Alphabet Announces First Quarter 2023 Results
MOUNTAIN VIEW, Calif. – April 25, 2023 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial
results for the quarter ended March 31, 2023.
Sundar Pichai, CEO of Alphabet and Google, said: “We are pleased with our business performance in the firstquarter, with Search performing well and momentum in Cloud. We introduced important product updates anchoredin deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we seehuge opportunities ahead, continuing our long track record of innovation.”
Ruth Porat, CFO of Alphabet and Google, said: “Resilience in Search and momentum in Cloud resulted in Q1
consolidated revenues of $69.8 billion, up 3% year over year, or up 6% in constant currency. We remain committed
to delivering long-term growth and creating capacity to invest in our most compelling growth areas by re-engineering
our cost base.”
Q1 2023 financial highlights (unaudited)
Our first quarter 2023 results reflect:i.

$2.6 billion in charges related to reductions in our workforce and office space;ii.

a $988 million reduction in depreciation expense from the change in estimated useful life of our servers andcertain network equipment; andiii. a shift in the timing of our annual employee stock-based compensation awards resulting in relatively lessstock-based compensation expense recognized in the first quarter compared to the remaining quarters of
the year. The shift in timing itself will not affect the amount of stock-based compensation expense over thefull fiscal year 2023.
For further information, please refer to our blog post also filed with the SEC via Form 8-K on April 20, 2023.
The following table summarizes our consolidated financial results for the quarters ended March 31, 2022 and 2023
(in millions, except for per share information and percentages).
Quarter Ended March 31,
2022
2023
68,011 $69,787
23 %
3%
26 %
6%

Revenues
Change in revenues year over year
Change in constant currency revenues year over year(1)$Operating income
Operating margin$

20,094 $30 %17,41525 %Other income (expense), net$(1,160) $790

Net income
Diluted EPS$$

16,436
1.23

(1)

$
$

15,051
1.17

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” formore details.

Q1 2023 supplemental information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC), and number of employees

Google Search & other
YouTube ads
Google Network
Google advertising
Google other
Google Services total
Google Cloud
Other Bets
Hedging gains (losses)
Total revenues$

Total TAC$$

Number of employees(1)(1)

Quarter Ended March 31,
2022
2023
39,618 $40,359
6,869
6,693
8,174
7,496
54,66154,5486,811
7,413
61,472
61,961
5,821
7,454
440
288
278
84
68,011 $69,787
11,990$163,906

11,721
190,711

As of March 31, 2023, the number of employees includes almost all of the employees affected by the reduction of ourworkforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarterof 2023, subject to local law and consultation requirements.

Segment Operating Results
Reflecting DeepMind’s increasing collaboration with Google Services, Google Cloud, and Other Bets, beginning in
the first quarter of 2023 DeepMind is reported as part of Alphabet’s unallocated corporate costs instead of within
Other Bets. Additionally, beginning in the first quarter of 2023, we updated and simplified our cost allocation
methodologies to provide our business leaders with increased transparency for decision-making. Prior periods havebeen recast to reflect the revised presentation and are shown in Recast Historical Segment Results below.
As announced on April 20, 2023, we are bringing together part of Google Research (the Brain Team) and DeepMind
to significantly accelerate our progress in AI. This change does not affect first quarter reporting. The group, called
Google DeepMind, will be reported within Alphabet's unallocated corporate costs beginning in the second quarter of2023.
Quarter Ended March 31,
2022
2023
(recast)Operating income (loss):
Google Services
Google Cloud
Other Bets
Corporate costs, unallocated(1)Total income from operations(1)$

21,973 $
(706)
(835)
(338)

21,737
191(1,225)(3,288)$20,094 $17,415

Hedging gains (losses) related to revenue included in unallocated corporate costs were $278 million and $84 million for thethree months ended March 31, 2022 and 2023, respectively. For the three months ended March 31, 2023, unallocatedcorporate costs include charges related to the reductions in our workforce and office space totaling $2.5 billion.

2

Additional information relating to the quarter ended March 31, 2023 (unaudited)
Reductions in Our Workforce and Office SpaceIn January 2023, we announced a reduction of our workforce, and as a result in the first quarter of 2023 werecorded employee severance and related charges of $2.0 billion, representing the majority of expected costs
associated with this action. In addition, we are taking actions to optimize our global office space, and as a result werecorded charges related to office space reductions of $564 million in the first quarter of 2023. We may incur
additional charges in the future as we further evaluate our real estate needs.
These severance and office space charges are included within our consolidated statements of income for the threemonths ended March 31, 2023 as follows (in millions):
Severance andRelated
Cost of revenues$

Office Space

Total

461 $

220 $

Research and development

835

247

1,082

Sales and marketing

445

35

480

General and administrative

253

62

315

1,994 $

564 $

2,558

Total charges$

681

For segment reporting, the substantial majority of these charges are included within unallocated corporate costs inour 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 andadjusted 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 for the three months ended March 31, 2023 was a reduction in depreciation expense of$988 million and an increase in net income of $770 million, or $0.06 per basic and $0.06 per diluted share.
Timing of Our Annual Employee Equity Grants
Beginning in 2023, the timing of our annual employee stock-based compensation awards shifted from January to
March. While the shift in timing itself will not affect the amount of stock-based compensation expense over the full
fiscal year 2023, it results in relatively less expense recognized in the first quarter compared to the remaining
quarters of the year.
Stock Repurchases
On April 19, 2023, the Board of Directors of Alphabet 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 totime, 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.
Webcast and conference call information
A live audio webcast of our first quarter 2023 earnings release call will be available on YouTube at https://www.youtube.com/watch?v=76CVRgZUfps. The call begins today at 2:00 PM (PT) / 5:00 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 future3

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, 2022, 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, 2023, and may be set forth in otherreports and filings we make with the SEC. All information provided in this release and in the attachments is as ofApril 25, 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 unlessrequired 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 percentagechange in constant currency revenues. The presentation of this financial information is not intended to beconsidered in isolation or as a substitute for, or superior to, the financial information prepared and presented inaccordance 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, which are recognized at the consolidated level. We believe thatboth 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 bothbecause (1) they allow for greater transparency with respect to key metrics used by management in its financial andoperational 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 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 fromnet 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 inconstant currency revenues” included at the end of this release.
Contact
Investor relations
Media
investor-relations@abc.xyz press@abc.xyz

4Alphabet Inc.
CONSOLIDATED BALANCE SHEETS(In millions, except par value per share amounts)
As of December 31,
2022

As of March 31,2023(unaudited)

AssetsCurrent assets:
Cash and cash equivalents$

21,879$25,924Marketable securities

91,88389,178

Total cash, cash equivalents, and marketable securities

113,762

115,102

Accounts receivable, net

40,25836,036Inventory

2,670

2,315

Other current assets

8,105

8,532

Total current assets

164,795

161,985

Non-marketable securities

30,492

31,213

Deferred income taxes

5,261

6,885

Property and equipment, net

112,668

117,560

Operating lease assets

14,381

14,447

Intangible assets, net

2,084

1,968

Goodwill

28,96028,994

Other non-current assets

6,623

Total assets

6,439

$

365,264$

369,491

$

5,128

$

4,184

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Accrued compensation and benefits

14,028

9,954

Accrued expenses and other current liabilities

37,86643,185

Accrued revenue share

8,370

7,816

Deferred revenue

3,908

3,715

69,30068,854

14,701

13,697599

610

Total current liabilities
Long-term debt
Deferred revenue, non-current
Income taxes payable, non-current

9,258

9,722

Deferred income taxes

514

542

Operating lease liabilities

12,501

12,799Other long-term liabilities

2,247

2,373

Total liabilities

109,120

108,59700

68,18470,269Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100 shares authorized; no sharesissued and outstanding
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 parvalue per share: 300,000 shares authorized (Class A 180,000, Class B 60,000,
Class C 60,000); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,722(Class A 5,943, Class B 883, Class C 5,896) shares issued and outstanding
Accumulated other comprehensive income (loss)
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity$

5(7,603)(6,000)195,563

196,625

256,144

260,894

365,264$

369,491

Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME(In millions, except per share amounts, unaudited)
Quarter Ended March 31,
2022
Revenues$

2023

68,011$

69,787

Costs and expenses:
Cost of revenues

29,59930,612

Research and development

9,119

11,468

Sales and marketing

5,825

6,533

3,374

3,759

Total costs and expenses

General and administrative

47,91752,372

Income from operations

20,094

17,415

Other income (expense), net(1,160)790

Income before income taxes

18,934

18,205

Provision for income taxes

2,498

3,154

Net income$

16,436$

15,051

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

$

1.24

$

1.18

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

$

1.23

$

1.17

Number of shares used in basic earnings per share calculation

13,203

12,781

Number of shares used in diluted earnings per share calculation

13,351

12,8236

Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions, unaudited)
Quarter Ended March 31,
2022

2023

Operating activities
Net income$

16,436$

15,051

Adjustments:
Depreciation and impairment of property and equipment

3,591

Amortization and impairment of intangible assets

3,060

191

126

Stock-based compensation expense

4,504

5,284

Deferred income taxes(2,090)(1,854)(Gain) loss on debt and equity securities, net

1,437

(84)

140

553

Accounts receivable, net

4,364

4,454

Income taxes, net

3,820

4,069

Other assets

(776)

(746)

Accounts payable(2,373)(1,105)

Accrued expenses and other liabilities(3,216)(4,496)

(828)

(602)

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

Accrued revenue share
Deferred revenue

(94)

(201)

25,10623,509Purchases of property and equipment(9,786)(6,289)Purchases of marketable securities(28,462)(14,227)

Maturities and sales of marketable securities

29,77918,327

(776)

(626)

12

36

(173)

(42)

Net cash provided by operating activities
Investing activities

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

355

(125)

(9,051)(2,946)

Net payments related to stock-based award activities(2,916)(1,989)Repurchases of stock(13,300)(14,557)

Proceeds from issuance of debt, net of costs

16,422

6,927

Repayments of debt

(16,420)(6,952)

Net cash used in investing activities
Financing activities

Proceeds from sale of interest in consolidated entities, net
Net cash used in financing activities

03(16,214)(16,568)

Effect of exchange rate changes on cash and cash equivalents

100

50

Net increase (decrease) in cash and cash equivalents

(59)

4,045

Cash and cash equivalents at beginning of period

20,945

Cash and cash equivalents at end of period$

720,886

21,879$25,924

Segment results
The following table presents our segment revenues and operating income (loss) (in millions; unaudited):
Quarter Ended March 31,
2022
2023
(recast)Revenues:
Google Services
Google Cloud
Other Bets
Hedging gains (losses)
Total revenues
Operating income (loss):
Google Services
Google Cloud
Other Bets
Corporate costs, unallocatedTotal income from operations

$

$
$

$

61,472 $
5,821
440
278
68,011 $61,961
7,454
288
84
69,787

21,973 $
(706)
(835)
(338)
20,094 $21,737
191(1,225)(3,288)17,415

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; salesof 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 forenterprise 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.
After the segment reporting changes discussed above, unallocated corporate costs primarily include AI-focusedshared R&D activities; corporate initiatives such as our philanthropic activities; and corporate shared costs such as
finance, certain human resource costs, and legal, including certain fines and settlements. In the first quarter of 2023,
unallocated corporate costs also include charges associated with reductions in our workforce and office space.
Additionally, hedging gains (losses) related to revenue are included in unallocated corporate costs.
Recast Historical Segment Results
Recast historical segment results are as follows (in millions; unaudited):
Quarter
Recast Historical Results
Q1 2022

Q2 2022

Q3 2022

Fiscal Year

Q4 2022

2021

2022

Operating income (loss):
Google Services$

Google Cloud
Other Bets
(1)

Corporate costs, unallocatedTotal income from operations(1)$

21,973$

21,621$

18,883$

20,222$

88,132$

82,699

(706)

(590)

(440)

(186)

(2,282)(1,922)(835)(1,339)(1,225)(1,237)(4,051)(4,636)

(338)

(239)

(83)

(639)

(3,085)(1,299)20,094$

19,453$

17,135$

18,160$78,714$

74,842

Includes hedging gains (losses); in fiscal years 2021 and 2022 hedging gains of $149 million and $2.0 billion, respectively.

8For reference, segment results as previously reported are as follows (in millions; unaudited):
Quarter

Fiscal Year

Previously Reported Historical Results
Q1 2022

Q2 2022

Q3 2022

Q4 2022

2021

2022

Operating income (loss):
Google Services$

Google Cloud
Other Bets
(1)

Corporate costs, unallocatedTotal income from operations(1)$

22,920$22,770$19,781$

21,101$

91,855$86,572

(931)

(858)

(699)

(480)

(3,099)(2,968)(1,155)(1,686)(1,611)(1,631)(5,281)(6,083)

(740)

(773)

(336)

(830)

(4,761)(2,679)20,094$

19,453$

17,135$

18,160$78,714$

74,842

Includes hedging gains (losses); in fiscal years 2021 and 2022 hedging gains of $149 million and $2.0 billion, respectively.

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)Performance fees
Income (loss) and impairment from equity method investments, net
Other
Other income (expense), net
(1)

$

$

Quarter Ended March 31,
2022
2023
414 $
797
(83)
(80)
(73)
(210)
(367)
(293)
(1,070)
377
233
118
(89)
(51)
(125)
132
(1,160) $790

Includes all gains and losses, unrealized and realized, on equity securities. For Q1 2023, the net effect of the gain on equity
securities of $377 million and the $118 million reversal of previously accrued performance fees related to certain
investments increased the provision for income tax, net income, and diluted EPS by $104 million, $391 million, and $0.03,
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 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, 2023$
23,509(6,289)$17,220Net 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.

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 thecomparison 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 ourcore 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 inconstant 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, 2022 to the Quarter Ended March 31, 2023
Quarter Ended March 31, 2023
% Change from Prior Period
Quarter Ended March 31,
2022
United States$

31,7332023$

32,864

Constant
Currency
Revenues

Less FX
Effect
$

0

$

Less
Hedging
EffectAs
Reported

Less FX
EffectConstant
Currency
Revenues

32,864

4%

0%

4%

EMEA

20,31721,078(1,173)

22,251

4%

(6)%

10 %

APAC

11,841

11,681(834)

12,515

(1)%

(7)%

6%

Other Americas

3,842

4,080

(167)

4,247

6%

(5)%

11 %

Revenues, excluding hedging effect

67,73369,703(2,174)71,877

3%

(3)%

6%

71,877

3%

(3)%

6%

Hedging gains (losses)
Total revenues(1)
(1)

278
$

68,011

84$

69,787$0%

Total constant currency revenues of $71.9 billion for the quarter ended March 31, 2023 increased $4.1 billion compared to $67.7 billion inrevenues, excluding hedging effect for the quarter ended March 31, 2022.

Comparison from the Quarter Ended December 31, 2022 to the Quarter Ended March 31, 2023
Quarter Ended March 31, 2023
% Change from Prior Period
Quarter Ended

United States

December31, 2022

March 31,
2023

$

$

36,98232,864

EMEA

21,762

21,078APAC

11,979

11,681Less FX
Effect$0Constant
Currency
Revenues$As
Reported

Less
Hedging
EffectLess FX
EffectConstant
Currency
Revenues

32,864

(11)%

0%

(11)%

1,010

20,068

(3)%

5%

(8)%

415

11,266

(2)%

4%

(6)%

Other Americas

4,656

4,080

17

4,063

(12)%

1%

(13)%

Revenues, excluding hedging effect75,37969,703

1,442

68,261

(8)%

1%

(9)%

68,261

(8)%

1%

(9)%

Hedging gains (losses)
Total revenues(1)
(1)

669
$

76,04884$

69,787$0%

Total constant currency revenues of $68.3 billion for the quarter ended March 31, 2023 decreased $7.1 billion compared to $75.4 billion inrevenues, excluding hedging effect for the quarter ended December 31, 2022.

10

Total Revenues — Prior Year Comparative Periods
Comparison from the Quarter Ended March 31, 2021 to the Quarter Ended March 31, 2022
Quarter Ended March 31, 2022
% Change from Prior Period
Quarter Ended March 31,
2021
Revenues excluding hedging effect$Hedging gains (losses)
Total revenues

55,423

2022
$

(109)
$

55,314

Less FX
Effect67,733$

Constant
Currency
RevenuesAs
Reported(1,991) $69,72422 %$

69,72423 %Less
Hedging
EffectLess FX
EffectConstant
Currency
Revenues

(4)%

26 %

(4)%

26 %

278
$

68,01111

1%