AOL Q1 Beats With $625.1M In Sales, EPS Of $0.35 On Back Of Ad Growth

Amid a challenging market for tech stocks this quarter, AOL today reported its most recent earnings. For the quarter that ended March 31, the company posted revenues of $625.1 and adjusted earnings per share of $0.35.

Analysts were on average expecting revenues of $594.6 million and adjusted EPS of $0.32.

“AOL grew its consumer base strongly and saw continued strength in video, mobile and programmatic advertising, while we also updated the structure and capabilities of the company,” said CEO Tim Armstrong in the earnings release. “AOL continues to grow in strength and we are on a mission to scale the first Media Technology company of the internet and mobile age.”

In pre-market trading today, AOL’s stock was down by about 1 percent, and coming into the earnings AOL’s stock was down a few percentage points further after a negative analyst report from Goldman Sachs citing competitive concerns.

Last quarter, AOL’s stock dropped about 11 percent after it missed on revenues but beat on earnings as it continued to shift its business into more programmatic advertising, with some restructuring going on alongside that.

AOL makes revenues from three primary areas: running advertising on sites that it owns (TechCrunch among them); ads on third-party sites; and legacy dial-up subscriptions.

But all three of these areas are facing pressure from rivals: on the side of ads, from others like Google, Facebook, Yahoo and more all also ramping up in programmatic ad tech; and on the side of connectivity subscriptions, from broadband providers.

AOL has also been contracting in its revenue growth, down nearly 6 percent this quarter, while the wider sector has expanded 26.3 percent.

Perhaps unsurprisingly given the growth trends and larger competition, in January it was reported that Verizon had approached AOL for an acquisition or JV — a report that was somewhat dismissed by Verizon’s CEO, who described “significant acquisition discussions” as “not accurate” emphasizing instead that a potential video partnership, hypothetically, might be interesting.

In fact, we’ve recently heard rumors again swirling of yet more Verizon interest, but for only select parts of the AOL business.

When Bloomberg first reported Verizon’s interest, it noted programmatic advertising and AOL’s legacy dial-up business as two areas that might be of interest to Verizon. The former would help it compete against AT&T and also offer an ad product alongside its video service; while the latter group of dial-up users could be tapped for new broadband subscriptions.

Other recent events point to AOL’s ongoing strategy to shore up its ad business. In April, the company launched One, its new, consolidated programmatic platform.

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