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AOL Beats on Revenue, Misses on Earnings

Ad network sales are booming, but not profitable.

Asa Mathat

AOL delivered the Q1 revenue Wall Street was looking for, but not the earnings: Tim Armstrong’s company generated $583 million in sales last quarter and 34 cents a share in earnings, after factoring out one-time charges. Analysts were expecting $578 million and 45 cents. More shortly.

AOL’s top line appears to be fueled almost entirely by growth in ad network sales and its “programmatic” ad sales business, which grew 43 percent, though the operating unit didn’t turn a profit. Revenue for AOL’s own properties, which included Huffington Post and TechCrunch, declined 6 percent, though AOL says a good chunk of that drop comes from the absence of Patch, the local news play it sloughed off at the beginning of the year.

As always, almost all of AOL’s profits come from its sales of dial-up Internet access and other money generated by its “membership” business, which threw off $138 million in adjusted operating income. But AOL’s in-house publishing business also generated a small operating profit of $1.8 million. That’s the first time AOL has seen that in four years.

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