Looking at the slide, with my limited accounting knowledge, it seems Google has managed to decrease the total cost of expense which contributed to the increase in revenue from Q1.
Cost of revenue = expenses that scale up directly with revenue. For a manufacturing company, this would typically consist mainly of what they pay to their suppliers. In Google's case, power and bandwidth are major items.
Gross profit = Revenue - cost of revenue
Operating expenses = costs that aren't directly tied to revenue, such as payrolls and building leases. Operating expenses also include depreciation of capital assets, the computation of which is somewhat of a black art.
