SUNNYVALE, Calif., October 20, 2009 – Yahoo! Inc. (NASDAQ: YHOO) today
reported revenues of $1,575 million for the quarter ended September 30, 2009, a
decrease of 12 percent from the third quarter of 2008 and slightly above the second quarter of 2009. Excluding the impact of currency rate fluctuations and divested business lines, revenues for the third quarter of 2009 would have declined 7 percent compared to the third quarter of 2008.
Net income per diluted share for the third quarter of 2009 was $0.13, compared to $0.04 for the third quarter of 2008. Non-GAAP net income per diluted share for the third quarter of 2009 and 2008 was $0.15.
“With revenue coming in above our guidance and flat sequentially, we had a solid third quarter that signals our major businesses have stabilized,” said Yahoo! chief executive officer Carol Bartz. “With new products like Yahoo! homepage, our brand revitalization campaign and expansion in the Middle East through Maktoob.com, our execution is improving and we’re focused on what we do best — being the center of people’s online lives.”

Financial Highlights
GAAP Results (in millions, except percentages and per share amounts)
Q3 2008 Q3 2009 Change
Revenues $1,786 $1,575 (12%)
Income from operations $70 $91 30%
Net income $54 $186 244%
Net income per diluted
share $0.04 $0.13 225%
Non-GAAP Results (in millions, except percentages and per share amounts)
Q3 2008 Q3 2009 Change
Operating cash flow $410 $384 (6%)
Non-GAAP net income $213 $213 0%
Non-GAAP net income
per diluted share $0.15 $0.15 0%

“In the third quarter we saw strength in key areas of our business,” said Yahoo! chief financial officer Tim Morse. “Our efforts to reposition Yahoo! are still in the early stages, but we’re confident that our investments in the business will enable us to capitalize on growth opportunities as the economy recovers.”
Revenues
�� Marketing services revenues declined 12 percent and fees revenues declined 11
percent, compared to the third quarter of 2008.
�� Marketing services revenues were flat and fees revenues increased 2 percent,
compared to the second quarter of 2009.
�� Marketing services revenues from Owned and Operated sites were $851 million
for the third quarter of 2009, a 15 percent decrease compared to $1,002 million
for the same period of 2008. The decrease was primarily driven by a 19 percent
decline in search advertising revenue and an 8 percent decline in display
advertising revenue.
�� Marketing services revenues from Affiliate sites were $526 million for the third quarter of 2009, a 6 percent decrease compared to $561 million for the same period of 2008.

Cash Flow and Cash Balance
�� Cash flow from operating activities for the third quarter of 2009 was $355 million,
a 2 percent increase compared to $347 million for the same period of 2008.
�� Free cash flow for the third quarter of 2009 was $258 million, a 20 percent
increase compared to $215 million for the same period of 2008.
�� Cash, cash equivalents, and investments in marketable debt securities were
$4,503 million at September 30, 2009 compared to $3,522 million at December
31, 2008, an increase of $981 million.

Business Outlook
GAAP revenue for the fourth quarter of 2009 is expected to be in the range of $1,600 million to $1,700 million. Non-GAAP operating income before depreciation, amortization, and stock-based compensation expense for the fourth quarter of 2009 is expected to be in the range of $400 million to $450 million. Income from operations for the fourth quarter of 2009 is expected to be in the range of $135 million to $155 million.