The Alphabet earnings report for the fourth quarter of 2023 was a mixed bag, but the holding company’s video-oriented subsidiary delivered positive results. YouTube ad revenue reached $9.2 billion in Q4, up from $7.96 billion a year ago.
YouTube ad revenue rose 15% year over year and was up a similar amount quarter-over-quarter. In its Q3 2023 earnings report, Alphabet put YouTube’s ad revenue at approximately $7.95 billion. The latest figure puts YouTube in a very different place from where it was a year ago. In Q4 2022, the video giant’s ad earnings missed Wall Street expectations. In contrast, YouTube met analyst projections during the most recent quarter.
Alphabet’s topline revenue of $86.31 billion exceeded projections by about $1 billion, but some divisions of Google‘s business are lagging behind the pack. Its flagship search engine posted quarterly revenue of $48 billion, which fell just short of expectations. On the day Alphabet released its Q4 2023 earnings, its stock price fell by approximately 5%.
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Google underwent a significant round of layoffs during Q4 2023, and that decision is affecting the company’s bottom line as well. The earnings report revealed that Google has allocated $700 million for severance in the current quarter. “We are being disciplined in how we run the company,” Google CEO Sundar Pichai told investors. “Teams are working to focus on key priorities and execute fast, removing layers and simplifying their organizational structures.”
YouTube has been affected by layoffs, too, but Google brass expressed optimism about the platform’s future. Advances in AI — which have informed many of the features that have rolled out during the Neal Mohan era — are bringing gains to YouTube’s bottom line. Pichi told investors that his company is “already benefiting from our AI investments and innovation.”
Google’s Chief Business Officer, Philipp Schindler, sees generative AI tools as key drivers of YouTube’s growth. Those tools are “supercharging” creativity on the platform and streamlining the content creation pipeline. “More creators means more content, which leads to more viewers, and via ads and subscriptions, these viewers fund our creators and drive the eyeballs and engagement our advertisers want,” Schindler said.
Alphabet and its subsidiaries plan to stay the course by launching even more AI-powered enhancements. Products mentioned on the earnings call include the Dream Screen backdrop feature and a translation tool. “There’s more to come,” Schindler said.
