Yahoo Beats Low Revenue Expectations, With Earnings Boost From Alibaba Stake (And CFO Magic)

Without the big fat earnings boost from the sale of its shares of Alibaba Group, cost cuts and financial engineering, Yahoo saw a 10 percent drop in its non-GAAP income from operations in the third quarter. That clocked in at $156 million for the third quarter, which the Silicon Valley Internet giant said was a 10 percent decline from last year.

“GAAP net earnings for the third quarter of 2014 was $6.8 billion (which included a gain from sale of Alibaba Group Holding Limited (“Alibaba Group”) shares of $6.3 billion, net of tax),” said Yahoo.

But still, net earnings handily beat the 32 cents a share expected by Wall Street, to clock in at 52 cents. (Kudos must go to CFO Ken Goldman for this obviously herculean effort.)

Revenue was also a brighter spot, rising one percent to $1.09 billion, reversing many quarterly declines. Doubtlessly, CEO Marissa Mayer had Yahoo’s sales troops pull out all the stops to pull this one off in the last weeks of the quarter.

“We had a good, solid third quarter,” said Mayer in a statement. “We achieved this revenue growth through strong growth in our new areas of investment — mobile, social, native and video — despite industry headwinds in some of our large, legacy businesses.”

Analysts expected the company to have $1.05 billion in revenue in the quarter, a close to three percent decline over last year.

Search revenue was up four percent, which was good, but display revenue was down another five percent, year over year. Mayer is trying to shift the company away from reliance on display and into new ad efforts such as native advertising. It was not entirely clear from the results where that native ad growth was allocated.

Perhaps most interestingly, Yahoo unveiled $200 million in mobile GAAP revenue. “We have invested deeply in mobile and we are seeing those investments pay off,” said Mayer. “Not only are our mobile products attracting praise and engagement from users and industry awards, they are generating meaningful revenue for Yahoo.” Rivals like Facebook and Google have been clocking in big revenue increases from mobile over the last several quarters and this is the first time Yahoo is putting actual numbers on the board, which is good news.

Not surprisingly, Yahoo shares were up over two percent in after-hours trading.

Mayer and Goldman will be reprising their quarterly news duo act for analysts in a video broadcast of its third-quarter results at 2 pm PT, which I will be live-blogging. The pair is expected to discuss a range of issues, including what they are planning to do with the Alibaba haul and also an update of the company’s turnaround strategy.

Until then, here are Yahoo’s earnings slides to peruse:

Q314_YHOO_Earnings_Slides_vs.FINAL.pdf

This article originally appeared on Recode.net.

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