Alphabet Announces First Quarter 2020 Results
MOUNTAIN VIEW, Calif. – April 28, 2020 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial
results for the quarter ended March 31, 2020.
“Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time,” said
Sundar Pichai, Chief Executive Officer of Alphabet and Google. “People are relying on Google’s services more thanever and we’ve marshalled our resources and product development in this urgent moment.”“Our business, led by Search, YouTube, and Cloud, drove Alphabet revenues to $41.2 billion, up 13% versus lastyear, or 15% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google.
“Performance was strong during the first two months of the quarter, but then in March we experienced a significant
slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in
our long-term opportunities.”
Q1 2020 financial highlights
The following table summarizes our consolidated financial results for the quarters ended March 31, 2019 and 2020
(in millions, except for per share information and percentages; unaudited). Prior period results excluding the effectof the European Commission (EC) fine of $1.7 billion have been included to facilitate comparison to current quarter
performance (labeled “Non-GAAP”).

Revenues
Increase in revenues year over year
Increase in constant currency revenues year over year

Quarter Ended March 31,
2019
2020
$36,339$41,159
17 %
13 %
19 %
15 %

Operating income
Operating margin
Operating income (Non-GAAP)(1)
Operating margin (Non-GAAP)(1)$6,60818 %$8,30523 %$7,97719 %$7,97719 %Other income (expense), net$1,538($220)Net income
Diluted EPS
Net income (Non-GAAP)(1)
Diluted EPS (Non-GAAP)(1)$6,657$9.50$8,339$11.90$6,836$9.87$6,836$9.87(1)

Non-GAAP results presented for Q1 2019 exclude the EC fine. See the table captioned “Reconciliation of non-GAAP results of operations
to the nearest comparable GAAP measures” for more details.

Q1 2020 supplemental information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC) and number of employees
The following table summarizes our revenues, total TAC and number of employees. Hedging gains, which werepreviously included in Google revenues, are presented separately.
Quarter Ended March 31,
2019
2020
$22,547$24,502
3,025
4,038
25,57228,5405,015
5,223
30,58733,763
1,825
2,777
3,620
4,435
36,032
40,975
170
135
137
49
$36,339$41,159

Google Search & other
YouTube ads(1)Google properties
Google Network Members' properties
Google advertising
Google Cloud
Google other(1)Google revenues
Other Bets revenues
Hedging gains
Total revenues
Total TAC

$6,860$7,452

Number of employees

103,459

123,048(1)

YouTube non-advertising revenues are included in Google other revenues.

Segment operating results
Quarter Ended March 31,
2019
2020
$9,188$9,270($868)($1,121)

Google operating income*
Other Bets operating loss

*The EC fine is included in reconciling items for the quarter ended March 31, 2019 as it is not allocated to Google for segment
reporting purposes.

Webcast and conference call information
A live audio webcast of our first quarter 2020 earnings release call will be available at http://abc.xyz/investor. The
call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain nonGAAP measures to their nearest comparable GAAP measures, is also available on that site.
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).
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 forthe year ended December 31, 2019, which is on file with the SEC and is 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, 2020. All information provided in this release and in
the attachments is as of April 28, 2020. Undue reliance should not be placed on the forward-looking statements inthis 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.

2

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: operating income, excluding the EC fine; operating margin,excluding the EC fine; net income, excluding the EC fine; diluted earnings per share, excluding the EC fine; free
cash flow; constant currency revenues; and constant currency revenue growth. 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 toevaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningfulsupplemental 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 foreignexchange rate movements and hedging activities or our operating performance excluding extraordinary fines. We
believe that both management and investors benefit from referring to these non-GAAP financial measures inassessing 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 areuseful to investors both because (1) they allow for greater transparency with respect to key metrics used bymanagement in its financial and operational decision-making and (2) they are used by our institutional investors andthe 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 theselimitations 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 inaccordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation of
non-GAAP results of operations to the nearest comparable GAAP measures,” “Reconciliation from net cash
provided by operating activities to free cash flow” and “Reconciliation from GAAP revenues to non-GAAP constantcurrency 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 share amounts which are reflected in thousands and par value per share amounts)
As ofDecember 31,
2019

As of
March 31,2020
(unaudited)

AssetsCurrent assets:
Cash and cash equivalents
Marketable securities
Total cash, cash equivalents, and marketable securities
Accounts receivable, net
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
Stockholders’ equity:
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; noshares 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); 688,335 (Class A 299,828, Class B 46,441,
Class C 342,066) and 683,972 (Class A 300,047, Class B 46,407, Class C 337,518)
shares issued and outstanding
Accumulated other comprehensive loss
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity

4

$

$

$

$

18,498101,177
119,675
25,326
2,166
999
4,412
152,578
13,078721
73,646
10,941
1,979
20,624
2,342
275,909

$

5,561
8,495
23,067
5,916
1,908
274
45,221
4,554
358
9,885
1,701
10,2142,534
74,467$$

19,644
97,585
117,229
21,825
1,910
889
5,165
147,018
12,367730
76,747
11,2191,840
20,734
2,748
273,403

4,099
5,656
22,601
4,982
1,938
913
40,189
5,016
350
9,207
2,079
10,476
2,427
69,7440050,552

53,688(1,232)
152,122
201,442
275,909 $(1,097)151,068
203,659
273,403

Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME(In millions, except share amounts which are reflected in thousands and per share amounts)

Revenues$

Quarter Ended March 31,
2019
2020
(unaudited)
36,339 $41,159Costs and expenses:
Cost of revenues

16,012

18,982

Research and development

6,029

6,820

Sales and marketing

3,905

4,500

General and administrative

2,088

2,880

European Commission fines

1,697

0

Total costs and expenses

29,73133,182

Income from operations

6,608

7,977

Other income (expense), net

1,538

(220)

Income before income taxes

8,146

7,757

Provision for income taxes

1,489

921

Net income

$

6,657

$

6,836

Basic earnings per share of Class A and B common stock and Class C capital stock

$

9.58

$

9.96

Diluted earnings per share of Class A and B common stock and Class C capital stock

$

9.50

$

9.87

Number of shares used in basic earnings per share calculation

694,869

686,465

Number of shares used in diluted earnings per share calculation

700,879

692,2675

Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)
Quarter Ended March 31,
2019
2020
(unaudited)
Operating activities
Net income

$

6,657

$

6,836

Adjustments:
Depreciation and impairment of property and equipment

2,416

2,899

197

209

2,769

3,191

(73)

175

(1,081)

802

22

297

Accounts receivable

1,172

2,602

Income taxes, net

1,068

(245)

Other assets

(265)

(115)

Accounts payable

(425)

(835)

Accrued expenses and other liabilities(229)(3,531)

Accrued revenue share

(147)

(871)

Amortization and impairment of intangible assets
Stock-based compensation expense
Deferred income taxes(Gain) loss on debt and equity securities, net
Other
Changes in assets and liabilities, net of effects of acquisitions:Deferred revenue
Net cash provided by operating activities

(81)

37

12,00011,451

Investing activities
Purchases of property and equipment(4,638)(6,005)Purchases of marketable securities(20,883)(37,563)

Maturities and sales of marketable securities

21,006

41,811

Purchases of non-marketable investments

(907)

(572)

Maturities and sales of non-marketable investments

99

260

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

(99)

(190)

Other investing activities

34

412

(5,388)(1,847)

Net payments related to stock-based award activities(1,175)(1,241)

Repurchases of capital stock(3,025)(8,496)

Net cash used in investing activities
Financing activities

Proceeds from issuance of debt, net of costs

315

1,898

Repayments of debt

(345)

(1,947)

Proceeds from sale of interest in consolidated entities
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents

47

1,600

(4,183)(8,186)18(272)

Net increase in cash and cash equivalents

2,447

1,146

Cash and cash equivalents at beginning of period

16,701

18,498Cash and cash equivalents at end of period$

619,148$19,644

Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures (in millions,
except percentages, share amounts which are reflected in thousands and per share amounts; unaudited)
We provide non-GAAP consolidated results excluding certain charges because they allow investors to makemeaningful comparisons between Alphabet's recurring core business operating results and those of othercompanies, as well as providing Alphabet's management with an important tool for financial and operational
decision making and for evaluating Alphabet's own recurring core business operating results over different periodsof time.
Quarter Ended
March 31, 2019
$
6,608
1,697
$
8,305

Operating income (GAAP)
Add: EC fine*Operating income (Non-GAAP)
Operating margin (GAAP)
Operating margin (Non-GAAP)

18 %
23 %

Net income (GAAP)
Add: EC fine, net of the foreign exchange gain*
Net income (Non-GAAP)$

Diluted net income per share (GAAP)
Diluted EPS (Non-GAAP)
Shares used in diluted per share calculation (in thousands)

$
$

6,657
1,682
8,339

$

9.50
11.90
700,879*There is no tax effect as this charge is not tax deductible.
Non-GAAP operating income: We define non-GAAP operating income as operating income excluding certain charges.
Non-GAAP operating margin: We define non-GAAP operating margin as non-GAAP operating income divided by revenues.
Non-GAAP net income and diluted EPS: We define non-GAAP net income as net income excluding certain charges, less therelated tax effects as applicable and non-GAAP diluted EPS as net income excluding certain charges, less the related tax effects
as applicable, divided by total weighted average outstanding shares, on a fully-diluted basis.

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 andinvestors 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, 2020$
11,451(6,005)$
5,446

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.

7

Reconciliation from GAAP revenues to non-GAAP constant currency revenues (in millions, except
percentages; unaudited):
We provide non-GAAP constant currency revenues and growth because they facilitate the comparison of current
results to historic performance by excluding the effect of foreign exchange rate movements and hedging activities,
which are not indicative of our core operating results.
Quarter Ended March 31, 2020

EMEA revenues (GAAP)

YoY(using Q1'19's FX rates)

QoQ(using Q4'19's FX rates)$$

Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates

12,845235

Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates

12,845
N/A

N/A

(63)

EMEA constant currency revenues (non-GAAP)$

13,080$12,782

Prior period EMEA revenues (GAAP)$

11,668$14,099EMEA revenue growth (GAAP)

10 %

(9)%

EMEA constant currency revenue growth (non-GAAP)

12 %

(9)%

APAC revenues (GAAP)

$

7,238

$

7,238

Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates

61

N/A

Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates

N/A

37

APAC constant currency revenues (non-GAAP)

$

7,299

$

7,275

Prior period APAC revenues (GAAP)

$

6,096

$

7,482

APAC revenue growth (GAAP)

19 %

(3)%

APAC constant currency revenue growth (non-GAAP)

20 %

(3)%

Other Americas revenues (GAAP)

$

2,157

$

2,157

Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates

96

N/A

Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates

N/A

14

Other Americas constant currency revenues (non-GAAP)

$

2,253

$

2,171

Prior period Other Americas revenues (GAAP)

$

1,906

$

2,666

Other Americas revenue growth (GAAP)

13 %

(19)%

Other Americas constant currency revenue growth (non-GAAP)

18 %

(19)%

United States revenues (GAAP)$

United States revenue growth (GAAP)

18,870$14 %18,870(13)%

Hedging gains

$

49

$

49

Revenues (GAAP)$

41,159$41,159$41,502$

41,098$36,202$

45,984

Constant currency revenues (non-GAAP)(1)Prior period revenues, excluding hedging effect (non-GAAP)
Revenue growth (GAAP)

13 %

(11)%

Constant currency revenue growth (non-GAAP)

15 %

(11)%

(1)

Total revenues and hedging gains for the quarter ended March 31, 2019 were $36,339 million and $137 million,
respectively. Total revenues and hedging gains for the quarter ended December 31, 2019 were $46,075 million and $91
million, respectively.

Non-GAAP constant currency revenues and growth: We define non-GAAP constant currency revenues as total revenues
excluding the effect of foreign exchange rate movements and hedging activities, and we use it to determine the constantcurrency revenue growth on year-on-year and quarter-on-quarter basis. Non-GAAP constant currency revenues are calculatedby translating current quarter revenues using prior period exchange rates and excluding any hedging effect recognized in thecurrent quarter. Constant currency revenue growth (expressed as a percentage) is calculated by determining the increase incurrent quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging effect recognized in
the prior period.

8

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

Interest income
Interest expense
Foreign currency exchange gain (loss), net
Gain (loss) on debt securities, net
Gain (loss) on equity securities, net(1)(2)
Performance fees
Gain (loss) and impairment from equity method investments, net
Other
Other income (expense), net
(1)

(2)

$

$

Quarter Ended
March 31,
2019
2020
522 $
586
(35)
(21)
74
(81)
(2)
12
1,083
(814)
(117)
6
(40)
74
53
18
1,538 $
(220)

Includes unrealized losses on equity investments that we hold. Fluctuations in the value of our investments could
significantly contribute to the volatility of OI&E in future periods.
All gains and losses, unrealized and realized, on equity security investments are recognized in OI&E. For Q1 2020, the net
effect of the loss on equity securities of $814 million and the performance fees reversal of $6 million decreased income tax,
net income, and diluted EPS by $170 million, $638 million, and $0.92, respectively.

9

Segment results
The following table presents our revenues, operating income (loss), stock-based compensation (SBC), capital
expenditures, and depreciation, amortization, and impairment by segment (in millions; unaudited):
Quarter Ended
March 31,20192020
Revenues:
Google(1)Other Bets
Hedging gains(1)Total revenues$$

Operating income (loss):
Google(1)Other Bets
Reconciling items(1)(2)
Total income from operations$$

Stock-based compensation(3):GoogleOther Bets
Reconciling items(4)Total stock-based compensation$$

Capital expenditures:
GoogleOther Bets
Reconciling items(5)Total capital expenditures$$

Depreciation, amortization, and impairment:
GoogleOther Bets
Reconciling items(4)Total depreciation, amortization, and impairment
(1)
(2)

(3)
(4)

(5)

$

$

36,032
170
137
36,339$$40,975135
49
41,1599,188 $
(868)
(1,712)
6,608 $

9,270
(1,121)
(172)
7,977

2,612
123
34
2,769

$

2,988
135
67
3,190

4,534
59
45
4,638

$

2,529
84
0
2,613

$

$

$

$

5,663
104
238
6,005

3,013
92
3
3,108

Hedging gains, which were previously included in Google revenues, are presented separately.
Reconciling items are generally comprised of corporate administrative costs, hedging gains and other miscellaneous items
that are not allocated to individual segments. Additionally, reconciling items for the quarter ended March 31, 2019 includes
the EC fine of $1.7 billion.
For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock.
Reconciling items are primarily related to corporate administrative and other costs that are not allocated to individual
segments.
Reconciling items are related to timing differences of payments, as segment capital expenditures are on an accrual basis
while total capital expenditures shown on the Consolidated Statements of Cash Flows are on a cash basis, and othermiscellaneous differences.

10