ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 61-1767919 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
1600 Amphitheatre Parkway |
Mountain View, CA 94043 |
(Address of principal executive offices, including zip code) |
(650) 253-0000 |
(Registrant’s telephone number, including area code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Alphabet Inc. |
Page No. | ||
Item 1 | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
Item 1 | ||
Item 1A | ||
Item 2 | ||
Item 6 | ||
Alphabet Inc. |
• | the growth of our business and revenues and our expectations about the factors that influence our success and trends in our business; |
• | our plans to continue to invest in new businesses, products, services and technologies, systems, facilities, and infrastructure, to continue to hire aggressively and provide competitive compensation programs, as well as to continue to invest in acquisitions; |
• | seasonal fluctuations in internet usage and advertiser expenditures, underlying business trends such as traditional retail seasonality, and macroeconomic conditions, which are likely to cause fluctuations in our quarterly results; |
• | the potential for declines in our revenue growth rate and operating margin; |
• | our expectation that we will continue to take steps to improve the relevance of the ads we deliver and to reduce the number of accidental clicks; |
• | fluctuations in our revenue growth, as well as the change in paid clicks and cost-per-click on Google properties and the change in impressions and cost-per-impression on Google Network Members’ properties, and various factors contributing to such fluctuations; |
• | our expectation that our foreign exchange risk management program will not fully offset our net exposure to fluctuations in foreign currency exchange rates; |
• | the expected variability of costs related to hedging activities under our foreign exchange risk management program; |
• | our expectation that our cost of revenues, research and development (R&D) expenses, sales and marketing expenses, and general and administrative expenses will increase in dollars and may increase as a percentage of revenues; |
• | our potential exposure in connection with pending investigations, proceedings, and other contingencies; |
• | our expectation that our monetization trends will fluctuate, which could affect our revenues and margins in the future; |
• | our expectation that our traffic acquisition costs (TAC) and the associated TAC rates will fluctuate in the future; |
• | our expectation that our results will be affected by our performance in international markets as users in developing economies increasingly come online; |
• | our expectation that the portion of our revenues that we derive from non-advertising revenues will continue to increase and may affect margins; |
• | our expectation that our other income (expense), net (OI&E), will fluctuate in the future, as it is largely driven by market dynamics; |
• | estimates of our future compensation expenses; |
• | fluctuations in our effective tax rate; |
• | the sufficiency of our sources of funding; |
• | fluctuations in our capital expenditures; |
• | our expectations related to the operating structure implemented pursuant to the Alphabet holding company reorganization; |
• | the sufficiency and timing of our proposed remedies in response to the European Commission's (EC) decisions; |
• | the expected timing and amount of Alphabet Inc.'s share repurchases; |
Alphabet Inc. |
Alphabet Inc. |
PART I. | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
As of December 31, 2018 | As of March 31, 2019 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Marketable securities | |||||||
Total cash, cash equivalents, and marketable securities | |||||||
Accounts receivable, net of allowance of $729 and $761 | |||||||
Income taxes receivable, net | |||||||
Inventory | |||||||
Other current assets | |||||||
Total current assets | |||||||
Non-marketable investments | |||||||
Deferred income taxes | |||||||
Property and equipment, net | |||||||
Operating lease assets | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Other non-current assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued compensation and benefits | |||||||
Accrued expenses and other current liabilities | |||||||
Accrued revenue share | |||||||
Deferred revenue | |||||||
Income taxes payable, net | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Deferred revenue, non-current | |||||||
Income taxes payable, non-current | |||||||
Deferred income taxes | |||||||
Operating lease liabilities | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Commitments and Contingencies (Note 10) | |||||||
Stockholders’ equity: | |||||||
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding | |||||||
Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 695,556 (Class A 299,242, Class B 46,636, Class C 349,678) and 694,782 (Class A 299,444, Class B 46,527, Class C 348,811) shares issued and outstanding | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Retained earnings | |||||||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Revenues | $ | $ | |||||
Costs and expenses: | |||||||
Cost of revenues | |||||||
Research and development | |||||||
Sales and marketing | |||||||
General and administrative | |||||||
European Commission fine | |||||||
Total costs and expenses | |||||||
Income from operations | |||||||
Other income (expense), net | |||||||
Income before income taxes | |||||||
Provision for income taxes | |||||||
Net income | $ | $ | |||||
Basic net income per share of Class A and B common stock and Class C capital stock | $ | $ | |||||
Diluted net income per share of Class A and B common stock and Class C capital stock | $ | $ |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Net income | $ | $ | |||||
Other comprehensive income: | |||||||
Change in foreign currency translation adjustment | ( | ) | |||||
Available-for-sale investments: | |||||||
Change in net unrealized gains (losses) | ( | ) | |||||
Less: reclassification adjustment for net (gains) losses included in net income | |||||||
Net change (net of tax effect of $0 and $88) | ( | ) | |||||
Cash flow hedges: | |||||||
Change in net unrealized gains (losses) | ( | ) | ( | ) | |||
Less: reclassification adjustment for net (gains) losses included in net income | ( | ) | |||||
Net change (net of tax effect of $12 and $1) | ( | ) | ( | ) | |||
Other comprehensive income | |||||||
Comprehensive income | $ | $ |
Alphabet Inc. |
Three Months Ended March 31, 2018 | ||||||||||||||||||
Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
Balance as of December 31, 2017 | $ | $ | ( | ) | $ | $ | ||||||||||||
Cumulative effect of accounting change | 0 | 0 | ( | ) | ( | ) | ( | ) | ||||||||||
Common and capital stock issued | 0 | 0 | ||||||||||||||||
Stock-based compensation expense | 0 | 0 | 0 | |||||||||||||||
Tax withholding related to vesting of restricted stock units and other | 0 | ( | ) | 0 | 0 | ( | ) | |||||||||||
Repurchases of capital stock | ( | ) | ( | ) | 0 | ( | ) | ( | ) | |||||||||
Sale of subsidiary shares | 0 | 0 | 0 | |||||||||||||||
Net income | 0 | 0 | 0 | |||||||||||||||
Other comprehensive income | 0 | 0 | 0 | |||||||||||||||
Balance as of March 31, 2018 | $ | $ | ( | ) | $ | $ |
Three Months Ended March 31, 2019 | ||||||||||||||||||
Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
Balance as of December 31, 2018 | $ | $ | ( | ) | $ | $ | ||||||||||||
Cumulative effect of accounting change | 0 | 0 | ( | ) | ( | ) | ( | ) | ||||||||||
Common and capital stock issued | 0 | 0 | ||||||||||||||||
Stock-based compensation expense | 0 | 0 | 0 | |||||||||||||||
Tax withholding related to vesting of restricted stock units and other | 0 | ( | ) | 0 | 0 | ( | ) | |||||||||||
Repurchases of capital stock | ( | ) | ( | ) | 0 | ( | ) | ( | ) | |||||||||
Sale of subsidiary shares | 0 | 0 | 0 | |||||||||||||||
Net income | 0 | 0 | 0 | |||||||||||||||
Other comprehensive income | 0 | 0 | 0 | |||||||||||||||
Balance as of March 31, 2019 | $ | $ | ( | ) | $ | $ |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Operating activities | |||||||
Net income | $ | $ | |||||
Adjustments: | |||||||
Depreciation and impairment of property and equipment | |||||||
Amortization and impairment of intangible assets | |||||||
Stock-based compensation expense | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Gain on debt and equity securities, net | ( | ) | ( | ) | |||
Other | ( | ) | |||||
Changes in assets and liabilities, net of effects of acquisitions: | |||||||
Accounts receivable | |||||||
Income taxes, net | |||||||
Other assets | ( | ) | ( | ) | |||
Accounts payable | ( | ) | |||||
Accrued expenses and other liabilities | ( | ) | ( | ) | |||
Accrued revenue share | ( | ) | ( | ) | |||
Deferred revenue | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities | |||||||
Purchases of property and equipment | ( | ) | ( | ) | |||
Proceeds from disposals of property and equipment | |||||||
Purchases of marketable securities | ( | ) | ( | ) | |||
Maturities and sales of marketable securities | |||||||
Purchases of non-marketable investments | ( | ) | ( | ) | |||
Maturities and sales of non-marketable investments | |||||||
Acquisitions, net of cash acquired, and purchases of intangible assets | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Financing activities | |||||||
Net payments related to stock-based award activities | ( | ) | ( | ) | |||
Repurchases of capital stock | ( | ) | ( | ) | |||
Proceeds from issuance of debt, net of costs | |||||||
Repayments of debt | ( | ) | ( | ) | |||
Proceeds from sale of subsidiary shares | |||||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Effect of exchange rate changes on cash and cash equivalents | |||||||
Net increase in cash and cash equivalents | |||||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ |
Alphabet Inc. |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google properties | $ | $ | |||||
Google Network Members' properties | |||||||
Google advertising revenues | |||||||
Google other revenues | |||||||
Other Bets revenues | |||||||
Total revenues(1) | $ | $ |
(1) |
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2018 | 2019 | ||||||||||||
United States | $ | % | $ | % | |||||||||
EMEA(1) | |||||||||||||
APAC(1) | |||||||||||||
Other Americas(1) | |||||||||||||
Total revenues(2) | $ | % | $ | % |
(1) | Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America (Other Americas). |
(2) |
Alphabet Inc. |
As of December 31, 2018 | |||||||||||||||||||||||
Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Marketable Securities | ||||||||||||||||||
Level 2: | |||||||||||||||||||||||
Time deposits(1) | $ | $ | 0 | $ | 0 | $ | $ | $ | |||||||||||||||
Government bonds | ( | ) | |||||||||||||||||||||
Corporate debt securities | ( | ) | |||||||||||||||||||||
Mortgage-backed and asset-backed securities | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ |
As of March 31, 2019 | |||||||||||||||||||||||
Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Marketable Securities | ||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||
Time deposits(1) | $ | $ | 0 | $ | 0 | $ | $ | $ | |||||||||||||||
Government bonds | ( | ) | |||||||||||||||||||||
Corporate debt securities | ( | ) | |||||||||||||||||||||
Mortgage-backed and asset-backed securities | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ |
(1) | The majority of our time deposits are domestic deposits. |
As of March 31, 2019 | |||
Due in 1 year | $ | ||
Due in 1 year through 5 years | |||
Due in 5 years through 10 years | |||
Due after 10 years | |||
Total | $ |
Alphabet Inc. |
As of December 31, 2018 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Government bonds | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Corporate debt securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Mortgage-backed and asset-backed securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
As of March 31, 2019 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Government bonds | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||
Corporate debt securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Mortgage-backed and asset-backed securities | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
As of December 31, 2018 | |||||||
Cash and Cash Equivalents | Marketable Securities | ||||||
Level 1: | |||||||
Money market funds | $ | $ | 0 | ||||
Marketable equity securities | 0 | ||||||
Level 2: | |||||||
Mutual funds | 0 | ||||||
Total | $ | $ |
Alphabet Inc. |
As of March 31, 2019 | ||||||||
(unaudited) | ||||||||
Cash and Cash Equivalents | Marketable Securities | |||||||
Level 1: | ||||||||
Money market funds | $ | $ | 0 | |||||
Marketable equity securities(1) | 0 | |||||||
Level 2: | ||||||||
Mutual funds | 0 | |||||||
Total | $ | $ |
(1) |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Unrealized gains | $ | $ | |||||
Unrealized losses (including impairment) | ( | ) | ( | ) | |||
Total unrealized gain (loss) for non-marketable equity securities | $ | $ |
Initial cost basis | $ | |||
Unrealized gains | ||||
Unrealized losses (including impairment) | ( | ) | ||
Total carrying value at the end of the period | $ |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Net gain (loss) on equity securities sold during the period | $ | $ | |||||
Unrealized gain (loss) on equity securities held as of the end of the period(1) | |||||||
Total gain (loss) recognized in other income (expense), net | $ | $ |
(1) |
Alphabet Inc. |
As of December 31, 2018 | |||||||||||||
Balance Sheet Location | Fair Value of Derivatives Designated as Hedging Instruments | Fair Value of Derivatives Not Designated as Hedging Instruments | Total Fair Value | ||||||||||
Derivative Assets: | |||||||||||||
Level 2: | |||||||||||||
Foreign exchange contracts | Other current and non-current assets | $ | $ | $ | |||||||||
Total | $ | $ | $ | ||||||||||
Derivative Liabilities: | |||||||||||||
Level 2: | |||||||||||||
Foreign exchange contracts | Accrued expenses and other liabilities, current and non-current | $ | $ | $ | |||||||||
Total | $ | $ | $ |
Alphabet Inc. |
As of March 31, 2019 | |||||||||||||
Balance Sheet Location | Fair Value of Derivatives Designated as Hedging Instruments | Fair Value of Derivatives Not Designated as Hedging Instruments | Total Fair Value | ||||||||||
(unaudited) | |||||||||||||
Derivative Assets: | |||||||||||||
Level 2: | |||||||||||||
Foreign exchange contracts | Other current and non-current assets | $ | $ | $ | |||||||||
Total | $ | $ | $ | ||||||||||
Derivative Liabilities: | |||||||||||||
Level 2: | |||||||||||||
Foreign exchange contracts | Accrued expenses and other liabilities, current and non-current | $ | $ | $ | |||||||||
Total | $ | $ | $ |
Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Derivatives in Cash Flow Hedging Relationship: | |||||||
Foreign exchange contracts | |||||||
Amount included in the assessment of effectiveness | $ | ( | ) | $ | ( | ) | |
Amount excluded from the assessment of effectiveness | ( | ) | ( | ) | |||
Derivatives in Net Investment Hedging Relationship: | |||||||
Foreign exchange contracts | |||||||
Amount included in the assessment of effectiveness | |||||||
Total | $ | ( | ) | $ |
Alphabet Inc. |
Gains (Losses) Recognized in Income | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, | |||||||||||||||
2018 | 2019 | ||||||||||||||
Revenues | Other income (expense), net | Revenues | Other income (expense), net | ||||||||||||
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded | $ | $ | $ | $ | |||||||||||
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship: | |||||||||||||||
Foreign exchange contracts | |||||||||||||||
Amount of gains (losses) reclassified from AOCI to income | $ | ( | ) | $ | $ | $ | |||||||||
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach | |||||||||||||||
Gains (Losses) on Derivatives in Fair Value Hedging Relationship: | |||||||||||||||
Foreign exchange contracts | |||||||||||||||
Hedged items | |||||||||||||||
Derivatives designated as hedging instruments | ( | ) | ( | ) | |||||||||||
Amount excluded from the assessment of effectiveness | |||||||||||||||
Gains (Losses) on Derivatives in Net Investment Hedging Relationship: | |||||||||||||||
Foreign exchange contracts | |||||||||||||||
Amount excluded from the assessment of effectiveness | |||||||||||||||
Gains (Losses) on Derivatives Not Designated as Hedging Instruments: | |||||||||||||||
Foreign exchange contracts | |||||||||||||||
Derivatives not designated as hedging instruments | ( | ) | ( | ) | |||||||||||
Total gains (losses) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Alphabet Inc. |
As of December 31, 2018 | |||||||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | |||||||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Non-Cash Collateral Received | Net Assets Exposed | |||||||||||||||||||||
Derivatives | $ | $ | ( | ) | $ | $ | ( | ) | (1) | $ | ( | ) | $ | ( | ) | $ | |||||||||||
As of March 31, 2019 | |||||||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | |||||||||||||||||||||||||||
Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Non-Cash Collateral Received | Net Assets Exposed | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Derivatives | $ | $ | ( | ) | $ | $ | ( | ) | (1) | $ | ( | ) | $ | ( | ) | $ |
(1) |
As of December 31, 2018 | |||||||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | |||||||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Pledged | Non-Cash Collateral Pledged | Net Liabilities | |||||||||||||||||||||
Derivatives | $ | $ | ( | ) | $ | $ | ( | ) | (2) | $ | $ | $ | |||||||||||||||
As of March 31, 2019 | |||||||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset | |||||||||||||||||||||||||||
Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Pledged | Non-Cash Collateral Pledged | Net Liabilities | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Derivatives | $ | $ | ( | ) | $ | $ | ( | ) | (2) | $ | $ | $ |
(2) |
Alphabet Inc. |
Three Months Ended March 31, 2019 | |||
Operating lease cost | $ | ||
Variable lease cost | |||
Total operating lease cost | $ |
Three Months Ended March 31, 2019 | |||
Cash payments for operating leases | $ | ||
New operating lease assets obtained in exchange for operating lease liabilities | $ |
Operating Leases | |||
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total future lease payments | |||
Less imputed interest | ( | ) | |
Total lease liability balance | $ |
Alphabet Inc. |
Alphabet Inc. |
As of December 31, 2018 | As of March 31, 2019 | ||||||
(unaudited) | |||||||
3.625% Notes due on May 19, 2021 | $ | $ | |||||
3.375% Notes due on February 25, 2024 | |||||||
1.998% Notes due on August 15, 2026 | |||||||
Unamortized discount for the Notes above | ( | ) | ( | ) | |||
Subtotal(1) | |||||||
Finance lease obligation | |||||||
Total long-term debt | $ | $ |
(1) |
Alphabet Inc. |
As of December 31, 2018 | As of March 31, 2019 | ||||||
(unaudited) | |||||||
Land and buildings | $ | $ | |||||
Information technology assets | |||||||
Construction in progress | |||||||
Leasehold improvements | |||||||
Furniture and fixtures | |||||||
Property and equipment, gross | |||||||
Less: accumulated depreciation | ( | ) | ( | ) | |||
Property and equipment, net | $ | $ |
As of December 31, 2018 | As of March 31, 2019 | ||||||
(unaudited) | |||||||
European Commission fines(1) | $ | $ | |||||
Accrued customer liabilities | |||||||
Other accrued expenses and current liabilities | |||||||
Accrued expenses and other current liabilities | $ | $ |
(1) |
Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Available-for-Sale Investments | Unrealized Gains (Losses) on Cash Flow Hedges | Total | ||||||||||||
Balance as of December 31, 2017 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Cumulative effect of accounting change | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | |||||||||||
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI | ( | ) | ( | ) | |||||||||||
Amounts reclassified from AOCI | |||||||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Balance as of March 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Alphabet Inc. |
Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Available-for-Sale Investments | Unrealized Gains (Losses) on Cash Flow Hedges | Total | ||||||||||||
Balance as of December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||
Cumulative effect of accounting change | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | |||||||||||||
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI | ( | ) | ( | ) | |||||||||||
Amounts reclassified from AOCI | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Balance as of March 31, 2019 | $ | ( | ) | $ | $ | $ | ( | ) |
Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
AOCI Components | Location | 2018 | 2019 | |||||||
Unrealized gains (losses) on available-for-sale investments | ||||||||||
Other income (expense), net | $ | ( | ) | $ | ( | ) | ||||
Benefit (provision) for income taxes | ( | ) | ||||||||
Net of tax | ( | ) | ( | ) | ||||||
Unrealized gains (losses) on cash flow hedges | ||||||||||
Foreign exchange contracts | Revenue | ( | ) | |||||||
Interest rate contracts | Other income (expense), net | |||||||||
Benefit (provision) for income taxes | ( | ) | ||||||||
Net of tax | ( | ) | ||||||||
Total amount reclassified, net of tax | $ | ( | ) | $ |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Interest income | $ | $ | |||||
Interest expense(1) | ( | ) | ( | ) | |||
Foreign currency exchange gain (loss), net | ( | ) | |||||
Gain (loss) on debt securities, net | ( | ) | ( | ) | |||
Gain on equity securities, net | |||||||
Performance fees(2) | ( | ) | ( | ) | |||
Loss and impairment from equity method investments, net | ( | ) | ( | ) | |||
Other | |||||||
Other income (expense), net | $ | $ |
(1) | Interest expense is net of interest capitalized of $ |
(2) |
Alphabet Inc. |
Google | Other Bets | Total Consolidated | |||||||||
Balance as of December 31, 2018 | $ | $ | $ | ||||||||
Acquisitions | |||||||||||
Foreign currency translation and other adjustments | |||||||||||
Balance as of March 31, 2019 | $ | $ | $ |
As of December 31, 2018 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Patents and developed technology | $ | $ | $ | ||||||||
Customer relationships | |||||||||||
Trade names and other | |||||||||||
Total | $ | $ | $ | ||||||||
As of March 31, 2019 | |||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
(unaudited) | |||||||||||
Patents and developed technology | $ | $ | $ | ||||||||
Customer relationships | |||||||||||
Trade names and other | |||||||||||
Total | $ | $ | $ |
Alphabet Inc. |
Remainder of 2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
Alphabet Inc. |
Alphabet Inc. |
Three Months Ended March 31, | |||||||||||||||||||||||
2018 | 2019 | ||||||||||||||||||||||
Class A | Class B | Class C | Class A | Class B | Class C | ||||||||||||||||||
Basic net income per share: | |||||||||||||||||||||||
Numerator | |||||||||||||||||||||||
Allocation of undistributed earnings | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Denominator | |||||||||||||||||||||||
Number of shares used in per share computation | |||||||||||||||||||||||
Basic net income per share | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Diluted net income per share: | |||||||||||||||||||||||
Numerator | |||||||||||||||||||||||
Allocation of undistributed earnings for basic computation | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares | |||||||||||||||||||||||
Reallocation of undistributed earnings | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Allocation of undistributed earnings | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Denominator | |||||||||||||||||||||||
Number of shares used in basic computation | |||||||||||||||||||||||
Weighted-average effect of dilutive securities | |||||||||||||||||||||||
Add: | |||||||||||||||||||||||
Conversion of Class B to Class A common shares outstanding | |||||||||||||||||||||||
Restricted stock units and other contingently issuable shares | |||||||||||||||||||||||
Number of shares used in per share computation | |||||||||||||||||||||||
Diluted net income per share | $ | $ | $ | $ | $ | $ |
Alphabet Inc. |
Unvested Restricted Stock Units | ||||||
Number of Shares | Weighted- Average Grant-Date Fair Value | |||||
Unvested as of December 31, 2018 | $ | |||||
Granted | $ | |||||
Vested | ( | ) | $ | |||
Forfeited/canceled | ( | ) | $ | |||
Unvested as of March 31, 2019 | $ |
• | Google – Google includes our main products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube. Our technical infrastructure is also included in Google. Google generates revenues primarily from advertising; sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including fees received for Google Cloud offerings. |
Alphabet Inc. |
• | Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Revenues from the Other Bets are derived primarily through the sales of internet and TV services through Access as well as licensing and R&D services through Verily. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Revenues: | |||||||
Google | $ | $ | |||||
Other Bets | |||||||
Total revenues | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Operating income (loss): | |||||||
Google | $ | $ | |||||
Other Bets | ( | ) | ( | ) | |||
Reconciling items(1) | ( | ) | ( | ) | |||
Total income from operations | $ | $ |
(1) | Reconciling items are primarily comprised of the EC fine for the three months ended March 31, 2019 as well as corporate administrative costs and other miscellaneous items that are not allocated to individual segments for all periods presented. Performance fees previously included in reconciling items were reclassified for the prior period from general and administrative expenses to other income (expense), net to conform with current period presentation. For further information on the reclassification, see Note 1. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Capital expenditures: | |||||||
Google | $ | $ | |||||
Other Bets | |||||||
Reconciling items(2) | ( | ) | |||||
Total capital expenditures as presented on the Consolidated Statements of Cash Flows | $ | $ |
(2) | Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flow are on cash basis and other miscellaneous differences. |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Stock-based compensation: | |||||||
Google | $ | $ | |||||
Other Bets | |||||||
Reconciling items(3) | |||||||
Total stock-based compensation(4) | $ | $ | |||||
Depreciation, amortization, and impairment: | |||||||
Google | $ | $ | |||||
Other Bets | |||||||
Total depreciation, amortization, and impairment | $ | $ |
(3) | Reconciling items represent corporate administrative costs that are not allocated to individual segments. |
(4) |
As of December 31, 2018 | As of March 31, 2019 | ||||||
(unaudited) | |||||||
Long-lived assets: | |||||||
United States | $ | $ | |||||
International | |||||||
Total long-lived assets | $ | $ |
Alphabet Inc. |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Revenues of $36.3 billion and revenue growth of 17% year over year, constant currency revenue growth of 19% year over year. |
• | Google segment revenues of $36.2 billion with revenue growth of 17% year over year and Other Bets revenues of $170 million with revenue growth of 13% year over year. |
• | Revenues from the United States, EMEA, APAC, and Other Americas were $16.5 billion, $11.8 billion, $6.1 billion, and $1.9 billion, respectively. |
• | Cost of revenues was $16.0 billion, consisting of TAC of $6.9 billion and other cost of revenues of $9.2 billion. Our TAC as a percentage of advertising revenues were 22%. |
• | Operating expenses (excluding cost of revenues) were $13.7 billion, including the EC AFS fine of $1.7 billion. |
• | Income from operations was $6.6 billion. |
• | Other income (expense), net, was $1.5 billion. |
• | Effective tax rate was 18%. |
• | Net income was $6.7 billion with diluted net income per share of $9.50. |
• | Operating cash flow was $12.0 billion. |
• | Capital expenditures were $4.6 billion. |
• | Number of employees was 103,459 as of March 31, 2019. |
• | Google – Google includes our main products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube. Our technical infrastructure is also included in Google. Google generates revenues primarily from advertising; sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including fees received for Google Cloud offerings. |
• | Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Revenues from the Other Bets are derived primarily through the sales of internet and TV services through Access as well as licensing and R&D services through Verily. |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google segment | |||||||
Google properties revenues | $ | 21,998 | $ | 25,682 | |||
Google Network Members' properties revenues | 4,644 | 5,038 | |||||
Google advertising revenues | 26,642 | 30,720 | |||||
Google other revenues | 4,354 | 5,449 | |||||
Google segment revenues | 30,996 | 36,169 | |||||
Other Bets | |||||||
Other Bets revenues | 150 | 170 | |||||
Revenues | $ | 31,146 | $ | 36,339 |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google segment revenues | $ | 30,996 | $ | 36,169 | |||
Google segment revenues as a percentage of total revenues | 99.5 | % | 99.5 | % |
• | advertiser competition for keywords; |
• | changes in advertising quality, formats or delivery; |
• | changes in device mix; |
• | changes in foreign currency exchange rates; |
• | fees advertisers are willing to pay based on how they manage their advertising costs; |
• | general economic conditions; |
• | growth rates of revenues within Google properties; |
• | seasonality; and |
Alphabet Inc. |
• | traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google properties revenues | $ | 21,998 | $ | 25,682 | |||
Google properties revenues as a percentage of Google segment revenues | 71.0 | % | 71.0 | % | |||
Paid clicks change | 39 | % | |||||
Cost-per-click change | (19 | )% |
• | Google search properties which includes revenues from traffic generated by search distribution partners who use Google.com as their default search in browsers, toolbars, etc.; and |
• | Other Google owned and operated properties like Gmail, Google Maps, Google Play, and YouTube. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google Network Members' properties revenues | $ | 4,644 | $ | 5,038 | |||
Google Network Members' properties revenues as a percentage of Google segment revenues | 15.0 | % | 13.9 | % | |||
Impressions change | 6 | % | |||||
Cost-per-impression change | 1 | % |
Alphabet Inc. |
• | AdMob; |
• | AdSense (such as AdSense for Content, AdSense for Search, etc.); and |
• | Google Ad Manager. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Google other revenues | $ | 4,354 | $ | 5,449 | |||
Google other revenues as a percentage of Google segment revenues | 14.0 | % | 15.1 | % |
• | Google Cloud offerings; |
• | Hardware; and |
• | YouTube subscriptions. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Other Bets revenues | $ | 150 | $ | 170 | |||
Other Bets revenues as a percentage of total revenues | 0.5 | % | 0.5 | % |
Alphabet Inc. |
Three Months Ended | |||||
March 31, | |||||
2018 | 2019 | ||||
United States | 45 | % | 45 | % | |
EMEA | 34 | % | 33 | % | |
APAC | 15 | % | 17 | % | |
Other Americas | 6 | % | 5 | % |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
EMEA revenues | $ | 10,474 | $ | 11,791 | |||
Exclude foreign exchange effect on current period revenues using prior year rates | (1,094 | ) | 762 | ||||
Exclude hedging effect recognized in current period | 217 | (123 | ) | ||||
EMEA constant currency revenues | $ | 9,597 | $ | 12,430 | |||
Prior period EMEA revenues, excluding hedging effect | $ | 7,933 | $ | 10,691 | |||
EMEA revenue growth | 29 | % | 13 | % | |||
EMEA constant currency revenue growth | 21 | % | 16 | % | |||
APAC revenues | $ | 4,804 | $ | 6,112 | |||
Exclude foreign exchange effect on current period revenues using prior year rates | (198 | ) | 199 | ||||
Exclude hedging effect recognized in current period | 15 | (16 | ) | ||||
APAC constant currency revenues | $ | 4,621 | $ | 6,295 | |||
Prior period APAC revenues, excluding hedging effect | $ | 3,560 | $ | 4,819 | |||
APAC revenue growth | 33 | % | 27 | % | |||
APAC constant currency revenue growth | 30 | % | 31 | % | |||
Other Americas revenues | $ | 1,724 | $ | 1,904 | |||
Exclude foreign exchange effect on current period revenues using prior year rates | (19 | ) | 192 | ||||
Exclude hedging effect recognized in current period | 7 | 2 | |||||
Other Americas constant currency revenues | $ | 1,712 | $ | 2,098 | |||
Prior period Other Americas revenues, excluding hedging effect | $ | 1,271 | $ | 1,731 | |||
Other Americas revenue growth | 36 | % | 10 | % | |||
Other Americas constant currency revenue growth | 35 | % | 21 | % | |||
United States revenues | $ | 14,144 | $ | 16,532 | |||
United States revenue growth | 20 | % | 17 | % | |||
Total revenues | $ | 31,146 | $ | 36,339 | |||
Total constant currency revenues | $ | 30,074 | $ | 37,355 | |||
Total revenue growth | 26 | % | 17 | % | |||
Total constant currency revenue growth | 23 | % | 19 | % |
Alphabet Inc. |
• | Content acquisition costs primarily related to payments to content providers from whom we license video and other content for distribution on YouTube advertising and subscription services and Google Play (we pay fees to these content providers based on revenues generated or a flat fee); |
• | Expenses associated with our data centers and other operations (including bandwidth, compensation expenses (including SBC), depreciation, energy, and other equipment costs); and |
• | Inventory related costs for hardware we sell. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
TAC | $ | 6,288 | $ | 6,860 | |||
Other cost of revenues | 7,179 | 9,152 | |||||
Total cost of revenues | $ | 13,467 | $ | 16,012 | |||
Total cost of revenues as a percentage of revenues | 43.2 | % | 44.1 | % | |||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
TAC to distribution partners | $ | 2,902 | $ | 3,383 | |||
TAC to distribution partners as a percentage of Google properties revenues(1) (Google properties TAC rate) | 13.2 | % | 13.2 | % | |||
TAC to Google Network Members | $ | 3,386 | $ | 3,477 | |||
TAC to Google Network Members as a percentage of Google Network Members' properties revenues(1) (Network Members TAC rate) | 72.9 | % | 69.0 | % | |||
TAC | $ | 6,288 | $ | 6,860 | |||
TAC as a percentage of advertising revenues(1) (Aggregate TAC rate) | 23.6 | % | 22.3 | % |
(1) | Revenues include hedging gains (losses) which affect TAC rates. |
Alphabet Inc. |
• | Google Network Members TAC rates, which are affected by a combination of factors such as geographic mix, product mix, revenue share terms, and fluctuations of the U.S. dollar compared to certain foreign currencies; |
• | Google properties TAC rates, which are affected by changes in device mix between mobile, desktop, and tablet, partner mix, partner agreement terms such as revenue share arrangements, and the percentage of queries channeled through paid access points; |
• | Relative revenue growth rates of Google properties and Google Network Members' properties; |
• | Costs associated with our data centers and other operations to support ads, Google Cloud, Search and YouTube and other products; |
• | Content acquisition costs, which are affected by the relative growth rates in our YouTube advertising and subscription businesses; |
• | Costs related to hardware sales; and |
• | Increased proportion of non-advertising revenues, which generally have higher costs of revenues, relative to our advertising revenues. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Research and development expenses | $ | 5,039 | $ | 6,029 | |||
Research and development expenses as a percentage of revenues | 16.2 | % | 16.6 | % |
• | Compensation expenses (including SBC) and facilities-related costs for engineering and technical employees responsible for R&D of our existing and new products and services; |
• | Depreciation expenses; |
• | Equipment-related expenses; and |
• | Professional services fees primarily related to consulting and outsourcing services. |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Sales and marketing expenses | $ | 3,604 | $ | 3,905 | |||
Sales and marketing expenses as a percentage of revenues | 11.6 | % | 10.7 | % |
• | Advertising and promotional expenditures related to our products and services; and |
• | Compensation expenses (including SBC) and facilities-related costs for employees engaged in sales and marketing, sales support, and certain customer service functions. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
General and administrative expenses | $ | 1,403 | $ | 2,088 | |||
General and administrative expenses as a percentage of revenues | 4.5 | % | 5.7 | % |
• | Compensation expenses (including SBC) and facilities-related costs for employees in our facilities, finance, human resources, information technology, and legal organizations; |
• | Depreciation; |
• | Equipment-related expenses; and |
• | Professional services fees primarily related to audit, information technology consulting, outside legal, and outsourcing services. |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Other income (expense), net | $ | 2,910 | $ | 1,538 | |||
Other income (expense), net, as a percentage of revenues | 9.3 | % | 4.2 | % |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Provision for income taxes | $ | 1,142 | $ | 1,489 | |||
Effective tax rate | 10.8 | % | 18.3 | % |
Alphabet Inc. |
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2019 | ||||||
Net cash provided by operating activities | $ | 11,642 | $ | 12,000 | |||
Net cash used in investing activities | $ | (7,846 | ) | $ | (5,388 | ) | |
Net cash used in financing activities | $ | (2,018 | ) | $ | (4,183 | ) |
Alphabet Inc. |
Alphabet Inc. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
Alphabet Inc. |
PART II. | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Purchased (in thousands) (1) | Average Price Paid per Share (2) | Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | ||||||||||
January 1 - 31 | 863 | $ | 1,069.16 | 863 | $ | 13,266 | ||||||||
February 1 - 28 | 689 | $ | 1,112.13 | 689 | $ | 12,500 | ||||||||
March 1 - 31 | 1,134 | $ | 1,178.04 | 1,134 | $ | 11,164 | ||||||||
Total | 2,686 | $ | 1,126.14 | 2,686 |
(1) | In January 2018, the board of directors of Alphabet authorized the company to repurchase up to $8.6 billion of its Class C capital stock, which was completed during the three months ended March 31, 2019. In January 2019, the board of directors of Alphabet authorized the company to repurchase an additional $12.5 billion of its Class C capital stock. The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The repurchase program does not have an expiration date. See Note 11 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information related to share repurchases. |
(2) | Average price paid per share includes costs associated with the repurchases. |
Alphabet Inc. |
ITEM 6. | EXHIBITS |
Exhibit Number | Description | Incorporated by reference herein | ||||
Form | Date | |||||
31.01 | * | |||||
31.02 | * | |||||
32.01 | ‡ | |||||
99.01 | EC AdSense for Search Decision | (File No. 001-37580) | March 20, 2019 | |||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
‡ | Furnished herewith. |
Alphabet Inc. |
ALPHABET INC. | ||
April 29, 2019 | By: | /s/ RUTH M. PORAT |
Ruth M. Porat | ||
Senior Vice President and Chief Financial Officer |
ALPHABET INC. | ||
April 29, 2019 | By: | /s/ AMIE THUENER O'TOOLE |
Amie Thuener O'Toole | ||
Vice President and Chief Accounting Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Alphabet Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ LARRY PAGE |
Larry Page |
Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Alphabet Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ RUTH PORAT |
Ruth Porat |
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
By: | /S/ LARRY PAGE |
Name: | Larry Page |
Title: | Chief Executive Officer (Principal Executive Officer) |
By: | /S/ RUTH PORAT |
Name: | Ruth Porat |
Title: | Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 22, 2019 |
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Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | GOOG, GOOGL | |
Entity Registrant Name | Alphabet Inc. | |
Entity Central Index Key | 0001652044 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 299,436,023 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 46,544,284 | |
Class C Capital Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 348,263,508 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Income Statement [Abstract] | ||
Revenues | $ 36,339 | $ 31,146 |
Costs and expenses: | ||
Cost of revenues | 16,012 | 13,467 |
Research and development | 6,029 | 5,039 |
Sales and marketing | 3,905 | 3,604 |
General and administrative | 2,088 | 1,403 |
European Commission fine | 1,697 | 0 |
Total costs and expenses | 29,731 | 23,513 |
Income from operations | 6,608 | 7,633 |
Other income (expense), net | 1,538 | 2,910 |
Income before income taxes | 8,146 | 10,543 |
Provision for income taxes | 1,489 | 1,142 |
Net income | $ 6,657 | $ 9,401 |
Basic net income per share of Class A and B common stock and Class C capital stock (in dollars per share) | $ 9.58 | $ 13.53 |
Diluted net income per share of Class A and B common stock and Class C capital stock (in dollars per share) | $ 9.50 | $ 13.33 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,657 | $ 9,401 |
Other comprehensive income: | ||
Change in foreign currency translation adjustment | (36) | 657 |
Available-for-sale investments: | ||
Change in net unrealized gains (losses) | 719 | (208) |
Less: reclassification adjustment for net (gains) losses included in net income | 7 | 39 |
Net change (net of tax effect of $0 and $88) | 726 | (169) |
Cash flow hedges: | ||
Change in net unrealized gains (losses) | (30) | (262) |
Less: reclassification adjustment for net (gains) losses included in net income | (104) | 194 |
Net change (net of tax effect of $12 and $1) | (134) | (68) |
Other comprehensive income | 556 | 420 |
Comprehensive income | $ 7,213 | $ 9,821 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Statement of Comprehensive Income [Abstract] | ||
Tax expense (benefit) related to available-for-sale investments | $ 88 | $ 0 |
Tax expense (benefit) related to cash flow hedges | $ (1) | $ (12) |
Nature of Operations and Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we implemented a holding company reorganization, and as a result, Alphabet Inc. (Alphabet) became the successor issuer to Google. We generate revenues primarily by delivering relevant, cost-effective online advertising. Basis of Consolidation The consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. Noncontrolling interests are not presented separately as the amounts are not material. All intercompany balances and transactions have been eliminated. Unaudited Interim Financial Information The Consolidated Balance Sheet as of March 31, 2019, the Consolidated Statements of Income for the three months ended March 31, 2018 and 2019, the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2019, the Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2018 and 2019 and the Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2019 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2019, our results of operations for the three months ended March 31, 2018 and 2019, and our cash flows for the three months ended March 31, 2018 and 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as amended, filed with the SEC. Use of Estimates Preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to bad debt allowance, sales allowances, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, and contingent liabilities, among others. We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. We will adopt ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings. We are currently evaluating new credit loss models and updating our processes and controls in preparation for the adoption of ASU 2016-13. The effect on our consolidated financial statements will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption. Recently adopted accounting pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (Topic 842) "Leases." Topic 842 supersedes the lease requirements in Accounting Standards Codification Topic 840, "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. We adopted Topic 842 effective January 1, 2019. The most significant effects of Topic 842 were the recognition of $8.0 billion of operating lease assets and $8.4 billion of operating lease liabilities and the de-recognition of $1.5 billion of build-to-suit assets and liabilities. We applied Topic 842 to all leases as of January 1, 2019 with comparative periods continuing to be reported under Topic 840. In the adoption of Topic 842, we carried forward the assessment from Topic 840 of whether our contracts contain or are leases, the classification of our leases, and remaining lease terms. Our accounting for finance leases remains substantially unchanged. The standard does not have a significant effect on our consolidated results of operations or cash flows. See Note 4 for further details. Prior Period Reclassifications Certain amounts in prior periods have been reclassified to conform with current period presentation. Performance fees have been reclassified for all periods from general and administrative expenses to other income (expense), net to align with the presentation of the investment gains and losses on which the performance fees are based. See Note 13 for further details.
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Revenues | Revenues Disaggregated Revenues The following table presents our revenues disaggregated by revenue source (in millions, unaudited). Sales and usage-based taxes are excluded from revenues.
The following table presents our revenues disaggregated by geography, based on the addresses of our customers (in millions, unaudited):
Deferred Revenues We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The decrease in the deferred revenue balance for the three months ended March 31, 2019 was primarily driven by the recognition of $826 million of revenues that were included in the deferred revenue balance as of December 31, 2018, offset by cash payments received or due in advance of satisfying our performance obligations.
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial InstrumentsDebt Securities We classify our marketable debt securities within Level 2 in the fair value hierarchy because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. The following tables summarize our debt securities by significant investment categories as of December 31, 2018 and March 31, 2019 (in millions):
We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. We recognized gross realized gains of $2 million and $46 million for the three months ended March 31, 2018 and 2019, respectively. We recognized gross realized losses of $41 million and $48 million for the three months ended March 31, 2018 and 2019, respectively. We reflect these gains and losses as a component of other income (expense), net, in the Consolidated Statements of Income. The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities (in millions, unaudited):
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2018 and March 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):
The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method. Marketable equity securities Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets. The following table summarizes marketable equity securities measured at fair value by significant investment categories as of December 31, 2018 and March 31, 2019 (in millions):
Non-marketable equity securities Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. Non-marketable equity securities that have been remeasured are classified within Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold. The following is a summary of unrealized gains and losses recorded in other income (expense), net, and included as adjustments to the carrying value of non-marketable equity securities (in millions, unaudited):
The following table summarizes the total carrying value of our non-marketable equity securities held as of March 31, 2019 including cumulative unrealized gains and losses (in millions, unaudited):
During the three months ended March 31, 2019, included in the $12.9 billion of non-marketable equity securities, $1.4 billion were measured at fair value based on observable market transactions, resulting in a net unrealized gain of $390 million. Gains and losses on marketable and non-marketable equity securities Gains and losses for our marketable and non-marketable equity securities are summarized below (in millions, unaudited):
In the table above, net gain (loss) on equity securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the purchase date, if later. The cumulative net gain measured as the sale price less the initial purchase price for equity securities sold during the period ending March 31, 2019 was $118 million. Equity securities accounted for under the Equity Method Equity securities accounted for under the equity method had a carrying value of approximately $1.3 billion as of December 31, 2018 and March 31, 2019. Our share of gains and losses including impairment are included as a component of other income (expense), net. See Note 7 for further details on other income (expense), net.Derivative Financial InstrumentsWe classify our foreign currency and interest rate derivative contracts primarily within Level 2 in the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments. We recognize derivative instruments as either assets or liabilities in the Consolidated Balance Sheets at fair value. We record changes in the fair value (i.e., gains or losses) of the derivatives in the Consolidated Statements of Income as either other income (expense), net, or revenues, or in the Consolidated Balance Sheets in accumulated other comprehensive income (AOCI), as discussed below. Any components excluded from the assessment of hedge effectiveness are recognized in the same income statement line as the hedged item. We enter into foreign currency contracts with financial institutions to reduce the risk that our cash flows, earnings, and investment in foreign subsidiaries will be adversely affected by foreign currency exchange rate fluctuations. We also use interest rate derivative contracts to hedge interest rate exposures on our fixed income securities and debt issuances. Our program is not used for trading or speculative purposes. We enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. To further reduce credit risk, we enter into collateral security arrangements under which the counterparty is required to provide collateral when the net fair value of certain financial instruments fluctuates from contractually established thresholds. We can take possession of the collateral in the event of counterparty default. As of December 31, 2018 and March 31, 2019, we received cash collateral related to the derivative instruments under our collateral security arrangements of $327 million and $518 million, respectively, which was included in other current assets. Cash Flow Hedges We use foreign currency forwards and option contracts, including collars (an option strategy comprised of a combination of purchased and written options), designated as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar. The notional principal of these contracts was approximately $11.8 billion and $12.4 billion as of December 31, 2018 and March 31, 2019, respectively. These contracts have maturities of 24 months or less. For forwards and option contracts, we exclude the change in the forward points and time value from our assessment of hedge effectiveness. The initial value of the excluded component is amortized on a straight-line basis over the life of the hedging instrument and recognized in revenues. The difference between fair value changes of the excluded component and the amount amortized to revenues is recorded in AOCI. We reflect the gains or losses of a cash flow hedge included in our assessment of hedge effectiveness as a component of AOCI and subsequently reclassify these gains and losses to revenues when the hedged transactions are recorded. If the hedged transactions become probable of not occurring, the corresponding amounts in AOCI are immediately reclassified to other income (expense), net. As of March 31, 2019, the net accumulated gain on our foreign currency cash flow hedges before tax effect was $113 million, which is expected to be reclassified from AOCI into earnings within the next 12 months. Fair Value Hedges We use forward contracts designated as fair value hedges to hedge foreign currency risks for our investments denominated in currencies other than the U.S. dollar. We exclude changes in forward points for the forward contracts from the assessment of hedge effectiveness. We recognize changes in the excluded component in other income (expense), net. The notional principal of these contracts was $2.0 billion as of both December 31, 2018 and March 31, 2019. Gains and losses on these forward contracts are recognized in other income (expense), net, along with the offsetting gains and losses of the related hedged items. Net Investment Hedges We use forward contracts designated as net investment hedges to hedge the foreign currency risks related to our investment in foreign subsidiaries. We exclude changes in forward points for the forward contracts from the assessment of hedge effectiveness. We recognize changes in the excluded component in other income (expense), net. The notional principal of these contracts was $6.7 billion and $7.1 billion as of December 31, 2018 and March 31, 2019, respectively. Gains and losses on these forward contracts are recognized in AOCI as part of the foreign currency translation adjustment. Other Derivatives Other derivatives not designated as hedging instruments consist of foreign currency forward contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. We recognize gains and losses on these contracts, as well as the related costs in other income (expense), net, along with the foreign currency gains and losses on monetary assets and liabilities. The notional principal of the outstanding foreign exchange contracts was $20.1 billion and $18.6 billion as of December 31, 2018 and March 31, 2019, respectively. The fair values of our outstanding derivative instruments were as follows (in millions):
The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income (OCI) are summarized below (in millions, unaudited):
We present our forwards and purchased options at gross fair values in the Consolidated Balance Sheets. For foreign currency collars, we present at net fair values where both purchased and written options are with the same counterparty. Our master netting and other similar arrangements allow net settlements under certain conditions. As of December 31, 2018 and March 31, 2019, information related to these offsetting arrangements were as follows (in millions): Offsetting of Assets
Offsetting of Liabilities
(2) The balances as of December 31, 2018 and March 31, 2019 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases We have entered into operating and finance lease agreements primarily for data centers, land and offices throughout the world with lease periods expiring between 2019 and 2063. We determine if an arrangement is a lease at inception. Operating lease assets and liabilities are included on our Consolidated Balance Sheet beginning January 1, 2019. The current portion of our operating lease liabilities is included in accrued expenses and other current liabilities and the long term portion is included in operating lease liabilities. Finance lease assets are included in property and equipment, net. Finance lease liabilities are included in accrued expenses and other current liabilities or long-term debt. Operating lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in most of our leases is not readily determinable. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. Operating lease assets also include any prepaid lease payments and lease incentives. Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We generally use the base, non-cancelable, lease term when determining the lease assets and liabilities. Operating lease expense is recognized on a straight-line basis over the lease term. Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities. Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. These amounts include payments affected by the Consumer Price Index, payments contingent on wind or solar production for power purchase arrangements, and payments for maintenance and utilities. Components of operating lease expense were as follows (in millions, unaudited):
Supplemental cash flow information related to operating leases was as follows (in millions, unaudited):
As of March 31, 2019, our operating leases had a weighted average remaining lease term of 10 years and a weighted average discount rate of 2.9%. Future lease payments under operating leases as of March 31, 2019 were as follows (in millions, unaudited):
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Variable Interest Entities (VIEs) |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities (VIEs) | Variable Interest Entities (VIEs) Consolidated VIEs We consolidate VIEs in which we hold a variable interest and are the primary beneficiary. We are the primary beneficiary because we have the power to direct activities that most significantly affect their economic performance and have the obligation to absorb the majority of their losses or benefits. The results of operations and financial position of these VIEs are included in our consolidated financial statements. For certain consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of December 31, 2018 and March 31, 2019, assets that can only be used to settle obligations of these VIEs were $2.4 billion and the liabilities for which creditors only have recourse to the VIEs were $909 million and $786 million, respectively. Calico Calico is a life science company with a mission to harness advanced technologies to increase our understanding of the biology that controls lifespan. In September 2014, AbbVie Inc. (AbbVie) and Calico entered into a research and development collaboration agreement intended to help both companies discover, develop, and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer. In the second quarter of 2018, AbbVie and Calico amended the collaboration agreement resulting in an increase in total commitments. As of March 31, 2019, AbbVie has contributed $750 million to fund the collaboration pursuant to the agreement and is committed to an additional $500 million which will be paid by the fourth quarter of 2019. As of March 31, 2019, Calico has contributed $500 million and has committed up to an additional $750 million. Calico has used its scientific expertise to establish a world-class research and development facility, with a focus on drug discovery and early drug development; and AbbVie provides scientific and clinical development support and its commercial expertise to bring new discoveries to market. Both companies share costs and profits for projects covered under this agreement equally. AbbVie's contribution has been recorded as a liability on Calico's financial statements, which is reduced and reflected as a reduction to research and development expense as eligible research and development costs are incurred by Calico. As of March 31, 2019, we have contributed $480 million to Calico in exchange for Calico convertible preferred units and are committed to fund up to an additional $750 million on an as-needed basis and subject to certain conditions. Verily Verily is a life science company with a mission to make the world's health data useful so that people enjoy healthier lives. In December 2018, Verily received $900 million in cash from a $1.0 billion investment round. The remaining $100 million was received in the first quarter of 2019. As of March 31, 2019, Verily has received an aggregate amount of $1.8 billion from sales of equity securities to external investors. These transactions were accounted for as equity transactions and no gain or loss was recognized. Unconsolidated VIEs Certain renewable energy investments included in our non-marketable equity investments accounted for under the equity method are VIEs. These entities' activities involve power generation using renewable sources. We have determined that the governance structures of these entities do not allow us to direct the activities that would significantly affect their economic performance such as setting operating budgets. Therefore, we do not consolidate these VIEs in our consolidated financial statements. The carrying value and maximum exposure of these VIEs were $705 million and $665 million as of December 31, 2018 and March 31, 2019, respectively. The maximum exposure is based on current investments to date. We have determined the single source of our exposure to these VIEs is our capital investment in them. Other unconsolidated VIEs were not material as of December 31, 2018 and March 31, 2019.
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Debt |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Short-Term Debt We have a debt financing program of up to $5.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. We had no commercial paper outstanding as of December 31, 2018 and March 31, 2019. Long-Term Debt Google issued $3.0 billion of senior unsecured notes in three tranches (collectively, 2011 Notes) in May 2011, due in 2014, 2016, and 2021, as well as $1.0 billion of senior unsecured notes (2014 Notes) in February 2014 due in 2024. In April 2016, we completed an exchange offer with eligible holders of Google’s 2011 Notes due 2021 and 2014 Notes due 2024 (collectively, the Google Notes). An aggregate principal amount of approximately $1.7 billion of the Google Notes was exchanged for approximately $1.7 billion of Alphabet notes with identical interest rate and maturity. Because the exchange was between a parent and the subsidiary company and for substantially identical notes, the change was treated as a debt modification for accounting purposes with no gain or loss recognized. In August 2016, Alphabet issued $2.0 billion of senior unsecured notes (2016 Notes) due 2026. The net proceeds from the issuance of the 2016 Notes were used for general corporate purposes, including the repayment of outstanding commercial paper. The Alphabet notes due in 2021, 2024, and 2026 rank equally with each other and are structurally subordinate to the outstanding Google Notes. The total outstanding long-term debt is summarized below (in millions):
The effective interest yields based on proceeds received from the outstanding notes due in 2021, 2024, and 2026 were 3.734%, 3.377%, and 2.231%, respectively, with interest payable semi-annually. We may redeem these notes at any time in whole or in part at specified redemption prices. The total estimated fair value of all outstanding notes was approximately $3.9 billion and $4.0 billion as of December 31, 2018 and March 31, 2019, respectively. The fair value was determined based on observable market prices of identical instruments in less active markets and is categorized accordingly as Level 2 in the fair value hierarchy. Credit Facility As of March 31, 2019, we have $4.0 billion of revolving credit facilities which expire in July 2023. The interest rate for the credit facilities is determined based on a formula using certain market rates. No amounts were outstanding under the credit facilities as of December 31, 2018 and March 31, 2019.
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Supplemental Financial Statement Information |
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Balance Sheet Components Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Statement Information | Supplemental Financial Statement Information Property and Equipment, Net Property and equipment, net, consisted of the following (in millions):
As of December 31, 2018 and March 31, 2019, information technology assets under finance lease with a cost basis of $648 million and $835 million, respectively, were included in property and equipment. Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following (in millions):
Accumulated Other Comprehensive Income (Loss) The components of AOCI, net of tax, were as follows (in millions, unaudited):
The effects on net income of amounts reclassified from AOCI were as follows (in millions, unaudited):
Other Income (Expense), Net The components of other income (expense), net, were as follows (in millions, unaudited):
(2) Performance fees were reclassified for the prior period from general and administrative expenses to other income (expense), net to conform with current period presentation. For further information on the reclassification and performance fees, see Notes 1 and 13, respectively.
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Acquisitions |
3 Months Ended |
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Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions During the three months ended March 31, 2019, we completed various acquisitions and purchases of intangible assets for total consideration of approximately $79 million. In aggregate, $39 million was attributed to intangible assets, $41 million was attributed to goodwill, and $1 million was attributed to net liabilities assumed. These acquisitions generally enhance the breadth and depth of our offerings and expand our expertise in engineering and other functional areas. The amount of goodwill expected to be deductible for tax purposes is approximately $15 million. Pro forma results of operations for these acquisitions have not been presented because they are not material to the consolidated results of operations, either individually or in the aggregate. For all intangible assets acquired and purchased during the three months ended March 31, 2019, patents and developed technology have a weighted-average useful life of 3.7 years and trade names and other have a weighted-average useful life of 3.0 years.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Changes in the carrying amount of goodwill for the three months ended March 31, 2019 were as follows (in millions, unaudited):
Other Intangible Assets Information regarding purchased intangible assets were as follows (in millions):
Amortization expense relating to purchased intangible assets was $195 million and $197 million for the three months ended March 31, 2018 and 2019, respectively. As of March 31, 2019, expected amortization expense relating to purchased intangible assets for each of the next five years and thereafter are as follows (in millions, unaudited):
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Contingencies |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Legal Matters Antitrust Investigations On November 30, 2010, the EC's Directorate General for Competition opened an investigation into various antitrust-related complaints against us. On April 15, 2015, the EC issued a Statement of Objections (SO) regarding the display and ranking of shopping search results and ads, to which we responded on August 27, 2015. On July 14, 2016, the EC issued a Supplementary SO regarding shopping search results and ads. On June 27, 2017, the EC announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law. The EC decision imposed a €2.4 billion ($2.7 billion as of June 27, 2017) fine. On September 11, 2017, we appealed the EC decision and on September 27, 2017, we implemented product changes to bring shopping ads into compliance with the EC's decision. We recognized a charge of $2.7 billion for the fine in the second quarter of 2017. While under appeal, the fine is included in accrued expenses and other current liabilities on our Consolidated Balance Sheets as we provided bank guarantees in lieu of a cash payment for the fine. On April 20, 2016, the EC issued an SO regarding certain Android distribution practices. We responded to the SO and the EC's informational requests. On July 18, 2018, the EC announced its decision that certain provisions in Google’s Android-related distribution agreements infringed European competition law. The EC decision imposed a €4.3 billion ($5.1 billion as of June 30, 2018) fine and directed the termination of the conduct at issue. On October 9, 2018, we appealed the EC decision. On October 29, 2018, we implemented changes to certain of our Android distribution practices. We recognized a charge of $5.1 billion for the fine in the second quarter of 2018. While under appeal, the fine is included in accrued expenses and other current liabilities on our Consolidated Balance Sheets as we provided bank guarantees in lieu of a cash payment for the fine. On July 14, 2016, the EC issued an SO regarding the syndication of AdSense for Search (AFS). We responded to the SO and to the EC's informational requests. On March 20, 2019, the EC announced its decision that certain contractual provisions in agreements that Google had with AFS partners infringed European competition law. The EC decision imposed a fine of €1.5 billion ($1.7 billion as of March 20, 2019) and directed actions related to AFS agreements, which we implemented prior to the decision. We plan to appeal the EC's decision. We recognized a charge of $1.7 billion for the fine in the first quarter of 2019. The fine is included in accrued expenses and other current liabilities on our Consolidated Balance Sheet. The Comision Nacional de Defensa de la Competencia in Argentina, the Competition Commission of India (CCI), Brazil's Administrative Council for Economic Defense (CADE), and the Korean Fair Trade Commission have also opened investigations into certain of our business practices. In November 2016, we responded to the CCI Director General's report with interim findings of competition law infringements regarding search and ads. On February 8, 2018, the CCI issued its final decision, including a fine of approximately $21 million, finding no violation of competition law infringement on most of the issues it investigated, but finding violations, including in the display of the “flights unit” in search results, and a contractual provision in certain direct search intermediation agreements. We have appealed the CCI decision. The fine was accrued for in 2018. Patent and Intellectual Property Claims We have had patent, copyright, trade secret, and trademark infringement lawsuits filed against us claiming that certain of our products, services, and technologies infringe the intellectual property rights of others. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, functionalities, products, or services, and may also cause us to change our business practices, and require development of non-infringing products or technologies, which could result in a loss of revenues for us and otherwise harm our business. In addition, the U.S. International Trade Commission (ITC) has increasingly become an important forum to litigate intellectual property disputes because an ultimate loss for a company or its suppliers in an ITC action could result in a prohibition on importing infringing products into the U.S. Because the U.S. is an important market, a prohibition on importation could have an adverse effect on us, including preventing us from importing many important products into the U.S. or necessitating workarounds that may limit certain features of our products. Furthermore, many of our agreements with our customers and partners require us to indemnify them for certain intellectual property infringement claims against them, which would increase our costs as a result of defending such claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. Our customers and partners may discontinue the use of our products, services, and technologies, as a result of injunctions or otherwise, which could result in loss of revenues and adversely affect our business. In 2010, Oracle America, Inc. (Oracle) brought a copyright lawsuit against Google in the Northern District of California, alleging that Google's Android operating system infringes Oracle's copyrights related to certain Java application programming interfaces. After trial, final judgment was entered by the district court in favor of Google on June 8, 2016, and the court decided post-trial motions in favor of Google. Oracle appealed and on March 27, 2018, the appeals court reversed and remanded the case for a trial on damages. On May 29, 2018, we filed a petition for an en banc rehearing at the Federal Circuit, and on August 28, 2018, the Federal Circuit denied the petition. On January 24, 2019, we filed a petition to the Supreme Court of the United States to review this case. On April 29, 2019, the Supreme Court requested the views of the Solicitor General regarding our petition. We believe this lawsuit is without merit and are defending ourselves vigorously. Given the nature of this case, we are unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter. Other We are also regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving competition, intellectual property, privacy, tax and related compliance, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or publishers using our platforms, personal injury, consumer protection, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil or criminal penalties, or other adverse consequences. Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. With respect to our outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. We expense legal fees in the period in which they are incurred. Non-Income Taxes We are under audit by various domestic and foreign tax authorities with regards to non-income tax matters. The subject matter of non-income tax audits primarily arises from disputes on the tax treatment and tax rate applied to the sale of our products and services in these jurisdictions and the tax treatment of certain employee benefits. We accrue non-income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We believe these matters are without merit and we are defending ourselves vigorously. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from our expectations.
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Stockholders' Equity |
3 Months Ended |
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Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Share Repurchases In January 2018, the board of directors of Alphabet authorized the company to repurchase up to $8.6 billion of its Class C capital stock, which was completed during the three months ended March 31, 2019. In January 2019, the board of directors of Alphabet authorized the company to repurchase up to an additional $12.5 billion of its Class C capital stock. The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The repurchase program does not have an expiration date. During the three months ended March 31, 2019, we repurchased and subsequently retired 2.7 million shares of Alphabet Class C capital stock for an aggregate amount of $3.0 billion.
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Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share The following table sets forth the computation of basic and diluted net income per share of Class A and Class B common stock and Class C capital stock (in millions, except share amounts which are reflected in thousands, and per share amounts, unaudited):
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Compensation Plans |
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Compensation Plans | Compensation Plans Stock-Based Compensation For the three months ended March 31, 2018 and 2019, total stock-based compensation (SBC) expense was $2.5 billion and $2.9 billion, respectively, including amounts associated with awards we expect to settle in Alphabet stock of $2.5 billion and $2.8 billion, respectively. Stock-Based Award Activities The following table summarizes the activities for our unvested restricted stock units (RSUs) for the three months ended March 31, 2019 (unaudited):
As of March 31, 2019, there was $23.6 billion of unrecognized compensation cost related to unvested employee RSUs. This amount is expected to be recognized over a weighted-average period of 2.8 years. Performance Fees We have compensation arrangements with payouts based on realized investment returns. We recognize compensation expense based on the estimated payouts, which may result in expense recognized before investment returns are realized. For the three months ended March 31, 2018 and 2019, performance fees of $632 million and $117 million, respectively, primarily related to gains on equity securities (for further information on gains on equity securities, see Note 3) were accrued and recorded as a component of other income (expense), net. Performance fees for prior periods have been reclassified from general and administrative expenses to other income (expense), net to conform with current period presentation. For further information see Note 1.
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Income Taxes |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate for the three months ended March 31, 2018 and 2019 was 10.8% and 18.3%, respectively. The increase is primarily due to a release of our deferred tax asset valuation allowance related to the gains on equity securities in the three months ended March 31, 2018 and the non-deductible EC fine in the three months ended March 31, 2019. Our effective tax rate for the three months ended March 31, 2019 was lower than the U.S. federal statutory rate, primarily due to foreign earnings taxed at lower rates and partially offset by the impact from the EC fine that is not tax deductible. Our effective tax rate for the three months ended March 31, 2018 was lower than the U.S. federal statutory rate, primarily due to foreign earnings taxed at lower rates and the effects from a release of our deferred tax asset valuation allowance related to the gains on equity securities. We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Our total gross unrecognized tax benefits were $4.7 billion and $4.8 billion as of December 31, 2018 and March 31, 2019, respectively. Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $2.9 billion and $3.0 billion as of December 31, 2018 and March 31, 2019, respectively. For information regarding non-income taxes, see Note 10.
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Information about Segments and Geographic Areas |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information about Segments and Geographic Areas | Information about Segments and Geographic Areas We operate our business in multiple operating segments. Google is our only reportable segment. None of our other segments meet the quantitative thresholds to qualify as reportable segments; therefore, the other operating segments are combined and disclosed as Other Bets. Our reported segments are:
Revenues, cost of revenues, and operating expenses are generally directly attributed to our segments. Inter-segment revenues are not presented separately, as these amounts are immaterial. Our Chief Operating Decision Maker does not evaluate operating segments using asset information. Information about segments during the periods presented were as follows (in millions, unaudited):
Stock-based compensation and depreciation, amortization, and impairment are included in segment operating income (loss) as shown below (in millions, unaudited):
The following table presents our long-lived assets by geographic area (in millions):
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Nature of Operations and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we implemented a holding company reorganization, and as a result, Alphabet Inc. (Alphabet) became the successor issuer to Google. We generate revenues primarily by delivering relevant, cost-effective online advertising.
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Basis of Consolidation | Basis of ConsolidationThe consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. Noncontrolling interests are not presented separately as the amounts are not material. All intercompany balances and transactions have been eliminated. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The Consolidated Balance Sheet as of March 31, 2019, the Consolidated Statements of Income for the three months ended March 31, 2018 and 2019, the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2019, the Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2018 and 2019 and the Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2019 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). In our opinion, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of our financial position as of March 31, 2019, our results of operations for the three months ended March 31, 2018 and 2019, and our cash flows for the three months ended March 31, 2018 and 2019. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as amended, filed with the SEC.
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Use of Estimates | Use of EstimatesPreparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to bad debt allowance, sales allowances, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, and contingent liabilities, among others. We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently issued accounting pronouncements not yet adopted In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. We will adopt ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings. We are currently evaluating new credit loss models and updating our processes and controls in preparation for the adoption of ASU 2016-13. The effect on our consolidated financial statements will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption. Recently adopted accounting pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (Topic 842) "Leases." Topic 842 supersedes the lease requirements in Accounting Standards Codification Topic 840, "Leases." Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. We adopted Topic 842 effective January 1, 2019. The most significant effects of Topic 842 were the recognition of $8.0 billion of operating lease assets and $8.4 billion of operating lease liabilities and the de-recognition of $1.5 billion of build-to-suit assets and liabilities. We applied Topic 842 to all leases as of January 1, 2019 with comparative periods continuing to be reported under Topic 840. In the adoption of Topic 842, we carried forward the assessment from Topic 840 of whether our contracts contain or are leases, the classification of our leases, and remaining lease terms. Our accounting for finance leases remains substantially unchanged. The standard does not have a significant effect on our consolidated results of operations or cash flows. See Note 4 for further details.
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Prior Period Reclassifications | Prior Period ReclassificationsCertain amounts in prior periods have been reclassified to conform with current period presentation. Performance fees have been reclassified for all periods from general and administrative expenses to other income (expense), net to align with the presentation of the investment gains and losses on which the performance fees are based. See Note 13 for further details. |
Revenue Recognition | Deferred Revenues We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable.
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Fair Value of Financial Instruments | Debt SecuritiesWe classify our marketable debt securities within Level 2 in the fair value hierarchy because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. Equity Investments The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method. Marketable equity securities Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.
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Segment Reporting | We operate our business in multiple operating segments. Google is our only reportable segment. None of our other segments meet the quantitative thresholds to qualify as reportable segments; therefore, the other operating segments are combined and disclosed as Other Bets. |
Revenues (Tables) |
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Revenue by revenue source | The following table presents our revenues disaggregated by revenue source (in millions, unaudited). Sales and usage-based taxes are excluded from revenues.
(1) Revenues include hedging gains (losses) of $(239) million and $137 million for the three months ended March 31, 2018 and 2019, respectively, which do not represent revenues recognized from contracts with customers.
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Revenue by geographic location | The following table presents our revenues disaggregated by geography, based on the addresses of our customers (in millions, unaudited):
(2) Revenues include hedging gains (losses) for the three months ended March 31, 2018 and 2019.
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Financial Instruments (Tables) |
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Available-for-sale debt securities | The following tables summarize our debt securities by significant investment categories as of December 31, 2018 and March 31, 2019 (in millions):
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Investments by maturity date | The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities (in millions, unaudited):
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Schedule of unrealized loss on debt securities | The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2018 and March 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):
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Marketable equity securities | The following table summarizes marketable equity securities measured at fair value by significant investment categories as of December 31, 2018 and March 31, 2019 (in millions):
(1) Includes an investment that was reclassified from non-marketable equity securities following the initial public offering of the issuer.
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Summary of unrealized gains and losses for non-marketable equity securities | The following is a summary of unrealized gains and losses recorded in other income (expense), net, and included as adjustments to the carrying value of non-marketable equity securities (in millions, unaudited):
The following table summarizes the total carrying value of our non-marketable equity securities held as of March 31, 2019 including cumulative unrealized gains and losses (in millions, unaudited):
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Gains and losses on equity securities | Gains and losses for our marketable and non-marketable equity securities are summarized below (in millions, unaudited):
(1) Includes $2,488 million and $390 million related to non-marketable equity securities for the three months ended March 31, 2018 and 2019, respectively.
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Schedule of derivative instruments | The fair values of our outstanding derivative instruments were as follows (in millions):
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Schedule of gain (loss) on derivative instruments | The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income (OCI) are summarized below (in millions, unaudited):
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Offsetting assets | As of December 31, 2018 and March 31, 2019, information related to these offsetting arrangements were as follows (in millions): Offsetting of Assets
(1) The balances as of December 31, 2018 and March 31, 2019 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.
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Offsetting liabilities | Offsetting of Liabilities
(2) The balances as of December 31, 2018 and March 31, 2019 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Components of Operating Lease Expense | Components of operating lease expense were as follows (in millions, unaudited):
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Supplemental Cash Flow Information | Supplemental cash flow information related to operating leases was as follows (in millions, unaudited):
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Future Minimum Operating Lease Payments | Future lease payments under operating leases as of March 31, 2019 were as follows (in millions, unaudited):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | The total outstanding long-term debt is summarized below (in millions):
(1) Includes the outstanding (and unexchanged) Google Notes issued in 2011 and 2014 and the Alphabet notes exchanged in 2016.
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Supplemental Financial Statement Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net, consisted of the following (in millions):
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Accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in millions):
(1) Includes the effects of foreign exchange and interest. See Note 10 for further details.
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Components of accumulated other comprehensive income | The components of AOCI, net of tax, were as follows (in millions, unaudited):
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Schedule of effects on net income of amounts reclassified from AOCI | The effects on net income of amounts reclassified from AOCI were as follows (in millions, unaudited):
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Schedule of other income (expense), net | The components of other income (expense), net, were as follows (in millions, unaudited):
(2) Performance fees were reclassified for the prior period from general and administrative expenses to other income (expense), net to conform with current period presentation. For further information on the reclassification and performance fees, see
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying amount of goodwill | Changes in the carrying amount of goodwill for the three months ended March 31, 2019 were as follows (in millions, unaudited):
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Information regarding purchased intangible assets | Information regarding purchased intangible assets were as follows (in millions):
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Expected amortization expense related to purchased intangible assets | As of March 31, 2019, expected amortization expense relating to purchased intangible assets for each of the next five years and thereafter are as follows (in millions, unaudited):
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Net Income Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following table sets forth the computation of basic and diluted net income per share of Class A and Class B common stock and Class C capital stock (in millions, except share amounts which are reflected in thousands, and per share amounts, unaudited):
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Compensation Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock activity | The following table summarizes the activities for our unvested restricted stock units (RSUs) for the three months ended March 31, 2019 (unaudited):
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Information about Segments and Geographic Areas (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information by segment | Information about segments during the periods presented were as follows (in millions, unaudited):
Stock-based compensation and depreciation, amortization, and impairment are included in segment operating income (loss) as shown below (in millions, unaudited):
(4) For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock.
|
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Schedule of long-lived assets by geographic area | The following table presents our long-lived assets by geographic area (in millions):
|
Nature of Operations and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease assets | $ 8,837 | $ 0 | |
Total lease liability balance | 9,348 | ||
Derecognition of lease liability | (1,417) | (3,545) | |
Derecognition of build to suit asset | $ (60,528) | $ (59,719) | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease assets | $ 8,000 | ||
Total lease liability balance | 8,400 | ||
Construction in progress | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Derecognition of lease liability | 1,500 | ||
Derecognition of build to suit asset | $ 1,500 |
Revenues (Narrative) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue recognized during period | $ 826 |
Revenues (Revenue by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Revenue | $ 36,339 | $ 31,146 |
Revenues | ||
Segment Reporting Information [Line Items] | ||
Hedging gains (losses) included in consolidated revenue | 137 | (239) |
Segment Reporting Information [Line Items] | ||
Revenue | 5,449 | 4,354 |
Google | Google properties | ||
Segment Reporting Information [Line Items] | ||
Revenue | 25,682 | 21,998 |
Google | Google Network Members' properties | ||
Segment Reporting Information [Line Items] | ||
Revenue | 5,038 | 4,644 |
Google | Google advertising revenues | ||
Segment Reporting Information [Line Items] | ||
Revenue | 30,720 | 26,642 |
Other Bets | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 170 | $ 150 |
Financial Instruments (Contractual Maturity Date of Marketable Debt Securities) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Due in 1 year | $ 21,969 |
Due in 1 year through 5 years | 57,477 |
Due in 5 years through 10 years | 2,522 |
Due after 10 years | 10,018 |
Total | $ 91,986 |
Financial Instruments (Marketable Equity Securities) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | $ 6,452 | $ 3,493 |
Marketable Securities | 2,354 | 1,222 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | 6,452 | 3,493 |
Marketable Securities | 2,115 | 994 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | 6,720 | 5,963 |
Money market funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | 6,452 | 3,493 |
Mutual funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable Securities | $ 239 | $ 228 |
Financial Instruments (Measurement Alternative Investments) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Adjustments to Carrying Value of Non-Marketable Equity Securities | ||
Unrealized gains | $ 456 | $ 2,511 |
Unrealized losses (including impairment) | (66) | (23) |
Total unrealized gain (loss) for non-marketable equity securities | 390 | 2,488 |
Initial cost basis | 8,561 | |
Unrealized gains | 4,634 | |
Unrealized losses (including impairment) | (248) | |
Total carrying value at the end of the period | 12,947 | |
Equity Securities, FV-NI, Gain (Loss), Alternative [Abstract] | ||
Net gain (loss) on equity securities sold during the period | 42 | 387 |
Unrealized gain (loss) on equity securities held as of the end of the period(1) | 1,041 | 2,644 |
Total gain (loss) recognized in other income (expense), net | $ 1,083 | $ 3,031 |
Financial Instruments (Offsetting of Financial Assets and Financial Liabilities) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Offsetting of Assets | ||
Gross Amounts of Recognized Assets | $ 529 | $ 569 |
Gross Amounts Offset in the Consolidated Balance Sheets | (39) | (56) |
Net Presented in the Consolidated Balance Sheets | 490 | 513 |
Financial Instruments | (85) | (90) |
Cash Collateral Received | (399) | (307) |
Non-Cash Collateral Received | (2) | (14) |
Net Assets Exposed | 4 | 102 |
Offsetting of Liabilities | ||
Gross Amounts of Recognized Liabilities | 400 | 289 |
Gross Amounts Offset in the Consolidated Balance Sheets | (39) | (56) |
Net Presented in the Consolidated Balance Sheets | 361 | 233 |
Financial Instruments | (85) | (90) |
Cash Collateral Pledged | 0 | 0 |
Non-Cash Collateral Pledged | 0 | 0 |
Net Liabilities | $ 276 | $ 143 |
Leases Components of Operating Lease Expense (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 398 |
Variable lease cost | 128 |
Total operating lease cost | $ 526 |
Leases Narrative (Details) $ in Billions |
Mar. 31, 2019
USD ($)
|
---|---|
Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease term | 10 years |
Weighted average discount rate | 2.90% |
Operating leases not yet commenced, future minimum lease payments | $ 4.4 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, non-cancelable lease term | 1 year |
Finance lease, non-cancelable lease term | 0 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, non-cancelable lease term | 20 years |
Finance lease, non-cancelable lease term | 0 years |
Leases Supplemental Cash Flow Information (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Cash payments for operating leases | $ 374 |
New operating lease assets obtained in exchange for operating lease liabilities | $ 1,131 |
Leases Future Minimum Lease Payments (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | $ 1,071 |
2020 | 1,535 |
2021 | 1,437 |
2022 | 1,228 |
2023 | 1,070 |
Thereafter | 4,990 |
Total future minimum lease payments | 11,331 |
Less imputed interest | (1,983) |
Total lease liability balance | $ 9,348 |
Debt (Long-Term Debt) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Long-Term Debt | ||
Unamortized discount for the Notes above | $ (48) | $ (50) |
Subtotal | 3,952 | 3,950 |
Finance lease obligation under ASC 840 | 62 | |
Finance lease obligation | 114 | |
Total long-term debt | 4,066 | 4,012 |
3.625% Notes due on May 19, 2021 | ||
Long-Term Debt | ||
Long-term debt | $ 1,000 | 1,000 |
Long-term debt, interest rate | 3.625% | |
3.375% Notes due on February 25, 2024 | ||
Long-Term Debt | ||
Long-term debt | $ 1,000 | 1,000 |
Long-term debt, interest rate | 3.375% | |
1.998% Notes due on August 15, 2026 | ||
Long-Term Debt | ||
Long-term debt | $ 2,000 | $ 2,000 |
Long-term debt, interest rate | 1.998% |
Supplemental Financial Statement Information (Accrued Expenses and Other Current Liabilities) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Balance Sheet Components Disclosure [Abstract] | ||
European Commission fines | $ 9,388 | $ 7,754 |
Accrued customer liabilities | 1,808 | 1,810 |
Other accrued expenses and current liabilities | 8,186 | 7,394 |
Accrued expenses and other current liabilities | $ 19,382 | $ 16,958 |
Supplemental Financial Statement Information (Schedule of Other Income (Expense), Net) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Balance Sheet Components Disclosure [Abstract] | ||
Interest income | $ 522 | $ 399 |
Interest expense | (35) | (30) |
Foreign currency exchange losses, net | 74 | (24) |
Gain (loss) on debt securities, net | (2) | (39) |
Gain on equity securities, net | 1,083 | 3,031 |
Performance fees | (117) | (632) |
Loss and impairment from equity method investments, net | (40) | (7) |
Other | 53 | 212 |
Other income (expense), net | 1,538 | 2,910 |
Interest costs capitalized | $ 31 | $ 16 |
Acquisitions (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | ||
Goodwill | $ 17,943 | $ 17,888 |
Other acquisitions | ||
Business Acquisition [Line Items] | ||
Total consideration | 79 | |
Acquired intangible assets | 39 | |
Goodwill | 41 | |
Net liabilities assumed | 1 | |
Amount of goodwill expected to be deductible for tax purposes | $ 15 | |
Other acquisitions | Patents and developed technology | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets, weighted-average useful life | 3 years 8 months 12 days | |
Other acquisitions | Trade names and other | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets, weighted-average useful life | 3 years |
Goodwill and Other Intangible Assets (Goodwill Rolforward) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Changes in Carrying Amount of Goodwill | |
Balance as of December 31, 2018 | $ 17,888 |
Acquisitions | 41 |
Foreign currency translation and other adjustments | 14 |
Balance as of March 31, 2019 | 17,943 |
Changes in Carrying Amount of Goodwill | |
Balance as of December 31, 2018 | 17,521 |
Acquisitions | 41 |
Foreign currency translation and other adjustments | 14 |
Balance as of March 31, 2019 | 17,576 |
Other Bets | |
Changes in Carrying Amount of Goodwill | |
Balance as of December 31, 2018 | 367 |
Acquisitions | 0 |
Foreign currency translation and other adjustments | 0 |
Balance as of March 31, 2019 | $ 367 |
Goodwill and Other Intangible Assets (Expected Amortization Expense for Acquisition-Related Intangible Assets) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2019 | $ 520 |
2020 | 590 |
2021 | 538 |
2022 | 204 |
2023 | 7 |
Thereafter | 204 |
Total | $ 2,063 |
Contingencies (Details) $ in Millions, € in Billions |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 20, 2019
USD ($)
|
Jun. 27, 2017
USD ($)
|
Jun. 27, 2017
EUR (€)
|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2019
EUR (€)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2018
EUR (€)
|
|
Loss Contingencies [Line Items] | ||||||||||
European Commission fine | $ 1,697 | $ 0 | ||||||||
European Commission Antitrust Investigation | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
European Commission fine | $ 1,700 | $ 2,700 | € 2.4 | $ 1,700 | € 1.5 | $ 5,100 | $ 21 | $ 2,700 | $ 5,100 | € 4.3 |
Stockholders' Equity (Narrative) (Details) - USD ($) shares in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Stockholders Equity Note [Line Items] | ||||
Repurchases of capital stock | $ 3,025,000,000 | $ 2,173,000,000 | ||
Class C Capital Stock | Share Repurchase Program | ||||
Stockholders Equity Note [Line Items] | ||||
Authorized share repurchase amount | $ 12,500,000,000 | $ 8,600,000,000 | ||
Repurchases of capital stock (in shares) | 2.7 | |||
Repurchases of capital stock | $ 3,000,000,000.0 |
Compensation Plans (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Stockholders Equity Note [Line Items] | ||
Stock-based compensation expense | $ 2,900 | $ 2,500 |
Awards expected to be settled with stock | 2,769 | 2,457 |
Performance fees | 117 | $ 632 |
Restricted Stock Units (RSUs) | ||
Stockholders Equity Note [Line Items] | ||
Unrecognized compensation cost | $ 23,600 | |
Weighted average recognition period for unrecognized stock-based compensation expense | 2 years 9 months 18 days |
Compensation Plans (Unvested Restricted Stock Units Activity) (Details) - Restricted Stock Units (RSUs) |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Unvested restricted stock units - number of shares | |
Unvested at beginning of period (in shares) | shares | 18,467,678 |
Granted (in shares) | shares | 10,078,174 |
Vested (in shares) | shares | (2,830,657) |
Forfeited/canceled (in shares) | shares | (474,577) |
Unvested at end of period (in shares) | shares | 25,240,618 |
Unvested restricted stock units - weighted-average grant-date fair value | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 936.96 |
Granted (in dollars per share) | $ / shares | 1,053.10 |
Vested (in dollars per share) | $ / shares | 872.80 |
Forfeited/canceled (in dollars per share) | $ / shares | 968.80 |
Unvested at end of period (in dollars per share) | $ / shares | $ 989.93 |
Income Taxes (Details) - USD ($) $ in Billions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 18.30% | 10.80% | |
Gross unrecognized tax benefits | $ 4.8 | $ 4.7 | |
Unrecognized tax benefits that would impact effective tax rate | $ 3.0 | $ 2.9 |
Information about Segments and Geographic Areas (Revenue by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Revenues | $ 36,339 | $ 31,146 |
Segment Reporting Information [Line Items] | ||
Revenues | 36,169 | 30,996 |
Other Bets | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 170 | $ 150 |
Information about Segments and Geographic Areas (Operating Income (Loss) by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Segment operating income (loss) | $ 6,608 | $ 7,633 |
Operating Segments | Google | ||
Segment Reporting Information [Line Items] | ||
Segment operating income (loss) | 9,325 | 8,368 |
Operating Segments | Other Bets | ||
Segment Reporting Information [Line Items] | ||
Segment operating income (loss) | (868) | (571) |
Reconciling items | ||
Segment Reporting Information [Line Items] | ||
Segment operating income (loss) | $ (1,849) | $ (164) |
Information about Segments and Geographic Areas (Capital Expenditures by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 4,638 | $ 7,299 |
Operating Segments | Google | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 4,534 | 7,669 |
Operating Segments | Other Bets | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 59 | 55 |
Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 45 | $ (425) |
Information about Segments and Geographic Areas (Stock-based Compensation and Depreciation, Amortization and Impairment by Segment) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Stock-based compensation expense | $ 2,769 | $ 2,457 |
Depreciation, amortization and impairment | 2,613 | 1,986 |
Operating Segments | Google | ||
Segment Reporting Information [Line Items] | ||
Stock-based compensation expense | 2,612 | 2,304 |
Depreciation, amortization and impairment | 2,529 | 1,901 |
Operating Segments | Other Bets | ||
Segment Reporting Information [Line Items] | ||
Stock-based compensation expense | 123 | 112 |
Depreciation, amortization and impairment | 84 | 85 |
Reconciling items | ||
Segment Reporting Information [Line Items] | ||
Stock-based compensation expense | $ 34 | $ 41 |
Information about Segments and Geographic Areas (Long-Lived Assets by Geographic Area) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 107,142 | $ 97,116 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 81,160 | 74,882 |
International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 25,982 | $ 22,234 |
Label | Element | Value |
---|---|---|
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (599,000,000) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (4,000,000) |
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