AOL Q4 Profit Up 1%, Revenues Beat Estimates

(RTTNews) - AOL, Inc. (AOL) on Thursday reported a 1 percent increase in profit for the fourth quarter from last year, as double-digit revenue growth was mostly offset by an increase in restructuring costs. Global advertising revenue for the quarter grew 23 percent.

Earnings per share for the quarter missed analysts' expectations, while revenues beat their estimates. Shares of the company are gaining more than 5 percent in pre-market trades.

New York-based AOL, spun off from Time Warner, Inc. (TWX) in December 2009, reported net income for the fourth quarter of $36 million or $0.43 per share, up slightly from $35.7 million or $0.41 per share in the prior-year quarter.

AOL noted that the latest quarter's results were negatively impacted by pre-tax restructuring costs of $13.2 million, largely related to a reduction in personnel, including the company's Patch operations. The after-tax impact was $0.21 per share. This compares to restructuring costs of $2.4 million in the same period last year.

On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.60 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenue for the quarter increased 13 percent to $679 million from $599.5 million in the same quarter last year and beat analysts' consensus estimate of $655.81 million.

The increase in revenues reflects 23 percent growth in global advertising revenue that was fueled by pricing growth.

Among AOL's reportable segments, brand group revenue for the quarter grew 4 percent to $222 million, while membership group revenues declined 9 percent to $209.3 million from last year. AOL Networks revenue grew 50 percent to $275.0 million.

Global advertising revenue for the quarter rose 23 percent to $507 million, with AOL properties revenues rising 4 percent and global display revenues increasing 7 percent. Third-party network revenue surged 63 percent from last year.

However, global search revenue declined 2 percent, driven primarily by fewer search queries resulting from a decline in domestic AOL subscribers.

The increase in third-party network revenue was driven by growth in the sale of premium formats across AOL's programmatic platform and by the inclusion of revenue from Adap.tv. Third-party network revenue grew 20 percent excluding Adap.tv.

AOL properties' domestic average monthly unique visitors grew 6 percent from the year-ago period to 125 million.

Meanwhile, subscription revenues for the quarter declined 10 percent to $156.7 million. Domestic AOL-brand access subscriber monthly average churn was 1.3 percent in the quarter, compared to 1.8 percent in the year-ago period.

Domestic AOL-brand access subscribers declined 10 percent to 2.50 million, while average revenue per user or ARPU rose 4 percent to $20.01.

For fiscal 2013, net income attributable to AOL plunged to $92.4 million or $1.13 per share from $1.05 billion or $11.21 per share in the prior year, which includes a gain on disposal of assets of $964.2 million.

Total revenues for the year rose 6 percent to $2.32 billion from $2.19 billion in the previous year.

Street expected the company to earn $2.02 per share for the year on revenues of $2.30 billion.

AOL closed Wednesday's regular trading session at $47.57. In Thursday's pre-market trades, the stock is up $2.69 or 5.65 percent to $50.26.