Yahoo!Xtra surges into profit

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The Yahoo!Xtra joint venture is proving its mettle, moving from a $3.32 million loss in 2007 to a $1.58 million profit for the year ended December 2008.

Revenue grew from $5.63 million for the company’s 10 months of operation in 2007 to $8.2 million for the full year 2008. Expenses fell from $9.1 million to $7.1 million for the same periods.

CEO Kevin Bowler says there were a lot of start-up costs in the first year, including marketing, but the second year saw strong revenue growth. He says Yahoo!Xtra is benefiting from a move to online advertising in line with findings from the Internet Advertising Bureau. The bureau tracked growth in online advertising in New Zealand growing 43% between 2007 and 2008.

Bowler says he is optimistic IAB numbers due in May will see the whole market lift again.

As to Yahoo!Xtra’s prospect in 2009, Bowler says the company does not make public forecasts, but he is not seeing any sign of a downturn and growth continued in the first quarter.

Yahoo!Xtra’s result is in contrast with Yahoo!’s global performance, reported for the first quarter yesterday.

Yahoo had revenue of US$1.58 billion, down 13% from the first quarter of 2008 but higher than the $1.20 billion consensus expectation from analysts. The company’s net income fell 78% to $118 million, compared to $537 million, in the first quarter of 2008.

The Yahoo!Xtra joint venture was announced in December 2006. Telecom holds 49% of the company. Australia’s Yahoo!7, a joint venture between Yahoo! of the US and Seven Network in Australia, holds 51%.

Bowler says he sees a bit of a move towards performance advertising being sold on a pay-per-click or pay-per-action basis.

He says changes to the front page of the Yahoo!Xtra portal in the final quarter of 2008 have boosted time on site and increased the amount of advertising inventory available.