Yahoo's revenue up 34 percent in Q1

Yahoo, one of the world's most popular Web sites, ended the quarter with US$1.57 billion in revenue, up 34 percent compared with 2005's first quarter.

Excluding the commissions it pays to Web sites on its ad network, Yahoo had revenue of $1.09 billion, up 33 percent and ahead of the $1.08 billion consensus estimate from financial analysts polled by Thomson Financial.

Net income came in at $160 million, or $0.11 per share, down from $205 million, or $0.14 per share, but matching analysts' expectations.

This is the first quarter in which Yahoo is accounting for stock compensation expense under the so-called "fair value" method, as opposed to the "intrinsic value" method it had used in the past, and this affected its bottom line.

In the first quarter, compensation expense, recorded under the newly adopted method, came to $71 million, compared with $6 million in 2005's first quarter under the previous method.

If Yahoo had used the newly adopted method in the first quarter of 2005, stock compensation expense would have been $57 million and its net income would have been $138 million, or $0.09 per share, less than in the quarter just ended.

As usual, most of the revenue -- $1.38 billion -- came from online ad sales, and the rest -- $186 million -- from fees Yahoo charges for its services.

Yahoo executives said during a conference call that they were happy with the results because they showed what they described as strong revenue increases, healthy profitability and robust usage, and because the outlook for the rest of the year is good. "We're in an excellent position to take advantage of the [Internet's] growth and evolution," said Chairman and Chief Executive Officer Terry Semel.

Yahoo is hard at work on improvements to the technology it uses to serve up ads along with its search engine results, which the company believes will increase its ad revenue, Semel said. Yahoo will provide more details about this improved technology next month at its annual meeting with financial analysts, he said.

Yahoo expects revenue excluding ad network commissions to be in the range of $1.08 billion to $1.16 billion in the second quarter, and in the range of $4.60 billion to $4.85 billion for the entire year.

Unique users totaled 402 million in the quarter, compared with 365 million in 2005's fourth quarter. Of the 402 million, 208 million were active registered users, or users who have signed up for at least one Yahoo service, such as e-mail, and who visit the Yahoo network at least once per month. Active registered users were up from 193 million in the fourth quarter of 2005.

Among the active registered users, 13.3 million were fee-paying users, defined as those who pay for at least one Yahoo service. This was up from 12.6 million in 2005's fourth quarter. Daily average page views increased 16 percent from 2005's fourth quarter to 3.8 billion.

Meanwhile, Yahoo finished the quarter with 10,098 employees, up from 9,816 in 2005's fourth quarter.