YAHOO remained stuck in a revenue rut during the second quarter, muting the celebration of CEO Marissa Mayer's first year in the Internet company.

The numbers released on Tuesday showed Yahoo Inc's earnings are still rising, but they also highlighted the challenges the company faces as it loses ground to rivals Google Inc and Facebook Inc in the online advertising market that generates most of their revenue.

Yahoo sold slightly fewer display ads than it did at the same time last year, and the prices that marketers were willing to pay for the space fell by 12 percent, too. The Sunnyvale, California, company made some small strides in the Internet ad market dominated by Google, but it still wasn't enough to prevent Yahoo's revenue from slipping in a quarter when the digital ad market in the United States increased by 15 percent, based on estimates by the research firm eMarketer.

Google's second-quarter earnings, due out today, are expected to show even more robust growth. Mayer was hired from Google a year ago.

Yahoo's nagging ad headaches initially dragged down the company's stock by more than 2 percent in extended trading, but the selling reversed after management assured investors that it intends to keep buying back the company's stock. The commitment comes after Yahoo had already spent US$3.6 billion buying back about 190 million of its shares since last year, fulfilling a pledge that Mayer made shortly after the company realized a US$7.6 billion windfall from selling nearly half of its stake in Chinese Internet company Alibaba.

Yahoo still owns a 24 percent stake that is expected to bring in up to US$20 billion during the next few years.

Alibaba is also lifting Yahoo's ongoing earnings, as the second-quarter report illustrated. Yahoo made more money from its investments in Alibaba and Yahoo Japan in the quarter than it did from its US operations.

Yahoo earned US$331 million in the three months ending in June. That compared with net income of US$227 million at the same time last year.