AOL (AOL) Posts Q1 EPS of $0.11, Global Display Revs Fell 3%

(Updated - May 7, 2014 7:24 AM EDT)

AOL (NYSE: AOL) reported Q1 EPS of $0.11, which does not compare to the analyst estimate of $0.45. Revenue for the quarter came in at $583.3 million versus the consensus estimate of $577.7 million.

"Q1 marks the 5th consecutive quarter of consumer, revenue and Adjusted OIBDA growth,” said Tim Armstrong, AOL Chairman and CEO. “AOL’s investment in global media and technology platforms is allowing AOL to compete on a global scale.”

Q1 Consolidated AOL Revenue Trends:

• Q1 total revenue grew 8% year-over-year, driven by global advertising revenue growth.
• Global advertising revenue grew 16% year-over-year reflecting:
  • 55% growth in Third Party Platform revenue 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 Platform Revenue grew 18% excluding Adap.tv.
  • 3% decline in global display revenue primarily due to the absence in Q1’14 of approximately $10 million in revenue from shuttered or de-emphasized brands, including the disposition of Patch. Excluding these impacts, display grew 4% driven by improved overall inventory pricing.
  • 1% decline in global search revenue driven by a decline in AOL core search queries, partially offset by increased queries from search marketing related efforts.

• Subscription revenue declined 10% year-over-year. Domestic AOL subscriber monthly average churn was 1.5% in Q1 2014 compared to 1.9% monthly average churn in Q1 2013.

Q1 Consolidated AOL Profitability Trends:

• Operating income, net income and diluted EPS were negatively impacted by a pre-tax restructuring charge of $12 million and a $10 million asset impairment charge resulting from the write-off of capitalized software development costs.
• Adjusted OIBDA grew 2% year-over-year, driven by total revenue growth and a 9% decline in general and administrative expenses, partially offset by an increase in costs of revenues.

• Cost of revenues increased $64 million year-over-year, reflecting a $53 million increase in Traffic Acquisition Costs (TAC). TAC increases reflect the inclusion of Adap.tv as well as growth in Third Party Platform revenue and search marketing related efforts. Costs of revenues were also negatively impacted by the $10 million asset impairment charge noted above.
• General and administrative expenses declined $8 million in Q1 2014 year-over-year, driven by lower marketing related and personnel costs, resulting from AOL’s continued efficiency efforts.

For earnings history and earnings-related data on AOL (AOL) click here.

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