Google Inc. (NASDAQ: GOOGL) reported third-quarter 2014 results after markets closed Thursday. The search engine behemoth reported adjusted diluted earnings per share (EPS) of $6.35 on revenues of $16.52 billion, including traffic acquisition costs (TAC). In the year-ago quarter, Google posted EPS of $5.63 on revenues of $13.75 billion. Analysts were estimating EPS of $6.33 on revenues of $16.57 billion, including TAC.

Excluding traffic acquisition costs of $3.35 billion, Google’s revenues totaled $13.17 billion for the quarter. The majority of TAC — $2.4 billion — was paid to Google’s network members. Another $927 million was paid to distribution partners and others who direct traffic to Google’s website.

Google’s cost of revenues rose from $5.41 billion in the third quarter of last year to $6.7 billion this year, a jump of nearly 24%. Total costs and expenses rose 28% from $9.99 billion to $12.8 billion.

Other cost of revenues rose from 18% of revenues a year ago to 20%, and operating expenses rose from 33% of revenues a year ago to 37% this year.

Paid clicks rose approximately 17% year-over-year and rose about 2% sequentially, while cost-per-click fell approximately 2% year-over-year and was flat sequentially. The paid-click rate fell short of an analysts’ estimate of 33%.

Net cash from operations totaled $5.99 billion, up from $5.08 billion a year ago, and free cash flow was $3.58 billion, up from $2.79 billion in the third quarter a year ago.

Non-GAAP consolidated net income was $4.37 billion in the third quarter of 2014, compared to $3.82 billion in the third quarter of 2013. Stock-based compensation for the quarter totaled $1.26 billion, up from $856 million in the same period a year ago.

Operating cash flow rose about $900 million year-over-year, but investors are likely to focus on the rise in expenses and the slight miss on ex-TAC revenues.

Google did not offer a forecast, but the consensus fourth quarter estimates call for EPS of $6.97 on revenues of $14.6 billion. For the full year, analysts forecast EPS of $25.66 on revenues of $52.66 billion.

Shares were trading down about 2.9% at $509.30 in after-hours trading. The 52-week range is $502.80 to $604.83, and shares closed Thursday at $524.51. Thomson Reuters reported a consensus price target of around $678.30 before the earnings report.

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