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Internet search giant Yahoo! has posted third-quarter revenues exceeding expectations, as it strives to turn around its fortunes.

A statement issued by the US-based company revealed a 12 per cent increase in revenues for the three months to September 30th. Revenues rose to $1.8 billion (£886 million) over the period, up from the $1.6 billion (£788 million) reported for the corresponding period of the previous year.

However additional operating expenses saw net profits slip back slightly, falling by five per cent to $151 million (£74 million).

Yahoo's total operating expenses jumped to $877.1 million (£432 million), compared with $696.9 million (£343 million) in the same quarter of last year. The company's spending on product development and sales and marketing both increased over the third quarter.

Nonetheless shares in Yahoo lifted on Wall Street in after-hours trading on the better-than-expected revenues reported by the company, which also confirmed its intentions for the future in the wake of a three-month business review.

The review comes after Yahoo co-founder Jerry Yang took over as chief executive this summer, with the internet giant's new boss under pressure to reverse the business' disappointing recent performances.

It seems that the strategy may be beginning to pay off, with Yahoo revealing that its revenue from graphical display advertising – including banner ads – increased by almost 20 per cent over the third quarter. The rise comes after almost five quarters of slowing growth.

"Moving forward, we are focused on three big, multi-year objectives: to become the starting point for the most consumers on the internet; to be the ‘must buy’ for the most advertisers; and to deliver open, industry-leading platforms that attract the most developers," said Mr Yang.

"We are executing against our transformation and are excited about playing a leadership role in the large and growing internet market," he added.