YouTube Posts Second-Best Quarter Ever With $8.9 Billion in Sales

YouTube reported its second best quarter ever in terms of sales on Tuesday, with the Alphabet-owned streaming platform posting $8.92 billion in Q3 revenue. Company executives said the strong quarter was driven in large part by artificial intelligence, which helped YouTube do a better job of recommending videos — a development that ultimately led to its viewers interacting with more ads.

Here’s a quick look at the key takeaways:

Revenue: Increased 12.1% year-over-year to $8.92 billion. At the same time, it was the second straight quarter in which YouTube’s year-over-year increase declined, after the company posted a 20% year-over-year increase in Q1 and a 13% year-over-year increase last quarter.

Historical Comparison: YouTube’s best quarter in terms of sales came during Q4 2023, when the platform reported $9.2 billion in ad revenue.

The Last 12 Months: Alphabet, in its earnings release, noted “YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarter for the first time.”

YouTube Viewership: Alphabet kept its YouTube comments to a minimum. The company’s earnings release didn’t include an update on how many people watch YouTube. On the company’s earnings call, Alphabet CFO Anat Ashkenazi said YouTube had enjoyed “robust growth in watch time across the platform,” without offering further details. Chief Business Officer Philipp Schindler added YouTube’s Q3 ad growth was “driven by brand, closely followed by direct response.”

Subscriptions: Google subscriptions, which includes YouTube TV, Premium, Music, and NFL Sunday Ticket, was perhaps the biggest standout of Alphabet’s report; subscription revenue climbed 27.7% year-over-year to $10.66 billion.

Artificial Intelligence: AI was a fixture of Alphabet’s earnings report and call. As for Youtube, Schindler said the company is using AI to “greatly improve” YouTube recommendations.

“Driven by Gemini, our large language models have a deeper understanding of video content and viewer preferences. As a result, they can recommend more relevant, fresher, and personalized content to the viewer,” Schindler said.

The tech giant’s overall sales increased 15% year-over-year to $88.3 billion. Google Services — which includes subscriptions, platforms, devices, and YouTube ads — accounted for the bulk of Alphabet’s sales, increasing 13% annually to $76.5 billion.

Alphabet’s stock jumped 3.5% in early after-hours trading on Tuesday, hitting $177.09 per share.

YouTube remains the go-to destination for viewers looking for videos on a myriad of subjects, from kids content to football news to 2024 election coverage. On that last topic, a recent Pew survey found nearly one-third (32%) of Americans regularly get their news from YouTube, up from 23% in 2020.

The Alphabet-owned streaming service faces stiff competition for viewers from companies like Netflix, which recently reported it added another 5 million subscribers; overall, Netflix has 282.7 million customers. Still, YouTube continues to lead the streaming pack in terms of viewership, with the platform accounting for 10.6% of all TV streaming in September, according to Nielsen’s Gauge report.

Netflix, for comparison, accounted for 7.9% of TV streaming, and Prime Video, the third-ranked platform, accounted for 3.6%, according to Nielsen.

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