The company, which appointed Marissa Mayer of Google as its new chief executive on Monday, said profit fell four percent to $226.6 million, in a report that was better than expected.
That translated to 27 cents per share excluding special items, ahead of analyst expectations of 23 cents a share.
Revenues excluding traffic acquisition costs, the key barometer for the Web giant, were flat at $1.08 billion, below most forecasts. Total revenues were virtually unchanged at $1.2 billion.
The results underscored the turmoil at the California tech firm, which has been undergoing a major restructuring and then forced out its top executive in May over an inflated resume.
Tim Morse, Yahoo!'s chief financial officer, said the results beat consensus forecasts in several areas including display and search advertising, where Yahoo! has been pounded by Google.
Over the past quarter, Yahoo! "moved aggressively with new strategic agreements" and unveiled new partnerships, he said, as it tried to reposition itself in the sector.
Yahoo! shares gained 0.83 percent in after-hours trade to $15.73 after a small drop during the regular session on Wall Street.
Douglas McIntyre at 24/7 Wall Street said Yahoo!'s results were "within expectations."
Yet many analysts were focused on the new CEO and future strategy instead of the past quarter.
"Her background should certainly benefit Yahoo's mobile strategy in addition to news and search verticals," Susquehanna Financial Group's Herman Leung said on Monday.
"Three CEOs in less than a year does not spell confidence for investors despite a strong hire, but the good news is that she will likely have a few quarters of runway before investors gauge progress."
Morse pointed out that display revenues rose one percent and search revenue increased four percent. But that was well below the 23.8 percent growth pace of online advertising in the quarter, according to the research firm eMarketer.
Yahoo!'s share of overall US online ad revenues, at 15.7 percent in 2009, fell to just 9.5 percent last year, according to eMarketer.
The results came a day after the 37-year-old Mayer -- one of Google's first employees -- was named CEO.
The appointment "signals a renewed focus on product innovation to drive user experience and advertising revenue," Yahoo! said in a statement.
Mayer subsequently revealed she is pregnant and expecting the baby in October. She is arguably the most high-profile woman in Silicon Valley and a rare female CEO at one of America's largest firms.
Mayer was Google's 20th employee and its first female engineer, and is widely credited with developing the now ubiquitous user-friendly interfaces used by Google's search engine, Gmail, Google Maps and Google News.
Last week, shareholders endorsed the struggling Internet firm's overhauled board of directors and called for a fresh plan to compete against rivals such as Google and Facebook.
Yahoo! has been trying to reinvent itself as a "premier digital media" company since the once-flowering Internet search service found itself withering in Google's shadow.