Google beat analyst expectations in its first quarter, reporting turnover up 23 per cent year-on-year, and immediately reaffirmed its commitment to "heavy investment" in its core and newer businesses.

Google's revenue hit $6.77 billion (£4.4 billion) in the quarter, ended 31 March, up 23 per cent compared to the first quarter of 2009. Subtracting commissions and fees paid to its advertising network and other partners, revenue was $5.06 billion.

Net income came in at $1.96 billion, or $6.06 per share, compared to $1.42 billion, or $4.49 per share, in the first quarter of 2009, the company said on Thursday.

On a pro forma basis, which excludes certain one-time items, net income was $2.18 billion, or $6.76 per share, compared to $1.64 billion, or $5.16 per share, in the first quarter of 2009.

The consensus estimate from financial analysts polled by Thomson Financial had been for Google to report revenue minus commissions of $4.95 billion and pro forma earnings of $6.60 per share.

It has been a busy quarter for Google, which never seems far from controversy. In January, it shocked the world by saying it would stop censoring its search results in China, even if it meant being forced to leave the country. The following month it launched its Buzz social media service, which was promptly criticized for privacy lapses.

After a two-month impasse, Google stopped censoring results in China in March by redirecting Chinese users of Google Search, Google News and Google Images from to a site in Hong Kong.

Google explained the drastic move by saying it had been the victim of hacking attacks originating in China, through which Google intellectual property was stolen and the Gmail accounts of China human rights activists were compromised.

Despite dire predictions, the Chinese government doesn't appear to be blocking Google's services in the country any more than it has in the past, although government officials did condemn its decision to stop censoring. The company has even been able to retain its advertising sales staff and its research and development team in China.

Yesterday (15 March), Google Chief Financial Officer Patrick Pichette praised the way the company handled the China situation. "We still have sales [staff] in China, and the fact that we serve [search users] in and from Hong Kong doesn't stop us from having all the opportunities we want from the Chinese markets," Pichette said during a conference call to discuss the financial results.

Meanwhile, Google has tweaked Buzz several times since its launch to address the privacy concerns, and while the controversy has died down significantly, privacy advocates and the U.S. government still seem displeased with the service.

Google-owned sites generated 66 per cent of its revenue in the quarter, while partner sites accounted for 30 per cent. Fifty-three percent of total revenue came from outside of the U.S.

People clicked 15 per cent more times on Google search ads compared with the same quarter in 2009, while the average fee Google charges advertisers per ad click increased about 7 percent. Google makes most of its revenue from pay-per-click (PPC) search ads.

As Google has been pledging for years, officials again said the company is hard at work trying to diversify from the PPC text ads upon which it has built its empire. Susan Wojcicki, vice president of product management, said Google is targeting areas like mobile, display and search.

"We see a lot of opportunity to innovate in these categories and make the ads better and more useful. As we expand to new kinds of inventory beyond search, our goal is to enable high-performance, cross-media campaigns from within AdWords," she said.

For example, Google has started mixing photos, videos and additional information like stores and prices into search PPC ads, she said.

Google CEO Eric Schmidt, who is usually quite vocal on the earnings calls, was not present for the call this quarter.

As of 31 March, Google had cash, cash equivalents and short-term marketable securities worth $26.5 billion.

Google grew its global staff to 20,621 full-time employees from 19,835 full-time employees during the first quarter.

Google officials said that as the economy has rebounded, and online advertising along with it, the company has stepped up hiring, especially engineers, to boost technology development. Google is also looking to acquire companies.

Regarding its $750 million AdMob acquisition, Google officials said they feel certain the deal will not be blocked by U.S. regulators. The Federal Trade Commission has reportedly been assembling a team of litigators who may try to block the deal.