Alphabet Announces Fourth Quarter and Fiscal Year 2020 Results
MOUNTAIN VIEW, Calif. – February 2, 2021 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced
financial results for the quarter and fiscal year ended December 31, 2020.
Sundar Pichai, CEO of Google and Alphabet, said: “Our strong results this quarter reflect the helpfulness of our
products and services to people and businesses, as well as the accelerating transition to online services and thecloud. Google succeeds when we help our customers and partners succeed, and we see significant opportunities toforge meaningful partnerships as businesses increasingly look to a digital future.”
Ruth Porat, CFO of Google and Alphabet, said: “Our strong fourth quarter performance, with revenues of $56.9
billion, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year.
Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused ondelivering value across the growth opportunities we see.”
New reporting segment structure and operating results
We are now reporting results for three segments: Google Services, Google Cloud, and Other Bets. The following
table presents segment revenues and operating income (loss) under our new reporting segment structure for thequarters ended December 31, 2019 and 2020 and the years ended December 31, 2018, 2019 and 2020 (in millions;unaudited).
Quarter
Q4 2019
Q4 2020
Revenues:
Google Services
Google Cloud
Other Bets
Hedging gains (losses)
Total revenues$$

43,198 $
2,614
172
91
46,075 $2018

52,873 $
3,831
196
(2)
56,898 $Quarter
Q4 2019
Q4 2020
Operating income (loss):
Google Services
Google Cloud
Other Bets
Corporate costs, unallocated(1)Total income from operations(1)

Fiscal Year2019

130,524 $
5,838
595
(138)
136,819 $2018

151,825 $
8,918
659
455
161,857 $Fiscal Year
2019

2020
168,635
13,059657
176
182,5272020$

13,488 $(1,194)(2,026)(1,002)

19,066 $(1,243)(1,136)(1,036)

43,137 $(4,348)(3,358)(7,907)

48,999 $(4,645)(4,824)(5,299)54,606(5,607)(4,476)(3,299)$9,266 $

15,651

27,524 $34,231 $41,224$

Corporate costs, unallocated for fiscal year 2018 includes a fine of $5.1 billion and fiscal year 2019 includes a fine and alegal settlement totaling $2.3 billion.

For a description of our segments and unallocated corporate costs, refer to “Segment results” in this earnings
release.

Q4 2020 financial highlights
The following table summarizes our consolidated financial results for the quarters ended December 31, 2019 and2020 (in millions, except for per share information and percentages; unaudited).
Quarter Ended December 31,
2019
2020
$
46,075$56,898
17 %
23 %
19 %
23 %

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

$

9,266
$
20 %

15,65128 %Other income (expense), net

$

1,438

$

3,038

Net income
Diluted EPS$$

10,671
15.35$$

15,22722.30(1)

Non-GAAP measure. See the table captioned “Reconciliation from GAAP revenues to non-GAAP constant currency
revenues” for more details.

Q4 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.

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

Quarter Ended December 31,
2019
2020
$
27,185 $31,903
4,717
6,885
6,032
7,411
37,934
46,1995,264
6,674
43,19852,873
2,614
3,831
172
196
91
(2)
$
46,075 $56,898

Total TAC$

Number of employees

8,501
118,899$

10,466135,301

Change in the useful lives of our server and network equipment (unaudited)
In January 2021, we completed an assessment of the useful lives of our servers and network equipment anddetermined we should adjust the estimated useful life of our servers from three years to four years and theestimated useful life of certain network equipment from three years to five years. This change in accounting
estimate will be effective beginning fiscal year 2021. For assets that are in-service as of December 31, 2020, we
expect operating results to be favorably impacted by approximately $2.1 billion for the full fiscal year 2021. The
effect of the change may be different due to our capital investments during the fiscal year 2021.

2

Webcast and conference call information
A live audio webcast of our fourth quarter 2020 earnings release call will be available on YouTube at https://
youtu.be/O45kGgcbR8s. The call begins today at 2:00 PM (PT) / 5:00 PM (ET). This press release, including thereconciliations 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 forthe year ended December 31, 2019, and our most recent Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020 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 Annual
Report on Form 10-K for the year ended December 31, 2020. All information provided in this release and in theattachments is as of February 2, 2021. 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.
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. We believe that both management and investors benefit fromreferring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, andanalyzing 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 believethese 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 areused 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” 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
December 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 675,222 (Class A 300,730, Class B 45,843, Class C 328,649)
shares issued and outstanding
Accumulated other comprehensive income (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$$0$50,552(1,232)
152,122
201,442
275,909 $26,465110,229
136,694
30,930
454
728
5,490
174,296
20,703
1,084
84,74912,211
1,445
21,175
3,953
319,616

5,589
11,08628,631
7,500
2,543
1,485
56,834
13,932
481
8,849
3,561
11,146
2,269
97,072058,510633
163,401
222,544
319,616

Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME(In millions, except share amounts which are reflected in thousands and per share amounts)
Quarter Ended December 31,
2019
2020
(unaudited)
Revenues$

46,075$

Year Ended December 31,
2019
2020
(unaudited)

56,898$161,857$

182,527

Costs and expenses:
Cost of revenues

21,02026,08071,896

84,732

Research and development

7,222

7,022

26,01827,573

Sales and marketing

5,738

5,314

18,464

17,946

General and administrative

2,829

2,831

9,551

11,052European Commission fine

0

0

1,697

0

Total costs and expenses

36,80941,247

127,626

141,303

Income from operations

9,266

15,651

34,231

41,224

Other income (expense), net

1,438

3,038

5,394

6,858

Income before income taxes

10,704

18,68939,62548,082

33

3,462

5,282

7,813

Provision for income taxes
Net income$

10,671$

15,227$34,343$40,269Basic earnings per share of Class A and B common stock
and Class C capital stock

$

15.49

$

22.54

$

49.59

$

59.15

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

15.35

$

22.30

$

49.16

$

58.61

Number of shares used in basic earnings per sharecalculation

688,806

675,582

692,596

680,816

Number of shares used in diluted earnings per sharecalculation

695,194

682,969

698,556

687,0285

Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)
Quarter Ended December 31,
2019
2020
(unaudited)Year Ended December 31,
2019
2020
(unaudited)

Operating activities
Net income$

10,671$

15,227$34,343$40,269Adjustments:
Depreciation and impairment of property and equipment

3,082

3,539

10,856

12,905

331

186

925

792

Stock-based compensation expense

2,645

3,223

10,794

12,991

Deferred income taxes

(208)

1,670

173

1,390

Gain on debt and equity securities, net(399)(3,262)(2,798)(6,317)

Other

(473)

392

(592)

1,267

Accounts receivable(4,365)(5,445)(4,340)(6,524)

Income taxes, net(3,338)740(3,128)

1,209

Other assets

166

(738)

(621)

(1,330)Accounts payable

814

963

428

694

Accrued expenses and other liabilities

4,243

4,613

7,170

5,504

Accrued revenue share

1,072

1,362

1,273

1,639

186

207

37

635

14,42722,67754,52065,124

Amortization and impairment of intangible assets

Changes in assets and liabilities, net of effects ofacquisitions:Deferred revenue
Net cash provided by operating activities
Investing activities
Purchases of property and equipment(6,052)(5,479)(23,548)(22,281)

Purchases of marketable securities(19,347)(31,644)(100,315)(136,576)

Maturities and sales of marketable securities

23,04235,15597,825

132,906

Purchases of non-marketable investments(433)(5,311)(1,932)(7,175)Maturities and sales of non-marketable investments

108

425

405

1,023

Acquisitions, net of cash acquired, and purchases ofintangible assets(2,142)(370)(2,515)

(738)

121

(57)

589

68

(4,703)(7,281)(29,491)(32,773)

Net payments related to stock-based award activities(1,199)(1,647)(4,765)(5,720)

Repurchases of capital stock(6,098)(7,904)(18,396)(31,149)

0

0

317

11,761Other investing activities
Net cash used in investing activities
Financing activities

Proceeds from issuance of debt, net of costs
Repayments of debt

(47)

(57)

(585)

(2,100)

Proceeds from sale of interest in consolidated entities, net

18

338

220

2,800

(7,326)(9,270)(23,209)(24,408)

Net cash used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

68

210

(23)

24

2,466

6,336

1,797

7,967

16,032$

18,498

6

20,129$26,465

16,701$

18,49818,498$26,465

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
December 31, 2020$
22,677(5,479)$17,198Net 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 the non-GAAP percentage change in constant currency
revenues because they facilitate the comparison of current results to historic performance by excluding the effect offoreign exchange rate movements and hedging activities, which are not indicative of our core operating results.
Quarter Ended December 31, 2020

EMEA revenues (GAAP)

YoY(using Q4'19's FX rates)

QoQ(using Q3'20's FX rates)$$

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

17,238(457)

Exclude foreign exchange effect on Q4'20 revenues using Q3'20 rates

17,238
N/A

N/A

(91)

EMEA constant currency revenues (non-GAAP)$

16,781$

17,147

Prior period EMEA revenues (GAAP)$

14,099$13,924EMEA revenue percentage change (GAAP)

22 %

24 %

EMEA constant currency revenue percentage change (non-GAAP)

19 %

23 %

APAC revenues (GAAP)$

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

9,909

$

(156)

Exclude foreign exchange effect on Q4'20 revenues using Q3'20 rates

9,909
N/A

N/A

(109)

APAC constant currency revenues (non-GAAP)

$

9,753

$

9,800

Prior period APAC revenues (GAAP)

$

7,482

$

8,458

APAC revenue percentage change (GAAP)

32 %

17 %

APAC constant currency revenue percentage change (non-GAAP)

30 %

16 %

Other Americas revenues (GAAP)$

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

3,050

$

324

Exclude foreign exchange effect on Q4'20 revenues using Q3'20 rates

3,050
N/A

N/A

11

Other Americas constant currency revenues (non-GAAP)

$

3,374

$

3,061

Prior period Other Americas revenues (GAAP)

$

2,666

$

2,371

Other Americas revenue percentage change (GAAP)

14 %

29 %

Other Americas constant currency revenue percentage change (non-GAAP)

27 %

29 %

United States revenues (GAAP)$

United States revenue percentage change (GAAP)

26,703$23 %

26,70325 %Hedging gains (losses)

$

(2)

$

(2)

Revenues (GAAP)$

56,898$56,898$56,611$

56,711$

45,984$

46,195Constant currency revenues (non-GAAP)(1)Prior period revenues, excluding hedging effect (non-GAAP)
Revenue percentage change (GAAP)

23 %

23 %

Constant currency revenue percentage change (non-GAAP)

23 %

23 %

(1)

Total revenues and hedging gains (losses) for the quarter ended December 31, 2019 were $46,075 million and $91 million,
respectively. Total revenues and hedging gains (losses) for the quarter ended September 30, 2020 were $46,173 million
and $(22) million, respectively.

Non-GAAP constant currency revenues and percentage change: 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 theconstant currency revenue percentage change on year-on-year and quarter-on-quarter basis. Non-GAAP constant currency
revenues are calculated by translating current quarter revenues using prior period exchange rates and excluding any hedging
effect recognized in the current quarter. Constant currency revenue percentage change is calculated by determining the increasein current 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
Income (loss) and impairment from equity method investments, net
Other(3)Other income (expense), net
(1)

$

$

Quarter Ended
December 31,
2019
2020
621 $
386
(17)
(53)
40
(87)
4
210
395
3,052
7
(405)
460
355
(72)
(420)
1,438 $
3,038

Includes unrealized gains and 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 Q4 2020, the net
effect of the gain on equity securities of $3,052 million and the performance fees of $405 million increased the provision forincome tax, net income, and diluted EPS by $556 million, $2,091 million, and $3.06, respectively.
In 2020, we entered into derivatives that hedged the changes in fair value of certain marketable equity securities, which
resulted in a $497 million net loss for the quarter ended December 31, 2020. The offsetting recognized gains on themarketable equity securities are reflected in Gain (loss) on equity securities, net.

(2)

(3)

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

Fiscal Year

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

2018

2019

2020

$ 43,198$ 38,198$ 34,991$ 42,573$ 52,873$ 130,524$ 151,825$ 168,635

Google Cloud

2,614

2,777

3,007

3,444

3,831

5,838

8,918

13,059Other Bets

172

135

148

178

196

595

659

657

Hedging gains (losses)

91

49

151

(22)

(2)

(138)

455

176

$ 46,075$ 41,159$ 38,297$ 46,173$ 56,898$ 136,819$ 161,857$ 182,527

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

2018

2019

2020

$

Revenues:
Google Services

Total revenues

Quarter

Fiscal Year

Operating income (loss):
Google Services$ 13,488$ 11,548

9,539$ 14,453$ 19,066$ 43,137$ 48,999$ 54,606

Google Cloud(1,194)(1,730)(1,426)(1,208)(1,243)(4,348)(4,645)(5,607)

Other Bets

(2,026)(1,121)(1,116)(1,103)(1,136)(3,358)(4,824)(4,476)

Corporate costs, unallocated(1)(1,002)

(720)

(614)

(929)

(1,036)(7,907)(5,299)(3,299)6,383$ 11,213$ 15,651$ 27,524$ 34,231$ 41,224

Total income from operations
(1)

$

9,266

$

7,977

$

Corporate costs, unallocated for fiscal year 2018 includes a fine of $5.1 billion and fiscal year 2019 includes a fine and alegal settlement totaling $2.3 billion

Beginning in the fourth quarter of 2020, we report our segment results as Google Services, Google Cloud, andOther 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, in-app purchases, digital content products, and hardware; and fees received for subscription-based
products such as YouTube Premium and YouTube TV.

9•

Google Cloud includes Google’s infrastructure and data analytics platforms, collaboration tools, and otherservices for enterprise customers. Google Cloud generates revenues primarily from fees received for
Google Cloud Platform services and Google Workspace (formerly known as G Suite) collaboration tools.

•

Other Bets is a combination of multiple operating segments that are not individually material. Revenues
from the Other Bets are derived primarily through the sale of internet services as well as licensing and R&D
services.

Unallocated corporate costs primarily include corporate initiatives, corporate shared costs, such as finance andlegal, including fines and settlements, as well as costs associated with certain shared research and development
activities. Additionally, hedging gains (losses) related to revenue are included in corporate costs.

10