AOL Earnings: Margins SHRINK For Fifth Straight Quarter

AOL Inc. (NYSE:AOL) reversed to a profit in the second quarter, beating Wall Street estimates. AOL is a global web services company whose business consists of online content, products, and services that it offers to consumers, publishers, and advertisers.

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AOL Inc. Earnings Cheat Sheet

Results: Reported a profit of $970.8 million ($10.37 per diluted share) in the quarter. AOL Inc. had a net loss of $11.8 million or a loss 11 cents per share in the year-earlier quarter.

Revenue: Fell 2% to $531.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: AOL Inc. beat the mean analyst estimate of 10 cents per share. It beat the average revenue estimate of $518.7 million.

Quoting Management: “Today’s results represent a significant milestone for AOL as we returned to Adjusted OIBDA growth for the first time in four years,” said Tim Armstrong, Chairman and CEO. “The strong results and consumer performance we announced today are clear signs our strategic and operating efforts are translating into significant financial progress.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.2 percentage point to 25.4% from the year-earlier quarter. Over that time, margins have contracted on average eight percentage points per quarter on a year-over-year basis.

For four consecutive quarters, revenue has fallen. Revenue declined 4% to $529.4 million in the first quarter. The figure fell 6% in the fourth quarter of the last fiscal year from the year earlier and dropped 5.6% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now topped analyst estimates for the last three quarters. It beat the mark by 11 cents in the first quarter and by 18 cents in the fourth quarter of the last fiscal year.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the third quarter is 14 cents per share, up from 9 cents ninety days ago. For the fiscal year, the average estimate has moved up from 49 cents a share to 75 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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