YouTube brought in $6.86 billion in ad revenue during the first quarter as the service experiences a slowdown in growth, falling below Wall Street expectations of $7.4 billion and representing a 14 percent year-over-year increase.
The video streaming platform previously saw major growth last year during the pandemic, when it brought in $28.8 billion in advertising revenue and saw a 50 percent year-over-year increase in revenue during the first quarter of 2021.
In a call with analysts, Alphabet CFO Ruth Porat noted that YouTube saw a “pullback in advertiser spend” in Europe in light of the war in Ukraine that had an “outsized impact” on the platform’s revenue. YouTube also had an “exceptional” first quarter in 2021 for direct-response advertising, making it difficult to match the growth rates seen at that time, Porat said.
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YouTube has focused more of its resources into YouTube Shorts, its short-form video platform seen as a competitor to TikTok. The platform now averages more than 30 billion daily views, according to Alphabet CEO Sundar Pichai. And as Shorts viewership grows, the company is testing advertising to Shorts and focused on “closing the gap” with traditional YouTube ads, Porat said.
Alphabet, the parent company of Google, also reported an earnings miss for Q1 with roughly $16.4 billion in net income and $68 billion in total revenue. Porat attributed some of the declines in growth to a “tough” comparison to the previous year, when Google saw the tailwind impact of the pandemic on the company’s ad business. The executive also cautioned that next quarter’s results will reflect that Google “suspended the vast majority of [the company’s] commercial activities in Russia” in March due to the invasion of Ukraine. Roughly 1 percent of Google’s revenue in 2021 came from Russia, primarily via advertising, according to Porat.
