Common-Size Income Statement
Quarterly Data
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Yahoo! Inc., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
- Revenue and Cost Structure
- Revenue remained constant as the baseline at 100% throughout the reported periods.
- The percentage of revenue allocated to Traffic Acquisition Costs decreased significantly from about 11.8% in early 2012 to a low near 4% in early 2014, but then saw a sharp reversal, rising sharply in late 2014 and through 2016 to levels exceeding 35%. This suggests a major shift in spending or transactional cost efficiencies, with increased costs relative to revenue in the latter years.
- Other costs as a percentage of revenue fluctuated within a range mostly between 17% and 25%, with some reduction in 2016 relative to earlier years, indicating a somewhat stable pattern with moderate improvement toward the latest periods.
- Overall Cost of Revenue mirrored the trends in traffic acquisition costs, showing a reduction through early 2014, then increasing dramatically to more than 56% by late 2016, reflecting heavier cost burdens impacting gross margins.
- Gross profit margins increased initially from 67.4% in early 2012 up to a peak over 73% by late 2012 and early 2014, but then declined substantially, falling below 44% by early 2017, indicating deteriorating profitability on sales.
- Operating Expenses
- Sales and Marketing expenses fluctuated notably, initially averaging between 20% to 24% of revenue, peaking near 29% at the end of 2013, and then gradually decreasing to approximately 15% by early 2017, suggesting tighter cost controls or strategic reallocation of marketing budgets.
- Product Development expenses showed increases through 2013 and into early 2015, reaching around 24-28%, before gradually decreasing to below 20% towards 2017, implying a focus on efficiency or shifts in investment priorities in technology or product enhancements.
- General and Administrative costs varied mostly within the 10-14% range, with some peaks in 2014 and 2015, maintaining fairly consistent levels though with a slight reduction in 2016, indicating controlled overhead expenditures.
- Amortization of intangibles remained a small fraction of revenue but showed slight fluctuations, generally staying below 2%, reflecting the ongoing expense related to intangible assets.
- Non-Recurring Items and Charges
- Gain on sale of patents was irregular but contributed positively in some quarters between 2013 and 2015, with a notable peak of 9.18% in one quarter, suggesting occasional one-time gains boosting income.
- Significant impairment charges were recorded starting around 2015, including asset impairment charges, goodwill impairment, and intangible assets impairment. These charges were substantial with goodwill impairment reaching an exceptional magnitude near -350% in one quarter, significantly impacting net results.
- Restructuring charges showed inconsistent but mostly negative impacts on income, indicating ongoing organizational adjustments or cost-saving initiatives during the period.
- Profitability and Income Metrics
- Income from operations initially ranged positively between approximately 4% to 16% of revenue until 2014 but suffered dramatic declines thereafter, including an extreme negative result of nearly -356% related to impairment charges in late 2015, reflecting serious operational profitability challenges.
- Other income exhibited extreme volatility, with several extraordinary spikes (one exceeding nearly 900%) and notable negative reversals, indicating highly irregular non-operating income or expenses affecting overall results.
- Income before income taxes and equity interests followed operational income trends, with severe declines after 2014 and large negative dips paralleling impairment charges and other extraordinary losses.
- Provision for income taxes showed fluctuations sometimes moving into benefits or negative taxes, likely related to the impact of non-recurring items and losses affecting taxable income.
- Earnings in equity interests were relatively stable in the range of approximately 7% to 34%, supporting income but insufficient to offset large impairment losses toward the later periods.
- Net income demonstrated strong positive values in early years, spiking extraordinarily in one quarter in 2014 at over 590%, likely due to one-time items. However, from late 2015 onward, net income turned sharply negative, particularly in 2015-2016 periods, with losses exceeding -348% at one point before modest recovery towards 7% by early 2017.
- Net income attributable to Yahoo! Inc. mirrored the overall net income trends closely, confirming that noncontrolling interests had minimal impact on the broader income results.
- Overall Interpretation
- The data suggests a period of relative operational stability and profitability through 2012 to early 2014 with efficient cost management and healthy gross margins. This was followed by a period marked by aggressive increases in costs, notably traffic acquisition costs, and significant one-time impairment charges severely impacting profitability from 2015 onward.
- The extreme volatility in non-operating income and large impairment-related losses indicate major restructuring, asset write-downs, or strategic shifts. These factors combined to cause substantial swings in income metrics, including net income and operating profit.
- While operating expenses such as sales, marketing, and product development were gradually reduced proportionate to revenue toward 2017, the damage from impairments and increased costs had a lasting negative impact on overall financial performance.
- In conclusion, the financial profile reveals a company facing significant challenges in maintaining profitability after 2014, with large write-offs and cost pressures outweighing prior operational gains.