AOL makes revenue gains, finally

February 08, 2013  |  Jason Del Rey for Advertising Age  |  Comments

It was a long time coming, but AOL has reported revenue growth for the first time in eight years. Its fourth quarter numbers show a revenue increase of 4% to $600 million from $577 million in 2012. Third-party networks and search revenues seem to be at the heart of the positive financial momentum.

The company earned 41 cents a share, which analysts were expecting, compared to 23 cents a share last year.

AOL CEO Tim Armstrong said the company is at an “inflection point” and is now transitioning into an “early-stage growth company.”

AOL saw big gains in its third-party network business, which grew 31%, as well as in search revenue, which rose 17%. The growth in the third-party network business includes $9.2 million of new revenue from Japan, whose revenue was not counted in the same period a year ago.

Still, the core revenue driver for AOL if it’s going to continue to call itself a media business first and foremost – display ad revenue – is not yet showing growth. Overall display revenue was flat year-over-year at about $170 million, and domestic display revenue dropped once again – this time, 3%. Subscription revenue dropped 10% year-over-year but grew quarter over quarter.

One area that didn’t live up to expectations in Q4: Patch. Patch did not hit $40 million in revenue in 2012; previously, the company said it was on track to reach between $40 million and $50 million in revenue. Armstrong blamed Hurricane Sandy’s effect on businesses in Patch towns as well as the company’s focus on bringing the network of local-news sites to profitability, which AOL says it will reach by Q4 of 2013.

Lastly, the board has approved another $100 million for a stock repurchase, AOL said.

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