Yahoo Inc. YHOO -0.26 % is scheduled to announce its third-quarter earnings after the market closes Tuesday. Here’s what you need to know:
EARNINGS FORECAST: Analysts, on average, expect Yahoo to report quarterly earnings of 14 cents per share, excluding certain expenses, according to Thomson Reuters. That is roughly in line with Yahoo’s adjusted earnings of 15 cents per share in the third quarter of 2015.
REVENUE FORECAST: Yahoo is expected to report third-quarter revenue of $1.31 billion, up 6.6% from a year earlier. But UBS analysts project that revenue minus commissions paid to partners for web traffic will fall 14% to $862 million, marking the seventh decline in the past eight periods for this key metric.
WHAT TO WATCH:
--A BIG DEAL: Investors are hungry for news on Verizon Communications Inc. VZ -0.32 % ’s $4.8 billion deal to buy Yahoo and the potential fallout from Yahoo’s recently disclosed data breach of 500 million accounts. The breach occurred in 2014, but Yahoo said it was discovered after it signed the Verizon deal in July. Last week, Verizon’s general counsel signaled the breach might allow it to renegotiate the deal’s terms; Yahoo responded by saying it was confident in its value.
Analysts expect the deal will ultimately go through but may require further concessions from Yahoo. Investors will have to rely on Yahoo’s earnings release for answers. The company decided to skip its analysts’ call, allowing it to sidestep any thorny questions about Verizon and the data breach.
--MAYDAY FOR MAVENS?: Revenue from “Mavens”—a financial metric Yahoo introduced last year to track mobile, video, native and social ads—is expected to fall for the second straight quarter, according to SunTrust analyst Robert Peck. He expects revenue from this group will fall 9% in the third quarter to $385 million, excluding the effects of Yahoo’s recent change to the way it reports revenue. This comes after a 4% drop in the second quarter on that basis. Chief Executive Marissa Mayer previously said this segment would drive Yahoo’s growth.
--WEAK CORE: Can Yahoo shore up its digital ad market share and core ad revenue? Some analysts have their doubts. EMarketer expects Yahoo’s ad revenue to drop 10.2% in 2016, after a 3.5% decline last year. “We think it is tough for Yahoo to attract incremental ad dollars because of the recent layoffs, ongoing uncertainty from the pending sale, and continued decline in platform relevance,” Mr. Peck said.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com