Google Earnings Beat, but Revenue Misses

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Google reported quarterly earnings that topped market expectations, supported by strong growth in its core advertising business.

After the earnings announcement on Thursday, the company's shares gained. (Click here for the latest after-hours quotes.)

Revenue in the Internet giant's core business grew 22 percent to $9.99 billion, excluding traffic acquisition costs, from $8.14 billion a year earlier.

Revenue from advertisers measured in cost per click has a major effect on Google's margins. Average cost-per-click, which measures how much an advertiser pays when users click on ads, decreased approximately 4 percent over the first quarter of 2012. That's an improvement from the 6 percent year-over-year decline recorded in the fourth quarter.

Paid clicks, which measures how often users click on Google ads, rose about 20 percent over the first quarter of last year.

(Read More: Fast Money: What to Make of Google Earnings)

The Internet giant posted first-quarter earnings excluding items of $11.58 a share, up from $10.08 a share in the year-earlier period.

Consolidated revenue, which includes the Motorola business and traffic acquisition costs, increased to $13.97 billion from $8.14 billion a year ago.

Analysts had expected Google to report earnings excluding items of $10.66 a share on $14.09 billion in revenue, according to a consensus estimate from Thomson Reuters.

Ben Schacter, an analyst with Macquarie, told Reuters, "Google.com seemed to be doing fine but the network was a bit light. Considering some of the scares around Europe, it's not nearly as bad as it could've been."