AOL Q4 2012 Beats The Street On Sales Of $600M, Showing Its First Revenue Growth In 8 Years

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AOL (owner of TechCrunch) has just reported earnings for Q4 2012: revenues came in at $599.5 million on earnings of 41 cents per share. That matches analysts expectations on EPS but beats on revenues of $573.1 million. The figures show that after years of decline, the company continues to get back on track with revenue growth.

Within that, advertising — the largest portion of AOL’s revenue — grew by 13% to $410.6 million. Within that, display, at $169.8 million, was essentially flat on a year ago, while search ads — which it offers in partnership with Google — were up by 17% to $103.6 million. Ad revenues from third-party networks — AOL works with sites like parenting.com to provide advertising alongside their content — brought in revenues of $137.2 million — a rise of 31%.

Subscriptions, which essentially refers to AOL’s legacy dial-up Internet access business, brought in $174.2 million, a decline of 10%.

Still, when it comes down to how different divisions are pulling in revenues, AOL still attributes the most revenues on its balance sheet to its Membership group, which includes AOL Mail, subscription services, AIM and related items. These were at $231 million, a decline of 9%. Second in line was the Brand group, which includes properties like the Huffington Post and TechCrunch, whose revenues were up by 4% to $213 million.

aol revenue attribution q4 2012

As a point of comparison, last quarter AOL reported flat revenues of $531.7 million, although that in itself was an achievement, since it was the first time in seven years that AOL had not reported a sales decline. Earnings per share in Q3 were 22 cents. With those results beating expectations, AOL’s stock jumped by some 22% after the news, although it did drop back down and before the market opened today were trading at $31.41.

In Q4 a year ago, AOL reported revenues of $577 million, on an EPS of 23 cents per share.

AOL Q4 2012

Full-year revenues, also reported today, were up by 8% to $1.4 billion. Free-cash flow for the quarter was down by 36% to $46.3 million, but up for the full year by 49% to $245.1 million. Part of the decline in cash flow in the quarter, AOL says, was because of a special year-end bonus paid to employees as a result of the company’s $1.1 billion patent sale to Microsoft (which worked out to bonuses of $1,056 :) ). AOL says that it had $466.6 million of cash and cash equivalents at December 31, 2012.

AOL, which first started life in the 1980s providing early online interactivity for Atari and Commodore consoles, pivoted in 1988 into a business as one of the first big Internet service providers, and saw growth skyrocket. Fast forward more than two decades past a merger/demerger with Time Warner and another pivot, AOL has spent years refocusing itself as an online media company, running advertising across its own network of online properties as well as those of third parties. Still, it continues to make a good portion of its revenues from its old dial-up business, although that continues to shrink.

So, to show that it continues to focus itself as a media content business built around advertising, AOL has been trimming, rebranding and growing assets. This week, in the lead up to today’s earnings. Two businesses that did not fit into its bigger strategic idea are now gone: About.me was spun out as a separate business and Hipster.com was closed down. Advertising.com — which includes the Advertising.com display ad network that runs across AOL properties, AOL On video network, the goviral content distributor, the Adtech management platform and Pictela for content-based advertising – was renamed AOL Networks. And it is reportedly buying Gdgt, a tech blog started by two of the people who used to run Engadget (another AOL property). (A sale has not been confirmed.)