search revenue ex-TAC
|
|
$
|
387,104
|
|
|
$
|
333,832
|
|
|
$
|
1,648,363
|
|
|
$
|
1,320,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP display revenue
|
|
$
|
604,132
|
|
|
$
|
572,716
|
|
|
$
|
2,085,754
|
|
|
$
|
1,981,535
|
|
TAC associated with display revenue
|
|
|
(129,756
|
)
|
|
|
(75,975
|
)
|
|
|
(409,590
|
)
|
|
|
(296,201
|
)
|
Display revenue ex-TAC
|
|
$
|
474,376
|
|
|
$
|
496,741
|
|
|
$
|
1,676,164
|
|
|
$
|
1,685,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other revenue
|
|
$
|
141,561
|
|
|
$
|
129,831
|
|
|
$
|
768,699
|
|
|
$
|
514,500
|
|
TAC associated with GAAP other revenue
|
|
|
(564
|
)
|
|
|
(264
|
)
|
|
|
(2,439
|
)
|
|
|
(1,662
|
)
|
Other revenue ex-TAC
|
|
$
|
140,997
|
|
|
$
|
129,567
|
|
|
$
|
766,260
|
|
|
$
|
512,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue ex-TAC:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue (1)
|
|
$
|
1,273,393
|
|
|
$
|
1,469,140
|
|
|
$
|
4,968,301
|
|
|
$
|
5,169,135
|
|
TAC (1)
|
|
|
(270,916
|
)
|
|
|
(509,000
|
)
|
|
|
(877,514
|
)
|
|
|
(1,650,786
|
)
|
Revenue ex-TAC
|
|
$
|
1,002,477
|
|
|
$
|
960,140
|
|
|
$
|
4,090,787
|
|
|
$
|
3,518,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue ex-TAC by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue (1)
|
|
$
|
1,012,465
|
|
|
$
|
1,197,813
|
|
|
$
|
3,976,770
|
|
|
|
4,172,836
|
|
TAC (1)
|
|
|
(239,393
|
)
|
|
|
(450,318
|
)
|
|
|
(788,725
|
)
|
|
|
(1,463,221
|
)
|
Revenue ex-TAC
|
|
$
|
773,072
|
|
|
$
|
747,495
|
|
|
$
|
3,188,045
|
|
|
$
|
2,709,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue (1)
|
|
$
|
97,116
|
|
|
$
|
119,057
|
|
|
$
|
343,646
|
|
|
$
|
397,768
|
|
TAC (1)
|
|
|
(19,885
|
)
|
|
|
(47,760
|
)
|
|
|
(57,284
|
)
|
|
|
(144,547
|
)
|
Revenue ex-TAC
|
|
$
|
77,231
|
|
|
$
|
71,297
|
|
|
$
|
286,362
|
|
|
$
|
253,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP revenue (1)
|
|
$
|
163,812
|
|
|
$
|
152,270
|
|
|
$
|
647,885
|
|
|
$
|
598,531
|
|
TAC (1)
|
|
|
(11,638
|
)
|
|
|
(10,922
|
)
|
|
|
(31,505
|
)
|
|
|
(43,018
|
)
|
Revenue ex-TAC
|
|
$
|
152,174
|
|
|
$
|
141,348
|
|
|
$
|
616,380
|
|
|
$
|
555,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue ex-TAC
|
|
$
|
1,002,477
|
|
|
$
|
960,140
|
|
|
$
|
4,090,787
|
|
|
$
|
3,518,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs by segment (5):
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
70,796
|
|
|
$
|
61,667
|
|
|
$
|
284,875
|
|
|
$
|
263,010
|
|
EMEA
|
|
|
31,842
|
|
|
|
4,507
|
|
|
|
95,789
|
|
|
|
51,597
|
|
Asia Pacific
|
|
|
46,290
|
|
|
|
47,796
|
|
|
|
196,056
|
|
|
|
185,195
|
|
Global operating costs (6)
|
|
|
639,670
|
|
|
|
538,132
|
|
|
|
2,582,235
|
|
|
|
2,214,842
|
|
Gain on sale of patents and land
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,100
|
)
|
|
|
(121,559
|
)
|
Asset impairment charge
|
|
|
2,682
|
|
|
|
-
|
|
|
|
44,381
|
|
|
|
-
|
|
Goodwill impairment charge
|
|
|
4,460,837
|
|
|
|
-
|
|
|
|
4,460,837
|
|
|
|
394,901
|
|
Intangible assets impairment charge
|
|
|
15,423
|
|
|
|
-
|
|
|
|
15,423
|
|
|
|
87,335
|
|
Restructuring charges, net
|
|
|
7,087
|
|
|
|
2,053
|
|
|
|
104,019
|
|
|
|
88,629
|
|
Depreciation and amortization
|
|
|
151,983
|
|
|
|
119,195
|
|
|
|
609,613
|
|
|
|
507,555
|
|
Stock-based compensation expense
|
|
|
105,901
|
|
|
|
122,639
|
|
|
|
457,153
|
|
|
|
491,902
|
|
(Loss) income from operations
|
|
$
|
(4,530,034
|
)
|
|
$
|
64,151
|
|
|
$
|
(4,748,494
|
)
|
|
$
|
(645,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Commencing in the second quarter of 2016, TAC payments related to
the Microsoft Search Agreement, which previously would have been
recorded as a reduction to revenue, began to be recorded as cost of
revenue - TAC due to a required change in revenue presentation. See
"Change in Revenue Presentation" in the accompanying press release.
|
(4)
|
|
In the first quarter of 2016, we reclassified certain amounts
from other revenue to either display or search revenue. Prior period
amounts have been revised to conform to the current presentation.
|
(5)
|
|
Direct costs for each segment include certain cost of revenue -
other and costs associated with the local sales teams. Prior to the
second quarter of 2016, certain account management costs associated
with Yahoo Properties were managed locally and included as direct
costs for each segment. Prior period amounts have been revised to
conform to the current presentation.
|
(6)
|
|
Global operating costs include product development, marketing,
real estate workplace, general and administrative, account
management costs and other corporate expenses that are managed on a
global basis and that are not directly attributable to any
particular segment. Beginning in the second quarter of 2016, certain
account management costs associated with Yahoo Properties are
managed globally and included as global costs. Prior period amounts
have been revised to conform to the current presentation.
|
|
|
|
Yahoo! Inc.
|
Supplemental Financial Data and GAAP to Non-GAAP Reconciliations
(continued)
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
Reconciliation of net (loss) income attributable to Yahoo! Inc.
to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Yahoo! Inc.
|
|
$
|
(4,434,987
|
)
|
|
$
|
161,998
|
|
|
$
|
(4,359,082
|
)
|
|
$
|
(214,321
|
)
|
Advisory fees
|
|
|
808
|
|
|
|
5,634
|
|
|
|
8,808
|
|
|
|
57,061
|
|
Security incidents costs
|
|
|
-
|
|
|
|
10,406
|
|
|
|
-
|
|
|
|
10,406
|
|
Gain on sale of land
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(120,059
|
)
|
Depreciation and amortization
|
|
|
151,983
|
|
|
|
119,195
|
|
|
|
609,613
|
|
|
|
507,555
|
|
Stock-based compensation expense
|
|
|
105,901
|
|
|
|
122,639
|
|
|
|
457,153
|
|
|
|
491,902
|
|
Asset impairment charge
|
|
|
2,682
|
|
|
|
-
|
|
|
|
44,381
|
|
|
|
-
|
|
Goodwill impairment charge
|
|
|
4,460,837
|
|
|
|
-
|
|
|
|
4,460,837
|
|
|
|
394,901
|
|
Intangible assets impairment charge
|
|
|
15,423
|
|
|
|
-
|
|
|
|
15,423
|
|
|
|
87,335
|
|
Restructuring charges, net
|
|
|
7,087
|
|
|
|
2,053
|
|
|
|
104,019
|
|
|
|
88,629
|
|
Other expense, net
|
|
|
9,023
|
|
|
|
15,440
|
|
|
|
75,782
|
|
|
|
53,916
|
|
Benefit for income taxes
|
|
|
(13,985
|
)
|
|
|
(1,492
|
)
|
|
|
(89,598
|
)
|
|
|
(126,228
|
)
|
Earnings in equity interests
|
|
|
(92,845
|
)
|
|
|
(113,704
|
)
|
|
|
(383,571
|
)
|
|
|
(363,283
|
)
|
Net income attributable to noncontrolling interests
|
|
|
2,760
|
|
|
|
1,909
|
|
|
|
7,975
|
|
|
|
4,858
|
|
Adjusted EBITDA
|
|
$
|
214,687
|
|
|
$
|
324,078
|
|
|
$
|
951,740
|
|
|
$
|
872,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net cash provided by (used in) operating
activities to free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
132,290
|
|
|
$
|
255,259
|
|
|
$
|
(2,383,422
|
)
|
|
$
|
1,248,863
|
|
Acquisition of property and equipment, net
|
|
|
(125,711
|
)
|
|
|
(40,903
|
)
|
|
|
(542,987
|
)
|
|
|
10,678
|
|
Dividends received from equity investee
|
|
|
-
|
|
|
|
-
|
|
|
|
(142,045
|
)
|
|
|
(156,968
|
)
|
Excess tax benefits from stock-based awards
|
|
|
24,923
|
|
|
|
16,264
|
|
|
|
58,282
|
|
|
|
18,007
|
|
Free cash flow(2)(3)
|
|
$
|
31,502
|
|
|
$
|
230,620
|
|
|
$
|
(3,010,172
|
)
|
|
$
|
1,120,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP mobile revenue to gross mobile revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP mobile revenue (1)
|
|
$
|
290,686
|
|
|
$
|
458,752
|
|
|
$
|
1,047,539
|
|
|
$
|
1,493,524
|
|
Revenue share with third parties (1)
|
|
|
158,338
|
|
|
|
36,080
|
|
|
|
631,743
|
|
|
|
260,712
|
|
Gross mobile revenue
|
|
$
|
449,024
|
|
|
$
|
494,832
|
|
|
$
|
1,679,282
|
|
|
$
|
1,754,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP search revenue to gross search revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP search revenue (1)
|
|
$
|
527,700
|
|
|
$
|
766,593
|
|
|
$
|
2,113,848
|
|
|
$
|
2,673,100
|
|
Revenue share with third parties (1)
|
|
|
344,345
|
|
|
|
54,475
|
|
|
|
1,527,623
|
|
|
|
486,163
|
|
Gross search revenue
|
|
$
|
872,045
|
|
|
$
|
821,068
|
|
|
$
|
3,641,471
|
|
|
$
|
3,159,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2016
|
Reconciliation of net (loss) income attributable to Yahoo! Inc.
to adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Yahoo! Inc.
|
|
|
|
|
|
|
|
|
|
|
(4,358,726
|
)
|
|
|
324,824
|
|
Advisory fees
|
|
|
|
|
|
|
|
|
|
|
808
|
|
|
|
32,784
|
|
Security incidents costs
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
10,406
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
304,395
|
|
|
|
234,663
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
216,327
|
|
|
|
251,531
|
|
Asset impairment charge
|
|
|
|
|
|
|
|
|
|
|
44,381
|
|
|
|
-
|
|
Goodwill impairment charge
|
|
|
|
|
|
|
|
|
|
|
4,460,837
|
|
|
|
-
|
|
Intangible assets impairment charge
|
|
|
|
|
|
|
|
|
|
|
15,423
|
|
|
|
-
|
|
Restructuring charges, net
|
|
|
|
|
|
|
|
|
|
|
33,099
|
|
|
|
12,015
|
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
32,978
|
|
|
|
21,562
|
|
Benefit for income taxes
|
|
|
|
|
|
|
|
|
|
|
(107,193
|
)
|
|
|
(107,005
|
)
|
Earnings in equity interests
|
|
|
|
|
|
|
|
|
|
|
(188,040
|
)
|
|
|
(229,932
|
)
|
Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
4,635
|
|
|
|
2,383
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
$
|
458,924
|
|
|
$
|
553,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Commencing in the second quarter of 2016, TAC payments related to
the Microsoft Search Agreement, which previously would have been
recorded as a reduction to revenue, began to be recorded as cost of
revenue - TAC due to a required change in revenue presentation. See
"Change in Revenue Presentation" in the accompanying press release.
|
(2)
|
|
During the year ended December 31, 2015, the Company satisfied
the $3.3 billion income tax liability related to the sale of Alibaba
Group ADSs in September 2014.
|
(3)
|
|
During the year ended December 31, 2016, the Company received net
cash proceeds from a sale of land of $246 million and received a
cash tax refund of $190 million associated with the Company's claim
to carry back its 2015 losses and tax attributes to earlier taxable
years.
|
|
|
|
Yahoo! Inc.
|
GAAP to Non-GAAP Reconciliations
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (loss) income from operations
|
|
|
$
|
(4,530,034
|
)
|
|
|
$
|
64,151
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Restructuring charges, net
|
|
|
|
7,087
|
|
|
|
|
2,053
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Stock-based compensation expense
|
|
|
|
105,901
|
|
|
|
|
122,639
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Advisory fees
|
|
|
|
808
|
|
|
|
|
5,634
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
Security incidents costs
|
|
|
|
-
|
|
|
|
|
10,406
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
Asset impairment charge
|
|
|
|
2,682
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
Goodwill impairment charge
|
|
|
|
4,460,837
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
|
Intangible impairment charge
|
|
|
|
15,423
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations
|
|
|
$
|
62,704
|
|
|
|
$
|
204,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income attributable to Yahoo! Inc.
|
|
|
$
|
(4,434,987
|
)
|
|
|
$
|
161,998
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Restructuring charges, net
|
|
|
|
7,087
|
|
|
|
|
2,053
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Stock-based compensation expense
|
|
|
|
105,901
|
|
|
|
|
122,639
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Advisory fees
|
|
|
|
808
|
|
|
|
|
5,634
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
Security incidents costs
|
|
|
|
-
|
|
|
|
|
10,406
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
(Gain) loss on Hortonworks warrants
|
|
|
|
(42
|
)
|
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
Asset impairment charge
|
|
|
|
2,682
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
|
Goodwill impairment charge
|
|
|
|
4,460,837
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
|
Intangible impairment charge
|
|
|
|
15,423
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
To adjust the provision for income taxes to reflect an effective
tax rate of 35% for both the three months ended December 31, 2015
and 2016
|
|
|
|
(32,759
|
)
|
|
|
|
(67,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net earnings
|
|
|
$
|
124,950
|
|
|
|
$
|
235,008
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss) income attributable to Yahoo! Inc. common
stockholders per share - diluted
|
|
|
$
|
(4.70
|
)
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net earnings per share - diluted
|
|
|
$
|
0.13
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP per share calculation - diluted
|
|
|
|
949,758
|
|
|
|
|
958,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
|
$
|
(4,748,494
|
)
|
|
|
$
|
(645,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Restructuring charges, net
|
|
|
|
104,019
|
|
|
|
|
88,629
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Stock-based compensation
|
|
|
|
457,153
|
|
|
|
|
491,902
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Advisory fees
|
|
|
|
8,808
|
|
|
|
|
57,061
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
Security incidents costs
|
|
|
|
-
|
|
|
|
|
10,406
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
Gain on sale of land
|
|
|
|
-
|
|
|
|
|
(120,059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
Goodwill impairment charge
|
|
|
|
4,460,837
|
|
|
|
|
394,901
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
|
Intangible assets impairment charge
|
|
|
|
15,423
|
|
|
|
|
87,335
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
|
Asset impairment charge
|
|
|
|
44,381
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income from operations
|
|
|
$
|
342,127
|
|
|
|
$
|
365,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss attributable to Yahoo! Inc.
|
|
|
$
|
(4,359,082
|
)
|
|
|
$
|
(214,321
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Restructuring charges, net
|
|
|
|
104,019
|
|
|
|
|
88,629
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Stock-based compensation
|
|
|
|
457,153
|
|
|
|
|
491,902
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Advisory fees
|
|
|
|
8,808
|
|
|
|
|
57,061
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
Security incidents costs
|
|
|
|
-
|
|
|
|
|
10,406
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
Gain on sale of land
|
|
|
|
-
|
|
|
|
|
(120,059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
Goodwill impairment charge
|
|
|
|
4,460,837
|
|
|
|
|
394,901
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
|
Intangible assets impairment charge
|
|
|
|
15,423
|
|
|
|
|
87,335
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
|
Loss on Hortonworks warrants
|
|
|
|
19,199
|
|
|
|
|
50,046
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
Asset impairment charge
|
|
|
|
44,381
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
(j)
|
|
To adjust the provision for income taxes to reflect an effective
tax rate of 35% for both the years ended December 31, 2015 and 2016
|
|
|
|
(189,538
|
)
|
|
|
|
(252,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net earnings
|
|
|
$
|
561,200
|
|
|
|
$
|
593,236
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss attributable to Yahoo! Inc. common stockholders per
share - diluted
|
|
|
$
|
(4.64
|
)
|
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net earnings per share - diluted
|
|
|
$
|
0.59
|
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in non-GAAP per share calculation - diluted
|
|
|
|
948,111
|
|
|
|
|
955,654
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170123006053/en/
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