Google Inc. reported its earnings and revenue increased less than expected in the third quarter, while the search giant also posted a slowdown in paid clicks on advertiser links next to its search results.

Shares dropped about 2% after hours.

Google GOOG, -0.35% has reported sharp top-line growth for several quarters as it tries to capitalize on booming growth in mobile and video advertising. The company's total revenue increased 20% to $16.52 billion in the latest period, but missed the $16.57 billion expected by analysts polled by Thomson Reuters.

Revenue from Google's own properties, which includes a lot of its main search advertising business, jumped 20% to $11.25 billion. Meanwhile, revenue from the network business on partner sites, which includes display advertising, climbed 9% to $3.43 billion.

The rising use of smartphones is driving more clicks on paid advertisements in searches—the major source of Google's revenue—but advertisers pay less for clicks from mobile devices because they lead to fewer sales.

Overall, the company posted a profit of $2.81 billion, or $4.09 a share, down from $2.97 billion, or $4.38 a share, in the same period a year earlier. Excluding stock-based compensation and other expenses, Google earned $6.35 a share, up form $5.63 a year earlier. Analysts called for earnings of $6.53 a share.

An expanded version of this report appears at WSJ.com.

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