AOL’s quarterly earnings are in and things aren’t looking too bad for the company. Advertising revenue is up 5% year-over-year, and diluted earning per share reached an incredible $0.22, which is much higher than experts were predicting (they predicted around $0.08 per share).

The bad news is subscription and other revenues fell 15% and 27% respectively. This drop makes for an overall 4% decrease in total revenue at AOL. One thing they had working for them was a dramatic decrease in the amount they were investing back into restructuring.

Chairman and CEO, Tim Armstrong comments on the results on AOL’s performance during the first quarter of 2012:

“AOL is a much stronger company today than a year ago and began 2012 by growing advertising revenue, lowering expenses and improving Adjusted OIBDA trends,”

“In 2012 and beyond we are simultaneously focused on the continued successful execution of our strategy and on creating and unlocking value for our shareholders.”

So overall things look pretty good for AOL, but one thing that stands out on the report is the 1% drop in domestic advertising revenues. This is a key component to their financial health, and I have to wonder were they are going wrong. According to All Things D, the advertising team over at AOL was falling down on the job and some big clients discontinued their ads on the platform.

I don’t know if we can expect much to change in this next quarter, but things seem to be headed in the right direction overall. We will keep on on them in the coming months as they continue to tweak their ad platforms. Who knows, it could be an opportunity for some big growth if they get it right.