Alphabet discloses YouTube, Cloud revenues for the first time

Alphabet discloses YouTube, Cloud revenues for the first time

Google broke out numbers for its YouTube and cloud businesses for the first time in its fourth-quarter 2019 earnings report Monday. But the disclosure was limited in scope, making it difficult to gauge the profitability for those businesses.

YouTube ads generated $15.15 billion in revenue in fiscal 2019, with $4.72 billion in the fourth quarter alone. The segment generated $11.16 billion in revenue in 2018, including $3.61 billion in the the fourth quarter of that year. The segment does not include YouTube’s nonadvertising revenue, like subscriptions for YouTube TV, which are included in Google’s other revenue segment.

On a call with analysts, CFO Ruth Porat said YouTube’s nonadvertising revenue reached a $3 billion revenue run rate in the fourth quarter. She added that the majority of YouTube ad revenue goes to creators, though Google does not break out that number.

A Google spokesperson declined to say what percentage of YouTube’s advertising revenue goes to its creators, making it difficult to gauge how profitable it actually is, despite impressive growth in gross ad revenue over the last two years.

Google’s cloud business generated $8.92 billion in revenue in fiscal 2019, with $2.61 billion generated in the fourth quarter. That compares with 2018 revenue of $5.84 billion for the cloud business, with $1.71 billion generated in the fourth quarter of that year.

Shares of Google’s parent company Alphabet were down about 3.5% after hours.

Analysts have long called for Google to report YouTube’s earnings separately, as it is thought to be a substantial part of its advertising business. To put YouTube’s revenue in perspective of another media company, it generated more from ads in 2018 than Discovery, which reported annual revenue of $10.6 billion compared to YouTube’s $11.16 billion. Discovery has not yet reported its full-year 2019 results.

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