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

(Click for larger view)

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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