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  • It’s Old Spock vs. New Spock In The Latest Audi Ad

    Audi’s latest ad is titled: “Zachary Quinto vs. Leonard Nimoy: “The Challenge”. This features the original Star Trek’s Spock (Nimoy) and the new Star Trek’s Spock (Quinto).

    As an added bonus, it also features Nemoy doing his Bilbo Baggins song.

  • Facebook’s Real-Time FBX News Feed Ads Head To Beta

    Back in March, Facebook announced its alpha test for expanding real-time, cookie-based Facebook Exchange ads to the News Feed. Now, the company has announced that these ads have moved to beta.

    Now, additional businesses can scale their FBX efforts from the right hand side of Facebook to more engaging territory. All qualified DSPs received beta access, and can now begin implementation.

    “After a successful alpha with Nanigans, Mediamath, and Tellapart, desktop Page Post Link Ads are moving into beta on Facebook Exchange (FBX)- a solution for direct response campaigns where the targeting, conversion objective and measurement are outside of Facebook,” Facebook says.

    “In this beta, DSPs can implement all types of campaigns, including those with product-specific creative, by creating Unpublished Page Posts and selecting the right one for the right user at the right time,” the company says.

    Facebook is currently working on integrating the Facebook Exchange real-time dynamic creative functionality into the Link Page Post ad format, so stay tuned for that.

    You can see Facebook’s list of Qualified DSPs here.

  • In Honor Of Jeff Hanneman, Here’s Google’s Slayer Commercial

    Slayer guitarist Jeff Hanneman passed away on Thursday at the age of 49. Fans around the web are expressing their grief, sharing memories, and of course, listening to Slayer.

    With that, it seemed like a fine time to reflect on this ad Google released last October for Chromebooks, which makes use of Slayer’s “Raining Blood”.

    The ad was obviously Halloween-themed, and says: “For little devils. For scaring off viruses. For spooky-fast startup. For undead battery. For horror movie marathons. For no fear of crashes. For no phantom files. For no software nightmares. For a fun size. For no haunting hassles. The $249 laptop from Google. For everyone.”

    Probably not what the band had in mind when they wrote the song, but it shows just how far Slayer’s influence really does go.

  • Google Makes Changes To AdSense Reporting

    Google announced today that it is making some changes to how reporting works in AdSense accounts. The company is updating the way certain data is shown.

    AdSense product manager Matt Goodridge explains on the Inside AdSense blog:

    As you may know, your earnings at the end of each month currently reflect the amount you’ve earned less any deductions for invalid activity. This is a step we’ve always taken to ensure advertisers are not charged for such activity. Until now, however, clicks and impressions associated with this activity still appeared in AdSense performance reports. Starting May 1st, we’ll remove those associated clicks and impressions to address this discrepancy and provide you with the most accurate reporting.

    So what does this mean for your AdSense account? First and foremost, this change will not impact your earnings in any way. In most cases, removing the invalid activity from your reports means you can expect to see a slight decrease in clicks and impressions, causing a slight increase in CPC (cost-per-click) and RPM (revenue per thousand impressions). The clicks and impressions that we’ll no longer show in reports include activity like accidental clicks, so metrics like your CTR (clickthrough rate) will more accurately reflect your site’s performance. You might also see a more noticeable difference in your AdSense reporting when compared with your own account statistics measured through other tools. Please note that this change won’t affect the way we screen for invalid activity.

    Reports for dates from before May 1st will not be affected by the changes.

    A couple weeks ago, Google announced changes to the Terms and Conditions for Adsense. More on that here.

  • Instagram Will Probably Hold Off on the Ads for Now, But It’s Not for Lack of Interest

    Instagram Will Probably Hold Off on the Ads for Now, But It’s Not for Lack of Interest

    Facebook CEO Mark Zuckerberg briefly discussed Instagram at yesterday’s Q1 earnings call, and the takeaway is that big brands want more commercialization, but the Facebook-owned company is content with a growth strategy at the time being. That means no ads on Instagram…for now.

    “They’re really doing well and growing quickly and that is the right focus for them,” Zuckerberg said. “They have the opportunity to…build community. I am really optimistic about the business and the opportunities.”

    He went on to say that the addition of ads could possibly hamper Instagram’s growth. Instagram just surpassed 100 million monthly active users, and the photo-sharing app is growing at a faster rate than Facebook did at this time in its life.

    According to Zuckerberg, it’s not that Instagram isn’t drawing any interest from businesses looking to advertise. “Big brands are approaching us,” he said.

    You may remember that Facebook has to tread carefully when approaching the topic of ads on Instagram. Last year, Instagram users were up in arms over some proposed changes to the Instagram privacy policy. Originally, the company wanted to add this clause to the terms:

    Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.

    This led to a mostly misguided outrage that Instagram was going to sell users’ photos. What did deserve outrage was Instagram’s tricky, vague, lawyerly language that attempted to describe a future ad product that didn’t yet exist.

    Co-founder Kevin Systrom ended up apologizing, saying they were wrong to put the cart before the horse.

    “Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.”

    Instagram will be properly monetized, it’s inevitable. Facebook has already put way too much into the acquisition and Instagram is already such a powerful social channel. But for now, at least, it looks like Zuck is fine to let it grow.

  • Here’s A Dope Jam Kris Kross Did For Sprite Back In The Day

    Chris Kelly, half of the famous rap duo Kris Kross, which rose to fame when Kelly (The Mac Daddy) and Chris Smith (The Daddy Mac) were just kids, has died of an apparent drug overdose.

    Those of us at the right age to have been listening to Kris Kross in the early 90s when hits like “Jump,” “Warm it Up,” and “I Missed the Bus” were getting steady airplay, are taking some time to reflect on the joy Kris Kross once brought to our lives. That includes memories of backwards clothing, the legendary “Make My Video” for Sega CD, and of course, dope beats and rhymes.

    One of Kris Kross’ forgotten classics actually comes in the form of an ad for Sprite. After all this time, I have yet to see Sprite release a better commercial.

  • Google Releases Tutorial On Enhanced Campaigns Upgrade Center

    Last week, Google announced the launch of the Enhanced Campaigns Upgrade Center for AdWords. It is in the process of rolling out.

    Today, Google released a tutorial for how to use the Upgrade Center ahead of the transition date.

    “In order to take advantage of the powerful bidding tools, smarter ads, and advanced reporting that come with enhanced campaigns, you need to start by upgrading your campaigns,” Google says.

    The video discusses how to use the tool to upgrade and merge legacy campaigns.

  • Twitter Opens Up Self-Service Ads to All U.S. Users

    For the past couple of years, Twitter has been slowly adding business partners to its self-service af platform, which allows users to easily build marketing campaigns on the site via promoted tweet and account targeting.

    And today, Twitter is finally opening Twitter Ads up to all U.S. users. You no longer need an invite.

    “When we built our self-service ad platform last March, our goal was to create an experience that would be powerful and also extremely easy for anybody to use. Whether you’re an individual looking to grow your personal brand, or an online retailer looking to increase sales, Twitter’s ad platform has the right products to help achieve your unique goals. Over the past year we’ve listened carefully to feedback from the thousands of businesses and individuals who’ve had access to the self-serve tool, and made enhancements based on their suggestions, including more targeting and reporting in the UI,” says Twitter Product Manager Ravi Narasimhan.

    Last month, Twitter unveiled new interest, device, and gender targeting to its self-service ad platform. And earlier this month, they finally launched keyword targeting.

    Twitter says that nothing will change for those already using Twitter ads. But if you’re new and wish to sign up, all you have to do is visit their self-service page for businesses to get going.

  • Should Facebook Allow Businesses To Give Away Guns?

    Pennsylvania gun store Pittsburgh Tactical Firearms was running a giveaway for an AR-15 on Facebook, when the social network shut it down without warning.

    Should gun sellers be able to run promotions for guns on Facebook? Let us know what you think in the comments.

    Few things are causing more arguments these days than guns, and major Internet companies have made it more difficult for gun sellers than for most types of businesses to get their products in customers’ hands. Facebook is no exception.

    In this case, Facebook shut down the store’s entire page, though as pictured above, the store has another one that is currently running. That one, however, is focused on survival courses.

    According to The Blaze, the contest had been running for a couple months before Facebook shut down the page, along with another page the store had tried to replace it with. The Blaze interviewed the store’s Erik Lowry:

    “I still don’t know what’s going on,” Lowry told The Blaze in a phone interview.

    Lowry said three days ago he awoke to calls and emails from fans asking where his Facebook page had gone. Lowry used the page to keep Pittsburgh Tactical Firearm’s more than 27,000 followers updated on store and stock information and Second Amendment news.

    Lowry has reportedly been sending Facebook message after message without response, though Voativ recently ran an article about gun giveaways on the social network, which shared a statement from a company spokesperson, saying, “Our Ad Guidelines prohibit promotion of the sale of weapons and the Ad Guidelines apply to pages with commercial content on them. Ads may not promote the sale or use of weapons, ammunition, or explosives.”

    Lowry thinks the article is what led Facebook to take notice.

    In an update, Vocativ shared another quote from Facebook: “Facebook strives to create a safe and trusted environment for everyone that uses our service.”

    Facebook’s guidelines in this area haven’t always been the same. In fact, an update in 2011 lifted blanket prohibition of promotions (including give-aways) for tobacco, dairy, gambling, prescription drugs, gasoline, and yes, firearms, as reported by InsideFacebook.

    As Josh Constine wrote in that article, “This does not make these kinds of promotions or sweepstakes legal — it merely means Facebook will differ to local laws rather than enforce its own.”

    And in some places, such giveaways are legal.

    Somewhere along the way, Facebook began taking a different approach. Facebook’s Ad Guidelines can be found here. The relevant section simply states, “Ads may not promote the sale or use of weapons, ammunition, or explosives.” The Pages Guidelines also clearly say, “Ads and commercial content (including Page post content) are subject to the Advertising Guidelines.”

    Facebook is far from the only Internet company to have gun-related restrictions in its terms. Earlier this year, for example, Groupon decided to pull all gun-related deals. This caused a significant amount of controversy.

    Michael Cargill, a gun rights activist, concealed handgun instructor, and owner of Central Texas Gun Works, called for a nationwide boycott of Groupon, saying his contract with the company had been “abruptly terminated”, after then Groupon CEO Andrew Mason “decided the company would no longer associate with any business related to firearms,” according to shooting sports news site Ammoland.

    Last year, Google stirred up some similar controversy when it removed guns from shopping results. Additionally, Google has strict terms prohibiting guns and gun-related products in AdWords.

    Are these companies making the right call when it comes to guns? Share your thoughts in the comments.

  • Check Out This Shining-Inspired Film Ink Ad

    Stanley Kubrick’s masterpiece The Shining continues to influence pop culture on a regular basis, and an ad from Australian film magazine Film Ink is the latest example.

    The hype around the documentary Room 237 has no doubt played a role in much of the recent interest in the film, but The Shining will continue to inspire countless pieces of Internet fun for years to come, without a doubt.

    With the new Film Ink ad, we can’t help but be reminded of this Channel 4 ad for The Stanley Kubrick Season from a few years back:

    [via The Overlook Hotel]

  • Apple’s New iPhone Ad Abandons the Word Barrage, Is Much Better

    Apple has just released a new ad for the iPhone 5, and it’s good. Much better than their previous efforts, in fact. It’s a one-minute ad called “Photos Every Day,” and uses a simple fact to make a point about the device’s massive popularity.

    “Every day, more photos are taken with the iPhone than any other camera.”

    And with that, the only words in the ad, Apple builds a nice commercial around the act of snapping pictures with the iPhone. Gone is the barrage of words that they’ve been throwing at you with their previous ads, and it’s been replaced by a subtle piano. Apple is at its best when making ads like this. Let’s hope it continues.

  • Latest Google Enhanced Campaigns Webinar Focuses On Mobile Strategy

    Since introducing Enhanced Campaigns earlier this year, Google has regularly been conducting webinars to help advertisers get acquainted with the changes, and to help them optimize their campaigns.

    Google has uploaded a new webinar specifically on optimizing mobile strategy:

    This week, Google launched the Enhanced Campaigns upgrade center, which provides a tool to help you transition to the new campaigns ahead of the date (July 22) when all campaigns will be upgraded automatically.

    Google also added social annotations and availability for mobile app advertisers.

  • Google Launches New AdSense Ad Size

    Google announced the launch of a new ad size for AdSense ads today: the 970×90. This is a newly adopted IAB standard known as “super leaderboards”.

    “This larger ad size is another visually impactful placement for advertisers to promote their products and services even on wider screens,” says Google AdSense software engineer Omer Gimenez and AdSense product manager Johan Land in a joint blog post.

    AdSense ads get bigger

    “Please note that since the 970×90 unit is new to our network, you’ll currently see mainly text ads appearing in this format,” they say. “The new super leaderboard ad unit can show up to four text ads organized in a column layout but, as with other ad sizes, the number of text ads per unit may vary per impression. When enabling image and rich media ads for this unit, display ads in the size of a 728×90 unit will be displayed initially. Over time, we expect that the inventory of image and rich media ads for the 970×90 will grow and you’ll see more full-size display ads being served.”

    Back in November, Google introduced the 300×600 ad unit to positive feedback. Those who wanted larger ad sizes are truly getting their wish.

  • Here’s A Meat-And-Olive Ndamukong Suh (And A BBQ Chicken Jarvis Jones)

    You know those Subway commercials with all the athletes? Did you know that when you’re one of Subway’s athletes, you get a sandwich bust in your likeness?

    Georgia linebacker Jarvis Jones is the latest to enter into this tradition. Detroit Lions DT Ndamukong Suh shares this, along with a memory of his old bust, on Facebook, saying, “Welcome to the Subway fam Jarvis Jones! I remember mine like it was yesterday!!!!”

    The img.ly post comes with the caption:

    Welcome to the family @sacmanjones_29 ! I remember mine like it was yesterday! #FamousFan @subway #smokehousebbqchicken sculpture

    Jones is also showing his sandwich pride, tweeting out some different angles as captured with Instagram:

    (image)

    Why don’t they put these in the commercials? These are much better than this actual Smokehouse BBQ Chicken ad from Subway:

    At least they’re actively promoting the sandwich art on social media (and in interviews):

  • Google Launches Enhanced Campaigns Upgrade Center

    Google announced the launch of a new upgrade center for upgrading AdWords accounts to Enhanced Campaigns today. The center lets advertisers upgrade several campaigns at once and merge them together.

    In a blog post, Google explains how to use the tool:

    There are two basic ways to use the upgrade center.

    1. Bulk upgrade

    This option provides a fast way to upgrade multiple campaigns that don’t need to be merged. Rather than upgrade campaigns one at a time, you can select several campaigns, choose a mobile bid adjustment, view traffic estimates, and upgrade with fewer clicks.

    2. Merge and upgrade

    If you have search-only or search+display campaigns that have similar keywords and location targets, the upgrade center automatically identifies them as candidates to merge. You’ll then be able to preview and adjust the proposed campaign settings, ad groups, and extensions for the merged campaign. By default, ad groups and budgets will be combined. Other campaign level settings and extensions in the Primary campaign will override those in the Secondary campaign.

    The upgrade center will be rolling out over the coming weeks. It can be found in the left-hand navigation bar on the Campaigns tab.

    All campaigns will be upgraded to Enhanced Campaigns on July 22.

  • Microsoft Launches ‘versaTiles’ Ad Format For Outlook.com

    Microsoft introduced a new ad format for Outlook.com today, called versaTiles. It’s currently being sold in the U.S. and Brazil, but will also soon launch in Australia, Canada, France, Germany, Italy, Japan, Netherlands, Spain and the U.K.

    The format consists of flexible-sized tile strips, which Microsoft says gives advertisers a “valuable surface area” to deliver relevant content in scenarios where people expect commercial content. Here’s a look:

    There are three customizable templates that advertisers can use: Online Retailer, Media Showcase and Catalogue.

    Online Retailer, Microsoft says, “Allows the advertiser to capture consumers’ attention, and showcase a product or a service, and then connect the consumer to the advertiser’s online distributors. From a consumer standpoint, this template enables them to locate brick and mortar retail outlets in their area, alongside viewing and discovering product or service details within the tile experience.”

    The company adds that Media Showcase “Gives a unique ad experience to get a brand’s message conveyed by using a combination of video, image galleries and text. The template is applicable to multiple verticals aiming at building awareness and consumer engagement.”

    Catalogues simply lets you feature multiple products. The first tile shows the theme, and the others show different products.

    In addition to three templates, the versaTiles format also consists of three states: Default, Hover and Click. The default state is what consumers see when they log in to Outlook.com, the hover state shows more in-depth info and/or additional images and info when they hover over the ad, and the click state has the ad expand when clicked, showing different creative elements or brand messaging (which varies by template).

  • Tumblr Launches New Mobile Ads

    Users of Tumblr’s iOS and Android apps will begin to see ads in their streams – ones that look and feel like organic blog posts inside the apps.

    The new ad push marks a first for Tumblr – putting sponsored content in the same context as regular posts. First reported by AdAge, users will now see as many as four of the new ads per day. You’ll be able to tell the difference between the ads and the normal posts by a dollar sign that accompanies the sponsored content.

    You may recall that this dollar sign is the same way that Tumblr identified its current ads – the decidedly less-intrusive “Radar” ads that Tumblr debuted in May of last year. These ads appear on the “Spotlight” page, which highlights editor-selected blogs, as well as the Radar, which is seen on the sidebar of Tumblr pages. Back in May, the starting bid for these “Radar” ads was reported to be around $25,000.

    “This mobile advertising opportunity is native to how our consumers experience content on our apps; as a continuous stream,” said Tumblr sale head Lee Brown in a statement.

    Tumblr is launching the new ads with a handful of high-profile partners, including ABC Entertainment and ABC Family, GE, Pepsi, and Warner Bros. You can expect to see heavy promotion from Warner Bros, who will be serving up ads for upcoming films to the Tumblr mobile community.

    This is a mobile-only push, but only for now. Tumblr confirmed to AdAge that these new types of in-stream ads will eventually pop up on the desktop version of Tumblr, but they were unwilling to give a specific date.

    Tumblr recently announced that they had crossed the 100 million blogs milestone. As of now, there are over 48.6 billion posts on the site.

  • Is Keyword Targeting What Businesses Need To Get More Out Of Twitter?

    Twitter may have gotten significantly more useful for businesses this week with the launch of keyword targeting for its ad platform. The company began rolling out the feature on Wednesday in all languages and markets where Twitter ads are supported.

    Do you think the new targeting capability makes Twitter more valuable for businesses? Let us know in the comments.

    With keyword targeting, advertisers can reach users based on words in their recent tweets and in tweets with which they’ve recently engaged.

    “This is an important new capability – especially for those advertisers looking for signals of intent – because it lets marketers reach users at the right moment, in the right context,” says Twitter Revenue product manager Nipoon Malhotra. “For example: let’s say a user tweets about enjoying the latest album from their favorite band, and it so happens that band is due to play a concert at a local venue. That venue could now run a geotargeted campaign using keywords for that band with a Tweet containing a link to buy the tickets. That way, the user who tweeted about the new album may soon see that Promoted Tweet in their timeline letting them know tickets are for sale in their area.”

    According to Twitter, users are more likely to engage with promoted tweets that take advantage of keyword targeting. The company ran tests with clients like GoPro, Everything Everywhere, Microsoft Japan and Walgreens, and found this to be the case.

    “After testing keyword targeting in timeline across four marketing campaigns, GoPro saw close to two million impressions, and engagement rates as high as 11 percent on Tweets promoted using the new feature,” says Malhotra.

    Twitter’s new offering has been drawing comparisons to search advertising. Peter Kafka at All Things D says it’s Twitter making its ad pitch “more Googley”. Ingrid Lunden at TechCrunch also compares it to search.

    In fact, even Malhotra plays the search card, saying, “Setting up a campaign to target keywords in the timeline is very similar to the setup process for search. Enter the keywords you want to target, choose whether you want to use phrase match or unordered keyword match, and specify your other targeting options such as geographic location, device and gender.”

    As Kafka notes, however, some have been quick to point out that it’s not exactly like search in that the intent expressed in a tweet is hardly reflective of the intent of a search. Essentially, when you’re searching, you’re looking for something. When you’re tweeting, you’re simply saying something. Occasionally, that might be a signal of something you’re interested in buying, but how often?

    The set-up process is about as easy as it could possibly be. You simply go to Twitter’s Advertisers page, log in, and follow the steps. Tell Twitter who you want to target, what you want to promote, how much you want to spend, and how you want to pay. That’s pretty much it.

    Twitter Keyword targeting

    Some are still skeptical about how effective the new feature will make Twitter for advertisers, but it certainly can’t hurt. The functionality is available in the full Twitter Ads user interface as well as through the Ads API.

    What do you think? Does this make Twitter a better place to advertise? Share your thoughts in the comments.

  • Twitter Ads Get Keyword Targeting

    Twitter has announced the launch of keyword targeting in timelines as a new feature for its ad platform. It is rolling out today in all languages and markets (where Twitter Ads are supported).

    The feature is available in the full Twitter Ads user interface, as well as through the Ads API. It lets advertisers reach users based on the keywords in recent tweets, as well as the tweets with which they have recently engaged.

    Twitter Ads with keyword targeting

    “Advertising on Twitter works well because the experience is built into the fabric of the product: a Promoted Tweet, for instance, is simply a Tweet targeted using the interest graph formed from public user signals like follows,” writes Twitter Revenue product manager Nipoon Malhotra in a blog post. “Until today, the content of Tweets has only been one factor among many in shaping the interest graph. Today, it becomes a first-class citizen.”

    “This is an important new capability – especially for those advertisers looking for signals of intent – because it lets marketers reach users at the right moment, in the right context,” says Malhotra. “For example: let’s say a user tweets about enjoying the latest album from their favorite band, and it so happens that band is due to play a concert at a local venue. That venue could now run a geotargeted campaign using keywords for that band with a Tweet containing a link to buy the tickets. That way, the user who tweeted about the new album may soon see that Promoted Tweet in their timeline letting them know tickets are for sale in their area.”

    Twitter says users won’t notice any difference in their own Twitter experience. In other words, just because there’s a new targeting capability, users won’t start seeing more ads crammed into their timelines.

  • Yahoo Ad Revenue Disappoints, But Paid Search Clicks Are Up

    Yahoo reported its Q1 earnings on Tuesday, with GAAP revenue at $1,140 million for the quarter. Revenue ex-TAC was $1,074 million.

    The company posted GAAP income from operations at $186 million and Non-GAAP income from operations at $224 million.

    In the search department, GAAP revenue was $425 million for the quarter, down 10% from the same quarter last year, when it was $470 million. Search revenue ex-TAC was $409 million for the quarter, up 6% from $384 million for the first quarter of 2012.Paid Clicks (excluding Korea) increased by about 16% compared to the first quarter of 2012. Price-per-Click (excluding Korea) decreased by 7% for that time period.

    CEO Marissa Mayer said, “I’m pleased with Yahoo!’s performance in the first quarter. We saw continued stability in our business, strengthened our team, and started the year with fast execution against our products and partnerships. We are moving quickly to roll out beautifully designed, more intuitive experiences for our users. I’m confident that the improvements we’re making to our products will set up the Company for long-term growth.”

    As Yahoo News is reporting (okay, it’s just the AP), Yahoo’s earnings gain is being overshadowed by its ad slump. GAAP dsplay revenue dropped 11% year-over-year.

    Here’s the release in its entirety:

    SUNNYVALE, Calif.–(BUSINESS WIRE)–Yahoo! Inc. (NASDAQ: YHOO) today reported results for the first quarter ended March 31, 2013.

    “Supplemental Financial Data and GAAP to Non-GAAP Reconciliations”

    Q1 2013
    GAAP revenue $1,140 million
    Revenue ex-TAC $1,074 million
    GAAP income from operations $186 million
    Non-GAAP income from operations* $224 million
    GAAP net earnings per diluted share $0.35
    Non-GAAP net earnings per diluted share* $0.38

    *Excludes stock-based compensation expense of $45 million.

    “I’m pleased with Yahoo!’s performance in the first quarter. We saw continued stability in our business, strengthened our team, and started the year with fast execution against our products and partnerships,” said Yahoo! CEO Marissa Mayer. “We are moving quickly to roll out beautifully designed, more intuitive experiences for our users. I’m confident that the improvements we’re making to our products will set up the Company for long-term growth.”

    GAAP revenue was $1,140 million for the first quarter of 2013, a 7 percent decrease from the first quarter of 2012. Revenue excluding traffic acquisition costs (“revenue ex-TAC”) was $1,074 million for the first quarter of 2013, flat compared to the first quarter of 2012.

    Adjusted EBITDA for the first quarter of 2013 was $386 million, flat compared to the same period of 2012.

    Commencing this quarter, Yahoo! is excluding stock-based compensation expense from its reported non-GAAP income from operations, non-GAAP net earnings and non-GAAP net earnings per diluted share. The relevant prior period amounts have been revised to exclude stock-based compensation expense to conform to the current presentation.

    GAAP income from operations increased 10 percent to $186 million in the first quarter of 2013, compared to $169 million in the first quarter of 2012. Non-GAAP income from operations was $224 million in the first quarter of 2013, compared to $231 million in the first quarter of 2012. Non-GAAP income from operations for the quarter would have been $179 million including stock-based compensation expense of $45 million.

    GAAP net earnings for the first quarter of 2013 was $390 million, a 36 percent increase from the same period of 2012. Non-GAAP net earnings for the first quarter of 2013 was $420 million, a 26 percent increase from the same period of 2012. Non-GAAP net earnings for the quarter would have been $386 million including stock-based compensation expense of $34 million, net of tax.

    GAAP net earnings per diluted share was $0.35 in the first quarter of 2013, compared to $0.23 in the first quarter of 2012. Non-GAAP net earnings per diluted share was $0.38 in the first quarter of 2013, compared to $0.27 in the first quarter of 2012. Non-GAAP net earnings per diluted share for the quarter would have been $0.35 per share including $0.03, net of tax, related to stock-based compensation.

    Business Highlights

    • Yahoo! launched its new, fast and personalized Yahoo.com experience, with a customizable news feed, infinite scroll, and intuitive interface optimized for mobile devices, tablets and the Web.
    • Yahoo! continued to improve the Mail experience, announcing a partnership with Dropbox to make it easier for users to share and store larger files as attachments.
    • Yahoo! acquired Snip.it, Alike, and Jybe, further accelerating the Company’s efforts to build world-class technology and engineering teams in mobile and personalization.
    • Yahoo! also announced the acquisition of Summly, a company that helps simplify the way we get information – making it faster, easier to read and more concise. As part of the acquisition, Yahoo! acquired Summly’s technology and intellectual property, which it plans to integrate across its mobile content experiences.
    • Yahoo! continued to invest in people, building out its executive team and recruiting exceptional talent from around the world. Yahoo! welcomed Sandy Gould, senior vice president of talent acquisition and development; and Bob Stohrer, senior vice president of brand creative.
    • The Company announced a global, non-exclusive agreement with Google to display ads on various Yahoo! Properties and certain co-branded sites using Google’s AdSense for Content and AdMob services. By adding Google to its list of world-class contextual ad partners, Yahoo! can serve users with ads that are even more meaningful and personal.
    • Yahoo! launched the second season of its acclaimed series, Burning Love. The popular series, which spoofs reality dating shows and features A-list comedians and stars, premiered on Yahoo! Screen and aired on cable television for the first time.

    First Quarter 2013 Financial Highlights

    Display:

    • GAAP display revenue was $455 million for the first quarter of 2013, an 11 percent decrease compared to $511 million for the first quarter of 2012.
    • Display revenue ex-TAC was $402 million for the first quarter of 2013, an 11 percent decrease compared to $454 million for the first quarter of 2012.
    • The Number of Ads Sold (excluding Korea) decreased approximately 7 percent compared to the first quarter of 2012.
    • Price-per-Ad (excluding Korea) decreased approximately 2 percent compared to the first quarter of 2012.

    Search:

    • GAAP search revenue was $425 million for the first quarter of 2013, a 10 percent decrease compared to $470 million for the first quarter of 2012.
    • Search revenue ex-TAC was $409 million for the first quarter of 2013, a 6 percent increase compared to $384 million for the first quarter of 2012.
    • Paid Clicks (excluding Korea) increased approximately 16 percent compared to the first quarter of 2012.
    • Price-per-Click (excluding Korea) decreased approximately 7 percent compared to the first quarter of 2012.

    Cash Balance:

    • Cash, cash equivalents, and investments in marketable debt securities were $5.4 billion as of March 31, 2013 compared to $6 billion as of December 31, 2012, a decrease of $0.6 billion.
    • During the first quarter of 2013, Yahoo! repurchased 38 million shares for $775 million.

    Conference Call

    Yahoo! will host a conference call to discuss first quarter 2013 results at 5 p.m. Eastern Time today. On the conference call, Yahoo! will also provide its business outlook for the second quarter and full year of 2013. A live Webcast of the conference call, together with supplemental financial information, can be accessed through the Company’s Investor Relations Website at http://investor.yahoo.com/results.cfm. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available for one week following the conference call by calling toll-free (855) 859-2056 or toll (404) 537-3406, conference ID number: 31852463.

    Non-GAAP Financial Measures

    This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): revenue ex-TAC; adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per share – diluted; and free cash flow.

    Revenue ex-TAC is GAAP revenue less traffic acquisition costs. Adjusted EBITDA, non-GAAP income from operations, non-GAAP net earnings and non-GAAP net earnings per share – diluted, exclude from the most comparable GAAP financial measures certain gains, losses, and expenses that we do not believe are indicative of ongoing results, and exclude stock-based compensation expense. Adjusted EBITDA also excludes taxes, depreciation, amortization of intangible assets, other income, net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests. Free cash flow is GAAP net cash provided by operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net and dividends received from equity investees.

    These measures may be different than non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). Explanations of the Company’s non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Financial Statements,” “Supplemental Financial Data and GAAP to Non-GAAP Reconciliations,” and “GAAP to Non-GAAP Reconciliations.”

    About Yahoo!

    Yahoo! is focused on making the world’s daily habits inspiring and entertaining. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo! is headquartered in Sunnyvale, California, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom (pressroom.yahoo.net) or the company’s blog (yodel.yahoo.com).

    “Affiliates” refers to the third-party entities that have integrated Yahoo!’s advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”).

    “Alibaba Group” means Alibaba Group Holding Limited.

    “Net earnings” means net income attributable to Yahoo! Inc., and “net earnings per diluted share” means net income attributable to Yahoo! Inc. common stockholders per share – diluted.

    “Number of Ads Sold” is defined as the total number of ads displayed, or impressions, for paying advertisers on Yahoo! Properties.

    “Paid Clicks” are defined as the total number of times an end-user clicks on a sponsored listing on Yahoo! Properties and Affiliate sites for which an advertiser pays on a per click basis.

    “Price-per-Ad” is defined as display revenue from Yahoo! Properties divided by our Number of Ads Sold.

    “Price-per-Click” is defined as search revenue divided by our Paid Clicks.

    Additional information about how “Number of Ads Sold,” “Paid Clicks,” “Price-per-Ad,” and “Price-per-Click” are defined and calculated is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, which is on file with the SEC and available on the SEC’s website at www.sec.gov. Due to the closure of the Korea business in the fourth quarter of 2012, “Number of Ads Sold”, “Paid Clicks”, “Price-per-Ad”, and “Price-per-Click,” as presented above, exclude the Korea market for all periods.

    “Search Agreement” refers to the Search and Advertising Services and Sales Agreement between Yahoo! and Microsoft Corporation, as amended.

    “TAC” refers to traffic acquisition costs. TAC consists of payments to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo! Properties.

    “Yahoo! Properties” refers to the online properties and services that Yahoo! provides to users.

    This press release contains forward-looking statements concerning Yahoo!’s expected financial performance and Yahoo!’s strategic and operational plans (including, without limitation, the quotation from management). Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, acceptance by users of new products and services (including, without limitation, products and services for mobile devices and alternative platforms); Yahoo!’s ability to compete with new or existing competitors; reduction in spending by, or loss of, advertising customers; risks associated with the Search Agreement with Microsoft Corporation; risks related to Yahoo!’s regulatory environment; interruptions or delays in the provision of Yahoo!’s services; security breaches; risks related to joint ventures and the integration of acquisitions; risks related to Yahoo!’s international operations; adverse results in litigation; Yahoo!’s ability to protect its intellectual property and the value of its brands; dependence on third parties for technology, services, content, and distribution; and general economic conditions. All information set forth in this press release and its attachments is as of April 16, 2013. Yahoo! does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances. More information about potential factors that could affect the Company’s business and financial results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, which is on file with the SEC and available on the SEC’s website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo!’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, which will be filed with the SEC in the second quarter of 2013.

    Yahoo! and the Yahoo! logos are trademarks and/or registered trademarks of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.

    Yahoo! Inc.
    Unaudited Condensed Consolidated Balance Sheets
    (in thousands)
    December 31, March 31,
    2012 2013
    ASSETS
    Current assets:
    Cash and cash equivalents $ 2,667,778 $ 1,174,633
    Short-term marketable debt securities 1,516,175 1,838,527
    Accounts receivable, net 1,008,448 943,658
    Prepaid expenses and other current assets 460,312 644,204
    Total current assets 5,652,713 4,601,022
    Long-term marketable debt securities 1,838,425 2,382,026
    Alibaba Group Preference Shares 816,261 830,925
    Property and equipment, net 1,685,845 1,612,690
    Goodwill 3,826,749 3,803,433
    Intangible assets, net 153,973 136,610
    Other long-term assets 289,130 239,427
    Investments in equity interests 2,840,157 2,884,846
    Total assets $ 17,103,253 $ 16,490,979
    LIABILITIES AND EQUITY
    Current liabilities:
    Accounts payable $ 184,831 $ 110,162
    Accrued expenses and other current liabilities 808,475 720,463
    Deferred revenue 296,926 308,462
    Total current liabilities 1,290,232 1,139,087
    Long-term deferred revenue 407,560 370,414
    Capital lease and other long-term liabilities 124,587 121,475
    Deferred and other long-term tax liabilities, net 675,271 674,077
    Total liabilities 2,497,650 2,305,053
    Total Yahoo! Inc. stockholders’ equity 14,560,200 14,139,915
    Noncontrolling interests 45,403 46,011
    Total equity 14,605,603 14,185,926
    Total liabilities and equity $ 17,103,253 $ 16,490,979

     

    Yahoo! Inc.
    Unaudited Condensed Consolidated Statements of Income
    (in thousands, except per share amounts)
    Three Months Ended
    March 31,
    2012 2013
    Revenue $ 1,221,233 $ 1,140,368
    Operating expenses:
    Cost of revenue – traffic acquisition costs 144,091 66,068
    Cost of revenue – other 253,980 278,007
    Sales and marketing 285,267 257,019
    Product development 228,478 219,580
    General and administrative 124,271 133,421
    Amortization of intangibles 10,053 7,365
    Restructuring charges (reversals), net 5,717 (7,062 )
    Total operating expenses 1,051,857 954,398
    Income from operations 169,376 185,970
    Other income, net 2,278 17,072
    Income before income taxes and earnings in equity interests 171,654 203,042
    Provision for income taxes (56,419 ) (29,736 )
    Earnings in equity interests 172,243 217,588
    Net income 287,478 390,894
    Less: Net income attributable to noncontrolling interests (1,135 ) (609 )
    Net income attributable to Yahoo! Inc. $ 286,343 $ 390,285
    Net income attributable to Yahoo! Inc. common stockholders per share – diluted $ 0.23 $ 0.35
    Shares used in per share calculation – diluted 1,226,486 1,108,095
    Stock-based compensation expense by function:
    Cost of revenue – other $ 2,893 $ 3,578
    Sales and marketing 21,097 16,045
    Product development 19,471 8,263
    General and administrative 12,505 16,719
    Supplemental Financial Data:
    Revenue ex-TAC $ 1,077,142 $ 1,074,300
    Adjusted EBITDA $ 384,307 $ 385,605
    Free cash flow $ 195,823 $ 149,908

     

    Yahoo! Inc.
    Unaudited Condensed Consolidated Statements of Cash Flows
    (in thousands)
    Three Months Ended
    March 31,
    2012 2013
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income $ 287,478 $ 390,894
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation 122,750 143,864
    Amortization of intangible assets 31,345 18,410
    Stock-based compensation expense 55,966 44,605
    Non-cash restructuring charges – 547
    Accrued dividend income related to Alibaba Group Preference Shares – (20,251 )
    Dividends received from equity investees – 12,000
    Tax benefits from stock-based awards 1,014 9,537
    Excess tax benefits from stock-based awards (8,161 ) (12,807 )
    Deferred income taxes (4,399 ) (20,158 )
    Earnings in equity interests (172,243 ) (217,588 )
    (Gain) loss from sale of investments, assets, and other, net (3,857 ) 11,905
    Changes in assets and liabilities, net of effects of acquisitions:
    Accounts receivable, net 102,641 57,853
    Prepaid expenses and other (9,430 ) 19,707
    Accounts payable (42,442 ) (71,135 )
    Accrued expenses and other liabilities (43,988 ) (123,472 )
    Deferred revenue (19,221 ) (25,229 )
    Net cash provided by operating activities 297,453 218,682
    CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment, net (109,791 ) (69,581 )
    Purchases of marketable debt securities (176,220 ) (1,481,293 )
    Proceeds from sales of marketable debt securities 133,961 424,347
    Proceeds from maturities of marketable debt securities 77,700 183,100
    Purchases of intangible assets (1,802 ) (1,128 )
    Acquisitions, net of cash acquired – (10,147 )
    Other investing activities, net (7,280 ) 3,822
    Net cash used in investing activities (83,432 ) (950,880 )
    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock, net 11,623 61,108
    Repurchases of common stock (70,500 ) (775,075 )
    Excess tax benefits from stock-based awards 8,161 12,807
    Tax withholdings related to net share settlements of restricted stock awards and restricted stock units (31,504 ) (43,689 )
    Other financing activities, net (1,013 ) (1,405 )
    Net cash used in financing activities (83,233 ) (746,254 )
    Effect of exchange rate changes on cash and cash equivalents 26,790 (14,693 )
    Net change in cash and cash equivalents 157,578 (1,493,145 )
    Cash and cash equivalents, beginning of period 1,562,390 2,667,778
    Cash and cash equivalents, end of period $ 1,719,968 $ 1,174,633

     

    Yahoo! Inc.

    Note to Unaudited Condensed Consolidated Financial Statements

    This press release and its attachments include the non-GAAP financial measures of revenue excluding traffic acquisition costs (“revenue ex-TAC”); adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per diluted share; and free cash flow, which are reconciled to revenue; net income attributable to Yahoo! Inc. (in the case of adjusted EBITDA and non-GAAP net earnings); income from operations; net income attributable to Yahoo! Inc. common stockholders per share – diluted; and net cash provided by operating activities, which we believe are the most comparable GAAP measures. We use these non-GAAP financial measures for internal managerial purposes and to facilitate period-to-period comparisons. We describe limitations specific to each non-GAAP financial measure below. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Further, management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, revenue, net income attributable to Yahoo! Inc., income from operations, net income attributable to Yahoo! Inc. common stockholders per share – diluted, and net cash provided by operating activities calculated in accordance with GAAP.

    Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue less TAC. TAC consists of payments made to third-party entities that have integrated our advertising offerings into their Websites or other offerings (those Websites and other offerings, “Affiliate sites”) and payments made to companies that direct consumer and business traffic to Yahoo!’s online properties and services (“Yahoo! Properties”). Based on the terms of the Search Agreement with Microsoft, Microsoft retains a revenue share of 12 percent of the net (after TAC) search revenue generated on Yahoo! Properties and Affiliate sites in transitioned markets. Yahoo! reports the net revenue it receives under the Search Agreement as revenue and no longer presents the associated TAC. Accordingly, for transitioned markets Yahoo! reports GAAP revenue associated with the Search Agreement on a net (after TAC) basis rather than a gross basis. For markets that have not yet transitioned, revenue continues to be recorded on a gross basis, and TAC is recorded as a part of operating expenses. We present revenue ex-TAC to provide investors a metric used by the Company for evaluation and decision-making purposes during the Microsoft transition and to provide investors with comparable revenue numbers when comparing periods preceding, during and following the transition period. A limitation of revenue ex-TAC is that it is a measure which we have defined for internal and investor purposes that may be unique to the Company, and therefore it may not enhance the comparability of our results to other companies in our industry who have similar business arrangements but address the impact of TAC differently. Management compensates for these limitations by also relying on the comparable GAAP financial measures of revenue and total operating expenses, which includes TAC in non-transitioned markets.

    Adjusted EBITDA is defined as net income attributable to Yahoo! Inc. before taxes, depreciation, amortization of intangible assets, stock-based compensation expense, other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and other gains, losses, and expenses that we do not believe are indicative of our ongoing results. Yahoo! presents adjusted EBITDA because the exclusion of certain gains, losses, and expenses facilitates comparisons of the operating performance of our Company on a period to period basis. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for results reported under GAAP. These limitations include: adjusted EBITDA does not reflect tax payments and such payments reflect a reduction in cash available to us; adjusted EBITDA does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses; adjusted EBITDA does not include stock-based compensation expense related to the Company’s workforce; adjusted EBITDA also excludes other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and other gains, losses, and expenses that we do not believe are indicative of our ongoing results, and these items may represent a reduction or increase in cash available to us; and adjusted EBITDA is a measure that may be unique to the Company, and therefore it may not enhance the comparability of our results to other companies in our industry. Management compensates for these limitations by also relying on the comparable GAAP financial measure of net income attributable to Yahoo! Inc., which includes taxes, depreciation, amortization, stock-based compensation expense, other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and the other gains, losses and expenses that are excluded from adjusted EBITDA.

    Non-GAAP income from operations is defined as income from operations excluding certain gains, losses, and expenses that we do not believe are indicative of our ongoing operating results and further adjusted to exclude stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on income from operations. We consider non-GAAP income from operations to be a profitability measure which facilitates the forecasting of our operating results for future periods and allows for the comparison of our results to historical periods. A limitation of non-GAAP income from operations is that it does not include all items that impact our income from operations for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measure of income from operations which includes the gains, losses, and expenses that are excluded from non-GAAP income from operations.

    Non-GAAP net earnings is defined as net income attributable to Yahoo! Inc. excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing results and further adjusted to exclude stock-based compensation expense and its related tax effects. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on net income and net income per share. We consider non-GAAP net earnings and non-GAAP net earnings per diluted share to be profitability measures which facilitate the forecasting of our results for future periods and allow for the comparison of our results to historical periods. A limitation of non-GAAP net earnings and non-GAAP net earnings per diluted share is that they do not include all items that impact our net income and net income per diluted share for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measures of net income attributable to Yahoo! Inc. and net income attributable to Yahoo! Inc. common stockholders per share – diluted, both of which include the gains, losses, expenses and related tax effects that are excluded from non-GAAP net earnings and non-GAAP net earnings per diluted share.

    Free cash flow is a non-GAAP financial measure defined as net cash provided by operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net and dividends received from equity investees. We consider free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by the business after the acquisition of property and equipment, which can then be used for strategic opportunities including, among others, investing in the Company’s business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in the Company’s unaudited condensed consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

    Yahoo! Inc.
    Supplemental Financial Data and GAAP to Non-GAAP Reconciliations
    (in thousands)
    Three Months Ended
    March 31,
    2012 2013
    Revenue for groups of similar services:
    Display $ 511,217 $ 455,071
    Search 470,397 424,687
    Other 239,619 260,610
    Total revenue $ 1,221,233 $ 1,140,368
    Revenue excluding traffic acquisition costs (“revenue ex-TAC”) for groups of similar services:
    GAAP display revenue $ 511,217 $ 455,071
    TAC associated with display revenue (57,426 ) (53,047 )
    Display revenue ex-TAC $ 453,791 $ 402,024
    GAAP search revenue $ 470,397 $ 424,687
    TAC associated with search revenue for non-transitioned markets (86,665 ) (16,057 )
    Search revenue ex-TAC $ 383,732 $ 408,630
    Other GAAP revenue $ 239,619 $ 260,610
    TAC associated with other GAAP revenue – 3,036
    Other revenue ex-TAC $ 239,619 $ 263,646
    Revenue ex-TAC:
    GAAP revenue $ 1,221,233 $ 1,140,368
    TAC (144,091 ) (66,068 )
    Revenue ex-TAC $ 1,077,142 $ 1,074,300
    Revenue ex-TAC by segment:
    Americas:
    GAAP revenue $ 836,033 $ 842,195
    TAC (42,955 ) (37,522 )
    Revenue ex-TAC $ 793,078 $ 804,673
    EMEA:
    GAAP revenue $ 133,962 $ 94,824
    TAC (45,662 ) (11,536 )
    Revenue ex-TAC $ 88,300 $ 83,288
    Asia Pacific:
    GAAP revenue $ 251,238 $ 203,349
    TAC (55,474 ) (17,010 )
    Revenue ex-TAC $ 195,764 $ 186,339
    Total revenue ex-TAC $ 1,077,142 $ 1,074,300
    Direct costs by segment (1):
    Americas $ 179,225 $ 170,124
    EMEA 40,221 38,428
    Asia Pacific 51,491 55,014
    Global operating costs (2) 421,898 425,129
    Restructuring charges, net 5,717 (7,062 )
    Depreciation and amortization 153,248 162,092
    Stock-based compensation expense 55,966 44,605
    Income from operations $ 169,376 $ 185,970
    Reconciliation of net income attributable to Yahoo! Inc. to adjusted EBITDA:
    Net income attributable to Yahoo! Inc. $ 286,343 $ 390,285
    Depreciation and amortization 153,248 162,092
    Stock-based compensation expense 55,966 44,605
    Restructuring charges, net 5,717 (7,062 )
    Other income, net (2,278 ) (17,072 )
    Provision for income taxes 56,419 29,736
    Earnings in equity interests (172,243 ) (217,588 )
    Net income attributable to noncontrolling interests 1,135 609
    Adjusted EBITDA $ 384,307 $ 385,605
    Reconciliation of net cash provided by operating activities to free cash flow:
    Net cash provided by operating activities $ 297,453 $ 218,682
    Acquisition of property and equipment, net (109,791 ) (69,581 )
    Dividends received from equity investees – (12,000 )
    Excess tax benefits from stock-based awards 8,161 12,807
    Free cash flow $ 195,823 $ 149,908
    (1) Direct costs for each segment include cost of revenue (excluding TAC) and other operating expenses that are directly attributable to the segment such as employee compensation expense (excluding stock-based compensation expense), local sales and marketing expenses, and facilities expenses.
    (2) Global operating costs include product development, service engineering and operations, general and administrative, and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment.

     

    Yahoo! Inc.
    GAAP to Non-GAAP Reconciliations
    (in thousands, except per share amounts)
    Three Months Ended
    March 31,
    2012 2013
    GAAP income from operations $ 169,376 $ 185,970
    (a) Restructuring charges, net 5,717 (7,062 )
    (b) Stock-based compensation expense 55,966 44,605
    Non-GAAP income from operations (3) $ 231,059 $ 223,513
    GAAP net income attributable to Yahoo! Inc. $ 286,343 $ 390,285
    (a) Restructuring charges, net 5,717 (7,062 )
    (b) Stock-based compensation expense 55,966 44,605
    (c) To adjust the provision for income taxes to exclude the tax impact of items (a) and (b) above for the three months ended March 31, 2012 and 2013 (14,444 ) (7,646 )
    Non-GAAP net earnings (4) $ 333,582 $ 420,182
    GAAP net income attributable to Yahoo! Inc. common stockholders per share – diluted $ 0.23 $ 0.35
    Non-GAAP net earnings per share – diluted (4) $ 0.27 $ 0.38
    Shares used in per share calculation – diluted 1,226,486 1,108,095
    (3) Commencing in 2013, non-GAAP income from operations excludes stock-based compensation expense. Prior period amounts have been revised to conform to the current presentation.
    (4) Commencing in 2013, non-GAAP net earnings and non-GAAP net earnings per share – diluted exclude stock-based compensation expense and its related tax effects. Prior period amounts have been revised to conform to the current presentation.

  • ‘Ship My Pants’ Ad Seems To Be Working For Kmart

    Earlier this week, we looked at a new Kmart ad entitled, “Ship My Pants”. It pretty much came out of left-field. I don’t think anyone would’ve expected an ad like this from Kmart, and perhaps that’s the point. If you haven’t seen it yet, take a moment:

    Done? Go ahead, watch it again.

    Yeah, that Kmart ad has almost ten million YouTube views. Ten MILLION. A Kmart ad. It hasn’t even been up a week yet.

    Naturally, it’s generating a lot of buzz in social media. Here are some recent tweets (about 30 more have come in since I started writing this a few minutes ago):

    Kmart itself seems to be having a blast with it:

    Whether all of the social buzz leads to more people going to Kmart and having things shipped remains to be seen.