AOL just released its earnings report for the second quarter of the year, coming in ahead of Wall Street expectations with revenue of $541 million, up 2 percent percent from the same period last year, and diluted earnings per share of $0.35.
Analysts had estimated that the company (which owns TechCrunch) would earn $0.32 per share on revenue of $540 million.
The company’s net income was $28.5 million — as AOL notes, it’s hard to make a year-over-year comparison because of the $1.1 billion patent sale that it made to Microsoft during the second quarter of 2012. (Though if you want to know, it was a decline of 97 percent.) It is in the same range as the $25.9 million in net income that AOL reported last quarter.
As part of the report, AOL also announced that it has reached an agreement to acquire video ad company Adap.tv for $405 million in cash and stock.
“AOL takes a major step forward today with another quarter of growth and our agreement to acquire the Adap.tv video marketplace platform that will make AOL a clear global leader in the most important growth segment in our industry – online video,” AOL Chairman and CEO Tim Armstrong said in the report. “AOL continued to get leaner during Q2 while growing consumer traffic, growing all advertising revenue lines, and improving our subscription trends.”
That bit about subscription trends refers to the fact that while subscription revenue continues to decline (insert dial-up Internet joke here), it’s “only” down 5 percent, compared to the 13 percent decline it saw during the same period last year.
Ad revenue, meanwhile, grew 7 percent to a total of $361 million, with 5 percent growth in display (that number was 19 percent internationally), 9 percent growth in third-party network revenue, and 8 percent growth in revenue from search advertising.
The number of unique visitors to AOL-owned properties also grew by 3 percent domestically year-over-year, and visitors to the AOL ad network grew 1 percent.
Update: The report doesn’t mention AOL’s local news initiative Patch, but on the analyst call, Armstrong reiterated his commitment to get Patch profitable by the fourth quarter of the year, saying that will be achieved by a mix of cost-cutting measures (such as finding local partners in markets that are underperforming in either traffic or revenue). Those measures will likely reduce traffic and revenue while hopefully improving profitability.
Despite those changes, Armstrong said the vision for Patch remains the same: “Put a platform in place that allows offline things to be done online.” To do that, Patch should enable visitors to find high-quality local information, to upload and share information, and to make advertising and commerce transactions — those are the three areas where AOL will be making Patch investments in the future, he said.