The second quarter of 2023 was a smashing success for Alphabet. In its latest earnings report, the parent company of Google and YouTube reported quarterly revenue of $74.60 billion and a net income of $18.37 billion during Q2.
Those figures allowed Alphabet’s earnings report to exceed Wall Street expectations for the second-straight quarter. The tech giant posted a strong overall showing in Q1 despite disappointing results from YouTube.
YouTube’s Q2 2023 performance told a different story. Over three months, the leading video platform hauled in $7.7 billion of ad revenue, which represents a year-over-year increase of about 5%. YouTube’s ad revenue had previously declined for three straight quarters.
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Several factors contributed to YouTube’s reversal. In CEO Neal Mohan‘s first full quarter since he took over for former YouTube boss Susan Wojcicki, he began to deliver the creator-friendly tools he had previously teased. Q2 2023 was the first full quarter for Primetime Channels and YouTube Shorts ads. The latter feature helped Shorts add users; according to Google boss Sundar Pichai, YouTube’s TikTok competitor is now watched by two billion logged-in users, up from 1.5 billion a year ago.
YouTube Premium has also experienced “significant subscriber growth,” according to Ruth Porat. The Google CFO said that the growth of YouTube’s subscription service informed the price hike that went live a week before the Alphabet earnings call.
Alphabet’s strong Q2 results suggest that the tech giant has been able to return to the “dramatic growth” Pichai described when he announced his company’s decision to lay off about 12,000 employees at the start of 2023. Though Google has faced competition from companies like TikTok in its search and video businesses, it has found ways to turn those challenges into advantages.
AI, for example, is redefining Google’s search business even though OpenAI’s ChatGPT has been hailed as a potential successor to traditional search engines. “This is our seventh year as an A.I.-first company, and we intuitively know how to incorporate A.I. into our products,” Pichai said during the earnings call. “These advances provide an opportunity to reimagine many of our products, including our most important product: search.”
Pichai also announced a promotion for one of his senior deputies. Porat will progress past the CFO role to take on two new titles: President and Chief Investment Officer. “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 about the eight-year Google vet. “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.”