SAN FRANCISCO — After years of big spending on risky projects that CEO Larry Page proudly hails as "moonshots," Google may be launching into a new orbit of financial discipline.
Investor hopes for a more austere Google are largely tied to the arrival of a new chief financial officer, Ruth Porat. She joined Google in late May, about two-thirds of the way through the Internet company's second quarter. Thursday's release of Google's report covering that period indicates that Porat already may be shaking things up.
Excluding stock compensation expense and several other items, Google earned $6.99 per share — topping the average estimate of $6.70 per share among analysts surveyed by FactSet.
The pleasant surprise ended a streak of six consecutive quarters in which Google's earnings missed the analyst estimates that steer investors' perceptions about publicly held companies. Investors welcomed the change as Google's stock gained $43.90, or 7 percent, to $645.68 in extended trading after the numbers came out.
"It's like, 'Wow, look Ruth is already doing her thing,'" said BGC Financial analyst Colin Gillis.
Google could have been making more money all along if the growth in its expenses hadn't consistently been rising at a faster pace than its revenue, Gillis said.
The company's rising costs have been driving primarily by a hiring spree and its commitment to "moonshots" that have little or nothing to do with its main business of Internet search and advertising. The list of far-flung projects include self-driving cars, Internet-beaming balloons, medical research and even a recently launched initiative to change the way cities operate.
Google's operating expenses climbed 13 percent from last year in the second quarter, slightly eclipsing an 11 percent increase in the company's revenue to $17.7 billion.
Porat signaled that may change in future quarters. While Google will continue to explore promising opportunities, Porat pledged to do so "with great care regarding resource allocation."
Porat had impressed Wall Street with her budget management while holding the same job at investment bank Morgan Stanley for five years.
The expansion into new areas has come as Google faces more competitive threats from other big Internet companies such as Facebook and Amazon.com Inc. while mobile applications make it easier for people to find what they need in other places besides Google's search engine. The average prices for most of Google's digital advertising has been steadily declining since 2011, partly because marketers haven't yet been willing to pay as much money for commercial messages shown on the smaller screens of smartphones instead of personal computers.