He said user engagement remains down and that price per ad on the display side was slid 2 percent.
"If you look at pricing of both kinds of advertising that Yahoo sells, whether you're talking about search advertising or display advertising we saw notable declines," Scott Kessler, an analyst with S&P Capital IQ, told CNBC. "That is concerning."
Kessler expects only mid-single-digit revenue growth for Yahoo over the next couple of years, significantly below companies such as Facebook and Google.
Barclays' DiClemente said investors will need to give CEO Mayer six to eight quarters to develop new products that can increase user engagement and eventually lead to monetization, adding "because unless you have the impressions and clicks you can't really drive ad revenue."
In the meantime, investors may want to focus on Yahoo's Asian assets. "Those Asian assets are on fire from our perspective," DiClemente said. Yahoo owns 24 percent of China e-commerce firm Alibaba Group and 35 percent of Yahoo Japan.