Google's non advertising revenue is growing fast

 Alphabet (NASDAQ: GOOG, GOOGL) is experiencing a sharp rise in its non-advertising revenue. Its business is divided into two reportable segments that include Google & Other Bets.

Alphabet's main source of revenue from the Google segment is advertising which accounted for more than 85% of the company's entire revenue in 2018. In 2019, the share of advertising revenue has declined to less than 85% of the company's net revenue and in 2021 to around 81% of the company's total revenues.

The share of non-advertising revenue in the net revenue of Alphabet (Google) has kept rising over the past six years. Total non-advertising revenue of Google grew by more than 90% from 2016 to 2018. According to 2018 form 10K of Alphabet, non-advertising revenue in 2016 stood at $10.6 billion which grew to $19.9 billion in 2018. The fourth quarter non-advertising revenue of Alphabet in 2018 reached $6.5 billion compared to $4.97 billion in 2017 Q4.

In fiscal 2021, Alphabet (parent company of Google) experienced a sharp jump in its total net revenues. The net revenues of the company grew by 41% driven mainly by growth in its revenues Google services and Google cloud. Its total net revenues increased by around $75 billion reaching $257.637 billion. The share of advertising revenues of Google in its total net revenues was $209.5 billion in 2021 compared to $146.9 billion in the previous year.The non-advertising revenues of Google increased to $47.24 billion in 2021 compared to $34.8 billion in the previous year. Alphabet's total revenues from other bets also increased to $753 million in 2021 from $657 million in 2020. 

While Google's non-advertising revenue grew 34% in 2020 compared to 2019, it increased by around 36% in 2021 compared to 2020. Its growth rate has continued to improve over the past several years. In 2019, Google's non-advertising revenue had increased 30% compared to 2018.

Here is how much Google generated from non-advertising businesses during 2016-2021:

Google's Non-Advertising and Advertising Revenues in millions 2017-2021
Google's Non-Advertising and Advertising Revenues in millions 2017-2021

 

YearNon-Ad Revenue ($mn)%change in non-ad revenueAd Revenues (m)
2016$10,601  
2017$14,97041.5%$95,577
2018$19,90132.6%$116,461
2019$25,93230%$134,811
2020$34,77034%$146,924
2021$47,23836%$209,497

 The sources of non-advertising revenues of Google include sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including subscription fees for Google Cloud offerings. 

The following table shows the quarterly non-ad revenue of Google for fiscal 2019. Sums are in millions.

2019/QuarterNon ad revenue (millions)
Q1$5,449
Q2$6,181
Q3$6,428
Q4$7,878
Total$25,932

As you can see, Google's non-advertising revenue has gained significantly compared to the previous year in 2019. Total revenue of Google during fiscal 2019 at the end of the third quarter was $18,058 million compared to $13,419 million during the same period previous year. Net revenue of Google during the fourth quarter of 2019 grew to $45.8 billion compared to $39 billion in 2018. 

About Google:

Google is the leading search engine in the world with the largest market share. Its core source of revenue is digital advertising where it leads the industry. The parent company of Google is Alphabet which also operates other businesses (collectively termed as other bets) apart from Google. Google is the largest business segment of Alphabet which has enjoyed revenue growth from cloud as well as YouTube ads in recent years. The company has its headquarters in Mountain View, California, United States. The CEO of Alphabet is Sundar Pichai. Google was founded on 4th September, 1998 at Menlo Park, California, United States. The head office of Google at Mountainview, California, is known as Googleplex.