Citi Research analysts Mark May, Kevin Allen and Nathaniel Brogadir rate Google Inc (NASDAQ:GOOG) as a Buy as they see growth in YouTube’s overall revenue.
Each month we track third-party data that helps provide a better understanding of intra-quarter trends in YouTube usage. Since Google Inc (NASDAQ:GOOG) does not disclose any metrics related to either YouTube or its video business in general, including revenues or video views, we cannot estimate with confidence the correlation between the datapoints we track and Google’s actual financial results.
That said, we do believe that the y/y growth in total video views, in particular, likely represents the minimal growth in YouTube’s overall revenue, as we believe other key variables like CPM and ad load likely act as positive contributors to this volume based data point. We also note that, given our limited historical data (our database currently starts in September 2013), we believe the usefulness of this tracker will improve as we capture additional monthly data points.
Google’s January 2014 data
We highlight the following key data points for January 2014 for the top 100 video producers on YouTube:
- Total worldwide video views were 15.2bn in January 2014. Trailing three months average views for January is up 15% vs. the comparable period for December, suggesting an annualized growth rate of 175%.
- The total number of videos was 3.6mn at the end of January. Trailing three months average videos for January is up 5% vs. the comparable period for December, suggesting an annualized growth rate of 62%.
- The total number of YouTube subscriptions was 1.4bn at the end of January. Trailing three months average subs for January is up 6% vs. the comparable period for December, suggesting an annualized growth rate of 70%.
While we estimate that YouTube represents only 6-7% of total gross revenue for Google Inc (NASDAQ:GOOG), we estimate that it contributes 10-15% of incremental revenue growth given its above-average growth (>30% y/y) and is among the top sources of potential upside given the positive fundamental trends in the online video sector (e.g., trend toward greater multi-screen ad campaign buys). We view the tracker data as encouraging given that it supports our growth forecasts for YouTube (e.g., in 1Q14, +31% y/y to $1.0bn) and may, in fact, suggest an upside bias.