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Yahoo Misses on Already Lackluster Q1 Earnings and Revenue Expectations

CEO Marissa Mayer is still turning around this troubled ocean liner.

Yahoo disappointed on both earnings and revenue, coming in significantly below what Wall Street had expected. It earned 15 cents a share on an adjusted basis, even though analysts had expected Yahoo to earn 18 cents per share. That was down from 38 cents the year before.

Yahoo’s revenue was expected to be $1.055 billion, down from $1.087 billion a year ago. But it came in at $1.043 billion.

No surprise: Yahoo shares dipped in after-hours trading by 1.5 percent.

Search was a bright spot, up eight percent on a gross revenue basis, but it was largely due to the pricey deal CEO Marissa Mayer struck with Mozilla to become the default search option on that browser. When the costs are backed out, Yahoo search revenue was actually down three percent compared to a year ago.

But display was down on an actual basis — down another seven percent. And Yahoo efforts to make up the difference in mobile, video, native and social advertising — which Mayer awkwardly calls MaVeNS and which sounds like a bad rap group — is still not making up the difference.

So how did Mayer explain the continued lack of a turnaround? Very opaquely, that’s how! Said Mayer:

“Yahoo is amidst a multi-year transformation to return an iconic company to greatness. This quarter, we saw encouraging revenue growth of 8%, with display revenue growing a modest 2% and search growing 20% on a GAAP basis. Our mobile GAAP revenue reached $234 million in Q1, growing 61% year-over-year. We anticipated that we would grow GAAP revenue ahead of revenue ex-TAC and EBITDA, and that’s precisely what we saw this quarter. For the next phase of the transformation, we will focus on accelerating our GAAP revenue growth while managing our margins and costs.”

Let me translate: Mobile is growing, but it is too tiny to make any difference as yet. Nonetheless, we will stress top-line growth and try to cut costs to make the real results better. Soon. I promise. Multi-year!

As I wrote earlier today, Yahoo is facing a number of challenges in making its core business healthy and growing. Among them, a management rejiggering by Mayer, a possibly costly effort to get back into the search business and increasingly negative morale at the company due to “drip layoffs.”

In fact, Yahoo’s headcount dropped by 1,000, or eight percent, to 11,400, evidence of these secretive firings that Yahoo has been doing, laying off five to 15 people per department to avoid media scrutiny and requirement of regulatory filings.

Most of all, it’s the lack of revenue and earnings growth that is the problem, which Mayer will address later today in a call with analysts. I’ll be liveblogging, of course.

This article originally appeared on Recode.net.