SUNNYVALE, Calif. - January 14, 2004 - Yahoo! Inc. (Nasdaq: YHOO) today reported results for the fourth quarter and full year ended December 31, 2003.

"Yahoo!'s fourth quarter performance completes a year of phenomenal growth for our company, and represents the most successful quarter in the history of Yahoo!. As we made across-the-board improvements in our business, we were rewarded with deeper and more profitable relationships with our customers," said Terry Semel, chairman and chief executive officer, Yahoo!. "We believe the key to Yahoo!'s long-term growth continues to be building and improving products and services essential to our customers' lives. Our focus on expanding the world's largest and most diverse online marketing platform and improving the best user experience on the web is expected to be the catalyst for the future success of Yahoo!."

· Revenues of $663.9 million in the fourth quarter of 2003 compared to $285.8 million in the same period of 2002.
· Revenues excluding traffic acquisition costs ("TAC") of $511.3 million in the fourth quarter of 2003, compared to $285.8 million for the same period of 2002.
· Gross profit for the fourth quarter of 2003 was $443.1 million, compared to $243.5 million for the same period of 2002.
· Operating income for the fourth quarter of 2003 was $94.4 million, compared to $55.4 million for the same period of 2002.
· Operating income before depreciation and amortization for the fourth quarter of 2003 was $157.5 million, compared to $84.6 million for the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $20.1 million for the quarter ended December 31, 2003, primarily as a result of the acquisition of Overture Services, Inc. ("Overture"), compared to $0.7 million for the same period of 2002.
· Cash flow from operating activities for the fourth quarter of 2003 was $101.9 million, compared to $79.4 million for the same period of 2002.
· Free cash flow for the fourth quarter of 2003 was $92.3 million, compared to $62.7 million for the same period of 2002. Free cash flow for the quarter ended December 31, 2003 included approximately $28.7 million of costs related to the acquisition of Overture.

"We are very pleased with the strength of our fourth quarter and year-end results, and believe that they are a reflection of the strength of our current fundamentals and also represent progress on our key longer-term initiatives. As we exit our second consecutive year of strong free cash flow generation, we continue to re-invest in our customers, users and infrastructure," said Susan Decker, chief financial officer, Yahoo!. "We achieved tremendous growth this year balanced throughout the businesses of our company, and we remain focused on delivering long-term growth across our key financial metrics."

· Revenues for the year ended December 31, 2003 totaled $1,625.1 million compared to the $953.1 million reported for the same period in 2002.
· Revenues excluding TAC for 2003 were $1,472.5 million, compared to $953.1 million for the same period of 2002.
· Gross profit for 2003 was $1,267.0 million, compared to $790.2 million for the same period of 2002.
· Operating income for 2003 was $295.7 million, compared to $88.2 million for the same period of 2002.
· Operating income before depreciation and amortization for 2003 was $455.4 million, compared to $197.6 million for the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $22.0 million for the year ended December 31, 2003 primarily as a result of the acquisition of Overture, compared to $8.4 million for the same period of 2002.
· Cash flow from operating activities for the year ended December 31, 2003 was $428.1 million, compared to $302.4 million for the same period of 2002.
· Free cash flow for the year ended December 31, 2003 was $338.9 million, compared to $220.9 million for the same period of 2002. Free cash flow for the year ended December 31, 2003 included approximately $43.2 million of costs primarily related to the acquisitions of Overture and Inktomi Corporation ("Inktomi"), which closed during 2003.


Fourth Quarter and Year Ended 2003 Financial Highlights

Cash flow from operating activities and Free cash flow: Cash flow from operating activities for the fourth quarter of 2003 totaled $101.9 million, compared to $79.4 million for the same period of 2002. Free cash flow for the fourth quarter of 2003 totaled $92.3 million, a 47 percent increase over the $62.7 million reported for the same period of 2002. Free cash flow for the quarter ended December 31, 2003 included approximately $28.7 million of costs related to the acquisition of Overture, which closed in the fourth quarter of 2003.
Cash flow from operating activities for the year ended December 31, 2003 totaled $428.1 million, compared to $302.4 million for the same period of 2002. Free cash flow for the year ended December 31, 2003 totaled $338.9 million, a 53 percent increase compared to the $220.9 million reported for the same period of 2002. Free cash flow for the year ended December 31, 2003 included approximately $43.2 million of costs primarily related to the acquisitions of Overture and Inktomi, which closed during 2003.
Cash, cash equivalents and investments in marketable debt and equity securities increased to $2,571.2 million at December 31, 2003, compared to $1,537.6 million at December 31, 2002. In addition to the free cash flow of $338.9 million generated for the year ended December 31, 2003, the company increased its cash, cash equivalents and investments in marketable debt and equity securities balances by $733.1 million related to issuance of convertible debt, and $353.2 million related to issuance of common stock from exercise of employee stock options, offset by approximately $370.4 million used for acquisitions completed in 2003, net of cash acquired.
Revenues: In the fourth quarter of 2003, Yahoo! reported revenues of $663.9 million, a 132 percent increase from the same period in 2002. For the year ended December 31, 2003, revenues were $1,625.1 million, a 71 percent increase from the $953.1 million reported in the same period in 2002.

Marketing services revenue for the fourth quarter of 2003 totaled $545.5 million, a 178 percent increase from the $196.4 million reported in the same period in 2002. Marketing services revenue for the year ended December 31, 2003 totaled $1,199.7 million, an 84 percent increase from the $651.6 million reported in the same period in 2002. These increases resulted primarily from the strong increase in revenues from Yahoo!'s search and marketplace properties and growth in the balance of Yahoo!'s global marketing services revenues, as well as the incremental revenue associated with the acquisition of Overture in the fourth quarter of 2003.


Fees revenue for the fourth quarter of 2003 totaled $85.2 million, a 37 percent increase compared to the $62.0 million reported in the same period in 2002. Fees revenue for the year ended December 31, 2003 totaled $298.2 million, a 43 percent increase compared to the $207.9 million reported in the same period in 2002. These increases were primarily driven by the growth in paying relationships for Yahoo!'s premium services, including SBC Yahoo! DSL and Dial, small business and communications suites of premium services, and Yahoo! Personals, partially offset by a decrease in our event webcasting business.

Listings revenue for the fourth quarter of 2003 totaled $33.2 million, a 21 percent increase compared to the $27.4 million reported in the same period in 2002. Listings revenue for the year ended December 31, 2003 totaled $127.2 million, a 36 percent increase compared to the $93.6 million reported in the same period in 2002. These increases were driven by the increases in our search and marketplace services revenues as well as increased revenue from HotJobs, which was acquired in February 2002.

Revenues excluding TAC and Gross profit: Revenues excluding TAC for the fourth quarter of 2003 totaled $511.3 million, a 79 percent increase compared to the $285.8 million in the same period of 2002. Gross profit for the fourth quarter of 2003 totaled $443.1 million, compared to $243.5 million in the same period of 2002.

Revenues excluding TAC for the year ended December 31, 2003 totaled $1,472.5 million, a 55 percent increase compared to the $953.1 million in the same period of 2002. Gross profit for the year ended December 31, 2003 totaled $1,267.0 million, compared to $790.2 million in the same period of 2002.

The increases in revenues excluding TAC for both the quarter and year ended December 31, 2003, when compared to the same periods in 2002, resulted from the combination of a strong increase in revenues from Yahoo!'s search and marketplace properties and growth in the balance of Yahoo!'s global revenues. In addition, revenues excluding TAC for the quarter ended December 31, 2003 increased as a result of the incremental revenue associated with the acquisition of Overture.

Operating income and Operating income before depreciation and amortization: Operating income for the fourth quarter of 2003 totaled $94.4 million, compared to $55.4 million in the same period of 2002. Operating income before depreciation and amortization for the fourth quarter of 2003 totaled $157.5 million, an 86 percent increase compared to the $84.6 million reported in the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $20.1 million for the fourth quarter of 2003, primarily as a result of the acquisition of Overture, compared to $0.7 million for the same period in 2002.

Operating income for the year ended December 31, 2003 totaled $295.7 million, compared to $88.2 million in the same period of 2002. Operating income before depreciation and amortization for the year ended December 31, 2003 totaled $455.4 million, a 130 percent increase compared to the $197.6 million reported in the same period of 2002. Operating income and operating income before depreciation and amortization include stock compensation expense of $22.0 million for the year ended December 31, 2003, primarily as a result of the acquisition of Overture, compared to $8.4 million for the same period in 2002.

The substantial increase in operating income and operating income before depreciation and amortization both for the quarter and year ended December 31, 2003, when compared to the same periods in 2002, reflects strong growth in revenues excluding TAC while maintaining ongoing cost discipline.

Net Income: Net income for the fourth quarter of 2003 was $75.0 million or $0.11 per diluted share, compared with $46.2 million or $0.08 per diluted share for the same period of 2002.
Net income for the year ended December 31, 2003 was $237.9 million or $0.37 per diluted share, compared with income before the cumulative effect of accounting change of $106.9 million or $0.18 per diluted share for the same period of 2002. Net income was $42.8 million or $0.07 per diluted share for the year ended December 31, 2002, including the charge of $64.1 million for the cumulative effect of the accounting change for the implementation of Statement of Financial Accounting Standard No. 142 ("SFAS 142"). SFAS 142, which the Company adopted January 1, 2002, requires companies to assess the goodwill recorded from previous acquisitions, and as necessary, record an impairment charge that does not affect cash or the Company's operations.
Please refer to the "Note to Unaudited Condensed Consolidated Statements of Operations" and "Business Outlook" attached to this press release.


Quarterly Conference Call

Yahoo! will host a conference call to discuss fourth quarter results at 5:00 p.m. Eastern Time today. A live Webcast of the conference call, together with supplemental financial information can be accessed through the Company's Investor Relations Web site at
http://yhoo.client.shareholder.com/earnings.cfm. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available following the conference call by calling 877-213-9653 or 630-652-3041, reservation number: 8226589.


About Yahoo!

Yahoo! Inc. is a leading provider of comprehensive online products and services to consumers and businesses worldwide. Yahoo! is the No. 1 Internet brand globally and the most trafficked Internet destination worldwide. Headquartered in Sunnyvale, Calif., Yahoo!'s global network includes 25 World properties and is available in 13 languages.


This press release includes the financial measures revenues excluding traffic acquisition costs, operating income before depreciation and amortization and free cash flow. These measures are defined as non-GAAP financial measures by the Securities and Exchange Commission and may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. See Note to Unaudited Condensed Consolidated Statements of Operations and Reconciliations to Unaudited Consolidated Condensed Statements of Operations included in this press release for further information regarding these non-GAAP financial measures.


This press release and its attachments contain forward-looking statements that involve risks and uncertainties concerning Yahoo!'s expected financial performance (as described without limitation in the Business Outlook section and quotations from management in this press release), as well as Yahoo!'s strategic and operational plans. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, decreases or delays in marketing services spending, including performance of the Company's newly acquired Overture business; the actual increases in demand by customers for Yahoo!'s premium services; acceptance of new products and services; general economic conditions; risks related to the integration of recent acquisitions; the ability to adjust to changes in personnel, including management changes; and the dependence on third parties for technology, services, content and distribution. All information set forth in this release and its attachments is as of January 14, 2004. Yahoo! undertakes no duty to update this information. More information about potential factors that could affect the Company's business and financial results is included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, including (without limitation) under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are on file with the SEC and available at the SEC's website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo!'s Annual Report on Form 10-K for the year ended December 31, 2003, which will be filed with the SEC in the first quarter of 2004.

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