AOL Posts Jump in Q1 Revenue on Surge in Ad Sales

AOL Inc reported a rise in first-quarter revenue on Wednesday, boosted by a surge in advertising sales through its automated electronic exchange.

The digital media and entertainment company said revenue from ads bought and sold on its electronic exchange soared 55 percent to almost $187 million.

Advertising is an important revenue stream for AOL, and its growth is critical to the company's overall performance, especially as subscription revenue from its dial-up service slips away.

AOL, which owns the Huffington Post website and the TechCrunch blog, has been investing in advertising, especially in the so-called programmatic side, referring to machine-buying and selling of digital advertising.

Total revenue rose to $583.3 million from $538.3 million in the quarter. Ad revenue jumped 16 percent to $433.4 million.

Net income attributable to AOL fell to $9.3 million, or 11 cents per share, from $25.9 million, or 32 cents per share, a year earlier.

The stock was down 7.2 percent to $40.75 in premarket trading.

On Tuesday AOL said it was acquiring Convertro Inc, a platform that helps advertisers manage spending budgets across different media, for $101 million. In March the company unveiled a new one-stop advertising platform aimed at changing the media-buying process for digital advertising.

Still, the company is struggling in some areas, including search advertising, which Chief Executive Officer Tim Armstrong flagged during a conference call with analysts. He said in January, the company experienced "headwinds" that pushed search advertising revenue down 1 percent.

© Thomson Reuters 2014