The company said it earned $21m (Â£14m) in the first quarter, compared with $312m a year earlier.
Although revenue from the company's mobile offerings increased by 61%, overall revenue from operations was $1.04bn, below expectations.
Shares in the firm fell nearly 2% in trading after markets closed.
"Yahoo is amidst a multi-year transformation to return an iconic company to greatness," said chief executive Marissa Mayer in a statement accompanying the earnings.
Investors are concerned about how the company will continue to generate revenue once it spins off its 15% stake in Chinese e-commerce giant Alibaba.
Ms Mayer highlighted a re-negotiated contract with Microsoft as a potential area of new growth.
She also said the company's partnership with search engine Mozilla had led to increased search traffic.
Internet search giant Yahoo has reported worse-than-expected profits for the first three months of this year, adding to investor concern.