America Online Inc finished off its fiscal year on a high note, posting fourth-quarter earnings that exceeded expectations amid strong growth in subscribers and commerce-related revenue. The Dulles, Virginia-based company reported net income of $160m, or $0.13 per share, ahead of the First Call consensus estimate of $0.11 and matching the so-called whisper numbers that had been making the rounds earlier this week. Revenue for the period jumped 46% to $1.38bn. In the year-ago period AOL posted earnings of $7.0m, or $0.01 per share.
The strong results were fueled by advertising and commerce revenues that soared 86.6% to $306m as AOL signed 33 long-term deals during the quarter worth $1m or more. The advertising and commerce backlog grew by $200m during the quarter to $1.5bn. Subscription-based revenues also showed strong growth, up 39.5% year-over-year at $943m. In addition, the bottom line was helped by sales and marketing expenses that declined to 16% of revenues from 17% in the year-ago period. Excluding one-time items, operating margins improved to just over 16% from less than 9% last year.
AOL added 755,000 new members during the quarter, with 686,000 in North America – for 31% year-over-year growth – and another 69,000 internationally. The full fiscal year saw 5.1 million new members added and the AOL service finished the year with 17.6 million, while CompuServe now boasts two million members. Of the combined total, roughly three million are outside of the US. Daily average usage per member rose to 52 minutes during the quarter from 44 minutes a year ago.
Results for the latest quarter included a $15m charge related to the MovieFone, Spinner and Nullsoft acquisitions, while year-ago results include a combined $88m in acquisition and legal settlement charges. For the full year, AOL reported net income of $762m, or $0.60 per share, on revenue up 54.5% at $4.78bn. Full- year results include merger and restructuring charges of $95m and $75m for this year and last year, respectively. Year-ago results also include a $94m acquisition charge and a $17m legal settlement charge. The company finished the year with cash and equivalents of $887m, up 31% from a year ago.
