Google Inc's results soundly trounced Wall Street's most bullish expectations, sending its shares up 12 percent and easing concerns that its battle with Facebook and Twitter is costing too much and hindering growth.
The Internet giant's flagship search advertising business, combined with new efforts like display and mobile advertising, boosted the company's revenue by 36 percent in its first three months under the helm of new Chief Executive Larry Page.
The media-averse Page, who provoked grumbles by saying only a few words on the last quarterly earnings call, ticked off a string of fresh statistics on Thursday that underscored the company's progress on various fronts, including the strong start for its 2-week old social networking service.
Page told analysts the company had signed up more than 10 million people for Google+: the company's biggest foray into the hot social networking arena and the vanguard of its battle with Facebook and Twitter for websurfers' time and attention.
Google is fighting technology heavyweights that also include Apple Inc and Microsoft Corp, as well as upstarts such as Groupon, as it seeks to protect its lucrative search business at a time when mobile gadgets and social media are redefining the way consumers use the Web.
"Google should be viewed as a growth company again this quarter," said Stifel Nicolaus analyst Jordan Rohan. "The combination of mobile search, Android, ad exchange, YouTube, and the core search businesses, they're all doing well. Google is no longer a one-trick pony."
"The number to focus on is really the GAAP earnings number. Google spent aggressively, hiring just as many people this quarter as the did last quarter."
Investors had feared Google's ever-increasing spending would eat into margins. Operating expenses leapt 49 percent to $2.97 billion in the second quarter, to about a third of revenue.
Analysts said the big increase in sales more than compensated for the rise in costs, but Google might find it increasingly difficult to shore up margins while it continues to hire, acquire and invest.
"Revenue growth overrides the hiring and the expense issues," BGC Partners analyst Colin Gillis said in response to the share price jump.
"Nice quarter from the guys, but you still have a situation of declining margins," he added.