AOL (owner of TechCrunch) has just reported its Q1 results for the quarter, and it’s a mixed bag, with sales of $539 million, up 2%, beating Wall Street estimates, with diluted earnings per share coming in at $0.32. Analysts were expecting revenues of $537.15 million, with First Call’s EPS estimate of EPS at $0.32. Still, Q1′s EPS number is up 45% on the same period a year ago. Net income was up 23% to $25.9 million.
Here’s how revenues and profit break down over the last several quarters:
This quarter, it looks like AOL’s global display revenues are finally in an upswing, rising 8% over a year ago to $140 million. Subscription revenues, the legacy part of AOL’s business that still includes (yes) revenues from dial-up customers, is still coming in as a bigger part of AOL’s revenues, at $165.8 million. They are slowly on the decline, though, down 9% on a year ago.
Last quarter was a notable one for AOL in that it was the first one in eight years where the company had posted revenue growth, with revenues of $600 million for the three-month period. As with many other online, advertising-based companies, AOL’s revenues for this most recent, post-holiday quarter will be seasonally lower.
More interestingly, the company has been working to reposition itself around a couple of key strengths where it can still gain ground, even as Google continues to dominate the online advertising market overall. As eMarketer notes, in AOL’s biggest market, the U.S., its share of online ad spend is in decline, with AOL’s share expected to be 2.3% this year compared to 2.5% in 2012, with Facebook and Google particularly gaining in the display sector where AOL makes most of its revenue. Total display ad spend in the U.S. is projected to be $17.7 billion this year, with AOL taking 3.1% of that, with Google and Facebook taking 17.6% and 15.5% respectively. In this regard, for AOL to make its position as strong as possible in the couple of areas where it can still grow.
The first of these involves innovations around ad tech. That has included grouping together all of the company’s online advertising sales and technology assets into a single group, AOL Networks. And last week the strategy got another boost when AOL signed a deal with FreeWheel and Mediaocean so that AOL’s online inventory, and specifically its video inventory, can be bundled together with TV ad buys in a multiscreen strategy.
The second is a stronger emphasis on rich-media advertising, specifically against premium content that AOL owns itself or has deals to provide advertising for. AOL’s portfolio got a boost early in the quarter with the acquisition of gdgt, started by two former Engadgeteers (founder Peter Rojas and ex-editor-in-chief Ryan Block).
And last week, AOL expanded the amount of content against which it can sell online ads even further with the news that it would be releasing 15 new original video programs, created in a factual, unscripted format that fits with the rest of AOL’s newsy portfolio. However, as it grows in these areas, it’s also continuing to whittle down assets in others, such as its nearly-concurrent decision to shut down AOL Music.
AOL’s own branded content is still lagging behind the company’s subscription revenues (again, these relate mainly to the company’s legacy services) but they are also showing the strongest growth in terms of revenues over a year ago. But if you look at operating income before depreciation and amortization, collectively the Brand Group, along with AOL Networks, are still loss-making, if coming very close to break-even:
The third-party advertising business continues to grow for AOL. This quarter revenues for ads distributed on sites not owned by AOL were up 10% to $120.7 million.
LinkedIn has just reported Q1 earnings of $324.7 million, up 72% year-on-year, and non-GAAP earnings per share of $0.45, both soundly beating analysts’ estimates (via First Call) of $317 million and EPS of $0.31; as well as LinkedIn’s own guidance from last quarter, when it said it expected between $305 million and $310 million in revenues. Net income for Q1 was $22.6 million a big rise on the $5.0 million in earnings last year. Nevertheless, shares of the work-focused social network, however, are down nearly 11% in after-hours trading on news that next quarter won’t be quite as rosy.
First Call had estimated revenues of Q2 of $359 million, but today LinkedIn issued guidance that it expects sales of between $342 million and $347 million. That’s up between 50% and 52% on the same quarter a year ago, and is a sign of how growth is slowing. This slide from the earnings presentation says everything about the company’s revenue decline:
The company says it now has 225 million users, up from 200 million last quarter. Judging by some of the product launches in the last few weeks it may have been that LinkedIn is laying the groundwork for how it will better monetize the users it has longer term as other revenue streams and customer acquisition decelerate. The new launches have included upgraded, more media-enhanced profiles; a Contacts update to add in more “personal assistant” life organizing features; new iPhone and Android apps; an expanded search engine; @mentions in status updates; Klout-style endorsements; and a Recruiter homepage redesign for the site’s most dedicated user vertical.
Here is how different divisions of the company have performed this past quarter:
Talent Solutions revenue was $184.3 million, up 80% over last year. Talent Solutions revenue was 57% of total revenue in the first quarter of 2013, versus 54% last year.
Marketing Solutions revenue was $74.8 million, up 56% compared to the first quarter of 2012. Marketing Solutions revenue declined by 2 percentage points to make up 23% of total revenue in the first quarter of 2013.
Premium Subscriptions products revenue was $65.6 million, up 73% compared to the first quarter of 2012. It remained level at 20% of total revenue for Q1.
The U.S. remains the biggest market for the company, with $201.4 million in revenue, 62% of the total. That’s the same proportion as the previous quarter, and has generally been declining over the last several years. International markets sales were $123.3 million.
LinkedIn continues to have a heavy amount of its sales coming from its “field sales channel”: $184 million compared to $140.7 million online. Field sales, involving actual people, are more costly for LinkedIn and so the company will likely be trying to increase its online sales in quarters ahead to improve earnings as growth slows.
We’re just about to listen to the call and will update with details from there.
Facebook has just posted its earnings for the quarter that ended March 31, 2013. Facebook hit $1.46 billion in revenue up 38% from Q1 2012, beating Wall Street estimates of sales of $1.44 billion. Facebook reported earnings of $1.06 billion for the same quarter a year ago. Earnings per shared missed estimates, staying flat at $0.12 (analysts had expected earnings per share of $0.13.
Net income was up 7% to $219 million, versus $205 million a year ago (GAAP figures).
While revenue only grew slightly, the amount of its 1.11 billion monthly users that returned daily, 665 million, was slightly better than last quarter. For more details on user growth, read our post by Drew Olanoff.
Facebook also noted in an SEC filing issued today that Chief Accounting Officer David Spillane is leaving the company. Spillane had been the company’s revenue controller since 2008, overseeing growth and IPO. He is getting replaced by Jas Athwal effective May 10.
Initial reactions from the stock market were mildly positive, with the Facebook’s share price increasing slightly in after-hours trading just after the earnings were released, though the price had fallen 1.22% and closed at $27.43.
The percentage of Facebook’s total ad revenue that came from mobile surged to 30%, up from 23% last quarter. Read more on Facebook’s mobile progress from Kim-Mai Cutler.
Last quarter, Facebook posted earnings of $1.59 billion, a rise of 40% year-over-year. Last quarter the company had 1.1 billion monthly users, 618 million daily users, and 680 mobile monthly million, up 57% year-over-year.
In the lead-up to today’s earnings, there were a lot of expectations about how Facebook would perform performing around some key metrics.
User numbers. As noted in the WSJ, one area where Facebook will be scrutinized will be in its proportion of daily to monthly active users. In Q4 the figure was 58.5% globally. Mark Mahaney of RBC Capital Markets told the newspaper that he expects that to go up to 59% but “anything less than 58% would be a negative for Facebook.” Elsewhere, there have been some reports of user attrition. However, Facebook hit a 60% daily to monthly users, showing slightly better engagement.
The fact that Facebook saw a higher DAU/MAU ratio means that Facebook was more engaging this quarter than last, a strong sign rebuking critics who claim people are using the site less. However, Facebook’s user growth is currently coming predominantly from developing markets that don’t earn it nearly as much money as users in first-world markets like the United States.
Advertising and payments. Last quarter Facebook’s ad revenue was $1.33 billion, up 41% on the year before, and payments revenue came in at $256 million. Facebook’s payments revenue in Q1 was $213 million, it’s biggest payment three-month quarter yet. [Correction: We original said payments revenue fell, but that's because Q4 2013 was a four-month quarter, irregularly boosting its revenue on the books.]
213M for 1Q13 payments. This was biggest payment quarter – there were four months included in 4Q revenue.
We talked about it on call but should have reminded people.
Mobile. Last quarter mobile revenues revenues grew to make up 23 percent of the company’s total sales. Mobile revenues effectively equals mobile advertising, since gifts, also sold on mobile, are negligible. Next quarter, however, Facebook will start making another revenue stream in mobile by way of Parse, the mobile development platform. Parse has around 60,000 developers, and offers a freemium model based on usage, with the cheapest paid version priced at around $199 per month. This was still a relatively small business when it was acquired last month for a price believed to be around $85 million so it’s not likely to grow and become a significant revenue source for another couple of years. Another specific area proving to be a significant driver within Facebook’s mobile ads business are app install ads, where app publishers pay a fee for an add to appear in a person’s mobile news feed.
Facebook Home; Graph Search. This past quarter saw the launch of two major initiatives for the company, Facebook Home on mobile and Graph Search, the “third pillar” after News Feed and Timeline, according to CEO Mark Zuckerberg. Facebook Home saw a little surge of interest with 500,000 downloads in its first five days across a limited amount of devices that currently support it.
The earnings call is at 2pm PT; we’ll be listening in and reporting on that.
Daily deals company LivingSocial continues to face challenges in the market. In the last quarter it posted sales of $135 million, up 23% on a year ago, but it also swung to a net loss of $50 million, from net income of $156 million in Q1 2012. The numbers were revealed in a 10-Q filing from one of its key investors, Amazon, in line with its Q1 earnings reported on Thursday.
The filing also shows that Amazon was the majority investor in the $110 million round earlier this year. Amazon put in $56 million of that sum.
“Additionally, in Q1 2013 we made a $56 million investment in LivingSocial that we have recorded as a cost method investment,” it notes.
LivingSocial’s operating loss, meanwhile, was down to about half the size of last year, at $44 million. The Washington Business Journal cites a source that notes that LivingSocial has reduced its operating cash burn to single-digit millions to continue that trend. The company has been making an effort to cut expenses; in November it laid of 10% of its staff, equivalent to about 400 people.
E-commerce giant Amazon has a 29% equity stake in the company, it noted in the SEC filing. It also writes in the 10-Q that the book value of its equity-method investment was $36 million at the end of March. The losses at LivingSocial had a $17 million negative impact on Amazon.
Overall, Amazon saw revenues of $16 billion, falling just short of analyst expectations of $16.2 billion, with a bleak outlook for the quarter ahead, with its aggressive, thin-margin strategy leading it to an operating loss of up to $340 million. Right now, its stock is trading nearly 7% down.
The market for daily deals sites is less than healthy right now. Rival Groupon in February also reported a worse-than-expected loss and then lost its founder and CEO Andrew Mason in the wake of the news, and now it’s working on a pivot to become more of a multi-purpose local commerce player.
LivingSocial, which has been around since 2007, has raised an eye-watering $918 million in the last six years — and what that much sunk into the company, you can see why existing investors are key to keep it from falling over. CEO Tim O’Shaughnessy noted in February that its most recent $110 million round of fundraising was indeed a “down round”, valuing the company at around $1.5 billion, lower than in its last fundraise. But it was not an emergency debt infusion, he maintained: at least some of the investors took equity in the company as part of the deal.
Baidu posted double-digit percentage revenue growth in 1Q2013–but its earnings still missed analysts’ expectations as the Chinese search giant’s costs soared.
Baidu’s 1Q2013 net income increased 8.5 percent to $328.9 million (2.043 billion RMB), short of the $354.9 million (2.19 billion yuan) expected by analysts polled by Bloomberg. Total revenue rose 40 percent from $961 million (5.97 billion RMB), missing the 5.99 billion RMB analysts expected.
Online marketing revenue grew 40 percent to $958.5 million (5.95 billion RMB), while Baidu’s active online marketing customers rose 28 percent to 410,000 from a year earlier. But revenue per online advertising customer slipped 6.5 percent from the previous quarter.
Baidu faces tighter competition in the search market as it competes for advertising customers with upstarts like Qihoo 360.
But Baidu’s selling, general and administrative costs increased 77 percent and its R&D jumped 83 percent. The company’s profit margins also narrowed after Baidu announced plans to buy a stake in online video site iQiyi last November. Baidu is gearing up to compete with streaming video giant Youku-Tudou, with reports emerging recently that it purchased PPStream.
In its earnings release, Baidu’s CFO Jennifer Li said “we remain committed to investing aggressively, particularly in marketing and R&D. By deploying resources in the most strategically important areas of our business, we’re confident we can build exceptional long-term value for shareholders.”
Baidu forecast second quarter revenue between $1.19 billion and $1.22 billion, in-line with analysts’ estimates.