But since then, the disclosure of two hackings of unprecedented size has stoked doubts about the deal.
The Securities and Exchange Commission is investigating whether Yahoo's two breaches, which occurred in 2013 and 2014, should have been reported to investors sooner, according to The Wall Street Journal.
CEO Marissa Mayer did not directly address or confirm the investigation in the earnings release, but did say that Yahoo's commitment to the security of its users is "unwavering." In October, the company said that the number of messages sent and received on Yahoo mail actually ticked up after the first notification of the breach, but Monday's release did not provide an update on that front.
"In addition to integration planning, our top priority continues to be enhancing security for our users," Mayer said in a statement. "With security protocols and password changes in place, approximately 90 percent of our daily active users have already taken or do not need to take remedial action to protect their accounts, and we're aggressively continuing to drive this number up."
CFRA Research Analyst Scott Kessler said he sees the Verizon deal closing, but he downgraded Yahoo's stock headed into earnings.
"[W]e see some risks," Kessler wrote in a note. "Importantly, YHOO may directly/indirectly indicate the two substantial breaches announced in September 2016 and December 2016 were material. Although we see the VZ deal closing, we are not sure about the ultimate consideration or timing."
The company also reported quarterly earnings that beat analysts' expectations on Monday, and revenue that topped Wall Street's forecasts.
The internet advertising technology company posted adjusted fourth-quarter earnings per share of 25 cents, excluding items, on revenues of $1.47 billion. Analysts expect Yahoo to report adjusted earnings of 21 cents a share on revenue of $1.38 billion, according to a consensus estimate from Thomson Reuters.
That's up from 13 cents a share on revenue of $1.27 billion in the year-ago period, when the company recorded a $4.46 billion goodwill impairment.
Though display ad prices declined, Yahoo exceeded expectations when it comes to display revenue, and easily beat expectations on search revenue during the quarter. The number of display ads sold increased 4 percent, and the price-per-click of search ads increased 18 percent.
Display revenue hit $573 million during the fourth quarter, not accounting for traffic acquisition costs, above the $568 million expected by a StreetAccount consensus estimate. Search revenue hit $767 million, not accounting for traffic acquisition costs, above the $698.8 million forecast by StreetAccount.
Yahoo shares were up about half a percent in after-hours trade, while Verizon shares were unchanged.
Despite a growing focus on mobile, social and video, Yahoo's core business has struggled to keep up with Facebook and Google in the advertising arena. The once-iconic tech company with over 1 billion total monthly users had only held 1.5 percent of the worldwide digital advertising market last year, according to eMarketer estimates.
Mobile revenue increased to $459 million during the quarter, up from just $291 billion a year ago.
Over the past year, Mayer has restructured the company, writing down a chunk of its social network, Tumblr, and announcing layoffs. Still, the company owns shares of Alibaba, which will not be bought by Verizon and have increased 40 percent in price the past year.
As of this time last year, Yahoo had closed 22 offices and sunsetted more than 120 products and features at Yahoo during Mayer's tenure. Headcount at Yahoo has fallen 18 percent to 8,500 over the past year.
Still, the company launched several new initiatives during the quarter, adding to its coverage of major-league hockey, expanding access to Hulu TV show clips, and creating new advertising features.
On Monday, Mayer, said the company's cost structure was the lowest in a decade. Verizon is scheduled to report earnings Tuesday before the opening bell.
"The opportunities ahead with Verizon look bright," Mayer said in a statement.