EX-99.1 2 googexhibit991q32023.htm EX-99.1 Document
Exhibit 99.1
Alphabet Announces Third Quarter 2023 Results
MOUNTAIN VIEW, Calif. – October 24, 2023 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2023.
Sundar Pichai, CEO, said: “I’m pleased with our financial results and our product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.”
Ruth Porat, President and Chief Investment Officer; CFO said: “The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value.”
Q3 2023 Financial Highlights (unaudited)
The following table summarizes our consolidated financial results for the quarters ended September 30, 2022 and 2023 (in millions, except for per share information and percentages).
Quarter Ended September 30,
20222023
Revenues$69,092 $76,693 
Change in revenues year over year%11 %
Change in constant currency revenues year over year(1)
11 %11 %
Operating income$17,135 $21,343 
Operating margin25 %28 %
Other income (expense), net
$(902)$(146)
Net income$13,910 $19,689 
Diluted EPS$1.06 $1.55 
(1)    Non-GAAP measure. See the table captioned “Reconciliation from GAAP revenues to non-GAAP constant currency revenues and GAAP percentage change in revenues to non-GAAP percentage change in constant currency revenues” for more details.



Q3 2023 Supplemental Information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC), and Number of Employees

Quarter Ended September 30,
20222023
Google Search & other$39,539 $44,026 
YouTube ads7,071 7,952 
Google Network7,872 7,669 
Google advertising54,482 59,647 
Google other6,895 8,339 
Google Services total61,377 67,986 
Google Cloud6,868 8,411 
Other Bets209 297 
Hedging gains (losses)638 (1)
Total revenues$69,092 $76,693 
Total TAC$11,826 $12,642 
Number of employees(1)
186,779 182,381 
(1)    Substantially all of the employees affected by the reduction of our workforce were no longer included in our headcount as of September 30, 2023.
Segment Operating Results
As announced on April 20, 2023, we brought together part of Google Research (the Brain team) and DeepMind to significantly accelerate our progress in artificial intelligence (AI). The group, called Google DeepMind, is reported within Alphabet's unallocated corporate costs prospectively beginning in the second quarter of 2023. Previously, the Brain team was included within Google Services.

Quarter Ended September 30,
20222023
(recast)
Operating income (loss):
Google Services$18,883 $23,937 
Google Cloud(440)266 
Other Bets(1,225)(1,194)
Corporate costs, unallocated(1)
(83)(1,666)
Total income from operations$17,135 $21,343 
(1)In addition to the Alphabet-level costs included in unallocated corporate costs, hedging gains (losses) related to revenue were $638 million and $(1) million for the three months ended September 30, 2022 and 2023, respectively.
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Additional Information Relating to the Quarter Ended September 30, 2023 (unaudited)
Reductions in Our Workforce and Office Space
In January 2023, we announced a reduction of our workforce, and as a result we recorded employee severance and related charges of $86 million and $2.1 billion for the three and nine months ended September 30, 2023, respectively. In addition, we are taking actions to optimize our global office space. As a result, exit charges recorded during the three and nine months ended September 30, 2023 were $16 million and $649 million, respectively. In addition to these exit charges, for the three and nine months ended September 30, 2023, we incurred $207 million in accelerated rent and accelerated depreciation. We may incur additional charges in the future as we further evaluate our real estate needs.
For segment reporting, the substantial majority of these charges are included within unallocated corporate costs in our segment results.
Change in Useful Lives of Our Server and Network Equipment
In January 2023, we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal year 2023, and the effect was a reduction in depreciation expense of $977 million and $2.9 billion and an increase in net income of $761 million and $2.3 billion, or $0.06 and $0.18 per basic and $0.06 and $0.18 per diluted share for the three and nine months ended September 30, 2023, respectively.
Webcast and Conference Call Information
A live audio webcast of our third quarter 2023 earnings release call will be available on YouTube at https://www.youtube.com/watch?v=oXQInS9SV2Q. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available at http://abc.xyz/investor.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
We also share Google news and product updates on Google’s Keyword blog at https://www.blog.google/, which may be of interest or material to our investors.
Forward-Looking Statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which are on file with the SEC and are available on our investor relations website at http://abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and may be set forth in other reports and filings we make with the SEC. All information provided in this release and in the attachments is as of October 24, 2023. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: free cash flow; constant currency revenues; and percentage change in constant currency revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign
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exchange rate movements and hedging activities, which are recognized at the consolidated level. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation from net cash provided by operating activities to free cash flow” and “Reconciliation from GAAP revenues to non-GAAP constant currency revenues and GAAP percentage change in revenues to non-GAAP percentage change in constant currency revenues” included at the end of this release.
Contact
Investor relations
Media
investor-relations@abc.xyzpress@abc.xyz

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Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value per share amounts)
As of December 31,As of September 30,
20222023
(unaudited)
Assets
Current assets:
Cash and cash equivalents$21,879 $30,702 
Marketable securities91,883 89,233 
Total cash, cash equivalents, and marketable securities113,762 119,935 
Accounts receivable, net40,258 41,020 
Inventory2,670 2,957 
Other current assets8,105 12,398 
Total current assets164,795 176,310 
Non-marketable securities30,492 30,907 
Deferred income taxes5,261 10,983 
Property and equipment, net112,668 125,705 
Operating lease assets14,381 14,199 
Intangible assets, net2,084 1,833 
Goodwill28,960 29,146 
Other non-current assets6,623 7,628 
Total assets$365,264 $396,711 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,128 $5,803 
Accrued compensation and benefits14,028 12,562 
Accrued expenses and other current liabilities37,866 55,602 
Accrued revenue share8,370 8,025 
Deferred revenue3,908 4,303 
Total current liabilities69,300 86,295 
Long-term debt14,701 13,781 
Deferred revenue, non-current599 884 
Income taxes payable, non-current9,258 8,038 
Deferred income taxes514 528 
Operating lease liabilities12,501 12,550 
Other long-term liabilities2,247 1,433 
Total liabilities109,120 123,509 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100 shares authorized; no shares issued and outstanding
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par value per share: 300,000 shares authorized (Class A 180,000, Class B 60,000, Class C 60,000); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,541 (Class A 5,922, Class B 874, Class C 5,745) shares issued and outstanding
68,184 74,591 
Accumulated other comprehensive income (loss)(7,603)(7,036)
Retained earnings195,563 205,647 
Total stockholders’ equity256,144 273,202 
Total liabilities and stockholders’ equity$365,264 $396,711 
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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts, unaudited)
Quarter Ended September 30,Year to Date September 30,
2022202320222023
Revenues$69,092 $76,693 $206,788 $221,084 
Costs and expenses:
Cost of revenues31,158 33,229 90,861 95,757 
Research and development10,273 11,258 29,233 33,314 
Sales and marketing6,929 6,884 19,384 20,198 
General and administrative3,597 3,979 10,628 11,219 
Total costs and expenses51,957 55,350 150,106 160,488 
Income from operations17,135 21,343 56,682 60,596 
Other income (expense), net(902)(146)(2,501)709 
Income before income taxes16,233 21,197 54,181 61,305 
Provision for income taxes2,323 1,508 7,833 8,197 
Net income$13,910 $19,689 $46,348 $53,108 
Basic earnings per share of Class A, Class B, and Class C stock$1.07 $1.56 $3.53 $4.19 
Diluted earnings per share of Class A, Class B, and Class C stock$1.06 $1.55 $3.50 $4.16 
Number of shares used in basic earnings per share calculation13,018 12,581 13,118 12,677 
Number of shares used in diluted earnings per share calculation13,097 12,696 13,229 12,761 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)
Quarter Ended September 30,Year to Date September 30,
2022202320222023
Operating activities
Net income$13,910 $19,689 $46,348 $53,108 
Adjustments:
Depreciation and impairment of property and equipment3,933 3,671 11,222 10,010 
Amortization and impairment of intangible assets113 129 505 373 
Stock-based compensation expense4,976 5,743 14,262 16,801 
Deferred income taxes(1,920)(1,824)(6,157)(6,093)
Loss on debt and equity securities, net1,378 869 3,856 1,294 
Other167 262 369 912 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net(97)(2,821)2,298 (1,315)
Income taxes, net(1)
(609)1,872 (862)10,392 
Other assets(2,647)(1,624)(4,268)(2,883)
Accounts payable1,907 223 735 237 
Accrued expenses and other liabilities2,210 3,657 491 (380)
Accrued revenue share(80)103 (1,022)(315)
Deferred revenue112 707 104 690 
Net cash provided by operating activities23,353 30,656 67,881 82,831 
Investing activities
Purchases of property and equipment(7,276)(8,055)(23,890)(21,232)
Purchases of marketable securities(17,054)(13,833)(67,253)(49,422)
Maturities and sales of marketable securities28,713 15,593 84,087 52,642 
Purchases of non-marketable securities(364)(663)(1,628)(2,176)
Maturities and sales of non-marketable securities562 131 743 
Acquisitions, net of cash acquired, and purchases of intangible assets(5,649)(126)(6,885)(466)
Other investing activities791 (628)1,367 (985)
Net cash used in investing activities(833)(7,150)(14,071)(20,896)
Financing activities
Net payments related to stock-based award activities(2,041)(2,432)(7,221)(7,157)
Repurchases of stock(15,392)(15,787)(43,889)(45,313)
Proceeds from issuance of debt, net of costs15,094 1,248 44,322 9,298 
Repayments of debt(15,768)(1,414)(45,350)(9,621)
Proceeds from sale of interest in consolidated entities, net10 10 
Net cash used in financing activities(18,097)(18,382)(52,128)(52,785)
Effect of exchange rate changes on cash and cash equivalents(375)(351)(643)(327)
Net increase in cash and cash equivalents4,048 4,773 1,039 8,823 
Cash and cash equivalents at beginning of period17,936 25,929 20,945 21,879 
Cash and cash equivalents at end of period$21,984 $30,702 $21,984 $30,702 
(1)     The three and nine month period ended September 30, 2023 include the effect of the IRS payment deferral relief made available to taxpayers headquartered in designated counties in California. On October 16, 2023, we made an estimated tax payment to the IRS of $10.5 billion that will be reflected in our fourth quarter operating cash flow.
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Segment Results
The following table presents our segment revenues and operating income (loss) (in millions; unaudited):
Quarter Ended September 30,
20222023
(recast)
Revenues:
Google Services$61,377 $67,986 
Google Cloud6,868 8,411 
Other Bets209 297 
Hedging gains (losses)638 (1)
Total revenues$69,092 $76,693 
Operating income (loss):
Google Services$18,883 $23,937 
Google Cloud(440)266 
Other Bets(1,225)(1,194)
Corporate costs, unallocated(83)(1,666)
Total income from operations$17,135 $21,343 
We report our segment results as Google Services, Google Cloud, and Other Bets:
Google Services includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; sales of apps and in-app purchases, and hardware; and fees received for subscription-based products such as YouTube Premium and YouTube TV.
Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services.
Other Bets is a combination of multiple operating segments that are not individually material. Revenues from Other Bets are generated primarily from the sale of health technology and internet services.
Certain costs are not allocated to our segments because they represent Alphabet-level activities. These costs primarily include AI-focused shared R&D activities; corporate initiatives such as our philanthropic activities; corporate shared costs such as certain finance, human resource, and legal costs, including certain fines and settlements. Charges associated with reductions in our workforce and office space announced in January 2023 are not allocated to our segments. Additionally, hedging gains (losses) related to revenue are not allocated to our segments.
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Other Income (Expense), Net
The following table presents our other income (expense), net (in millions; unaudited):
Quarter Ended September 30,
20222023
Interest income$615 $1,066 
Interest expense(101)(116)
Foreign currency exchange gain (loss), net(136)(311)
Gain (loss) on debt securities, net(731)(503)
Gain (loss) on equity securities, net(1)
(647)(366)
Performance fees54 179 
Income (loss) and impairment from equity method investments, net(99)(215)
Other143 120 
Other income (expense), net$(902)$(146)
(1)Includes all gains and losses, unrealized and realized, on equity securities. For Q3 2023, the net effect of the loss on equity securities of $366 million and the $179 million of performance fees related to certain investments decreased the provision for income tax, net income, and diluted EPS by $39 million, $148 million, and $0.01, respectively. Fluctuations in the value of our investments may be affected by market dynamics and other factors and could significantly contribute to the volatility of OI&E in future periods.
Reconciliation from Net Cash Provided by Operating Activities to Free Cash Flow (in millions; unaudited):
We provide free cash flow because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet.
Quarter Ended September 30, 2023
Net cash provided by operating activities$30,656 
Less: purchases of property and equipment(8,055)
Free cash flow$22,601 
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.

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Reconciliation from GAAP Revenues to Non-GAAP Constant Currency Revenues and GAAP Percentage Change in Revenues to Non-GAAP Percentage Change in Constant Currency Revenues (in millions, except percentages; unaudited):
We provide non-GAAP constant currency revenues (“constant currency revenues”) and non-GAAP percentage change in constant currency revenues (“percentage change in constant currency revenues”), because they facilitate the comparison of current results to historic performance by excluding the effect of foreign exchange rate movements (“FX Effect”) as well as hedging activities, which are recognized at the consolidated level, as they are not indicative of our core operating results.
Non-GAAP constant currency revenues is defined as revenues excluding the effect of foreign exchange rate movements and hedging activities and is calculated by translating current period revenues using prior period exchange rates and excluding any hedging effect recognized in the current period. We calculate the percentage change in constant currency revenues by comparing constant currency revenues to the prior year comparable period revenues, excluding any hedging effect recognized in the prior period.
Revenues by Geography
Comparison from the Quarter Ended September 30, 2022 to the Quarter Ended September 30, 2023
Quarter Ended September 30, 2023
% Change from Prior Period
Quarter Ended September 30,Less FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
20222023
United States$33,372 $36,354 $$36,354 %%%
EMEA19,450 22,661 803 21,858 17 %%12 %
APAC11,494 13,126 (270)13,396 14 %(3)%17 %
Other Americas4,138 4,553 (106)4,659 10 %(3)%13 %
Revenues, excluding hedging effect
68,454 76,694 427 76,267 12 %%11 %
Hedging gains (losses)638 (1)
Total revenues(1)
$69,092 $76,693 $76,267 11 %(1)%%11 %
(1)Total constant currency revenues of $76.3 billion for the quarter ended September 30, 2023 increased $7.8 billion compared to $68.5 billion in revenues, excluding hedging effect for the quarter ended September 30, 2022.
Comparison from the Quarter Ended June 30, 2023 to the Quarter Ended September 30, 2023
Quarter Ended September 30, 2023
% Change from Prior Period
Quarter EndedLess FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
June 30, 2023September 30, 2023
United States$35,073 $36,354 $$36,354 %%%
EMEA22,289 22,661 46 22,615 %%%
APAC12,728 13,126 (219)13,345 %(2)%%
Other Americas4,511 4,553 59 4,494 %%%
Revenues, excluding hedging effect74,601 76,694 (114)76,808 %%%
Hedging gains (losses)(1)
Total revenues(1)
$74,604 $76,693 $76,808 %%%%
(1)Total constant currency revenues of $76.8 billion for the quarter ended September 30, 2023 increased $2.2 billion compared to $74.6 billion in revenues, excluding hedging effect for the quarter ended June 30, 2023.
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Total Revenues — Prior Year Comparative Periods
Comparison from the Quarter Ended September 30, 2021 to the Quarter Ended September 30, 2022
Quarter Ended September 30, 2022
Quarter Ended September 30,% Change from Prior Period
 Less FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
20212022
Revenues excluding hedging effect$65,056 $68,454 $(3,918)$72,372 %(6)%11 %
Hedging gains (losses)62 638 
Total revenues$65,118 $69,092 $72,372 %%(6)%11 %

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