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7/23/2019 Q1 2015 AOL Earnings Presentation
http://slidepdf.com/reader/full/q1-2015-aol-earnings-presentation 1/17
FIRST QUARTER 2015
EARNINGS SUMMARY
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AOL Q1 2015 HIGHLIGHTS
3
AOL’S MULTI-PLATFORM USER GROWTH FASTEST AMONG THE TOP 5 INTERNET
PROPERTIES
AOL’S GLOBAL ADVERTISING REVENUE GROWTH ACCELERATES
PROGRAMMATIC GROWS 80% AND SURGES TO 45% OF GLOBAL BRAND
ADVERTISING REVENUE
AOL STRONGLY GROWS VIDEO, MOBILE, PROGRAMMATIC AND NATIVE ADVERTISING
REVENUE
GLOBAL ADVERTISING PRICING GROWS MORE THAN 10%
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4
Q1 2015 CONSOLIDATED RESULTS AT A GLANCE
AOL GROWS REVENUE WHILE INVESTING FOR GROWTH
• Please see page 17 for endnotes.
Summary Results ($ in millions except per share amounts)
Q1 2015 Q1 2014 Change
Revenues
Global Advertising and other $ 483.5 $ 433.4 12%
AOL Properties Display 130.5 136.0 ‐4%
AOL Properties Search 116.4 97.6 19%
Third Party Properties 231.6 194.7 19%
Other
5.0
5.1 ‐
2%Subscription 141.6 149.9 ‐6%
Total Revenues $ 625.1 $ 583.3 7%
Global advertising and other revenue net of TAC⁽¹⁾ $ 287.3 $ 282.9 2%
Adjusted OIBDA⁽²⁾ $ 104.1 $ 107.3 ‐3%
Operating income $ 23.9 $ 24.2 ‐1%
Net income attributable to AOL Inc. $ 7.0 $ 9.3 ‐25%
Diluted EPS $ 0.09 $ 0.11 ‐18%
Adjusted Diluted EPS ⁽³⁾ $ 0.34 $ 0.35 ‐3%
Cash provided by operating activities $ 55.7 $ 23.5 137%
Free Cash Flow ⁽⁴⁾ $ 13.4 $ (10.5) N/A
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Segment Results
(In Millions)
Revenues Q1’13 Q2’13 Q3’13 Q4’13 FY 2013 Q1’14 Q2’14 Q3’14 Q4’14 FY2014 Q1’15
Brand Group $ 189.6 $ 190.3 $ 192.5 $ 222.0 $ 794.4 $ 178.8 $ 185.7 $ 187.3 $ 219.1 $ 770.9 $ 193.4
Membership
Group 211.5 213.8 204.5 209.3 839.1 196.3 203.8 196.7 194.8 791.6 182.6
AOL Platforms 160.9 160.4 188.7 275.0 785.0 230.8 247.1 271.9 330.6 1,080.4 279.8
Corporate
and Other 0.3 0.3 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.0
Intersegment
eliminations (24.0) (23.5) (24.4) (27.3) (99.2) (22.6) (29.8) (29.1) (34.2) (115.7) (30.7)
Total Revenues $ 538.3 $ 541.3 $ 561.3 $ 679.0 $ 2,319.9 $ 583.3 $ 606.8 $ 626.8 $ 710.3 $ 2,527.2 $ 625.1
Adjusted
OIBDA Q1’13 Q2’13 Q3’13 Q4’13 FY 2013 Q1’14 Q2’14 Q3’14 Q4’14 FY2014 Q1’15
Brand Group $ (4.9) $ (1.4) $ 10.9 $ 35.6 $ 40.2 $ 1.8 $ 13.1 $ 17.0 $ 36.5 $ 68.4 $ 12.9
Membership
Group 146.4 151.6 149.8 145.9 593.7 138.0 143.4 139.2 141.5 562.1 126.6
AOL Platforms (2.5) (11.3) (7.1) 5.9 (15.0) (3.5) (5.0) (0.6) 13.5 4.4 (9.8)
Corporate
and Other (33.7) (30.6) (33.8) (40.1) (138.2) (29.0) (30.0) (33.8) (34.8) (127.6) (25.6)
Total Adjusted
OIBDA $ 105.3 $ 108.3 $ 119.8 $ 147.3 $ 480.7 $ 107.3 $ 121.5 $ 121.8 $ 156.7 $ 507.3 $ 104.1
FINANCIAL RESULTS BY SEGMENT
AOL BEGAN 2015 WITH IMPROVEMENTS ACROSS ALL SEGMENTS
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6
12% growth in advertising and other revenue
fueled accelerated total revenue growth in Q1 2015.
TOTAL REVENUE GROWTH ACCELERATES
DOUBLE-DIGIT AD REVENUE GROWTH PROPELS TOTAL REVENUE GROWTH
12%
‐6%
7%
‐30%
‐20%
‐10%
0%
10%
20%
30%
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Y/Y Advertising and other revenue Y/Y Subscription revenue Y/Y Total revenue
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PRICING GROWTH ON AOL & 3RD PARTY FUEL AD REVENUE GROWTH
PROGRAMMATIC REVENUE GROWS 80% AND REPRESENTS 45% OFGLOBAL BRAND ADVERTISING REVENUE
AOL sold 34% more of its owned and operated inventory through its programmatic platform
versus Q1 2014, fueling significant growth in pricing.
‐4%
19%
19%
12%
‐2%
‐80%
‐70%
‐60%
‐50%
‐40%
‐30%
‐20%
‐10%
0%
10%
20%
30%
40%
50%
60%
70%
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
AOL Properties Display Y/Y % Change AOL Properties Search Y/Y % Change Third Party Properties Y/Y % Change Total Advertising and Other Y/Y % Change Other Y/Y % Change
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Churn & Subscriber Rate of Decline Average Revenue Per User (ARPU)
8
Subscription revenue trend improvements continue
with 7% year‐over‐year growth in ARPU and churn of 1.4%.
Q1’11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15
Subscribers ⁽⁷⁾(in thousands)
3,621 3,433 3,452 3,272 3,115 3,031 2,893 2,794 2,662 2,583 2,508 2,501 2,422 2,338 2,274 2,217 2,156
AOL SUBSCRIBER TRENDS CONTINUE TO PROGRESS
CHURN RATE IMPROVES & ARPU GROWTH ACCELERATES Y/Y
A R P U
A R P U
Y / Y % C h a n g e
C h u r n R a t e
R a t e o f S u b D e c l i n e Y / Y
• Please see page 17 for endnotes.
(⁶)
‐6%
‐4%‐2%
0%
2%
4%
6%
8%
10%
12%
14%
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
ARPU % Change
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
‐25%
‐20%
‐15%
‐10%
‐5%
0%
Subscriber Decline Churn⁽⁵⁾
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$307
$235
$215
$195
$138$128
$29 $26
$0
$100
$200
$300
2009 2010 2011 2012 2013 2014 Q1’14 Q1’15
AOL has efficiently managed corporate expenses while investing in strategic areas of high growth.
Impact of “Corporate & Other” on Adjusted OIBDA (in millions)
AOL HAS A TRACK RECORD OF EXPENSE REDUCTION
AOL CONTINUES TO MANAGE EXPENSES, WHILE GROWING REVENUE
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$107
$104
$95
$100
$105
$110
$115
Q1'14 Q1'15
AOL INVESTS IN STRATEGIC AREAS TO ACCELERATE GROWTH IN 2016
ADJUSTED OIBDA DECLINES REFLECT INCREASED INVESTMENTS
Adjusted OIBDA by Quarter (in millions) Adjusted OIBDA (in millions)
AOL is growing revenue, making strategic investments,
reducing corporate expenses and optimizing its structure for future growth.
$108
$80 $87
$133
$94 $95$101
$123
$105$108$120
$147
$107$122
$122
$157
$104includes
~$9M of
investment
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106
78
0
20
40
60
80
100
120
December 2009 March 2015
C o m m o n S h a r e s O
u t s t a n d i n g ( I n M i l l i o n s )
SINCE SPIN AOL HAS REDUCED COMMON SHARES OUTSTANDING BY 27%
AOL repurchased approximately 0.1 million shares of common stock for approximately $4 million in Q1 2015.
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EXPLANATION OF CONSOLIDATED REVENUE TO SEGMENTS
Hypothetical Only:
Below
represents
an
approximate
allocation
of
consolidated
revenue
to
AOL’s
reported
segments and is for illustrative purposes only.
BRAND
GROUP
AOL
PLATFORMS
MEMBERSHIP
GROUP ELIMINATIONS TOTAL
AOL PROPERTIES DISPLAY 70% 30% 20% (20%) 100%
AOL PROPERTIES SEARCH80% 1% 19% - 100%
THIRD PARTY PROPERTIES - 100% - - 100%
OTHER 80% - 20% - 100%
SUBSCRIPTION - - 100% - 100%
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AOL
PLATFORMS
AOL
SEGMENTELIMINATIONS TOTAL
GROSS REVENUE $100 ------ ------ $100
INTERSEGMENT TAC < $70 > ------ $70 ------
INTERSEGMENT
REVENUE------ $70 < $70 > ------
NET REVENUE $30 $70 ------ $100
EXPLANATION OF INTERSEGMENT REVENUE & ELIMINATIONS
AOL inventory sold through AOL Platforms is recognized in AOL Platforms with a corresponding intersegment TAC charge.
Similarly, an amount equal to the TAC charge, reflecting the revenue net of the margin retained by AOL Platforms, is then
reflected as intersegment revenue in the segment where the inventory originated.
Hypothetical only:
For the example below, a Traffic Acquisition Cost (TAC) rate of 70% was chosen for illustrative purposes only.
This rate is not necessarily indicative of the actual TAC rate AOL Platforms offers to its partners.
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U n i q u e V i s i t o r s ( i
n m i l l i o n s )
AOL UNIQUE VISITORS
AOL HAD THE FASTEST RATE OF MULTI-PLATFORM USER GROWTH AMONGTOP 5 INTERNET PROPERTIES IN Q1
AOL Multi‐Platform Unique Visitors⁽⁸⁾
AOL has successfully managed to consistently grow total cross‐screen usage.
+12% Y/Y
100
120
140
160
180
200
220
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RECONCILIATION OF NON-GAAP MEASURES ⁹
in millions)Three months ended March 31,
2015 2014
Global advertising and other revenue net of TAC:
Global advertising and other revenue $ 483.5 $ 433.4
Less: Total TAC 196.2 150.5
Global advertising and other revenue net of TAC $ 287.3 $ 282.9
Adjusted OIBDA:
Operating income $ 23.9 $ 24.2
Add: Depreciation 32.8 33.4
Add: Amortization of intangible assets 17.3 15.2
Add: Restructuring costs 16.9 11.6
Add: Equity‐based compensation 13.0 13.0
Add: Asset
impairments
and
write
‐offs 1.2 10.4
Add: (Gain)/loss on disposals of assets, net (1.0) (0.5)
Adjusted OIBDA $ 104.1 $ 107.3
• Please see page 17 for endnotes.
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RECONCILIATION OF NON-GAAP MEASURES ⁹
• Please see page 17 for endnotes.
($ in millions, except per share amounts)Three months ended March 31,
2015 2014
Adjusted Diluted EPS:
Net income attributable to AOL Inc. $ 7.0 $ 9.3
Add (less) items impacting comparability of net income:
Restructuring costs 16.9 11.6
Equity‐based compensation expense 13.0 13.0
Asset impairments and write‐offs 1.2 10.4
(Gain) loss on disposal of assets, net (1.0) (0.5)
Foreign currency transaction adjustments 3.6 0.7
Income tax impact of items above ⁽¹⁰⁾ (13.0) (15.0)
Adjusted Net Income (1) $ 27.7 $ 29.5
Shares used for diluted EPS 81.9 84.1
Adjusted Diluted EPS $ 0..34 $ 0.35
Marginal tax rate ⁽¹¹⁾ 40.1% 39.7%
Free Cash Flow:
Cash provided by continuing operations $ 55.7 $ 23.5
Less: Capital expenditures and product development costs 25.3 16.9
Less: Principal payments on capital leases 17.0 17.1
Free Cash Flow$
13.4
$
(10.5)
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