Net earnings for the quarter ended March 31, excluding one-time charges, reached $271 million, or 11 cents a share, on revenues of $1.8 billion. That's a 47 percent increase from the $1.25 billion in revenues during the same period last year, the company said.
Analysts expected AOL to earn 9 cents a share, according to a consensus of analysts polled by First Call.
AOL shares today closed up $1.75 at $60.50. The earnings report was issued after the close of regular trading.
Driving the past quarter's growth was a 103 percent increase in advertising and commerce revenues to $557 million, up from $275 million in the same quarter last year.
Subscription revenues totaled $1.15 billion, up 33 percent from $869 million during the same period last year. The company added 1.7 million new subscribers for a total of 22.2 million as of the end of the quarter.
Jordan Rohan, an analyst at Wit Capital, described the quarter as "ferocious." He noted that AOL's advertising revenues vastly beat even Wall Street's most aggressive estimates. That could indicate that AOL's lead in the market may be expanding.
"This is a very high-margin revenue, and I think this type of outperformance is a true acceleration of growth for the company," Rohan said. "They're gaining market share substantially, and the viability of their promotional platform has never been stronger."
Although analysts applauded AOL's strong earnings performance and last week's similarly strong report from Time Warner, some pointed out ongoing uncertainties regarding the companies' proposed merger. Questions about executives' roles and a potential ego or culture clash remain unresolved.
"Will the management teams be able to get along? The early indication is, yes, they will," said Youssef Squali, a research analyst at ING Barings. "But there's a cloud of uncertainty around it."
Nevertheless, the quarter was marked by some significant moves by AOL. Time Warner and AOL presented their initial pledge to open their cable lines to outside ISPs, formally ending an ongoing battle against AT&T for open access. In addition, AOL unveiled its next-generation browser, Netscape 6.0, which the company views as a concerted step toward developing browsers for non-PC devices.
On the cable access front, AOL's Case said the company is close to striking a deal with Time Warner Cable to offer high-speed Internet access. Such a deal would mark AOL's first step toward offering high-speed Internet upgrades to its existing service.
"It's highly likely we'll complete a deal before the merger and highly likely we will complete the deal this quarter," Case said during a conference call to Wall Street analysts.
Case added that the deal would serve as a precursor to how the company may create deals with ISPs looking for carriage on Time Warner Cable's network. AOL and Time Warner are working out the deal's specifics, such as consumer pricing, Case said.
As for the launch of Netscape 6.0, both Case and AOL president Bob Pittman touted the browser as a centerpiece for "AOL Anywhere," the company's push to spread its services beyond the PC. Case shooed speculation that the launch of Netscape 6.0 and its accompanying Gecko technology was a shot across Microsoft's bow in the browser wars. Instead, he viewed the launch as turning over a leaf for Netscape, possibly injecting new life into the division.
"We think there is an opportunity for a fresh start for Netscape," Case said.