Google reported its third quarter earnings after the close of the US stock exchange today and, as it has done more than a few times in the past, the Mountain View company delivered more than analysts were expecting.

Net revenue in the quarter was $4.38bn with earnings per share of $5.89. Analysts had expected $4.24bn in net revenue and $5.42 in earnings per share. All told, total revenue was up 7% year-over-year. So the good news: Google is managing to grow even in a very tough economic environment. The bad news: growth is, by past standards, a bit modest.

Google CEO Eric Schmidt is clearly hoping that won’t be the case for long. In the company’s press release, he stated:

While there is a lot of uncertainty about the pace of economic recovery, we
believe the worst of the recession is behind us and now feel confident about
investing heavily in our future.

Time will tell if he’s right, and whether the end of the Great Recession will mean a return to ‘good times‘. But there’s no doubt that Google’s core business has managed to do quite well given the circumstances. Year-over-year, paid clicks were up 14% in the third quarter compared to Q3 2008 and up 4% from the second quarter of this year. The average cost per click was down 6% year-over-year but increased 5% quarter-over-quarter, perhaps indicating that many of the advertisers who had cut spending or left the market during the worst of the recession have returned and are bidding up keywords again.

The question for Google now is where it goes next. While there’s no doubt that the recession has impacted growth, it’s also clear that Google is a mature company whose cash cow can only keep growing so fast. Today, it more closely resembles an industry veteran like, say, Microsoft, than a fast-growing upstart like, say, Facebook. It has a lot of things going on (YouTube, Android, the upcoming Chrome OS) but none yet look like they will propel massive revenue growth in the near future.

Will Google look elsewhere for this growth? With $22.0bn in the bank as of September 30, there are no shortage of acquisition opportunities. If Eric Schmidt really feels the worst is behind us, it wouldn’t be surprising to see Google make some moves over the next few quarters.

Photo credit: dannysullivan via Flickr.