AOL Says Ad Revenue Helped First-Quarter Earnings

The company attributed the growth largely to increasing advertising revenue. It said this revenue grew across all lines, but that combined third-party network and AOL Properties display ads were particularly strong, with revenue increasing 9 percent compared with a year earlier.

The company also showed signs of having kept internal costs down as adjusted operating income before amortization and depreciation rose 12 percent, to $105 million.

While the numbers were positive for a company that not two years ago was struggling to turn a profit, revenue did decline from the fourth quarter of fiscal 2012, when it was $599.5 million. The company reported earnings-per-share of 32 cents, which was just a shade below Wall Street’s expectations, and the stock fell 9.5 percent in morning trading.

In a call with financial analysts, the company’s chief executive, Tim Armstrong, emphasized that AOL’s strong performance on ad sales stemmed from its strategy of investing in high-quality programming for the Internet. “Our ad pricing has gone up based on premium formats on video and iterations of product on HuffPo and TechCrunch,” he said, referring to The Huffington Post.

The company said its total ad revenue grew to $359 million, from $330 million in the quarter a year earlier. Global display ads were up 8 percent to $140 million and third-party ads were up 10 percent to $121 million.

The company also experienced a 9 percent increase in search revenue, to $98 million, despite a 15 percent decline in AOL subscriptions in the United States over the year.

AOL said that, in fact, that it had slowed the decline of subscription revenue, but it was still down 9 percent year-to-year to $166 million.

AOL’s growth, while solid, did not keep pace with the rest of the digital market. Overall digital ad spending in the United States grew 14.8 percent to $9.64 billion in the first quarter of 2013, according to eMarketer. For the full year 2013, United States digital ad spending growth will reach 14 percent, eMarketer estimates.

Article source: http://www.nytimes.com/2013/05/09/business/media/aol-says-ad-revenue-helped-first-quarter-earnings.html?partner=rss&emc=rss