Yahoo beats Q1 revenue expectations, despite profits slump

Struggling web firm boosted by Chinese internet firm Alibaba as CEO Marissa 'buoyed by growth'

Web search firm Yahoo has beaten its financial expectations for the first quarter of 2014, although its profits remain lower than they did this time last year.

The search engine - which has struggled to compete with Google in recent years - made earnings of $312m (£187m) between January and March, down 20 per cent from the $390m (£233m) it made in the first quarter of 2013.

Revenues also improved, with revenue from display advertising rising by 2 per cent up to $409m (£244m), representing the first rise in this area for a significant period of time. The total sum for first quarter revenue was $1.1bn (£660m), the highest it has been for four years, something which Yahoo CEO Marissa Mayer sees as a positive development to build upon.

"I am really pleased by our first quarter performance, marking our best Q1 revenue ex-TAC [excluding Traffic Acquisition Cost] since 2010," she said in a statement released with Yahoo's first quarter results.

"Buoyed by our ninth consecutive quarter of year-over-year growth in search revenue ex-TAC and our first quarter of Q1 year-over-year growth in display revenue ex-TAC since 2011, Q1 was an early and important sign of growth in our core business," Mayer continued.

Mayer also pointed to Yahoo's growth in mobile as a source of optimism. The firm is looking to piggyback on the rapid growth of smartphone and tablet use in order to drive revenues and has made a number of mobile acquisitions in the past year.

"And, with mobile pivotal to our future growth, we're delighted to now see more than 430 million monthly mobile users accessing Yahoo's new products," Mayer added.

The Yahoo CEO has previously pointed to mobile as a core focus for the company as it looks to reshift its business plans to stay competitive with the likes of Facebook and Google and maintain competitiveness in the web sector by attracting mobile advertising.

Yahoo's growth has also been aided by a very strong performance by Chinese internet firm Alibaba, in which Yahoo owns a 24 per cent share. Alibaba's revenues increased by two-thirds in the final quarter of last year to $3.06bn ($1.8bn), while profits increased by 110 per cent to $1.4bn (£840m).

Shares in Yahoo initially jumped by almost 9 per cent following the release of the financial report, although overnight the value of Yahoo stock returned to about pre-report levels.