In a robust financial quarter, Alphabet Inc., the parent company of Google, reported an 11% revenue growth, marking a return to double-digit expansion for the first time in over a year. The company's third-quarter results surpassed Wall Street's expectations, driven primarily by a resurgence in advertising and the impressive performance of its video platform, YouTube.
YouTube, the internet video giant, reported a 12.5% year-over-year increase, accumulating $7.95 billion in ad revenue for Q3 2023. This figure exceeded analysts' projections, which had anticipated YouTube's advertising revenue to be around $7.81 billion for the quarter, according to data from FactSet. This surge in revenue is particularly noteworthy given that YouTube had fallen short of expectations in the same period the previous year, witnessing a 1.9% drop in ad revenue.
Alphabet's overall performance was also commendable. The company posted $76.69 billion in total revenue, an 11% increase, and a net income of $19.69 billion ($1.55 per share) for the period ending September 30. These figures surpassed the Wall Street consensus estimates, which had predicted $75.97 billion in revenue and earnings per share of $1.45, based on Refinitiv data.
While Alphabet's earnings reports typically break out only YouTube's ad sales, it's worth noting that these figures do not account for subscription revenue from services like YouTube TV, YouTube Premium, and YouTube Music. Additionally, the revenue from YouTube's exclusive multibillion-dollar deal for the NFL Sunday Ticket out-of-market games package is not included in these numbers.
In recent years, YouTube has faced stiff competition from the popular video entertainment app TikTok. This competition prompted YouTube to launch a similar feature called YouTube Shorts. The company reported that more than 2 billion monthly logged-in users now engage with Shorts, with an average of over 70 billion YouTube Shorts viewed daily. In a strategic move to consolidate its offerings, the company also announced its decision to shut down Google Podcasts in 2024, focusing instead on making YouTube Music the go-to platform for podcast creators and listeners.
YouTube's leadership has also seen changes. The platform is currently helmed by CEO Neal Mohan, who succeeded Susan Wojcicki earlier this year.
Ruth Porat, who previously held the position of CFO for both Alphabet and Google, transitioned to the role of president and chief investment officer as of September 1. She continues to serve as the chief financial officer while the company searches for her successor. Commenting on the company's Q3 performance, Porat stated, "The fundamental strength of our business was apparent again in Q3." She attributed the positive results to "meaningful growth in Search and YouTube, and momentum in Cloud."
However, it wasn't all positive news for Alphabet. The company reported a 2.4% year-over-year decrease in its total headcount, bringing the number of employees to 182,381, following layoffs earlier in 2023.
