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YouTube, a day after formally launching its revenue-sharing program for YouTube Shorts creators, reported $7.96 billion in advertising revenue to close out the holiday season, falling short of Wall Street expectations of ad revenue crossing the $8 billion mark.
The video giant’s fourth-quarter ad revenue is almost an 8 percent decline from the previous year, when YouTube ended 2021 with $8.63 billion in quarterly ad revenue. The slowdown is a marked change for the Google-owned video giant, which had a strong 2021 that saw YouTube surpassing its ad revenue earnings by $1 billion at one point. But since then, YouTube has seen a decline in its ad revenue due to a slowing ad market that has impacted most major tech companies. Under parent company Alphabet, Google advertising also dropped to about $59 billion during the fourth quarter, down from the $61.2 billion seen at the end of 2021.
In a statement announcing the results, Alphabet CEO Sundar Pichai said there was “great momentum” in YouTube subscriptions, which would include offerings like YouTube TV and YouTube Music Premium, but the company has not yet disclosed those numbers. The top executive also said Shorts, the company’s short-form TikTok competitor, now averages 50 billion views a day — up from the 30 billion daily views reported last year.
YouTube ended the year with a new chief business officer after longtime executive Robert Kyncl left the company in October to lead Warner Music Group as its CEO. He was succeeded by Mary Ellen Coe, who previously served as the president of global customer solutions at Google.
Thursday’s earnings report comes weeks after parent company Alphabet said it would lay off around 12,000 employees, or roughly 6 percent of its workforce. Included in the cuts was YouTube’s global head of original kids and family content, Craig Hunter, according to a post on the executive’s LinkedIn page.
Alphabet expects to take a $1.9 billion to $2.3 billion hit in severance and other personnel costs related to the layoffs that will be reflected in the current quarter. An additional $0.5 billion is expected for costs related to downsizing Alphabet’s offices in Q1.
Total revenue for parent company Alphabet was $76.05 billion for the quarter — another revenue miss for the company and a modest 1 percent increase from the previous year. The tech giant follows other disappointing earnings reports from companies like Snap. Led by CEO Evan Spiegel, Snap reported its fourth-quarter earnings earlier this week and saw its shares fall as it forecast a weak first quarter, with revenue expected to be down between 2 to 10 percent. Meta also reported a Q4 earnings drop on Feb. 1, but Wall Street appeared to rally behind the company after it performed better than expected and lowered guidance for its 2023 expenses.
“It’s clear after a period of significant acceleration in digital spending during the pandemic, the macroeconomic climate has become more challenging,” Pichai said in prepared remarks during the company’s earnings call.
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