Yahoo Japan, the country's most visited Web site, said on Wednesday quarterly profit gained 20% as it signed up more users to its auction site and attracted more stores on its online mall.
Net income rose to 15.2 billion yen ($125 million) in the three months ended Dec. 31 against 12.7 billion yen a year earlier. Its estimated profit range was 13.7 to 15.2 billion yen.
The result compared with an average forecast of 15.4 billion yen from four analyst polled by Reuters Estimates.
Yahoo Japan, which competes with Web firms such as Rakuten and Google, said the total value of transactions at its online auction, shopping and other services jumped 14.7% in calendar 2006 from a year earlier, in contrast with sluggish wages and spending in the overall economy.
It has enjoyed higher commissions from auction users and stores at its virtual shopping mall, but advertising revenues have remained weak as large firms refrained from raising spending, Chief Executive Masahiro Inoue told reporters.
Yahoo Japan, 41% owned by Internet and telecoms conglomerate Softbank, said sales in the October-December quarter gained 17% to 54.5 billion yen, compared with its forecast range of 51.7 to 55.2 billion yen.
"For the fourth quarter, we expect advertising to pick up a little from the previous quarter, but e-commerce may fall because it's past the year-end shopping season," Inoue said.
Also, for the first time this business year, the company said it expects net income of 56.2 to 57 billion yen in the year ending in March, up from 47.1 billion yen a year earlier.
Forecasts by 19 analysts had Yahoo Japan's full-year profit rising to 60.2 billion yen in the year ending in March.
U.S.-based Yahoo, which owns a third of the Japanese firm, said on Tuesday its quarterly profit fell 61% after paying option expenses but also said a new Web search advertising system was nearly ready, sending its shares up nearly 6%.
Yahoo Japan, one of the most popular stocks with retail investors, rose 0.4% in Tokyo before the company announced its earnings result, closely in line with gains in the overall market.