Yahoo, Fortune, Pattie Sellers, Marissa Mayer

Yahoo chief executive officer Marissa Mayer being interviewed by Fortune's Pattie Sellers.

Stuart Isett

Yahoo’s first-quarter earnings results came in line with their own estimates and analyst estimates, as earnings per share were expected at 7 cents a share and Yahoo reported at 8 cents.

EPS for the quarter fell almost 50 percent lower than the 15 cents reported a year ago. For the three months ending March 31, generally accepted accounting principles’ revenue was at $1.08 billion, which was slightly down from $1.2 billion reported in the first quarter of 2015. Adjusted earnings were at $147 million, down from $231 million in the first quarter of last year.

Chief executive officer Marissa Mayer said the company was still very focused on a possible sale or reverse spin, but did not share any details on how that might look. She said Yahoo’s efforts to “simplify” the business were going strong, with a focus on Search, Mail and Tumblr, keeping only four core editorial verticals (news, sports, finance and lifestyles), laying off thousands of employees and closing multiple international offices. She also called out Polyvore, which Yahoo acquired in July and recently expanded into men’s wear.

Mayer said she was pleased that Yahoo delivered results that were in line with expectations, and said the ongoing changes were difficult to employees.

“Our 2016 plan is off to a solid start as we continue to focus on driving efficiency, lowering costs and improving long-term growth,” she said. Regarding the possible sale or reverse spin, she said Yahoo had made “substantial progress.” “The management team and I have supported the board’s process from the start. And we are moving expeditiously.” And, she said, “The people I work with here inspire me every day, and I am so proud of what we have achieved.”

The revenue from Mavens, which is the term used to describe Yahoo’s mobile, video, native and social ad products, increased slightly compared to the first quarter of 2015, to $390 million compared to $365 million; it made up 38 percent of traffic-driven revenue (it was at 33 percent a year ago). The revenue from mobile was also up slightly from the first quarter of 2015, at $260 million, or 25 percent of traffic-driven revenue.

Compared with a year ago, gross search revenue was down 15 percent, GAAP search revenue was down 9 percent and the number of paid clicks was down 21 percent, while the cost of revenue had increased 44 percent. GAAP display revenue didn’t change much; however, the number of display ads sold increased 8 percent (although the price-per-ad decreased 6 percent).

Still, chief financial officer Ken Goldman said results were at the “high end” of expected ranges, and that due to “improved working capital efficiencies, excellent cost control, reduced capital expenditures and a large tax refund,” free cash flow was $297 million. “While we remain focused on the strategic alternatives process as a top priority, our employees showed their determination and commitment to Yahoo by executing on our operating plan.”

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