AOL Reports Q3 Earnings, Beats Expectations

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AOL just reported its Q3 earnings.

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It beat expectations.

Profits are down sharply year-over-year, but that's because AOL finally cut costs in its local news division, Patch, and had to deal with restructuring costs and asset impairments.

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Investors have long yearned for AOL to cut Patch costs, so they likely won't mind the short term pain.

Adjusting for those costs, profits are up.

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Here's a quick run down from the company:

  • Total Revenue was $561.3M versus ~$549 million estimates.
  • Adjusted OIBDA of $119.8 versus ~$115 million estimates.
  • Profits were down 90% year-over-year, but this is due to "pre-tax restructuring costs of $19.0 million as well as $25.0 million related to non-cash intangible asset impairments in our Patch operations."
  • Excluding the items impacting comparability detailed on page 9 of the release gets you to an Adjusted EPS of $0.55, which is $0.04 ahead of the consensus estimate of $0.51.
AOL says it repurchased 2.5 million shares from July 1 through today at an average of $34.25.

AOL highlighted these trends in a release emailed to us:

  • Grew all advertising revenue lines year-over-year for the 3rd consecutive quarter
  • Grew global advertising revenue year-over-year for the 10th consecutive quarter
  • Grew search revenue year-over-year for the 5th consecutive quarter
  • Grew Third Party Network revenue 32% year-over-year for the 10th consecutive quarter
  • Grew Third Party Network revenue 17% year-over-year, excluding Adap.tv
  • Grew Brand Group display revenue double-digits (11%)
  • Brand Group returns to positive Adjusted OIBDA
  • Traffic on AOL properties accelerated to 4% year-over-year growth, our 5th consecutive quarter of growth