AOL posted a stronger than expected quarterly earnings report on Wednesday and said it will spend $405 million to acquire Adap.tv with the hopes of strengthening its position in the online video space.
For the three months ending in June, AOL saw revenues increase 2 percent from the year-ago quarter to $541.3 million. The company posted earnings of 35 cents a share, a substantial drop from the $10.17 it posted a year ago after it sold $1 billion in patents to Microsoft.
Analysts had project that the company would see revenue of $540 million on profits of 32 cents a share.
“AOL takes a major step forward today with another quarter of growth and our agreement to acquire the Adap.tv video marketplace platform that will make AOL a clear global leader in the most important growth segment in our industry – online video,” Tim Armstrong, AOL chairman and CEO, said in a statement. “AOL continued to get leaner during Q2 while growing consumer traffic, growing all advertising revenue lines, and improving our subscription trends.”
AOL's purchase of Adap.tv tops the $315 million it shelled out to buy the Huffington Post in 2011. It will consist of $83 million in stock and $322 million in cash, the company said.
Based in San Mateo, California, Adap.tv has over 200 employees and is backed by Bessemer Venture Partners, Gemini Israel Funds, Redpoint Ventures and Spark Capital.
Investors greeted news of the acquisition enthusiastically, pushing shares of AOL up 5.37 percent to $38.10 in pre-market trading.
