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Yahoo! Soars Following Q1 Beat, Alibaba Growth

Updated from 4:44 p.m. to include comments from the earnings call.

NEW YORK (TheStreet) Yahoo! (YHOO - Get Report) reported first-quarter earnings that beat Wall Street estimates, sending shares higher in after-hours trading.

Sunnyvale, Calif.-based Yahoo! earned 38 cents a share on $1.087 billion in revenue, excluding traffic acquisition costs (TAC) for the first quarter.

For the quarter, the company noted that display revenue ex-TAC was $409 million, a 2% increase year over year, as the number of ads increased 7% year-over-year, but the price per ad continued to trend lower, falling 5% over the same time frame.

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Shares of Yahoo! were soaring in after-hours trading, gaining 6.1% to $36.30. Yahoo! shares closed higher in the regular trading session, gaining 2.3% to finish at $34.21.

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Search revenue jumped 9% year-over-year, rising to $444 million excluding TAC, as paid clicks increased approximately 6% compared to the first quarter of 2013, and price-per-click increased approximately 8% during the same time frame.

"I am really pleased by our first quarter performance, marking our best Q1 revenue ex-TAC since 2010. Buoyed by our 9th consecutive quarter of year-over-year growth in Search revenue ex-TAC and our first quarter of Q1 year-over-year growth in display revenue ex-TAC since 2011, Q1 was an early and important sign of growth in our core business," said Yahoo CEO Marissa Mayer. "And, with mobile pivotal to our future growth, we're delighted to now see more than 430 million monthly mobile users accessing Yahoo's new products."

Analysts surveyed by Thomson Reuters were looking for Yahoo! to earn 37 cents a share on $1.08 billion in revenue for the first quarter. Analysts surveyed by Estimize were looking for Yahoo! to earn 41 cents a share on almost $1.09 billion in revenue.

At the end of the first-quarter, Yahoo! ended the quarter with $4.6 billion in cash, compared to $5 billion at the end of 2013, a draw down of $400 million. During the quarter, the company used $450 million to buy back 12 million shares and $22 million for acquisitions.

Though display and search revenue rose year-over-year, the real stalwart of the earnings report were the results from Alibaba, which Yahoo! owns a 24% stake in.

For the quarter, Alibaba earned $1.36 billion on $3.058 billion, a rise of 110% and 66% year-over-year, respectively.

For the second-quarter, Yahoo! said it expected revenue ex-TAC to be between $1.06 billion and $1.1 billion. It expects Adjusted EBITDA to be between $290 million and $330 million, with Non-GAAP operating income between $130 million and $170 million.

On the earnings call, Mayer noted that core Yahoo! is accelerating, albeit very slowly. She noted that there will continue to be acquisitions, as Yahoo! looks to turn around the core business. There will be some "strategic acquisitions," and some tuck-in acquisitions, as Yahoo! has done in the past.

--Written by Chris Ciaccia in New York

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