Alphabet Announces First Quarter 2024 Results

MOUNTAIN VIEW, Calif. - April 25, 2024 - Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2024.

Sundar Pichai, CEO, said: "Our results in the first quarter reflect strong performance from Search, YouTube and Cloud. We are well under way with our Gemini era and there's great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation."

Ruth Porat, President and Chief Investment Officer; CFO said: "Our strong financial results for the first quarter reflect revenue strength across the company and ongoing efforts to durably reengineer our cost base. We delivered revenues of $80.5 billion, up 15% year-on-year, and operating margin expansion."

Q1 2024 Financial Highlights (unaudited)

The following table summarizes our consolidated financial results for the quarters ended March 31, 2023 and 2024 (in millions, except for per share information and percentages).

Quarter Ended March 31,

2023

2024

(unaudited)

Revenues

$

69,787

$

80,539

Change in revenues year over year

3 %

15 %

Change in constant currency revenues year over year(1)

6 %

16 %

Operating income

$

17,415

$

25,472

Operating margin

25 %

32 %

Other income (expense), net

$

790

$

2,843

Net income

$

15,051

$

23,662

Diluted EPS

$

1.17

$

1.89

  1. Non-GAAPmeasure. 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.

Q1 2024 Supplemental Information (in millions, except for number of employees; unaudited)

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

Quarter Ended March 31,

2023

2024

Google Search & other

$

40,359

$

46,156

YouTube ads

6,693

8,090

Google Network

7,496

7,413

Google advertising

54,548

61,659

Google subscriptions, platforms, and devices

7,413

8,739

Google Services total

61,961

70,398

Google Cloud

7,454

9,574

Other Bets

288

495

Hedging gains (losses)

84

72

Total revenues

$

69,787

$

80,539

Total TAC

$

11,721

$

12,946

Number of employees

190,711

180,895

Segment Operating Results

As announced on April 18, 2024, we are consolidating teams that focus on building artificial intelligence (AI) models across Google Research and Google DeepMind to further accelerate our progress in AI. AI model development teams previously under Google Research in our Google Services segment will be included as part of Google DeepMind, reported within Alphabet-level activities, prospectively beginning in the second quarter of 2024.

Quarter Ended March 31,

2023

2024

Operating income (loss):

Google Services

$

21,737

$

27,897

Google Cloud

191

$

900

Other Bets

(1,225)

$

(1,020)

Alphabet-level activities(1)

(3,288)

$

(2,305)

Total income from operations

$

17,415

$

25,472

  1. In addition to the costs included in Alphabet-level activities, hedging gains (losses) related to revenue were $84 million and $72 million for the three months ended March 31, 2023 and 2024, respectively. For the three months ended March 31, 2023 and 2024, Alphabet-level activities included substantially all of the charges related to employee severance and our office space optimization efforts.

Additional Information Relating to the Quarter Ended March 31, 2024 (unaudited)

Dividend Program

Alphabet's Board of Directors today approved the initiation of a cash dividend program, and declared a cash dividend of $0.20 per share that will be paid on June 17, 2024, to stockholders of record as of June 10, 2024, on each of the company's Class A, Class B, and Class C shares. The company intends to pay quarterly cash dividends in the future, subject to review and approval by the company's Board of Directors in its sole discretion.

Stock Repurchases

Alphabet's Board of Directors today authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares in a manner deemed in the best interest of the company and its stockholders, taking into account the economic cost and prevailing market conditions, including the relative trading prices and volumes of the Class A and Class C shares. The repurchases are expected to be executed from time to time, subject to

2

general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.

Employee Severance and Related Charges

Compensation expenses included employee severance and related charges for the three months ended March 31, 2024 of $716 million, a $1.3 billion decrease in severance and related charges as compared to the three months ended March 31, 2023. For the first quarter of 2024, these charges are included within cost of revenues, research and development, sales and marketing, and general and administrative expenses in the amounts of $153 million, $247 million, $217 million, and $99 million, respectively. For additional information about the effect of these charges in each period, see the section captioned "Reconciliation from Certain GAAP Measures to Certain Non-GAAP Measures, Excluding the Effect of Severance and Related and Office Space Charges" below.

Webcast and Conference Call Information

A live audio webcast of our first quarter 2024 earnings release call will be available on YouTube at https:// www.youtube.com/watch?v=A2O2f5dlzcE. 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, 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 March 31, 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 April 25, 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, and other cost of sales, operating expenses, and operating margin, excluding the effect of severance and related and office space charges. 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.

3

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", "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" and "Reconciliation from Certain GAAP Measures to Certain Non-GAAP Measures, Excluding the Effect of Severance and Related and Office Space Charges" included at the end of this release.

Contact

Investor relations

Media

investor-relations@abc.xyz press@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 March 31,

2023

2024

(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

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 12,381 (Class A 5,879, Class B 867, Class C 5,635) shares issued and outstanding

Accumulated other comprehensive income (loss) Retained earnings

Total stockholders' equity

Total liabilities and stockholders' equity

$

$

$

$

24,048

$

24,493

86,868

83,597

110,916

108,090

47,964

44,552

12,650

12,829

171,530

165,471

31,008

33,994

12,169

11,687

134,345

143,182

14,091

13,768

29,198

29,183

10,051

10,065

402,392

$

407,350

7,493

$

6,198

15,140

9,703

46,168

48,603

8,876

8,520

4,137

3,973

81,814

76,997

13,253

13,228

911

921

8,474

9,234

485

486

12,460

11,957

1,616

1,683

119,013

114,506

0

0

76,534

77,913

(4,402)

(4,839)

211,247

219,770

283,379

292,844

402,392

$

407,350

5

Alphabet Inc.

CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts, unaudited)

Quarter Ended March 31,

2023

2024

Revenues

$

69,787

$

80,539

Costs and expenses:

Cost of revenues

30,612

33,712

Research and development

11,468

11,903

Sales and marketing

6,533

6,426

General and administrative

3,759

3,026

Total costs and expenses

52,372

55,067

Income from operations

17,415

25,472

Other income (expense), net

790

2,843

Income before income taxes

18,205

28,315

Provision for income taxes

3,154

4,653

Net income

$

15,051

$

23,662

Basic earnings per share of Class A, Class B, and Class C stock

$

1.18

$

1.91

Diluted earnings per share of Class A, Class B, and Class C stock

$

1.17

$

1.89

Number of shares used in basic earnings per share calculation

12,781

12,415

Number of shares used in diluted earnings per share calculation

12,823

12,527

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Alphabet Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, unaudited)

Quarter Ended March 31,

2023

2024

Operating activities

Net income

$

15,051

$

23,662

Adjustments:

Depreciation of property and equipment

2,635

3,413

Stock-based compensation expense

5,284

5,264

Deferred income taxes

(1,854)

419

Loss (gain) on debt and equity securities, net

(84)

(1,781)

Other

1,104

334

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

Accounts receivable, net

4,454

3,167

Income taxes, net

4,069

3,011

Other assets

(746)

(1,000)

Accounts payable

(1,105)

(2,124)

Accrued expenses and other liabilities

(4,496)

(5,054)

Accrued revenue share

(602)

(322)

Deferred revenue

(201)

(141)

Net cash provided by operating activities

23,509

28,848

Investing activities

Purchases of property and equipment

(6,289)

(12,012)

Purchases of marketable securities

(14,227)

(20,684)

Maturities and sales of marketable securities

18,327

24,985

Purchases of non-marketable securities

(626)

(1,206)

Maturities and sales of non-marketable securities

36

313

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

(42)

(61)

Other investing activities

(125)

101

Net cash used in investing activities

(2,946)

(8,564)

Financing activities

Net payments related to stock-based award activities

(1,989)

(2,929)

Repurchases of stock

(14,557)

(15,696)

Proceeds from issuance of debt, net of costs

6,927

1,982

Repayments of debt

(6,952)

(3,079)

Proceeds from sale of interest in consolidated entities, net

3

8

Net cash used in financing activities

(16,568)

(19,714)

Effect of exchange rate changes on cash and cash equivalents

50

(125)

Net increase (decrease) in cash and cash equivalents

4,045

445

Cash and cash equivalents at beginning of period

21,879

24,048

Cash and cash equivalents at end of period

$

25,924

$

24,493

7

Segment Results

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

Quarter Ended March 31,

2023

2024

Revenues:

Google Services

$

61,961

$

70,398

Google Cloud

7,454

9,574

Other Bets

288

495

Hedging gains (losses)

84

72

Total revenues

$

69,787

$

80,539

Operating income (loss):

Google Services

$

21,737

$

27,897

Google Cloud

191

$

900

Other Bets

(1,225)

$

(1,020)

Alphabet-level activities

(3,288)

$

(2,305)

Total income from operations

$

17,415

$

25,472

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 employee severance in the first quarter of 2024, were 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 March 31,

2023

2024

Interest income

$

797

$

1,061

Interest expense

(80)

(94)

Foreign currency exchange gain (loss), net

(210)

(238)

Gain (loss) on debt securities, net

(293)

(462)

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

377

2,243

Performance fees

118

104

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

(51)

(26)

Other

132

255

Other income (expense), net

$

790

$

2,843

  1. Includes all gains and losses, unrealized and realized, on equity securities. For Q1 2024, the net effect of the gain on equity securities of $2.2 billion and the $104 million reversal of previously accrued performance fees related to certain investments increased the provision for income tax, net income, and diluted EPS by $493 million, $1.9 billion, and $0.15, 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.

Quarter Ended

March 31, 2024

Net cash provided by operating activities

$

28,848

Less: purchases of property and equipment

(12,012)

Free cash flow

$

16,836

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

9

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 March 31, 2023 to the Quarter Ended March 31, 2024

Quarter Ended March 31, 2024

% Change from Prior Period

Quarter Ended March 31,

Constant

Less

Constant

Less FX

Currency

As

Hedging

Less FX

Currency

2023

2024

Effect

Revenues

Reported

Effect

Effect

Revenues

United States

$

32,864

$

38,737

$

0

$

38,737

18 %

0 %

18 %

EMEA

21,078

23,788

204

23,584

13 %

1 %

12 %

APAC

11,681

13,289

(439)

13,728

14 %

(4)%

18 %

Other Americas

4,080

4,653

(152)

4,805

14 %

(4)%

18 %

Revenues, excluding hedging effect

69,703

80,467

(387)

80,854

15 %

(1)%

16 %

Hedging gains (losses)

84

72

Total revenues(1)

$

69,787

$

80,539

$

80,854

15 %

0 %

(1)%

16 %

  1. Total constant currency revenues of $80.9 billion for the quarter ended March 31, 2024 increased $11.2 billion compared to $69.7 billion in revenues, excluding hedging effect for the quarter ended March 31, 2023.

Comparison from the Quarter Ended December 31, 2023 to the Quarter Ended March 31, 2024

Quarter Ended March 31, 2024

% Change from Prior Period

Quarter Ended

Constant

Less

Constant

December

March 31,

Less FX

Currency

As

Hedging

Less FX

Currency

31, 2023

2024

Effect

Revenues

Reported

Effect

Effect

Revenues

United States

$

41,995

$

38,737

$

0

$

38,737

(8)%

0 %

(8)%

EMEA

25,010

23,788

360

23,428

(5)%

1 %

(6)%

APAC

13,979

13,289

85

13,204

(5)%

1 %

(6)%

Other Americas

5,176

4,653

(72)

4,725

(10)%

(1)%

(9)%

Revenues, excluding hedging effect

86,160

80,467

373

80,094

(7)%

0 %

(7)%

Hedging gains (losses)

150

72

Total revenues(1)

$

86,310

$

80,539

$

80,094

(7)%

0 %

0 %

(7)%

  1. Total constant currency revenues of $80.1 billion for the quarter ended March 31, 2024 decreased $6.1 billion compared to $86.2 billion in revenues, excluding hedging effect for the quarter ended December 31, 2023.

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Alphabet Inc. published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 20:06:36 UTC.