Yahoo! Earnings Call Nuggets: User Engagement and Search Details
Decline in User Engagement
Heath Terry – Goldman Sachs: Marissa, related to the 7% decline in ads sold, what proportion of that would you say is related to the decline in user engagement versus the strategic decision that you talked about to reduce the number of ads per page? And if it’s reduction in ads per page, how much of that is sort of mix shift to mobile versus that strategic decision just to reduce the ad load that users are seeing?
Marissa Mayer – President and CEO: I think that this overall space has several different factors operating on it. One, we are seeing continued traffic trends that are declining. However, we are seeing slowing in that trend. Our sell-through rate on ads has been holding steady, and if anything increasing to yield just more ad sold. I think that overall the piece that merits the most explanation is around the pricing side of this which was – what was under the 2% decline year-over-year and this is where the mobile question comes in. We think there was a few things happening there. One is that mobile has becomes bigger and bigger, we ultimately aren’t seeing what we really think the price ultimately will be for mobile ads. We think they are every bit as effective as they are on the PC, and we anticipate that pricing will eventually get us to that point. In terms of some of the user interface changes we’ve made in terms of reducing the numbers of ads, we have seen that that’s actually increased user engagement. I think that’s why there has been a slowing in the declines. The other thing we’ve seen is the ads we have are more desirable and there’s greater demand for them. That said after we make those changes we generally have to wait at least a certain number of weeks if not a few months to see where the trends to stabilize so we can adjust pricing according to demand. So, the fact that pricing change sometimes lags the user interface change that could be some of the softness in pricing.
Anthony DiClemente – Barclays: Barclays.
Anthony DiClemente – Barclays: Thank you very I have one question for Marissa and one for Kent. Marissa just want to follow-up on your commentary about partnerships. If you could help just frame how you’re thinking about partnerships, in particular wondering about a potential partnerships with Apple or with iPhone, and how that could possibly help Yahoo! and just what a partnership like that needs to look like to really help you here at the core. Then for Ken, I just looked at the next quarter guidance versus the prior year and noticed that your guidance implies a year-over-year decline in EBITDA and I’m just wondering if there’s anything on the cost side for the 2Q that we should be aware of or that you’d like to call out.
Marissa Mayer – President and CEO: I’ll take the question on partners first. We really like the way we’re positioned in the marketplace regarding partnerships. As I said, the four companies that we have multiyear significant partnerships with Microsoft, Facebook, Google and Apple. It’s a very unique blend in terms of being able to partner with all four of them, and I think it represents how well Yahoo! is able to partner. For us, the way we think about this is how can our services and our content be brought to the many different platforms and places where our users use our products, and so this is why we’ve been very excited especially in the mobile sphere to partner with Apple, as well as we able to provide our services on the Android platform as we move forward. So, I think this is a great opportunity for us. It’s one that we continue to explore and think about, as we release new products and as we think about where we might be able to add the most user value in the future.
Ken Goldman – CFO: I would say on the expenses side, we’re fortunate, we did a pretty good job overall relative to Q1 expenses. I do think we’ll see some incremental expenses in Q2 come in as we do add some headcount per, my earlier comments and we’re also doing a number of content deals which we also expect will impact our expenses. And also, lastly, some impacts of some of the small acquisitions we are doing, there are some expenses associated with those as well. So, I would say, in total, those are pretty modest. But they do add a little bit and that’s because that’s been relatively flattish revenue to show a small decline in EBITDA year-over-year.
Douglas Anmuth – JPMorgan: Just want to ask two things about Search. First, Marissa, you talked about higher search click volume and a couple of things around optimizing number of ads and then the formats there. Could you provide a little bit more detail there and in particular, you’ve talked in the past a lot about being able to control the UI and what you’ve done there in particular. Then secondly, Ken you mentioned on Microsoft that you’re assuming no RPS Guarantee. Can you just provide us with an update on where the RPS Guarantee stands now? Is there any small chance that that could continue going forward?
Marissa Mayer – President and CEO: Sure. I’ll take the question on click volume. Overall, what we’ve been doing is we have been growing the amount of search we see on our own site. We’ve also been partnering to bring in some syndication partners that have increased click volume. And in terms of optimizations on the user interface, we have been playing with different ways to present the ads, but ultimately have made those ads more attractive and more useful to our users. So, we have seen some increased click volume there. Today, my view is that our progress has been somewhat incremental. We’re making small changes. I’d like to see us grow our search business even faster, especially in terms of click volume and for that I think we need to invest in making the Search experience even more immersive which we will be doing over this coming quarter.
Ken Goldman – CFO: Yeah, this is Ken. Relative to the – we work – as a matter of fact, we talk to Microsoft daily on a whole variety of things. So I don’t want to suggest one way or the other that it will get renewed. Obviously from conservative point of view, we’ve assumed no renewal. To the extent we do anything forward with Microsoft different than that, then we would expect it would be positive to our numbers, but again, I don’t have that in the assumptions at this point. But we do talk to Microsoft every day about how to basically optimize what we’re doing together.
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