Online video progress sees Alphabet spell double-digit revenue growth in Q4
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Michelle Clancy
| 28 January 2017

YouTube helped its parent Alphabet write out significantly higher revenue for the fourth quarter of 2016.


Revenue in the last three months of the year spiked 22% from a year earlier, reaching $26.1 billion, while net income rose 8% to $5.3 billion.

“2016 was simply a great year for us,” said Ruth Porat, CFO of Alphabet and Google, during the earnings call. “We see tremendous potential ahead for… the continued development of non-advertising revenue streams for YouTube”

The main chunk of the revenue came from advertising ($22.4 billion) and while the search giant doesn’t break out YouTube figures, eMarketer estimates that with 180 million users in the US, YouTube ad revenues likely grew 30% over the course of 2016 to roughly $5.6 billion. It also predicts that those revenues will grow 20% in 2017.

The subscription-based live-TV service YouTube Red is also delivering results, according to execs.

“We’ve launched in five countries. We’re pleased with the early success, and it’s still early days,” Porat said. “It takes a while to build a subscription business here.”

Sundar Pichai, Alphabet CEO, added that additional investment in content is on deck for YouTube Red. “We work very closely with TV networks on their individual shows … so you’ll see us work hard to make these partnerships deeper,” he said. “You will see us invest more, more countries, more original content… But we are seeing traction, with the rate of sign-ups.”

Google didn’t manage to beat Wall Street expectations, despite the strong showing. Analyst estimates were for earnings of about $9.67 per share, so the actual $9.36 per share was lower than expected.