That figure topped analysts’ average estimate of $1.05bn, according to data compiled by Bloomberg.
As the New York Times put it, "Marissa Mayer finally has something to crow about."
For the third quarter, profit was 52 cents a share. Analysts had projected 30 cents a share. Net income attributable to Yahoo was $6.77bn, up from $296.7m a year earlier.
Yahoo's stake in Alibaba has been buoying the stock - but Mayer has been investing in new content, mobile and other features to attract users and advertisers to bolster her turnaround effort.
The results come at a crucial time, according to Bloomberg. Activist investor Starboard Value has been calling for a breakup of the company.
Starboard wants Yahoo to “unlock value” by exploring a breakup or merging with AOL, something that Tim Armstrong has denied is on the cards.
In a recent letter to Mayer, Starboard CEO Jeffrey Smith said such a breakup could add about $16bn of value to Yahoo.
The company also should explore cost cuts and pull back on acquisitions, he said.
“Clearly Yahoo is deeply undervalued relative to the sum of its parts,” Smith wrote in the letter.
Yahoo shares were up 4.8 per cent in extended trading last night, after closing at $40.17 in New York.
The company got a one-time boost of more than $9bn before taxes last month from a sale in the initial public offering of Alibaba, which still makes up more than half of Yahoo’s valuation. Yahoo retains a stake of about 15 per cent in Alibaba.
With effiiciency in mind, Yahoo has recently closed an office in Amman, Jordan, cutting 80 jobs and is also trimming about 400 jobs in India.
Mayer has also agreed to acquire analytics startup Flurry for more than $300m and is reportedly close to investing in mobile-messaging startup Snapchat.
TechCrunch yesterday reported Yahoo wanted to acquire ad-technology startup BrightRoll Inc. for around $700m.
Mayer has also boasted of progress in monetising mobile. She estimated gross revenue in mobile will exceed $1.2bn this year.
“We have invested deeply in mobile and we are seeing those investments pay off,” Mayer said in a statement.
