While AOL (NYSE: AOL) managed to arrest the decline of its U.S. display revenues in Q3, the “hard work” that CEO Tim Armstrong has repeatedly reminded investors of still has a ways to go. Display was down just 8 percent– but that’s amid a significant broader turnaround in ad spending. For example, by way of comparison, Yahoo’s display ad sales were up 17 percent last quarter. Overall, with the European business still being rebuilt (international display fell 54 percent), AOL’s total display numbers were down 14 percent.
Buried towards the bottom of AOL’s earnings report were details about its recent spate of acquisitions of 5Min Media, Thing Labs and TechCrunch for a collective $97.1 million.
Revenue free-fall: AOL’s revenue figures were down across the board. Aside from its general display woes, AOL received $46.9 million less in third party network revenue due to the shutdown of its European businesses. At the same time, AOL says that revenues were reduced because it’s trying to get out of the “low margin” search engine campaign management and lead gen affiliate products.
Subscription losses: The company also has to contend with the downward spiral of its internet access subscription business, which sank 26 percent in Q3. AOL ended the quarter with 24 percent fewer subscribers in the U.S. Average revenue per user declined 2 percent year-over-year. Churn was a low 2.6 percent, about the same as it was in Q2.
Cash: At the end of the quarter, AOL had $623.3 million of cash. Continuing operations was $165.0 million, down 2.5 percent year-over-year, while Free Cash Flow was $130.8 million, up 4.4 percent year-over-year. AOL said previously it was terminating its revolving credit facility given its cash position and projected cash flows. AOL never borrowed under this facility and did not pay any penalties for the early termination.

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