NEW YORK ( TheStreet) -- Yahoo! (YHOO - Get Report) CEO Marissa Mayer had a lot to prove going into last night's earnings report. While the company's 2% revenue growth isn't going to break anyone's bank, it's a sign that Mayer and Yahoo! are heading in the right direction, which is more than be said for the company's prior regimes.
For the first time in four years, Yahoo! reported an annual revenue increase, with sales increasing 2% year-over-year. The company also beat analysts' expectations, which helped send shares higher. On a non-GAAP basis, Yahoo! earned 32 cents a share on $1.22 billion in revenue during the fourth quarter. Yahoo! revenues exclude traffic acquisition costs (TAC). Analysts polled by Thomson Reuters were looking for earnings of 28 cents a share on $1.21 billion for the quarter.
While much of the attention has been focused on Yahoo!'s share price, which is up almost 30% over the last 12 months, the company's core business is actually starting to turn around, albeit slowly. Search and display, for example, generated $947 million in sales during the quarter, up 2.7% year-over-year. Search was the primary driver here, with revenue climbing 14% year-over-year to $427 million.
Wells Fargo analyst Peter Stabler noted that paid clicks grew 11%, with cost-per-click (CPC) growing 1%. "It appears that ongoing improvements to Yahoo! search user experience is yielding incremental gains as paid clicks grew a healthy 11%, with CPCs posting respectable 1% growth," Stabler wrote in his note. CPC growth of 1% was strong compared to Google (GOOG - Get Report).It should also be noted, however, that Yahoo! may not be making headway in mobile search, something which has plagued rival Google for some time. Mayer and her team would not break out mobile results, saying only that it's a work in progress. Mayer spent a large portion of the conference call talking about projects that have been fixed (Flicker!) or need fixing, identifying a dozen properties that are in the works. It seems as if Yahoo! Finance and Yahoo! Sports, two of Yahoo!'s most visited properties, will be beefed up in the near future, though Mayer would not divulge specific projects when pressed by analysts.