Google's first quarter net revenue, in contrast, soared by 24 percent from last year to $8.14 billion. The overall Internet ad market in the U.S. increased by about 23 percent, according to the research firm eMarketer.
In a Tuesday conference call, Thompson assured analysts he won't be happy until Yahoo's revenue is keeping pace with the rest of the Internet ad market.
"Yahoo must be nimble, responsive and act with a real sense of urgency," Thompson said on the call. "We have to think and to move like a growth company."
Investors evidently liked what they saw in the numbers and what they heard from Thompson. Yahoo shares rose 43 cents, or nearly 3 percent, to $15.44 in Tuesday's extended trading. The stock hasn't traded above $20 since the third quarter of 2008 â¿¿ the last time Yahoo's revenue climbed from the previous year.
The vote of confidence comes as Thompson tries to ward off a rebellion from one of Yahoo's largest shareholders, Daniel Loeb, who is waging a campaign to gain four seats on the company's board of directors.
Yahoo is trying to bring in more money with fewer workers and products. Earlier this month, Thompson announced the largest layoffs in Yahoo's 17-year history in a cost-cutting move that will save the company about $375 million annually. The housecleaning will jettison 2,000 employees, or 14 percent of Yahoo's workforce.
Thompson told analysts Tuesday that the cuts needed to be made because Yahoo had grown too unwieldy. He also said he is in the process of trying to sell about 50 Yahoo products and services that weren't attracting enough traffic to the company's website or producing enough revenue.
If Thompson's vision pans out, the company will do a better job of mining the information that it collects about the nearly 700 million people who visit its website each month so it can do a better job of showing them online advertising and other content that appeals to their personal interests. If Yahoo can achieve that goal, he reasons Web surfers will come back to Yahoo more frequently and advertisers will increase their spending on the website.