Google has revealed YouTube revenue and cloud activity, but it has not provided investors

Company Alphabetically , Parent company of Google, Recently announced changes to the top management – instead of two founders Larry Page and Sergey Brin (who served as CEO and president respectively) was appointed CEO Sunder Picchai, Which has been the CEO of Google for the past few years. It was not a dramatic change because Alphabetic is primarily comprised of Google, but it also includes a failure to admit, because Alphabetic was trying to create a holding company with income diversification, not with great success.

A major change Pichai has already made in his first reports is the exposure of active income YouTube (From advertising) and revenue from the company’s cloud operations (Google Cloud). Because these are important and growing markets for Google, analysts needed them to make accurate valuations for the company, but had to settle for estimates. YouTube’s figure, for example, was one of the reasons for investors’ disappointment with Alphabet’s reports.

Alphabetically posted $ 46 billion in Q4 2019, close to $ 1 billion below analysts’ forecasts. Revenue reflected 17% growth over the same quarter. Google also did not show any predictable results in the earnings line – operating profit was $ 9.3 billion, $ 600 million below analysts’ forecasts. The operating profit margin fell from 21% in the corresponding quarter to 20%. The Wall Street Journal noted that the company had disappointed with that figure in nine of the last ten quarters. Despite this, net earnings per share were higher than projections. The discrepancy is probably due to a one-off gain or unexpected change in the number of shares. Overall, the company’s net profit grew 19% to $ 10.6 billion.

YouTube and Facebook have 2 billion users: Who gets more out of them?

A YouTube site, which is a platform for uploading and viewing video content, is one of Google’s growth engines. Google reports for the first time released $ 15.1 billion in YouTube advertising revenue, a 35% increase over 2018 revenue. The site’s revenues account for 13% of Google’s advertising revenue and 9% of the company’s total revenue. However, because Google is growing 18%, YouTube has a significant role to play in growing the company. However, analysts were disappointed with this revenue, as they had previously estimated that YouTube revenue was significantly higher. Analysts have also estimated that revenues are $ 25 billion.

YouTube competes for advertising revenue with Google’s main activity, search engine, and of course, social networks and other sites – Facebook, Amazon, Twitter, Snap and more. Everyone wants to get to know the user better and thus optimize their advertisements. YouTube shows significantly higher revenue than Twitter and Snap, which are expected to show revenues of $ 3.5 billion and $ 1.7 billion, respectively.

In fact, the market is built from Google and Facebook’s duopoly, and those trying to tail them are Amazon, which is growing fast – 39% during 2019 – but is far behind. It was interesting to see the dynamics in the market if YouTube operated as a site disconnected from Google, and what it would do to the competition.

However, it is impossible to ignore that YouTube does not realize its potential, as Facebook, for example. Facebook has around 2 billion users and it manages to generate $ 71 billion in revenue a year (most of which is crushing from advertising). In the fourth quarter, it managed to generate $ 8.5 in revenue per user. YouTube also benefits from 2 billion users, but earns less than a quarter in revenue. Is it an opportunity or not? It is already in the eyes of the beholder. On the one hand, the company has where to grow, for example Google CEO Sunder Pichai talked about a better connection to online trading.

“I think there is still room, a lot of room, to increase monetization in the medium and long term,” Pichay said. Meanwhile, YouTube is growing 35%, while Facebook is growing 26%, but when Facebook was at YouTube today, it grew at a faster rate of tens of percent.

Can Google become relevant in the cloud market?

Another activity whose revenues were first exposed is in the cloud sector. Google posted $ 8.9 billion in revenue last year, a 53% year-over-year growth. Google maintained its growth rate in the fourth quarter as well. Google is the fourth player in the cloud market share, after Amazon, which owns about half of the market, Microsoft and Alibaba. Cloud computing revenues jumped 264 percent in the past decade, according to Gartner Research.

The cloud domain is actually relaying information to remote server farms, which they have set up among other companies. Instead of keeping the information about physical servers in the organization, they can be stored on these farms and accessed if needed. This also allows the organization flexibility, for example, on days when much computing power is needed. The growth of this market is considered to be one of the things that has enabled the rapid growth of the high-tech industry, the establishment of many startups and the integration of technology into our daily lives.

Despite many efforts, Google is currently far behind. One of the reasons is the aggressiveness that Amazon is taking in the cloud market. In fact, companies do not differ in the cloud services themselves, but in the whole platform, in the added value they are able to give their clients, for example, artificial intelligence capabilities, analytics, cyber security and more. Amazon launches services very aggressively, and is also able to identify successful third-party developed products and develop similar solutions. Amazon also has the advantage of being the one who invented the field and managed to gain a gap over the competition.

Amazon is showing $ 35 billion in revenue a year, with a 34% growth rate, Microsoft is growing 62%, but not disclosing its revenue. To catch up with the two, Google emphasized in a conversation with analysts after the reports were released that they were going to invest large sums of money in the cloud, including sales. Amazon has 26% operating profitability in the cloud, but according to what Google says, their profitability seems to be lower because of the same investments. With regard to Google’s 53% growth rate, this is a disappointing figure for the level of revenue the company currently has, and there currently appear to be only two players on the field – Amazon and Microsoft.