Aol investors must think this is the ’90s.
The once dominant Internet brand, whose shares have more than doubled this year, continued its revival yesterday by reporting a third-quarter profit amid a 7 percent rise in global ad revenue.
Investors, buoyed by the news, bid AOL shares up 22 percent yesterday, to $43.70, a 52-week high.
The initial AOL jump-start came from a $1 billion patent sale to Microsoft in April, when the company announced plans to return the proceeds to investors.
Since then, CEO Tim Armstrong’s turnaround strategy has started to pay off, and the company has made cuts to properties like Patch, a network of hyper-local media websites.
“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,” Armstrong said in a statement.
AOL beat Wall Street’s expectations with profits of $20.8 million, or 22 cents a share, beating Wall Street’s forecast of 18 cents.
Revenue of $531.7 million was unchanged.
The company benefitted from an almost 8 percent growth in search revenue, to $91.8 million.
The boost in search was “driven by continued improvements to the AOL.com user experience as well as through yield optimization and marketing campaigns,” analyst Ken Sena of Evercore Partners wrote in a note to clients.
Meanwhile, US ad revenue dropped, one downside to AOL’s third quarter. The weakness was partly blamed on underperforming media properties like The Huffington Post.
Also, AOL’s dial-up subscription business continued its decline, only a little more slowly. Subscription revenue was down 9.6 percent year over year, to $173.5 million.