YouTube Q3 Ad Revenue Balloons 43% to $7.2 Billion, Tops 50 Million Music and Premium Subscribers

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YouTube kept raking in huge ad bucks in the third quarter of 2021 and now counts more than 50 million subscribers worldwide for its music and YouTube Premium services.

The world’s largest video platform generated $7.205 billion in advertising revenue for the period, an annual increase of 43%. That’s a new quarterly record for YouTube, up from $7 billion in Q2, and puts it within range of Netflix’s Q3 revenue of $7.48 billion.

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Overall, Alphabet — the parent company of Google and YouTube — posted $65.12 billion in revenue, up 41%, and earnings per share of $27.99, handily beating estimates. Net income of $18.94 billion was an increase of 68% year over year. Wall Street analysts on average expected Alphabet’s Q3 revenue to come in at $63.45 billion and EPS to be $23.47, per Refinitiv data.

Apple’s update in iOS 14.5 to require user opt-in for ad tracking had a “modest” impact on YouTube ad revenue, primarily in direct-response advertising, Alphabet and Google CFO Ruth Porat said on the earnings call.

It’s worth noting that the YouTube reported ad revenue as reported by Alphabet does not include subscription revenue.

In Q3, YouTube surpassed 50 million music and premium subscribers, Sundar Pichai, CEO of Alphabet and Google, said on the analyst call. In the U.S., YouTube Music costs $9.99/month for the standard plan, while YouTube Premium, whose benefits include stripping out ads and allowing offline viewing, is $11.99/month in the U.S. Pichai also said YouTube Shorts, in the year since the TikTok-like feature launched, has seen the average number of first-time creators more than double.

“Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners,” Pichai said in announcing earnings. He cited ongoing improvements to Google Search and the newly announced Android Pixel 6 smartphone as examples of the successful execution of the strategy.

The Google Cloud business also showed strong growth, with Q3 revenue hitting $4.99 billion, up 45%. The unit narrowed its quarterly loss to $644 million, versus $1.21 billion in the year-ago period.

Total headcount rose 13.6% in the quarter, to stand at 150,028 as of Sept. 30, 2021, compared with 132,121 in the year-ago period.

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