AOL Reports 86% Decline in First-Quarter Profit
NEW YORK - AOL Inc. posted a lower first-quarter profit on Wednesday due to lower revenue and certain acquisition and restructuring costs, but the online company reported a positive development on the display advertising front.
AOL reported a quarterly profit of $4.7 million, compared with $34.7 million in the year-ago period, down 86 percent.
Profitability was affected by $9 million in deal related expenses primarily for the acquisitions of The Huffington Post and goviral and $8.4 million of incentive compensation expenses tied to acquisitions made in 2010 and in the first quarter of 2011. AOL has said it is important for the company to retain key talent as part of its acquisitions. The first quarter also included $27.8 million in restructuring expenses related to The Huffington Post acquisition and the reassessment of the firm's operations in India.
AOL's first-quarter revenue declined 17 percent to $551.4 million. Total advertising revenue fell 11 percent. However, global display ad revenue grew 4 percent, marking the first quarter of year-over-year growth since late 2007.
"Today represents an important milestone in the turnaround of AOL as global display revenue grew for the first time since the fourth quarter of 2007," said AOL chairman and CEO Tim Armstrong. "I am proud of the work completed thus far and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company."
On a conference call, Armstrong said the latest quarterly results exceeded his expectations and promised improvements ahead as his team has looked to reduce costs and make AOL a bigger content company.
He highlighted that AOL is now the number two online video player behind YouTube, according to comScore, which he called "an amazing accomplishment" given that the company was nowhere to be found in this space two years ago.
Armstrong also once again lauded the Huffington Post acquisition as the fastest integration he has ever experienced and said it has gone "very well." He said the Huffington Post saw growth of almost 30 percent in the first quarter.