Google Inc. (NASDAQ: GOOG) reported first-quarter 2014 results after markets closed Wednesday. The search engine behemoth reported adjusted diluted earnings per share (EPS) of $6.27 on revenues of $15.4 billion including traffic acquisition costs (TAC). Analysts were estimating EPS of $6.41 on revenues of $15.5 billion according to The Wall Street Journal.

Excluding traffic acquisition costs of $3.23 billion, Google’s revenues totaled $12.2 billion for the quarter. The majority of TAC — $2.39 billion — was paid to Google’s network members. Another $845 million was paid to distribution partners and others who direct traffic to Google’s website.

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Paid clicks rose 26% year-over-year and declined about 1% sequentially, while cost-per-click fell 9% year-over-year and was flat sequentially. The paid-click rate fell short of an analysts’ estimate of 33%.

The company’s CEO said:

We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses.

Non-GAAP operating income rose on a dollar basis, from $4.4 billion in the same period a year ago to $4.95 billion this year. As a percentage of revenue, however, non-GAAP operating income slipped from 34% a year ago to 32% this year.

Cost of revenues rose from 17% of revenues a year ago to 18%, and operating expenses rose from 31% of revenues a year ago to 35% this year.

It’s costing Google more to acquire content and maintain its data centers, and the company’s revenues are growing fast enough to keep up with costs. This state of affairs is going to weigh down the stock price this evening.

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Shares are down 5.8% at $524.50 in after-hours trading today. The 52-week range is $518.46 to $604.83. No price target consensus has been added since the stock split.

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