AOL reported first quarter earnings this morning, which saw it posting higher revenues than expected by analysts, with $529.4 million in revenue during the quarter, beating the $527 million consensus. However, this represented a 4% drop from a year earlier. Meanwhile, net income rose fourfold from the same quarter last year, with net income at $21.1 million (22 cents per share), up from $4.7 million (4 cents per share) in this quarter last year.
Although total ad revenue increased by 5% to $330.1 million, AOL reported that U.S. display ads fell 1% to $118.9 million – representing the first decline in the last five quarters. AOL owns several online properties, including TechCrunch, as well as Engadget, local news source Patch, and the Huffington Post, among others.
Globally, the display revenue was driven by growth in international display advertising, particularly growth in both the U.K. and Canada. The domestic display advertising revenue declined primarily reflecting a decline in reserved impressions sold, but this was partially offset by growth in reserved inventory pricing and Patch revenue. (Yes, Patch!) According to AOL’s report, “Patch grew traffic and advertisers over 40% year-over-year and revenue over 100% year-over-year.”
Other areas doing well in the product/consumer space included video (videos, video views, video ad impressions, and video revenue grew at double-digit rates), and traffic was up over Q4 2011 to 108 million uniques.
In April, AOL agreed to sell more than 800 patents to Microsoft for $1.06 billion, and that transaction is expected to close by year-end. In today’s statement, AOL said Microsoft might have to pay $211.2 million if the deal is terminated.
In a statement, Tim Armstrong, Chairman and CEO, said: “AOL is a much stronger company today than a year ago and began 2012 by growing advertising revenue, lowering expenses and improving Adjusted OIBDA trends. In 2012 and beyond we are simultaneously focused on the continued successful execution of our strategy and on creating and unlocking value for our shareholders.”