Google announced its Q3 earnings yesterday and the stock surged post. “We generated strong revenue growth in the quarter,” said CEO Sundar Pichal.
Here are some of the more notable advertising wins:
YouTube revenue, including subscriptions and ads, surpassed $50 billion for the first time, with ad revenue specifically growing 12% to $8.9 billion. YouTube Shorts and short-form video continue to be growth areas, as Shorts monetization saw improvements and the company noted it’s “significantly closing the gap with in-stream video.”
On the search side, Google reported that AI integration, including features like Lens (visual search) and AI-based overviews, is encouraging users to return more frequently, driving an increase in search queries (take that, Perplexity!). Google Services generated $76.5 billion in quarterly revenue, up 13% year-over-year, led by Search, which grew 12%. Total search and other advertising revenue rose 12% to $49.4 billion.
Find the full Q3 call transcript here and the press release here.
Why This Matters:
Google beat analysts’ expectations on both revenue and profit, sending shares up in after-hours trading.
However, The Wall Street Journal offered a bit more of tempered perspective with a headline about the earnings that read “Growth slows in search and YouTube, indicating weakness in advertising business.” Some additional context from their take:
“Search advertising brought in $49.4 billion for Google in the third quarter, an increase of 12.2% from the same period last year. The business grew 13.8% in the second quarter.
Google’s search ads business is expected to fall below 50% market share next year because of growing competition from Amazon.com and others, according to eMarketer data.
YouTube generated $8.9 billion of ad sales in the three months ended in September, an increase of 12.2% from the third quarter last year. That compared with a growth rate of 13% in the previous quarter.”
Yeesh, it’s hard being a multibillion dollar company.
Still, the market didn’t seem that concerned and was generally pleased by the results. Despite the competition and slightly slower growth, Google was able to spotlight YouTube’s overall performance, and AI and cloud—the latter of which saw revenue go to $11.4 billion, up 35% from the previous year—to drive an optimistic outlook.
Experts React:
Interesting perspective on YouTube here:
Our Take:
Hey, Google had a strong quarter, with the ad business growing steadily, even if at a slightly slower rate than prior quarters.
It remains to be seen how ongoing antitrust efforts might affect any gains. Will there be an impact? Either way, with AI and cloud, in particular, as massive “newer” growth engines, Google has buffers in place to be just fine. The company also seems to be trying to bring down costs, shifting more work to AI for better margins.
