The company’s CEO said:
We just reported the best relative revenue performance in seven years and the second consecutive quarter of year-over-year profit growth, exceeding our expectations. We have positioned AOL for growth in 2013 and beyond with consumer and advertiser demand growing for our premium content and innovative products, video, services and ad formats.
AOL’s ability to match quarterly revenue from a year ago is the first time in seven years that the company has performed that well. Seven years of continuing declines turned around. We will see over the next few quarter sif that is a one-time burst or the beginning of a new era.
And if bad news can be sort-of good, the company’s subscription losses in the quarter were cut by 10%, the lowest decline rate in six years. Subscription revenue represents about half the amount of revenue generated by advertising, but slowing the decline in subscriptions lets AOL keep more of its advertising revenue growth, which rose by 7% year-over-year in the quarter.
Domestic display ad revenue fell 3%, while international display ad revenue rose 18%. But domestic display ad revenue is 10x the size of international revenue. Continued growth depends on rising display ad revenue, and not just in the international division.
The company did not provide guidance, but the consensus estimate for fourth quarter EPS is $0.35 on revenue of $564.94 million. For the full fiscal year ending in December, EPS is expected to total $1.29 on revenue of $2.15 billion.
The company’s shares are up almost 3% in premarket trading this morning at $36.85, in a 52-week range of $13.49 to $37.94. The consensus target price for the shares was around $34.60 before today’s report.