Yahoo 1998 Annual Report Download - page 17

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advertising was about double that of 1997. And, 1998 appears to be the first
“critical mass” year in online business-to-consumer commerce. Internet connec-
tivity became more ubiquitous, both at work and at home, PC shipments were
up substantially, and “Internet connectivity” became a primary driver when
consumers decided to buy a PC.
Throughout 1998, Yahoo! continued to focus on leadership, scale, leverage, and
the delivery of superior financial results. We started the year with one of the
Web’s most well-known brands and a large audience share, and we exited the
year with the same strong position. We ended 1997 with approximately 26
million unique users in the U.S., and in December 1998, we had more than 50
million unique users worldwide, a result of Yahoo!’s capability of delivering
the ultimate Web experience. As of December 1998, we had approximately 35
million unique registrations for our registered services and have one of the
Web’s largest preferences databases to use in the targeted delivery of services
and merchant offers. Our traffic grew from an average of 65 million page views
per day in December 1997 to an average of 167 million page views per day in
December 1998, again making Yahoo! one of the most highly trafficked sites
on the Web. Our 1998 net revenues nearly tripled to $203.3 million. In 1998,
we exhibited the leverage inherent to our business model and, on a pro forma
basis, grew our gross margin to 90 percent and our operating margin to 36
percent as a percentage of net revenues in the fourth quarter 1998. Our cash
and investments in marketable debt securities increased to $482 million at the
end of the year, compared to $108 million as of December 31, 1997. These results
and our ability to anticipate the next level of growth have been possible because
we’ve hired only the very best people and scaled them as we’ve grown our busi-
ness. Our employees are passionate about delivering Web users the best possible
experience, and they also understand the value of operating discipline and
profitability. With strong gross margins, positive cash flow, and a healthy
balance sheet, we have positioned Yahoo! to aggressively and proactively grow
our worldwide business.
During the year, Yahoo! significantly enhanced and expanded the content,
commerce, communication, and community services we offer our diverse users
worldwide. At the end of 1998, we had 15 direct, branded versions of Yahoo! in
operation outside the United States and we have since added three additional
sites in Asia, bringing the total to 18 world properties. People now use Yahoo!
in 12 languages from countries all around the world to access a wide array of
news, information, and services. We also now offer 13 registered services,
enabling Yahoo! members to personalize their Web experience.
This year, we aggressively expanded our efforts in online commerce, enabling
our users to find, connect with, buy, and ship what they are looking for, and
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