America Online 2014 Annual Report Download - page 66

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AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Membership Group
2014 vs. 2013
Membership Group revenue decreased due to the 11% decline in our domestic AOL subscribers, which
resulted in a decline in subscription revenue of $58.7 million and a decline in search revenue of $8.8 million.
This decline was partially offset by an increase in ARPU of 4%, which resulted in an increase in subscription
revenue of $23.5 million. The increase in ARPU is primarily due to price increases related to our value plan
strategy that provides additional features and services to subscribers. Membership Group revenue declines were
also partially offset by growth in display revenue of $8.7 million, driven by improved pricing on AOL Mail.
Membership Group Adjusted OIBDA decreased due to the decrease in revenue discussed above and the
benefit of the disposition of a claim regarding a legal matter in the third quarter of 2013, partially offset by
declines in costs associated with the declines in domestic AOL subscribers.
2013 vs. 2012
Membership Group revenue decreased due to the 10% decline in our domestic AOL subscribers, which
resulted in a decline in subscription revenue of $99.8 million. This decline was partially offset by an increase in
ARPU of 8%, which resulted in an increase in subscription revenue of $53.0 million. This increase is primarily
due to price increases related to our value plan strategy that provides additional features and services to
subscribers.
Adjusted OIBDA for the Membership Group decreased due to the decrease in revenue discussed above,
partially offset by overall declines in costs associated with the declines in domestic AOL subscribers and the
favorable disposition of a claim regarding a legal matter in the third quarter of 2013.
AOL Platforms
2014 vs. 2013
AOL Platforms revenue increased primarily due to growth in the sale of premium formats, including video,
across AOL’s programmatic platforms, growth in the sale of AOL Properties inventory sold through the platform
and by the inclusion of revenue from Adap.tv for a full year as compared to approximately four months in 2013
(Third Party Properties revenue grew approximately 20% for the year ended December 31, 2014 excluding
Adap.tv). In addition, AOL Platforms’ revenue grew due to an increase in platform fees of $10.5 million related
to Adap.tv and an increase in revenue of $5.1 million from licensing Convertro’s attribution modeling
technology.
AOL Platforms Adjusted OIBDA increased due to the increases in revenue discussed above, partially offset
by increased TAC of $184.7 million and investments in our programmatic platforms and premium formats.
2013 vs. 2012
AOL Platforms revenue increased primarily due to growth in the sale of premium formats across our
programmatic platform and by the inclusion of revenue from Adap.tv. AOL Platforms revenue includes $78.4
million related to Adap.tv, which was acquired in September 2013. The increase in AOL Platforms revenue was
partially offset by the absence of revenue from StudioNow due to the divestiture in Q1 2013. StudioNow
contributed $7.5 million in revenue to AOL Platforms in 2012.
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