Second Quarter 2010 Revenue Results
Marketing services revenue increased four percent and fees revenue decreased16 percent, compared to the second quarter of 2009.
Marketing services revenue increased one percent and fees revenue decreasedseven percent, compared to the first quarter of 2010.
Marketing services revenue from Owned and Operated sites of $881 millionincreased three percent compared to $858 million for the same period of 2009.This was primarily driven by a 19 percent increase in display advertising revenue,partially offset by an eight percent decline in search advertising revenue.
Marketing services revenue from Affiliate sites were $557 million, a sevenpercent increase compared to $520 million for the same period of 2009.
Second Quarter 2010 Cash Flow and Cash Balance
Cash flow from operating activities was $347 million, a two percent increasecompared to $342 million for the same period of 2009.
Free cash flow was $127 million, a 52 percent decrease compared to $266million for the same period of 2009.
Cash, cash equivalents, and investments in marketable debt securities were$3,799 million at June 30, 2010 compared to $4,518 million at December 31,2009, a decline of $719 million. During the second quarter of 2010, Yahoo!repurchased 32 million shares for $496 million.
Revenue for the third quarter of 2010 is expected to be in the range of $1,570 million to$1,650 million. Income from operations for the third quarter of 2010 is expected to be inthe range of $160 million to $200 million. Total expenses (cost of revenue plus totaloperating expenses) for the third quarter of 2010 is expected to be in the range of$1,410 million to $1,450 million. Total expenses less traffic acquisition costs (“TAC”) forthe third quarter of 2010 is expected to be in the range of $945 million to $965 million.Total expenses less TAC, depreciation and amortization (“D&A”), and stock-basedcompensation expense (“SBC”) for the third quarter of 2010 is expected to be in therange of $735 million to $745 million.
Yahoo! will host a conference call to discuss second quarter 2010 results at 5 p.m.Eastern Time today. A live webcast of the conference call, together with supplementalfinancial information, can be accessed through the Company's Investor Relationswebsite at http://yhoo.client.shareholder.com/results.cfm.In addition, an archive of thewebcast can be accessed through the same link. An audio replay of the call will beavailable for one week following the conference call by calling (888) 286-8010 or (617)801-6888, reservation number: 38398529.
Note Regarding Non-GAAP Financial Measures
This press release and its attachments include the following financial measures definedas non-GAAP financial measures by the Securities and Exchange Commission (“SEC”):free cash flow, total expenses less TAC, total expenses less TAC, D&A, and SBC, non-GAAP net income, and non-GAAP net income per diluted share. These measures may