( BW)(CA-YAHOO)(YHOO) Yahoo! Reports Fourth Quarter and Fiscal
Year 2002 Financial Results
Business Editors/High-Tech Writers
SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 15, 2003--
Fourth Quarter Revenues Grow 51 Percent Year Over Year; Full Year Revenues Grow 33
Percent Over 2001; Fourth Quarter Earnings Per Share of $0.08
Yahoo! Inc. (Nasdaq: YHOO) today reported results for the fourth quarter and fiscal
year ended December 31, 2002. Net revenues for the fourth quarter totaled $285.8
million, a 51 percent increase over the $188.9 million reported in the same period in
2001.
Net income on a GAAP (Generally Accepted Accounting Principles) basis for the
fourth quarter of 2002 was $46.2 million or $0.08 per diluted share, compared with a net
loss of $8.7 million or $0.02 per diluted share for the same period in 2001. Assuming the
adoption of Financial Accounting Standard No. 142 ("FAS 142") "Goodwill and Other
Intangible Assets" had occurred at the beginning of 2001, Yahoo! would have reported a
net profit for the fourth quarter of 2001 of $6.8 million or $0.01 per diluted share.
EBITDA (earnings before interest, taxes, depreciation, amortization and stock
compensation expense) for the quarter was $85.3 million or 30 percent of net revenues,
compared to $11.7 million, or 6 percent of net revenues, for the same period in 2001,
which included $16.8 million of restructuring costs. Free cash flow for the fourth quarter of
2002 was $61.4 million compared to a free cash flow loss of $6.4 million for the same
period in 2001. Free cash flow is the Company's EBITDA plus non-operating cash
income, less taxes paid, investments in working capital and capital expenditures. The
Company considers EBITDA and free cash flow to be important measures of the
Company's performance because they reflect the resources available for strategic
opportunities including, among others, to invest in the business, make strategic
acquisitions, strengthen the balance sheet and repurchase stock.
Net revenues for the year ended December 31, 2002 were $953.1 million, a 33
percent increase over the $717.4 million reported in 2001.
Reported GAAP income before the cumulative effect of a change in accounting
principle for the year ended December 31, 2002 was $106.9 million or $0.18 per diluted
share compared to a reported net loss of $92.8 million or $0.16 per diluted share for
2001. The Company's adoption of FAS 142 in the first quarter of 2002 resulted in a
non-cash charge of $64.1 million or $0.11 per diluted share recorded as a cumulative
effect of a change in accounting principle. Assuming the Company had adopted FAS
142 at the beginning of 2001, reported net loss for the year ended December 31, 2001
before the cumulative effect of a change in accounting principle would have been $36.9
million or $0.06 per diluted share.
EBITDA for the year ended December 31, 2002 was $206.0 million compared with an
EBITDA loss of $18.6 million for 2001, which included $62.2 million of restructuring and
acquisition related costs. Free cash flow for the year ended December 31, 2002 was
$221.0 million compared to a $26.6 million free cash flow loss in 2001.
"Over the last twelve months we have executed against a business plan which has
taken Yahoo! from a company with tremendous potential to one with multiple strong
businesses from which we believe we can continue to build a sustainable long-term
future. We experienced growth in both our existing businesses and newer areas and we
continue to demonstrate the capability of our business model to generate cash flow and
to scale. As we begin 2003 we believe we are in a strong position to continue to deliver
profitable, sustainable long-term growth and I'm excited to build on our success in the
upcoming year," said Terry Semel, chairman and chief executive officer, Yahoo! Inc.
Business Outlook
"I am very pleased with the significant progress we have made on our strategic and
financial goals in 2002. As we move into 2003, we continue to focus on maximizing
long-term free cash flow per share," said Susan Decker, chief financial officer, Yahoo!
Inc. "Our long-term financial strategy of attracting significantly more revenue from our
growing user base without commensurately increasing our expense appears to be
gaining traction. In 2003, we expect strong growth in revenue, profitability, and free cash
flow even as we continue to invest in areas that we expect will drive long-term growth."
The following information is based on current information as of January 15, 2003, and
excludes the effects of the pending acquisition of Inktomi.
First Quarter 2003 Outlook:
--
Revenues are expected to be between $255 and $275 million for the quarter.
--
EBITDA is expected to be between $60 and $70 million for the quarter.
Full Year 2003 Outlook:
-- Revenues are expected to be between $1.145 and $1.215 billion
for the full year 2003.
-- EBITDA is expected to be between $295 and $330 million for the
full year 2003.
-- Capital Expenditures are expected to be between $70 and $90
million for the full year 2003.
-- Depreciation expense is expected to be between $95 and $105
million for the full year 2003.
Yahoo!'s business outlook as of today is expected to be available on the Company's
Investor Relations Web site throughout the current quarter. It is currently expected the full
business outlook will not be updated until the release of Yahoo!'s next quarterly earnings
announcement; however, Yahoo! may update the full business outlook or any portion
thereof at any time.
Fourth Quarter 2002 Financial Highlights
Revenues: In the fourth quarter of 2002, Yahoo! reported net revenues of $285.8
million, a 51 percent increase from the same period in 2001. Excluding HotJobs related
revenues that resulted from the acquisition completed in early 2002, revenues increased
39 percent over the same period in 2001.
Marketing Services revenues totaled $177.5 million, a 31 percent increase from the
same period in 2001. This increase was primarily a result of an increase in revenues
from small-to-medium sized companies realized through Yahoo!'s sponsored search
services and inside sales organization, partially offset by a decrease in barter revenues.
Fees and Listings revenues totaled $89.4 million, a 120 percent increase compared
to the same period in 2001. Excluding HotJobs revenues, the increase was 65 percent.
This increase was primarily driven by the increase in paying customers for Yahoo!'s fee-
and listings-based services, including Yahoo! Personals and the new SBC Yahoo! Dial
and DSL products.
Transactions revenues totaled $19.0 million, a 45 percent increase compared to the
same period in 2001. This increase was driven primarily by increased commerce
transactions enabled on the Yahoo! network and a change in the Company's pricing for
the Yahoo! Store platform from a fixed fee- to a transaction-based structure.
United States revenues for the quarter totaled $242.4 million, a 53 percent increase
compared to the same period in 2001. International revenues were $43.4 million, a 45
percent increase compared to the same period in 2001. International revenues
represented 15 percent of total revenues for this quarter and 16 percent for the same
period in 2001.
EBITDA: In the fourth quarter of 2002, Yahoo! reported EBITDA of $85.3 million or 30
percent of net revenues, versus $11.7 million or 6 percent of net revenues reported for
the same period in 2001. Excluding the $16.8 million in restructuring costs recorded in
the fourth quarter of 2001, EBITDA for that period would have been $28.5 million or 15
percent of net revenues. The favorable comparison to the same period in the prior year
is primarily the result of the $96.9 million, or 51 percent revenue increase as described
above, combined with costs growing at a slower pace. Recurring costs and expenses
included in EBITDA increased only $40.1 million or 25 percent, primarily as a result of
ongoing costs and expenses associated with HotJobs being brought into Yahoo!'s cost
structure, in addition to increases in total compensation related and marketing expenses
from investments in areas that the Company believes will drive long-term growth.
United States EBITDA for the quarter was $82.0 million, or 34 percent of United
States net revenues, which compares favorably to $18.0 million, or 11 percent of United
States net revenues reported for the same period in 2001. International EBITDA for the
quarter was $3.3 million, compared to a $6.3 million EBITDA loss reported for the same
period in 2001.
Depreciation and Amortization: Depreciation expense for the fourth quarter of 2002
was $23.3 million, a $5.7 million increase compared to the same period in 2001. The
increase primarily resulted from the HotJobs acquisition and depreciation on the
Sunnyvale headquarters facility, which was converted from a synthetic lease to property
and equipment during the third quarter of 2002.
Amortization expense for the fourth quarter of 2002 was $5.9 million, a $12.6 million
reduction from the same period in 2001, primarily resulting from the discontinuance of
goodwill amortization in accordance with the adoption of FAS 142, partially offset by
additional intangible amortization expense as a result of the HotJobs acquisition.
Other income, net: In the fourth quarter of 2002, Yahoo! reported other income, net, of
$20.2 million, which is slightly below the $21.5 million recorded in the same period of
2001 and reflects the decrease in interest income related to a decline in interest rates.
Leading Internet Brand and Global Audience
Yahoo!'s brand leadership and broad audience support the Company's leadership
position and success in efforts to build deeper relationships with consumers. Yahoo!
continues to be the Internet brand of choice, ranking No.1 in brand strength with U.S.
consumers according to Brand Asset Valuator(R) (Young & Rubicam, December 2002),
providing a strong basis for increasing consumer loyalty and usage.
During the quarter, Nielsen//NetRatings (November 2002) ranked Yahoo!'s global
network the world's most trafficked Internet destination for the 30th consecutive month,
based on unique audience, total time spent, reach, and total page views. In addition,
Yahoo! was recognized as the most trafficked Internet brand in the United States, with
the greatest breadth of usage, having 20 Yahoo! properties ranked among the top three
in their respective vertical categories.
Yahoo!'s global audience, excluding Yahoo! Japan, was approximately 213 million
unique users in December 2002 compared to approximately 188 million in December
2001. In addition, approximately 101 million active registered users, excluding Yahoo!
Japan, logged onto Yahoo's global network during December 2002, compared to
approximately 74 million in December 2001.
"Yahoo!'s industry-leading loyal user base continues to grow both in size and in depth.
Consumers are expanding their relationship with Yahoo! both in time spent and pages
consumed, underscoring one of our key objectives to continue to develop stronger
relationships with our audience. As we continue to execute on our strategic and financial
goals, we will concentrate on total product quality, superior ease-of-use and increased
product relevancy, enabling Yahoo! to further enrich the consumer experience and build
on our already strong metrics," said Semel.
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