AOL posts loss in Q3 despite ad sales jump


Despite a rise in display advertising revenue, AOL posted a 6 percent drop in total revenue during the third quarter of 2011, the company announced today. The company’s total revenue came in at $531.7 million, which is still higher than a consensus of some Wall Street analysts, which estimated AOL would earn $524 million in revenue. AOL boasts that the drop in revenue was the lowest decline in five years.

AOL profits dropped $2.6 million, or 2 cents per share, in the quarter. That compares to $171.6 million in profits the Internet giant earned during the third quarter of 2010.

AOL Q3 2011

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Display ad sales rose 15 percent, while overall ad sales grew 8 percent over the same period last year. AOL subscription revenue dropped 22 percent during the third quarter to $192 million. And search and contextual revenue declined 15 percent, caused mostly by a drop in international search usage. 

AOL attributes its growth in ad sales – growth that is 1 percent less than the rise it saw in the second quarter of this year – to the continuing rise in readership for the Huffington Post, which AOL purchased earlier this year, as well a jump in readers for its Stylelist, AOL Autos, AOL Entertainment and TechCrunch web properties. 

Patch, AOL’s ultra-local site, has grown to a monthly unique readership of 10 million user, and 10,000 bloggers nationwide. Unfortunately, AOL attributes a portion of its lower operating income ($8.6 million) to continued investment in Patch. 

AOL currently has a free cash flow of $56.4 million, down 57 percent from last year’s third quarter cash flow of $129.9 million. 

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