After shares of the New York-based company plummeted three months ago when Armstrong declared 2015 to be an "investment year," the stock was rebounding Friday as sales from its automated advertising platform boosted first-quarter revenue and profits that handily beat analyst forecasts. AOL climbed 10% on Friday to $43.42, cutting its 2015 loss to 6%.
Revenue for the three-month period ended March 31 was $625 million, a 7.2% increase above the same period a year ago, while profit adjusted for some expenses was 34 cents a share, matching the average estimate from analysts of 32 cents, according to a Bloomberg survey.
But the big takeaway for investors was that Armstrong's big bet on automated or so-called programmatic advertising -- somewhere north of $750 million over the past three years -- is beginning to show the type of growth that the CEO, a one-time Google (GOOG) advertising executive, has long promised. Sales related to AOL's programmatic platform jumped 80% while accounting for 45% of its overall brand advertising revenue.
"The market, our products and our results are lining up," Armstrong said in a phone interview. "This quarter a fog is lifted off of AOL because you can really clearly see that the investments that we've made in programmatic and in video is really paying off."
Revenue at AOL platforms, including programmatic advertising, surged 21% to $279.8 million. Advertising sales from properties that include The Huffington Post and TechCrunch grew 12% to $483.5 million, also beat estimates.
AOL's automated advertising unit, recently branded as ONE by AOL, allows marketers and publishers to buy and sell ads in real time across thousands of Web sites and increasingly on television. The platform, which uses sophisticated computer software, is one half of AOL's two-pronged strategy to act as a conduit for marketers while also selling digital ad space on its own Web sites.