Alphabet Announces Second Quarter 2023 Results
Announces Plans for Chief Financial Officer Transition and Appointment of President and Chief
Investment Officer
MOUNTAIN VIEW, Calif. – July 25, 2023 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial
results for the quarter ended June 30, 2023.
Sundar Pichai, CEO of Alphabet and Google, said: “There’s exciting momentum across our products and thecompany, which drove strong results this quarter. Our continued leadership in AI and our excellence in engineeringand innovation are driving the next evolution of Search, and improving all our services. With fifteen products thateach serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliveron our mission.”
Ruth Porat, CFO of Alphabet and Google, said: “Our financial results reflect continued resilience in Search, with anacceleration of revenue growth in both Search and YouTube, as well as momentum in Cloud. We continue investingfor growth, while prioritizing our efforts to durably reengineer our cost base company-wide and create capacity todeliver sustainable value for the long term.”
Q2 2023 Financial Highlights (unaudited)
The following table summarizes our consolidated financial results for the quarters ended June 30, 2022 and 2023
(in millions, except for per share information and percentages).
Quarter Ended June 30,
2022
2023
69,685$74,604
13 %
7%
16 %
9%

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

19,453$28 %

21,83829 %Other income (expense), net

$

(439)

$

65

Net income
Diluted EPS$$

16,002
1.21$$

18,368
1.44(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” formore details.

Q2 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 June 30,
2022
2023
40,689 $42,628
7,340
7,665
8,259
7,850
56,28858,1436,553
8,142
62,841
66,285
6,276
8,031
193
285
375
3
69,685 $74,604
12,214$

174,014

12,537
181,798

The substantial majority of the employees affected by the reduction of our workforce are no longer included in
our headcount as of June 30, 2023. We expect most of the remaining employees affected will no longer bereflected in our headcount by the end of 2023, subject to local law and consultation requirements.

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, theBrain team was included within Google Services.
Quarter Ended June 30,
2022
2023
(recast)Operating income (loss):
Google Services
Google Cloud
Other Bets
Corporate costs, unallocated(1)Total income from operations(1)$

21,621 $(590)(1,339)(239)

23,454395(813)(1,198)$19,453 $21,838In addition to the Alphabet-level costs included in unallocated corporate costs, hedging gains (losses) related to revenue
were $375 million and $3 million for the three months ended June 30, 2022 and 2023, respectively.

2

Additional Information Relating to the Quarter Ended June 30, 2023 (unaudited)
Reductions in Our Workforce and Office SpaceIn January 2023, we announced a reduction of our workforce, and as a result we recorded employee severance andrelated charges of $2.0 billion for the six months ended June 30, 2023. In addition, we are taking actions to optimize
our global office space. As a result, total charges recorded during the six months ended June 30, 2023 were $633
million, of which $564 million and $69 million were recorded during the three months ended March 31, 2023 andJune 30, 2023, respectively. We may incur additional charges in the future as we further evaluate our real estateneeds.
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 was a reduction in depreciation expense of $966 million and $2.0 billion and an increasein net income of $752 million and $1.5 billion, or $0.06 and $0.12 per basic and $0.06 and $0.12 per diluted sharefor the three and six months ended June 30, 2023, respectively.
Additional Information Regarding Chief Financial Officer Transition and Appointment of President and Chief
Investment Officer
Alphabet and Google CFO Ruth Porat will assume the newly created role of President and Chief Investment Officer
of Alphabet and Google, effective September 1, 2023. Ruth will continue to serve as CFO, including leading thecompany’s 2024 and long-range capital planning processes, while the company searches for and selects her
successor.
In her new role, Ruth will continue to report to Sundar Pichai, Alphabet and Google CEO.
Ruth assumed the role of CFO in May 2015 and is the company’s longest-serving CFO.
In her new role, Ruth will be responsible for Alphabet’s investments in its Other Bets portfolio, working closely withSundar, and the company’s investments in countries and communities around the world. Alphabet’s investments
span numerous sectors and are engines of economic growth globally. She will also focus on engagement with
policymakers and regulators regarding employment, economic opportunity, competitiveness, and infrastructure
expansion.
“Ruth has worked to drive financial discipline and returns for shareholders, while spearheading investment to create
sustainable, long-term value. As today’s results show, we’re making good progress and we’re committed tocontinuing this important work,” Sundar said. “In her new role, Ruth will strengthen our collaboration with policy
makers and shape our corporate investments to have maximum economic impact for people and economies aroundthe world.”“I’m excited about this new role and the opportunity to engage with leaders globally to unlock economic growth via
technology and investment,” said Ruth. “I'm committed to Google’s continued growth and ensuring that our diverse
global investments are supported with strong partnership to create opportunities for people and communities,
everywhere.”
Webcast and Conference Call Information
A live audio webcast of our second quarter 2023 earnings release call will be available on YouTube at https://abc.xyz/2023-q2-earnings-call/. 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.

3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, 2022 and our most recent Quarterly Report on Form 10-Q for the quarter ended
March 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 Reporton Form 10-Q for the quarter ended June 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 July 25, 2023. Undue relianceshould 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 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 June 30,2023(unaudited)

AssetsCurrent assets:
Cash and cash equivalents$

21,879$25,929Marketable securities

91,88392,403

Total cash, cash equivalents, and marketable securities

113,762

118,332

Accounts receivable, net

40,25838,804Inventory

2,670

2,231

Other current assets

8,105

9,421

Total current assets

164,795

168,788

Non-marketable securities

30,492

31,224

Deferred income taxes

5,261

9,357

Property and equipment, net

112,668

121,208

Operating lease assets

14,381

14,469Intangible assets, net

2,084

1,966

Goodwill

28,96029,210

Other non-current assets

6,623

Total assets

6,822

$

365,264$

383,044

$

5,128

$

5,313

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

14,028

11,260Accrued expenses and other current liabilities

37,86649,300Accrued revenue share

8,370

7,990

Deferred revenue

3,908

3,846

69,30077,70914,701

13,705599

667

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

9,258

8,753

Deferred income taxes

514

558

Operating lease liabilities

12,501

12,746

Other long-term liabilities

2,247

1,765

Total liabilities

109,120

115,9030068,18472,248Commitments 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
12,629 (Class A 5,934, Class B 876, Class C 5,819) shares issued andoutstanding
Accumulated other comprehensive income (loss)
Retained earnings
Total stockholders’ equity(7,603)(5,991)

195,563

200,884

256,144

Total liabilities and stockholders’ equity$

5

365,264

267,141$

383,044Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME(In millions, except per share amounts, unaudited)
Quarter Ended June 30,
2022
Revenues$

69,685

Year to Date June 30,

2023
$

2022

74,604$

2023

137,696$

144,391

Costs and expenses:
Cost of revenues

30,104

31,91659,70362,528

Research and development

9,841

10,58818,96022,056

Sales and marketing

6,630

6,781

12,455

13,314

3,657

3,481

7,031

7,240

Total costs and expenses

General and administrative

50,232

52,766

98,149105,138

Income from operations

19,453

21,83839,54739,253

Other income (expense), net

(439)

65

(1,599)855

Income before income taxes

19,014

21,90337,94840,108Provision for income taxes
Net income

3,012

3,535

5,510

6,689

$

16,002$

18,368$32,438$33,419Basic earnings per share of Class A, Class B, and Class C stock $

1.22

$

1.45

$

2.46

$

2.63

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

1.21

$

1.44

$

2.44

$

2.61

$

Number of shares used in basic earnings per share calculation

13,133

12,668

13,16812,725

Number of shares used in diluted earnings per share calculation

13,23912,764

13,295

12,7946

Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions, unaudited)
Quarter Ended June 30,
2022

Year to Date June 30,

2023

2022

2023

Operating activities
Net income$

16,002$

18,368$32,438$33,419Adjustments:
Depreciation and impairment of property and equipment

3,698

Amortization and impairment of intangible assets

3,279

7,289

6,339

201

118

392

244

Stock-based compensation expense

4,782

5,774

9,286

11,058Deferred income taxes(2,147)(2,415)(4,237)(4,269)Loss on debt and equity securities, net

1,041

509

2,478

425

62

97

202

650

(1,969)(2,948)

2,395

1,506

Other
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net(1)(4,073)

4,451

(253)

8,520

Other assets

Income taxes, net

(845)

(513)

(1,621)(1,259)Accounts payable

1,201

1,119

(1,172)14

Accrued expenses and other liabilities

1,497

459

(1,719)(4,037)

Accrued revenue share

(114)

184

(942)

(418)

Deferred revenue

86

184

(8)

(17)

19,422

28,66644,52852,175Purchases of property and equipment(6,828)(6,888)(16,614)(13,177)

Purchases of marketable securities(21,737)(21,362)(50,199)(35,589)

Maturities and sales of marketable securities

25,59518,722

55,37437,049Purchases of non-marketable securities

(488)

(887)

(1,264)(1,513)Maturities and sales of non-marketable securities

113

145

125

181

(1,063)(298)(1,236)(340)

Net cash provided by operating activities
Investing activities

Acquisitions, net of cash acquired, and purchases of intangible
assetsOther investing activities
Net cash used in investing activities

221

(232)

576

(357)

(4,187)(10,800)(13,238)(13,746)

Financing activities
Net payments related to stock-based award activities(2,264)(2,736)(5,180)(4,725)

Repurchases of stock(15,197)(14,969)(28,497)(29,526)

Proceeds from issuance of debt, net of costs

12,806

1,123

29,228

8,050

Repayments of debt

(13,162)(1,255)(29,582)(8,207)

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

0

2

0

5

(17,817)(17,835)(34,031)(34,403)

(368)

(26)

(268)

24

Net increase (decrease) in cash and cash equivalents(2,950)5(3,009)4,050

Cash and cash equivalents at beginning of period

20,88625,92420,94521,879Cash and cash equivalents at end of period(1)$17,936$25,929$17,936$25,929The three and six months periods ended June 30, 2023 include the effect of the IRS payment deferral relief made available
to taxpayers headquartered in designated counties in California, The payment will be made in the fourth quarter of 2023.

7

Segment Results
The following table presents our segment revenues and operating income (loss) (in millions; unaudited):
Quarter Ended June 30,
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

$

$
$

$

62,841 $
6,276
193
375
69,685 $66,2858,031
285
374,604

21,621 $(590)(1,339)(239)
19,453 $23,454395(813)(1,198)21,838We 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.

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 andsettlements. 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 oursegments.

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

$

$

Quarter Ended June 30,
2022
2023
486 $
892
(83)
(43)
(260)
(268)
(790)
(304)
(251)
(205)
318
5
(118)
(106)
259
94
(439) $
65

Includes all gains and losses, unrealized and realized, on equity securities. For Q2 2023, the net effect of the gain on equity
securities of $205 million and the $5 million reversal of previously accrued performance fees related to certain investments
increased the provision for income tax, net income, and diluted EPS by $42 million, $158 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 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
June 30, 2023$
28,666(6,888)$21,778Net 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 June 30, 2022 to the Quarter Ended June 30, 2023
Quarter Ended June 30, 2023
% Change from Prior Period
Quarter Ended June 30,2022
United States

$

2023

32,727$35,073

Constant
Currency
Revenues

Less FX
Effect
$

0

$

Less
Hedging
EffectAs
Reported

Less FX
EffectConstant
Currency
Revenues

35,073

7%

0%

7%

EMEA

20,53322,289(275)

22,564

9%

(1)%

10 %

APAC

11,71012,728(565)

13,293

9%

(5)%

14 %

Other Americas

4,340

4,511

(306)

4,817

4%

(7)%

11 %

Revenues, excluding hedging effect69,31074,601(1,146)75,747

8%

(1)%

9%

75,747

7%

(1)%

9%

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

375
$

69,685

3$

74,604$(1)%

Total constant currency revenues of $75.7 billion for the quarter ended June 30, 2023 increased $6.4 billion compared to $69.3 billion inrevenues, excluding hedging effect for the quarter ended June 30, 2022.

Comparison from the Quarter Ended March 31, 2023 to the Quarter Ended June 30, 2023
Quarter Ended June 30, 2023
% Change from Prior Period
Quarter Ended
March 31,2023
United States$

32,864

June 30,
2023$

Less FX
Effect35,073

EMEA

21,07822,289APAC

11,681

12,728$0Constant
Currency
Revenues$As
Reported

Less
Hedging
EffectLess FX
Effect0%Constant
Currency
Revenues

35,073

7%

7%

275

22,014

6%

2%

4%

(99)

12,827

9%

(1)%

10 %

Other Americas

4,080

4,511

8

4,503

11 %

1%

10 %

Revenues, excluding hedging effect69,70374,601

184

74,4177%0%

7%74,417

7%

0%

7%

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

84
$

69,787

3$

74,604$0%Total constant currency revenues of $74.4 billion for the quarter ended June 30, 2023 increased $4.7 billion compared to $69.7 billion inrevenues, excluding hedging effect for the quarter ended March 31, 2023.

10

Total Revenues — Prior Year Comparative Periods
Comparison from the Quarter Ended June 30, 2021 to the Quarter Ended June 30, 2022
Quarter Ended June 30, 2022
% Change from Prior Period
Quarter Ended June 30,
2021
Revenues excluding hedging effect$Hedging gains (losses)
Total revenues

2022

61,887$(7)$

Less FX
Effect61,88069,310$Constant
Currency
RevenuesAs
Reported(2,682) $71,992

12 %$

71,992

13 %Less
Hedging
EffectLess FX
EffectConstant
Currency
Revenues

(4)%

16 %

(4)%

16 %

375
$

69,68511

1%