AOL Inc share price down, revenue beats estimates on strong advertising sales

AOL reported better-than-expected quarterly revenue due to strong performance of its advertising real-time platform.

The digital media stated a 12% increase in revenue to $626.8 million, compared to last years result of $561.3 million. This is the 7th consecutive quarter of growth for AOL.

Its global advertising revenue grew 18% to $473.4 million versus $399.7 million in Q3 2013. The result was strongly boosted by a 44% increase in revenue from its third-party platform to $215.1 million. The acquisition of video advertising platform Adap.tv, which grew 22% in the quarter, also helped achieve greater results.

In its display division AOL reported flat revenue of $141.5 million, but said that revenue in the unit grew 7%, excluding revenue from disposed or shuttered brands like Patch. Meanwhile the companys search division stated a 3% increase in sales. In January AOL spun off Patch, its local and hyper-local news media, and sold majority ownership to Hale Global.

For the recent quarter AOL reported a 5% year-on-year revenue decline from subscriptions, as a 6% growth in average monthly subscription revenue per user partially offset a 9% decline in subscribers.

Operating income was $48 million in the third quarter, a healthy increase from the $16.7 million of last year. Meanwhile net income stood at $28.5 million with $0.35 earnings per share, up from $2 million, or $0.02 earnings per share.

Adjusted earnings per share, excluding restructuring costs, asset impairments, equity-based compensation and other items, fell from $0.56 to $0.52 in the quarter hitting the average estimate of analysts polled by Thomson Reuters.

AOL said its brand and membership segments revenue fell by 3% and 4% and reached $187.3 million and $196.7 million respectively.

“In Q3, AOL continued its strong growth in consumer traffic, revenue and profitability across its portfolio of assets,” said Tim Armstrong Chairman and CEO. “AOL is a leader in global content, video, mobile, and programmatic advertising and is positioned directly at the center of the most disruptive changes happening online and offline in culture and code.”

AOL announced it had completed an investigation into the April data breach, which compromised around 2% of all email accounts, and said it did not experience any material loss related to it.

AOL Inc gained 0.64% on Wednesday and closed at $43.87 in New York. On Thursday the stock lost 5.68% in the early trading session to trade at $41.38 at 15:19 GMT, marking a one-year decrease of 4.05%. The company is valued at $3.45 billion. According to the Financial Times, the 20 analysts offering 12-month price targets for AOL Inc have a median target of $48.00, with a high estimate of $70.00 and a low estimate of $40.00. The median estimate represents a 9.41% increase from the previous close of $43.87.