Web service company AOL Inc. (AOL) on Wednesday reported a 23 percent increase in profit for the first quarter, reflecting growth in all advertising revenue lines for the first time in five years. However, earnings per share missed analysts' expectations, while revenues beat their estimates. The company's shares are down more than 5 percent in pre-market trades.
Tim Armstrong, chairman and CEO of AOL said, "Growth continues at AOL. AOL's strategy of being the first scaled media and technology company is clearly represented in our results today, and we will continue to aggressively drive the company toward near-and long-term growth."
Global advertising revenue for the first quarter rose 9 percent to $359.2 million. Within the segment, AOL Properties and Global Display revenue increased 8 percent each. AOL Properties' unique visitors grew 3 percent from last year.
Global Search revenue rose 9 percent, reflecting increased global queries from marketing related efforts and continued growth in revenue per search on AOL.com. Third-party network revenue grew 10 percent, driven by an increase in publishers and advertisers on the network, increased sales of video and growth in Canada.
Meanwhile, subscription revenues for the quarter declined 9 percent to $165.8 million. Monthly average churn was 1.9 percent in the quarter, compared to a 15 percent decline in the same period last year.
Domestic AOL-brand access subscribers declined 15 percent to 2.62 million, while average revenue per user or ARPU advanced 7 percent to $19.22.
AOL's first-quarter net income was $25.9 million or $0.32 per share, up from $21.1 million or $0.22 per share in the prior-year period. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total revenue for the quarter rose 2 percent to $538.3 million from $529.4 million in the same period last year, helped by global advertising revenue growth. Analysts had a consensus revenue estimate of $537.15 million.
Among AOL's reportable segments, Brand Group revenue grew 14 percent to $189.6 million, reflecting continued growth in search and display revenue. The segment includes advertising offerings on several owned and operated sites, such as AOL.com, the Huffington Post, Patch, TechCrunch and MapQuest.
Membership Group revenues declined 10 percent to $211.5 million, as subscription revenue dropped due to 15 percent fewer domestic AOL-brand access subscribers.
AOL Networks revenue increased 8 percent to $160.9 million in the quarter, driven by 10 percent growth in Third Party Network revenue.
AOL closed Tuesday's trading at $41.42. In Wednesday's pre-market, the stock is down $2.20 or 5.31 percent to $39.22.
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