YouTube’s advertising revenue continued to climb in the third quarter, reaching $7.95 billion, up from $7.7 billion in the previous quarter. This positive trend reversed the downward trend experienced in previous quarters. Additionally, the Q3 figure outperformed the same period in 2022 when YouTube reported $7.1 billion in advertising revenue.
It is important to note that these advertising numbers exclude subscription revenues from platforms such as YouTube TV, YouTube Premium, YouTube Music, and the recently launched YouTube TV’s NFL Sunday Ticket package. Nevertheless, the “Other Revenues” segment reached $8.3 billion, a 21 percent year-over-year increase. This growth was primarily driven by the subscriber growth of YouTube TV and YouTube Music premium. CFO Ruth Porat expects the revenues from NFL Sunday Ticket and content acquisition costs to be more fully reflected in the fourth quarter.
Although there were no specific figures provided for NFL Sunday Ticket, Alphabet CEO Sundar Pichai mentioned that the new feature had received positive reviews, particularly for its multi-view functionality. Pichai expressed the company’s ability to execute significant partnerships with excellence and scalability, emphasizing the positive feedback from NFL partners.
Porat added that the company anticipates generating an attractive return on investment from the NFL Sunday Ticket deal. The company is also excited about the additional opportunities that arise from working with partners to deliver clips and other content.
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Both Pichai and Porat highlighted the “solid momentum” YouTube experienced in its advertising and subscription businesses during the third quarter. Porat further noted that advertiser spending had stabilized compared to the previous year.
Overall, Alphabet, the parent company of YouTube, reported revenue of $77 billion for the third quarter, marking an 11 percent year-over-year increase. Net income stood at $19.7 billion, or $1.55 per share, compared to $13.9 billion, or $1.06 per share, in the same period last year.
Pichai expressed satisfaction with the financial results and product momentum achieved during the quarter, highlighting the AI-driven innovations across various platforms, including Search, YouTube, Cloud, and Pixel devices. The company remains committed to making AI more helpful for everyone and expects exciting progress in the future.
Furthermore, Alphabet faced challenges earlier in the year, leading to layoffs of approximately 12,000 employees in January 2023. This resulted in severance and related charges amounting to $86 million and $2.1 billion for the three and nine months ended September 30, 2023, respectively. Additionally, the company incurred exit charges of $16 million for the three months and $649 million over the nine-month period as part of its global office space optimization efforts.
In conclusion, YouTube’s ad revenue continued its positive trajectory, reinforced by a significant increase in the third quarter. The company’s overall performance, as part of Alphabet, demonstrated growth and financial success, with a focus on AI-driven innovations and continued investment in expanding its offerings and partnerships.
