Media company AOL reported their first quarter financials today. AOL’s revenues hit $538 million for the quarter, which is up from the same quarter one year earlier. Net income increased 23% to $26 million. The growth is largely due to increasing advertising revenue. Total ad revenue grew to $359 million, up from $330 million in the same quarter one year earlier. Global display ads increased 8% to $140 million.
Unfortunately, AOL’s third-party ads only grew 10% to $121 million. This is a large drop from the 32% growth that the company saw in Q4 last year. Investors were not happy about this news because the company’s stock dropped over 8.5% with a closing price of $37.74. Yesterday the company’s stock price was over $41. Another reason why investors were not impressed is because AOL reported an EPS of 32 cents, which just met Wall Street’s expectations.
AOL reported a 9% increase in search revenues to $98 million even though there was a 15% decline in AOL subscriptions in the U.S. over the past year. The company slowed down the decline of their subscription revenues, but it is still down 9% year-to-year to around $166 million.
AOL CEO Tim Armstrong said that the company only had one advertising sales force and they recently put their attention into premium advertising for video and domestic display ads. Both of these forms of advertising forms group, but now the sales team will focus on lifting all forms of ads.
?Our ad pricing has gone up based on premium formats on video and iterations of product on HuffPo (The Huffington Post) and TechCrunch,? said Armstrong during the earnings call.