Yahoo! Inc. (Nasdaq: YHOO) today reported results for the first quarter ended March 31, 2004.

"Yahoo!'s performance surpassed even our high expectations, delivering the most successful quarter in the Company's history," said Terry Semel, chairman and chief executive officer, Yahoo!. "With our products more popular than ever before, we have experienced success across our entire business including strong growth in our fee-based and marketing services."

· Revenues were $758 million in the first quarter of 2004, compared to $283 million in the same period of 2003.
· Revenues excluding traffic acquisition costs ("TAC") were $550 million in the first quarter of 2004, compared to $283 million for the same period of 2003.
· Gross profit for the first quarter of 2004 was $476 million, compared to $240 million for the same period of 2003.
· Operating income for the first quarter of 2004 was $132 million, compared to $55 million for the same period of 2003.
· Operating income before depreciation and amortization for the first quarter of 2004 was $211 million, compared to $85 million for the same period of 2003.
· Cash flow from operating activities for the first quarter of 2004 was $236 million, compared to $99 million for the same period of 2003.
· Free cash flow for the first quarter of 2004 was $197 million, compared to $78 million for the same period of 2003.

"Yahoo! is off to a great start in 2004. Our growth is a result of very impressive performance from our ongoing operations, leveraged further by recent acquisitions," said Susan Decker, chief financial officer, Yahoo!. "Looking forward, we are focused on making the appropriate investments and capital allocation decisions to help ensure sustainable, long-term growth. Due to our increased optimism about our business, we have raised our financial outlook for the full year 2004."

First Quarter 2004 Financial Highlights
Cash flow from operating activities and Free cash flow: Cash flow from operating activities for the first quarter of 2004 totaled $236 million, compared to $99 million for the same period of 2003. Free cash flow for the first quarter of 2004 totaled $197 million, a 153 percent increase over the $78 million reported for the same period of 2003.

Cash, cash equivalents and investments in marketable debt and equity securities increased by approximately $219 million to $2,790 million at March 31, 2004, compared to $2,571 million at December 31, 2003. In addition to the free cash flow of $197 million generated for the quarter ended March 31, 2004, the company increased its cash, cash equivalents and investments in marketable debt and equity securities balances by $92 million related to issuance of common stock from exercise of employee stock options and approximately $24 million related to other investing activities, offset by approximately $50 million used to enter into a structured stock repurchase transaction and approximately $44 million used for acquisitions completed in the first quarter of 2004, net of cash acquired. The structured stock repurchase will mature in the third quarter of 2004, at which point depending on the price per share of Yahoo! shares, Yahoo! will either repurchase shares or receive the $50 million investment and a premium.
Revenues: In the first quarter of 2004, Yahoo! reported revenues of $758 million, a 168 percent increase compared to the $283 million reported in the same period in 2003.
Marketing services revenue for the first quarter of 2004 totaled $635 million, a 235 percent increase from the $190 million reported in the same period in 2003. This amount includes approximately $10 million related to a one-time gain from unredeemed third party loyalty program points that expired during the quarter. The year over year increase in marketing services revenue (excluding the gain related to the points expiration) resulted from a 48 percent growth in Yahoo!'s organic marketing services revenues, primarily in the search and marketplace properties, and incremental revenue associated with acquisitions completed during the past year.
Fees revenue for the first quarter of 2004 totaled $88 million, a 39 percent increase compared to the $64 million reported in the same period in 2003. This increase was primarily driven by the growth in the number of paying relationships for Yahoo!'s premium services, which were approximately 5.8 million at March 31, 2004 compared to approximately 2.9 million at March 31, 2003.

Listings revenue for the first quarter of 2004 totaled $34 million, a 16 percent increase compared to the $29 million reported in the same period in 2003. This increase was primarily driven by our search and marketplace listings.

Revenues excluding TAC and Gross profit: Revenues excluding TAC for the first quarter of 2004 totaled $550 million, a 94 percent increase compared to the $283 million in the same period of 2003. Gross profit for the first quarter of 2004 totaled $476 million, compared to $240 million in the same period of 2003. The increase in revenues excluding TAC for the quarter ended March 31, 2004, when compared to the same period in 2003, resulted from the combination of a strong increase in revenues from Yahoo!'s organic marketing services revenues, as well as the incremental revenue associated with the acquisitions completed during the past year.

Operating income and Operating income before depreciation and amortization: Operating income for the first quarter of 2004 totaled $132 million, compared to $55 million in the same period of 2003. Operating income before depreciation and amortization for the first quarter of 2004 totaled $211 million, a 149 percent increase compared to the $85 million achieved in the same period of 2003. The increase in operating income and operating income before depreciation and amortization for the quarter ended March 31, 2004, when compared to the same period in 2003, reflects strong growth in revenues excluding TAC while maintaining ongoing cost discipline.
Net Income: Net income for the first quarter of 2004 was $101 million or $0.14 per diluted share (which included $0.01 per diluted share related to the one-time gain from unredeemed third party loyalty program points that expired during the quarter), compared with $47 million or $0.08 per diluted share for the same period of 2003.
Stock Split: Yahoo!'s Board of Directors approved a two-for-one split of all outstanding shares of the company's common stock, payable May 11, 2004 to stockholders of record on April 26, 2004.
Please refer to the "Note to Unaudited Condensed Consolidated Statements of Operations" for definition of these key financial measures and "Business Outlook" attached to this press release.


Quarterly Conference Call

Yahoo! will host a conference call to discuss first 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: 8685021


About Yahoo!

Yahoo! Inc. headquartered in Sunnyvale, Calif., 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.

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 Condensed Consolidated 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 recently acquired businesses; 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 April 7, 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, 2003, including (without limitation) under the captions, "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which is 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, which will be filed with the SEC in the second quarter of 2004.

###


Yahoo! and the Yahoo! logos are trademarks and/or registered trademarks of
Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners