New York-based AOL increased sales in the automatic and real-time ad-buying business 100% year over year, a major factor in the 20% jump in global advertising revenue recorded over the quarter.
"Advertisers aren't saying they want to spend less, they want better ROI, and better targeting. And we've done an exceptional job [providing that]," CEO Tim Armstrong said of the programmatic offering's success in a post-earnings conference call.
It appears AOL is at a critical juncture as it begins to see returns on investment in new digital advertising services while competing against Yahoo! (YHOO) and Google (GOOGL) which are doing likewise. Here's what analysts have to say of the company's future.
JMP Securities (Market Perform, PT $55 from $53)
"AOL has invested heavily in premium ad formats, video, and its programmatic offerings over the past several years and we believe the company is now beginning to see the return on these investments. Pricing was up double digits, organic display grew 9%, AOL's core DSP and SSP platforms once again grew in excess of 100%, and cross-platform usage rose 18%, to 171 million unique visitors. Importantly, we believe these trends are sustainable.
"We now project 2014E gross revenue of $2.55 billion, net revenue of $1.85 billion, and EBITDA of $523 million."
Deutsche Bank (Buy, PT $46 from $42)
"The bull case on AOL following the run-up from patent deal has been around stable topline and improving margins, and while the latter was in question over the past 6 months, 2Q results put AOL back on track. The company reported revenue inline and OIBDA 10% above our estimate, and importantly, Brand AOL margin increased 610bps Q/Q to an all-time record levels for a nonseasonal quarter. In terms of guidance, AOL sees upside to its original $500m OIBDA guidance in 2014."