7 Key Metrics To Judge Marissa Mayer's First Year As Yahoo CEO

Yahoo just reported second-quarter earnings, bringing Marissa Mayer's first year as CEO of the company full circle. Here's how she performed based on seven key line items in the company's financial report for this year versus the same period last year when she took over.

Yahoo's stock has gained more than 70% during Marissa Mayer's first year as Yahoo CEO.

There is some debate over whether that's a result of Mayer's impact on the company through a string of corporate makeovers and acquisitions — most notably buying Tumblr for $1.1 billion — or the tantalizing prospect of its big stake in Alibaba.

In the second quarter, Yahoo beat analyst expectations for earnings per share, but missed when it comes to revenue minus traffic acquisition costs (ex-TAC). The stock is shifting rapidly, but is down about 2% right now.

Throughout her tenure, Mayer's spending spree has been funded by the sale of a part of Yahoo's stake in Alibaba. But overall, the key metrics of Yahoo appear to be a mixed bag compared to what they were before she took over.

Display revenue ex-TAC

Like it or not, Yahoo at its core is still a business built on advertising. Until very recently, Yahoo's display advertising growth had stalled, though it recently reversed that decline. It was up 1% year-over-year between 2011 and 2012.

However, display revenue ex-TAC was down significantly year-over-year, coming at $432 million, compared to $473 million in 2012 — a drop of 9%. This isn't surprising, as Mayer has said she wants to focus on propping up engagement, which could come at the cost of some advertisements in the near-term. Better engagement means more expensive ads.

Search revenue ex-TAC

In addition to display advertising, Yahoo still has a rather large search business, much in the same way Google makes money off its searches. Surprisingly, Yahoo's search business (in partnership with Microsoft) is still going strong. After growing 4% year-on-year between 2011 and 2012, it again rose slightly to $403 million ex-TAC, up 5% from $385 million ex-TAC in 2012.

Operating expenses

Mayer — like her predecessors — has also spent part of her time streamlining Yahoo's operations. Operating expenses were just shy of $1 billion in Q2 2013, compared to $1.16 billion in Q2 2012.


While Mayer has been on an acquiring spree, she still has to keep headcount at a manageable level. Yahoo had 12,500 employees at the end of the second quarter of 2012. It staff now stands at 11,500, a drop of nearly 10%.

Unique Visitors

Throughout her tenure, Mayer has said several times that Yahoo should be focusing on engagement. Higher engagement means Yahoo can sell more expensive ads. From the second quarter of 2011 to 2012, Yahoo said its unique visitors grew by 1%. Yahoo didn't disclose the change in visitors this time, but said "the combination of Tumblr and Yahoo! is expected to grow Yahoo!'s audience to more than one billion monthly visitors."

Mobile monthly active users

By the end of the first quarter, Mayer said Yahoo had more than 300 million monthly mobile active users (MAUs). That's a 100 million increase from the 200 million at end of last year. Mobile engagement is important for Yahoo not just because that's increasingly how users are accessing the internet, but also for Mayer in particular since she has spent much of her time redesigning the company's mobile apps like Weather.

Update: As of Q2 2013, Yahoo had 340 million monthly mobile active users, Mayer said on the earnings call.

Net Income

For investors, this is basically all that matters. Between Q2 2011 and 2012, Yahoo's non-GAAP net income edged up slightly to $240 million. Between 2012 and 2013, it fell 13% to $209 million.

So, while much of Yahoo's stock price rise has been attributed to its Alibaba stake, it does appear that its core business under Mayer is shifting any more than expected and that the report card for her first 12 months at the helm of Yahoo — she took over in July of last year — is a bit more nuanced than whether she deserves all or none of the credit for the company's rebound.

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