Yahoo! on Monday reported that its quarterly profit rocketed above $3 billion, fueled by the sale of part of its stake in Chinese e-commerce giant Alibaba.
Alibaba last month announced that it bought back billions of dollars worth of stock from Yahoo! in a step toward independence from the US Internet pioneer.
The California company's revenue from display advertising was little changed from the same quarter last year but Yahoo! reported its income from ads served up with online search results was up 11 percent.
The earnings topped Wall Street expectations and Yahoo! shares climbed nearly three percent to $16.20 in after-market trading on the Nasdaq.
"Yahoo! had a solid third quarter, and we are encouraged by the stabilization in search and display revenue," said chief executive Marissa Mayer.
"We're taking important steps to position Yahoo! for long-term success, and we're confident that our focus on quality and improving the user experience will drive increased value for our advertisers, partners and shareholders."