AOL Inc. (NYSE: AOL) reported 57% jump in fourth-quarter earnings and first revenue growth on year-on-year basis, in last eight years thanks to strong growth in search and third party network advertising sales, underpinning the fact that AOL’s quest to become more of an ad-driven digital media company is paying rich dividends.
For the fiscal fourth quarter, AOL reported a profit of $35.7 million or 41 cents a share, up from earnings of $22.8 million or 23 cents a share, in the year-earlier quarter. Total revenue during the period climbed 3.9% to $599.5 million.
Analysts’ consensus estimate was for earnings of 41 cents a share on revenue of $574 million, according to a data compiled by Thomson Reuters.
While revenue from subscriptions slumped 10% to $174.2 million, the churn rate, or the percentage of subscribers cancelling the contract fell to 1.8%, down from 2.2%, in the same period of last year.
AOL said that revenue from advertising climbed 13% to $410.6 million in the fourth quarter, a seventh successive quarter in which the Company posted growth in ad-revenue with search advertising growing by 17%.
Revenue from advertising sold through AOL’s third-party network leaped 37 percent to $183.5 million at AOL Networks.
Ever since AOL started its turnaround campaign, enhancing revenue from adverting and moving away from subscription based dial up services has been a main focus for the company.
The Company in order to bolster revenue from domestic display advertising has focused on gaining maximum traffic through its media properties such as Patch and Huffington Post even as it tries to drift away advertisers from conventional banner ads towards video-ads, since it allows the Company to charge a premium.
The company also announced a $100 million stock-buyback program.
Shares were gaining 7.23% to $33.68 by midday trading.