YouTube ad revenue has almost doubled in the last two years
For the first time, Google is giving more details on YouTube's money-making performance.
If you've been following Google and its parent company Alphabet in recent years, you won't be shocked to know that it's making a ton of money. Alphabet just dropped its latest earnings release, and there are some intriguing details beyond the simple fact that the company is making more money than ever (revenue of $46.1 billion for the quarter was up 18 percent year-over-year). For the first time, Alphabet broke out YouTube advertising revenues and that gives us a look at just how important the video site is to the company.
In 2019, YouTube ad revenues were $15.15 billion, which represents 86 percent growth since 2017. By contrast, the main Google search business grew by 40 percent to $98.1 billion over the last two years. Of course, Google's search business is even more mature than YouTube, and 40 percent growth is still quite impressive. But the importance of YouTube to the Alphabet business can't be overstated; indeed, Sundar Pichai has highlighted the growth of YouTube advertising on nearly every earnings call we've listened to in recent years.
Alphabet's "other revenue" category is another one we're always interested in, because it's the only way we can really get an idea of how projects like Google's hardware division are doing. This quarter, other revenues totaled $5.3 billion, up 10 percent over the previous year -- something that could suggest the Pixel 4 launch was a little more successful than the Pixel 3 launch in 2018. But this category also includes things like the Play Store and "YouTube non-advertising revenues" (which are probably things like the YouTube Premium subscription service), so we can't say for sure how much of this is due to hardware. Regardless, the "other revenue" category has grown 56 percent over the last two years -- so like YouTube, it's outperforming Google's core search ad business.
Alphabet's conference call for investors kicks off at 5PM ET, and we'll be listening to see if they disclose anything else of note. We'll share those updates here.
