EX-99.1 2 googexhibit991q12023.htm EX-99.1 Document
Exhibit 99.1
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 first quarter, with Search performing well and momentum in Cloud. We introduced important product updates anchored in deep computer science and AI. Our North Star is providing the most helpful answers for our users, and we see huge 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 and certain network equipment; and
iii.a shift in the timing of our annual employee stock-based compensation awards resulting in relatively less stock-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 the full 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,
20222023
Revenues$68,011 $69,787 
Change in revenues year over year23 %3 %
Change in constant currency revenues year over year(1)
26 %6 %
Operating income$20,094 $17,415 
Operating margin30 %25 %
Other income (expense), net
$(1,160)$790 
Net income$16,436 $15,051 
Diluted EPS$1.23 $1.17 
(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” for more details.


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

Quarter Ended March 31,
20222023
Google Search & other$39,618 $40,359 
YouTube ads6,869 6,693 
Google Network8,174 7,496 
Google advertising54,661 54,548 
Google other6,811 7,413 
Google Services total61,472 61,961 
Google Cloud5,821 7,454 
Other Bets440 288 
Hedging gains (losses)278 84 
Total revenues$68,011 $69,787 
Total TAC$11,990 $11,721 
Number of employees(1)
163,906 190,711 
(1)    As of March 31, 2023, the number of employees includes almost all of the employees affected by the reduction of our workforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarter of 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 have been 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 of 2023.

Quarter Ended March 31,
20222023
(recast)
Operating income (loss):
Google Services$21,973 $21,737 
Google Cloud(706)191 
Other Bets(835)(1,225)
Corporate costs, unallocated(1)
(338)(3,288)
Total income from operations$20,094 $17,415 
(1)Hedging gains (losses) related to revenue included in unallocated corporate costs were $278 million and $84 million for the three months ended March 31, 2022 and 2023, respectively. For the three months ended March 31, 2023, unallocated corporate costs include charges related to the reductions in our workforce and office space totaling $2.5 billion.
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Additional information relating to the quarter ended March 31, 2023 (unaudited)
Reductions in Our Workforce and Office Space
In January 2023, we announced a reduction of our workforce, and as a result in the first quarter of 2023 we recorded 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 we recorded 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 three months ended March 31, 2023 as follows (in millions):
Severance and RelatedOffice SpaceTotal
Cost of revenues$461 $220 $681 
Research and development835 247 1,082 
Sales and marketing445 35 480 
General and administrative253 62 315 
Total charges$1,994 $564 $2,558 
For segment reporting, the substantial majority of these charges are included within unallocated corporate costs in our 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 and adjusted 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 to time, 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 future
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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, 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 other reports and filings we make with the SEC. All information provided in this release and in the attachments is as of April 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 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, which are recognized at the consolidated level. 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 and GAAP percentage change in revenues to non-GAAP percentage change in 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 March 31,
20222023
(unaudited)
Assets
Current assets:
Cash and cash equivalents$21,879 $25,924 
Marketable securities91,883 89,178 
Total cash, cash equivalents, and marketable securities113,762 115,102 
Accounts receivable, net40,258 36,036 
Inventory2,670 2,315 
Other current assets8,105 8,532 
Total current assets164,795 161,985 
Non-marketable securities30,492 31,213 
Deferred income taxes5,261 6,885 
Property and equipment, net112,668 117,560 
Operating lease assets14,381 14,447 
Intangible assets, net2,084 1,968 
Goodwill28,960 28,994 
Other non-current assets6,623 6,439 
Total assets$365,264 $369,491 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,128 $4,184 
Accrued compensation and benefits14,028 9,954 
Accrued expenses and other current liabilities37,866 43,185 
Accrued revenue share8,370 7,816 
Deferred revenue3,908 3,715 
Total current liabilities69,300 68,854 
Long-term debt14,701 13,697 
Deferred revenue, non-current599 610 
Income taxes payable, non-current9,258 9,722 
Deferred income taxes514 542 
Operating lease liabilities12,501 12,799 
Other long-term liabilities2,247 2,373 
Total liabilities109,120 108,597 
Commitments and 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); 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
68,184 70,269 
Accumulated other comprehensive income (loss)(7,603)(6,000)
Retained earnings195,563 196,625 
Total stockholders’ equity256,144 260,894 
Total liabilities and stockholders’ equity$365,264 $369,491 
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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts, unaudited)
Quarter Ended March 31,
20222023
Revenues$68,011 $69,787 
Costs and expenses:
Cost of revenues29,599 30,612 
Research and development9,119 11,468 
Sales and marketing5,825 6,533 
General and administrative3,374 3,759 
Total costs and expenses47,917 52,372 
Income from operations20,094 17,415 
Other income (expense), net(1,160)790 
Income before income taxes18,934 18,205 
Provision for income taxes2,498 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 calculation13,203 12,781 
Number of shares used in diluted earnings per share calculation13,351 12,823 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)
Quarter Ended March 31,
20222023
Operating activities
Net income$16,436 $15,051 
Adjustments:
Depreciation and impairment of property and equipment3,591 3,060 
Amortization and impairment of intangible assets191 126 
Stock-based compensation expense4,504 5,284 
Deferred income taxes(2,090)(1,854)
(Gain) loss on debt and equity securities, net1,437 (84)
Other140 553 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net4,364 4,454 
Income taxes, net3,820 4,069 
Other assets(776)(746)
Accounts payable(2,373)(1,105)
Accrued expenses and other liabilities(3,216)(4,496)
Accrued revenue share(828)(602)
Deferred revenue(94)(201)
Net cash provided by operating activities25,106 23,509 
Investing activities
Purchases of property and equipment(9,786)(6,289)
Purchases of marketable securities(28,462)(14,227)
Maturities and sales of marketable securities29,779 18,327 
Purchases of non-marketable securities(776)(626)
Maturities and sales of non-marketable securities12 36 
Acquisitions, net of cash acquired, and purchases of intangible assets(173)(42)
Other investing activities355 (125)
Net cash used in investing activities(9,051)(2,946)
Financing activities
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 costs16,422 6,927 
Repayments of debt(16,420)(6,952)
Proceeds from sale of interest in consolidated entities, net0 3 
Net cash used in financing activities(16,214)(16,568)
Effect of exchange rate changes on cash and cash equivalents100 50 
Net increase (decrease) in cash and cash equivalents(59)4,045 
Cash and cash equivalents at beginning of period20,945 21,879 
Cash and cash equivalents at end of period$20,886 $25,924 

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Segment results
The following table presents our segment revenues and operating income (loss) (in millions; unaudited):
Quarter Ended March 31,
20222023
(recast)
Revenues:
Google Services$61,472 $61,961 
Google Cloud5,821 7,454 
Other Bets440 288 
Hedging gains (losses)278 84 
Total revenues$68,011 $69,787 
Operating income (loss):
Google Services$21,973 $21,737 
Google Cloud(706)191 
Other Bets(835)(1,225)
Corporate costs, unallocated(338)(3,288)
Total income from operations$20,094 $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; sales of 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 for enterprise 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-focused shared 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):
QuarterFiscal Year
Recast Historical Results
Q1 2022Q2 2022Q3 2022Q4 202220212022
Operating income (loss):
Google Services$21,973 $21,621 $18,883 $20,222 $88,132 $82,699 
Google Cloud(706)(590)(440)(186)(2,282)(1,922)
Other Bets(835)(1,339)(1,225)(1,237)(4,051)(4,636)
Corporate costs, unallocated(1)
(338)(239)(83)(639)(3,085)(1,299)
Total income from operations$20,094 $19,453 $17,135 $18,160 $78,714 $74,842 
(1)Includes hedging gains (losses); in fiscal years 2021 and 2022 hedging gains of $149 million and $2.0 billion, respectively.
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For reference, segment results as previously reported are as follows (in millions; unaudited):
QuarterFiscal Year
Previously Reported Historical Results
Q1 2022Q2 2022Q3 2022Q4 202220212022
Operating income (loss):
Google Services$22,920 $22,770 $19,781 $21,101 $91,855 $86,572 
Google Cloud(931)(858)(699)(480)(3,099)(2,968)
Other Bets(1,155)(1,686)(1,611)(1,631)(5,281)(6,083)
Corporate costs, unallocated(1)
(740)(773)(336)(830)(4,761)(2,679)
Total income from operations$20,094 $19,453 $17,135 $18,160 $78,714 $74,842 
(1)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):
Quarter Ended March 31,
20222023
Interest income$414 $797 
Interest expense(83)(80)
Foreign currency exchange gain (loss), net(73)(210)
Gain (loss) on debt securities, net(367)(293)
Gain (loss) on equity securities, net(1)
(1,070)377 
Performance fees233 118 
Income (loss) and impairment from equity method investments, net(89)(51)
Other(125)132 
Other income (expense), net$(1,160)$790 
(1)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 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 March 31, 2023
Net cash provided by operating activities$23,509 
Less: purchases of property and equipment(6,289)
Free cash flow$17,220 
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
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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 the comparison 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 our core 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 in constant 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,Less FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
20222023
United States$31,733 $32,864 $0 $32,864 4 %0 %4 %
EMEA20,317 21,078 (1,173)22,251 4 %(6)%10 %
APAC11,841 11,681 (834)12,515 (1)%(7)%6 %
Other Americas3,842 4,080 (167)4,247 6 %(5)%11 %
Revenues, excluding hedging effect
67,733 69,703 (2,174)71,877 3 %(3)%6 %
Hedging gains (losses)278 84 
Total revenues(1)
$68,011 $69,787 $71,877 3 %0 %(3)%6 %
(1)Total constant currency revenues of $71.9 billion for the quarter ended March 31, 2023 increased $4.1 billion compared to $67.7 billion in revenues, 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 EndedLess FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
December 31, 2022March 31, 2023
United States$36,982 $32,864 $0 $32,864 (11)%0 %(11)%
EMEA21,762 21,078 1,010 20,068 (3)%5 %(8)%
APAC11,979 11,681 415 11,266 (2)%4 %(6)%
Other Americas4,656 4,080 17 4,063 (12)%1 %(13)%
Revenues, excluding hedging effect75,379 69,703 1,442 68,261 (8)%1 %(9)%
Hedging gains (losses)669 84 
Total revenues(1)
$76,048 $69,787 $68,261 (8)%0 %1 %(9)%
(1)Total constant currency revenues of $68.3 billion for the quarter ended March 31, 2023 decreased $7.1 billion compared to $75.4 billion in revenues, excluding hedging effect for the quarter ended December 31, 2022.
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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
Quarter Ended March 31,% Change from Prior Period
 Less FX EffectConstant Currency RevenuesAs ReportedLess Hedging EffectLess FX EffectConstant Currency Revenues
20212022
Revenues excluding hedging effect$55,423 $67,733 $(1,991)$69,724 22 %(4)%26 %
Hedging gains (losses)(109)278 
Total revenues$55,314 $68,011 $69,724 23 %1 %(4)%26 %

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