YouTube powered up advertising revenue to a whopping $6 billion in Q1 of 2021, up 49% from the year-earlier period. Alphabet, Google’s parent company, trounced Wall Street forecasts with record revenue for the first quarter.
Alphabet’s strong growth for Google and YouTube — all the more impressive on already-massive numbers — showed that the internet giant is continuing to ride tailwinds of the pandemic-fueled shift to digital services. Note that that the ad revenue reported for YouTube does not include fees for subscription-based products such as YouTube Premium and YouTube TV.
In discussing YouTube on the earnings call, Sundar Pichai, CEO of Google and Alphabet, called out the dramatic growth of YouTube Shorts — a TikTok-like short-form video feature — which had 6.5 billion daily views in March, up from 3.5 billion at the end of 2020.
According to Alphabet, YouTube continues to boast more than 2 billion monthly logged-in users, who watch more than 1 billion hours of video daily. Google chief business officer Philipp Schindler touted YouTube’s strong growth in direct-response advertising in Q1 and pointed to a new integrated shopping experience that will let viewers make purchases directly on YouTube. “I think we’re scratching the surface on what’s possible with commercial intent on YouTube,” Schindler said on the earnings call.
Overall, Alphabet posted revenue of $55.31 billion, an increase of 34%. Net income was up 2.6 times year-over-year to $17.93 billion (or diluted earnings per share of $26.29), as the company’s ad sales showed marked improvement after COVID-19 depressed advertising in the first three months of 2020. Analysts on average had expected Alphabet to report Q1 revenue of $51.68 billion and earnings of $15.88 per share.
A rising stock market and an uptick in startup valuations helped Alphabet’s bottom line: For Q1 2021, net income included a gain on equity securities of $4.84 billion compared with a $814 million loss in the year-ago period.
The better-than-expected revenue haul for Q1 reflected “elevated consumer activity online and broad-based growth in advertiser revenue,” said Ruth Porat, CFO of Google and Alphabet.
Google Search revenue surged 30% to $31.88 billion for the first quarter. The Google Cloud unit had Q1 sales of $4.05 billion (up 46%) and narrowed its operating loss to $974 million (versus an operating loss of $1.73 billion in the first quarter of 2020).
As previously announced, in the U.S. this year, Alphabet plans to invest $7 billion in offices and data centers and expects to create at least 10,000 new jobs. As of Q1, Alphabet had 139,995 employees worldwide, up 13.8% year over year.
In announcing the results, Pichai said in prepared remarks, “Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.”