July 15, 2011 / 16:40 IST
Google Inc's profit grew roughly 36% in the second quarter, even as spending at the Internet search leader continued to rise.
Google shares were up 11.7% at USD 590.96 in after-hours trading.
Google posted net revenue, which excludes fees paid to partner websites, of USD 6.92 billion in the second quarter, compared with USD 5.09 billion in the year-ago period.
Net income in the second quarter was USD 2.51 billion, or USD 7.68 a share, up from USD 1.84 billion, or USD 5.71 a share, in the year ago period. The company's operating expenses were up 49% year-on-year at USD 2.97 billion.
"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 they did last quarter."
Investors had feared Google's ever-increasing spending would eat into margins. But analysts said the big increase in sales more than compensated for the rise in costs.
"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."
Chief Executive Larry Page is expected to face analysts' questions on a conference call on Thursday regarding not just its spending and margins, but also newly released social networking service Google+, an effort to take on Facebook and Twitter, which are siphoning off websurfers' time and attention.
Before the earnings, some analysts had argued that the launch of Google+, its biggest foray so far into the hot field of social networking, may take some of the heat off the company for its spending and make Wall Street more comfortable with co-founder Page, who took the CEO reins in April.
Investors are hungry also for details about an investigation by the US Federal Trade Commission into Google's business practices, as well as any commentary about how the European debt crisis is affecting its advertising business.
