26 February 2020
Alphabet has shared its fourth-quarter earnings report in which it has talked about earnings made by its several products and services. This is the first report under the new CEO Sundar Pichai, who took over as the chief executive of the entire company last year after the co-founders Larry Page and Sergey Brin stepped back.
For the first time, the company broke out numbers for YouTube and cloud. Alphabet shared that YouTube ads generated $15.15 billion in revenue in fiscal 2019, compared with $11.16 billion in 2018. The numbers do not include YouTube’s non-advertising revenue, like subscriptions for YouTube TV, however, they have been added to Google’s "other revenue" section.
According to the report, this other revenue section has made $5.3 billion last quarter and this also includes hardware like Pixel phones and Google Home speakers. As per CNBC, on a call with analysts, Ruth Porat, the CFO of Google and YouTube’s parent company Alphabet, said that YouTube’s non-advertising revenue reached $3 billion in revenue. So, does that mean that the Pixel phones and Home speakers alone bear the remaining revenue in Google’s other revenue segment? Well, that may not be true as according to the earnings call, “Google other revenues” line also includes Made by Google, the Play Store as well. It is possible that the overall Pixel 4 sales didn’t perform well as the company made no mention of how well they sold.
During the announcement, Google has also made a note on the number of subscribers YouTube has. Google said YouTube has more than 20 million subscribers across its Premium and Music Premium offerings as well as more than 2 million subscribers.
Porat also added that the majority of YouTube ad revenue goes to creators, though the numbers on the same have not been disclosed.
Google’s cloud business generated $8.92 billion ($2.6 billion (£2bn) in revenues for the fourth quarter) in revenue in fiscal 2019, compared to $5.84 billion in 2018. Overall, Alphabet made $46 billion in revenue in the fourth quarter. This is a 17 percent jump over 2018. Google’s search business remains the big hit and the reason the company could make such a big revenue number.
Porat said during the earnings call,
We believe our strengths in AI and software give us an advantage in providing seamless experiences to users wherever they are across multiple surfaces. We have been investing heavily in developing our capabilities in hardware engineering, as well as building out supply and physical distribution chains, and we’ve created a multibillion-dollar revenue business in the past three years. We’re looking forward to our acquisition of Fitbit, which will add strong capabilities in wearables and advance our vision of ambient computing for the Android ecosystem. As we look at the near-term product roadmap, we continue to execute at a measured pace.