Google's parent Alphabet Inc (GOOGL.O) reported a first-quarter adjusted profit that was lower than analysts' estimates, as cost per clicks fell.
Shares of the company dropped more than 5 percent in after market trading on Thursday.
Cost-per-click, or the average price of online ads, fell 9 percent in the quarter ended March 31.
Google's advertising revenue increased 16.2 percent to $18.02 billion, while the number of ads, or paid clicks, rose 29 percent, the company said.
With paid clicks, advertisers pay Google only if a user clicks on an ad.
The company's Other Bets business generated revenue of $166 million, and an operating loss of $802 million.
The Other Bets includes its broadband business Google Fiber, home automation products Nest, self-driving cars and X, the company's research facility that works on "moon shot" ventures.
Alphabet, the world's No.2 publicly traded company by market capitalization, said consolidated revenue rose to $20.26 billion from $17.26 billion.
Net income rose to $4.21 billion, or $6.02 per Class A and B share and Class C capital stock, from $3.52 billion, or $5.10 per share.
Excluding one-time items, it earned $7.50 per share.
Analysts on average were expecting a profit of $7.97 per share, according to Thomson Reuters I/B/E/S.
(Reporting by Narottam Medhora in Bengaluru; Editing by Savio D'Souza)
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