A hybrid transmission providing multiple modes of operation in a compact arrangement is provided and includes first and second planetary gear sets and first and second electric machines. An electric machine shaft directly couples the first planetary gear set to the second planetary gear set and the second electric machine to the second planetary gear set. The second electric machine is selectively directly coupled to an output shaft via a first clutch mechanism, and indirectly coupled to the output shaft via the second planetary gear set and a drive shaft, which extends parallel to the electric machine shaft and external to the second electric machine. A second clutch mechanism selectively couples the first electric machine to a carrier of the second planetary gear set and a third clutch mechanism selectively couples a ring gear of the second planetary gear set to a hybrid drive unit housing.