AOL’s Q4 2010: Revenues Dropped 26 Percent YoY, Beat Expectations

Our parent company AOL just reported its Q4 2010 earnings, so let’s take a look.

Total revenues for the quarter were down 26 percent (the exact same drop witnessed in Q3), from $806.7 million in Q4 2009 to $596 million last quarter.

The company was expected to earn $0.42 per share on revenues of $587.37 million, so the results handily beat expectations.

Display advertising revenue came in at $151.1 million, down 14% compared to the same period the year before. Search advertising revenues dipped below the $100 million mark, coming in at $96.4 million. Total ad revenues were $331.6 million.

Advertising revenue thus declined 29%, or $137 million, compared to the fourth quarter of 2009, of which $80.2 million relates to shutdowns of operations in Europe and de-emphasis of “low margin search engine campaign management and lead generation affiliate products” and the absence of revenue from Bebo and ICQ which AOL sold earlier in 2010.

More useful facts:

AOL acquired two companies in Q4 2010, Pictela and, for an aggregate amount of $31.4 million.

AOL’s subscription revenues for the quarter shows a 23% decline in subscribers year-over-year. Subscription revenues came in at $235.9 million.

AOL ended the year with $801.8 million of cash.

Says AOL chief exec Tim Armstrong:

“I am very proud of what we accomplished in 2010 as we began the year with a significant restructuring of AOL and ended the year with a significantly improved balance sheet, a number of exciting new products and a new culture focused on winning.

We have set aggressive goals for ourselves in 2011 in pursuit of capturing the growing opportunity ahead of us.”

We’re focused on winning, folks. You heard it here first.

Here are a few highlights from the earnings call:

Armstrong says that Patch is now 775 sites strong, and is churning out one piece of content every 9 seconds. Expenses for Patch for Q4 came in at $40 million; but the company says that it expects Patch to start contributing to AOL’s profitability this year. AOL rolled out 554 local Patch sites in Q4.

AOL Video views are up 400 percent year-over-year.

AOL actually sold its minority stake in video platform Brightcove, worth $17 million.

Armstrong says “There are incredible opportunities in the mobile space;” but adds that a lot of innovation will be focused on mobile video.