Yahoo's net revenue dipped slightly in the third quarter as prices for its display ads remained under pressure.
Yahoo shares, which are up roughly 70 percent since the start of the year, rose in after-hours trading following the announcement. What is Yahoo stock doing now? (Click here to get the latest quote.)
The Web portal reported $1.08 billion in net revenue, which excludes fees paid to third-party websites, in the three months ended September 30, compared with $1.09 billion in the year-ago period. The average analyst expectation was for net revenue of $1.082 billion according to Thomson Reuters.
Yahoo said it earned $297 million in net income in the third quarter, or 28 cents a share, compared to $3.16 billion, or $2.64 a share in the third quarter of 2012, when Yahoo's results included a $2.8 billion gain from the sale of a portion of its stake in Alibaba Group.
Excluding certain items, Yahoo said it earned 34 cents per share, a penny above the average analyst estimate.
CEO Marissa Mayer said Yahoo has more than 800 million monthly users, up 20 percent over the past 15 months.
"[W]e're achieving meaningful increases in user engagement and traffic," she said in a statement.
Still, the company has challenges ahead.
Display ad revenue dropped by 7 percent to $470 million, compared to the year-earlier quarter.
And Yahoo's outlook fell short: The company expects fourth-quarter revenue excluding traffic-acquisition costs to come in between $1.18 billion and $1.22 billion, below analyst expectations of $1.40 billion.