It also reported a 6% fall in revenue to $1.06bn (£0.64bn) for the three months to 31 March.
The fall in revenue was partly due to a 19% fall in search revenue to $357m (£218m).
The digital media company blamed the fall on the revenue share under the terms of its search agreement with Microsoft.
Display revenue, however, increased 10% year on year to $471m ($288m).
CEO Carol Bartz is targeting display advertising in her turnaround strategy to return the company to growth.
Bartz’ is also switching Yahoo!’s focus to becoming a content provider by hosting more online video programmes and brokering content deals similar to its Premier League highlights shows.
The strategy appears to behaving some positive impact as the minutes users spent on Yahoo! branded content sites increased 17% during the period and users increased 15%.
Bartz says Yahoo! is “solidly executing” its strategy to return to revenue and profit growth.