Yahoo! Reports Strong Q2

Increased demand for online advertising helped to boost Yahoo’s quarterly profits in what looks to be a robust earnings season for ad-supported online companies.

Yahoo second quarter net profit was $754.7 million, or 51 cents a share, including an investment gain of 38 cents a share. This compares to a year ago profit of $112.5 million, or 8 cents per share.

Chairman and CEO Terry Semel noted in a statement, “solid growth in the second quarter as a result of our strength in both search marketing and brand advertising” was a driver of growth for the company.

Marketing services reaped $1.1 billion for the quarter, a 51 percent increase over the year-ago period. Semel predicted Yahoo will outpace the 34 percent overall growth forecast for online advertising this year.

Semel cited automotive, CPG and financial services companies as the company’s top advertisers. He singled out automotive as “integral” to lifestyle and demographic targeting, while saying CPG advertisers are reallocating traditional media dollars.

In addition, Semel promised “important upgrades” in search advertiser platforms, calling these among the “highest company priorities.”

Fee-based and subscription revenue grew 45 percent over the year-ago quarter to $159 million. Semel said paid users are the company’s fastest-growing subset. He claims 10.1 million paid user relationships, up 58 percent from last year. “We’re well on our way to our new goal of 15 million paid relationships,” announced Semel.

Yahoo’s quarterly domestic revenues were $870 million, up 39 percent from the $624 million reported for the same period of 2004. International revenues for the period were $383 million, an 84 percent increase from the $208 million reported for the year-ago period.