AOL Q3 Profit Down 90%, But Revenues Beat View

(RTTNews) - AOL, Inc. (AOL) on Tuesday reported a 90 percent decline in profit for the third quarter from last year as higher revenues were more than offset by restructuring costs as well as impairments. Earnings per share for the quarter missed analysts' expectations, while revenues beat their estimates. Shares of the company are gaining almost 4 percent in pre-market trades.

New York-based AOL, spun off from Time Warner, Inc. (TWX) in December 2009, reported net income for the third quarter of $2 million or $0.02 per share, down from $20.8 million or $0.22 per share in the prior-year quarter.

AOL noted that the latest quarter's results were negatively impacted by pre-tax restructuring costs of $19.0 million as well as $25.0 million related to non-cash asset impairments in the company's Patch operations.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenue for the quarter increased 6 percent to $561.3 million from $531.7 million in the same quarter last year and beat analysts' consensus estimate of $548.81 million.

The increase in revenues were driven by global advertising revenue growth. The company noted that growth continued in all advertising revenue lines for the third consecutive quarter.

Among AOL's reportable segments, brand group revenue for the quarter grew 9 percent to $192.5 million, while membership group revenues declined 7 percent to $204.5 million from last year. AOL Networks revenue increased 19 percent to $188.7 million.

Global advertising revenue for the quarter rose 14 percent to $386 million, with AOL properties revenues rising 4 percent, global display revenues increasing 5 percent, global search revenue improving 3 percent and third-party network revenue growing 32 percent from last year.

The increase in third-party network revenue was driven by growth in the sale of premium formats, primarily video, across AOL's programmatic platform. Third Party Network revenue includes $17.6 million from Adap.tv following its acquisition on September 5, 2013 and grew 17 percent excluding Adap.tv.

AOL properties' unique visitors grew 4 percent from the year-ago period to 115 million.

Meanwhile, subscription revenues for the quarter declined 7 percent to $161.6 million. Domestic AOL-brand access subscriber monthly average churn was 1.4 percent in the quarter, compared to 1.8 percent in the year-ago period.

Domestic AOL-brand access subscribers declined 13 percent to 2.51 million, while average revenue per user or ARPU rose 9 percent to $20.15.

AOL closed Monday's regular trading session at $38.72, up $2.04 on a volume of 5.30 million shares. In Tuesday's pre-market trades, the stock is up $1.53 or 3.95 percent to $40.25.