Google has announced its first quarter financial earnings, and so far the results look decent — given the economic climate. The search giant reported net revenue of $5.5 billion, or $5.16 per share. In terms of historic earnings, Google’s Q1 performance was actually down 3 percent compared to Q4 2008, and up 6 percent in comparison to Q1 2008.

The company’s net profit came in at $1.42 billion for the quarter, or $4.49 a share. Although hardly explosive growth, this still represents a modest increase from last year’s $1.31 billion in revenue, and $4.12 a share.

As for the market’s expectations, Google’s performance wasn’t that bad. Analysts were expecting revenue drops as low as 13 percent for the quarter and 2 percent for the year. Still, it’s worth noting that Google’s Q1 performance represents the company’s first quarter-over-quarter decline. However, given the current economic climate, the market still apparently views the company’s performance favorably. At the time of this posting GOOG shares are trading at $388.74, which is an increase of $9.24.

Below is a quick hit on some of the highlights. For the full monty, be sure to check out the company’s release:

  • Free Cash Flow: Low capital expenditures allowed Google to clear a whopping $2.2 billion in free cash flow. Market estimates pegged the company at $1.8 billion. CEO Eric Schmidt joked that the money isn’t “burning a hole in our pocket,” and said the company will remain fiscally conservative.
  • Networks Revenue: Google’s AdSense program saw a 3 percent revenue dip compared to both Q4 and Q1 2008. CFO Patrick Pinchette says an overhaul of network partners and slower spending by advertisers was largely to blame.
  • Paid Clicks: Google saw a 17 percent increase in paid clicks year-over-year (3 percent quarter-over-quarter). This safely beat out analysts’ expectations of a 13 percent decrease.
  • Personnel Changes: Omid Kordestani, Senior Vice President for Worldwide Sales, is moving to the role of Senior Advisor for Eric, Larry, and Sergey. Current President of Operations, Nikesh Arora, will step in as Kordestani’s successor.
  • Head Count: Layoffs in Q1 produced the company’s first hiring dips. Today the company has 20,164 employees, compared to 20,222 at the end of Q4. Despite, this the company is still hiring (in certain areas).
  • YouTube: Executives say advertising and studio deals are still a priority (with new announcements coming very soon), and a new micropayments system on the way.
  • Android: Schmidt says 8 percent of mobile browsing is done on Android phones — second only to iPhone users. The company also expects a big year for the open source operating system, with forthcoming announcements from hadware partners.