Google's second-quarter profit exceeded analyst estimates, earning $1.48 billion, or $4.66 per share, during the three months ended in June. That's up from $1.24 billion for the same period last year.
Still, shares fell by nearly 3 percent in Thursday's extended trading after the results were released, indicating that the performance was a letdown for investors.
"Google had a very good quarter, especially given the continued macro-economic downturn," Eric Schmidt, chief executive of Google, said in a written statement. "These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs."
Revenues rose a slight 3 percent to $5.52 billion, Google's lowest growth rate since the company went public five years ago. This is the second consecutive quarter that the company has only had single-digit revenue growth. In years past, that rate was never below 30 percent.
Google still makes nearly all of its revenue from ad sales. The company had its first-ever quarterly profit drop in the fourth quarter of 2008, when ad sales slowed during the recession.
Analysts polled by Thomson Reuters had estimated that shares would cost $5.09 each, and Google said it would have made $5.36 per share if it weren't for stock compensation expenses.
The company's net revenue was $4.1 billion after subtracting ad commissions. Google was able to ramp its profits up despite sluggish ad sales because of cost cutting and a low tax rate of 20 percent. In June, Google had 19,786 employees -- a 378 person reduction since March.
Google remains leader in the Internet search field, with 65% of market share in June, according to a report released earlier this week by online data tracker comScore. Trailing behind Google is Yahoo wth 19.6% of the market, followed by Microsoft's new search engine Bing, which has already garnered 8.4%.
The company's shares fell $12.40, or 2.8 percent, after finishing the regular session at $442.60, up $4.43.
