Its revenue rose to $6.82 billion, from $5.52 billion in the year-ago quarter. Net revenue, which excludes commissions paid to advertising partners, was $5.09 billion, up from $4.07 billion a year ago. Google said that in the second quarter, paid clicks on Google sites and other sites that run Google ads grew 15 percent from the same period last year, and decreased 3 percent over the first quarter of 2010.
Though revenue beat analysts’ expectations, its profit missed expectations.
“It’s an incredibly talented pony, possibly the most talented pony we’ve ever seen, but we’re waiting for that second trick,” said Jordan Rohan, a managing director at Stifel Nicolaus and an Internet and digital media analyst.
Google has been testing out new tricks, including display ads and mobile phones, with its Android mobile operating system and acquisition of AdMob, the mobile advertising company, which was completed during the quarter.
Customers are activating 160,000 Android mobile devices a day, up from 65,000 last quarter, said Jonathan Rosenberg, senior vice president of product management at Google, in a call with analysts. And Google is developing new kinds of mobile ads. For instance, when Carnival Cruise Lines included a phone number in its mobile ad, bookings almost tripled, he said.
The display ad business is also growing well, Mr. Rosenberg said. Google is experimenting with new types of display ads, like expandable ads on YouTube and ads aimed at a specific audience, like young women who like basketball. More advertisers are running campaigns that include search, display and mobile ads. Google also announced that it had formed a partnership with Omnicon Media Group, the advertising company, to create a trading desk for display ads.
But none of these new businesses are generating significant revenue for the search giant yet.
“Search has slowed down and Google has more competition, but Google’s non-search business is not enough to move the needle,” said Sandeep Aggarwal, senior Internet and software analyst at Caris & Company.
In May, Google shuttered its online store selling the Nexus One mobile phone after poor sales. And while Google has hinted that YouTube, a hub for display ads, is on the verge of profitability, it did not announce on Thursday that the video site was profitable, as some analysts expected it might.
“What I can tell you is we’re incredibly pleased by its trajectory,” said Patrick Pichette, Google’s chief financial officer. YouTube videos with ads are viewed a billion times a week, he said.
As Google expands into new businesses, it continues to face increasing competition from many directions.
“Investors are curious about what Google feels like in a world where Apple controls a big chunk of the mobile world, Facebook controls a big chunk of the social world, and Google and Amazon vie for control of the commercial world,” Mr. Rohan said.
Google’s ambitious hiring and spending on acquisitions cut into its profit margins, even though the investments may pay off over the long term, analysts said. The company added 1,184 employees during the quarter, mostly in engineering and sales, bringing the total to 21,805 employees.
Google is also racking up legal and lobbying costs as it faces increased pressure from regulators. Most recently, antitrust regulators said they were looking into Google’s planned acquisition of ITA, which makes flight information software.
The company’s international business, which accounts for just over half of its revenue, has recently received good news. China renewed Google’s license to operate a Web site there after a standoff over the country’s Internet censorship rules, and business in Brazil, India and Russia grew during the quarter.
