Yahoo has posted lower-than-expected third quarter profits of $76.3 million (£49.6 million ) compared with $6.77 billion for the same period in 2014.
However, last year's profit included proceeds of $6.3 billion from the sale of shares in Chinese e-commerce company Alibaba.
Revenue from mobile traffic was up to $271 million up from $207 million and revenue from mobile, video, native and social advertising increased 43 per cent to $422 million, the company said. Yahoo's shares fell two per cent in after-hour trading following the announcement.
"As we move into 2016, we will work to narrow our strategy, focusing on fewer products with higher quality to achieve improved growth and profitability," Yahoo's chief executive Marissa Mayer said in a statement.
The company also announced it signed a deal with Google in a bid to bolster its search revenues.
It said it would send an unspecified share of its traffic to Google and allow its rival search advertising platform AdSense to generate both desktop and mobile revenue on its behalf.
The deal will be subject to a review by US antitrust authorities and will not extend to Europe. Ms Mayer said the deal offered "significant, additional flexibility" for Yahoo.
Firefox's default search engine
This year, Yahoo has also become the default search engine on Firefox, taking over from Google, which had a partnership with Firefox maker Mozilla running for the past ten years.
Firefox was first launched in 2002 to rival established internet browsers such as Internet Explorer. It was initially developed for Windows, OS X and Linux and then was expanded to include a mobile version for Android mobile handsets.
As of February 2014, Firefox was estimated to have a global usage of between 12 per cent and 22 per cent, making it the third most web browser.
Yahoo's ability to secure a deal to be Firefox's main search engine has been seen as a major coup and makes a dent in Google's dominance of the sector.
According to figures from research firm comScore, Google remains a major player in the search engine stakes with 64 per cent of all searches from US desktops going through the company. Microsoft is second with 20 per cent while Yahoo is third with 13 per cent.
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