Yahoo beat on earnings Tuesday but its revenue outlook fell short. Mayer was upbeat about the company's progress but analysts said there's still a lot of work to do.
Yahoo said it expects revenue excluding traffic acquisition costs (TAC) of $1.06 billion to $1.1 billion. Analysts currently expect revenue of $1.12 billion, according to Thomson Reuters.
The stock, which has jumped about 70 percent since Marissa Mayer took over as CEO a year ago, initially fell in after-hours trading but then bobbed into positive territory.
"Mostly the gains [in the stock] have been Marissa Mayer's star power, her connections throughout Silicon Valley and her acquisition strategy … but the core business has been relatively stagnant," Roger Kay, founder of Endpoint Technologies, said on CNBC's "Closing Bell."
But Mayer remained upbeat about the core business.
"I'm encouraged by Yahoo!'s performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week," said Yahoo! CEO Marissa Mayer in a statement.
For the second quarter, Yahoo's net income jumped 46 percent to $331.2 million, or 30 cents a share, from $226.6 million, or 18 cents a share, in the second quarter last year.
Excluding items, earnings rose to 35 cents a share from 30 cents per share a year earlier.
Yahoo's revenue ex-TAC, which excludes fees paid to partner websites, slipped 1 percent to $1.07 billion from $1.08 billion, as display revenue fell 11 percent from the year-earlier quarter.
Analysts were expecting the Internet company to report second-quarter earnings of 30 cents per share on revenue of $1.08 billion, according to estimates from Thomson Reuters.
The number of ads sold in the second quarter fell 2 percent while the price-per-ad dropped about 12 percent, highlighting a recurring problem despite other signs of progress under Mayer's leadership.
On the conference call, Yahoo said its display business was hit by a shift away from premium ads and away from the U.S. to international.
However, search revenue rose 5 percent as paid clicks were up about 21 percent. Price-per-click fell 8 percent.
David Garrity, principal at GVA Research Principal, said the nickel beat on second-quarter earnings was encouraging but Yahoo has some challenges ahead with its billion-dollar acquisition of blogging site Tumblr.
"Tumblr has a lot of traffic but not a lot of monetization," Garrity said on "Closing Bell." "The question really here for CEO Marissa Mayer is gonna be, 'OK, fine, you spent a billion dollars to buy Tumblr, you bought traffic. Let's see how we can actually leverage this so that this margin surprise we saw in the current quarter can be extended going into the second half of 2013 and then into 2014.'"
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— AP contributed to this article.