AOL: Patch Remains on Path to Profitability, Expenses Cut 30%

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Patch saw a 19% year-over-year bump in traffic during September, bringing monthly unique visitors across the property to 11.9 million, according to AOLs second quarter earnings report.  During its Q3 earnings call Tuesday, the company reassured investors that the hyperlocal network remained on track to achieve run-rate profitability by Q4 2013, driven by, what AOL COO Artie Minson called, continued revenue growth and “an expense base that was 30% lower than last year.”

Minson attributed the lower costs to recent efforts by the company to combine towns and “more efficiently [structure] the Patch operations” — likely referring to reported cutbacks to its editorial operations that have come as the company looks to push toward a more user-driven model. Patch released a major redesign to handful of alpha sites in October with a distinct focus on user-generated content as the company looks to mitigate expenses and increase engagement in what AOL CEO Tim Armstrong called “phase two” for the hyperlocal initiative.

Armstrong remained mum on the progress for the alpha sites, saying only that traffic numbers were “comparable overall” to the original sites and that “[the alpha sites] have not seen huge spikes up or down in usage.” Its remains early days in the pivot, but the success of the redesign likely rests on forthcoming revenues models built around the increased engagement seen in the alpha sites.

Part of the reason Armstrong remained hesitant to release specific figures was that Patch, as a whole, saw a big bump in the wake of Sandy. Traffic on the 329 sites affected by the storm quadrupled over the past two days, with social traffic doubling. Last Tuesday, the day after the storm hit, was the single highest traffic in the network’s history — twice as high as the previous record.

It remains unclear to what extent the traffic spikes driven by Sandy, and the elections, will translate into sustained growth, but key actions like mobile app downloads, which increased seven fold after the storm, should help convert news users in brand consumers.

Steven Jacobs is deputy editor at Street Fight.

Related: Patch Redesign Emphasizes Social as Path to Revenue Growth