Here's Google's official release on its results.

October 16, 2014 - Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2014.

“Google had another strong performance this quarter, with revenue up 20% year on year, at $16.5 billion,” said Patrick Pichette, CFO of Google. “We continue to be excited about the growth in our advertising and emerging businesses.” Google Inc. Announces Third Quarter 2014 Results [investor.google.com]

Google Inc. reported consolidated revenues of $16.52 billion for the quarter ended September 30, 2014, an increase of 20% compared to the third quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2014, TAC totaled $3.35 billion, or 23% of advertising revenues.

Q3 Financial Highlights

Revenues and other information - Google Inc. revenues for the quarter ended September 30, 2014 were $16.52 billion, representing a 20% increase over third quarter of 2013 revenues of $13.75 billion.

Sites Revenues - Our sites generated revenues of $11.25 billion, or 68% of total revenues, in the third quarter of 2014. This represents a 20% increase over third quarter of 2013 sites revenues of $9.38 billion.
Network Revenues - Our partner sites generated revenues of $3.43 billion, or 21% of total revenues, in the third quarter of 2014. This represents a 9% increase over third quarter of 2013 network revenues of $3.15 billion.
Other Revenues - Other revenues were $1.84 billion, or 11% of total revenues, in the third quarter of 2014. This represents a 50% increase over third quarter of 2013 other revenues of $1.23 billion.

International Revenues - Our revenues from outside of the United States totaled $9.55 billion, representing 58% of total revenues in the third quarter of 2014, compared to 58% in the second quarter of 2014 and 56% in the third quarter of 2013.

Our revenues from the United Kingdom totaled $1.63 billion, representing 10% of total revenues in the third quarter of 2014, compared to 10% in the third quarter of 2013.

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[news.sky.com ]

The Internet search leader earned $2.81bn (£1.75bn) for the three months ending in September compared to income of $2.97bn in the same period last year - a fall of 5%.

interesting part:

Google's average ad prices in the third quarter dipped by just 2% from last year - the smallest decrease during what is now a three-year slump in the prices paid to Google for ads appearing alongside search results and other Web content.
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Google has been able to offset the lower ad prices by inducing people to click on marketing links more frequently.

my emphasis on an *odd* statement

The BBC story reads a little different [bbc.com ]

Turnover is vanity, profit is sanity. The profits slid 5% and ad prices slid 2%. The markets aren't impressed with Google's result.

20pct higher is good, but Google have been spending a lot on betting for future gains. Can anything be as profitable as its ads programmes? I somehow doubt it, in the short to medium term. I suspect the Google executives are looking to the long term.

I knew this party wouldn't last forever. Google has been artificially pumping up YoY % growth in paid clicks for quite some time.

This is the first quarter where their strategy is starting to fall apart.

They've pretty much used every trick they can to move clicks from organic to paid, and they are out of tricks :)

Ad impressions generally grow at 20% per year. (source: presentation, Alex Blaikley, Industry Head at Google, "The future of Display Advertising", page 10)

Yet, on 20% growth YoY on impressions, Google was, for a long time showing huge % YoY growth in paid clicks:

% YoY Growth in paid clicks
Q2 2013 - 23%
Q3 2013 - 26%
Q4 2013 - 31%
Q1 2014 - 26%
Q2 2014 - 25%

But, now it looks like growth is tied more closely to growth of impressions. In other words, they can't push more clicks from organic to paid without doing something really drastic.

Q3 2014 - 17%

A downturn in profits is inevitable because they are choking off the very people who buy ads, merchant webmasters. You can only go to the well so many times before it dries up. They've been taking some ridiculously large scoops in recent years.

The reality is, when Google is up, the Mom & Pops go down. Those gains are unsustainable, but as GG said "Greed is Good". Maybe they could add that to their mission statement.

Key quote from the NY Times story:

But research-and-development costs have soared, to $2.7 billion from $1.8 billion from the same quarter a year ago.

R&D = bad? I guess the answer depends on your attention span.

If they mean R&D on projects like Calico or mining asteroids for water or maybe researching better gourmet lunch selections, I'd say that's a waste of money.

If they want to do good and be loved, try using those massive resources to make our lives and communities better NOW. Not for stopping death, sourcing premium shellfish or finding water when 2/3 of the planet is covered in it.

R&D = bad?

The article doesn't say R&D is bad. It questions the wisdom of adding $900M to spend when revenue growth is slowing.

“People are certainly concerned about the expenses,” said Ben Schachter, an analyst with Macquarie Securities. “Revenue growth is slowing ...As long as the core business holds up, that’s fine, but if the core slows dramatically, that’s a problem.”

I'm sure they will surprise us with some absurd "new feature" that everybody is automatically opted in costs us more money. That seems to be there way of doing business. I still can't believe they do forced remarketing by showing our ads on searches we did not bid on. It still blows my mind that I can do a search for red shoes then a search for RV parts and get an ad for red shoes.

The markets aren't impressed with Google's result.

You can say that again. GOOG is down almost 3% on a day when the markets are soaring.

I'm sure Google will find a way to use their search engine to squeeze out more profits. Just one more paid at the top might satisfy shareholders today. A month from now there may be two additional paid ads at the top. A year from now the whole first page may be paid ads.

Google moves in slow steps to avoid a large group of people from crying foul.

Well, they're obviously doomed if their revenues are up only 20 percent.

my emphasis on an *odd* statement

I think it tries to explain the CTR. CPC is down but due to high CTR earnings are up.

Dangerous game google are playing. You could argue CTR may have increased due to low quality score of serps.

CPC is down and they have lost shopping results to Amazon.

I think they'll bounce back but these are not outstanding reports,

Poor SERPs and blended ads might have had an effect. Amazon dominating shopping is the real killer. A similar thing happened about ten years ago with the rise of Wikipedia. Google used to be the best generic search engine until people remembered to go directly to Wikipedia. Now Google plasters SERPs with plagiarised Wikipedia content. Of course the shills are still shilling for Google but the market is changing. Amazon has shopping. Facebook/Twitter have social media. Ebay has auctions. With decreasing SERPs quality, all Google will have is adverts - but for how long?

Regards...jmcc

Well, they're obviously doomed if their revenues are up only 20 percent.

Revenues and profit are two different things.

Google pays no dividends. An investor buying their shares now can only hope to make money if the price rises. This won't happen if profits are falling. Retrenchment can be very painful for a business the size of Google.

Correct me if I'm wrong but I seem to recall that they have never had a profit fall in their history to date. This may be a one-off of course but if this trend continues Google certainly won't collapse but they could be severely weakened. This not a good time for falling profits when Europe is flexing it's muscles over tax, privacy, their stranglehold on mobile and alleged market abuse.

Revenues and profit are two different things.

Indeed.

Tax is only paid on the latter.

This not a good time for falling profits when Europe is flexing it's muscles over tax

Starbucks, with billions in revenue from over 700 outlets in UK, claims to make no profits there at all.

Amazon and others are apparently doing little better, despite massive revenues.

The most important people at a multinational corporation are the accountants.

...

I think Google have peaked. The crushed small merchants have left or gone to amazon and that leaves corporate money mostly. Expedia and booking.com make up a huge % of their bottom line and oh how I wish someone would smash them to pieces.

My dream is that everyone installs and add blocker and punishes them :)