The company, which has been finding it hard to keep up with the shift to advertising on mobile phones, reported revenues, excluding sales passed on to partners, of $15.42 billion for the quarter that ended March 31, up 19 percent from the first quarter of 2013, but $100 million below analysts' estimate of $15.52 billion.
Net income was strong at $3.45 billion or $5.04 a share during the first three months of 2014, compared with $3.35 billion, or $4.97, a year earlier.
Google CEO Larry Page seemed upbeat about the results and said the company had completed "another great quarter."
"We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses," he added.
While Page has been able to attract more advertisers to buy promotions, with total volume rising 26 percent, the average price of the ad has dropped 9 percent. With smartphones having smaller screens the number of ads that can be displayed has been limited and advertisers have become very selective about using their ads.
According to IgnitionOne, cost per click for search advertising on smartphones dropped 35 percent during the first quarter in the U.S., whereas they rose 29 percent for tablets, which have larger screens like traditional desktops.
Google also spent a lot more on spreading its services, as expenses climbed 23 percent to $11.3 billion in the latest quarter, outpacing sales growth, which grew 19 percent.
“Mobile is perceived as the single biggest risk over the near-term,” said Scott Kessler, an analyst at S&P Capital IQ Inc. “Mobile is definitely helping Google and many others in the number of volume-related metrics, but mobile has also had a notable negative impact on pricing.”
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