Yahoo To Improve Profitability and Accelerate Growth By Sharpening Focus

Board To Pursue Reverse Spin Concurrent With Other Strategic Alternatives

SUNNYVALE, Calif. – Yahoo! Inc. (NASDAQ: YHOO) announced an aggressive strategic plan to simplify the company, narrowing its focus on areas of strength to better fuel growth, drive revenue and increase efficiency in 2016 and beyond.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Collectively, the strategic plan aims to:

  • Improve consumer and advertiser product quality and grow daily active users (DAUs)
  • Drive continued growth in revenue realized through Mavens (mobile, video, native and social) to $1.8 billion this year,
  • Improve profitability to reach an adjusted EBITDA run rate of approximately one billion dollars by the second half of 2016
  • Reduce operating expenses by more than $400 million by the end of 2016
  • Limit GAAP revenue impact of product and regional exits to approximately $100 million
  • Explore non-strategic asset divestitures that, if consummated, could generate in excess of $1 billion in cash, and
  • Deliver increased value to shareholders, advertisers, and the more than one billion people who use Yahoo’s products and services.

“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said Marissa Mayer, CEO of Yahoo. “This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”

“The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today. We have tremendous respect for the thousands of Yahoos who work very hard to make the world a better place,” said Maynard Webb, Yahoo’s Chairman of the Board. “The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.”

Strategic Plan for Growth

On this afternoon’s fourth quarter and year end 2015 earnings call, Yahoo will lay out a go-forward plan for accelerating growth at the Company through four key objectives:

  • Play to Strengths to Grow User Engagement. Yahoo has grown into a guide to digital information discovery for more than one billion monthly active users. In 2016, the Company will prioritize growing engagement with its enormous user base. Yahoo will simplify its product portfolio to emphasize the products that distinguish the Company competitively and drive the most substantial portion of users, revenue, and market opportunity. This focus will increase the pace of innovation and product improvement, deliver a more deeply integrated Yahoo experience and more quickly grow key metrics such as page views, logged in users, and DAUs.For consumer products, Yahoo will consist of three global platforms: Search, Mail, and Tumblr, and four verticals: News, Sports,Finance and Lifestyle in growth markets like the U.S., Canada, U.K., Germany, Hong Kong, and Taiwan. For advertisers, Yahoo will be defined by two core offerings: Gemini and BrightRoll. Gemini combines search and native ads for superior results, while BrightRoll offers programmatic buying and selling tools for video, display and native advertising.

    For Yahoo’s search business, mobile search is the biggest opportunity. The Company will shift most of the resources in this area toward more forward-leaning mobile search investments, positioning it to redefine search for mobile devices, which will help drive sustainable long-term growth and differentiation.

    Yahoo Mail is the heart of the Company’s communications products. To continue to grow DAUs and increase engagement, investment in Yahoo Mail will be used to improve speed and stability, as well as add features that make it easier for users to share, search and connect through the platform. As an essential driver of the Company’s entire product portfolio, focused investment in Yahoo Mail will help accelerate growth across the business.

    For the Tumblr platform and Yahoo’s digital content strongholds of News, Sports, Finance, and Lifestyle, investment will be focused on growing user engagement, especially on mobile. The Company will invest in features and experiences that engage users as both consumers and creators of content, encouraging them to do more with, and therefore spend more time on, the Yahoo network.

  • Drive Mavens Revenue Growth. Yahoo will continue to invest in the Mavens strategy to counterbalance legacy business declines with an emphasis on mobile. Mavens revenue exceeded $1.6 billion in GAAP revenue in 2015, a 45 percent year-over-year increase that surpassed our forecast. Focus on engagement growth and improved monetization for the core consumer products, together with the syndication of mobile tools through the Yahoo Mobile Developer Suite, Yahoo expects to drive long-term sustainable revenue growth and reach more than $1.8 billion in Mavens GAAP revenue in 2016.Advertiser spend in Mavens areas is projected to increase significantly. Mobile industry ad spend is anticipated to nearly double by 2018, and programmatic technology has become the proven advertising solution for optimal performance, pricing and control. In response to these trends, Yahoo’s global sales team has already begun to shift toward performance and programmatic offerings and the Company has already seen the benefits of this in Q4. This strategy, plus the work that’s been done over the last two years with Mavens-focused ad formats and investment in Gemini and BrightRoll platforms, positions Yahoo well to ride these trends toward sustainable growth.
  • Simplify the Business to Improve Execution. In 2016, a smaller product portfolio emphasizing Yahoo’s core strengths will yield better focus, execution, and ultimately clearer value to shareholders, advertisers and users. Since 2012 the Company has invested across different product areas and markets to drive innovation and fuel growth and now it will align resources towards proven growth areas. In Q4 the Company closed Yahoo Screen and shifted away from original scripted content. In 2016, Yahoo will consolidate some Digital Magazines under one of our four core verticals, while others will be shut down. The Company will also exit legacy products, including Games and Smart TV, which have not met growth expectations. A simpler product portfolio more focused on Yahoo’s strengths will allow the Company to more quickly improve offerings to increase profitability.In addition to a clarified product portfolio, Yahoo has begun to explore divesting non-strategic assets of value such as the responsible monetization of non-strategic patents, the sale of valuable real estate, and other non-core, non-strategic assets. Through the end of the year, the Company estimates that these efforts could generate between one and three billion dollars in cash.
  • Efficiently Align Resources. Yahoo’s plan reflects the Company’s goal to continue to spend thoughtfully, operate effectively, and drive profitability. As part of this plan, the Company has begun executing on a number of additional cost-savings efforts. Since 2012, Yahoo has already made significant strides to manage headcount and achieve stability with fewer employees. Yahoo values everyone who has dedicated themselves and made contributions to the Company. The changes in the employee footprint have not been easy, but are necessary to position the Company for a stronger future.To that end, Yahoo plans to reduce our workforce by roughly 15 percent and exit five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan, subject to local laws and consultation processes. It’s expected that most of these changes will take place in Q1, but by the end of 2016, the Company anticipates having approximately 9,000 employees and fewer than 1,000 contractors. This represents a workforce that is roughly 42 percent smaller than it was in 2012 and will result in savings in short term operating expense of $400 million annually. Yahoo does not take this decision lightly and will make every effort to handle the process with thoughtfulness, transparency, and compassion.

As a result of this four-point plan, Yahoo is expected to return to modest and accelerating growth in 2017 and 2018. Yahoo’s leadership and Board together believe that by taking these steps, the Company will more quickly realize a significant and positive impact on the trajectory of its transformation.

About Yahoo

Yahoo is a guide focused on informing, connecting, and entertaining our users. 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 ( or the Company’s blog (

via BusinessWire