Display advertising was up 18% over the quarter, but was offset by a 7% decline in search advertising revenue.
The results show improved fortunes for the company, but lag behind that of rival Google, which posted increased revenues were up 23% on last year to $7.29bn (£4.54bn) over the same period.
Yahoo has been the which has been at the centre of recent takeover rumours, with the likes of AOL and NewsCorp linked to a bid.
Despite the modest increase in revenue, Yahoo reported a 113% increase in net earnings of $396 million (£252m) in the third quarter ending in September. This upturn was is likely due in part to the company repurchasing more than 7% of the its stock.
Carol Bartz, president and chief executive of Yahoo, said the company had had a “strong quarter” due to investment in its assets, and “strategic acquisitions.”
The company acquired display ad creation site Dapper earlier this month, and bought open publishing platform Associated Content and fantasy sports company Citizen Sports earlier in the year.
It has also increased its strategic partnerships with social networking sites Twitter and Facebook, and with mobile companies T-Mobile and Sprint.