Google Announces YouTube Revenue For 1st Time: $15 Billion
Google gave investors a look at fourth quarter revenue for the YouTube video platform, showing impressive growth despite parent company Alphabet missing overall analyst estimates in Q4.
YouTube generated $15 billion in ad sales in 2019, up 36 percent from $11 billion the previous year. On a conference call with analysts, Alphabet CEO Sundar Pichai also provided some transparency on YouTube’s subscription business. YouTube has:
- 20 million paid subscribers on YouTube Music and Premium
- 2 million U.S. subscribers on YouTube TV, the company’s “cord-cutter” service.
The growth in YouTube’s ad business was driven mostly by brand advertising and “direct response” advertising such as click-to-buy ads that run on product review videos.
The information should give advertisers valuable information about the importance of YouTube as a digital ad vehicle, said eMarketer analyst Nicole Perrin in a statement Monday. “This is something investors have been looking for.” But the big news is that Google is breaking out YouTube ad revenues for the first time, Perrin said.
In the quarter ending Dec. 31, Alphabet reported $46.07 billion in sales, missing analyst estimates of $46.94 billion, the company said Monday. However, earnings per share were up at $15.35, exceeding expectations of $12.53 per share, according to Thomson Reuters.
In the past, the company has broken out only the finances for Google’s advertising business and “other” areas of business, lumping together key segments such as YouTube, cloud and search, CNN reported.
YouTube is an increasingly important part of Alphabet’s business as people search beyond Google’s homepage. However, the Google platform, which has more than 2 billion visitors a month, has also become a major source of controversy for Alphabet. YouTube has been trying to get rid of content on the site that promotes child exploitation and extremism.
This marks the company’s first earnings report since Pichai took over as CEO of Alphabet, and the first time it has released revenue figures for YouTube, CNet reported.
Analysts appreciated the transparency.
“Thank you so much for the enhanced disclosure,” Goldman Sachs analyst Heather Bellini said on Alphabet’s earnings call Monday evening. “I think this is the best Google call — or Alphabet call — that I’ve been on since I covered the company.”
The last three months have seen upheaval and landmarks at Google.
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Google co-founders Larry Page and Sergey Brin stepped down after 21 years. Chief legal counsel David Drummond retired under a cloud over personal relationships at the company. And Alphabet became a trillion-dollar company, joining Apple, Amazon and Microsoft as the only U.S. companies to reach that place.
Pichai talked more about YouTube as a vehicle for commerce.
“When you look at the fact that people are consuming a lot of goods and services as part of their experience in YouTube, how can we create better commerce experiences also is a big opportunity for us,” Pichai said.
CFO Ruth Porat mentioned “declining hardware revenue” in Google brand devices including the Pixel phone, Nest Mini smart speaker and Google Wi-Fi router, CNet reported.