Yahoo! – 8 April 1999
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[YHOO] The securities of the company are not listed but trade over-the-counter in the United States. In the US, retail sales and/or distribution of this report may be made only in states where these securities are exempt from
registration or have been qualified for sale. MLPF&S or its affiliates usually make a market in the securities of this company.
Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce,
5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend.
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Yahoo!
Quarterly Earnings (Reflects Geocities Pooling)
Fiscal Years Ending December
Dollars in millions, except per-share
1997 1998 1999E 2000E 1998 1999E
Year Year Year Year Mar Jun^ Sep Dec** Mar Jun-E Sep-E Dec-E
Net Revenues $70.5 $221.0 $430.9 $606.8 $32.7 $44.9 $59.7 $83.7 $93.0 $99.5 $113.5 $125.0
Cost of Revenues 10.9 32.9 57.2 72.8 5.9 7.6 8.3 11.1 12.8 13.4 14.8 16.2
Gross Profit 59.5 188.1 373.7 534.0 26.9 37.3 51.4 72.6 80.2 86.1 98.7 108.7
Sales and Marketing 45.8 109.6 165.7 233.2 18.8 23.7 28.6 38.5 37.0 39.3 43.1 46.2
Product Development 12.1 26.5 52.0 66.0 5.3 5.9 6.7 8.6 11.7 12.9 13.0 14.4
G & A 7.4 18.3 24.8 29.6 3.2 4.2 4.7 6.2 5.9 7.0 5.7 6.2
Operating Income (5.7) 33.7 131.2 205.1 (0.4) 3.5 11.4 19.2 25.6 26.9 36.9 41.9
Extraordinary and merger-related
costs
25.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Investment Income, net 4.5 16.9 32.8 39.0 1.6 2.1 6.0 7.1 7.5 7.8 8.5 9.0
Minority Interests in JVs 0.7 0.1 (2.2) (9.2) 0.2 0.1 0.0 (0.3) (0.3) (0.3) (0.3) (1.2)
Reported Pre-tax Income (25.5) 50.7 161.8 235.0 1.5 5.8 17.4 26.1 32.7 34.4 45.0 49.7
Adjusted Pre-tax Income (0.4) 50.7 161.8 235.0 1.5 5.8 17.4 26.1 32.7 34.4 45.0 49.7
Income Taxes 0.0 17.8 58.0 84.6 1.1 3.1 5.6 8.1 14.1 11.7 15.3 16.9
Reported Net Income (25.5) 32.8 103.8 150.4 0.4 2.7 11.8 17.9 18.6 22.7 29.7 32.8
Adjusted Net Income ($0.4) $32.8 $103.8 $150.4 $0.4 $2.7 $11.8 $17.9 $18.6 $22.7 $29.7 $32.8
Reported EPS ($0.15) $0.13 $0.39 $0.54 $0.00 $0.01 $0.05 $0.07 $0.07 $0.08 $0.11 $0.12
Adjusted EPS ($0.00) $0.13 $0.39 $0.54 $0.00 $0.01 $0.05 $0.07 $0.07 $0.08 $0.11 $0.12
Avg. Shares Out. 174.6 246.9 268.9 280.9 233.5 239.8 253.6 260.5 264.4 267.4 270.4 273.4
Margins
Gross 84.5% 85.1% 86.7% 88.0% 82.1% 83.0% 86.1% 86.7% 86.2% 86.5% 87.0% 87.0%
Operating (8.1%) 15.3% 30.4% 33.8% (1.2%) 7.8% 19.1% 23.0% 27.5% 27.0% 32.5% 33.5%
Net (0.6%) 14.9% 24.1% 24.8% 1.3% 6.0% 19.8% 21.4% 20.0% 22.8% 26.2% 26.2%
% of Sales
Cost of Revenues 15.5% 14.9% 13.3% 12.0% 17.9% 17.0% 13.9% 13.3% 13.8% 13.5% 13.0% 13.0%
Marketing 65.0% 49.6% 38.4% 38.4% 57.4% 52.8% 47.9% 46.0% 39.8% 39.5% 38.0% 37.0%
Product Development 17.1% 12.0% 12.1% 10.9% 16.1% 13.2% 11.3% 10.3% 12.6% 13.0% 11.5% 11.5%
G&A 10.5% 8.3% 5.8% 4.9% 9.9% 9.3% 7.9% 7.4% 6.4% 7.0% 5.0% 5.0%
Total Operating 92.6% 69.9% 56.3% 54.2% 83.3% 75.2% 67.0% 63.7% 58.7% 59.5% 54.5% 53.5%
Tax Rate (% of Pre-Tax) 0.0% 35.2% 35.9% 36.0% 72.2% 53.2% 32.0% 31.2% 43.2% 34.0% 34.0% 34.0%
Add'l Yr/Yr % Change
Net Revenue 258% 214% 95% 41% 205% 211% 219% 215% 184% 122% 90% 49%
Operating Income (35%) NM 289% 56% NM NM NM NM NM 668% 224% 118%
Net Income (90%) NM 216% 45% NM NM NM NM 4414% 741% 151% 83%
Adjusted EPS (95%) NM 190% 39% NM NM NM NM 3887% 654% 136% 74%
Sequential % Change
Revenues 23% 37% 33% 40% 11% 7% 14% 10%
COGS 55% 30% 9% 34% 15% 5% 10% 10%
Sales and Marketing 19% 26% 21% 35% (4%) 6% 10% 7%
Operating Expenses 26% 24% 19% 33% 2% 8% 4% 8%
Performance Metrics
Registered Users (mm) 12 18 25 35 47
Average Daily PageViews
(mm)
95 115 144 167 235 306 357 390
Advertising Revenue (mm) $26.1 $33.2 $43.9 $62.7 $69.7 $73.3 $83.0 $82.6
Commerce Revenue (mm) $6.6 $11.7 $15.8 $20.9 $23.2 $25.7 $30.0 $41.8
Number of Advertisers 1,600 1,800 1,950 2,225 2,125 2,275 2,425 2,575
Avg. Monthly Rev. Per
Advertiser
$6,820 $8,316 $10,207 $12,533 $10,938 $10,744 $11,412 $10,698
Revenue Per 1,000
PageViews
$0.34 $0.39 $0.41 $0.50 $0.40 $0.33 $0.32 $0.32
Source: Company Reports and Merrill Lynch Internet Research estimates. * Excludes a non-recurring charge of $21.345 in Q3, 1997 **Includes 7,495,000 common stock
equivalents. **Excludes the amortization ($1.25 million) and one-time charges of $2.1 million related to Yoyodyne and $2.3 million related to HyperParallel. ^Excludes non-recurring
expense of $44.100 in connection with the acquisition of Viaweb Inc. |
