Alphabet Inc. (Class C) · Earnings release

Alphabet Announces Third Quarter 2024 Results

MOUNTAIN VIEW, Calif. – October 29, 2024 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2024.

•Consolidated Alphabet revenues in Q3 2024 increased 15%, or 16% in constant currency, year over year to $88.3 billion reflecting strong momentum across the business.

•Google Services revenues increased 13% to $76.5 billion, led by strength across Google Search & other, Google subscriptions, platforms, and devices, and YouTube ads.

•Google Cloud revenues increased 35% to $11.4 billion led by accelerated growth in Google Cloud Platform (GCP) across AI Infrastructure, Generative AI Solutions, and core GCP products.

•Total operating income increased 34% and operating margin percent expanded by 4.5 percentage points to 32%.

•Net income increased 34% and EPS increased 37% to $2.12.

Sundar Pichai, CEO, said: “The momentum across the company is extraordinary. Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools.

In Search, our new AI features are expanding what people can search for and how they search for it. In Cloud, our AI solutions are helping drive deeper product adoption with existing customers, attract new customers and win larger deals. And YouTube’s total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time.

We generated strong revenue growth in the quarter, and our ongoing efforts to improve efficiency helped deliver improved margins. I’m looking forward to driving more advances for consumers, customers and creators globally.”

Q3 2024 Financial Highlights (unaudited)

The following table summarizes our consolidated financial results for the quarters ended September 30, 2023 and 2024 (in millions, except for per share information and percentages).

Quarter Ended September 30,

Revenues

$

$

Change in revenues year over year

%

%

Change in constant currency revenues year over year(1)

%

%

Operating income

$

$

Operating margin(2)

%

%

Other income (expense), net

$

$

Net income

$

$

Diluted EPS

$

$

(1) Non-GAAP measure. See the section 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.

(2) Operating margin percent expanded by 4.5 percentage points year over year. This reflects, when rounding to one decimal place, operating margins of 27.8% and 32.3% for the quarters ended September 30, 2023 and 2024, respectively.

1

Q3 2024 Supplemental Information (in millions, except for number of employees; unaudited)

Revenues, Traffic Acquisition Costs (TAC), and Number of Employees

Quarter Ended September 30,

Google Search & other

$

$

YouTube ads

Google Network

Google advertising

Google subscriptions, platforms, and devices

Google Services total

Google Cloud

Other Bets

Hedging gains (losses)

(1)

Total revenues

$

$

Total TAC

$

$

Number of employees

Segment Operating Results

As announced on October 17, 2024, the Gemini app team within Google Services that is developing the direct consumer interface to our Gemini models will join Google DeepMind. We are currently evaluating the potential effect the reorganization will have on our segment operating results.

Quarter Ended September 30,

Operating income (loss):

Google Services

$

$

Google Cloud

$

Other Bets

$

Alphabet-level activities(1)

$

Total income from operations

$

$

(1)In addition to the costs included in Alphabet-level activities, hedging gains (losses) related to revenue were $(1) million and $17 million for the three months ended September 30, 2023 and 2024, respectively. For the three months ended September 30, 2023 and 2024, Alphabet-level activities included substantially all of the charges related to employee severance and our office space optimization efforts. During the quarter ended September 30, 2024, we incurred office space charges totaling $607 million.

Additional Information Relating to the Quarter Ended September 30, 2024 (unaudited)

Dividend Program

Dividend payments to stockholders of Class A, Class B, and Class C shares were $1.2 billion, $173 million, and $1.1 billion, respectively, totaling $2.5 billion for the three months ended September 30, 2024. On October 29, 2024, Alphabet announced a cash dividend of $0.20 per share that will be paid on December 16, 2024, to stockholders of record as of December 9, 2024, on each of the company’s Class A, Class B, and Class C shares.

2

Webcast and Conference Call Information

A live audio webcast of our third quarter 2024 earnings release call will be available on YouTube at https://www.youtube.com/live/wjkf4t8BfLM. 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, 2023 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, 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, 2024, 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 29, 2024. 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 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 sections captioned “Reconciliation from GAAP Net Cash Provided by Operating Activities to Non-GAAP 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.xyz

press@abc.xyz

3

Alphabet Inc.

CONSOLIDATED BALANCE SHEETS

(In millions, except par value per share amounts)

As of

As of

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

$

Marketable securities

Total cash, cash equivalents, and marketable securities

Accounts receivable, net

Other current assets

Total current assets

Non-marketable securities

Deferred income taxes

Property and equipment, net

Operating lease assets

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

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

Stockholders’ equity:

Preferred stock, $0.001 par value per share, 100 shares authorized; no shares issued and outstanding

0

0

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); 12,460 (Class A 5,899, Class B 870, Class C 5,691) and 12,264 (Class A 5,844, Class B 865, Class C 5,555) shares issued and outstanding

Accumulated other comprehensive income (loss)

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

4

Alphabet Inc.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts, unaudited)

Quarter Ended September 30,

Year to Date September 30,

Revenues

$

$

$

$

Costs and expenses:

Cost of revenues

Research and development

Sales and marketing

General and administrative

Total costs and expenses

Income from operations

Other income (expense), net

Income before income taxes

Provision for income taxes

Net income

$

$

$

$

Basic earnings per share

$

$

$

$

Diluted earnings per share

$

$

$

$

Number of shares used in basic earnings per share calculation

Number of shares used in diluted earnings per share calculation

5

Alphabet Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, unaudited)

Quarter Ended September 30,

Year to Date September 30,

Operating activities

Net income

$

$

$

$

Adjustments:

Depreciation of property and equipment

Stock-based compensation expense

Deferred income taxes

Loss (gain) on debt and equity securities, net

Other

Changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable, net

Income taxes, net(1)

Other assets

Accounts payable

Accrued expenses and other liabilities(2)

Accrued revenue share

Deferred revenue

Net cash provided by operating activities

Investing activities

Purchases of property and equipment

Purchases of marketable securities

Maturities and sales of marketable securities

Purchases of non-marketable securities

Maturities and sales of non-marketable securities

Acquisitions, net of cash acquired, and purchases of intangible assets

Other investing activities

Net cash used in investing activities

Financing activities

Net payments related to stock-based award activities

Repurchases of stock

Dividend payments

0

0

Proceeds from issuance of debt, net of costs

Repayments of debt

Proceeds from sale of interest in consolidated entities, net

3

8

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$

$

$

(1) The three and nine months periods ended September 30, 2023 included the effect of the IRS payment deferral relief made available to taxpayers headquartered in designated counties in California.

(2) The three and nine months periods ended September 30, 2024 included a cash payment of $3.0 billion for the 2017 EC shopping fine.

6

Segment Results

The following table presents our segment revenues and operating income (loss) (in millions; unaudited):

Quarter Ended September 30,

Revenues:

Google Services

$

$

Google Cloud

Other Bets

Hedging gains (losses)

(1)

Total revenues

$

$

Operating income (loss):

Google Services

$

$

Google Cloud

$

Other Bets

$

Alphabet-level activities

$

Total income from operations

$

$

We report our segment results as Google Services, Google Cloud, and Other Bets:

•Google Services includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; fees received for consumer subscription-based products such as YouTube TV, YouTube Music and Premium, and NFL Sunday Ticket, as well as Google One; the sale of apps and in-app purchases and devices.

•Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues primarily from consumption-based fees and subscriptions 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 healthcare-related services 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, including development costs of our general AI models; 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 employee severance and office space reductions during 2023 and 2024 were also not allocated to our segments. Additionally, hedging gains (losses) related to revenue are not allocated to our segments.

7

Other Income (Expense), Net

The following table presents our other income (expense), net (in millions; unaudited):

Quarter Ended September 30,

Interest income

$

$

Interest expense

Foreign currency exchange gain (loss), net

Gain (loss) on debt securities, net

Gain (loss) on equity securities, net(1)

Performance fees

Income (loss) and impairment from equity method investments, net

Other

Other income (expense), net

$

$

(1)Includes all gains and losses, unrealized and realized, on equity securities. For Q3 2024, the net effect of the gain on equity securities of $1.8 billion and the $29 million reversal of previously accrued performance fees related to certain investments increased the provision for income tax, net income, and diluted EPS by $389 million, $1.5 billion, and $0.12, 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 GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow (in millions; unaudited):

We provide non-GAAP 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.

Net cash provided by operating activities

$

Less: purchases of property and equipment

Free cash flow

$

Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.

8

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, 2023 to the Quarter Ended September 30, 2024

% Change from Prior Period

Quarter Ended September 30,

Less FX Effect

Constant Currency Revenues

As Reported

Less Hedging Effect

Less FX Effect

Constant Currency Revenues

United States

$

$

$

0

$

%

0

%

%

EMEA

%

(1)

%

%

APAC

%

(2)

%

%

Other Americas

%

%

%

Revenues, excluding hedging effect

%

(1)

%

%

Hedging gains (losses)

(1)

Total revenues(1)

$

$

$

%

0

%

(1)

%

%

(1)Total constant currency revenues of $89.3 billion for the quarter ended September 30, 2024 increased $12.6 billion compared to $76.7 billion in revenues, excluding hedging effect for the quarter ended September 30, 2023.

Comparison from the Quarter Ended June 30, 2024 to the Quarter Ended September 30, 2024

% Change from Prior Period

Quarter Ended

Less FX Effect

Constant Currency Revenues

As Reported

Less Hedging Effect

Less FX Effect

Constant Currency Revenues

United States

$

$

$

0

$

5

%

0

%

5

%

EMEA

3

%

1

%

2

%

APAC

5

%

0

%

5

%

Other Americas

3

%

(4)

%

7

%

Revenues, excluding hedging effect

4

%

0

%

4

%

Hedging gains (losses)

Total revenues(1)

$

$

$

4

%

0

%

0

%

4

%

(1)Total constant currency revenues of $88.1 billion for the quarter ended September 30, 2024 increased $3.5 billion compared to $84.6 billion in revenues, excluding hedging effect for the quarter ended June 30, 2024.

9

Total Revenues — Prior Year Comparative Periods

Comparison from the Quarter Ended September 30, 2022 to the Quarter Ended September 30, 2023

Quarter Ended September 30,

% Change from Prior Period

Less FX Effect

Constant Currency Revenues

As Reported

Less Hedging Effect

Less FX Effect

Constant Currency Revenues

Revenues excluding hedging effect

$

$

$

$

%

1

%

%

Hedging gains (losses)

$

$

(1)

Total revenues

$

$

$

%

(1)

%

1

%

%