EX-99.1 3 googexhibit991q32022.htm EX-99.1 Document
Exhibit 99.1
Alphabet Announces Third Quarter 2022 Results
MOUNTAIN VIEW, Calif. – October 25, 2022 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2022.
Sundar Pichai, CEO of Alphabet and Google, said: “We’re sharpening our focus on a clear set of product and business priorities. Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”
Ruth Porat, CFO of Alphabet and Google, said: “Our third quarter revenues were $69.1 billion, up 6% versus last year or up 11% on a constant currency basis. Financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud, while affected by foreign exchange. We’re working to realign resources to fuel our highest growth priorities.”
Q3 2022 financial highlights
The following table summarizes our consolidated financial results for the quarters ended September 30, 2021 and 2022 (in millions, except for per share information and percentages; unaudited).
Quarter Ended September 30,
20212022
Revenues$65,118 $69,092 
Change in revenues year over year41 %6 %
Change in constant currency revenues year over year(1)
39 %11 %
Operating income$21,031 $17,135 
Operating margin32 %25 %
Other income (expense), net
$2,033 $(902)
Net income$18,936 $13,910 
Diluted EPS$1.40 $1.06 
(1)    Non-GAAP measure. See the table captioned “Reconciliation from GAAP revenues to non-GAAP constant currency revenues” for more details.



Q3 2022 supplemental information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC) and number of employees
Quarter Ended September 30,
20212022
Google Search & other$37,926 $39,539 
YouTube ads7,205 7,071 
Google Network7,999 7,872 
Google advertising53,130 54,482 
Google other6,754 6,895 
Google Services total59,884 61,377 
Google Cloud4,990 6,868 
Other Bets182 209 
Hedging gains (losses)62 638 
Total revenues$65,118 $69,092 
Total TAC$11,498 $11,826 
Number of employees150,028 186,779 
Segment Operating Results
Quarter Ended September 30,
20212022
Operating income (loss):
Google Services$23,973 $19,781 
Google Cloud(644)(699)
Other Bets(1,288)(1,611)
Corporate costs, unallocated(1,010)(336)
Total income from operations$21,031 $17,135 
Webcast and conference call information
A live audio webcast of our third quarter 2022 earnings release call will be available on YouTube at https://youtu.be/AWRe3SGZFsU. 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 future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 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 September 30, 2022. All information provided in this release and in the attachments is as of October 25, 2022. Undue reliance should not be placed on the forward-looking statements in
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this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: free cash flow; constant currency revenues; and percentage change in constant currency revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign exchange rate movements and hedging activities. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation from net 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.xyzpress@abc.xyz

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Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value per share amounts)
As of December 31,As of September 30,
20212022
(unaudited)
Assets
Current assets:
Cash and cash equivalents$20,945 $21,984 
Marketable securities118,704 94,275 
Total cash, cash equivalents, and marketable securities139,649 116,259 
Accounts receivable, net39,304 34,697 
Income taxes receivable, net966 1,479 
Inventory1,170 3,156 
Other current assets7,054 10,518 
Total current assets188,143 166,109 
Non-marketable securities29,549 30,419 
Deferred income taxes1,284 2,991 
Property and equipment, net97,599 108,363 
Operating lease assets12,959 13,677 
Intangible assets, net1,417 2,192 
Goodwill22,956 28,834 
Other non-current assets5,361 5,670 
Total assets$359,268 $358,255 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$6,037 $6,303 
Accrued compensation and benefits13,889 12,366 
Accrued expenses and other current liabilities31,236 35,038 
Accrued revenue share8,996 7,662 
Deferred revenue3,288 3,585 
Income taxes payable, net808 1,025 
Total current liabilities64,254 65,979 
Long-term debt14,817 14,653 
Deferred revenue, non-current535 594 
Income taxes payable, non-current9,176 8,572 
Deferred income taxes5,257 476 
Operating lease liabilities11,389 11,984 
Other long-term liabilities2,205 2,371 
Total liabilities107,633 104,629 
Contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100 shares authorized; no shares issued and outstanding0 0 
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par value per share: 300,000 shares authorized (Class A 180,000, Class B 60,000, Class C 60,000); 13,242 (Class A 6,015, Class B 893, Class C 6,334) and 12,971 (Class A 5,978, Class B 884, Class C 6,109) shares issued and outstanding
61,774 66,258 
Accumulated other comprehensive income (loss)(1,623)(8,852)
Retained earnings191,484 196,220 
Total stockholders’ equity251,635 253,626 
Total liabilities and stockholders’ equity$359,268 $358,255 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts, unaudited)
Quarter Ended September 30,Year to Date September 30,
2021202220212022
Revenues$65,118 $69,092 $182,312 $206,788 
Costs and expenses:
Cost of revenues27,621 31,158 77,951 90,861 
Research and development7,694 10,273 22,854 29,233 
Sales and marketing5,516 6,929 15,308 19,384 
General and administrative3,256 3,597 9,370 10,628 
Total costs and expenses44,087 51,957 125,483 150,106 
Income from operations21,031 17,135 56,829 56,682 
Other income (expense), net2,033 (902)9,503 (2,501)
Income before income taxes23,064 16,233 66,332 54,181 
Provision for income taxes4,128 2,323 10,941 7,833 
Net income$18,936 $13,910 $55,391 $46,348 
Basic earnings per share of Class A, Class B, and Class C stock$1.42 $1.07 $4.14 $3.53 
Diluted earnings per share of Class A, Class B, and Class C stock$1.40 $1.06 $4.08 $3.50 
Number of shares used in basic earnings per share calculation13,315 13,018 13,386 13,118 
Number of shares used in diluted earnings per share calculation13,530 13,097 13,588 13,229 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)
Quarter Ended September 30,Year to Date September 30,
2021202220212022
Operating activities
Net income$18,936 $13,910 $55,391 $46,348 
Adjustments:
Depreciation and impairment of property and equipment3,085 3,933 8,340 11,222 
Amortization and impairment of intangible assets219 113 662 505 
Stock-based compensation expense3,874 4,976 11,422 14,262 
Deferred income taxes(1,287)(1,920)192 (6,157)
(Gain) loss on debt and equity securities, net(2,158)1,378 (9,792)3,856 
Other64 167 (199)369 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable(2,409)(97)(3,276)2,298 
Income taxes, net3,041 (609)2,744 (862)
Other assets(1,255)(2,647)(1,447)(4,268)
Accounts payable238 1,907 (874)735 
Accrued expenses and other liabilities2,562 2,210 2,763 491 
Accrued revenue share357 (80)386 (1,022)
Deferred revenue272 112 406 104 
Net cash provided by operating activities25,539 23,353 66,718 67,881 
Investing activities
Purchases of property and equipment(6,819)(7,276)(18,257)(23,890)
Purchases of marketable securities(34,497)(17,054)(95,106)(67,253)
Maturities and sales of marketable securities31,459 28,713 92,126 84,087 
Purchases of non-marketable securities(656)(364)(2,068)(1,628)
Maturities and sales of non-marketable securities334 6 590 131 
Acquisitions, net of cash acquired, and purchases of intangible assets(259)(5,649)(2,233)(6,885)
Other investing activities388 791 441 1,367 
Net cash used in investing activities(10,050)(833)(24,507)(14,071)
Financing activities
Net payments related to stock-based award activities(2,602)(2,041)(7,239)(7,221)
Repurchases of stock(12,610)(15,392)(36,801)(43,889)
Proceeds from issuance of debt, net of costs6,350 15,094 13,949 44,322 
Repayments of debt(6,392)(15,768)(15,070)(45,350)
Proceeds from sale of interest in consolidated entities, net0 10 310 10 
Net cash used in financing activities(15,254)(18,097)(44,851)(52,128)
Effect of exchange rate changes on cash and cash equivalents(146)(375)(106)(643)
Net increase (decrease) in cash and cash equivalents89 4,048 (2,746)1,039 
Cash and cash equivalents at beginning of period23,630 17,936 26,465 20,945 
Cash and cash equivalents at end of period$23,719 $21,984 $23,719 $21,984 

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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 and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet.
Quarter Ended September 30, 2022
Net cash provided by operating activities$23,353 
Less: purchases of property and equipment(7,276)
Free cash flow$16,077 
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
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 of foreign exchange rate movements and hedging activities, which are not indicative of our core operating results.
Comparison from the Quarter Ended September 30, 2020 to the Quarter Ended September 30, 2021
 Quarter Ended
September 30, 2020September 30, 2021% Change from Prior Year
EMEA revenues$13,924 $19,839 42 %
EMEA constant currency revenues19,349 39 %
APAC revenues8,458 11,705 38 %
APAC constant currency revenues11,697 38 %
Other Americas revenues2,371 3,688 56 %
Other Americas constant currency revenues3,571 51 %
United States revenues21,442 29,824 39 %
Hedging gains (losses)(22)62 
Total revenues$46,173 $65,118 41 %
Revenues, excluding hedging effect
$46,195 $65,056 
Exchange rate effect(615)
Total constant currency revenues$64,441 39 %

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Comparison from the Quarter Ended September 30, 2021 to the Quarter Ended September 30, 2022
 Quarter Ended
September 30, 2021September 30, 2022% Change from Prior Year
EMEA revenues$19,839 $19,450 (2)%
EMEA constant currency revenues22,093 11 %
APAC revenues11,705 11,494 (2)%
APAC constant currency revenues12,604 8 %
Other Americas revenues3,688 4,138 12 %
Other Americas constant currency revenues4,303 17 %
United States revenues29,824 33,372 12 %
Hedging gains (losses)62 638 
Total revenues$65,118 $69,092 6 %
Revenues, excluding hedging effect
$65,056 $68,454 
Exchange rate effect3,918 
Total constant currency revenues$72,372 11 %
Comparison from the Quarter Ended June 30, 2022 to the Quarter Ended September 30, 2022
 Quarter Ended
June 30, 2022September 30, 2022% Change from Prior Quarter
EMEA revenues$20,533 $19,450 (5)%
EMEA constant currency revenues20,390 (1)%
APAC revenues11,710 11,494 (2)%
APAC constant currency revenues11,949 2 %
Other Americas revenues4,340 4,138 (5)%
Other Americas constant currency revenues4,290 (1)%
United States revenues32,727 33,372 2 %
Hedging gains (losses)375 638 
Total revenues$69,685 $69,092 (1)%
Revenues, excluding hedging effect
$69,310 $68,454 
Exchange rate effect1,547 
Total constant currency revenues$70,001 1 %
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 the constant 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 increase in current quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging effect recognized in the prior period.
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Other income (expense), net
The following table presents our other income (expense), net (in millions; unaudited):
Quarter Ended September 30,
20212022
Interest income$387 $615 
Interest expense(77)(101)
Foreign currency exchange gain (loss), net(139)(136)
Gain (loss) on debt securities, net37 (731)
Gain (loss) on equity securities, net(1)
2,121 (647)
Performance fees(492)54 
Income (loss) and impairment from equity method investments, net188 (99)
Other8 143 
Other income (expense), net$2,033 $(902)
(1)Includes all gains and losses, unrealized and realized, on equity investments. For Q3 2022, the net effect of the loss on equity securities of $647 million and the $54 million reversal of previously accrued performance fees related to certain investments decreased the provision for income tax, net income, and diluted EPS by $125 million, $468 million, and $0.04, 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.
Segment results
The following table presents our revenues and operating income (loss) (in millions; unaudited):
Quarter Ended September 30,
20212022
Revenues:
Google Services$59,884 $61,377 
Google Cloud4,990 6,868 
Other Bets182 209 
Hedging gains (losses)62 638 
Total revenues$65,118 $69,092 
Operating income (loss):
Google Services$23,973 $19,781 
Google Cloud(644)(699)
Other Bets(1,288)(1,611)
Corporate costs, unallocated(1,010)(336)
Total income from operations$21,031 $17,135 
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; sales of apps and in-app purchases, digital content products, and hardware; and fees received for subscription-based products such as YouTube Premium and YouTube TV.
•Google Cloud includes Google’s infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace 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.
Unallocated corporate costs primarily include corporate initiatives, corporate shared costs, such as finance and legal, including certain fines and settlements, as well as costs associated with certain shared R&D activities. Additionally, hedging gains (losses) related to revenue are included in corporate costs.
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