The deal is reportedly valued between $30m and $40m.
Yahoo has acquired the San Francisco based email and address book management app Xobni for an undisclosed sum, as the Internet company looks to expand its web traffic.
The company plans to combine Xobni’s technology into its communications products including the mobile and PC versions of its email and instant messaging services.
As part of the transaction, 31 employees of the app maker will join Yahoo as the app maker moves to the company’s headquarters located at Sunnyvale.
Yahoo is reported by the technology blog AllThingsD to have spent between $30m to $40m on the transaction.
Xobni, which was founded in March 2006 as a part of the Y Combinator summer founder’s programme, makes software applications and services including products for Microsoft Outlook and mobile devices.
Yahoo has also axed several products that were not generating any profit, as part of its efforts to streamline its product line-up.