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YouTube’s parent company, Alphabet, reported a 13% jump in YouTube ad revenue for the second quarter of 2024, reaching $8.66 billion. While this represents a significant increase compared to the same period last year, it fell short of analysts’ expectations, sending shockwaves through the market.
The double-digit growth is a welcome change from the revenue declines YouTube experienced a year ago, but it’s a far cry from the 20.9% year-over-year growth seen in the previous quarter. This slowdown in growth has investors concerned, leading to a dip in Alphabet’s stock price.
Despite the ad revenue miss, YouTube’s subscription services, including YouTube Music and YouTube Premium, continue to thrive. Alphabet CFO Ruth Porat highlighted the strong performance of YouTube TV and YouTube Music Premium, attributing the growth to a significant increase in subscriber adoption.
However, Porat acknowledged that the segment’s growth would have been even stronger had it not been for a recent price hike to YouTube TV, which fell outside the year-over-year comparison.
While YouTube’s ad revenue growth may be slowing, the platform continues to dominate video streaming on television screens. Google Chief Business Officer Philipp Schindler cited Nielsen data showing YouTube as the number one most-watched streaming platform on TV screens in the US for 17 consecutive months.
YouTube is also making significant strides in its short-form video offering, YouTube Shorts. The platform has seen a surge in Shorts views on connected TVs, with views more than doubling last year. Google is actively working to enhance the Shorts experience for creators, making it easier to add captions and convert regular videos into Shorts.
Another key area of focus for YouTube is its Shopping feature, launched in 2022 in partnership with Shopify. This feature aims to capitalize on the growing trend of online shopping, offering viewers a platform to discover and purchase products directly from their favorite creators.
Schindler highlighted the impressive growth in shopping-related video watch time, with a 25% increase in the past year. While it’s still early days for YouTube Shopping, it remains a key area of investment for the platform.
Overall, Alphabet’s earnings for the quarter came in close to analyst expectations, with total revenue reaching $84.74 billion, a 14% increase year-over-year. However, the slight miss in YouTube’s ad revenue expectations has cast a shadow over the company’s performance, leading to a decline in its stock price.
