SANTA CLARA, Calif. Jan. 10, 2001. Yahoo! Inc. (Nasdaq: YHOO) today reported results for the fiscal fourth quarter and the fiscal year ended Dec. 31, 2000. Net revenues for the fourth quarter increased 53 percent to $310,873,000 from net revenues of $203,148,000 for the fourth quarter of 1999. Pro forma net income for the fourth quarter of 2000 was $80,242,000 or $0.13 per share diluted.1 This compares to pro forma net income of $55,703,000 or $0.09 per share diluted for the fourth quarter of 1999.¹ Including pro forma charges, which include a write-down of certain equity investments of $163,221,000, the net loss for the fourth quarter ended Dec. 31, 2000 was $97,819,000 or $0.17 per share diluted, compared to net income for the fourth quarter of 1999 of $37,764,000, or $0.06 per share diluted.

Net revenues for fiscal 2000 were $1,110,178,000, representing an 88 percent increase over net revenues of $591,786,000 in fiscal 1999. Pro forma net income for fiscal 2000 was $290,983,000 or $0.48 per share diluted compared to pro forma net income of $138,035,000 or $0.23 per share diluted in fiscal 1999.1 Including pro forma charges, fiscal 2000 net income was $70,776,000 or $0.12 per share diluted and fiscal 1999 net income was $47,811,000 or $0.08 per share diluted.

"Yahoo! continued its strong performance in the final quarter of 2000, capping a year in which we grew revenues by almost 90 percent while expanding and strengthening the company," said Tim Koogle, chairman and CEO, Yahoo! Inc. "By almost any measure Yahoo! continued to outperform the industry, and took market share despite a challenging environment. Yahoo! has become increasingly essential to consumers and businesses, and we are entering 2001 as one of the strongest brands in the world. In the coming year, we will invest further in key initiatives to gain still greater market share and to succeed in the long term."

Global Consumer Audience

Yahoo! continued to build its leading brand, now ranked among the top 40 consumer brands in the world at No. 38 (Interbrand, July 2000). During the quarter, Yahoo! also expanded and delivered a deep array of essential communications, commerce and media services for the world’s largest Internet audience. As a result, the company’s audience size and usage reached record levels. Yahoo!’s global audience grew to 180 million unique users during December, up from 120 million in December 1999. A record 60 million active registered members logged onto Yahoo!® during December 2000, up from 36 million in December 1999.

Yahoo! users are consuming more services and staying longer, with usage increasing more than 94 percent from 1999 page views. The company’s traffic increased to more than 900 million page views per day on average during December 2000. Yahoo! Japan and Yahoo! Europe’s traffic, which is included in these page view totals, increased to more than 116 million and 45 million page views per day on average in December, respectively. In addition, Yahoo! is ranked No. 1 among the top five Web sites in average combined time spent by home and work users, which was one hour and 37 minutes in November 2000 (Nielsen//NetRatings).

Business and Enterprise Services

Throughout the year, Yahoo! launched a range of business products and services that are becoming increasingly essential to companies, including Corporate Yahoo!™, a popular customized enterprise portal solution; Yahoo! Website Services, a turnkey service enabling companies to manage their Web presence; and most recently, Yahoo! Webcast Studio, which allows business customers to easily create and stream their own corporate events. Corporate Yahoo! demonstrated strong momentum during the fourth quarter. Yahoo! now has 18 major corporate clients licensed to make Corporate Yahoo! available to more than 800,000 of their employees, customers and business partners. In addition, Yahoo! Broadcast hosted and distributed 1,067 streamed audio and video corporate events for clients during the quarter.

Marketing and Merchant Services

"The past year proved that only the companies with a leadership position, financial strength, the best business models, the strongest talent pool, and leading brand assets will thrive," said Koogle. He noted that while the advertising market in the fourth quarter was impacted by a decline in spending experienced across all media types, Yahoo! continued to broaden its client base, particularly among top-tier advertisers:

• An increasing number of traditional companies are choosing to market on the global Yahoo! network. Yahoo!’s advertiser count increased to 3,700 from 3,450 in the third quarter. Fortune 50 and 100 advertisers increased to 32 and 55 respectively.
• During the fourth quarter, Yahoo! enabled $1.4 billion in commerce transactions, a 110 percent increase compared to fourth quarter 1999.
• Yahoo! Shopping, the Internet’s No. 1 shopping portal (Nielsen//NetRatings, December 2000) enabled 13,000 merchants to sell directly to Yahoo!’s audience during December.

"We are very proud of Yahoo!’s performance in the fourth quarter and for the full year," said Sue Decker, Yahoo!’s chief financial officer and senior vice president of Finance and Administration. "Yahoo!’s performance in 2000 puts it among the best-positioned companies to emerge from the current market environment in an even stronger competitive position. Additionally, our track record of profitability, the strength of our balance sheet and our conservative fiscal discipline, provides us with the ability to invest in our platform and deliver increasing value for our shareholders, consumers and business partners."

Financial highlights for 2000 include the following:

• Fiscal year 2000 revenues grew to $1.1 billion, up 88 percent from 1999, while fourth quarter revenue reached nearly $311 million, a 53 percent increase from the same period in 1999.
• Non-U.S. operations represented 15 percent of total consolidated revenues during the full year, excluding the company’s 34 percent interest in Yahoo! Japan. Business services accounted for 10 percent of consolidated revenue.
• Pro forma earnings before interest, tax, depreciation and amortization (EBITDA) was $411 million for the year, up 117 percent from 1999.
• EBITDA margins were 37 percent for fiscal year 2000 and 36 percent for the fourth quarter.
• Cash and marketable debt securities were approximately $1.7 billion at year end.

"We are more confident than ever in the fundamental power of the Internet and how Yahoo!’s core business strategies position it to capitalize on future Internet growth. It is the most significant and effective medium ever created for consumers and businesses, and its commercial importance will continue to increase in the coming years, driving further growth for leaders such as Yahoo!," Decker said. "Over the next year, we expect to see some short-term effects from the apparent softening economy and the continued realignment of our client base. However, when we exit 2001, Yahoo! will be well on its way to becoming the Internet’s leading global consumer and business services company."

Yahoo! will continue to invest in and extend its global leadership position and take advantage of opportunities to build market share. In addition to its core efforts to aggressively expand its communications, commerce and media areas, the company will invest in its ongoing effort to deliver essential marketing and merchant services, business and enterprise solutions, and premium consumer services.

For the full year 2001, Yahoo! expects revenues to be $1.2 billion to $1.3 billion, with marketing services and commerce accounting for 80 percent to 85 percent of revenues, and business services growing to 15 percent to 20 percent. In the first quarter of 2001, Yahoo! expects revenues between $220 million and $240 million, which reflects a changing customer mix, an expectation of slower advertising expenditures, and a continuation of current general economic conditions.

For the full year 2001, Yahoo! expects pro forma EBITDA margins to average between 25 percent and 30 percent. In the 2001 first quarter, EBITDA margins are estimated at 16 percent to 20 percent. Based on these assumptions and its strategic growth initiatives, the company expects pro forma earnings per share (EPS) of $0.33 to $0.43 for the full year 2001. Pro forma EPS for the first quarter 2001 is expected to be in the range of $0.04 to $0.07 per share.

The company expects depreciation to be approximately $15 million to $16 million in the first quarter and $75 million to $85 million for fiscal year 2001. Charges related to amortization are expected to be approximately $14 million to $15 million in the first quarter and $50 million to $55 million for the full 2001 year. These figures include the pending acquisition of Kimo, which accounts for approximately $7 million and $30 million in the first quarter and the full year 2001, respectively. In the event that Yahoo! makes additional acquisitions of companies during 2001, among other factors, expected amortization charges could change significantly. The company expects its pro forma tax rate for the fiscal year 2001 to be 39 percent.

Due to its growing mix of advertising revenues from traditional and international marketing clients, Yahoo! expects that its days sales outstanding levels going forward will trend toward those of the best-managed traditional media companies, which tend to be in the 30 to 50 days range.

Capital spending for the first quarter and the full year 2001 is expected to be approximately $70 million to $80 million and $170 million to $200 million, respectively. Of these expenditures, $40 million in the first quarter and $50 million for the full year 2001 are attributable to Yahoo!’s planned move to a new headquarters facility during the first half of 2001.

These business outlook statements, as well as the statements regarding Yahoo!’s future market share, plans to invest, business strategy, prospects for the Internet generally, and expenditures for advertising specifically, are based on current expectations as of today only. Due to economic and advertising market variables, among other factors, actual results could be above or below the stated outlook. Yahoo!’s business outlook will be available on its Investor Relations Web site throughout the current quarter. Yahoo! makes these statements as of today and undertakes no obligation to update these statements. It is currently expected that these business outlook statements will not be updated until the release of Yahoo!’s next quarterly earnings announcement. The company reserves the right to update the outlook for any reason during the quarter, including the occurrence of material events.

Quarterly Conference Call

Yahoo! will host a conference call today to discuss fourth quarter and fiscal year 2000 results at 5:00 p.m. Eastern Time. A live Webcast of Yahoo!’s conference call can be accessed at http://webevents.broadcast.com/yahoo/Q400earnings. In addition, a replay of the call will be available for 48 hours following the conference call and can be accessed through the "Conference Calls" area of the company’s Investor Relations Web site at http://www.yahoo.com/info/investor, or by calling (800) 633-8284, reservation No. 16498855.

About Yahoo!

Yahoo! Inc. is a global Internet communications, commerce and media company that offers a comprehensive branded network of services to more than 180 million individuals each month worldwide. As the first online navigational guide to the Web, www.yahoo.com is the leading guide in terms of traffic, advertising, household and business user reach. Yahoo! is the most recognized and valuable Internet brand globally, and is ranked the No. 38 leading consumer brand worldwide. The company also provides online business and enterprise services designed to enhance the productivity and Web presence of Yahoo!’s clients. These services include Corporate Yahoo!, a popular customized enterprise portal solution; audio and video streaming; store hosting and management; and Web site tools and services. The company’s global Web network includes 24 World properties. Yahoo! has offices in Europe, the Asia Pacific, Latin America, Canada and the United States, and is headquartered in Santa Clara, Calif.

The matters discussed in this release contain forward-looking statements that involve risks and uncertainties. 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, the slower spending environment for advertising sales, including the lack of access to capital to fund early stage companies; the actual increases in demand by customers for Yahoo!’s branded services; the ability to successfully change the customer mix among Yahoo!’s advertising customers; general economic conditions; and the dependence on third parties for technology, content and distribution. 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 year ended Dec. 31, 1999, and Yahoo!’s quarterly report on Form 10-Q for the three- and nine-month periods ended Sept. 30, 2000, 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 Securities and Exchange Commission. Additional information will also be set forth in those sections in Yahoo!’s Annual Report on Form 10-K for the year ended Dec. 31, 2000, which will be filed with the Securities and Exchange Commission by March 31, 2001.

¹Pro forma net income and net income per share calculations for all 2000 and 1999 periods exclude acquisition-related charges, amortization of intangibles and stock compensation, employer payroll taxes on gains realized by employees from non-qualified stock option exercises, the write-down of certain equity investments, and/or the gains or losses from exchanges or sales of certain equity investments.

Contacts:
Diane Hunt, Corporate Communications, Yahoo! Inc., (408) 731-3441, diane@yahoo-inc.com
Nicki Dugan, Corporate Communications, Yahoo! Inc., (408) 992-7361, nicki@yahoo-inc.com
Andrea Klipfel, Investor Relations, Yahoo! Inc., (408) 731-3402, mailto:andrea@yahoo-inc.com