Google's quarterly revenue beat Wall Street's target despite an ongoing decline in prices for its online ads and deepening losses at Motorola, the handset-making division to be sold to China's Lenovo.
Google executives said it benefited from strong demand from brand marketers and retailers in the fourth quarter, as well as healthy demand for online ads in international markets.
"In the holiday season one thing has become very clear, the Web has truly become the new holiday store window," Google's chief business officer Nikesh Arora said.
Paid clicks on Google's online ads jumped 31% during the typically busy Christmas quarter, but the average cost per click that marketers paid the company slid 11%.
Google's advertising rates, like those of other Internet companies including Yahoo, has been under pressure as more consumers access its online services on mobile devices such as smartphones and tablets, where advertising rates are lower than on PCs.
Motorola, which Google has agreed to sell to China's top PC maker for $2.91 billion, saw operating losses of $384m in the quarter, more than double the $152m loss from a year earlier.
The Internet search giant has struggled to turn the unit around in the face of steep competition from Apple, and the sale of the loss-making unit is considered a positive for Google.
Google's consolidated revenue, which includes the money-losing Motorola smartphone business, rose to $16.86 billion from $14.42 billion in the fourth quarter of 2012. Analysts were looking for $16.75 billion.
Revenue in Google's core Internet business totaled $15.7 billion in the last three months of the year, up 22% from the $12.91 billion the same time the previous year.
Google's consolidated net income was $3.38 billion, or $9.90 per share, compared to $2.89 billion, or $8.62 per share, the same the previous year.
Excluding certain items, Google said it earned $12.01 per share, below analysts' expectations for about $12.20.
The company has an Irish workforce of over 3,000.