America Online 2014 Annual Report Download - page 51

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AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion of our results of operations and financial condition together with
our consolidated financial statements and the notes thereto included elsewhere in this Annual Report as well as
the discussion in the “Item 1—Business” section. This discussion contains forward-looking statements that
involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on
current expectations, estimates, assumptions and projections about our industry, business and future financial
results. Our actual results could differ materially from the results contemplated by these forward-looking
statements due to a number of factors, including those discussed in “Item 1A—Risk Factors” and “Cautionary
Statement Concerning Forward-Looking Statements.”
Introduction
Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is a
supplement to the accompanying consolidated financial statements and provides additional information on our
business, recent developments, results of operations, liquidity and capital resources and critical accounting
policies. MD&A is organized as follows:
•Overview. This section provides a description of our recent developments we believe are important in
understanding our results of operations and financial condition or in understanding anticipated future
trends.
•Results of operations. This section provides an analysis of our results of operations for each of the three
years in the period ended December 31, 2014.
•Liquidity and capital resources. This section provides a discussion of our current financial condition
and an analysis of our cash flows for each of the three years in the period ended December 31, 2014.
This section also provides a discussion of our contractual obligations and commitments, off-balance
sheet arrangements, indemnification obligations, principal debt obligations and customer credit risk
that existed at December 31, 2014.
•Critical accounting policies. This section identifies those accounting policies that are considered most
important to our results of operations and financial condition and require the most significant judgment
and estimates on the part of management.
Overview
Recent Business Initiatives
The online display advertising market has experienced a rapid and significant increase in programmatic
buying of advertising inventory. We continue to invest in programmatic technology, such as our demand side and
supply side platforms, in order for advertisers and agencies to better manage their advertising campaigns through
the use of our optimization technology. We believe there is a significant opportunity to attract advertisers through
the increased sale of premium formats, including video, through AOL Platforms. We believe our scale, ability to
target premium audiences and investments in technology and premium formats will allow us to increase the
number of advertisers we work with and enable us to capitalize on the increase in programmatic buying. We
believe our investments in premium formats and targeting will enable us to maximize yield for our advertisers.
Revenues from the sale of our programmatic offerings are primarily reflected in AOL Platforms’ results.
In 2015 we are launching ONE by AOL, our end-to-end open programmatic marketing suite for brands and
agencies that provides a single, unified, enterprise-level platform for driving powerful brand insight and
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