Yahoo said a nine per cent increase in revenues to $1.8 billion (£0.9 billion) for the first quarter was "solid" and claimed the firm had performed well under challenging circumstances.
Excluding one-time items and stock compensation costs, Yahoo reported a profit of $150 million (£75.26 million), or 11 cents (5.5p) per share, which beat forecasts.
According to a Reuters survey, Wall Street analysts were on average predicting a profit of nine cents per share.
Net income for the first quarter of 2008 was $542 million (£272 million) compared to $142 million (£71.3 million) for last year, but includes a $401 million (£201.2 million) gain from the initial public offering of Alibaba.com.
But operating income for the first quarter of 2008 was $121 million (£60.1 million), a 28 per cent decrease compared to $169 million (£84.8 million) for the same period of 2007.
The internet search engine firm said it was hit by a $17 million (£8.53 million) charge for cutting its workforce and a $14 million (£7 million) bill for advice on fighting off Microsoft's hostile takeover bid.
Jerry Yang, co-founder and chief executive officer of Yahoo, said: "As outlined in our investor presentation, we believe we can significantly accelerate our revenue growth, return to our historically high margins, and double our operating cash flow by 2010.
"This quarter's solid performance underscores the fact that we are executing on that plan."
Although Yahoo's profits were better than expected, the internet firm is not likely to get a better offer from Microsoft, analysts say. Microsoft has offered £43 billion (£21.6 billion) for the firm and Yahoo's board has until Saturday to make a decision.