YouTube’s ad sales momentum continued in the second quarter of 2024, growing 13% year over year to $8.66 billion, driven primarily by brand and direct response advertising.
Google subscriptions, platforms and devices revenue, which includes YouTube TV, Music, Premium and NFL Sunday Ticket, grew 14% year over year to $9.3 billion.
“YouTube is focused on a clear strategy: connecting creators with a massive audience and enabling them to build successful businesses through ads and subscriptions, while helping advertisers reach their desired audience,” Alphabet CEO Sundar Pichai told analysts during the company’s earnings call on Tuesday.
In TV viewing, YouTube continued to lead the pack with a 9.9% share, with Netflix following closely behind at 8.4%, according to Nielsen’s latest Gauge report for the month of June. The two services accounted for a combined 18.3%, or nearly half, of the 40% of total TV time in the U.S. dominated by streaming for the month. When looking at cross-platform TV viewing, YouTube ranked second for the month with a share of 9.9%, behind Disney’s 10.8%.
Pichai noted that views on YouTube Shorts and connected TVs more than doubled last year and that the platform is making it easier for creators to add captions and turn regular videos into Shorts. Google chief business officer Phillip added that views on connected TV have increased more than 130% in the last three years and watch time on YouTube has grown 30% year over year across multiple verticals, including sports.
In its quarterly shareholder letter, Netflix acknowledged YouTube is a “clear leader” in direct-to-consumer entertainment, but said it would focus on winning a larger share of the more than 80% of TV time that neither company currently has.
“That share of TV time grew against linear and as linear continues to give. I think there’s a lot of opportunity for us to grow as long as we keep executing well,” Netflix co-CEO Ted Sarandos added during the company’s earnings call last week. “We clearly do compete with YouTube in certain segments of their business, and we certainly compete with them for time and attention. But our services also feed each other really well.”
Co-CEO Greg Peters added that Netflix fulfills “an important need for creators who want partners that can share in the risk that’s inherent” in bringing stories to life, which he said can’t exist in the same way for YouTube.
The video platform’s growth comes as its parent company Alphabet beat Wall Street’s earnings expectations for the quarter, driven by strong results in its Search and Cloud divisions, which delivered revenues of $48.51 billion and $10.35 billion, respectively.
Here are the top-line results for Alphabet:
Net income: $23.62 billion, compared to $18.37 billion for the prior-year period.
Earnings per share: $1.89 per share, compared to $1.85 per share expected by analysts surveyed by Zacks Investment Research.
Revenue: $84.7 billion, compared to $70.6 billion expected by Zacks.
Alphabet also saw growth through Google’s implementation of AI Overview, which uses artificial intelligence to provide users on search a near-instant answer to their queries based on several sources from around the web.
Pichai said the company was “pleased” with the positive trends that have been seen as AI testing continues, which include increased search usage and increased user satisfaction. “We see even higher engagement from users, aged 18 to 24, when they use search with AI overviews,” he added.
The CEO also teased that the company is experimenting with new ways to use AI to develop search. That will soon include employing VR lenses, which will allow users to ask questions by taking a video with lens, and new features coming soon to Gmail and to Google Photos.
“Soon you’ll be able to ask Photos those questions like, ‘What did I eat at that restaurant in Paris last year?’” Pichai said.
Overall, Pichai noted that the company has seen “tremendous momentum” from its AI investments. More than 1.5 million developers are now using Gemini, Google’s AI model.
“Gemini is making Google’s own products better. All six of our products with more than 2 billion monthly users now use Gemini,” he added. “This means that Google is the company that’s truly bringing AI to everyone.”
Alphabet shares fell 2% in after-hours trading on Thursday following the earnings results.