The results, which were in line with Wall Street expectations, included a 22% decline in first-quarter profits down to $160m (拢90m) from $205m, but it was boosted by ad sales growth, which jumped 35% to $1.38bn, pushing its shares up 6% or by $1.92 in after-hours trading.
Despite losing ground to Google, Yahoo! still leads the market in online display advertising and the boost has come as more businesses pay to have larger format ads next to search engine results.
The rise in display helps Yahoo! stay in the battle with Google, which has come to dominate in the search advertising market.
Revenue for the first quarter to March 31 rose 34% to $1.57bn, up from $1.17bn last time. Analysts had been expecting results in the range of $1.09bn to $1.19bn.
Terry Semel, Yahoo! chairman and CEO, said: "Yahoo! had another strong performance this quarter. Our overall advertising business saw solid growth and our user numbers continued to climb.
"We believe that our business model and our focus on exploring new opportunities in emerging areas has set us apart from the competition and has enabled us to offer our users the best online experience and our advertisers the most value online."
Yahoo! buoyed investors with a positive outlook, saying that it expected second-quarter net revenues to rise from $1.08bn to $1.16bn. Some investors had been worried that Yahoo! would follow its previous quarter when it issued a cautious forecast that sent shares falling.
Susan Decker, chief financial officer at Yahoo!, said: "We are off to a terrific start to the year, demonstrated by strong revenue and profitability growth, along with significant free cash generation."
"Our business strength allowed us to both invest close to $750m in buying back stock this quarter while also investing in key operating initiatives that will enhance our solutions for our advertisers and our offerings for our user community."
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