YouTube‘s second-quarter 2023 ad sales had a modest year-over-year uptick, rising 4.4% to $7.67 billion, a reversal after three consecutive quarters of declines at the video platform. Alphabet, the parent company of Google and YouTube, came in above analyst earnings expectations, with top-line growth of 7%.
Alphabet reported $74.60 billion in revenue and net income of $18.37 billion, or $1.44 per share. Wall Street had pegged $72.82 billion in revenue and earnings per share of $1.34 on average, according to Refinitiv data.
Analysts had forecast YouTube ad sales coming in at $7.43 billion. The second-quarter growth in YouTube advertising revenue was driven by brand advertising, followed by direct-response, “reflecting further stabilization in spending by advertisers,” Alphabet and Google CFO Ruth Porat said on the earnings call. In announcing Q2 earnings, the company said Porat will assume the newly created role of president and chief investment officer, effective Sept. 1.
YouTube and Google have faced tough year-over-year comparisons the last few quarters after notching high double-digit revenue jumps in 2021 driven by the pandemic: For the full-year 2021, YouTube ad revenue was up a whopping 46%.
In its earnings reports, the internet giant breaks out YouTube ad sales; that does not include subscription revenue from YouTube TV (which increased its baseline fee in March), YouTube Premium or YouTube Music (which both saw price hikes last week). Google is betting that YouTube’s exclusive multibillion-dollar deal for NFL Sunday Ticket out-of-market games package, which will start with the 2023 season, will pull in new YouTube TV and a la carte subscribers.
Over the past two years, YouTube also has heavily pushed Shorts, its TikTok-style short-form video feature. Earlier this year, Google said YouTube Shorts was generating more than 50 billion views per day. On the earnings call Tuesday, Alphabet and Google CEO Sundar Pichai said Shorts are watched by more than 2 billion logged-in monthly users, up from 1.5 billion a year ago. As of Q2, brand advertisers started testing spots in Shorts, in addition to direct-response formats, chief business officer Philipp Schindler.
Meanwhile, Alphabet’s Google Cloud division turned in another strong quarter of growth, with revenue up 28% to $8.03 billion. It generated an operating profit of $395 million versus a loss of $590 million a year earlier.
Alphabet announced earlier this year that it was laying off 12,000 employees. As of June 30, the company reported 181,798 employees, up 4.5% year over year. According to Alphabet, “The substantial majority of the employees affected by the reduction of our workforce are no longer included in our headcount as of June 30, 2023.”
Porat, as she takes on the new role of president and chief investment officer, will continue to serve as CFO, including leading the company’s 2024 and long-range capital planning processes, while the company searches for a replacement.
“Ruth has worked to drive financial discipline and returns for shareholders, while spearheading investment to create sustainable, long-term value. As today’s results show, we’re making good progress and we’re committed to continuing this important work,” Pichai said in a statement. “In her new role, Ruth will strengthen our collaboration with policy makers and shape our corporate investments to have maximum economic impact for people and economies around the world.”
