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Last year was a time of transformation for our industry and for Yahoo! As we close 2002 and commence 2003, we're really pleased with our financial results. We believe they are a validation that we've changed our business model in a way that positions us to achieve our long-term objective for superior, consistent and sustainable growth.
The financial objective that drives our business goals is to maximize long-term free cash flow. We define free cash flow as after-tax cash generated from operations, net of expenses for capital spending and investments in working capital. We believe this is the most appropriate measure of how we can increase our intrinsic value for shareholders. Our strategy is to attract significantly more revenue from our growing user base without a commensurate increase in our expenses. In 2002, we established two ambitious financial goals: to double the revenue we generate per user and to double the revenue supported by each Yahoo! employee over a 3- to 5-year period.
We also put in strong controls on capital spending, redeployed resources to what we are expecting to be our properties and services with the highest returns, and established goals for option issuance to support our objective to increase our free cash flow. Free cash flow for 2002 was $221 million, up dramatically from the free cash flow loss of $27 million that we generated in 2001, our transition year.**
Revenue per average user per month advanced 14% in 2002, when compared to 2001. When combined with an approximate 16% rise in the number of average users, Yahoo!'s consolidated revenue growth was a healthy 33%.* It is our most revenue-productive users and customers that are growing the fastest. Our approximately 101 million active registered users (including 2.2 million unique paying relationships), who stay connected longer and consume more services, grew about 37% on average versus a year ago, significantly outperforming the 14% growth in our overall pool of users. This is the subset of active registered users that we believe is most attractive to our marketing customers.
Revenue per average employee advanced 23% year-over-year, consistent with our operating goals to improve the productivity of our talented employee base.
Best of all, as proud as we are of the progress we've made in validating and evolving our business model in 2002, we are even more excited about the opportunities that lie ahead of us in 2003 and beyond. Many of our strategic initiatives are still in the early stages of development, leading us to feel optimistic about continuing success in years to come.
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