Yahoo 2014 Annual Report Download - page 47

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Key Financial Metrics
The key financial metrics we use are as follows: revenue; revenue less traffic acquisition costs
(“TAC”), or revenue ex-TAC; income from operations; adjusted EBITDA; net income attributable to
Yahoo! Inc.; net cash provided by (used in) operating activities; and free cash flow. Revenue ex-TAC,
adjusted EBITDA, and free cash flow are financial measures that are not defined in accordance with
U.S. generally accepted accounting principles (“GAAP”). We use these non-GAAP financial measures
for internal managerial purposes and to facilitate period-to-period comparisons. See “Non-GAAP
Financial Measures” below for a description of, and limitations specific to, each of these non-GAAP
financial measures.
Years Ended December 31,
2012 2013 2014
(dollars in thousands)
Revenue
$4,986,566 $4,680,380 $4,618,133
Revenue ex-TAC
$4,467,660 $4,425,938 $4,400,602
Income from operations(1)
$ 566,368 $ 589,926 $ 142,942
Adjusted EBITDA
$1,698,727 $1,564,245 $1,361,548
Net income attributable to Yahoo! Inc.
$3,945,479 $1,366,281 $7,521,731
Net cash provided by (used in) operating activities
$ (281,554) $1,195,247 $ 896,700
Free cash flow(2)
$ (834,865) $ 786,465 $ 590,450
(1) Includes:
Stock-based compensation expense
$ 224,365 $ 278,220 $ 420,174
Restructuring charges, net
$ 236,170 $ 3,766 $ 103,450
(2) Excluding the impact of the cash taxes paid of $2.3 billion related to the initial repurchase by
Alibaba Group of 523 million Alibaba Group ordinary shares (“Alibaba Group shares”) in
September 2012 (the “Initial Repurchase”), free cash flow for the year ended December 31, 2012
would have been $1.4 billion.
Revenue ex-TAC (a non-GAAP financial measure)
Years Ended December 31, 2012-2013
% Change
2013-2014
% Change2012 2013 2014
(dollars in thousands)
Revenue
$4,986,566 $4,680,380 $4,618,133 (6)% (1)%
Less: TAC
518,906 254,442 217,531 (51)% (15)%
Revenue ex-TAC
$4,467,660 $4,425,938 $4,400,602 (1)% (1)%
For the year ended December 31, 2014, revenue ex-TAC decreased $25 million, or 1 percent, due to a
decline in display revenue ex-TAC and other revenue ex-TAC, partially offset by an increase in search
revenue ex-TAC. For the year ended December 31, 2013, revenue ex-TAC decreased $42 million, or 1
percent, due to a decrease in display revenue ex-TAC partially offset by an increase in search
revenue ex-TAC and other revenue ex-TAC.
The decline in TAC for the year ended December 31, 2014 was primarily driven by the impact of the
transition of paid search to Microsoft’s platform. The decline in TAC for the year ended December 31,
2013 was primarily driven by the impact of the closure of our Korea business and the transition of
paid search to Microsoft’s platform.
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