Yahoo Earnings Net $75 Million in Q4 2003

Yahoo! Inc. today reported results for the fourth quarter and full year ended December 31, 2003.Yahoo’s performance matched industry analyst expectations by reporting a fourth-quarter net profit of $75 million, or 11 cents per diluted share.

“Yahoo’s fourth quarter performance completes a year of phenomenal growth for our company, and represents the most successful quarter in the history of Yahoo!. As we made across-theboard improvements in our business, we were rewarded with deeper and more profitable relationships with our customers,” said Terry Semel, chairman and chief executive officer,Yahoo!.

“We believe the key to Yahoo!’s long-term growth continues to be building and improving products and services essential to our customers’ lives. Our focus on expanding the world’s largest and most diverse online marketing platform and improving the best user experience on the web is expected to be the catalyst for the future success of Yahoo!.”

• Revenues of $663.9 million in the fourth quarter of 2003 compared to $285.8 million in the same period of 2002.
• Revenues excluding traffic acquisition costs (“TAC”) of $511.3 million in the fourth quarter of 2003, compared to $285.8 million for the same period of 2002.
• Gross profit for the fourth quarter of 2003 was $443.1 million, compared to $243.5 million for the same period of 2002.
• Operating income for the fourth quarter of 2003 was $94.4 million, compared to $55.4 million for the same period of 2002.
• Operating income before depreciation and amortization for the fourth quarter of 2003 was $157.5 million, compared to $84.6 million for the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $20.1 million for the quarter ended December 31, 2003, primarily as a result of the acquisition of Overture Services, Inc.(“Overture”), compared to $0.7 million for the same period of 2002.
• Cash flow from operating activities for the fourth quarter of 2003 was $101.9 million, compared to $79.4 million for the same period of 2002.
• Free cash flow for the fourth quarter of 2003 was $92.3 million, compared to $62.7 million for the same period of 2002. Free cash flow for the quarter ended December 31, 2003 included approximately $28.7 million of costs related to the acquisition of Overture.

“We are very pleased with the strength of our fourth quarter and year-end results, and believe that they are a reflection of the strength of our current fundamentals and also represent progress on our key longer-term initiatives. As we exit our second consecutive year of strong free cash flow generation, we continue to re-invest in our customers, users and infrastructure,” said Susan Decker, chief financial officer, Yahoo!. “We achieved tremendous growth this year balanced throughout the businesses of our company, and we remain focused on delivering long-term growth across our key financial metrics.”

• Revenues for the year ended December 31, 2003 totaled $1,625.1 million compared to the $953.1 million reported for the same period in 2002.
• Revenues excluding TAC for 2003 were $1,472.5 million, compared to $953.1 million for the same period of 2002.
• Gross profit for 2003 was $1,267.0 million, compared to $790.2 million for the same period of 2002.
• Operating income for 2003 was $295.7 million, compared to $88.2 million for the same period of 2002.
• Operating income before depreciation and amortization for 2003 was $455.4 million, compared to $197.6 million for the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $22.0 million for the year ended December 31, 2003 primarily as a result of the acquisition of Overture, compared to $8.4 million for the same period of 2002.

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