YouTube brings in ad revenue of $15.15bn in 2019

It is first time parent Alphabet has revealed revenue breakdown for video platform.

YouTube: generated $4.72bn in ad revenue in final quarter
YouTube: generated $4.72bn in ad revenue in final quarter

Sundar Pichai is lifting the veil on Alphabet's revenue breakdown, revealing historical YouTube ad revenue and Google Cloud figures for the first time.

In his first financial report since taking the helm as Alphabet chief executive in December, after Google co-founders Larry Page and Sergey Brin announced that they were leaving their respective roles, Pichai has finally provided details on Alphabet's divisions. Until now, the parent company had only provided a breakdown of Google revenue, not of its other businesses.

Unaudited figures show that YouTube ad revenue surged 36% between 2018 and 2019, bringing in $15.15bn last year, of which $4.72bn was generated in the fourth quarter alone. The 2019 figure is up 86% from 2017's $8.15bn (the earliest figures go back), showing that despite YouTube's many brand-safety issues in recent years advertisers continue to pour in.

This means YouTube's ad revenue made up 11% of Google's $134.8bn overall ad revenue in 2019 and 9% of Google's total $160.74bn in revenue last year.

During the company's earnings call, chief financial officer Ruth Porat said the company pays out "a majority" of YouTube's ad revenue to its creators.

Porat also revealed that YouTube’s non-advertising revenue, which includes money generated from its subscription services YouTube Premium and YouTube Music, reached a $3bn revenue run rate in the fourth quarter. 

Also in the investor call, Pichai revealed that the subscription services have garnered a combined base of more than 20 million subscribers, while YouTube's US over-the-top TV service now has two million customers.

In the financial report, YouTube's non-advertising revenue is included in Google's "other revenues" section, which generated $17.01bn in full-year 2019.

Google's overall ad revenue increased by 16% in 2019, from 2018's $116.46bn. Google's search (and other) revenue was $98.12bn for the year, compared with $85.3bn in 2018.

The fresh details were provided in the company's fourth-quarter and fiscal year ending 31 December 2019 report.

Elsewhere, Alphabet also revealed Google Cloud figures for the first time. The cloud division brought in $8.92bn in revenue in 2019, with $2.6bn of it from the fourth quarter. This represents a 53% increase on 2018's $5.84bn and more than double from 2017's $4.06bn.

Pichai had revealed during the company's second-quarter 2019 results that the cloud division had reached an $8bn run rate.

Alphabet's unaudited full-year figures show an 18% revenue hike to $161.86bn. Net income for the year increased 12% to $34.34bn.

In the 12 months, sales and marketing costs increased by 13% to $18.46bn. Alphabet paid $1.7bn in European Commission fines, significantly down from the $5.1bn it shelled out the previous year.

Regional breakdown for Alphabet

The Asia-Pacific region had the strongest growth, with fourth-quarter revenue up 24% to $7.48bn. However, growth has been slowing: growth reached 26% in the third quarter and 29% in the second quarter, which itself is a slowdown from 36% growth in the second quarter of 2018.

All regions were impacted by slower growth: US revenue grew 16% to $21.74bn in the final quarter, down from 21% growth the previous quarter; "other Americas" grew 21% to $2.67bn, down from 25%; and EMEA was up 15% to $14.1bn, down from 16%.

The company's fourth-quarter results came in lower than Wall Street expectations, leading to a 4% fall in stock price in after-hours trading. In the quarter, Alphabet brought in $46.08 billion in total revenue, while its operating income was $9.27 billion.

A version of this article first appeared on Campaign Asia-Pacific