YouTube Revenue Drives Alphabet's 1Q Earnings

YouTube, the Google-owned video giant, continues to dominate the advertising landscape. In the first quarter of 2024, YouTube’s ad sales reached an impressive $8.1 billion, marking its highest Q1 total to date. This figure represents a 21% year-over-year increase in ad revenue. Notably, this amount doesn’t even include subscription revenue generated by YouTube.

Alphabet, YouTube’s parent company, reported overall revenue of $80.54 billion, a significant 15% growth, and net income of $23.66 billion (up 57%). These robust results exceeded Wall Street expectations, driving Alphabet’s stock up by 12% in after-hours trading.

YouTube creation has also seen a lift. “In 2023, more people created content on YouTube than ever before,” Phillip Schindler, chief business officer for Google, said on Alphabet’s earnings call.

Additionally, its YouTube Partner Program has paid out “more than any other creator monetization platform,” Schindler said. In the past three years, the creator monetization platform has paid over $70 billion to creators, artists and media companies.

YouTube Shorts has seen significant growth as of late. The number of channels uploading YouTube Shorts grew 50% year over year, and the company recently topped 3 million channels. Over the last 12 months in the United States, the monetization rate of Shorts relative to in-stream viewing doubled, including a 10% sequential improvement in the first quarter alone. The offering is now also ad-supported on its mobile, table, living room and desktop versions.

Schindler noted that Shorts have served as a “long-term bet” to help YouTube respond to creator and viewer demand for short-form video.

CEO Sundar Pichai expressed optimism, expecting YouTube and Google Cloud to achieve a combined annual run rate of $100 billion by the end of 2024. Alphabet’s leadership in AI research, infrastructure, and global product footprint positions it well for the next wave of innovation.

On the subscription front, Alphabet CFO Ruth Porat said that “significant growth” in subscriptions is continuing to drive the “majority of revenue growth in this line.” But the company did see a decline in subscription revenue growth during the first quarter of 2024 compared to the last quarter of 2023. This shift reflects that YouTube only had one week of its NFL Sunday Ticket subscription this quarter compared to 14 weeks last quarter.

Additionally, Alphabet announced its first-ever cash dividend of $0.20 per share, to be paid on June 17, and authorized a new $70 billion buyback program. Despite challenges in the broadband market, Alphabet’s strategic focus on YouTube and other ventures continues to drive impressive financial performance.