In another positive sign for Wall Street, Google on Thursday reported a year-over-year increase in its second-quarter revenue. The earnings suggest the online advertising market may be recovering even as the search giant's cost-cutting measures are paying off.

Google reported revenue of $5.52 billion for the quarter ended June 30, a modest increase of three percent compared to the second quarter of 2008. After accounting for the $1.45 billion it paid to advertisers, Google ended the quarter with $4.07 billion in revenue.

"Google had a very good quarter, especially given the continued macroeconomic downturn. While most of the world's largest economies shrank, Google's year-over-year revenues were up three percent," said Eric Schmidt, CEO of Google. "These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs. We remain focused on investing in technical innovation to drive growth in our core and new businesses."