AOL Q4 Profit Up 66%, Beats View; But Revenues Miss

(RTTNews) - Web services company AOL, Inc. (AOL) on Wednesday reported a 66 percent increase in profit for the fourth quarter from last year, reflecting growth in global advertising and other revenue as well as on lower expenses.

Adjusted earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates. The company recorded an 11 percent decline in domestic subscribers in the quarter.

For the fourth quarter, net income attributable to the company surged to $59.6 million or $0.73 per share from $36 million or $0.43 per share in the prior-year period.

Adjusted earnings for the quarter were $0.92 per share, compared to $0.64 per share in the same period last year. On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.72 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter grew 5 percent to $710.3 million from $679 million in the year-ago period. Analysts expected revenue of $721.84 million for the quarter.

Global advertising and other revenues rose 8 percent from last year to $562.2 million, while subscription revenue declined 5 percent to $148.1 million.

The increase in global advertising and other revenues includes 16 percent growth in Third Party Properties revenue, 6 percent increase in AOL Properties search revenue, and 48 percent growth in other revenue that was driven by increased revenue from platform and service fees. However, AOL Properties display revenue declined 6 percent.

Meanwhile, subscription revenue declined, as growth in average monthly subscription revenue per AOL subscriber or ARPU was offset by a decline in subscribers.

Domestic AOL subscribers in the quarter declined 11 percent from the year-ago period to 2.22 million. ARPU, calculated as domestic average monthly subscription revenue per AOL subscriber, rose 6 percent to $21.18.

Domestic AOL subscriber monthly average churn of 1.3 percent was flat with last year.

The company saw 15 percent growth in domestic multi-platform unique visitors compared to last year.

General and administrative expenses for the quarter declined 3 percent from last year to $82.1 million. Restructuring costs in the quarter were $6.3 million, significantly down from $13.2 million a year ago.

For fiscal 2014, net income attributable to AOL rose to $125.6 million or $1.51 per share from $92.4 million or $1.13 per share last year. Adjusted earnings for the year were $2.24 per share, compared to $2.08 per share in the prior year.

Total revenues for the year grew 9 percent to $2.53 billion from $2.32 billion in the previous year.

Street expected the company to report earnings of $2.02 per share for the year on revenues of $2.54 billion.

AOL closed Tuesday's trading at $44.83, up $0.59 or 1.33 percent on a volume of 1.59 million shares. In Wednesday's pre-market activity, the stock is down $0.06 or 0.13 percent to $44.77.