Exhibit 99.1
FOR IMMEDIATE RELEASE
YAHOO! REPORTS FOURTH QUARTER AND
1998 FISCAL YEAR END FINANCIAL RESULTS
FOURTH QUARTER PRO FORMA NET INCOME OF $0.21 PER SHARE
SANTA CLARA, CALIF.-JAN. 12, 1999-Yahoo! Inc. (NASDAQ: YHOO) today
reported net revenues totaling $76,410,000 for the fourth quarter ended Dec.
31, 1998, nearly triple the net revenues of $26,584,000 for the fourth
quarter of 1997. Pro forma net income for the fourth quarter of 1998 was
$25,043,000 or $0.21 per share diluted, excluding the effects of amortization
of intangible assets, a one-time charge of $2,100,000 incurred in connection
with the acquisition of Yoyodyne Entertainment, Inc., and a one-time charge
of $2,300,000 for in-process research and development purchased in the
December 1998 acquisition of HyperParallel, Inc., a data analysis company.
This compares with pro forma net income of $1,909,000 or $0.02 per share
diluted for the fourth quarter of 1997, excluding the effect of a one-time
charge of $3,850,000 incurred in connection with the acquisition of Four11
Corporation. Including the amortization of intangibles and one-time charges,
the net income for the fourth quarter of 1998 was $18,524,000 or $0.16 per
share diluted as compared to a net loss for the fourth quarter of 1997 of
$1,941,000 or $0.02 per share diluted.
Net revenues for fiscal 1998 were $203,270,000, nearly triple the net
revenues of $70,450,000 for fiscal 1997. Pro forma net income for fiscal
1998 was $49,933,000 or $0.45 per share diluted compared to a net loss of
$425,000 or $0.00 per share diluted in fiscal 1997. Pro forma fiscal 1998
results exclude the amortization of intangible assets, the second quarter
one-time charge of $15,000,000 for in-process research and development
purchased in the acquisition of Viaweb Inc., and the fourth quarter one-time
charges relating to the Yoyodyne and HyperParallel acquisitions. Including
the amortization of intangibles and one-time charges, fiscal 1998 net income
was $25,588,000 or $0.23 per share diluted. Pro forma fiscal 1997 results
exclude one-time charges of $25,095,000. Including these one-time charges,
the fiscal 1997 net loss was $25,520,000 or $0.29 per share diluted. In
light of the SEC's recent interpretation of the accounting for acquired
in-process technology, during the fourth quarter of 1998, Yahoo! reviewed the
accounting treatment used in connection with its acquisition of in-process
technologies. As a result and with the SEC's concurrence, Yahoo! has reduced
the second quarter of 1998 in-process research and development one-time
charge from $44,100,000 to $15,000,000 and adjusted the amortization of
related intangible assets for the second and third quarters of 1998.
In separate announcements today, Yahoo! said its Board of Directors has
approved a 2-for-1 common stock split and that the company has expanded
executive roles. Tim Koogle, Yahoo!'s president and chief executive officer,
has been appointed chairman and chief executive officer. Jeff Mallett has
been named president in addition to his current role as chief operating
officer of the company and has joined the Board of Directors.
During the month of December 1998, traffic on the Yahoo!-Registered
Trademark- global network of properties grew to an average of 167 million
page views per day, compared to an average of 144 million page views per day
in September 1998. Yahoo! Japan's traffic, which is included in the above
page view totals, increased to more than 13 million page views per day during
the month of December 1998 from approximately 11 million in September 1998.
A page view is defined as one electronic page of information displayed in
response to a user request.
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Yahoo! today also announced that its registration base reached more than
35 million unique registrations during the fourth quarter, representing the
number of registrations for Yahoo!'s registered member services. Yahoo!
currently provides more than a dozen registered services for its members,
including Yahoo! Shopping, Yahoo! Auctions, Yahoo! Clubs, Yahoo! Address
Book, Yahoo! Calendar, Yahoo! Mail, My Yahoo!, stock portfolios and travel
reservations and ticketing.
Yahoo!'s reach continues to grow across its network. The Yahoo! network
of properties is ranked No. 1 in reach among work users (49.6 percent) and is
second only to AOL Web sites in home reach (43.7 percent). In combined
work/home reach, Yahoo! is ranked No. 3 behind AOL Web sites and Microsoft
Web sites (Media Metrix, November 1998).
"1998 was another landmark year for Yahoo!. We consistently and
carefully managed the business, executed our original plan, and invested in
growing the company while increasing profits each quarter," said Tim Koogle,
chairman and CEO of Yahoo!. "Our performance exceeded expectations and is
the result of relentless expansion of value-added choices and services we
offer users, advertisers and merchants. While giving users the best
experience available on the Web, we delivered a uniquely powerful platform on
which advertisers and merchants can build their online businesses. We look
forward to continuing to maintain and strengthen our leadership position in
the coming year."
MERCHANT AND ADVERTISER SERVICES
During the fourth quarter, Yahoo! expanded its leading direct marketing
services through its acquisition of Yoyodyne Entertainment, Inc., a leader in
Internet permission-based, direct marketing. Yoyodyne's direct marketing
services are now available as a component of Yahoo!'s extensive suite of
advertising and merchant services, enabling Yahoo! to offer its clients even
greater options.
During the fourth quarter, Yahoo! extended its presence in online
commerce. The company unveiled a major new online shopping service, Yahoo!
Shopping (http://shopping.yahoo.com), that leverages Yahoo!'s acquisition of
Viaweb to provide a complete service for merchants to reach Yahoo!'s millions
of unique users. Online shoppers purchased a wide array of products from
more than 3,400 participating Yahoo! Store merchants during the holiday
season. In addition, Digital Chef, Genesis Direct, and Value America joined
Yahoo!'s premier merchant program to provide users easy access to purchase
gourmet food and kitchenware, sports merchandise, and consumer electronics
throughout relevant areas of the Yahoo! network.
DISTRIBUTION
In addition to ongoing distribution including Compaq, Gateway, Microsoft's
MSN and WebTV, Yahoo! recently secured global distribution on Hewlett-Packard
Pavilion PCs, featuring a co-branded HP My Yahoo! start page accessible directly
from the keyboard and the desktop. Yahoo! also entered a global distribution
agreement with IBM. The new IBM Aptiva PCs connect users to both Yahoo!'s Web
directory (http://www.yahoo.com) and a co-branded My Yahoo! personalized start
page (http://my.yahoo.com). Yahoo! and British Telecommunications plc (BT)
launched Yahoo! Click, a new service combining Internet access from BT with the
navigational and aggregation expertise of Yahoo! UK & Ireland
(http://www.yahoo.co.uk) for Web users in the United Kingdom. In addition,
Yahoo! announced plans to give wireless access to Yahoo! People Search
(http://people.yahoo.com) for users of the Palm VII-TM- organizer from Palm
Computing. The company expects to begin testing this service for Palm VII
organizer users in the first half of 1999.
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NETWORK PROGRAMMING AND SERVICES
During the quarter, Yahoo! expanded its
Web programming for users. The company added audio content to Yahoo! News
(http://dailynews.yahoo.com) through a relationship with National Public
Radio. Leveraging its extensive nationwide classifieds listings
(http://classifieds.yahoo.com), Yahoo! launched Yahoo! Employment
(http://employment.yahoo.com), a guide to researching and finding career
information on the Web. Yahoo! Sports (http://sports.yahoo.com) and Fox
Sports Online teamed to offer fans Coverage of the World Series
(http://foxsports.yahoo.com), a site hosted on Yahoo! Sports offering
comprehensive information on the 1998 World Series. Also in the sports
arena, Yahoo! launched Yahoo! Ski and Snow (http://snow.yahoo.com), providing
snow conditions, sports equipment, resort and travel information, and access
to relevant chats.
COMMUNITY AND COMMUNICATION SERVICES
During the fourth quarter, Yahoo! launched Yahoo! Address Book
(http://address.yahoo.com), an online contact manager enabling users to
access and use their address book from any Internet-connected computer. The
company also introduced a beta version of TrueSync for Yahoo!, allowing users
of Yahoo! Calendar (http://calendar.yahoo.com), Yahoo! Address Book and
Yahoo! To Do List to access their information from computers and devices
including Microsoft Outlook and 3Com Palm products. Yahoo! offers its
registered members a complete suite of communications and community tools,
including Yahoo! Mail, Yahoo! Pager, Yahoo! Chat, Yahoo! Message Boards,
Yahoo! Clubs, Yahoo! Calendar, Yahoo! Address Book and Yahoo! To Do List.
INTERNATIONAL SERVICES
During the fourth quarter, Yahoo! launched Yahoo! Spain
(http://www.yahoo.es), the newest addition to Yahoo!'s network of 15 world
properties. Openfind's Chinese language search engine was integrated into the
Yahoo! Chinese (http://gbchinese.yahoo.com and http://chinese.yahoo.com) Web
directory and navigational guide. Yahoo! Chinese has quickly become one of the
most popular navigational Web guides for Chinese language Web sites.
ABOUT YAHOO!
Yahoo! Inc. is a global Internet media company that offers a branded
network of comprehensive information, communication and shopping services to
millions of users daily. As the first online navigational guide to the Web,
www.yahoo.com is a leading guide in terms of traffic, advertising, household and
business user reach, and is one of the most recognized brands associated with
the Internet. The company's global Web network includes 15 world properties.
Yahoo! has offices in Europe, the Asia Pacific and Canada, and is headquartered
in Santa Clara, Calif.
This announcement contains forward-looking statements that involve risks
and uncertainties, including those relating to the company's ability to grow its
user and advertiser bases, its advertising and commerce revenues, and to
continue to generate profits and positive cash flow from operations. Actual
results may 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, the company's limited operating
history, the increasingly competitive and constantly changing environment for
advertising sales and for Yahoo! branded services, the early stage of the Web as
an advertising and commerce medium, and the company's dependence on advertising
revenues and on third parties for technology, content and distribution. More
information about potential factors that could affect the company's business and
financial results is included in the company's Annual Report on Form 10-K for
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YAHOO! REPORTS FOURTH QUARTER AND 1998 FISCAL YEAR END FINANCIAL RESULTS/PAGE 4
the year ended Dec. 31, 1997 and Quarterly Report on Form 10-Q for the period
ended Sept. 30, 1998, including (without limitation) under the captions,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Risk Factors," "Competition," and "Proprietary Rights," which are
on file with the Securities and Exchange Commission (http://www.sec.gov). The
accompanying condensed consolidated statements of operations and balance sheets
are an integral part of this announcement.
# # #
Yahoo! and the Yahoo! logo are registered trademarks of Yahoo! Inc.
All other names are trademarks and/or registered trademarks of
their respective owners.
Contacts:
Gary Valenzuela Diane Hunt
Chief Financial Officer Director, Corporate Communications
Yahoo! Inc. Yahoo! Inc.
(408) 731-3350 (408) 731-3441
garyval@yahoo-inc.com diane@yahoo-inc.com
YAHOO! INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
Net revenues $ 76,410 $ 26,584 $ 203,270 $ 70,450
Cost of revenues 7,889 3,790 23,825 10,885
---------- ----------- ----------- -----------
Gross profit 68,521 22,794 179,445 59,565
---------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 30,527 15,776 92,380 45,778
Product development 7,076 3,797 22,742 12,082
General and administrative 3,575 2,163 11,210 7,392
---------- ----------- ----------- -----------
Total operating expenses 41,178 21,736 126,332 65,252
---------- ----------- ----------- -----------
Income (loss) from operations 27,343 1,058 53,113 (5,687)
Investment income, net 6,142 755 14,579 4,535
Minority interests in operations
of consolidated subsidiaries (297) 96 68 727
---------- ----------- ----------- -----------
Income (loss) before income taxes 33,188 1,909 67,760 (425)
Provision for income taxes 8,145 - 17,827 -
---------- ----------- ----------- -----------
Pro forma net income (loss) $ 25,043 $ 1,909 $ 49,933 $ (425)
---------- ----------- ----------- -----------
Pro forma net income (loss) per share - diluted $ 0.21 $ 0.02 $ 0.45 $ 0.00
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Pro forma weighted average common shares and
equivalents used in per share calculation - diluted 117,246 106,689 112,050 87,336
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Note: The above pro forma condensed consolidated statements of operations
exclude the effects of the following:
- $2,300,000 of in-process research and development incurred in connection
with the acquisition of HyperParallel, Inc. during the quarter ended
December 31, 1998;
- $2,100,000 incurred in connection with the acquisition of Yoyodyne
Entertainment, Inc. during the quarter ended December 31, 1998;
- $15,000,000 of in-process research and development incurred in
connection with the acquisition of Viaweb Inc. during the quarter
ended June 30, 1998;
- $3,850,000 incurred in connection with the acquisition of Four11
Corporation during the quarter ended December 31, 1997;
- $21,245,000 of non-cash costs related to the termination of the Visa
Marketplace agreement incurred during the quarter ended June 30, 1997;
- amortization of purchased technology from the Viaweb acquisition of
$1,250,000 in the quarter ended December 31, 1998 and $2,917,000 in
the year ended December 31, 1998;
- amortization of intangibles from the Viaweb acquisition of $869,000
in the quarter ended December 31, 1998 and $2,028,000 in the year ended
December 31, 1998.
Note: The results for all periods presented have been restated to reflect the
merger of Yahoo! Inc. and Yoyodyne Entertainment, Inc. which was
completed on October 20, 1998 and has been accounted for as a pooling
of interests. Additionally, as a result of a change in accounting for
the Viaweb acquisition, Yahoo!'s pro forma net income for the second
quarter ended June 30, 1998 was adjusted to $6,730,000 or $0.06 per
share diluted and the pro forma net income for the third quarter ended
September 30, 1998 was adjusted to $14,890,000 or $0.13 per share
diluted. The above share and per share calculations do not reflect
the effect of the 2-for-1 stock split announced on January 12, 1999.
YAHOO! INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
Net revenues $ 76,410 $ 26,584 $ 203,270 $ 70,450
Cost of revenues 7,889 3,790 23,825 10,885
Amortization of purchased technology 1,250 - 2,917 -
---------- ----------- ----------- -----------
Total cost of revenues 9,139 3,790 26,742 10,885
---------- ----------- ----------- -----------
Gross profit 67,271 22,794 176,528 59,565
---------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 30,527 15,776 92,380 45,778
Product development 7,076 3,797 22,742 12,082
General and administrative 3,575 2,163 11,210 7,392
Amortization of intangibles 869 - 2,028 -
Other - non-recurring costs (1) 4,400 3,850 19,400 25,095
---------- ----------- ----------- -----------
Total operating expenses 46,447 25,586 147,760 90,347
---------- ----------- ----------- -----------
Income (loss) from operations 20,824 (2,792) 28,768 (30,782)
Investment income, net 6,142 755 14,579 4,535
Minority interests in operations
of consolidated subsidiaries (297) 96 68 727
---------- ----------- ----------- -----------
Income (loss) before income taxes 26,669 (1,941) 43,415 (25,520)
Provision for income taxes 8,145 - 17,827 -
---------- ----------- ----------- -----------
Net income (loss) $ 18,524 $ (1,941) $ 25,588 $ (25,520)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Net income (loss) per share - diluted $ 0.16 $ (0.02) $ 0.23 $ (0.29)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
Weighted average common shares and equivalents
used in per share calculation - diluted 117,246 89,713 112,050 87,336
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
(1) Non-recurring costs consist of the following:
- $2,300,000 of in-process research and development incurred in
connection with the acquisition of HyperParallel, Inc. during the
quarter ended December 31, 1998;
- $2,100,000 incurred in connection with the acquisition of Yoyodyne
Entertainment, Inc. during the quarter ended December 31, 1998;
- $15,000,000 of in-process research and development incurred in
connection with the acquisition of Viaweb Inc. during the quarter
ended June 30, 1998;
- $3,850,000 incurred in connection with the acquisition of Four11
Corporation during the quarter ended December 31, 1997;
- $21,245,000 of non-cash costs related to the termination of the
Visa Marketplace agreement incurred during the quarter ended June
30, 1997.
Note: The results for all periods presented have been restated to reflect the
merger of Yahoo! Inc. and Yoyodyne Entertainment, Inc. which was completed
on October 20, 1998 and has been accounted for as a pooling of interests.
Additionally, as a result of a change in accounting for the Viaweb
acquisition, Yahoo!'s net loss for the second quarter ended June 30, 1998
was adjusted to $8,977,000 or $0.10 per share diluted and the net income
for the third quarter ended September 30, 1998 was adjusted to $12,771,000
or $0.11 per share diluted. The above share and per share calculations do
not reflect the effect of the 2-for-1 stock split announced on January 12,
1999.
YAHOO! INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
1998 1997
--------------- --------------
(UNAUDITED) (AUDITED)
ASSETS
Cash, cash equivalents, and investments
in marketable debt securities $ 482,426 $ 108,045
Accounts receivable, net 24,831 11,163
Property and equipment, net 15,189 7,364
Investments in marketable equity securities 41,339 -
Other assets 58,099 16,940
----------- ----------
Total assets $ 621,884 $ 143,512
----------- ----------
----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $ 6,504 $ 6,022
Accrued expenses and other liabilities 39,621 13,331
Deferred revenue 38,301 5,085
----------- ----------
Total liabilities 84,426 24,438
----------- ----------
Minority interests in consolidated subsidiaries 1,248 716
----------- ----------
Shareholders' equity:
Common Stock 522,865 151,321
Unrealized gain on investments, net 21,787 -
Accumulated deficit (8,442) (32,963)
----------- ----------
Total shareholders' equity 536,210 118,358
----------- ----------
$ 621,884 $ 143,512
----------- ----------
----------- ----------
Note: The balances as of December 31, 1997 have been restated to reflect the
merger of Yahoo! Inc. and Yoyodyne Entertainment, Inc. which was
completed on October 20, 1998 and has been accounted for as a pooling
of interests.