AOL Stock Up Double Digits Despite 3Q Loss

Global ad revenue increased by 8 percent while subscription revenues dropped 22 percent

AOL stock is up double digits so far Wednesday despite announcing a net loss in its third quarter earnings report and a decrease in revenue.

AOL reported a $2.6 million loss for the quarter, compared to a net profit of $171.6 million in the same frame a year ago, but that loss was not as bad as many analysts had expected. AOL said its 8 percent increase in ad revenue was the obvious headline, as that marked the second straight quarter of growth.

The street seems to agree, with the company's share price is up 10 percent in early trading Wednesday.

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‘The trajectory of results show a growing set of improvements from where we were year ago in ad growth,” Chairman and CEO Tim Armstrong told analysts. He added that this represented the “continued execution of our strategy directed at becoming the premiere, scaled branded media and technology company for the web.”

The higher revenues owe a lot to the acquisition of HuffPost and TechCrunch, but Armstrong portrayed this third quarter as a sign of improvement compared to the company's past performance as revenue declines continue to slow.

"We are growing meaningfully as a company again," Armstrong said. "We are closing in on meaningful inflection points."

Also read: AOL CEO Tim Armstrong: No Interest in Yahoo Merger (Video)

Armstrong, who according to reports has expressed interest in a merger with Yahoo, also rejected that possibility Wednesday given what he views as his company's upward trajectory.

Still, despite the increase in ad revenue overall revenue did decline 5.8 percent to $531.7 million due to a 22 percent drop in subscriber revenue and a 15 percent dip in other revenues.

On the earnings call, Armstrong trumpeted continued growth at the recently acquired Huffington Post even though AOL's overall traffic is largely flat.

Armstrong also suggested that the outlook for local news service Patch continues to improve. While many analysts have deemed it a money-losing proposition, Armstrong noted that Patch had passed 10 million unique visitors a month and said that the initially soft advertising figures would continue to improve.