Yahoo Reports Q3 Beat: Your Move, Verizon

Yahoo! Inc. YHOO reported its Q3 results and issued its adjusted EBITDA guidance for Q4 ahead of expectations.

BMO Capital’s Daniel Salmon maintains a Market Perform rating on the company with a price target of $44.

Q3 Results

Yahoo reported its ex-TAC revenue for Q3:16, however, slightly below the consensus forecast, which the analyst believes was “reflective of continued top-line challenges, but a renewed focus on cash flow over the past year as the sale process has played out.”

Salmon expects this trend to play an important role in getting Verizon Communications Inc. VZ to go through with the deal.

MaVENS revenue rose 24 percent year-on-year to $524 million during the quarter, ahead of the estimate, while the adjusted EBITDA came in at $172 million, beating the estimate and the consensus.

Yahoo also reported its EPS for Q3 ahead of expectations at $0.20.

Related Link: 10 Questions Yahoo Investors Need Answers To

Q4 Guidance

The company guided to adjusted EBITDA of $260 million–$300 million for Q4:16, ahead of the consensus forecast of $245 million.

“GAAP revenue is expected to be between $1.36 billion and $1.4 billion, TAC is estimated at $480 mm and non-GAAP operating income is expected in the range of $140 million–180 million,” Salmon stated.

The analyst believes that the improved cash flow guidance reflects increased focus on core properties, following a number of product closures over the last 12–24 months.

At last check, Yahoo was up 2.54 percent at $42.74, while Verizon was up 0.58 percent at $50.56.

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