AOL Sizzles to All-Time Highs on Strong Earnings

Andrew Klips |

AOL Sizzles to All-Time Highs on Strong EarningsAOL Inc. (AOL) is having its best day in seven months heading into the lunch break after reporting Tuesday morning better-than-expected revenue and profit on the back of the strongest advertising growth the company has seen since 2005.

AOL, the publisher of the Huffington Post and TechCrunch websites, said that revenues $531.7 million, which was flat against the year prior period, but ahead of analyst predictions of $521.6 million. Net income for the latest quarter tallied $20.8 million, or 22 cents per share, compared with a year-earlier loss of $2.6 million, or 2 cents per share. Analysts were only calling-for earnings of 17 cents per share.

Excluding some items, profit was 34 cents per share, also ahead of analyst predictions of 29 cents a share.

Advertising revenue for the New York-based company rose 7 percent to $340 million. The company has been transitioning for the last couple years under the tutelage of CEO Tim Armstrong from purely an internet service provider to an ad-based content provider. The transition is showing in increased ad revenue while subscription revenue for its dial-up services fell 10 percent to $173.5 million. Subscription revenue had its lowest rate of decline in six years.

AOL split from Time Warner Inc. (TWX) in 2009 and began making the shift from its legacy role as an ISP. The company bought the Huffington Post website last year for $315 million and has pumped more than $300 million into developing local news website “Patch.” Total readership to all of AOL’s properties increased 4 percent to 111 million people in the quarter.

Revenue from search advertising rose almost 8 percent to $91.8 million while sales from its own advertising network jumped to $112.8 million (+18% compared to year prior quarter). While U.S. display advertising faded 2.6 percent, the loss was overcome by an advance of 18 percent in international display ads.

“We just reported the best relative revenue performance in seven years and the second consecutive quarter of year-over-year profit growth, exceeding our expectations,” said CEO and Chairman Armstrong. “We have positioned AOL for growth in 2013 and beyond with consumer and advertiser demand growing for our premium content and innovative products, video, services and ad formats.”

Shares of AOL finished morning trading up by more than 14 percent at all-time highs of $40.96 per share. It’s the biggest one-day stock move for AOL since April 9. The company has outpaced its peers, such as Yahoo Inc. (YHOO) and Google Inc. (GOOG) with the stock climbing about 175 percent from the beginning of January through trading this morning.

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Companies

Symbol Name Price Change % Volume
GCL:CA Colabor Group Inc. 1.39 -0.01 -0.71 44,118
TWX Time Warner Inc. New 93.80 0.46 0.49 1,450,540
GOOG Alphabet Inc. 763.05 0.53 0.07 164,662
YHOO Yahoo! Inc. 40.32 0.12 0.30 1,495,474

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