By Deepa Seetharaman and Ryan Knutson

Yahoo Inc. said Monday its $4.8 billion deal with Verizon Communications Inc. will close a quarter later than expected, as both sides grapple with the fallout of two massive data breaches disclosed by the internet company.

The hacks, announced in September and December, have cast a shadow over the future of Verizon's agreement in July to buy Yahoo's core internet business.

The acquisition was expected to close in the first three months of 2017, but onMonday Yahoo said the deal's closure would be pushed into the second quarter, citing "work required to meet closing conditions."

In a quarterly earnings report, Yahoo shared a chart showing a slight decline in page views, searches and email messages sent and read compared with metrics recorded on Dec. 14, when Yahoo announced a second breach affecting more than one billion user accounts. It didn't provide underlying numbers in the chart.

A person familiar with Verizon's thinking said the company was encouraged by Yahoo's user-engagement numbers because they didn't show a major decline. But, this person said, Verizon still needs more time to monitor the impact before making a final determination.

In a statement, Yahoo CEO Marissa Mayer said the opportunities with Verizon "look bright" and she pointed to "continued stability in our user engagement trends." As it did the previous quarter, Yahoo skipped its conference call with analysts.

Investors remained optimistic the deal would go through. On Monday, Yahoo's stock rose nearly 1% in after-hours trading to $42.70 after rising about 4% since the disclosure on Dec. 14 of the second hack.

If the sale of Yahoo's core internet business is completed, the remaining company would be called Altaba Inc., which would contain Yahoo's stake in Alibaba Group Holding Ltd. and Yahoo Japan.

Complicating matters for the deal is an investigation by the Securities and Exchange Commission into whether Yahoo should have disclosed the breaches sooner, as reported Sunday by The Wall Street Journal.

In September, Yahoo disclosed the 2014 theft of personal data of more than 500 million user accounts. The stolen data included names, email addresses, dates of birth, telephone numbers and encrypted passwords, Yahoo said.

In October, Yahoo shared a chart that showed usage of its email product rose slightly after the first breach was reported.

Then in mid-December, Yahoo said it was hit with a different massive data breach in 2013 that compromised private information of more than one billion user accounts. The second hack amplified concerns among investors that the accord was at risk of falling apart.

Before Yahoo disclosed that second hack, Verizon was close to an agreement with Yahoo on how to handling future hacking liabilities. The second hack put things on hold.

The disclosures of the hacks have overshadowed Yahoo's waning financial health. On Monday, Yahoo said its fourth-quarter revenue excluding commissions paid to partners for web traffic fell 4.2% to $960.1 million, marking the eight decline in the past nine periods for the key metric.

Overall revenue rose 16% to $1.47 billion, but a change in the way Yahoo reports revenue contributed $302 million to that figure. Excluding the change, total revenue fell about 8%.

The same trend occurred when looking at revenue from "Mavens," a grouping Ms. Mayer introduced to track the growing areas of mobile, video, native an social ads. Revenue here rose 25% to $590 million, but excluding the accounting change, revenue would have fallen about 5%.

Helped in part by the accounting change, Yahoo reported its second consecutive profitable quarter, with $164 million in the fourth period. A year earlier, the company had booked a huge loss because of a $4.46 billion goodwill impairment charge.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com and Ryan Knutson at ryan.knutson@wsj.com

(END) Dow Jones Newswires

January 24, 2017 02:47 ET (07:47 GMT)

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