AOL Q2 Results Top Estimates, To Buy Adap.tv For $405 Mln

(RTTNews) - AOL, Inc. (AOL) reported Wednesday a profit for the second quarter that plummeted from last year, which was boosted by significant gain related to a patent deal. However, adjusted earnings per share and quarterly revenues topped analysts' expectations.

Global advertising revenue grew 7 percent, while subscription revenues declined 5 percent.

Separately, AOL agreed to acquire Adap.tv, a unified programmatic video platform, for $405 million in cash and stock to take a leading position in premium & programmatic video advertising. The combination of AOL On and Adap.tv will create the world's most powerful cross-screen solutions provider for brands, agencies and publishers. The deal is expected to close in the third quarter of 2013.

"AOL takes a major step forward today with another quarter of growth and our agreement to acquire the Adap.tv video marketplace platform that will make AOL a clear global leader in the most important growth segment in our industry - online video. AOL continued to get leaner during Q2 while growing consumer traffic, growing all advertising revenue lines, and improving our subscription trends," Chairman and CEO Tim Armstrong said in a statement.

New York-based AOL, spun off from Time Warner, Inc. (TWX) in December 2009, reported net income of $28.5 million or $0.35 per share for the second quarter, sharply lower than $970.8 million or $10.17 per share in the prior-year quarter, which included a $10.16 per share gain related to a patent transaction with Microsoft Corp. (MSFT).

Excluding items, adjusted net income for the quarter would have been $0.46 per share, compared to last year's $0.24 per share.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenue for the quarter improved 2 percent to $541.3 million from $531.10 million in the same quarter last year, helped by global advertising revenue growth, and topped eighteen Wall Street analysts' consensus estimate of $539.66 million by a whisker.

The company noted that growth continued in all advertising revenue lines for the second consecutive quarter as well as domestic and international markets drove global display revenue growth.

Among AOL's reportable segments, brand group revenue grew 10 percent to $190 million, while membership group revenues declined 6 percent to $214 million from last year. AOL Networks revenue increased 5 percent to $160 million from a year ago.

Global advertising revenue for the quarter rose 7 percent to $361 million, with AOL properties revenues rising 6 percent, global display revenues increasing 5 percent, global search revenue improving 8 percent and third-party network revenue growing 9 percent from last year. AOL properties' unique visitors grew 3 percent to 116 million from last year.

Meanwhile, subscription revenues for the quarter declined 5 percent to $166 million, with a 1.4 percent domestic AOL-brand access subscriber monthly average churn, compared to 1.7 percent last year.

Domestic AOL-brand access subscribers declined 15 percent to 2.58 million, while average revenue per user or ARPU advanced 12 percent to $20.03.

AOL closed Tuesday's regular trading session at $36.18, up $0.74 on a volume of 2.49 million shares. In the past 52-week period, the stock has been trading in a range of $29.16 to $43.93.