Business Operations Business Models

How Does Yahoo Make Money (Business and Revenue Model)

The Yahoo business model

How Does Yahoo Make Money?
Here’s what you should know:
  • What is Yahoo, and how does Yahoo work?
  • How does Yahoo make money?
  • Advertising (Search and Display Ads)
  • Yahoo Plus (4 Subscription Services)
  • Yahoo’s Subsidiaries, Acquisitions, and Exits
  • Yahoo’s profit and revenue
  • What is the Yahoo business and revenue model?
  • Yahoo’s funding and valuation

How does Yahoo make money if it’s free to use? Here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Yahoo business model, their year over year revenue, and how Yahoo works.

What is Yahoo, and how does Yahoo work?

Yahoo, styled yahoo!, is a multinational tech company that provides web services and products such as its search engine, web portal, Yahoo Mail, Yahoo Finance, and more.

Founded in 1994 by Jerry Yang and David Filo, Yahoo began trading on the NASDAQ on April 12, 1996, under the ticker symbol “YHOO” before later delisting after Verizon completed its acquisition of the company on June 13, 2017.

Since that time, Yahoo has remained amongst the top 3 most used search engines and email service providers on the internet.

How Yahoo works is: To use Yahoo, users can simply visit their homepage or go directly to the website of the Yahoo product they are interested in and sign up for an account.

Once signed up, users can use all of Yahoo’s products for free. But if a user wants additional perks that the free plans do not offer, they can upgrade to any one of Yahoo’s paid subscription plans for any of their products.

Some of Yahoo’s competitors include Google, Microsoft, and other multinational tech companies that offer web services and products.

Yahoo App in Apple App Store | Yahoo Business Model | How Does Yahoo Make Money? | How Does Yahoo Work?
Source: Apple App Store | Yahoo

How does Yahoo make money?

Yahoo has a multitude of users across all its products and services, as per reports. Ranging from their search engine that conducts more than 500 million daily searches to their mail service, Yahoo Mail, which has over 225 million active monthly users.

So how does Yahoo make money off of all these users who use all their products?

Below is a breakdown of how much money Yahoo makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Yahoo makes money (in 2022):

Yahoo has a revenue model that makes money in two (2) ways – advertising and subscription revenue.

#1. Advertising (Search and Display Ads)

Yahoo makes the majority of its money from its advertising.

How does Yahoo make money from ads? Well, Yahoo places search and display ads on all of the numerous product and service sites they own and show them to its hundreds of millions of users.

According to Yahoo, their ads receive more than 60 billion monthly global native impressions across their vast network of publishing partners, and the premium sites they own via all of the products and services they have.

Yahoo Advertising Cost | Yahoo Business Model | How Does Yahoo Make Money? | How Does Yahoo Work?
Source: Yahoo

Note: If users want an ad free experience, Yahoo upsells its users by offering upgraded paid plans on all of its products and services via Yahoo Plus. As seen below.

#2. Yahoo Plus (4 Subscription Services)

Yahoo also makes money through its subscription revenues with Yahoo Plus.

The company offers four (4) subscription services for four (4) separate products: Yahoo Finance Plus, Yahoo Mail Plus, Yahoo Protect Plus, and Yahoo Fantasy Plus.

All of which come with their own set of perks that the free plans do not offer such as being ad free, having 24/7 tech support, and more. And note, each product has its own separate costs and plans for each. Which you can see below.

Yahoo Plus Costs:

  • Mail Plus: $5 per month
  • Fantasy Plus: $2.92 per month, billed annually
  • Finance Plus: $25 to $35 per month depending on the plan
  • Protect Plus: $5 per month per phone for mobile coverage and $15 per month for home tech coverage
Yahoo Plus Costs | Yahoo Business Model | How Does Yahoo Make Money? | How Does Yahoo Work?
Source: Yahoo

Yahoo’s Subsidiaries, Acquisitions, and Exits

Aside from Yahoo being acquired in 2017 by Verizon for $4.5 billion, Yahoo has had its own fair share of acquisitions as well.

To date, Yahoo! Inc. has made a total of 120 acquisitions, 24 investments, 6 lead investments, and 14 successful exits.

Mergers and acquisitions business model
Source: Crunchbase | Yahoo

Yahoo’s profit and revenue

In 2020, Yahoo reported $7.4 billion in revenue. As for 2021, the company has not reported any official earnings.

Note: Because the Apollo Investment Corporation, the parent company of Yahoo, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Apollo’s publicly released financial reports, including annual reports, through Apollo’s investor section on their website.

What is the Yahoo business and revenue model?

Yahoo makes money through a few revenue models that they combine within their company, they are:

  • Freemium business model
  • Advertising based business model
  • Subscription based business model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Yahoo’s funding and valuation

According to Yahoo’s Crunchbase profile, Yahoo has raised $6.8 million over 2 rounds.

Yahoo was acquired by Verizon in June 2017, for $4.5 billion.