FIRST QUARTER 2015

EARNINGS SUMMARY

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This presentation contains certain forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding business
strategies, market potential, future financial and operational performance and other matters. Words such as anticipates, estimates, expects, projects,
forecasts, intends, plans, will, believes and words and terms of similar substance used in connection with any discussion of future operating or financial
performance identify forwardlooking statements. These forwardlooking statements are based on managements current expectations and beliefs about future
events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Except as required by law, we are under no
obligation to, and expressly disclaim any obligation to, update or alter any forwardlooking statements whether as a result of such changes, new information,
subsequent events or otherwise.
Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained
in the forwardlooking statements, including those factors discussed in detail in Item 1ARisk Factors in our Annual Report on Form 10K for the year ended
December 31, 2014 (Annual Report) filed with the Securities and Exchange Commission. In addition, we operate a web services company in a highly competitive,
rapidly changing and consumer and technologydriven industry. This industry is affected by government regulation, economic, strategic, political and social
conditions, consumer response to new and existing products and services, technological developments and, particularly in view of new technologies, the continued
ability to protect intellectual property rights. Our actual results could differ materially from managements expectations because of changes in such factors.
Achieving our business and financial objectives, including improved financial results and maintenance of a strong balance sheet and liquidity position, could be
adversely affected by the factors discussed or referenced in Item 1A Risk Factors in our Annual Report and Quarterly Report as well as, among other things: 1)
changes in our plans, strategies and intentions; 2) stock price volatility; 3) future borrowing and restrictive covenants under the revolving credit facility; 4) the impact
of the convertible senior notes and the related hedge and warrant transactions; 5) the impact of significant acquisitions, dispositions and other similar transactions; 6)
our ability to attract and retain key employees; 7) any negative unintended consequences of cost reductions, restructuring actions or similar efforts, including with
respect to any associated savings, charges or other amounts; 8) adoption of new products and services; 9) our ability to attract and retain unique visitors to our
properties; 10) asset impairments; and 11) the impact of cyber attacks.
This presentation is not an offer to sell, or a solicitation of an offer to buy, any securities.
NonGAAP Financial Measures: This presentation includes information regarding the historical financial performance of AOL through March 31, 2015 reflected in
certain nonGAAP financial measures such as Global advertising and other revenue net of TAC, Adjusted Operating Income Before Depreciation and Amortization
(Adjusted OIBDA), Adjusted Diluted income per common share (Adjusted EPS) and Free Cash Flow. Reconciliations of these nonGAAP financial measures to the GAAP
financial measures we consider most comparable are set forth herein.

AOL Q1 2015 HIGHLIGHTS

AOLS MULTI-PLATFORM USER GROWTH FASTEST AMONG THE TOP 5 INTERNET
PROPERTIES
AOLS GLOBAL ADVERTISING REVENUE GROWTH ACCELERATES
PROGRAMMATIC GROWS 80% AND SURGES TO 45% OF GLOBAL BRAND
ADVERTISING REVENUE
AOL STRONGLY GROWS VIDEO, MOBILE, PROGRAMMATIC AND NATIVE ADVERTISING
REVENUE
GLOBAL ADVERTISING PRICING GROWS MORE THAN 10%
3

Q1 2015 CONSOLIDATED RESULTS AT A GLANCE

AOL GROWS REVENUE WHILE INVESTING FOR GROWTH
SummaryResults($inmillionsexceptpershareamounts)

Q1 2015

Q1 2014

Change

Revenues
Global Advertisingandother

$483.5

$433.4

12%

AOLPropertiesDisplay

130.5

136.0

4%

AOL Properties Search

116.4

97.6

19%

ThirdPartyProperties

231.6

194.7

19%

5.0

5.1

2%

141.6

149.9

6%

TotalRevenues

$625.1

$583.3

7%

Globaladvertising andotherrevenuenetofTAC

$287.3

$282.9

2%

AdjustedOIBDA

$104.1

$107.3

3%

Operating income

$23.9

$24.2

1%

Netincomeattributable toAOLInc.

$7.0

$9.3

25%

DilutedEPS

$0.09

$0.11

18%

AdjustedDilutedEPS

$0.34

$0.35

3%

Cashprovided byoperatingactivities

$55.7

$23.5

137%

FreeCashFlow

$13.4

$(10.5)

N/A

Other
Subscription

Pleaseseepage17forendnotes.

FINANCIAL RESULTS BY SEGMENT

AOL BEGAN 2015 WITH IMPROVEMENTS ACROSS ALL SEGMENTS
SegmentResults
(InMillions)
Revenues

Q113

Q213

Q313

Q413

FY2013

Q114

Q214

Q314

Q414

FY2014

Q115

BrandGroup

$ 189.6

$190.3

$192.5

$222.0

$794.4

$178.8

$185.7

$187.3

$219.1

$770.9

$193.4

Membership
Group

211.5

213.8

204.5

209.3

839.1

196.3

203.8

196.7

194.8

791.6

182.6

AOLPlatforms

160.9

160.4

188.7

275.0

785.0

230.8

247.1

271.9

330.6

1,080.4

279.8

0.3

0.3

0.0

0.0

0.6

0.0

0.0

0.0

0.0

0.0

0.0

(24.0)

(23.5)

(24.4)

(27.3)

(99.2)

(22.6)

(29.8)

(29.1)

(34.2)

(115.7)

(30.7)

$538.3

$541.3

$561.3

$ 679.0

$2,319.9

$583.3

$606.8

$626.8

$710.3

$2,527.2

$625.1

Q113

Q213

Q313

Q413

FY2013

Q114

Q214

Q314

Q414

FY2014

Q115

BrandGroup

$ (4.9)

$ (1.4)

$10.9

$35.6

$40.2

$1.8

$13.1

$17.0

$36.5

$68.4

$12.9

Membership
Group

146.4

151.6

149.8

145.9

593.7

138.0

143.4

139.2

141.5

562.1

126.6

(2.5)

(11.3)

(7.1)

5.9

(15.0)

(3.5)

(5.0)

(0.6)

13.5

4.4

(9.8)

(33.7)

(30.6)

(33.8)

(40.1)

(138.2)

(29.0)

(30.0)

(33.8)

(34.8)

(127.6)

(25.6)

$105.3

$108.3

$119.8

$147.3

$480.7

$107.3

$121.5

$121.8

$156.7

$507.3

$104.1

Corporate
andOther
Intersegment
eliminations
TotalRevenues
Adjusted
OIBDA

AOL Platforms
Corporate
andOther
TotalAdjusted
OIBDA

TOTAL REVENUE GROWTH ACCELERATES

DOUBLE-DIGIT AD REVENUE GROWTH PROPELS TOTAL REVENUE GROWTH
30%

20%

12%

10%

7%
0%
Q1'11

Q2'11

Q3'11

Q4'11

Q1'12

Q2'12

Q3'12

Q4'12

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Q4'14

Q1'15
6%

10%

20%

30%

Y/YAdvertisingandotherrevenue

Y/YSubscriptionrevenue

Y/YTotalrevenue

12%growthinadvertisingandotherrevenue
fueledacceleratedtotalrevenuegrowthinQ12015.
6

PRICING GROWTH ON AOL & 3RD PARTY FUEL AD REVENUE GROWTH

PROGRAMMATIC REVENUE GROWS 80% AND REPRESENTS 45% OF
GLOBAL BRAND ADVERTISING REVENUE
70%
60%
50%
40%
30%

19%
19%
12%

20%
10%
0%
10%

Q1'11

Q2'11

Q3'11

Q4'11

Q1'12

Q2'12

Q3'12

Q4'12

Q1'13

Q2'13

Q3'13

Q4'13

Q1'14

Q2'14

Q3'14

Q4'14

2%
Q1'154%

20%
30%
40%
50%
60%
70%
80%
AOLPropertiesDisplayY/Y%Change

AOLPropertiesSearchY/Y%Change

ThirdPartyPropertiesY/Y%Change

TotalAdvertisingandOtherY/Y%Change

OtherY/Y%Change

AOLsold34%moreofitsownedandoperatedinventorythroughitsprogrammaticplatform
versusQ12014,fuelingsignificantgrowthinpricing.
7

AOL SUBSCRIBER TRENDS CONTINUE TO PROGRESS

CHURN RATE IMPROVES & ARPU GROWTH ACCELERATES Y/Y
Average Revenue Per User (ARPU)

3.0%

$25.00

5%

2.5%

$20.00

2.0%
1.5%

15%

1.0%

20%

0.5%

25%

0.0%

(in thousands)

$10.00
$5.00
$0.00

Churn

SubscriberDecline

Subscribers

14%
12%
10%
8%
6%
4%
2%
0%
2%
4%
6%

$15.00

ARPU

10%

()

ARPU

ARPUY/Y%Change

0%

ChurnRate

RateofSubDeclineY/Y

Churn & Subscriber Rate of Decline

%Change

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

Q314

Q414

Q115

3,621

3,433

3,452

3,272

3,115

3,031

2,893

2,794

2,662

2,583

2,508

2,501

2,422

2,338

2,274

2,217

2,156

Subscriptionrevenuetrendimprovementscontinue
with7%yearoveryeargrowthinARPUandchurnof1.4%.
Pleaseseepage17forendnotes.
8

AOL HAS A TRACK RECORD OF EXPENSE REDUCTION

AOL CONTINUES TO MANAGE EXPENSES, WHILE GROWING REVENUE
ImpactofCorporate&OtheronAdjustedOIBDA(inmillions)

$307
$300
$235
$215
$195

$200

$138

$128

$100

$29

$26

Q114

Q115

$0
2009

2010

2011

2012

2013

2014

AOLhasefficientlymanagedcorporateexpenseswhileinvestinginstrategicareasofhighgrowth.
9

AOL INVESTS IN STRATEGIC AREAS TO ACCELERATE GROWTH IN 2016

ADJUSTED OIBDA DECLINES REFLECT INCREASED INVESTMENTS
AdjustedOIBDAbyQuarter(inmillions)

AdjustedOIBDA(inmillions)

$115
$147
$133

$123

$108
$80

$87

$94 $95

$101

$120
$105$108

$122
$122
$107

$157

$110

$107

$104

$105

$104

includes
~$9Mof
investment

$100
$95
Q1'14Q1'15

AOLisgrowingrevenue,makingstrategicinvestments,
reducingcorporateexpensesandoptimizingitsstructureforfuturegrowth.
10

SINCE SPIN AOL HAS REDUCED COMMON SHARES OUTSTANDING BY 27%

CommonSharesOutstanding(InMillions)

120

106
100

78

80

60

40

20

December2009

March2015

AOLrepurchasedapproximately0.1millionsharesofcommonstockforapproximately$4millioninQ12015.
11

EXPLANATION OF CONSOLIDATED REVENUE TO SEGMENTS

HypotheticalOnly:BelowrepresentsanapproximateallocationofconsolidatedrevenuetoAOLsreported
segmentsandisforillustrativepurposesonly.

BRAND
GROUP

AOL
PLATFORMS

MEMBERSHIP
GROUP
ELIMINATIONS

TOTAL

AOL PROPERTIES DISPLAY

70%

30%

20%

(20%)

100%

AOL PROPERTIES SEARCH

80%

1%

19%

100%

THIRD PARTY PROPERTIES

100%

100%

80%

20%

100%

100%

100%

OTHER
SUBSCRIPTION

12

EXPLANATION OF INTERSEGMENT REVENUE & ELIMINATIONS

Hypotheticalonly:Fortheexamplebelow,aTrafficAcquisitionCost(TAC)rateof70%waschosenforillustrativepurposesonly.
ThisrateisnotnecessarilyindicativeoftheactualTACrateAOLPlatformsofferstoitspartners.

AOL
PLATFORMS

AOL
SEGMENT

ELIMINATIONS

TOTAL

$100

------

------

$100

< $70 >

------

$70

------

INTERSEGMENT
REVENUE

------

$70

< $70 >

------

NET REVENUE

$30

$70

------

$100

GROSS REVENUE
INTERSEGMENT TAC

AOLinventorysoldthroughAOLPlatformsisrecognizedinAOLPlatformswithacorrespondingintersegmentTACcharge.
Similarly,anamountequaltotheTACcharge,reflectingtherevenuenetofthemarginretainedbyAOLPlatforms,isthen
reflectedasintersegmentrevenueinthesegmentwheretheinventoryoriginated.
13

AOL UNIQUE VISITORS

AOL HAD THE FASTEST RATE OF MULTI-PLATFORM USER GROWTH AMONG
TOP 5 INTERNET PROPERTIES IN Q1
AOLMultiPlatformUniqueVisitors

220

+12%Y/Y

UniqueVisitors(inmillions)

200
180
160
140
120
100

AOLhassuccessfullymanagedtoconsistentlygrowtotalcrossscreenusage.
14

RECONCILIATION OF NON-GAAP MEASURES

inmillions)

Threemonths endedMarch31,
2015

2014

$483.5

$433.4

196.2

150.5

$287.3

$282.9

$ 23.9

$ 24.2

Add:Depreciation

32.8

33.4

Add:Amortizationofintangibleassets

17.3

15.2

Add:Restructuringcosts

16.9

11.6

Add:Equitybasedcompensation

13.0

13.0

1.2

10.4

(1.0)

(0.5)

$ 104.1

$107.3

Globaladvertising andotherrevenuenetofTAC:
Global advertisingandotherrevenue
Less:TotalTAC
Global advertisingandotherrevenuenetofTAC

AdjustedOIBDA:
Operatingincome

Add:Assetimpairmentsandwriteoffs
Add:(Gain)/lossondisposalsofassets,net
AdjustedOIBDA

Pleaseseepage17forendnotes.

15

RECONCILIATION OF NON-GAAP MEASURES

($inmillions,exceptpershareamounts)

Threemonthsended March31,
2015

2014

$7.0

$9.3

Restructuringcosts

16.9

11.6

Equitybasedcompensationexpense

13.0

13.0

1.2

10.4

(1.0)

(0.5)

3.6

0.7

(13.0)

(15.0)

27.7

$ 29.5

81.9

84.1

Adjusted DilutedEPS

$0..34

$0.35

Marginaltaxrate

40.1%

39.7%

$ 55.7

$ 23.5

Less:Capitalexpenditures andproductdevelopment costs

25.3

16.9

Less:Principalpaymentsoncapitalleases

17.0

17.1

$13.4

$ (10.5)

Adjusted DilutedEPS:
Net incomeattributabletoAOLInc.
Add(less)itemsimpactingcomparabilityofnetincome:

Assetimpairmentsandwriteoffs
(Gain)lossondisposalofassets,net
Foreigncurrencytransactionadjustments
Incometaximpactofitemsabove
AdjustedNetIncome (1)
SharesusedfordilutedEPS

FreeCashFlow:
Cashprovidedbycontinuingoperations

FreeCashFlow
Pleaseseepage17forendnotes.

16

ENDNOTES
(1) We use Global advertising and other revenue net of TAC, among other measures, to evaluate the financial performance of our business. TAC consists of costs incurred through
arrangements in which we acquire thirdparty online advertising inventory for resale and arrangements whereby partners direct traffic to AOL Properties. We believe that this definition
enhances the comparability of our advertising and other revenues to the advertising revenues of certain of our competitors. However, comparable activity may be measured differently
by other companies and our revenue sources and TAC may be different than those of our competitors. Therefore, our metrics involving TAC may not be directly comparable to those of
our competitors.
(2) We use Adjusted OIBDA as a supplemental measure of our performance. We define Adjusted OIBDA as operating income before depreciation and amortization excluding the impact of
restructuring costs, noncash equitybased compensation, gains and losses on all disposals of assets, noncash asset impairments, writeoffs and special items. We consider Adjusted
OIBDA to be a useful metric for management and investors to evaluate and compare the ongoing operating performance of our business on a consistent basis across reporting periods,
as it eliminates the effect of noncash items such as depreciation of tangible assets, amortization of intangible assets that were primarily recognized in business combinations, asset
impairments and writeoffs, as well as the effect of restructurings, gains and losses on asset sales and special items, which we do not believe are indicative of our core operating
performance. We exclude the impacts of equitybased compensation to allow us to be more closely aligned with the industry and analyst community.
(3) We use Adjusted Diluted EPS as a supplemental measure of our performance and consider it to be useful to management and investors as a profitability measure to allow comparison of
our results to historical periods and forecasting of our results for future periods. We define Adjusted Diluted EPS as diluted net income per common share excluding the netoftax
impact of restructuring costs, noncash equitybased compensation, gains and losses on all disposals of assets, noncash asset impairments and writeoffs, gains and losses from foreign
currency transactions and special items.
(4) We define Free Cash Flow as cash provided by operating activities, less capital expenditures and product development costs and principal payments on capital leases. We consider Free
Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures
and product development costs and principal payments on capital leases, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and
strengthening the balance sheet. Analysis of Free Cash Flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation on the
use of this metric is that Free Cash Flow does not represent the total increase or decrease in cash for the period because it excludes certain nonoperating cash flows.
(5) Churn represents the percentage of AOL subscribers that are either terminated or cancel our services, factoring in new and reactivated subscribers. Monthly average churn is calculated
as the monthly average number of terminations plus cancellations divided by the initial AOL subscriber base plus any new registrations and reactivations for the applicable period.
(6) ARPU is calculated as domestic average monthly subscription revenue per AOL subscriber.
(7) Domestic AOL subscribers include subscribers participating in introductory freetrial periods and subscribers that are paying no monthly fees or reduced monthly fees through member
service and retention programs. Individuals who are only registered for our free offerings, including subscribers who have migrated from paid subscription plans, are not included in the
AOL subscriber numbers presented above. Additionally, only those individuals whose subscription includes AOLbrand dialup access service are included in the AOL subscriber number.
(8) AOL multiplatform unique visitors represent the estimated number of individuals who visited any content of a website or application owned by AOL or for which the traffic has been
assigned to AOL by the owner during the applicable measurement period. Additionally, AOL multiplatform unique visitor metrics also include visitors to AOLs syndicated video content
distributed on third party sites. The source for our unique visitor information is a third party (comScore Multiplatform, US).
(9) This presentation includes the financial measures Global advertising and other revenue net of TAC, Adjusted OIBDA, Adjusted Diluted EPS and Free Cash Flow, all of which are nonGAAP
financial measures. These measures may be different than similarlytitled nonGAAP financial measures used by other companies. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
(10) The income tax impacts of restructuring charges, equitybased compensation and asset impairments and writeoffs are calculated by applying the marginal tax rate to deductible items.
The income tax impacts of (gain) loss on disposal of assets and (gain) loss on foreign currency transactions are calculated by using the actual tax expense for the transactions.
(11) For the three months ended March 31, 2015, the marginal tax rate used was calculated based on AOLs 2015 projected normalized annual effective tax rate as of March 31, 2015. For
the three months ended March 31, 2014, the marginal tax rate used was calculated based upon AOLs 2014 projected normalized annual effective tax rate as of March 31, 2014.
17