The company’s adjusted operating income rose by 12%, even as costs rose 8%. The rise in operating costs was attributed to a 21% increase in traffic acquisition costs (TAC). AOL’s TAC declined sequentially, from 29% to 21%, and global advertising revenue growth also was weaker sequentially, down from 13% in the fourth quarter of 2012 to 9% in the first quarter.
The company’s CEO said:
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.
Revenue in AOL’s membership group — the company’s largest revenue generator — fell 10% year-over-year, while the brand group (with properties like AOL.com and Huffington Post) saw a 14% jump in revenues. The brand group’s adjusted operating income rose 71%, but it still lost nearly $5 million. The membership groups adjusted operating income fell 8% but provided $146.4 million in income, the only one of the company’s divisions to post a profit.
AOL’s challenge is to replace its shrinking membership revenue and profit with higher revenue and profit from its brand and network groups. Both are near break-even on profit, but that will not be good enough or fast enough to replace lagging profits from memberships.
We will have to wait for the conference call for any guidance, but the consensus estimate for the current quarter calls for EPS of $0.32 on revenues of $541.93 million. For the full year, the estimate for EPS is $1.61 on revenues of $2.24 billion. Full-year estimates have risen since AOL reported results for the fourth quarter.
AOL’s shares are trading down about 2.8% in the premarket this morning, at $40.25. The stock’s 52-week range is $23.58 to $43.93. The consensus target price for the shares was around $41.60 before today’s report.
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
