The search giant has seen a big bump in quarterly profit, but flat revenue. More people are clicking on its Ad Words than a year ago, but advertisers are paying less per click.

For its quarter ending June 30, Google reported profit up 19% to $US1.48 billion, on revenue that increased 3% to $5.52 billion.

Chief executive Eric Schmidt said Google had enjoyed a “very good quarter ... While most of the world’s economies shrank, Google’s year-on-year revenues were up.” Mr Schmidt said the results proved the strength of its business model, and its efforts to cut costs “in a way that puts us in a good position of the economic upturn”. However, the Google boss did not take a punt on when that upturn might arrive.

The number of people clicking on Google Ad Words was up 15% from the year-ago quarter, but down 2% over the first quarter of 2009.

The situation was turned on its head for Google’s average cost-per-click metric, which includes Google ads serviced on other sites by AdSense partners. Advertisers paid 13% less per click than during the year-ago period, but 5% more over the first quarter of 2009.

Cut backs see Google’s workforce at 19,786 from the year-ago 20,164 - the first time the company has reduced staff during its 10-year history.

At its results conference call this morning, Google is expected to face questions about its YouTube video sharing site. A recent Credit Suisse report speculated the company is losing up to $US500 million a year on YouTube between hosting costs, and having to buy in commercial content for advertisers wary of their messages appearing around community content.

Google finished the quarter with $US19 billion in cash and short-term investments.

The company's shares (NAS: GOOG) were up 1.3% in regular trading, but were down more than 3% after hours.