Internet search engine Google reported lower profits in the second quarter of 2007 as operating expenses increased from $972 million (£473.7 million) in the first quarter of 2007 to $1.21 billion (£0.58 billion) in the second quarter of 2007.
As a result, Google's profits for the second quarter fell to $925 million (£450.9 million) from the $1 billion (£0.487 billion) achieved in the first quarter of this year.
The company blamed the higher expenses figure on a sharp increase in payroll-related and facilities costs. These expenses increased from $506 million (£246.6 million) in the first quarter to $625 million (£304.6 million) in the second quarter.
However, Google reported growth in revenue. The company achieved a six per cent increase in revenue to $3.87 billion (£1.88 billion) on the previous quarter and an increase of 58 per cent in revenue compared with the corresponding period of 2006.
Google chief executive officer Eric Schmidt said: "Our performance once again demonstrates the strength of our core search and ads business.
"The growth in our global traffic combined with our ongoing improvements in monetisation resulted in solid revenue growth, even in a seasonally slow quarter."
Speaking to CNN about the increase in expenses, Mr Schmidt said: "We overspent against our own plan in the area of head count.
"We will continue to watch this in the future," he added.
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