Yahoo beat profit expectations in the second quarter with non-GAAP earnings per share of $0.35, but weaknesses in its core businesses resulted in disappointing ex-TAC revenue of $1.07 billion. Analysts had expected $1.08 billion in revenue and $0.30 EPS.

Display revenue for the period was $472 million, down a troubling 12 percent year over year. Search revenue fell 9 percent year-over-year to $418 million.

“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,” CEO Marissa Mayer said in the earnings release. “From the new Yahoo! News, the new Yahoo! Sports app, the redesigned Yahoo! search, the new Flickr, the new Yahoo! Mail for tablet, the Yahoo! Weather app, our new Yahoo! app with Summly – this quarter drove tremendous improvements in our product line and our users responded with increased usage and engagement.”

Yahoo has definitely made progress with its products, but the slide in its display and search revenue suggest that those improvements have yet to lead to material benefits.

Shares of Yahoo were down 1.68 percent to $26.88 on Tuesday. The stock dropped an additional 2.19 percent in after-hours trading.

Mayer has been actively acquiring talent and companies to turn Yahoo around, and the second quarter saw her biggest purchase: Tumblr for $1.1 billion. The company made a total of nine acquisitions during the period: Summly, Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software and Tumblr.

Most of the funds for Mayer’s aggressive acquisition strategy came from proceeds of the company’s investment in Chinese e-commerce firm Alibaba. Yahoo took in $846 million from its Alibaba deal during the quarter.

Yahoo CFO Ken Goldman revealed that the company has “essentially completed” its plan to give back to shareholders $3.65 billion of the money it received from Alibaba.

“As part of our ongoing commitment to shareholders, we plan to continue to execute against the $5 billion share buyback that was authorized last year, of which approximately $1.9 billion remains. We plan to repurchase shares in open market or privately negotiated transactions,” he said.

In the first quarter of 2013, Yahoo reported $1.14 billion in revenue and $0.35 earnings per share on a GAAP basis. During the period, it posted $455 million in display revenue and search revenue of $425 million.

Notably, today marks one year to the day since Yahoo announced that Mayer was taking over as CEO. She started working at the company the day after. Since Mayer took the reins, Yahoo stock has climbed almost 75 percent.

Back in April, Mayer described her plans for Yahoo’s long-term success as a “series of sprints”. One of the first such endeavors was to raise workplace morale and standing. Another sprint was to attract top external talent to help with the comeback.

The company is set to stream a video broadcast of its second quarter earnings results on Yahoo Finance at 5pm EDT, and we’ll be watching.

Other recent acquisitions by Yahoo include email service Xobni, video slideshow company Qiki and fantasy sports app Bignoggins.

See also: Turnaround: Marissa Mayer’s first 300 days as Yahoo’s CEO

Image credit:  Justin Sullivan/Getty Images