Summary:

Aol has been in turnaround mode for years — this time, it looks like the turns are in the right direction. Advertising up, revenue decline almost flat, subscription churn lowest in a decade, latest re-org underway.

AOL (AOL)

When the lead bullet point on an earnings release brags about having the lowest revenue decline in seven years, that’s both a sign of progress — and a sigh. All the effort by Chairman and CEO Tim Armstrong, all the reorgs, the executive revolving door, the Huffington Post acquisition, etc. and this is where we are.

And yet, Aol does have a better story to tell. The company’s not out of the woods but there are signs of a path and a few clearings:

  • Advertising was up 6 percent — the fifth sequential increase; it included 21 percent growth internationally.
  • Revenue of $531 million was down two percent over the same quarter in 2011 but beat analyst expectations of $519 million.
  • Aided by the lucrative $1.05 patent sale to Microsoft and a patent licensing fee, Aol reported net income of $970.8 million in Q212, compared with a loss of $11.8 million in Q211. Income without factoring in the extras — OIBTDA — was $168.6 million, up from $76.6 million
  • Double-digit search revenue growth on Aol.com helped keep search decline to 1 percent, best in more than three years.
  • Another sign of stabilizaton: subscription churn at its lowest in more than a decade; revenue decline of 12 percent decline in subscribers, lowest in five years. That’s real money for Aol — more than $167 million in Q2.

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