AOL reported healthy top-line results thanks to higher advertising revenue in the third quarter, as total monthly users rose 14%.
The Internet media company posted total revenue of $626.8 million for the period, up 12% from the year-ago quarter and slightly higher than Wall Street expectations. Adjusted earnings per share of 52 cents (down 7%) were in-line with consensus estimate. Operating income was $48.0 million for Q3 2014, up from $16.7 million a year earlier.
Global advertising and other revenue grew 18% year-over-year, including 44% growth in third-party platform revenue. The segment’s results were driven by growth in sales of video and other premium formats, and by the inclusion of revenue from Adap.tv, the programmatic ad-buying company AOL acquired in August 2013, for a full quarter in 2014 versus approximately one month in 2013. Excluding Adap.tv, third-party platform revenue grew approximately 22%.
For the U.S., average monthly AOL unique visitors across all platforms was 179 million in Q3, versus 156 million in the year-ago period.
“In Q3, AOL continued its strong growth in consumer traffic, revenue and profitability across its portfolio of assets,” chairman and CEO Tim Armstrong said in announcing the results. He touted the company as “a leader in global content, video, mobile and programmatic advertising” that is well positioned for “the most disruptive changes happening online and offline in culture and code.”
However, the AOL’s display-advertising revenue was flat in the quarter at $141.5 million. The company attributed that to the absence in Q3 2014 of approximately $10 million in revenue from properties that have been shut down or otherwise discontinued, including local-news division Patch. Excluding those, display revenue would have grown 7%, which AOL was was driven by improved pricing. Search revenue grew 3%, to $97.9 million, driven by increased queries from search marketing-related efforts.
Revenue for AOL’s dial-up Internet access business declined 5% year-over-year, to $153.4 million. AOL had 2.27 million Internet dial-up customers as of the end of September, down 9% year over year.