With Patch Revenue Up 100% in Q2, Armstrong Hints at ‘Second Phase’

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Patch revenue is up 100% year-over-year in Q2 of 2012 and traffic is growing at “double-digit rates,” according to the company’s second quarter earnings report. The hyperlocal network is also gearing up for what AOL CEO Tim Armstrong calls, “phase two” of its product roadmap, which will focus on adding the ability for “high-level community involvement in a very precise way on the Patch platform.”

In an earnings call with investors this morning, the hyperlocal network’s co-founder said that expansion scheduled for the fall would allow Patch to do news and directory listings at “high scale,” while building in key commerce initiatives. “If you take the town as a campus … there’s also an ability for us to mimic the way in, which people in towns live their lives – including commerce,” Armstrong said.

According to Armstrong, Patch is working on two initiatives that will allow the company to “interact with businesses in a much more high-scale way” and play a bit more on “the direct commerce front.” The specifics of the new product remain unclear, but Armstrong is positioning the release as a major step forward for the closely watched entity: “When you see it, you’ll understand why,” he said.

Armstrong’s analogy of the town as a “campus” is indicative of the way in which Patch is approaching its monetization (and even product) strategy. The idea appears to be to disrupt the wider offline activities of the local consumer by replicating them within the Patch network. Starting with information — everything from business listings to news content — the company now appears to be moving towards the commercial framework that facilitates and manages commerce within a local network.

While Armstrong said that there are still “significant opportunities” in the existing advertising channels, real revenue growth for Patch will rely on a multi-stream approach. Information (and advertising as a subset) is a first step, but other facets of consumers’ hyperlocal lives like commerce and social, which Patch still has yet to broach, are equally valuable.

According to AOL’s newly-promoted COO Artie Minson, Patch’s expenses are coming down sequentially as its continues to “find ways to optimize the operating structure.” Minson also reassured investors that the company was “very confident” of the $40-50 million revenue guidance given earlier in the year.

Steven Jacobs is deputy editor at Street Fight.