UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 001-37580

Alphabet Inc.

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________


Delaware			61-1767919
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1600 Amphitheatre Parkway

Mountain View, CA 94043

(Address of principal executive offices, including zip code)

(650) 253-0000

(Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	GOOGL	Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)
Class C Capital Stock, $0.001 par value	GOOG	Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~July 20, 2021,~~April 19, 2022, there were~~301,084,627~~300,763,622 shares of Alphabet’s Class A ~~common~~ stock outstanding, ~~45,501,786~~44,359,838 shares of Alphabet's Class B ~~common~~ stock outstanding, and ~~320,168,491~~313,376,417 shares of Alphabet's Class C ~~capital~~ stock outstanding.


Table of Contents			Alphabet Inc.

Alphabet Inc.

Form 10-Q

For the Quarterly Period Ended ~~June 30, 2021~~March 31, 2022

TABLE OF CONTENTS


		Page No.
Note About Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	5
	Consolidated Balance Sheets - December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022	5
	Consolidated Statements of Income - Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021 and ~~2021~~2022	6
	Consolidated Statements of Comprehensive Income - Three ~~and Six~~ Months Ended ~~June 30, 2020~~ March 31, 2021 and ~~2021~~2022	7
	Consolidated Statements of Stockholders' Equity - Three ~~and Six~~ Months Ended ~~June 30, 2020~~ March 31, 2021 and ~~2021~~2022	8
	Consolidated Statements of Cash Flows - ~~Six~~Three Months Ended ~~June 30, 2020~~ March 31, 2021 and ~~2021~~2022	109
	Notes to Consolidated Financial Statements	1110
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3330
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4742
Item 4	Controls and Procedures	4742

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	4843
Item 1A	Risk Factors	4843
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4943


Item 6	Exhibits	5044
Signature		5145


Table of Contents			Alphabet Inc.

Note About Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These ~~statements~~ include, among other things, statements regarding:

•the ongoing effect of the novel coronavirus pandemic ("COVID-19"), including its macroeconomic effects on our business, operations, and financial results; ~~and the effect of governmental lockdowns, restrictions and new regulations on our operations and processes;~~

•the growth of our business and revenues and our expectations about the factors that influence our success and trends in our ~~business, including the size and timing of the expected return on our continuing investments in our Google Cloud segment;~~business;

•fluctuations in our revenue growth rate and operating margin and various factors contributing to such fluctuations;

•our expectation that the continuing shift from an offline to online world will continue to benefit our business;

•our expectation that the portion of our revenues that we derive from non-advertising revenues will continue to increase and may affect our margins;

•our expectation that our traffic acquisition costs ~~("TAC")~~(TAC) and the associated TAC rate will fluctuate, which could affect our overall margins;

•our expectation that our monetization trends will fluctuate, which could affect our revenues and margins;

•fluctuations in our revenue growth, as well as the change in paid clicks and cost-per-click and the change in impressions and cost-per-impression, and various factors contributing to such fluctuations;

•our expectation that we will continue to periodically review, refine, and update our methodologies for monitoring, gathering, and counting the number of paid clicks and impressions;

•our expectation that our results will be affected by our performance in international markets as users in developing economies increasingly come online;

•our expectation that our foreign exchange risk management program will not fully offset our net exposure to fluctuations in foreign currency exchange rates;

•the expected variability of gains and losses related to hedging activities under our foreign exchange risk management program;

•the amount and timing of revenue recognition from customer contracts with commitments for performance obligations, including our estimate of the remaining amount of commitments and when we expect to recognize revenue;

•fluctuations in our capital expenditures;

•our plans to continue to invest in new businesses, products, services and technologies, systems, land and buildings for data centers and offices, and infrastructure, as well as to continue to invest in ~~acquisitions;~~acquisitions and strategic investments;

•our pace of hiring and our plans to provide competitive compensation programs;

•our expectation that our cost of revenues, research and development ~~("R&D")~~(R&D) expenses, sales and marketing expenses, and general and administrative expenses may increase in amount and/or may increase as a percentage of revenues and may be affected by a number of factors;

•estimates of our future compensation expenses;

•our expectation that our other income (expense), net ~~("OI&E")~~(OI&E), will fluctuate in the future, as it is largely driven by market dynamics;

•fluctuations in our effective tax rate;

•seasonal fluctuations in internet usage and advertiser expenditures, underlying business trends such as traditional retail seasonality, ~~(including developments and volatility arising from COVID-19),~~ which are likely to cause fluctuations in our quarterly results;

•the sufficiency of our sources of funding;

•our potential exposure in connection with new and pending investigations, proceedings, and other contingencies;


Table of Contents			Alphabet Inc.

•the sufficiency and timing of our proposed remedies in response to decisions from the European Commission ~~("EC")~~(EC) and other regulators and governmental entities;

•our expectations regarding the timing, design, and ongoing phased implementation of our new global enterprise resource planning ~~("ERP")~~(ERP) system;

•the expected timing, amount, and ~~impact~~effect of Alphabet Inc.'s share repurchases;

•our long-term sustainability and diversity goals;

•~~our expectation that~~ the ~~change~~unpredictability of the ongoing broader economic effects resulting from the war in ~~the estimated useful life of servers and certain network equipment will have a favorable, yet declining, effect~~Ukraine on our ~~2021 operating~~future financial results;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission ~~("SEC")~~(SEC), including without limitation, the following sections: Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020, as updated in this Quarterly Report on Form 10-Q.~~2021. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "may," "could," "will likely result," and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020, as updated in this Quarterly Report on Form 10-Q,~~2021, and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

As used herein, "Alphabet," "the company," "we," "us," "our," and similar terms include Alphabet Inc. and its subsidiaries, unless the context indicates otherwise.

"Alphabet," "Google," and other trademarks of ours appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies' trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.


Table of Contents			Alphabet Inc.

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

Alphabet Inc.

CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts which are reflected in thousands, and par value per share amounts)

As of
December 31, 2020 As of
June 30, 2021
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 26,465 $ 23,630
Marketable securities 110,229 112,233
Total cash, cash equivalents, and marketable securities 136,694 135,863
Accounts receivable, net 30,930 31,967
Income taxes receivable, net 454 884
Inventory 728 907
Other current assets 5,490 6,076
Total current assets 174,296 175,697
Non-marketable investments 20,703 25,532
Deferred income taxes 1,084 1,153
Property and equipment, net 84,749 91,697
Operating lease assets 12,211 12,978
Intangible assets, net 1,445 1,626
Goodwill 21,175 22,406
Other non-current assets 3,953 4,298
Total assets $ 319,616 $ 335,387
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 5,589 $ 4,708
Accrued compensation and benefits 11,086 10,088
Accrued expenses and other current liabilities 28,631 28,981
Accrued revenue share 7,500 7,438
Deferred revenue 2,543 2,715
Income taxes payable, net 1,485 1,811
Total current liabilities 56,834 55,741
Long-term debt 13,932 14,328
Deferred revenue, non-current 481 510
Income taxes payable, non-current 8,849 8,651
Deferred income taxes 3,561 4,703
Operating lease liabilities 11,146 11,619
Other long-term liabilities 2,269 2,270
Total liabilities 97,072 97,822
Contingencies (Note 9) 0 0
Stockholders’ equity:
Convertible preferred stock, $0.001 par value per share: 100,000 shares authorized; 0 shares issued and outstanding 0 0
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); 675,222 (Class A 300,730, Class B 45,843, Class C 328,649) and 667,637 (Class A 301,040, Class B 45,546, Class C 321,051) shares issued and outstanding 58,510 60,436
Accumulated other comprehensive income (loss) 633 190
Retained earnings 163,401 176,939
Total stockholders’ equity 222,544 237,565
Total liabilities and stockholders’ equity $ 319,616 $ 335,387


	As of December 31, 2021		As of March 31, 2022
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,945	$	20,886
Marketable securities	118,704		113,084
Total cash, cash equivalents, and marketable securities	139,649		133,970
Accounts receivable, net	39,304		34,703
Income taxes receivable, net	966		919
Inventory	1,170		1,369
Other current assets	7,054		6,892
Total current assets	188,143		177,853
Non-marketable securities	29,549		30,544
Deferred income taxes	1,284		1,388
Property and equipment, net	97,599		104,218
Operating lease assets	12,959		12,992
Intangible assets, net	1,417		1,313
Goodwill	22,956		23,010
Other non-current assets	5,361		5,778
Total assets	$	359,268	$	357,096
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,037	$	3,436

Accrued compensation and benefits	13,889		9,803
Accrued expenses and other current liabilities	31,236		33,051
Accrued revenue share	8,996		8,116
Deferred revenue	3,288		3,198
Income taxes payable, net	808		4,344
Total current liabilities	64,254		61,948
Long-term debt	14,817		14,791
Deferred revenue, non-current	535		499
Income taxes payable, non-current	9,176		9,406
Deferred income taxes	5,257		2,843
Operating lease liabilities	11,389		11,363
Other long-term liabilities	2,205		2,242
Total liabilities	107,633		103,092
Contingencies (Note 9)	0		0
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding	0		0
Class A, Class B, and Class C 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); 662,121 (Class A 300,737, Class B 44,665, Class C 316,719) and 658,763 (Class A 300,763, Class B 44,404, Class C 313,596) shares issued and outstanding	61,774		62,832
Accumulated other comprehensive income (loss)	(1,623)		(4,049)
Retained earnings	191,484		195,221
Total stockholders’ equity	251,635		254,004
Total liabilities and stockholders’ equity	$	359,268	$	357,096

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Revenues $ 38,297 $ 61,880 $ 79,456 $ 117,194
Costs and expenses:
Cost of revenues 18,553 26,227 37,535 50,330
Research and development 6,875 7,675 13,695 15,160
Sales and marketing 3,901 5,276 8,401 9,792
General and administrative 2,585 3,341 5,465 6,114
Total costs and expenses 31,914 42,519 65,096 81,396
Income from operations 6,383 19,361 14,360 35,798
Other income (expense), net 1,894 2,624 1,674 7,470
Income before income taxes 8,277 21,985 16,034 43,268
Provision for income taxes 1,318 3,460 2,239 6,813
Net income $ 6,959 $ 18,525 $ 13,795 $ 36,455
Basic net income per share of Class A and B common stock and Class C capital stock $ 10.21 $ 27.69 $ 20.16 $ 54.32
Diluted net income per share of Class A and B common stock and Class C capital stock $ 10.13 $ 27.26 $ 20.00 $ 53.54


	Three Months Ended
	March 31,
		2021		2022
Revenues		$	55,314	$	68,011
Costs and expenses:
Cost of revenues		24,103		29,599
Research and development		7,485		9,119
Sales and marketing		4,516		5,825
General and administrative		2,773		3,374
Total costs and expenses		38,877		47,917
Income from operations		16,437		20,094
Other income (expense), net		4,846		(1,160)
Income before income taxes		21,283		18,934
Provision for income taxes		3,353		2,498
Net income		$	17,930	$	16,436




Basic net income per share of Class A, Class B, and Class C stock		$	26.63	$	24.90









Diluted net income per share of Class A, Class B, and Class C stock		$	26.29	$	24.62

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions; unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Net income $ 6,959 $ 18,525 $ 13,795 $ 36,455
Other comprehensive income (loss):
Change in foreign currency translation adjustment 284 366 (266) (57)
Available-for-sale investments:
Change in net unrealized gains (losses) 867 (52) 1,365 (540)
Less: reclassification adjustment for net (gains) losses included in net income (149) (75) (318) (64)
Net change, net of income tax benefit (expense) of $(220), $37, $(301) and $172 718 (127) 1,047 (604)
Cash flow hedges:
Change in net unrealized gains (losses) (86) (42) 292 137
Less: reclassification adjustment for net (gains) losses included in net income (115) (4) (137) 81
Net change, net of income tax benefit (expense) of $35, $15, $(46) and $(35) (201) (46) 155 218
Other comprehensive income (loss) 801 193 936 (443)
Comprehensive income $ 7,760 $ 18,718 $ 14,731 $ 36,012


	Three Months Ended
	March 31,
		2021		2022
Net income		$	17,930	$	16,436
Other comprehensive loss:
Change in foreign currency translation adjustment		(423)		39
Available-for-sale investments:
Change in net unrealized gains (losses)		(488)		(2,478)
Less: reclassification adjustment for net (gains) losses included in net income		11		148
Net change, net of income tax benefit (expense) of $135 and $633		(477)		(2,330)
Cash flow hedges:
Change in net unrealized gains (losses)		179		114
Less: reclassification adjustment for net (gains) losses included in net income		85		(249)
Net change, net of income tax benefit (expense) of $(50) and $44		264		(135)
Other comprehensive loss		(636)		(2,426)
Comprehensive income		$	17,294	$	14,010

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except share amounts which are reflected in thousands; unaudited)

Three Months Ended June 30, 2020
Class A and Class B
Common Stock, Class C Capital Stock and
Additional Paid-In Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of March 31, 2020 683,972 $ 53,688 $ (1,097) $ 151,068 $ 203,659
Common and capital stock issued 2,391 37 0 0 37
Stock-based compensation expense 0 3,413 0 0 3,413
Tax withholding related to vesting of restricted stock units and other 0 (1,558) 0 0 (1,558)
Repurchases of capital stock (5,148) (506) 0 (6,346) (6,852)
Sale of interest in consolidated entities 0 863 0 0 863
Net income 0 0 0 6,959 6,959
Other comprehensive income (loss) 0 0 801 0 801
Balance as of June 30, 2020 681,215 $ 55,937 $ (296) $ 151,681 $ 207,322


	Three Months Ended March 31, 2021
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2020	675,222	$	58,510	$	633	$	163,401	$	222,544
Stock issued	1,569	6		0		0		6
Stock-based compensation expense	0	3,788		0		0		3,788
Tax withholding related to vesting of restricted stock units and other	0	(2,234)		0		0		(2,234)
Repurchases of stock	(5,697)	(644)		0		(10,751)		(11,395)
Sale of interest in consolidated entities	0	10		0		0		10
Net income	0	0		0		17,930		17,930
Other comprehensive income (loss)	0	0		(636)		0		(636)
Balance as of March 31, 2021	671,094	$	59,436	$	(3)	$	170,580	$	230,013

Six Months Ended June 30, 2020
Class A and Class B
Common Stock, Class C Capital Stock and
Additional Paid-In Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of December 31, 2019 688,335 $ 50,552 $ (1,232) $ 152,122 $ 201,442
Common and capital stock issued 4,516 143 0 0 143
Stock-based compensation expense 0 6,635 0 0 6,635
Tax withholding related to vesting of restricted stock units and other 0 (2,737) 0 0 (2,737)
Repurchases of capital stock (11,636) (1,112) 0 (14,236) (15,348)
Sale of interest in consolidated entities 0 2,456 0 0 2,456
Net income 0 0 0 13,795 13,795
Other comprehensive income (loss) 0 0 936 0 936
Balance as of June 30, 2020 681,215 $ 55,937 $ (296) $ 151,681 $ 207,322


~~Table of Contents~~			~~Alphabet Inc.~~

Three Months Ended June 30, 2021
Class A and Class B
Common Stock, Class C Capital Stock and
Additional Paid-In Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of March 31, 2021 671,094 $ 59,436 $ (3) $ 170,580 $ 230,013
Common and capital stock issued 1,919 1 0 0 1
Stock-based compensation expense 0 3,844 0 0 3,844
Tax withholding related to vesting of restricted stock units and other 0 (2,515) 0 0 (2,515)
Repurchases of capital stock (5,376) (630) 0 (12,166) (12,796)
Sale of interest in consolidated entities 0 300 0 0 300
Net income 0 0 0 18,525 18,525
Other comprehensive income (loss) 0 0 193 0 193
Balance as of June 30, 2021 667,637 $ 60,436 $ 190 $ 176,939 $ 237,565

Six Months Ended June 30, 2021
Class A and Class B
Common Stock, Class C Capital Stock and
Additional Paid-In Capital Accumulated
Other
Comprehensive
Income (Loss) Retained
Earnings Total
Stockholders’
Equity
Shares Amount
Balance as of December 31, 2020 675,222 $ 58,510 $ 633 $ 163,401 $ 222,544
Common and capital stock issued 3,488 7 0 0 7
Stock-based compensation expense 0 7,632 0 0 7,632
Tax withholding related to vesting of restricted stock units and other 0 (4,749) 0 0 (4,749)
Repurchases of capital stock (11,073) (1,274) 0 (22,917) (24,191)
Sale of interest in consolidated entities 0 310 0 0 310
Net income 0 0 0 36,455 36,455
Other comprehensive income (loss) 0 0 (443) 0 (443)
Balance as of June 30, 2021 667,637 $ 60,436 $ 190 $ 176,939 $ 237,565


	Three Months Ended March 31, 2022
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2021	662,121	$	61,774	$	(1,623)	$	191,484	$	251,635
Stock issued	1,555	7		0		0		7
Stock-based compensation expense	0	4,547		0		0		4,547
Tax withholding related to vesting of restricted stock units and other	0	(2,895)		0		0		(2,895)
Repurchases of stock	(4,913)	(601)		0		(12,699)		(13,300)
Net income	0	0		0		16,436		16,436
Other comprehensive income (loss)	0	0		(2,426)		0		(2,426)
Balance as of March 31, 2022	658,763	$	62,832	$	(4,049)	$	195,221	$	254,004

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)

Six Months Ended
June 30,
2020 2021
Operating activities
Net income $ 13,795 $ 36,455
Adjustments:
Depreciation and impairment of property and equipment 6,077 5,255
Amortization and impairment of intangible assets 417 443
Stock-based compensation expense 6,573 7,548
Deferred income taxes (416) 1,479
Gain on debt and equity securities, net (1,040) (7,634)
Other 669 (263)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable 2,522 (867)
Income taxes, net 538 (297)
Other assets (359) (192)
Accounts payable (689) (1,112)
Accrued expenses and other liabilities (2,099) 201
Accrued revenue share (692) 29
Deferred revenue 148 134
Net cash provided by operating activities 25,444 41,179
Investing activities
Purchases of property and equipment (11,396) (11,438)
Purchases of marketable securities (64,111) (60,609)
Maturities and sales of marketable securities 65,874 60,667
Purchases of non-marketable investments (1,311) (1,412)
Maturities and sales of non-marketable investments 473 256
Acquisitions, net of cash acquired, and purchases of intangible assets (355) (1,974)
Other investing activities 531 53
Net cash used in investing activities (10,295) (14,457)
Financing activities
Net payments related to stock-based award activities (2,716) (4,637)
Repurchases of capital stock (15,348) (24,191)
Proceeds from issuance of debt, net of costs 1,898 7,599
Repayments of debt (1,982) (8,678)
Proceeds from sale of interest in consolidated entities, net 2,464 310
Net cash used in financing activities (15,684) (29,597)
Effect of exchange rate changes on cash and cash equivalents (221) 40
Net decrease in cash and cash equivalents (756) (2,835)
Cash and cash equivalents at beginning of period 18,498 26,465
Cash and cash equivalents at end of period $ 17,742 $ 23,630


	Three Months Ended
	March 31,
	2021		2022
Operating activities
Net income	$	17,930	$	16,436
Adjustments:
Depreciation and impairment of property and equipment	2,525		3,591
Amortization and impairment of intangible assets	228		191
Stock-based compensation expense	3,745		4,504
Deferred income taxes	1,100		(2,090)
(Gain) loss on debt and equity securities, net	(4,751)		1,437
Other	(255)		140
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	2,794		4,364
Income taxes, net	785		3,820
Other assets	7		(776)
Accounts payable	(982)		(2,373)
Accrued expenses and other liabilities	(3,530)		(3,216)
Accrued revenue share	(444)		(828)
Deferred revenue	137		(94)
Net cash provided by operating activities	19,289		25,106
Investing activities
Purchases of property and equipment	(5,942)		(9,786)
Purchases of marketable securities	(36,426)		(28,462)
Maturities and sales of marketable securities	39,248		29,779
Purchases of non-marketable securities	(646)		(776)
Maturities and sales of non-marketable securities	19		12


Acquisitions, net of cash acquired, and purchases of intangible assets	(1,666)		(173)
Other investing activities	30		355

Net cash used in investing activities	(5,383)		(9,051)
Financing activities
Net payments related to stock-based award activities	(2,184)		(2,916)

Repurchases of stock	(11,395)		(13,300)
Proceeds from issuance of debt, net of costs	900		16,422
Repayments of debt	(937)		(16,420)
Proceeds from sale of interest in consolidated entities, net	10		0
Net cash used in financing activities	(13,606)		(16,214)
Effect of exchange rate changes on cash and cash equivalents	(143)		100
Net increase (decrease) in cash and cash equivalents	157		(59)
Cash and cash equivalents at beginning of period	26,465		20,945
Cash and cash equivalents at end of period	$	26,622	$	20,886

See accompanying notes.

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Table of Contents			Alphabet Inc.

Alphabet Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. ~~Nature of Operations and~~ Summary of Significant Accounting Policies

Nature of Operations

Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we implemented a holding company reorganization, and as a result, Alphabet Inc. ("Alphabet") became the successor issuer to Google.

We generate revenues by delivering relevant, cost-effective online ~~advertising,~~advertising; cloud-based solutions that provide customers with ~~platforms,~~infrastructure and platform services and collaboration ~~tools and services, and~~tools; sales of other products and services, such as apps and in-app purchases, digital content products, and ~~subscriptions~~hardware; and fees received for ~~digital content,~~subscription-based products such as YouTube Premium and ~~hardware.~~YouTube TV.

Basis of Consolidation

The consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. All intercompany balances and transactions have been eliminated.

Unaudited Interim Financial Information

The Consolidated Balance Sheet as of June 30, 2021, the Consolidated Statements of Income for the three and six months ended June 30, 2020 and 2021, the Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2021, the Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2020 and 2021 and the Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2021 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ~~("GAAP"). In~~(GAAP), and in our opinion, ~~the unaudited interim consolidated financial statements~~ include all adjustments of a normal recurring nature necessary for ~~the~~ fair ~~presentation of our~~ financial ~~position as of June 30, 2021, our~~statement presentation. Interim results of operations for the three and six months ended June 30, 2020 and 2021, and our cash flows for the six months ended June 30, 2020 and 2021. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2021.~~2022. We have made estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.

These ~~unaudited interim~~ consolidated financial statements and other information presented in this Form 10-Q should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 filed with the SEC.

~~Use of Estimates~~

Preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, and contingent liabilities, among others. We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.Note 2. Revenues

Revenue Recognition

The ~~allowance for credit losses on accounts receivable was $789 million and $579 million as of December 31, 2020 and June 30, 2021, respectively.~~

~~Change in Accounting Estimate~~

In January 2021, we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from three years to four years and the estimated useful life of certain network equipment from three years to five years. This change in accounting estimate was effective beginning in fiscal year 2021. Based on the carrying value of servers and certain network equipment as of December 31, 2020, and those acquired during the six months ended June 30, 2021, the effect of this change in estimate was a reduction in depreciation expense of $721 million and $1.6 billion and an increase in net income of $561 million and $1.2 billion, or $0.84 and $1.81 per basic and $0.83 and $1.78 per diluted share, for the three and six months ended June 30, 2021, respectively.

~~Prior Period Reclassifications~~

~~Certain amounts in prior periods have been reclassified to conform with current period presentation.~~following table presents revenues disaggregated by type (in millions).


	Three Months Ended
	March 31,
		2021		2022
Google Search & other		$	31,879	$	39,618
YouTube ads		6,005		6,869
Google Network		6,800		8,174
Google advertising		44,684		54,661
Google other		6,494		6,811
Google Services total		51,178		61,472
Google Cloud		4,047		5,821
Other Bets		198		440
Hedging gains (losses)		(109)		278
Total revenues		$	55,314	$	68,011

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Table of Contents			Alphabet Inc.

~~Note 2. Revenues~~

~~Revenue Recognition~~

The following table presents ~~our revenues disaggregated by type (in millions).~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Google Search & other $ 21,319 $ 35,845 $ 45,821 $ 67,724
YouTube ads 3,812 7,002 7,850 13,007
Google Network 4,736 7,597 9,959 14,397
Google advertising 29,867 50,444 63,630 95,128
Google other 5,124 6,623 9,559 13,117
Google Services total 34,991 57,067 73,189 108,245
Google Cloud 3,007 4,628 5,784 8,675
Other Bets 148 192 283 390
Hedging gains (losses) 151 (7) 200 (116)
Total revenues $ 38,297 $ 61,880 $ 79,456 $ 117,194

~~The following table presents our~~ revenues disaggregated by geography, based on the addresses of our customers (in millions):

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
United States $ 17,999 47 % $ 28,208 46 % $ 36,869 47 % $ 53,240 45 %
EMEA(1)
11,363 30 19,084 31 24,208 30 36,115 31
APAC(1)
6,945 18 11,231 18 14,183 18 21,686 19
Other Americas(1)
1,839 5 3,364 5 3,996 5 6,269 5
Hedging gains (losses) 151 0 (7) 0 200 0 (116) 0
Total revenues $ 38,297 100 % $ 61,880 100 % $ 79,456 100 % $ 117,194 100 %


	Three Months Ended
	March 31,
		2021	2022
United States			$	25,032	45	%	$	31,733	47	%
EMEA(1)			17,031		31		20,317		30
APAC(1)			10,455		19		11,841		17
Other Americas(1)			2,905		5		3,842		6
Hedging gains (losses)			(109)		0		278		0
Total revenues			$	55,314	100	%	$	68,011	100	%

(1) Regions represent Europe, the Middle East, and Africa ~~("EMEA")~~(EMEA); Asia-Pacific ~~("APAC")~~(APAC); and Canada and Latin America ("Other Americas").

Revenue Backlog and Deferred Revenues

As of March 31, 2022, we had $50.5 billion of remaining performance obligations (“revenue backlog”), primarily related to Google Cloud, and ~~Remaining Performance Obligations~~expect to recognize approximately half of this amount as revenues over the next 24 months with the remaining to be recognized thereafter. Our revenue backlog represents commitments in customer contracts for future services that have not yet been recognized as revenues. The amount and timing of revenue recognition for these commitments is largely driven by when our customers utilize services and our ability to deliver in accordance with relevant contract terms, which could affect our estimate of revenue backlog and when we expect to recognize such as revenues. Revenue backlog includes related deferred revenue currently recorded as well as amounts that will be invoiced in future periods and excludes contracts with an original expected term of one year or less and cancellable contracts.

We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenues primarily relate to Google Cloud and Google other. ~~Our total deferred revenue was $3.0 billion and $3.2 billion as of December 31, 2020 and June 30, 2021, respectively. Of the total~~Total deferred revenue as of December 31, ~~2020, $1.8~~2021 was $3.8 billion, of which $1.4 billion was recognized as revenues during the ~~six~~three months ended ~~June 30, 2021.~~

Additionally, we have performance obligations associated with commitments in customer contracts, primarily related to Google Cloud, for future services that have not yet been recognized as revenues, also referred to as remaining performance obligations. Remaining performance obligations include related deferred revenue currently recorded as well as amounts that will be invoiced in future periods, and excludes (i) contracts with an original expected term of one year or less, (ii) cancellable contracts, and (iii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. As of June 30, 2021, the amount not yet recognized as revenues from these commitments was~~$35.3 billion. We expect to recognize approximately half over the next~~24 months with the remaining thereafter. However, the amount and timing of revenue recognition is largely driven by when the customer utilizes the services and our ability to deliver in accordance with relevant contract terms, which could affect our estimate of the remaining performance obligations and when we expect to recognize such as revenues.March 31, 2022.


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Note 3. Financial Instruments

Debt Securities

We classify our marketable debt securities, which are accounted for as available-for-sale, within Level 2 in the fair value hierarchy because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value.

For certain marketable debt securities, we have elected the fair value option for which changes in fair value are recorded in other income (expense), net. The fair value option was elected for these securities to align with the unrealized gains and losses from related derivative contracts. Unrealized net ~~gains~~losses related to debt securities still held where we have elected the fair value option were ~~$87~~$35 million and ~~$52~~$236 million as of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, respectively. As of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, the fair value of these debt securities was ~~$2.0~~$4.7 billion and ~~$2.8~~$5.6 billion, respectively.

The following tables summarize ~~our~~ debt securities, for which we did not elect the fair value option, by significant investment categories (in millions):


	As of December 31, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	5,133	$	0	$	0	$	5,133	$	5,133	$	0
Government bonds	53,288		258		(238)		53,308		5		53,303
Corporate debt securities	35,605		194		(223)		35,576		12		35,564
Mortgage-backed and asset-backed securities	18,829		96		(112)		18,813		0		18,813
Total	$	112,855	$	548	$	(573)	$	112,830	$	5,150	$	107,680

As of December 31, 2020
Adjusted
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Cash and Cash
Equivalents Marketable
Securities
Level 2:
Time deposits(1)
$ 3,564 $ 0 $ 0 $ 3,564 $ 3,564 $ 0
Government bonds 55,156 793 (9) 55,940 2,527 53,413
Corporate debt securities 31,521 704 (2) 32,223 8 32,215
Mortgage-backed and asset-backed securities 16,767 364 (7) 17,124 0 17,124
Total $ 107,008 $ 1,861 $ (18) $ 108,851 $ 6,099 $ 102,752

As of June 30, 2021
Adjusted
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Cash and Cash
Equivalents Marketable
Securities
Level 2:
Time deposits(1)
$ 6,311 $ 0 $ 0 $ 6,311 $ 6,311 $ 0
Government bonds 50,959 497 (50) 51,406 404 51,002
Corporate debt securities 34,476 444 (41) 34,879 0 34,879
Mortgage-backed and asset-backed securities 17,098 199 (33) 17,264 0 17,264
Total $ 108,844 $ 1,140 $ (124) $ 109,860 $ 6,715 $ 103,145


Table of Contents			Alphabet Inc.


	As of March 31, 2022
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	4,690	$	0	$	0	$	4,690	$	4,690	$	0
Government bonds	50,485		58		(1,365)		49,178		0		49,178
Corporate debt securities	36,621		30		(1,043)		35,608		10		35,598
Mortgage-backed and asset-backed securities	18,852		6		(594)		18,264		0		18,264
Total	$	110,648	$	94	$	(3,002)	$	107,740	$	4,700	$	103,040

(1)The majority of our time deposits are domestic deposits.

We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. We recognized gross realized gains of ~~$306~~$135 million and ~~$116~~$40 million for the three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021, respectively, and $563 million and $251 million for the six months ended June 30, 2020 and 2021,~~2022, respectively. We recognized gross realized losses of ~~$88~~$136 million and ~~$15~~$271 million for the three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021, respectively, and $127 million and $151 million for the six months ended June 30, 2020 and 2021,~~2022, respectively. We reflect these gains and losses as a component of other income (expense), net.


~~Table of Contents~~			~~Alphabet Inc.~~

The following table summarizes the estimated fair value of ~~our~~ investments in marketable debt securities by stated contractual maturity dates (in millions):


	As of ~~June 30, 2021~~March 31, 2022
Due in 1 year or less	$	~~20,663~~15,516
Due in 1 year through 5 years	~~69,749~~75,938
Due in 5 years through 10 years	~~3,297~~4,755
Due after 10 years	12,245
Total	$	~~105,954~~108,454

The following tables present fair values and gross unrealized losses recorded to AOCI, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):

As of December 31, 2020
Less than 12 Months 12 Months or Greater Total
Fair Value Unrealized
Loss Fair Value Unrealized
Loss Fair Value Unrealized
Loss
Government bonds $ 5,516 $ (9) $ 3 $ 0 $ 5,519 $ (9)
Corporate debt securities 1,999 (1) 0 0 1,999 (1)
Mortgage-backed and asset-backed securities 929 (5) 242 (2) 1,171 (7)
Total $ 8,444 $ (15) $ 245 $ (2) $ 8,689 $ (17)

As of June 30, 2021
Less than 12 Months 12 Months or Greater Total
Fair Value Unrealized
Loss Fair Value Unrealized
Loss Fair Value Unrealized
Loss
Government bonds $ 19,730 $ (50) $ 0 $ 0 $ 19,730 $ (50)
Corporate debt securities 9,681 (24) 0 0 9,681 (24)
Mortgage-backed and asset-backed securities 5,044 (32) 174 (1) 5,218 (33)
Total $ 34,455 $ (106) $ 174 $ (1) $ 34,629 $ (107)


	As of December 31, 2021
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	32,843	$	(236)	$	71	$	(2)	$	32,914	$	(238)
Corporate debt securities	22,737		(152)		303		(5)		23,040		(157)
Mortgage-backed and asset-backed securities	11,502		(106)		248		(6)		11,750		(112)
Total	$	67,082	$	(494)	$	622	$	(13)	$	67,704	$	(507)


	As of March 31, 2022
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	37,948	$	(1,203)	$	3,909	$	(162)	$	41,857	$	(1,365)
Corporate debt securities	27,403		(879)		2,572		(164)		29,975		(1,043)
Mortgage-backed and asset-backed securities	15,415		(532)		1,101		(62)		16,516		(594)
Total	$	80,766	$	(2,614)	$	7,582	$	(388)	$	88,348	$	(3,002)

During the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 and ~~2021,~~2022, we did 0tnot recognize ~~any~~ significant credit losses and the ending allowance balances for credit losses were immaterial as of December 31, ~~2020~~2021 and ~~June 30, 2021.~~March 31, 2022. See Note 6 for further details on other income (expense), net.


Table of Contents			Alphabet Inc.

Equity Investments

The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method.

Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.

Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs includingvolatility, rights, and obligations of the securities we hold. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.


~~Table of Contents~~			~~Alphabet Inc.~~

Gains and losses on marketable and non-marketable equity securities

Gains and losses reflected in other income (expense), net, for ~~our~~ marketable and non-marketable equity securities are summarized below (in millions):


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30,				June 30,					March 31,
		2020		2021		2020		2021				2021		2022
Net gain (loss) on equity securities sold during the period	Net gain (loss) on equity securities sold during the period	$	18	$	138	$	233	$	506	Net gain (loss) on equity securities sold during the period		$	201	$	(74)
Net unrealized gain (loss) on equity securities held as of the end of the period	Net unrealized gain (loss) on equity securities held as of the end of the period	1,437		2,634		408		7,103		Net unrealized gain (loss) on equity securities held as of the end of the period		4,636		(996)
Total gain (loss) recognized in other income (expense), net	Total gain (loss) recognized in other income (expense), net	$	1,455	$	2,772	$	641	$	7,609	Total gain (loss) recognized in other income (expense), net		$	4,837	$	(1,070)

In the table above, net gain (loss) on equity securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the purchase date, if later.

Cumulative net gains (losses) on equity securities sold during the period, which is summarized in the following table (in millions), represents the total net gains (losses) recognized after the initial purchase date of the equity security. While these net gains may have been reflected in periods prior to the period of sale, we believe they are important supplemental information as they reflect the economic ~~realized~~ net gains on the securities sold during the period. Cumulative net gains are calculated as the difference between the sale price and the initial purchase price for the equity security sold during the period.

Equity Securities Sold
Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Total sale price $ 590 $ 2,629 $ 1,499 $ 3,353
Total initial cost 424 409 685 766
Cumulative net gains(1)
$ 166 $ 2,220 $ 814 $ 2,587

~~(1)~~Cumulative net gains excludes cumulative losses of $684 million resulting from our equity derivatives, which hedged the changes in fair value of certain marketable equity securities sold during the second quarter of 2021. The associated derivative liabilities arising from these losses were settled against our holdings of the underlying equity securities.

~~Carrying value of marketable and non-marketable equity securities~~

The carrying value is measured as the total initial cost plus the cumulative net gain (loss). The carrying values for our marketable and non-marketable equity securities are summarized below (in millions):

As of December 31, 2020
Marketable Securities Non-Marketable Securities Total
Total initial cost $ 2,227 $ 14,616 $ 16,843
Cumulative net gain (loss)(1)
3,631 4,277 7,908
Carrying value(2)
$ 5,858 $ 18,893 $ 24,751

~~(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $6.1 billion unrealized gains and $1.9 billion unrealized losses (including impairment).~~

~~(2)The long-term portion of marketable equity securities of $429 million is included within other non-current assets.~~


		Equity Securities Sold
	Three Months Ended
	March 31,
		2021		2022
Total sale price		$	725	$	364
Total initial cost		357		260
Cumulative net gains		$	368	$	104

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Table of Contents			Alphabet Inc.

As of June 30, 2021
Marketable Securities(2)
Non-Marketable Securities Total
Total initial cost $ 2,662 $ 14,743 $ 17,405
Cumulative net gain (loss)(1)
4,208 8,730 12,938
Carrying value(2)
$ 6,870 $ 23,473 $ 30,343
Carrying value of marketable and non-marketable equity securities

The carrying value is measured as the total initial cost plus the cumulative net gain (loss). The carrying values for marketable and non-marketable equity securities are summarized below (in millions):


	As of December 31, 2021
	Marketable Securities		Non-Marketable Securities		Total
Total initial cost	$	4,211	$	15,135	$	19,346
Cumulative net gain (loss)(1)	3,587		12,436		16,023
Carrying value(2)	$	7,798	$	27,571	$	35,369

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of ~~$10.4~~$14.1 billion ~~unrealized~~ gains and $1.7 billion ~~unrealized~~ losses (including impairment).

(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of ~~$591 million~~$1.4 billion is included within other non-current assets.


	As of March 31, 2022
	Marketable Securities		Non-Marketable Securities		Total
Total initial cost	$	4,549	$	15,770	$	20,319
Cumulative net gain (loss)(1)	1,586		12,882		14,468
Carrying value(2)	$	6,135	$	28,652	$	34,787

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $14.9 billion gains and $2.1 billion losses (including impairment).

(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $1.5 billion is included within other non-current assets.

Marketable equity securities

The following table summarizes marketable equity securities measured at fair value by significant investment categories (in millions):


		As of December 31, 2020				As of June 30, 2021					As of December 31, 2021				As of March 31, 2022
		Cash and Cash Equivalents		Marketable Securities		Cash and Cash Equivalents		Marketable Securities			Cash and Cash Equivalents		Marketable Securities		Cash and Cash Equivalents		Marketable Securities
Level 1:	Level 1:									Level 1:
Money market funds	Money market funds	$	12,210	$	0	$	9,516	$	0	Money market funds	$	7,499	$	0	$	7,820	$	0
Marketable equity securities(1)(2)	Marketable equity securities(1)(2)	0		5,470		0		6,514		Marketable equity securities(1)(2)	0		7,447		0		5,877
		12,210		5,470		9,516		6,514			7,499		7,447		7,820		5,877
Level 2:	Level 2:									Level 2:
Mutual funds	Mutual funds	0		388		0		356		Mutual funds	0		351		0		258
Total	Total	$	12,210	$	5,858	$	9,516	$	6,870	Total	$	7,499	$	7,798	$	7,820	$	6,135

(1)The balance as of December 31, ~~2020 and June 30,~~ 2021 includes investments that were reclassified from non-marketable equity securities following the commencement of public market trading of the issuers or acquisition by public entities (certain ~~of which~~investments are subject to short-term lock-up restrictions).

(2)As of December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 the long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of ~~$429 million~~$1.4 billion and ~~$591 million,~~$1.5 billion, respectively, is included within other non-current assets.


Table of Contents			Alphabet Inc.

Non-marketable equity securities

The following is a summary of unrealized gains and losses recorded in other income (expense), net, ~~and~~which are included as adjustments to the carrying value of non-marketable equity securities held as of the end of the period (in millions):


	Three Months Ended
	March 31,
		2021		2022
Unrealized gains on non-marketable equity securities		$	4,678	$	838
Unrealized losses on non-marketable equity securities (including impairment)		(2)		(378)
Total unrealized gain (loss) recognized on non-marketable equity securities		$	4,676	$	460

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Unrealized gains $ 189 $ 1,852 $ 545 $ 5,128
Unrealized losses (including impairment) (98) (65) (1,395) (67)
Total unrealized gain (loss) for non-marketable equity securities $ 91 $ 1,787 $ (850) $ 5,061

During the three months ended ~~June 30, 2021,~~March 31, 2022, included in the ~~$23.5~~$28.7 billion of non-marketable equity securities ~~$4.7~~held as of the end of the period, $3.1 billion were measured at fair value ~~primarily based on observable market transactions,~~ resulting in a net unrealized gain of ~~$1.8~~$0.5 billion.

Equity securities accounted for under the Equity Method

As of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, equity securities accounted for under the equity method had a carrying value of approximately ~~$1.4~~$1.5 billion and ~~$1.6~~$1.4 billion, respectively. Our share of gains and losses, including ~~impairment~~impairments, are included as a component of other income (expense), net, in the Consolidated Statements of Income. See Note 6 for further details on other income (expense), net.

Derivative Financial Instruments

We enter into derivative instruments to manage risks relating to our ongoing business operations. The primary risk managed with derivative instruments is foreign exchange risk. We use foreign currency contracts to reduce the risk that our cash flows, earnings, and investment in foreign subsidiaries will be adversely affected by foreign


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currency exchange rate fluctuations. We also enter into derivative instruments to partially offset our exposure to other risks and enhance investment returns.

We recognize derivative instruments as either assets or liabilities in the Consolidated Balance Sheets at fair value and classify the derivatives primarily within Level 2 in the fair value hierarchy. We present our collar contracts (an option strategy comprised of a combination of purchased and written options) at net fair values where both the purchased and written options are with the same counterparty. For other derivative contracts, we present at gross fair values. We primarily record changes in the fair value in the Consolidated Statements of Income as either other income (expense), net, or revenues, or in the Consolidated Balance Sheets in AOCI, as discussed below.

We enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. Further, we enter into collateral security arrangements that provide for collateral to be received or pledged when the net fair value of certain financial instruments fluctuates from contractually established thresholds. Cash collateral received related to derivative instruments under our collateral security arrangements are included in other current assets with a corresponding liability. Cash and non-cash collateral pledged related to derivative instruments under our collateral security arrangements are included in other current assets.

Cash Flow Hedges

We designate foreign currency forward and option contracts (including collars) as cash flow hedges to hedge certain ~~forecasted~~forecasted revenue transactions denominated in currencies other than the U.S. dollar. These contracts have ~~maturities~~maturities of 24 months or less.

Cash flow hedge amounts included in the assessment of hedge effectiveness are deferred in AOCI and subsequently reclassified to revenue when the hedged item is recognized in earnings. We exclude the change in forward points and time value from our assessment of hedge effectiveness. The initial value of the excluded component is amortized on a straight-line basis over the life of the hedging instrument and recognized in revenues. The difference between fair value changes of the excluded component and the amount amortized to revenues is recorded in AOCI. If the hedged transactions become probable of not occurring, the corresponding amounts in AOCI are reclassified to other income (expense), net in the period of de-designation.

As of ~~June 30, 2021,~~March 31, 2022, the net accumulated gain on our foreign currency cash flow hedges before tax effect was ~~$87~~$356 million, which is expected to be reclassified from AOCI into earnings within the next 12 months.


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Fair Value Hedges

We designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for our investments denominated in currencies other than the U.S. dollar. Fair value hedge amounts included in the assessment of hedge effectiveness are recognized in other income (expense), net, along with the offsetting gains and losses of the related hedged items. We exclude changes in forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in other income (expense), net.

Net Investment Hedges

We designate foreign currency forward contracts as net investment hedges to hedge the foreign currency risks related to our investment in foreign subsidiaries. Net investment hedge amounts included in the assessment of hedge effectiveness are recognized in AOCI along with the foreign currency translation adjustment. We exclude changes in forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in other income (expense), net.

Other Derivatives

Other derivatives not designated as hedging instruments consist primarily of foreign currency forward contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains and losses on these contracts, as well as the related costs, are recognized in other income (expense), net, along with the foreign currency gains and losses on monetary assets and liabilities.

We also use derivatives not designated as hedging instruments to manage risks relating to interest rates, commodity prices, credit exposures and to enhance investment returns. Additionally, from time to time, we enter into derivatives to hedge the market price risk on certain of our marketable equity securities. Gains (losses) arising from these derivatives are reflected within the "other" component of other income (expense), net and the offsetting recognized gains (losses) on the marketable equity securities are reflected within the gain (loss) on equity securities, net component of other income (expense), net. See Note 6 for further details on other income (expense), net.

The gross notional amounts of outstanding derivative instruments were as follows (in millions):


	As of December 31, 2021		As of March 31, 2022
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
Cash flow hedges	$	16,362	$	17,817
Fair value hedges	$	2,556	$	2,438
Net investment hedges	$	10,159	$	9,933
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	$	41,031	$	42,338
Other contracts	$	4,275	$	6,052


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The fair values of outstanding derivative instruments were as follows (in millions):


		As of December 31, 2021
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	867	$	42	$	909
Other contracts	Other current and non-current assets	0		52		52
Total		$	867	$	94	$	961
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	8	$	452	$	460
Other contracts	Accrued expenses and other liabilities, current and non-current	0		121		121
Total		$	8	$	573	$	581


		As of March 31, 2022
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	705	$	26	$	731
Other contracts	Other current and non-current assets	0		76		76
Total		$	705	$	102	$	807
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	163	$	404	$	567
Other contracts	Accrued expenses and other liabilities, current and non-current	0		76		76
Total		$	163	$	480	$	643


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~~securities, net component of other income (expense), net. See Note 6 for further details on other income (expense), net.~~

~~The gross notional amounts of our outstanding derivative instruments were as follows (in millions):~~

As of December 31, 2020 As of June 30, 2021
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
    Cash flow hedges $ 10,187 $ 15,941
    Fair value hedges $ 1,569 $ 2,578
    Net investment hedges $ 9,965 $ 10,167
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts $ 39,861 $ 43,795
Other contracts $ 2,399 $ 2,933

~~The fair values of our outstanding derivative instruments were as follows (in millions):~~

As of December 31, 2020

Balance Sheet Location Fair Value of Derivatives Designated as Hedging Instruments Fair Value of
Derivatives Not
Designated as
Hedging Instruments Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts Other current and non-current assets $ 33 $ 316 $ 349
Other contracts Other current and non-current assets 0 16 16
Total $ 33 $ 332 $ 365
Derivative Liabilities:
Level 2:
Foreign exchange contracts Accrued expenses and other liabilities, current and non-current $ 395 $ 185 $ 580
Other contracts Accrued expenses and other liabilities, current and non-current 0 942 942
Total $ 395 $ 1,127 $ 1,522

As of June 30, 2021

Balance Sheet Location Fair Value of
Derivatives
Designated as
Hedging Instruments Fair Value of
Derivatives Not
Designated as
Hedging Instruments Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts Other current and non-current assets $ 355 $ 115 $ 470
Other contracts Other current and non-current assets 0 39 39
Total $ 355 $ 154 $ 509
Derivative Liabilities:
Level 2:
Foreign exchange contracts Accrued expenses and other liabilities, current and non-current $ 61 $ 201 $ 262
Other contracts Accrued expenses and other liabilities, current and non-current 0 93 93
Total $ 61 $ 294 $ 355


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The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income ~~("OCI")~~(OCI) are summarized below (in millions):


		Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
	Three Months Ended
	March 31,
		2021		2022
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness		$	162	$	135
Amount excluded from the assessment of effectiveness		49		(15)

Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness		378		149
Total		$	589	$	269

Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness $ (44) $ (60) $ 368 $ 102
Amount excluded from the assessment of effectiveness (49) (4) 3 45
Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness (121) (179) (41) 199
Total $ (214) $ (243) $ 330 $ 346

The effect of derivative instruments on income is summarized below (in millions):

Gains (Losses) Recognized in Income
Three Months Ended
June 30,
2020 2021
Revenues Other income (expense), net Revenues Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded $ 38,297 $ 1,894 $ 61,880 $ 2,624
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income $ 140 $ 0 $ (3) $ 0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach 11 0 (4) 0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items 0 9 0 28
Derivatives designated as hedging instruments 0 (9) 0 (28)
Amount excluded from the assessment of effectiveness 0 1 0 2
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness 0 33 0 21
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts 0 (69) 0 (64)
Other Contracts 0 (211) 0 (142)
Total gains (losses) $ 151 $ (246) $ (7) $ (183)


	Gains (Losses) Recognized in Income
	Three Months Ended
	March 31,
	2021				2022
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded	$	55,314	$	4,846	$	68,011	$	(1,160)

Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	(105)	$	0	$	297	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	(4)		0		(19)		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		0		0		13
Derivatives designated as hedging instruments	0		0		0		(12)
Amount excluded from the assessment of effectiveness	0		2		0		1
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		20		0		12
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		(340)		0		(247)
Other Contracts	0		323		0		38
Total gains (losses)	$	(109)	$	5	$	278	$	(195)


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Gains (Losses) Recognized in Income
Six Months Ended
June 30,
2020 2021
Revenues Other income (expense), net Revenues Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded $ 79,456 $ 1,674 $ 117,194 $ 7,470
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income $ 166 $ 0 $ (108) $ 0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach 34 0 (8) 0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items 0 (8) 0 28
Derivatives designated as hedging instruments 0 8 0 (28)
Amount excluded from the assessment of effectiveness 0 2 0 4
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness 0 111 0 41
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts 0 160 0 (404)
Other Contracts 0 (239) 0 181
Total gains (losses) $ 200 $ 34 $ (116) $ (178)

2018


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Offsetting of Derivatives

The gross amounts of ~~our~~ derivative instruments subject to master netting arrangements with various counterparties, and cash and non-cash collateral received and pledged under such agreements were as follows (in millions):

Offsetting of Assets

As of December 31, 2020
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Non-Cash Collateral Received Net Assets Exposed
Derivatives $ 397 $ (32) $ 365 $ (295) (1) $ (16) $ 0 $ 54
As of June 30, 2021
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
Gross Amounts of Recognized Assets Gross Amounts Offset in the Consolidated Balance Sheets Net Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Non-Cash Collateral Received Net Assets Exposed
Derivatives $ 554 $ (45) $ 509 $ (208) (1) $ (190) $ 0 $ 111


	As of December 31, 2021
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
Derivatives	$	999	$	(38)	$	961	$	(434)	(1)	$	(394)	$	(12)	$	121

	As of March 31, 2022
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
Derivatives	$	894	$	(87)	$	807	$	(427)	(1)	$	(310)	$	0	$	70

(1)The balances as of December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.

Offsetting of Liabilities

As of December 31, 2020
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Non-Cash Collateral Pledged Net Liabilities
Derivatives $ 1,554 $ (32) $ 1,522 $ (295) (2) $ (1) $ (943) $ 283
As of June 30, 2021
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Non-Cash Collateral Pledged Net Liabilities
Derivatives $ 400 $ (45) $ 355 $ (208) (2) $ (2) $ (86) $ 59


	As of December 31, 2021
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
Derivatives	$	619	$	(38)	$	581	$	(434)	(2)	$	(4)	$	(110)	$	33

	As of March 31, 2022
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
Derivatives	$	730	$	(87)	$	643	$	(427)	(2)	$	(5)	$	(49)	$	162

(2) The balances as of December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.

Note 4. Variable Interest Entities (VIE)

Consolidated VIEs

We consolidate VIEs in which we hold a variable interest and are the primary beneficiary. The results of operations and financial position of these VIEs are included in our consolidated financial statements.

For certain consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of December 31, 2021 and March 31, 2022, assets that can only be used to settle obligations of these VIEs were $6.0 billion and $5.5 billion, respectively, and the liabilities for which creditors only have recourse to the VIEs were $2.5 billion and $2.4 billion, respectively.

As of December 31, 2021 and March 31, 2022, total noncontrolling interests (NCI), including redeemable noncontrolling interests (RNCI), in our consolidated subsidiaries was $4.3 billion for both periods. NCI and RNCI are


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For certain consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of December 31, 2020 and June 30, 2021, assets that can only be used to settle obligations of these VIEs were $5.7 billion and $7.3 billion, respectively. The liabilities for which creditors only have recourse to the VIEs were $2.3 billion for both periods.

Total noncontrolling interests ("NCI"), including redeemable noncontrolling interests ("RNCI"), in our consolidated subsidiaries was $3.9 billion and $4.4 billion as of December 31, 2020 and June 30, 2021, respectively. ~~NCI and RNCI are~~ included within additional paid-in capital. Net loss attributable to noncontrolling ~~interests~~interests was not material for ~~any~~any period presented and is included within the "other" component of other income (expense), net. See Note 6 for further details on other income (expense), net.

~~Waymo~~

In June 2021, Waymo, a consolidated VIE, completed an investment round with additional funding of $2.5 billion, the majority of which represented investment from Alphabet. The investments from external parties were accounted for as equity transactions and resulted in recognition of noncontrolling interests. Waymo is a self-driving technology development company with a mission to make it safe and easy for people and things to get where they're going.

Unconsolidated VIEs

We have investments in ~~some~~ VIEs in which we are not the primary beneficiary. These VIEs include private companies that are primarily early stage companies and certain renewable energy entities in which activities involve power generation using renewable sources.

We have determined that the governance structures of these entities do not allow us to direct the activities that would significantly affect their economic performance. Therefore, we are not the primary beneficiary, and the results of operations and financial position of these VIEs are not included in our consolidated financial statements. We account for these investments as non-marketable equity ~~investments~~securities or equity method investments.

The maximum exposure of these unconsolidated VIEs ~~are~~is generally based on the current carrying value of the investments and any future funding commitments. We have determined that the single source of our exposure to these VIEs is our capital investments in them. The carrying value and maximum exposure of these unconsolidated VIEs were ~~not material~~$2.7 billion and $2.9 billion, respectively, as of December 31, ~~2020~~2021 and ~~June 30, 2021.~~$2.8 billion and $2.9 billion, respectively, as of March 31, 2022.

Note 5. Debt

Short-Term Debt

We have a debt financing program of up to ~~$5.0~~$10.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. We had~~had 0 commercial~~ no commercial paper outstanding as of December 31, ~~2020~~2021 and ~~June 30, 2021.~~March 31, 2022.

Our short-term debt balance also includes the current portion of certain long-term debt.

Long-Term Debt

~~The total~~Total outstanding debt is summarized below (in millions, except percentages):

Maturity Coupon Rate Effective Interest Rate As of December 31, 2020 As of
June 30, 2021
Debt
2011-2020 Notes Issuances 2024 - 2060 0.45% - 3.38% 0.57% - 3.38% $ 14,000 $ 13,000
Future finance lease payments, net(1)
1,201 1,608
Total debt 15,201 14,608
Unamortized discount and debt issuance costs (169) (163)
Less: Current portion of Notes(2)
(999) 0
Less: Current portion future finance lease payments, net(1)(2)
(101) (117)
Total long-term debt $ 13,932 $ 14,328


	Maturity	Coupon Rate	Effective Interest Rate	As of December 31, 2021		As of March 31, 2022
Debt
2014-2020 Notes Issuances	2024 - 2060	0.45% - 3.38%	0.57% - 3.38%	$	13,000	$	13,000
Future finance lease payments, net and other (1)				2,086		2,125
Total debt				15,086		15,125
Unamortized discount and debt issuance costs				(156)		(153)
Less: Current portion future finance lease payments, net and other current debt(1)(2)				(113)		(181)
Total long-term debt				$	14,817	$	14,791

(1)~~Net~~Future finance lease payments are net of imputed interest.

(2)Total current portion of long-term debt is included within other accrued expenses and current liabilities. See Note 6.


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The notes in the table above are ~~comprised of~~ fixed-rate senior unsecured obligations and generally rank equally with each other. We may redeem the notes at any time in whole or in part at specified redemption prices. The effective interest rates are based on proceeds received with interest payable semi-annually.

The total estimated fair value of the outstanding notes ~~including the current portion,~~ was approximately ~~$14.0~~$12.4 billion and ~~$12.4~~$11.4 billion as of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, respectively. The fair value was determined based on observable market prices of identical instruments in less active markets and is categorized accordingly as Level 2 in the fair value hierarchy.

Credit Facility

As of ~~June 30, 2021,~~March 31, 2022, we ~~have~~had $10.0 billion of revolving credit ~~facilities. NaN amounts were outstanding under the credit~~ facilities, ~~as of December 31, 2020 and June 30, 2021.~~

~~In April 2021, we terminated the existing $4.0~~$4.0 billion ~~revolving credit facilities, which were scheduled to expire in July 2023, and entered into 2 new revolving credit facilities in the amounts of $4.0 billion and $6.0 billion, which will expire~~expiring in April 2022 and $6.0 billion expiring in April 2026 ~~respectively.~~. In April 2022, we entered into a new $4.0 billion credit facility expiring in April 2023. The interest rates for ~~the new~~all credit facilities are determined based on a formula using certain market rates, as well


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as our progress toward the achievement of certain sustainability goals.No amounts ~~have been borrowed~~were outstanding under the ~~new~~ credit ~~facilities.~~facilities as of December 31, 2021 and March 31, 2022.

Note 6. Supplemental Financial Statement Information

Accounts Receivable

The allowance for credit losses on accounts receivable was $550 million and $578 million as of December 31, 2021 and March 31, 2022, respectively.

Property and Equipment, Net

Property and equipment, net, consisted of the following (in millions):

As of
December 31, 2020 As of
June 30, 2021
Land and buildings $ 49,732 $ 55,910
Information technology assets 45,906 51,188
Construction in progress 23,111 21,825
Leasehold improvements 7,516 7,951
Furniture and fixtures 197 201
Property and equipment, gross 126,462 137,075
Less: accumulated depreciation (41,713) (45,378)
Property and equipment, net $ 84,749 $ 91,697


	As of December 31, 2021		As of March 31, 2022
Land and buildings	$	58,881	$	62,869
Information technology assets	55,606		57,628
Construction in progress	23,172		25,555
Leasehold improvements	9,146		9,912
Furniture and fixtures	208		213
Property and equipment, gross	147,013		156,177
Less: accumulated depreciation	(49,414)		(51,959)
Property and equipment, net	$	97,599	$	104,218

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in millions):

As of
December 31, 2020 As of
June 30, 2021
European Commission fines(1)
$ 10,409 $ 10,254
Payables to brokers for unsettled investment trades 754 966
Accrued customer liabilities 3,118 2,865
Accrued purchases of property and equipment 2,197 2,387
Current operating lease liabilities 1,694 2,037
Other accrued expenses and current liabilities 10,459 10,472
Accrued expenses and other current liabilities $ 28,631 $ 28,981


	As of December 31, 2021		As of March 31, 2022
European Commission fines(1)	$	9,799	$	9,670
Accrued customer liabilities	3,505		3,171
Accrued purchases of property and equipment	2,415		3,175
Current operating lease liabilities	2,189		2,267
Other accrued expenses and current liabilities	13,328		14,768
Accrued expenses and other current liabilities	$	31,236	$	33,051

(1) Includes the effects of foreign exchange and interest. See Note 9 for further details.

Accumulated Other Comprehensive Income (Loss)

Components of AOCI, net of income tax, were as follows (in millions):


	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Investments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2020	$	(864)	$	1,612	$	(115)	$	633
Other comprehensive income (loss) before reclassifications	(423)		(488)		130		(781)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		49		49
Amounts reclassified from AOCI	0		11		85		96
Other comprehensive income (loss)	(423)		(477)		264		(636)
Balance as of March 31, 2021	$	(1,287)	$	1,135	$	149	$	(3)


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~~Accumulated Other Comprehensive Income (Loss)~~

~~The components of AOCI, net of income tax, were as follows (in millions):~~

Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Available-for-Sale Investments Unrealized Gains (Losses) on Cash Flow Hedges Total
Balance as of December 31, 2019 $ (2,003) $ 812 $ (41) $ (1,232)
Other comprehensive income (loss) before reclassifications (266) 1,365 289 1,388
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI 0 0 3 3
Amounts reclassified from AOCI 0 (318) (137) (455)
Other comprehensive income (loss) (266) 1,047 155 936
Balance as of June 30, 2020 $ (2,269) $ 1,859 $ 114 $ (296)


		Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Investments		Unrealized Gains (Losses) on Cash Flow Hedges		Total			Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Investments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2020		$	(864)	$	1,612	$	(115)	$	633
Balance as of December 31, 2021										Balance as of December 31, 2021	$	(2,306)	$	236	$	447	$	(1,623)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(57)		(540)		92		(505)		Other comprehensive income (loss) before reclassifications	39		(2,478)		129		(2,310)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		45		45		Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		(15)		(15)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	0		(64)		81		17		Amounts reclassified from AOCI	0		148		(249)		(101)
Other comprehensive income (loss)	Other comprehensive income (loss)	(57)		(604)		218		(443)		Other comprehensive income (loss)	39		(2,330)		(135)		(2,426)
Balance as of June 30, 2021		$	(921)	$	1,008	$	103	$	190
Balance as of March 31, 2022										Balance as of March 31, 2022	$	(2,267)	$	(2,094)	$	312	$	(4,049)

The effects on net income of amounts reclassified from AOCI were as follows (in millions):


			Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income											Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income
			Three Months Ended				Six Months Ended						Three Months Ended
			June 30,				June 30,						March 31,
AOCI Components	AOCI Components	Location	2020		2021		2020		2021		AOCI Components	Location		2021		2022
Unrealized gains (losses) on available-for-sale investments	Unrealized gains (losses) on available-for-sale investments										Unrealized gains (losses) on available-for-sale investments
		Other income (expense), net	$	189	$	96	$	403	$	82		Other income (expense), net		$	(14)	$	(190)
		Benefit (provision) for income taxes	(40)		(21)		(85)		(18)			Benefit (provision) for income taxes		3		42
		Net of income tax	149		75		318		64			Net of income tax		(11)		(148)
Unrealized gains (losses) on cash flow hedges	Unrealized gains (losses) on cash flow hedges										Unrealized gains (losses) on cash flow hedges
Foreign exchange contracts	Foreign exchange contracts	Revenue	140		(3)		166		(108)		Foreign exchange contracts	Revenue		(105)		297
Interest rate contracts	Interest rate contracts	Other income (expense), net	2		2		3		3		Interest rate contracts	Other income (expense), net		1		2
		Benefit (provision) for income taxes	(27)		5		(32)		24			Benefit (provision) for income taxes		19		(50)
		Net of income tax	115		4		137		(81)			Net of income tax		(85)		249
Total amount reclassified, net of income tax	Total amount reclassified, net of income tax		$	264	$	79	$	455	$	(17)	Total amount reclassified, net of income tax			$	(96)	$	101

Other Income (Expense), Net

Components of other income (expense), net, were as follows (in millions):


	Three Months Ended
	March 31,
		2021		2022
Interest income		$	345	$	414
Interest expense(1)		(76)		(83)
Foreign currency exchange gain (loss), net		113		(73)
Gain (loss) on debt securities, net		(86)		(367)
Gain (loss) on equity securities, net		4,837		(1,070)
Performance fees		(665)		233
Income (loss) and impairment from equity method investments, net		5		(89)
Other		373		(125)
Other income (expense), net		$	4,846	$	(1,160)

(1)Interest expense is net of interest capitalized of $47 million and $34 million for the three months ended March 31, 2021 and 2022, respectively.

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~~Other Income (Expense), Net~~

~~The components of other income (expense), net, were as follows (in millions):~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Interest income $ 433 $ 389 $ 1,019 $ 734
Interest expense(1)
(13) (76) (34) (152)
Foreign currency exchange gain (loss), net (92) (51) (173) 62
Gain (loss) on debt securities, net 387 111 399 25
Gain (loss) on equity securities, net 1,455 2,772 641 7,609
Performance fees (75) (523) (69) (1,188)
Income (loss) and impairment from equity method investments, net (54) 92 20 97
Other (147) (90) (129) 283
Other income (expense), net $ 1,894 $ 2,624 $ 1,674 $ 7,470

~~(1)~~Interest expense is net of interest capitalized of $57 million and $45 million for the three months ended June 30, 2020 and 2021, respectively, and $109 million and $92 million for the six months ended June 30, 2020 and 2021, respectively.

Note 7. Acquisitions

~~Fitbit~~Pending Acquisition of Mandiant

In ~~January 2021,~~March 2022, we ~~closed the~~entered into an agreement to acquire Mandiant, a leader in dynamic cyber defense and response, for $23.00 per share, in an all-cash transaction valued at approximately $5.4 billion, net of cash and debt. The acquisition of ~~Fitbit, Inc. for $2.1 billion. The addition~~Mandiant is subject to customary closing conditions, including the receipt of ~~Fitbit to Google Services~~regulatory and Mandiant stockholder approvals, and is expected to ~~help spur innovation in wearable devices.~~

~~The assets acquired and liabilities assumed were recorded at fair value. The purchase price excludes post~~close later this year. Upon the close of the acquisition, ~~compensation arrangements. The purchase price was attributed to $440 million cash acquired, $590 million~~Mandiant will be part of ~~intangible assets, $1.2 billion of goodwill and $92 million of net liabilities assumed. Goodwill was recorded in~~ the Google ~~Services segment and primarily attributable to synergies expected to arise after the acquisition. Goodwill is not expected to be deductible for tax purposes.~~Cloud segment.

Note 8. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were as follows (in millions):


		Google Services		Google Cloud		Other Bets		Total			Google Services		Google Cloud		Other Bets		Total
Balance as of December 31, 2020		$	18,517	$	1,957	$	701	$	21,175
Balance as of December 31, 2021										Balance as of December 31, 2021	$	19,826	$	2,337	$	793	$	22,956
Acquisitions	Acquisitions	1,221		5		1		1,227		Acquisitions	9		86		0		95
Foreign currency translation and other adjustments	Foreign currency translation and other adjustments	13		1		(10)		4		Foreign currency translation and other adjustments	(36)		(4)		(1)		(41)
Balance as of June 30, 2021		$	19,751	$	1,963	$	692	$	22,406
Balance as of March 31, 2022										Balance as of March 31, 2022	$	19,799	$	2,419	$	792	$	23,010

Other Intangible Assets

Information regarding purchased intangible assets ~~were~~was as follows (in millions):


	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents and developed technology	$	4,786	$	4,112	$	674
Customer relationships	506		140		366
Trade names and other	534		295		239
Total definite-lived intangible assets	5,826		4,547		1,279
Indefinite-lived intangible assets	138		—		138
Total intangible assets	$	5,964	$	4,547	$	1,417


		As of December 31, 2020							As of March 31, 2022
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents and developed technology	Patents and developed technology	$	4,639	$	3,649	$	990	Patents and developed technology	$	4,613	$	4,080	$	533
Customer relationships	Customer relationships	266		49		217		Customer relationships	506		166		340
Trade names and other	Trade names and other	699		461		238		Trade names and other	418		109		309
Total		$	5,604	$	4,159	$	1,445
Total definite-lived intangible assets								Total definite-lived intangible assets	5,537		4,355		1,182
Indefinite-lived intangible assets								Indefinite-lived intangible assets	131		0		131
Total intangible assets								Total intangible assets	$	5,668	$	4,355	$	1,313

For all intangible assets acquired and purchased during the three months ended March 31, 2022, patents and developed technology have a weighted-average useful life of 3.7 years, and trade names and other have a weighted-average useful life of 5.6 years.

Amortization expense relating to purchased intangible assets was $217 million and $191 million for the three months ended March 31, 2021 and 2022, respectively.

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As of June 30, 2021
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Patents and developed technology $ 4,824 $ 3,927 $ 897
Customer relationships 464 93 371
Trade names and other 861 503 358
Total $ 6,149 $ 4,523 $ 1,626

~~For all intangible assets acquired and purchased during the six months ended June 30, 2021, patents and developed technology have a weighted-average useful life of 4.0 years, customer relationships have a weighted-average useful life of 3.8 years, and trade names and other have a weighted-average useful life of 10.0 years.~~

~~Amortization~~Expected amortization expense ~~relating~~related to purchased intangible assets ~~was $194 million and $215 million for the three months ended June 30, 2020 and 2021, respectively, and $398 million and $432 million for the six months ended June 30, 2020 and 2021, respectively.~~

Asheld as of ~~June 30, 2021, expected amortization expense relating to purchased intangible assets for each of the next five years and thereafter~~March 31, 2022 was as follows (in millions):


Remainder of 2021		$	430
2022		507
Remainder of 2022				Remainder of 2022	$	363
2023	2023	226		2023	274
2024	2024	197		2024	244
2025	2025	74		2025	116
2026				2026	71
Thereafter	Thereafter	192		Thereafter	114
Total	Total	$	1,626	Total	$	1,182

Note 9. Contingencies

Indemnifications

In the normal course of business, including to facilitate transactions in our services and products and corporate activities, we indemnify certain parties, including advertisers, Google Network partners, customers of Google Cloud offerings, lessors, and service providers with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors, and our bylaws contain similar indemnification obligations to our agents.

It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows, or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period.

As of ~~June 30, 2021,~~March 31, 2022, we did not have any material indemnification claims that were probable or reasonably possible.

Legal Matters

Antitrust Investigations

On November 30, 2010, the EC's Directorate General for Competition opened an investigation into various antitrust-related complaints against us.

On June 27, 2017, the EC announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law. The EC decision imposed a €2.4 billion ($2.7 billion as of June 27, 2017) fine. On September 11, 2017, we appealed the EC decision to the General Court, and on September 27, 2017, we implemented product changes to bring shopping ads into compliance with the EC's decision. We recognized a charge of $2.7 billion for the fine in the second quarter of 2017.


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On November 10, 2021, the General Court rejected our appeal, and we subsequently filed an appeal with the European Court of Justice on January 20, 2022.

On July 18, 2018, the EC announced its decision that certain provisions in Google’s Android-related distribution agreements infringed European competition law. The EC decision imposed a €4.3 billion ($5.1 billion as of June 30, 2018) fine and directed the termination of the conduct at issue. On October 9, 2018, we appealed the EC ~~decision.~~decision, which remains pending. On October 29, 2018, we implemented changes to certain of our Android distribution practices. We recognized a charge of $5.1 billion for the fine in the second quarter of 2018.

On March 20, 2019, the EC announced its decision that certain contractual provisions in agreements that Google had with AdSense for Search partners infringed European competition law. The EC decision imposed a fine of €1.5 billion ($1.7 billion as of March 20, 2019) and directed actions related to AdSense for Search partners' agreements, which we implemented prior to the decision. On June 4, 2019, we appealed the EC ~~decision.~~decision, which remains pending. We recognized a charge of $1.7 billion for the fine in the first quarter of 2019.

While each EC decision is under appeal, we included the fines in accrued expenses and other current liabilities on our Consolidated Balance Sheets as we provided bank guarantees (in lieu of a cash payment) for the fines.


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From time to time we are subject to formal and informal inquiries and investigations on competition matters by regulatory authorities in the United States (U.S.), Europe, and other jurisdictions. In August 2019, we began receiving civil investigative demands from the U.S. Department of Justice ~~("DOJ")~~(DOJ) requesting information and documents relating to our prior antitrust investigations and certain aspects of our business. The DOJ and a number of state Attorneys General filed a lawsuit on October 20, 2020 alleging that Google violated U.S. antitrust laws relating to Search and Search advertising. Separately, on December 16, 2020, a number of state Attorneys General filed an antitrust complaint against Google in the ~~United States~~U.S. District Court for the Eastern District of Texas, alleging that Google violated U.S. antitrust laws as well as state deceptive trade laws relating to its advertising technology. On June 22, 2021, the EC opened a formal investigation into Google's advertising technology business practices. On July 7, 2021, a number of state Attorneys General filed an antitrust complaint against us in the ~~United States~~U.S. District Court for the Northern District of California, alleging that Google’s operation of Android and Google Play violated U.S. antitrust laws and state antitrust and consumer protection laws. We believe these complaints are without merit and will defend ourselves vigorously. The DOJ, ~~and~~ state Attorneys General, and EC continue their investigations into certain aspects of our business. We continue to cooperate with federal and state regulators in the ~~United States,~~U.S., the EC, and other regulators around the world.

Patent and Intellectual Property Claims

We have had patent, copyright, trade secret, and trademark infringement lawsuits filed against us claiming that certain of our products, services, and technologies infringe others' intellectual property rights. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, functionalities, products, or services. As a result, we may have to change our business practices and develop non-infringing products or technologies, which could result in a loss of revenues for us and otherwise harm our business. In addition, the U.S. International Trade Commission ~~("ITC")~~(ITC) has increasingly become an important forum to litigate intellectual property disputes because an ultimate loss in an ITC action can result in a prohibition on importing infringing products into the U.S. Because the U.S. is an important market, a prohibition on importation could have an adverse effect on us, including preventing us from importing many important products into the U.S. or necessitating workarounds that may limit certain features of our products.

Furthermore, many of our agreements with our customers and partners require us to indemnify them against certain intellectual property infringement claims, which would increase our costs as a result of defending such claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. In addition, our customers and partners may discontinue the use of our products, services, and technologies, as a result of injunctions or otherwise, which could result in loss of revenues and adversely affect our business.

In 2010, Oracle America, Inc. ("Oracle") brought a copyright lawsuit against Google in the Northern District of California, alleging that Google's Android operating system infringes Oracle's copyrights related to certain Java application programming interfaces (“Java APIs”). After trial, final judgment was entered by the district court in favor of Google on June 8, 2016, and the court decided post-trial motions in favor of Google. Oracle appealed and on March 27, 2018, the Federal Circuit Court of Appeals reversed and remanded the case for a trial on damages. On May 29, 2018, we filed a petition for a rehearing at the Federal Circuit, and on August 28, 2018, the Federal Circuit denied the petition. On January 24, 2019, we filed a petition to the Supreme Court of the United States to review the case. On April 29, 2019, the Supreme Court requested the views of the Solicitor General regarding our petition. On September 27, 2019, the Solicitor General recommended denying our petition, and we provided our response on October 16, 2019. On November 15, 2019, the Supreme Court granted our petition and made a decision to review the case. The Supreme Court heard oral arguments in our case on October 7, 2020. On April 5, 2021, the Supreme Court reversed the Federal Circuit's ruling and found that Google’s use of the Java APIs was a fair use as a matter


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of law. The Supreme Court remanded the case to the Federal Circuit for further proceedings in conformity with the Supreme Court opinion. On May 14, 2021, the Federal Circuit entered an order affirming the district court’s final judgment in favor of Google. On June 21, 2021, the Federal Circuit issued a mandate returning the case to the district court, and the case is now concluded.

Other

We are also regularly subject to claims, suits, regulatory and government investigations, ~~and~~ other proceedings, and consent decrees involving competition, intellectual property, privacy and cybersecurity, tax and related compliance, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or publishers using our platforms, personal injury, consumer protection, and other matters. For example, we currently have a number of privacy investigations and suits ongoing in multiple jurisdictions. Such claims, suits, regulatory and government investigations, ~~and~~ other proceedings, and consent decrees could result in substantial fines and penalties, injunctive relief, ongoing auditing and monitoring obligations, changes to our products and services, alterations to our business models and operations, and collateral related civil litigation or other adverse consequences, all of which could harm our business, reputation, financial condition, and operating results.

~~Certain~~We have ongoing legal matters in Russia. We do not believe these ongoing legal matters will have a material adverse effect on our business, consolidated financial position, results of ~~these~~operations, or cash flows.

Certain outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred, and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both the likelihood of there being and the estimated amount of a loss related to such matters.

With respect to our outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.


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We expense legal fees in the period in which they are incurred.

Non-Income Taxes

We are under audit by various domestic and foreign tax authorities with regards to non-income tax matters. The subject matter of non-income tax audits primarily arises from disputes on the tax treatment and tax rate applied to the sale of our products and services in these jurisdictions and the tax treatment of certain employee benefits. We accrue non-income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from our expectations.

For information regarding income tax contingencies, see Note 13.

Note 10. Stockholders' Equity

Share Repurchases

~~In July 2020, the Board of Directors of Alphabet authorized the company to repurchase up to $28.0 billion of its Class C capital stock, which was completed during the second quarter of 2021.~~ In April 2021, the Board of Directors of Alphabet authorized the company to repurchase up to ~~an additional~~ $50.0 billion of its Class C ~~capital~~ stock. In July 2021, the Board of Directors of Alphabet ~~board~~ approved an amendment to the April 2021 authorization, permitting the company to repurchase both 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. As of ~~June 30, 2021, $43.5~~March 31, 2022, $4.1 billion remains available for ~~repurchase. The~~Class A and Class C share repurchases under the amended authorization.

In accordance with the authorizations of the Board of Directors of Alphabet, during the three months ended March 31, 2022, we repurchased and subsequently retired 4.9 million aggregate shares for $13.3 billion. Of the aggregate amount repurchased and subsequently retired during the three months ended March 31, 2022, 0.2 million shares were Class A stock for $660 million and 4.7 million shares were Class C stock for $12.6 billion.

In April 2022, 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.

Repurchases are ~~being~~ 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. The repurchase program does not have an expiration date.

~~During~~Stock Split Effected in Form of Stock Dividend (“Stock Split”)

On February 1, 2022, the ~~three~~company announced that the Board of Directors had approved and ~~six months ended June 30, 2021, we repurchased~~declared a 20-for-one stock split in the form of a one-time special stock dividend on each share of the company’s Class A, Class B, and ~~subsequently retired 5.4 million~~Class C stock. The Stock Split is subject to stockholder approval of an amendment to the company’s Amended and ~~11.1 million~~Restated Certificate of Incorporation to increase the number of authorized shares of ~~Alphabet~~Class A, Class B, and Class C ~~capital~~stock to accommodate the Stock Split.

If approval is obtained, each of the company’s stockholders of record at the close of business on July 1, 2022 (the “Record Date”), will receive, after the close of business on July 15, 2022, a dividend of 19 additional shares of the same class of stock for ~~an aggregate amount~~every share held by such stockholder as of ~~$12.8 billion and $24.2 billion, respectively.~~the Record Date.

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Note 11. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share of Class A, ~~and~~ Class B, ~~common stock~~ and Class C ~~capital~~ stock (in millions, except share amounts which are reflected in thousands, and per share amounts):

Three Months Ended June 30,
2020 2021
Class A Class B Class C Class A Class B Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings $ 3,055 $ 473 $ 3,431 $ 8,321 $ 1,265 $ 8,939
Denominator
Number of shares used in per share computation 299,308 46,355 336,105 300,485 45,692 322,781
Basic net income per share $ 10.21 $ 10.21 $ 10.21 $ 27.69 $ 27.69 $ 27.69
Diluted net income per share:
Numerator
Allocation of undistributed earnings for basic computation $ 3,055 $ 473 $ 3,431 $ 8,321 $ 1,265 $ 8,939
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares 473 0 0 1,265 0 0
Reallocation of undistributed earnings (26) (3) 26 (149) (19) 149
Allocation of undistributed earnings $ 3,502 $ 470 $ 3,457 $ 9,437 $ 1,246 $ 9,088
Denominator
Number of shares used in basic computation 299,308 46,355 336,105 300,485 45,692 322,781
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A common shares outstanding 46,355 0 0 45,692 0 0
Restricted stock units and other contingently issuable shares 92 0 5,164 15 0 10,639
Number of shares used in per share computation 345,755 46,355 341,269 346,192 45,692 333,420
Diluted net income per share $ 10.13 $ 10.13 $ 10.13 $ 27.26 $ 27.26 $ 27.26


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Six Months Ended June 30,
2020 2021
Class A Class B Class C Class A Class B Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings $ 6,042 $ 935 $ 6,818 $ 16,330 $ 2,485 $ 17,640
Denominator
Number of shares used in per share computation 299,642 46,383 338,092 300,610 45,742 324,737
Basic net income per share $ 20.16 $ 20.16 $ 20.16 $ 54.32 $ 54.32 $ 54.32
Diluted net income per share:
Numerator
Allocation of undistributed earnings for basic computation $ 6,042 $ 935 $ 6,818 $ 16,330 $ 2,485 $ 17,640
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares 935 0 0 2,485 0 0
Reallocation of undistributed earnings (53) (7) 53 (269) (36) 269
Allocation of undistributed earnings $ 6,924 $ 928 $ 6,871 $ 18,546 $ 2,449 $ 17,909
Denominator
Number of shares used in basic computation 299,642 46,383 338,092 300,610 45,742 324,737
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A common shares outstanding 46,383 0 0 45,742 0 0
Restricted stock units and other contingently issuable shares 135 0 5,394 17 0 9,736
Number of shares used in per share computation 346,160 46,383 343,486 346,369 45,742 334,473
Diluted net income per share $ 20.00 $ 20.00 $ 20.00 $ 53.54 $ 53.54 $ 53.54


	Three Months Ended March 31,
	2021						2022
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	8,011	$	1,221	$	8,698	$	7,481	$	1,109	$	7,846

Denominator
Number of shares used in per share computation	300,800		45,840		326,580		300,478		44,535		315,158



Basic net income per share	$	26.63	$	26.63	$	26.63	$	24.90	$	24.90	$	24.90
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	8,011	$	1,221	$	8,698	$	7,481	$	1,109	$	7,846


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	1,221		0		0		1,109		0		0
Reallocation of undistributed earnings	(119)		(16)		119		(95)		(12)		95
Allocation of undistributed earnings	$	9,113	$	1,205	$	8,817	$	8,495	$	1,097	$	7,941




Denominator
Number of shares used in basic computation	300,800		45,840		326,580		300,478		44,535		315,158
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding	45,840		0		0		44,535		0		0

Restricted stock units and other contingently issuable shares	18		0		8,833		5		0		7,375
Number of shares used in per share computation	346,658		45,840		335,413		345,018		44,535		322,533



Diluted net income per share	$	26.29	$	26.29	$	26.29	$	24.62	$	24.62	$	24.62

For the periods presented above, the net income per share amounts are the same for Class A, ~~and~~ Class B, ~~common stock~~ and Class C ~~capital~~ stock because the holders of each class are entitled to equal per share dividends or distributions in liquidation in accordance with the Amended and Restated Certificate of Incorporation of Alphabet Inc.

Note 12. Compensation Plans

Stock-Based Compensation

For the three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021,~~2022, total stock-based compensation ~~("SBC")~~(SBC) expense was ~~$3.5~~$3.8 billion and ~~$4.0~~$4.5 billion, including ~~amounts~~amounts associated with awards we expect to settle in Alphabet stock ~~of $3.3 billion and~~of $3.7 billion r~~espectively.~~ an~~For the six months ended June 30, 2020 and 2021, total SBC expense was $6.8~~d $4.4 billion ~~and $7.8 billion, including amounts associated with awards we expect to settle in Alphabet stock of $6.5 billion and $7.4 billion,~~, respectively.

Stock-Based Award Activities

The following table summarizes the activities for ~~our~~ unvested Alphabet restricted stock units ~~("RSUs") in Alphabet stock~~(RSUs) for the ~~six~~three months ended ~~June 30, 2021:~~

Unvested Restricted Stock Units
Number of
Shares Weighted-
Average
Grant-Date
Fair Value
Unvested as of December 31, 2020 19,288,793 $ 1,262.13
Granted 9,082,093 $ 1,810.91
Vested (5,491,338) $ 1,315.93
Forfeited/canceled (973,555) $ 1,396.04
Unvested as of June 30, 2021 21,905,993 $ 1,475.11
March 31, 2022:


	Unvested Restricted Stock Units
	Number of Shares	Weighted- Average Grant-Date Fair Value
Unvested as of December 31, 2021	16,894,713	$	1,626.13
Granted	6,698,922	$	2,758.02
Vested	(2,431,649)	$	1,691.60
Forfeited/canceled	(536,815)	$	1,848.92
Unvested as of March 31, 2022	20,625,171	$	1,980.24

As of ~~June 30, 2021,~~March 31, 2022, there was ~~$30.6~~$38.9 billion of unrecognized compensation cost related to unvested employee RSUs. This amount is expected to be recognized over a weighted-average period of ~~2.7~~2.8 years.

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Note 13. Income Taxes

The following table presents ~~our~~ provision for income taxes (in millions, except for effective tax rate):


		Three Months Ended						Six Months Ended							Three Months Ended
		June 30,						June 30,							March 31,
		2020			2021			2020			2021					2021			2022
Income before provision for income taxes														Income before provision for income taxes		$	21,283		$	18,934
Provision for income taxes	Provision for income taxes	$	1,318		$	3,460		$	2,239		$	6,813		Provision for income taxes		$	3,353		$	2,498
Effective tax rate	Effective tax rate	15.9		%	15.7		%	14.0		%	15.7		%	Effective tax rate		15.8		%	13.2		%

We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. ~~Our total~~Total gross unrecognized tax benefits were ~~$3.8~~$5.2 billion and ~~$4.6~~$5.4 billion as of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, respectively. ~~Our total~~Total unrecognized tax benefits that, if recognized, would affect our effective tax rate were ~~$2.6~~$3.7 billion and ~~$3.2~~$3.9 billion as of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, respectively. Although the timing of the resolution, settlement, and closure of audits is not certain, we do not believe it is reasonably possible that our unrecognized tax benefits will materially change in the next 12 months.

For information regarding non-income taxes, see Note 9.

Note 14. Information about Segments and Geographic Areas

~~Beginning in the fourth quarter of 2020, we~~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 ~~data analytics platforms,~~platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues ~~primarily~~ from fees received for Google Cloud Platform services, ~~and~~ Google Workspace collaboration ~~tools.~~tools, and other enterprise services.

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

Revenues, ~~and~~ certain costs, such as costs associated with content and traffic acquisition, certain engineering activities, and hardware, ~~costs and other~~as well as certain operating expenses are directly attributable to our segments. Due to the integrated nature of Alphabet, other costs and expenses, such as technical infrastructure and office facilities, are managed centrally at a consolidated level. The associated costs, including depreciation and impairment, are allocated to operating segments as a service cost generally based on usage or headcount.

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 ~~research and development~~R&D activities. Additionally, hedging gains (losses) related to revenue are included in corporate costs.

Our ~~Chief Operating Decision Maker does~~operating segments are not ~~evaluate operating segments~~evaluated using asset information.

The following table presents information about segments (in millions):


	Three Months Ended
	March 31,
		2021		2022
Revenues:
Google Services		$	51,178	$	61,472
Google Cloud		4,047		5,821
Other Bets		198		440
Hedging gains (losses)		(109)		278
Total revenues		$	55,314	$	68,011


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~~Information about segments during the periods presented were as follows (in millions). For comparative purposes, amounts in prior periods have been recast:~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Revenues:
Google Services $ 34,991 $ 57,067 $ 73,189 $ 108,245
Google Cloud 3,007 4,628 5,784 8,675
Other Bets 148 192 283 390
Hedging gains (losses) 151 (7) 200 (116)
Total revenues $ 38,297 $ 61,880 $ 79,456 $ 117,194


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30,				June 30,					March 31,
		2020		2021		2020		2021				2021		2022
Operating income (loss):	Operating income (loss):									Operating income (loss):
Google Services	Google Services	$	9,539	$	22,343	$	21,087	$	41,889	Google Services		$	19,546	$	22,920
Google Cloud	Google Cloud	(1,426)		(591)		(3,156)		(1,565)		Google Cloud		(974)		(931)
Other Bets	Other Bets	(1,116)		(1,398)		(2,237)		(2,543)		Other Bets		(1,145)		(1,155)
Corporate costs, unallocated	Corporate costs, unallocated	(614)		(993)		(1,334)		(1,983)		Corporate costs, unallocated		(990)		(740)
Total income from operations	Total income from operations	$	6,383	$	19,361	$	14,360	$	35,798	Total income from operations		$	16,437	$	20,094

For revenues by geography, see Note 2.

The following table presents ~~our~~ long-lived assets by geographic area, which includes property and equipment, net and operating lease assets (in millions):

As of
December 31, 2020 As of
June 30, 2021
Long-lived assets:
United States $ 69,315 $ 74,993
International 27,645 29,682
Total long-lived assets $ 96,960 $ 104,675


	As of December 31, 2021		As of March 31, 2022
Long-lived assets:
United States	$	80,207	$	85,341
International	30,351		31,869
Total long-lived assets	$	110,558	$	117,210

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Please read the following discussion and analysis of our financial condition and results of operations together with "Note About Forward-Looking Statements" and our consolidated financial statements and related notes included under Item 1 of this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including Part I, Item 1A "Risk Factors."

Understanding Alphabet’s Financial Results

Alphabet is a collection of businesses — the largest of which is Google. We report Google in two segments, Google Services and Google Cloud; we also report all non-Google businesses collectively as Other Bets. Other Bets include earlier stage technologies that are further afield from our core Google business. For further details on our segments, see Note 14 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

~~The Impact of COVID-19 on our Results~~Seasonality and ~~Operations~~other

~~We began to observe the impact of COVID-19 on our financial results in March 2020 when, despite an increase in users' search activity, our~~Our advertising revenues ~~declined compared to the prior year due to a shift of user search activity to less commercial topics~~are affected by seasonal fluctuations in internet usage, advertising expenditures, and ~~reduced spending~~underlying business trends, such as traditional retail seasonality. Additionally, our non-advertising revenues, including those generated from Google Cloud, Google Play, hardware, and YouTube, may be affected by our advertisers. For the quarter ended June 30, 2020, our advertising revenues declined due to the continued impacts of COVID-19 and the related reductions in global economic activity. During the course of the quarter ended June 30, 2020, we observed a gradual return in user search activity to more commercial topics, followedfluctuations driven by increased spending by our advertisers that continued throughout the second half of 2020. Additionally, over the course of 2020, we experienced variability in our margins as many of our expenses are less variable in nature and/or may not correlate to changes in revenues. Market volatility contributed to fluctuations in the valuation of our equity investments. Further, our assessment of the credit deterioration of our customers due to changes in the macroeconomic environment during the period was reflected in our allowance for credit losses for accounts receivable.

~~During the first half of 2021, we continued to benefit from elevated consumer activity online~~pricing, digital content releases, fee structures, new product and ~~broad-based increases in advertiser spending. We remained focused on innovating~~service launches, and investing in the services we offer to consumers and businesses to support our long-term growth. For example, we continued to invest in our technical infrastructure and data centers. Additionally, our margins benefited from revenue growth while many of our ~~expenses remained less variable in nature and/or may not correlate to changes in revenues~~. These factors, combined with the adverse impact of COVID-19 in the prior year, particularly during the quarter ended June 30, 2020, positively affected year-over-year growth trends. Further, year-over-year trends benefited from a reduction in depreciation expense due to the change in the estimated useful life of our servers and certain network equipment beginning in the first quarter of 2021; we expect the effect of this change in estimate to decline through the remainder of the year (for further details see Note 1 of the Notes to Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q). The COVID-19 pandemic continues to evolve, be unpredictable and affect our business and financial results. Our past results may not be indicative of our future performance, and historical trends in our financial results may differ materially.

~~See Part II Item 7, "Impact of COVID-19" in our Annual Report on Form 10-K for the year ended December 31, 2020 for more information.~~


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~~Executive Overview~~

~~The following table summarizes our consolidated financial results (in millions, except for per share information and percentages).~~

Three Months Ended
June 30,
2020 2021
Revenues $ 38,297 $ 61,880
Change in revenues year over year (2) % 62 %
Change in constant currency revenues year over year 0 % 57 %
Operating income $ 6,383 $ 19,361
Operating margin 17 % 31 %
Other income (expense), net $ 1,894 $ 2,624
Net Income $ 6,959 $ 18,525
Diluted EPS $ 10.13 $ 27.26

•Total revenues were $61.9 billion, an increase of 62% year over year, primarily driven by an increase in Google Services segment revenues of $22.1 billion or 63% and an increase in Google Cloud segment revenues of $1.6 billion or 54%. The adverse effect of COVID-19 on the prior year comparable period's advertising revenues contributed to the year-over-year increase. Revenues from the United States, EMEA, APAC, and Other Americas were $28.2 billion, $19.1 billion, $11.2 billion, and $3.4 billion, respectively.

•Total cost of revenues was $26.2 billion, an increase of 41% year over year. TAC was $10.9 billion, an increase of 63% year over year, primarily driven by an increase in revenues subject to TAC. Other cost of revenues were $15.3 billion, an increase of 29% year over year, affected by a reduction in depreciation expense due to the change in the estimated useful life of our servers and certain network equipment.

•~~Operating expenses (excluding cost of revenues) were $16.3 billion, an increase of 22% year over year, primarily driven by headcount growth and increases in advertising and promotional expenses~~other market dynamics, as well as ~~charges related to legal matters.~~

~~Other information~~

•~~Operating cash flow was $21.9 billion for the three months ended June 30, 2021.~~

•~~Capital expenditures, which primarily included investments in technical infrastructure, were $5.5 billion for the three months ended June 30, 2021.~~

•~~Number of employees was 144,056 as of June 30, 2021.~~seasonality.

~~Our Segments~~

~~Beginning in the fourth quarter of 2020, we report our segment results as Google Services, Google Cloud,~~Revenues and ~~Other Bets:~~

•Monetization MetricsGoogle 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, 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 data analytics platforms, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues primarily from fees received for Google Cloud Platform ("GCP") services and Google Workspace 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.


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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 research and development activities. Additionally, hedging gains (losses) related to revenue are included in corporate costs.

~~Financial Results~~

~~Revenues~~

~~The following table presents our revenues by type (in millions).~~

Google Services

Google Services revenues consist of revenues generated from advertising ~~revenues~~

~~Our advertising revenue growth,~~(“Google advertising”) as well as ~~the change in paid clicks and cost-per-click on~~ revenues from other sources (“Google ~~Search &~~ other ~~properties and the change in impressions and cost-per-impression on~~ revenues”).

Google ~~Network partners' properties ("Google Network properties") and the correlation between these items, have been affected and may continue to be affected by various factors, including:~~

•~~advertiser competition for keywords;~~

•~~changes in advertising quality, formats, delivery or policy;~~

•~~changes in device mix;~~

•~~changes in foreign currency exchange rates;~~

•~~fees advertisers are willing to pay based on how they manage their advertising costs;~~

•~~general economic conditions including the impact of COVID-19;~~

•~~seasonality; and~~

•~~traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels.~~

Our advertising revenue growth rate has been affected over time as a result of a number of factors, including challenges in maintaining our growth rate as revenues increase to higher levels; changes in our product mix; changes in advertising quality or formats and delivery; the evolution of the online advertising market; increasing competition; our investments in new business strategies; query growth rates; and shifts in the geographic mix of our revenues. We also expect that our revenue growth rate will continue to be affected by evolving user preferences, the acceptance by users of our products and services as they are delivered on diverse devices and modalities, our ability to create a seamless experience for both users and advertisers, and movements in foreign currency exchange rates.Advertising

Google advertising revenues ~~consist primarily~~are comprised of the following:

•Google Search & other, ~~consists of~~which includes revenues generated on Google search properties (including revenues from traffic generated by search distribution partners who use Google.com as their default search in browsers, toolbars, etc.), and other Google owned and operated properties like Gmail, Google Maps, and Google Play;

•YouTube ads, ~~consists of~~which includes revenues generated on YouTube properties; and

•Google Network, ~~consists of~~which includes revenues generated on Google Network properties participating in AdMob, AdSense, and Google Ad Manager.


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~~Google Search & other~~

~~Google Search & other revenues increased $14.5 billion~~We use certain metrics to track how well traffic across various properties is monetized as it relates to our advertising revenues: paid clicks and ~~$21.9 billion from the three and six months ended June 30, 2020~~cost-per-click pertain to ~~the three and six months ended June 30, 2021, respectively. The increase was primarily driven by a number of interrelated factors as well as the adverse effect of COVID-19~~traffic on the prior year comparable period. The interrelated factors included increases in search queries resulting from growth in user adoption and usage, primarily on mobile devices, growth in advertiser spending, and improvements we have made in ad formats and delivery. The adverse effect of COVID-19 on prior year comparable period revenues included a shift in user activity to less commercial topics and reduced advertiser spend.

~~YouTube ads~~

YouTube ads revenues increased $3.2 billion from the three months ended June 30, 2020 to the three months ended June 30, 2021, driven by growth for our brand and direct response advertising products. The increase in revenues of $5.2 billion from the six months ended June 30, 2020 to the six months ended June 30, 2021 was driven by our direct response and brand advertising products. Growth for our brand advertising products was driven by both increased spending by our advertisers in the current period and the adverse effect of COVID-19 on prior year comparable period revenues. Growth for our direct response advertising products was primarily driven by increased advertiser spending as well as improvements to ad formats and delivery.

~~Google Network~~

Google Network revenues increased $2.9 billion and $4.4 billion from the three and six months ended June 30, 2020 to the three and six months ended June 30, 2021, respectively. The increase was primarily driven by strength in Google Ad Manager and AdMob. The increase was also affected by reduced advertiser spending driven by the effect of COVID-19 in the prior year comparable period.

~~Use of Monetization Metrics~~

~~Paid clicks for our~~ Google Search & other properties, while impressions and cost-per-impressions pertain to traffic on our Network partners’ properties.

Paid clicks represent engagement by users and include clicks on advertisements by end-users on Google search properties and other Google owned and operated properties including Gmail, Google Maps, and Google Play. Historically, we included certain viewed YouTube engagement ads and the related revenues in our paid clicks and cost-per-click monetization metrics. Over time, advertising on YouTube has expanded to multiple advertising formats and the type of viewed engagement ads historically included in paid clicks and cost-per-click metrics have increasingly covered a smaller portion of YouTube advertising revenues. As a result, beginning in the fourth quarter of 2020, we removed these ads and the related revenues from the paid clicks and cost-per-click metrics. The revised metrics presented below provide a better understanding of monetization trends on the properties included within Google Search & other, as they now more closely correlate with the related changes in revenues.

~~Impressions for Google Network properties include impressions displayed to users served on Google Network properties participating primarily in AdMob, AdSense and Google Ad Manager.~~

Cost-per-click is defined as click-driven revenues divided by our total number of paid clicks and represents the average amount we charge advertisers for each engagement by users.

Impressions include impressions displayed to users on Google Network properties participating primarily in AdMob, AdSense, and Google Ad Manager. Cost-per-impression is defined as impression-based and click-based revenues divided by our total number of impressions, and represents the average amount we charge advertisers for each impression displayed to users.

As our business evolves, we periodically review, refine, and update our methodologies for monitoring, gathering, and counting the number of paid clicks and the number of impressions, and for identifying the revenues generated by the corresponding click and impression activity.

Our advertising revenue growth, as well as the change in paid clicks and cost-per-click on ~~our~~ Google Search & other properties and the ~~number of~~change in impressions and cost-per-impression on Google Network properties and the correlation between these items, have been affected and may continue to be affected by various factors, including:

•advertiser competition for ~~identifying the revenues generated by click activity on our Google Search & other properties and the revenues generated by impression activity on Google Network properties.~~

~~Paid clicks and cost-per-click~~

~~The following table presents changes in our paid clicks and cost-per-click (expressed as a percentage):~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2021
Paid clicks change 26 % 25 %
Cost-per-click change 31 % 16 %
keywords;

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•changes in advertising quality, formats, delivery or policy;

•changes in device mix;

•changes in foreign currency exchange rates;

•fees advertisers are willing to pay based on how they manage their advertising costs;

•general economic conditions and various external dynamics, including the effect of COVID-19, geopolitical events, regulations and other measures;

•seasonality; and

•traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels.

Google Other

Google other revenues are comprised of the following:

•Google Play, which includes sales of apps and in-app purchases and digital content sold in the Google Play store;

•Devices and Services, which includes sales of hardware, including Fitbit wearable devices, Google Nest home products, and Pixel phones;

•YouTube non-advertising, which includes YouTube Premium and YouTube TV subscriptions; and

•other products and services.

Google Cloud

Google Cloud revenues are comprised of the following:

•Google Cloud Platform, which includes fees for infrastructure, platform, and other services;

•Google Workspace, which includes fees for cloud-based collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar and Meet; and

•other enterprise services.

Other Bets

Revenues from Other Bets are generated primarily from the sale of health technology and internet services.

For further details on how we recognize revenue, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Costs and Expenses

Our cost structure has two components: cost of revenues and operating expenses. Our operating expenses include costs related to R&D, sales and marketing, and general and administrative functions. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue.

Cost of Revenues

Cost of revenues is comprised of TAC and other costs of revenues.

•TAC includes:

◦Amounts paid to our distribution partners who make available our search access points and services. Our distribution partners include browser providers, mobile carriers, original equipment manufacturers, and software developers.

◦Amounts paid to Google Network partners primarily for ads displayed on their properties.

•Other cost of revenues includes:

◦Content acquisition costs, which are payments to content providers from whom we license video and other content for distribution on YouTube and Google Play (we pay fees to these content providers based on revenues generated or a flat fee).


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◦Expenses associated with our data centers (including bandwidth, compensation expenses, depreciation, energy, and other equipment costs) as well as other operations costs (such as content review as well as customer and product support costs).

◦Inventory and other costs related to the hardware we sell.

The cost of revenues as a percentage of revenues generated from ads placed on Google Network properties are significantly higher than the cost of revenues as a percentage of revenues generated from ads placed on Google Search & other properties, because most of the advertiser revenues from ads served on Google Network properties are paid as TAC to our Google Network partners.

Operating Expenses

Operating expenses are generally incurred during our normal course of business, which we categorize as either R&D, sales and marketing, or general and administrative.

The main components of our R&D expenses are:

•compensation expenses for engineering and technical employees responsible for R&D related to our existing and new products and services;

•depreciation; and

•professional services fees primarily related to consulting and outsourcing services.

The main components of our sales and marketing expenses are:

•compensation expenses for employees engaged in sales and marketing, sales support, and certain customer service functions; and

•spending relating to our advertising and promotional activities in support of our products and services.

The main components of our general and administrative expenses are:

•compensation expenses for employees in finance, human resources, information technology, legal, and other administrative support functions;

•expenses related to legal matters, including fines and settlements; and

•professional services fees, including audit, consulting, outside legal, and outsourcing services.

Other Income (Expense), Net

Other income (expense), net primarily consists of interest income (expense), the effect of foreign currency exchange gains (losses), net gains (losses) and impairment on our marketable and non-marketable securities, performance fees, and income (loss) and impairment from our equity method investments.

For additional details, including how we account for our investments and factors that can drive fluctuations in the value of our investments, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 and Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as well as Note 3 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

Provision for Income Taxes

Provision for income taxes represents the estimated amount of federal, state, and foreign income taxes incurred in the U.S. and the many jurisdictions in which we operate. The provision includes the effect of reserve provisions and changes to reserves that are considered appropriate as well as the related net interest and penalties.

For additional details, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as well as Note 13 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.


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Executive Overview

The following table summarizes consolidated financial results (in millions, except per share information, percentages, and number of employees):


		Three Months Ended
	March 31,
		2021			2022			$ Change		% Change
Consolidated revenues		$	55,314		$	68,011		12,697		23	%
Change in consolidated constant currency revenues										26	%

Cost of revenues		$	24,103		$	29,599		$	5,496	23	%
Operating expenses		$	14,774		$	18,318		$	3,544	24	%

Operating income		$	16,437		$	20,094		$	3,657	22	%
Operating margin		30		%	30		%			0	%

Other income (expense), net		$	4,846		$	(1,160)		$	(6,006)	(124)	%

Net Income		$	17,930		$	16,436		$	(1,494)	(8)	%
Diluted EPS		$	26.29		$	24.62		$	(1.67)	(6)	%

Number of Employees		139,995			163,906			23,911		17	%

•Revenues were $68.0 billion, an increase of 23% year over year, primarily driven by an increase in Google Services segment revenues of $10.3 billion or 20% and an increase in Google Cloud segment revenues of $1.8 billion or 44%.

•Cost of revenues was $29.6 billion, an increase of 23% year over year, driven by increases in other costs of revenues and TAC.

•Operating expenses were $18.3 billion, an increase of 24% year over year, primarily driven by headcount growth and increases in advertising and promotional expenses.

Other information

•During the first quarter of 2022, we suspended the vast majority of our commercial activities in Russia and effectively ceased business activities of our Russian entity. These direct actions did not have a material effect on our financial results. The ongoing broader economic effects resulting from the war in Ukraine on our future financial results may be unpredictable.

•We entered into an agreement to acquire Mandiant, a leader in dynamic cyber defense and response, in March 2022 for $23.00 per share, in an all-cash transaction valued at approximately $5.4 billion, net of cash and debt. See Note 7 of the Notes to the Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

•Repurchases of Class A and Class C shares were $13.3 billion. In April 2022, 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. See Note 10 of the Notes to the Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

•The company announced in February 2022 that the Board of Directors had approved and declared a 20-for-one stock split in the form of a one-time special stock dividend on each share of the company’s Class A, Class B, and Class C stock. See Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

•Operating cash flow was $25.1 billion, primarily driven by revenues generated from our advertising products.

•Capital expenditures of $9.8 billion reflects the increase in purchases of office facilities.


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Financial Results

Revenues

The following table presents revenues by type (in millions):


	Three Months Ended
	March 31,
		2021		2022
Google Search & other		$	31,879	$	39,618
YouTube ads		6,005		6,869
Google Network		6,800		8,174
Google advertising		44,684		54,661
Google other		6,494		6,811
Google Services total		51,178		61,472
Google Cloud		4,047		5,821
Other Bets		198		440
Hedging gains (losses)		(109)		278
Total revenues		$	55,314	$	68,011

Google Services

Google advertising revenues

Google Search & other

Google Search & other revenues increased $7.7 billion from the three months ended March 31, 2021 to the three months ended March 31, 2022. The overall growth was driven by interrelated factors including increases in search queries resulting from growth in user adoption and usage, primarily on mobile devices, growth in advertiser spending, and improvements we have made in ad formats and delivery.

YouTube ads

YouTube ads revenues increased $864 million from the three months ended March 31, 2021 to the three months ended March 31, 2022. The growth was driven by our brand and direct response advertising products. Growth for our brand advertising products was primarily driven by increased spending by our advertisers. Growth for our direct response advertising products was primarily driven by increased advertiser spending as well as improvements to ad formats and delivery.

Google Network

Google Network revenues increased $1.4 billion from the three months ended March 31, 2021 to the three months ended March 31, 2022. The growth was primarily driven by strength in AdSense and AdMob.

Monetization Metrics

Paid clicks and cost-per-click

The following table presents year-over-year changes in paid clicks and cost-per-click (expressed as a percentage):


			Three Months Ended March 31,

			2022


Paid clicks change			16%
Cost-per-click change			8%

Paid clicks increased from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021 primarily~~March 31, 2022, driven by a number of interrelated factors, including an increase in search queries resulting from growth in user adoption and usage, primarily on mobile devices; ~~an increase in clicks relating to ads on Google Play; continued~~ growth in advertiser ~~activity;~~spending; and improvements we have made in ad formats and ~~delivery; and the adverse effect of COVID-19 on the prior year comparable period when we experienced a shift to less commercial search activity and a reduction in advertiser spending.~~ delivery.


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The increase in cost-per-click from the three months ended March 31, 2021 to the three months ended March 31, 2022 was ~~primarily~~ driven by ~~the adverse effect~~a number of ~~COVID-19 on the prior year comparable period as well as the effect of a combination of~~interrelated factors including changes in device mix, geographic mix, growth in advertiser spending, ongoing product changes, ~~product mix,~~and property ~~mix, and fluctuations of the U.S. dollar compared to certain foreign currencies.~~mix.

Impressions and cost-per-impression

The following table presents year-over-year changes in ~~our~~ impressions and cost-per-impression (expressed as a percentage):

Three Months Ended June 30, Six Months Ended June 30,
2021 2021
Impressions change (1) % 3 %
Cost-per-impression change 63 % 39 %



			Three Months Ended March 31,
			2022
Impressions change			5%
Cost-per-impression change			17%

Impressions ~~decreased~~increased from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended June 30, 2021 primarily driven by a decline in impressions related to AdSense, partially offset by growth in AdMob. Impressions increased from the six months ended June 30, 2020 to the six months ended June 30, 2021March 31, 2022, primarily driven by growth in ~~AdMob and~~ Google Ad Manager ~~partially offset by a decline in impressions related to AdSense.~~

and AdMob. The increase in cost-per-impression from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was ~~primarily~~ driven by ~~the adverse effect~~a number of ~~COVID-19 on the prior year comparable period when we experienced a reduction in advertiser spending as well as the effect of a combination of~~interrelated factors including ongoing product and policy changes, ~~and~~ improvements we have made in ad formats and delivery, changes in device mix, geographic mix, product mix, and property ~~mix, and fluctuations of the U.S. dollar compared to certain foreign currencies.~~mix.

Google other revenues

Google other revenues ~~consist primarily of revenues from:~~

•~~Google Play, which includes revenues from sales of apps and in-app purchases (which we recognize net of payout to developers) and digital content sold in the Google Play store;~~

•~~Devices and Services which includes hardware, such as Fitbit wearable devices, Google Nest home products, Pixelbooks, Pixel phones and other devices;~~

•~~YouTube non-advertising, including YouTube Premium and YouTube TV subscriptions and other services; and~~

•~~other products and services.~~

~~Google other revenues~~ increased ~~$1.5 billion and $3.6 billion~~$317 million from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022. The growth was primarily driven by YouTube non-advertising, ~~Devices and Services and Google Play. Growth for YouTube non-advertising was primarily driven by~~largely due to an increase in paid subscribers. ~~Growth for Devices and Services reflects the inclusion of Fitbit revenues, as the acquisition closed~~The overall growth was partially offset by a decline in ~~January 2021. Growth for~~ Google Play ~~was primarily~~revenues largely driven by ~~sales of apps and in-app purchases.~~

~~Over time, our growth rate for Google other revenues may be affected by the seasonality associated with new product and service launches as well as market dynamics.~~fee structure changes we announced in 2021.

Google Cloud

~~Our~~ Google Cloud revenues increased ~~$1.6 billion and $2.9~~$1.8 billion from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022. The growth was primarily driven by GCP followed by Google Workspace offerings. Google Cloud's infrastructure and platform services were the largest drivers of growth in GCP.

~~Over time, our growth rate for Google Cloud revenues may be affected by customer usage, market dynamics, as well as new product and service launches.~~


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Revenues by Geography

The following table presents ~~our~~ revenues by geography as a percentage of revenues, determined based on the addresses of our customers:

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
United States 47 % 46 % 47 % 45 %
EMEA 30 % 31 % 30 % 31 %
APAC 18 % 18 % 18 % 19 %
Other Americas 5 % 5 % 5 % 5 %


	Three Months Ended
	March 31,
	2021		2022
United States	45	%	47	%
EMEA	31	%	30	%
APAC	19	%	17	%
Other Americas	5	%	6	%

For further details on revenues by geography, see Note 2 of the Notes to Consolidated Financial Statements included in ~~Part I,~~ Item 1 of this Quarterly Report on Form 10-Q.

Use of Constant Currency Revenues and Constant Currency Revenue Percentage Change

The effect of currency exchange rates on our business is an important factor in understanding period to period comparisons. Our international revenues are favorably affected as the U.S. dollar weakens relative to other foreign currencies, and unfavorably affected as the U.S. dollar strengthens relative to other foreign currencies. Our revenues are also favorably affected by net hedging gains and unfavorably affected by net hedging losses.

We use non-GAAP constant currency revenues and non-GAAP percentage change in constant currency revenues for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe the presentation of results on a constant currency basis in addition to GAAP results helps improve the ability to understand our performance because ~~they exclude~~it excludes the effects of foreign currency volatility that are not indicative of our core operating results.

Constant currency information compares results between periods as if exchange rates had remained constant period over period. We define constant currency revenues as total revenues excluding the effect of foreign exchange rate movements and hedging activities, and use it to determine the constant currency revenue percentage change on a ~~year-over-year~~year-on-year basis. Constant currency revenues are calculated by translating current period revenues using prior year comparable period exchange rates, as well as excluding any hedging effects realized in the current period.


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Constant currency revenue percentage change is calculated by determining the change in current period revenues over prior year comparable period revenues where current period foreign currency revenues are translated using prior year comparable period exchange rates and hedging effects are excluded from revenues of both periods.

These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP.

The following table presents the foreign exchange effect on international revenues and total revenues (in millions, except percentages):


	Three Months Ended
	March 31,
	2021		2022		% Change from Prior Year
EMEA revenues	$	17,031	$	20,317	19	%
EMEA constant currency revenues			21,628		27	%

APAC revenues	10,455		11,841		13	%
APAC constant currency revenues			12,440		19	%

Other Americas revenues	2,905		3,842		32	%
Other Americas constant currency revenues			3,923		35	%

United States revenues	25,032		31,733		27	%

Hedging gains (losses)	(109)		278
Total revenues	$	55,314	$	68,011	23	%
Revenues, excluding hedging effect	$	55,423	$	67,733
Exchange rate effect			1,991
Total constant currency revenues			$	69,724	26	%

EMEA revenue growth from the three months ended March 31, 2021 to the three months ended March 31, 2022 was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Euro.

APAC revenue growth from the three months ended March 31, 2021 to the three months ended March 31, 2022 was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Japanese yen.

Other Americas revenue growth from the three months ended March 31, 2021 to the three months ended March 31, 2022 was not materially affected by changes in foreign currency exchange rates.

Costs and Expenses

Cost of Revenues

The following table presents cost of revenues, including TAC (in millions, except percentages):


	Three Months Ended
	March 31,
	2021			2022
TAC	$	9,712		$	11,990
Other cost of revenues	14,391			17,609
Total cost of revenues	$	24,103		$	29,599
Total cost of revenues as a percentage of revenues	43.6		%	43.5		%


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~~The following table presents the foreign exchange effect on our international revenues and total revenues (in millions, except percentages):~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
EMEA revenues $ 11,363 $ 19,084 $ 24,208 $ 36,115
Exclude foreign exchange effect on current period revenues using prior year rates 361 (1,425) 596 (2,354)
EMEA constant currency revenues $ 11,724 $ 17,659 $ 24,804 $ 33,761
Prior period EMEA revenues $ 12,313 $ 11,363 $ 23,981 $ 24,208
EMEA revenue percentage change (8) % 68 % 1 % 49 %
EMEA constant currency revenue percentage change (5) % 55 % 3 % 39 %
APAC revenues $ 6,945 $ 11,231 $ 14,183 $ 21,686
Exclude foreign exchange effect on current period revenues using prior year rates 105 (350) 166 (713)
APAC constant currency revenues $ 7,050 $ 10,881 $ 14,349 $ 20,973
Prior period APAC revenues $ 6,536 $ 6,945 $ 12,632 $ 14,183
APAC revenue percentage change 6 % 62 % 12 % 53 %
APAC constant currency revenue percentage change 8 % 57 % 14 % 48 %
Other Americas revenues $ 1,839 $ 3,364 $ 3,996 $ 6,269
Exclude foreign exchange effect on current period revenues using prior year rates 240 (112) 336 79
Other Americas constant currency revenues $ 2,079 $ 3,252 $ 4,332 $ 6,348
Prior period Other Americas revenues $ 2,124 $ 1,839 $ 4,030 $ 3,996
Other Americas revenue percentage change (13) % 83 % (1) % 57 %
Other Americas constant currency revenue percentage change (2) % 77 % 7 % 59 %
United States revenues $ 17,999 $ 28,208 $ 36,869 $ 53,240
United States revenue percentage change 1 % 57 % 7 % 44 %
Hedging gains (losses) $ 151 $ (7) $ 200 $ (116)
Total revenues $ 38,297 $ 61,880 $ 79,456 $ 117,194
Total constant currency revenues $ 38,852 $ 60,000 $ 80,354 $ 114,322
Prior period revenues, excluding hedging effect(1)
$ 38,836 $ 38,146 $ 75,038 $ 79,256
Total revenue percentage change (2) % 62 % 6 % 47 %
Total constant currency revenue percentage change 0 % 57 % 7 % 44 %

~~(1)~~ Total revenues and hedging gains (losses) were $38,944 million and $108 million, respectively, for the three months ended June 30, 2019 and $75,283 million and $245 million, respectively, for the six months ended June 30, 2019.

EMEA revenue percentage change from the three and six months ended June 30, 2020 to the three and six months ended June 30, 2021 was favorably affected by foreign currency exchange rates, primarily due to the U.S. dollar weakening relative to the Euro and British pound.

APAC revenue percentage change from the three and six months ended June 30, 2020 to the three and six months ended June 30, 2021 was favorably affected by foreign currency exchange rates, primarily due to the U.S. dollar weakening relative to the Australian dollar.

Other Americas revenue percentage change from the three months ended June 30, 2020 to the three months ended June 30, 2021 was favorably affected by changes in foreign currency exchange rates, primarily due to the


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U.S. dollar weakening relative to the Canadian dollar. Other Americas revenue percentage change from the six months ended June 30, 2020 to the six months ended June 30, 2021 was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Brazilian real, partially offset by the U.S. dollar weakening relative to the Canadian dollar.

~~Costs and Operating Expenses~~

~~Cost of Revenues~~

Cost of revenues includes TAC which are paid to our distribution partners, who make available our search access points and services, and amounts paid to Google Network partners primarily for ads displayed on their properties. Our distribution partners include browser providers, mobile carriers, original equipment manufacturers, and software developers.

The cost of revenues as a percentage of revenues generated from ads placed on Google Network properties are significantly higher than the cost of revenues as a percentage of revenues generated from ads placed on Google properties (which includes Google Search & other and YouTube ads), because most of the advertiser revenues from ads served on Google Network properties are paid as TAC to our Google Network partners.

~~Additionally, other cost of revenues (which is the cost of revenues excluding TAC) includes the following:~~

•Content acquisition costs primarily related to payments to content providers from whom we license video and other content for distribution on YouTube advertising and subscription services and Google Play (we pay fees to these content providers based on revenues generated or a flat fee);

•Expenses associated with our data centers (including bandwidth, compensation expenses including SBC, depreciation, energy, and other equipment costs) as well as other operations costs (such as content review and customer support costs). These costs are generally less variable in nature and may not correlate with related changes in revenues; and

•~~Inventory related costs for hardware we sell.~~

~~The following tables present our cost of revenues, including TAC (in millions, except percentages):~~

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
TAC $ 6,694 $ 10,929 $ 14,146 $ 20,641
Other cost of revenues 11,859 15,298 23,389 29,689
Total cost of revenues $ 18,553 $ 26,227 $ 37,535 $ 50,330
Total cost of revenues as a percentage of revenues 48.4 % 42.4 % 47.2 % 42.9 %

Cost of revenues increased ~~$7.7~~$5.5 billion from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021.~~March 31, 2022. The increase was due to increases in ~~TAC and~~ other cost of revenues and TAC of ~~$4.2~~$3.2 billion and ~~$3.4~~$2.3 billion, respectively. Cost of revenues increased $12.8 billion from the six months ended June 30, 2020 to the six months ended June 30, 2021. The increase was due to increases in TAC and other cost of revenues of $6.5 billion and $6.3 billion, respectively.

The increase in other cost of revenues from the three and six months ended June 30, 2020 to the three and six months ended June 30, 2021 was primarily due to increases in content acquisition costs primarily for YouTube as well as data center and other operations costs. The increase in data center and other operations costs was partially offset by a reduction in depreciation expense due to the change in the estimated useful life of our servers and certain network equipment beginning in the first quarter of 2021.

The increase in TAC from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was due to increases in TAC paid to distribution partners and to Google Network partners, primarily driven by growth in revenues subject to TAC.

The TAC rate ~~decreased~~increased from ~~22.4%~~21.7% to ~~21.7%~~21.9% from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021 and decreased from 22.2% to 21.7% from the six months ended June 30, 2020 to the six months ended June 30, 2021 primarily~~March 31, 2022 due to a ~~revenue mix shift from Google Network properties to Google properties.~~combination of factors none of which were individually significant. The TAC rate on Google Search & other properties revenues and the TAC rate on Google Network ~~properties~~ revenues were both substantially consistent from ~~the~~ three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.


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~~Over time,~~The increase in other cost of revenues ~~as a percentage of total revenues may be affected by a number of factors, including~~from the ~~following:~~

•~~The amount of TAC paid~~three months ended March 31, 2021 to ~~distribution partners, which is affected by changes~~the three months ended March 31, 2022 was primarily due to increases in ~~device mix, geographic mix, partner mix, partner agreement terms such as revenue share arrangements, and the percentage of queries channeled through paid access points;~~

•~~The amount of TAC paid to Google Network partners, which is affected by a combination of factors such as geographic mix, product mix, and revenue share terms;~~

•~~Relative revenue growth rates of Google properties and Google Network properties;~~

•~~Certain costs that are less variable in nature and may not correlate with the related revenues;~~

•~~Costs associated with our~~ data ~~centers~~center and other operations ~~to support ads, Google Cloud, Search, YouTube and other products;~~

•~~Content~~costs, including depreciation expense, as well as content acquisition costs ~~which are~~ primarily ~~affected by the relative growth rates in our YouTube advertising and subscription revenues;~~

•~~Costs related to hardware sales; and~~

•~~Increased proportion of non-advertising revenues, which generally have higher costs of revenues, relative to our advertising revenues.~~for YouTube.

Research and Development

The following table presents ~~our~~ R&D expenses (in millions, except percentages):


	Three Months Ended
	March 31,
	2021			2022
Research and development expenses	$	7,485		$	9,119
Research and development expenses as a percentage of revenues	13.5		%	13.4		%

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Research and development expenses $ 6,875 $ 7,675 $ 13,695 $ 15,160
Research and development expenses as a percentage of revenues 18.0 % 12.4 % 17.2 % 12.9 %

R&D expenses ~~consist primarily of:~~

•~~Compensation expenses (including SBC) for engineering and technical employees responsible for R&D of our existing and new products and services;~~

•~~Depreciation;~~

•~~Equipment-related expenses; and~~

•~~Professional services fees primarily related to consulting and outsourcing services.~~

~~R&D expenses~~ increased ~~$800 million~~$1.6 billion from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021.~~March 31, 2022. The increase was ~~primarily~~ primarily due to an increase in compensation expenses of ~~$836~~$944 million, largely resulting from a ~~12%~~14% increase in headcount.

R&D expenses increased $1.5 billion from the six months ended June 30, 2020 to the six months ended June 30, 2021. The increase was primarily due to an increase in compensation expenses of $1.7 billion, largely resulting from a 10% increase in headcount. This increase was partially offset by a reduction in depreciation expense of $315 million including the effect of our change in the estimated useful life of our servers and certain network equipment.

Over time, R&D expenses as a percentage of revenues may fluctuate due to certain expenses that are generally less variable in nature and may not correlate to the changes in revenues. In addition, R&D expenses may be affected by a number of factors including continued investment in ads, Android, Chrome, Google Cloud, Google Maps, Google Play, hardware, machine learning, Other Bets, Search and YouTube.

Sales and Marketing

The following table presents ~~our~~ sales and marketing expenses (in millions, except percentages):

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Sales and marketing expenses $ 3,901 $ 5,276 $ 8,401 $ 9,792
Sales and marketing expenses as a percentage of revenues 10.2 % 8.5 % 10.6 % 8.4 %


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~~Sales and marketing expenses consist primarily of:~~

•~~Advertising and promotional expenditures related to our products and services; and~~

•~~Compensation expenses (including SBC) for employees engaged in sales and marketing, sales support, and certain customer service functions.~~


	Three Months Ended
	March 31,
	2021			2022
Sales and marketing expenses	$	4,516		$	5,825
Sales and marketing expenses as a percentage of revenues	8.2		%	8.6		%

Sales and marketing expenses increased ~~$1.4~~$1.3 billion from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021,~~March 31, 2022 primarily driven by an increase in compensation expenses of $599 million and an increase in advertising and promotional activities of ~~$808 million and compensation expenses of $496~~$494 million. ~~The increase in advertising and promotional activities was largely affected by reduced spending in the prior year comparable period as a result of COVID-19.~~ The increase in compensation expenses was largely due to a ~~13% increase in headcount.~~

Sales and marketing expenses increased $1.4 billion from the six months ended June 30, 2020 to the six months ended June 30, 2021, primarily driven by an increase in compensation expenses of $864 million and advertising and promotional activities of $672 million. The increase in compensation expenses was largely due to an 11%21% increase in headcount. The increase in advertising and promotional activities was ~~largely affected~~driven by ~~reduced~~both increased spending in the current period and a reduction in spending in the prior year comparable period ~~as a result of COVID-19.~~

~~Over time, sales and marketing expenses as a percentage of revenues may fluctuate~~ due to certain expenses that are generally less variable in nature and may not correlate to the changes in revenues. In addition, sales and marketing expenses may be affected by a number of factors including the seasonality associated with new product and service launches and strategic decisions regarding the timing and extent of our spending.COVID-19.

General and Administrative

The following table presents ~~our~~ general and administrative expenses (in millions, except percentages):

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
General and administrative expenses $ 2,585 $ 3,341 $ 5,465 $ 6,114
General and administrative expenses as a percentage of revenues 6.7 % 5.4 % 6.9 % 5.2 %

~~General and administrative expenses consist primarily of:~~

•~~Compensation expenses (including SBC) for employees in our finance, human resources, information technology, and legal organizations;~~

•~~Depreciation;~~

•~~Equipment-related expenses;~~

•~~Legal-related expenses; and~~

•~~Professional services fees primarily related to audit, information technology consulting, outside legal, and outsourcing services.~~


	Three Months Ended
	March 31,
	2021			2022
General and administrative expenses	$	2,773		$	3,374
General and administrative expenses as a percentage of revenues	5.0		%	5.0		%

General and administrative expenses increased ~~$756~~$601 million from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021.~~March 31, 2022. The increase was primarily driven by ~~a $796 million~~an increase in ~~charges relating to legal matters. The increase was partially offset by~~compensation expenses of $292 million, largely resulting from a ~~$246 million decline in allowance for credit losses for accounts receivable.~~

~~General and administrative expenses increased $649 million from the six months ended June 30, 2020 to the six months ended June 30, 2021. The increase was primarily driven by a $1.0 billion~~19% increase in charges relating to legal matters. The increase was partially offset by a $739 million decline in allowance for credit losses for accounts receivable, as the prior year comparable period reflected a higher allowance related to the economic impact of COVID-19.

Over time, general and administrative expenses as a percentage of revenues may fluctuate due to certain expenses that are generally less variable in nature and may not correlate to the changes in revenues, the effect of discrete items such as legal settlements, or allowances for credit losses for accounts receivable.headcount.

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Segment Profitability

The following table presents ~~our~~ segment operating income (loss) (in millions).


	Three Months Ended
	March 31,
	2021		2022








Operating income (loss):
Google Services	$	19,546	$	22,920
Google Cloud	(974)		(931)
Other Bets	(1,145)		(1,155)
Corporate costs, unallocated(1)	(990)		(740)
Total income from operations	$	16,437	$	20,094

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Operating income (loss):
Google Services $ 9,539 $ 22,343 $ 21,087 $ 41,889
Google Cloud (1,426) (591) (3,156) (1,565)
Other Bets (1,116) (1,398) (2,237) (2,543)
Corporate costs, unallocated (614) (993) (1,334) (1,983)
Total income from operations $ 6,383 $ 19,361 $ 14,360 $ 35,798
(1)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.

Google Services

Google Services operating income increased ~~$12.8~~$3.4 billion from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021.~~March 31, 2022. The increase was due to growth in revenues, partially offset by increases in TAC, content acquisition costs, as well as charges related to certain legal matters and compensation expenses. The increase in expenses was partially offset by a reduction in costs driven by the change in the estimated useful life of our servers and certain network equipment. The adverse effect of COVID-19 on the prior year comparable period results positively affected the year-over-year increase in operating income.

Google Services operating income increased $20.8 billion from the six months ended June 30, 2020 to the six months ended June 30, 2021. The increase was due to growth in revenues partially offset by increases in TAC, content acquisition costs, compensation expenses, and charges related to certain legal matters. The increase in expenses was partially offset by a reduction in costs driven by the change in the estimated useful life of our servers and certain network equipment. The adverse effect of COVID-19 on prior year comparable period results positively affected the year-over-year increase in operating income.content acquisition costs.

Google Cloud

Google Cloud operating loss decreased ~~$835~~$43 million ~~and $1.6 billion~~ from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022. The decrease in operating loss was primarily driven by growth in revenues, partially offset by an increase in expenses, primarily driven by compensation expenses. ~~The increase in expenses was partially offset by a reduction in costs driven by the change in the estimated useful life of our servers and certain network equipment.~~

Other Bets

Other Bets operating loss increased ~~$282 million and $306~~$10 million from the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 to the three ~~and six~~ months ended ~~June 30, 2021, respectively.~~March 31, 2022. The increase in operating loss was due to an increase in expenses, primarily driven by ~~increases~~compensation expenses, partially offset by an increase in ~~valuation-based compensation charges.~~revenues.

Other Income (Expense), Net

The following table presents other income (expense), net (in millions):

Three Months Ended Six Months Ended
June 30, June 30,
2020 2021 2020 2021
Other income (expense), net $ 1,894 $ 2,624 $ 1,674 $ 7,470


	Three Months Ended
	March 31,
	2021		2022
Other income (expense), net	$	4,846	$	(1,160)

Other income ~~(expense)~~(expense), net, ~~increased $730 million~~decreased $6.0 billion from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021. The change was~~March 31, 2022, primarily ~~driven by an increase in unrealized~~due to gains ~~recognized for our non-marketable~~and losses on equity securities ~~of $1.7 billion during~~and changes in accrued performance fees. In the three months ended ~~June 30, 2021,~~March 31, 2022, $1.5 billion of net unrealized losses were recognized on marketable equity securities, partially offset by ~~a decrease in~~$460 million of net unrealized gains ~~recognized for our marketable~~on non-marketable equity securities and a $233 million reversal of ~~$499 million and an increase in~~previously accrued performance fees ~~of $448 million.~~

~~Other income (expense), net, increased $5.8 billion from~~related to certain investments. In the ~~six~~three months ended ~~June 30, 2020 to the six months ended June 30, 2021. The change was primarily driven by increases in~~March 31, 2021, a net unrealized ~~gains~~gain of $4.7 billion was recognized ~~for our marketable and~~on non-marketable equity securities, ~~of $784 million, $5.9 billion, respectively, during the six months ended June 30, 2021,~~ partially offset by ~~an increase in~~$665 million of accrued performance ~~fees~~fees.

See Note 3 of ~~$1.1 billion.~~the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information.

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Over time, other income (expense), net, may be affected by market dynamics and other factors. Equity values generally change daily for marketable equity securities and upon the occurrence of observable price changes or upon impairment of non-marketable equity securities. Changes in our share of gains and losses in equity method investments may fluctuate. In addition, volatility in the global economic climate and financial markets could result in a significant change in the value of our investments. Fluctuations in the value of these investments has, and we expect will continue to, contribute to volatility of OI&E in future periods. For additional information about our investments, see Note 3 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Provision for Income Taxes

The following table presents ~~our~~ provision for income taxes (in millions, except ~~for~~ effective tax rate):


		Three Months Ended						Six Months Ended							Three Months Ended
		June 30,						June 30,							March 31,
		2020			2021			2020			2021				2021			2022
Income before provision for income taxes														Income before provision for income taxes	$	21,283		$	18,934
Provision for income taxes	Provision for income taxes	$	1,318		$	3,460		$	2,239		$	6,813		Provision for income taxes	$	3,353		$	2,498
Effective tax rate	Effective tax rate	15.9		%	15.7		%	14.0		%	15.7		%	Effective tax rate	15.8		%	13.2		%

~~Our~~The effective tax rate ~~was substantially consistent~~decreased 2.6% from the three months ended ~~June 30, 2020~~March 31, 2021 to the three months ended ~~June 30, 2021.~~March 31, 2022. The ~~change in the effective tax rate~~decrease was primarily due to ~~an increase~~a benefit driven by the effects of capitalization and amortization of research and development expenses starting in 2022 as required by the ~~stock-based compensation related tax benefit~~2017 Tax Cuts and a discrete impact from the initial establishment of a valuation allowance in 2020 for our net deferred tax assets that are not likely to be realized relating to certain of our Other Bets, largely offset by an increase in pre-tax earnings, including in countries that have higher statutory rates.

Our provision for income taxes increased from the three months ended June 30, 2020 to the three months ended June 30, 2021. The increase in the provision for income taxes was primarily due to an increase in pre-tax earnings, including in countries that have higher statutory rates, partially offset by an increase in the stock-based compensation related tax benefit and a discrete impact from the initial establishment of a valuation allowance in 2020 for our net deferred tax assets that are not likely to be realized relating to certain of our Other Bets.

Our provision for income taxes and our effective tax rate increased from the six months ended June 30, 2020 to the six months ended June 30, 2021. The increase in the provision for income taxes and our effective tax rate was primarily due to an increase in pre-tax earnings, including in countries that have higher statutory rates, partially offset byJobs Act generating an increase in the U.S. federal Foreign-Derived Intangible Income tax ~~deduction benefit and the stock-based compensation related tax benefit.~~

We expect our future effective tax rate to be affected by changes in pre-tax earnings, including the effect of countries with different statutory rates. Additionally, our future effective tax rate may be affected by changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws or regulations, as well as certain discrete items.deduction.

Financial Condition

Cash, Cash Equivalents, and Marketable Securities

As of ~~June 30, 2021,~~March 31, 2022, we had ~~$135.9~~$134.0 billion in cash, cash equivalents, and short-term marketable securities. Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities and marketable equity securities.

Sources, Uses of Cash and Related Trends

Our principal sources of liquidity are our cash, cash equivalents, and marketable securities, as well as the cash flow that we generate from ~~our~~ operations. The primary use of capital continues to be to invest for the long-term growth of the business. We regularly evaluate our cash and capital structure, including the size, pace and form of capital return to stockholders.


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The following table presents our cash flows (in millions):


		Six Months Ended					Three Months Ended
		June 30,					March 31,
		2020		2021			2021		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	25,444	$	41,179	Net cash provided by operating activities	$	19,289	$	25,106
Net cash used in investing activities	Net cash used in investing activities	$	(10,295)	$	(14,457)	Net cash used in investing activities	$	(5,383)	$	(9,051)
Net cash used in financing activities	Net cash used in financing activities	$	(15,684)	$	(29,597)	Net cash used in financing activities	$	(13,606)	$	(16,214)

Cash Provided by Operating Activities

Our largest source of cash provided by ~~our~~ operations are advertising revenues generated by Google Search & other properties, Google Network properties and YouTube ads. Additionally, we generate cash through sales of apps and in-app purchases, digital content products, and hardware; and licensing and service fees including fees received for Google Cloud offerings and subscription-based products.

Our primary uses of cash from our operating activities include payments to ~~our~~ distribution and Google Network partners, for compensation and related costs, and for content acquisition costs. In addition, uses of cash from operating activities include hardware inventory costs, income taxes, and other general corporate expenditures.

Net cash provided by operating activities increased from the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 to the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 primarily due to the net effect of ~~increases~~an increase in cash received from revenues and cash paid for cost of revenues and operating ~~expenses,~~expenses, and changes in operating assets and ~~liabilities, including the timing of income tax payments.~~liabilities.

Cash Used in Investing Activities

Cash provided by investing activities consists primarily of maturities and sales of ~~our~~ investments in marketable and non-marketable securities. Cash used in investing activities consists primarily of purchases of marketable and non-marketable securities, purchases of property and equipment, and payments for acquisitions.

Net cash used in investing activities increased from the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 to the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 primarily due to an increase of purchases of property and equipment, partially offset


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by a net decrease in maturities and sales of ~~securities and~~securities. The increase in ~~payments for acquisitions.~~property and equipment was primarily due to the purchases of office facilities.

Cash Used in Financing Activities

Cash provided by financing activities consists primarily of proceeds from issuance of debt and proceeds from the sale of interest in consolidated entities. Cash used in financing activities consists primarily of repurchases of ~~capital~~ stock, net payments related to stock-based award activities, and repayments of debt.

Net cash used in financing activities increased from the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 to the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 primarily due to ~~increases~~an increase in ~~cash payments for~~ repurchases of ~~capital stock, net payments related to stock-based award activities and repayment of debt, and a decrease in proceeds from the sale of interest in consolidated entities.~~stock.

Liquidity and Material Cash Requirements

We expect existing cash, cash equivalents, short-term marketable securities, cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.

Capital Expenditures and Leases

We make investments in land and buildings for data centers and offices and information technology assets through purchases of property and equipment and lease arrangements to provide capacity for the growth of our services and products.

Capital Expenditures

Our capital investments in property and equipment consist primarily of the following major categories:

•technical infrastructure, which consists of investments in servers and network equipment for computing, storage and networking requirements for ongoing business activities, including machine learning (collectively referred to as information technology assets) and data center land and building construction; and

•office facilities, ground up development projects, and related building improvements.

Construction in progress consists primarily of technical infrastructure and office facilities which have not yet been placed in service for our intended use. The time frame from date of purchase to placement in service of these assets may extend from months to years. For example, our data center construction projects are generally multi-year projects with multiple phases, where we acquire qualified land and buildings, construct buildings, and secure and install information technology assets.

During the three months ended March 31, 2021 and 2022, capital expenditures were $5.9 billion and $9.8 billion, respectively. Depreciation of our property and equipment commences when the deployment of such assets are completed and are ready for our intended use. Land is not depreciated. For the three months ended March 31, 2021 and 2022, depreciation and impairment expenses on property and equipment were $2.5 billion and $3.6 billion, respectively.

Leases

For the three months ended March 31, 2021 and 2022, we recognized total operating lease assets of $769 million and $915 million, respectively. As of March 31, 2022, the amount of total future lease payments under operating leases, which had a weighted average remaining lease term of 8 years, was $15.6 billion. As of March 31, 2022, we have entered into leases that have not yet commenced with future lease payments of $5.8 billion, excluding purchase options, that are not yet recorded on our Consolidated Balance Sheets. These leases will commence between 2022 and 2026 with non-cancelable lease terms of 1 to 25 years.

For the three months ended March 31, 2021 and 2022, our operating lease expenses (including variable lease costs) were $794 million and $880 million, respectively. Finance lease costs were not material for the three months ended March 31, 2021 and 2022.

Financing

We have a short-term debt financing program of up to $10.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. As of March 31, 2022, we had no commercial paper outstanding.

As of March 31, 2022, we had $10.0 billion of revolving credit facilities, $4.0 billion expiring in April 2022 and $6.0 billion expiring in April 2026. In April 2022, we entered into a new $4.0 billion credit facility expiring in April


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2023. The interest rates for all credit facilities are determined based on a formula using certain market rates, as well as our progress toward the achievement of certain sustainability goals. No amounts have been borrowed under the credit facilities.

As of ~~June 30, 2021,~~March 31, 2022, we had ~~long-term taxes payable~~senior unsecured notes outstanding with a total carrying value of ~~$5.7~~$12.8 billion ~~related to a one-time transition tax payable incurred as a result~~. See Note 5 of the ~~U.S. Tax Cuts~~Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information on our debt.

Share Repurchase Program

In April 2021, the Board of Directors of Alphabet authorized the company to repurchase up to $50.0 billion of its Class C stock. In July 2021, the Board of Directors of Alphabet approved an amendment to the April 2021 authorization, permitting the company to repurchase both Class A and ~~Jobs Act ("Tax Act").~~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. As ~~permitted by~~of March 31, 2022, $4.1 billion remains available for Class A and Class C share repurchases under the ~~Tax Act,~~amended authorization.

In accordance with the authorizations of the Board of Directors of Alphabet, during the three months ended March 31, 2022, we ~~will pay~~repurchased and subsequently retired 4.9 million aggregate shares for $13.3 billion. Of the ~~transition tax~~aggregate amount repurchased and subsequently retired during the three months ended March 31, 2022, 0.2 million shares were Class A stock for $660 million and 4.7 million shares were Class C stock for $12.6 billion.

In April 2022, 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 ~~annual interest-free installments~~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.

Repurchases are executed from time to time, subject to general business and market conditions and other investment opportunities, through ~~2025.~~open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The repurchase program does not have an expiration date.

European Commission Fines

In 2017, 2018 and 2019, the EC announced decisions that certain actions taken by Google infringed European competition law and imposed fines of €2.4 billion ($2.7 billion as of June 27, 2017), €4.3 billion ($5.1 billion as of June 30, 2018), and €1.5 billion ($1.7 billion as of March 20, 2019), respectively. While each EC decision is under appeal, we included the fines in accrued expenses and other current liabilities on our Consolidated Balance Sheets as we provided bank guarantees (in lieu of a cash payment) for the fines.

We have a short-term debt financing program of up to $5.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. As of June 30, 2021, we had no commercial paper outstanding. As of June 30, 2021, we had $10.0 billion of revolving credit facilities with no


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~~amounts outstanding. In April 2021, we terminated the existing revolving credit facilities, which were scheduled to exp~~ire in July 2023, and entered into two new revolving credit facilities in the amounts of $4.0 billion and $6.0 billion, which will expire in April 2022 and April 2026, respectively. The interest rates for the new credit facilities are determined based on a formula using certain market ~~rates, as well as our progress toward the achievement of certain sustainability goals.~~ ~~No amounts have been borrowed under the new credit facilities.~~

~~As of June 30, 2021, we have senior unsecured notes outstanding due from 2024 through 2060 with a total carrying value of $12.8 billion. Refer to~~ See Note 59 of the Notes to Consolidated Financial Statements included in ~~Part I,~~ Item 1 of this Quarterly Report on Form ~~10-Q for further information on~~10-Q.

Taxes

As of March 31, 2022, we had short-term and long-term income taxes payable of $805 million and $5.7 billion related to a one-time transition tax payable incurred as a result of the ~~notes.~~U.S. Tax Cuts and Jobs Act ("Tax Act").As permitted by the Tax Act, we will pay the transition tax in annual interest-free installments through 2025. We also have taxes payable of $3.7 billion primarily related to uncertain tax positions as of March 31, 2022.

Pending Acquisition

In ~~accordance with the authorizations~~March 2022, we entered into an agreement to acquire Mandiant, a leader in dynamic cyber defense and response, for $23.00 per share, in an all-cash transaction valued at approximately $5.4 billion, net of ~~the Board of Directors of Alphabet, during the six months ended June 30, 2021, we repurchased~~cash and subsequently retired 11.1 million shares of Alphabet Class C capital stock for an aggregate amount of $24.2 billion, respectively. In April 2021, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $50.0 billion of its Class C capital stock. In July 2021, the Alphabet board approved an amendment to the April 2021 authorization, permitting the company to repurchase both 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. As of June 30, 2021, $43.5 billion remains authorized and available for repurchase. The repurchases are being 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. The repurchase program does not have an expiration date. Refer todebt. See Note 107 of the Notes to Consolidated Financial Statements included in ~~Part I,~~ Item 1 of this Quarterly Report on Form 10-Q.

~~Capital Expenditures and Leases~~

During the six months ended June 30, 2020 and 2021, we spent $11.4 billion and $11.4 billion on capital expenditures and recognized total operating lease assets of $1.4 billion and $1.6 billion, respectively. As of June 30, 2021, the amount of total future lease payments under operating leases, which had a weighted average remaining lease term of 9 years, was $15.8 billion. As of June 30, 2021, we have entered into leases that have not yet commenced with future lease payments of $7.4 billion, excluding purchase options, that are not yet recorded on our Consolidated Balance Sheets. These leases will commence between 2021 and 2026 with non-cancelable lease terms of 1 to 25 years.

For the six months ended June 30, 2020 and 2021, our depreciation and impairment expenses on property and equipment were $6.1 billion and $5.3 billion, respectively. The change in estimated useful life of our servers and certain network equipment was effective beginning in fiscal year 2021. The effect of this change in accounting estimate was a reduction in depreciation expense of $1.6 billion for the six months ended June 30, 2021. For the six months ended June 30, 2020 and 2021, our operating lease expenses (including variable lease costs), were $1.4 billion and $1.6 billion, respectively. Finance leases were not material for the six months ended June 30, 2020 and 2021.

Critical Accounting ~~Policies and~~ Estimates

See Part II, Item 7, "Critical Accounting ~~Policies and~~ Estimates" in our Annual Report on Form 10-K for the year ended December 31, ~~2020. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2020.~~2021.

Available Information

Our website is located at www.abc.xyz, and our investor relations website is located at www.abc.xyz/investor. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our Proxy Statements, and any amendments to these reports, are available through our investor relations website, free of charge, after we file them with the SEC. We also provide a link to the section of the SEC's website at www.sec.gov that has all of the reports that we file or furnish with the SEC.


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We webcast via our investor relations website our earnings calls and certain events we participate in or host with members of the investment community. Our investor relations website also provides notifications of news or announcements regarding our financial performance and other items of interest to our investors, including SEC filings, investor events, press and earnings releases, and blogs. 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. Further, corporate governance information, including our certificate of incorporation, bylaws, governance guidelines,


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board committee charters, and code of conduct, is also available on our investor relations website under the heading "Other." The content of our websites are not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in foreign currency exchange rates, interest rates and equity investment risks. Our exposure to market risk has not changed materially since December 31, 2020. For quantitative and qualitative disclosures about market risk, refer to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of ~~June 30, 2021,~~March 31, 2022, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

We rely extensively on information systems to manage our business and summarize and report operating results. In 2019, we began a multi-year implementation of a new global enterprise resource planning ~~("ERP")~~(ERP) system, which will replace much of our existing core financial systems. The ERP system is designed to accurately maintain our financial records, enhance the flow of financial information, improve data management and provide timely information to our management team. The implementation is expected to continue in phases over the next few years. During the quarter ended June 30, 2021, we completed the implementation of certain of our subledgers, which included changes to our financial close processes, procedures and internal controls over financial reporting. As we continue with our phased implementation, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.

~~Other than the implementation of the subledgers as described above, there were~~There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~June 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. However, as the phased implementation of the new ERP system continues, we will change our processes and procedures, which in turn, could result in changes to our internal control over financial reporting. As such changes occur, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.

As a result of COVID-19, our global workforce continued to operate primarily in a work from home environment for the quarter ended ~~June 30, 2021.~~March 31, 2022. While we continue to evolve our work model in response to the uneven effects of the ongoing pandemic around the world, we believe that our internal controls over financial reporting continue to be effective. We have continued to re-evaluate and refine our financial reporting process to provide reasonable assurance that we could report our financial results accurately and timely.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, see Note 9 “Contingencies - Legal Matters” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A.RISK FACTORS

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our ~~common and capital stock. Below are changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2020.~~

We cannot guarantee that any share repurchase program will be fully consummated or will enhance long-term stockholder value, and share repurchases could increase the volatility of our stock prices and could diminish our cash reserves.

We engage in share repurchases of our Class A and Class C stock from time to time in accordance with authorizations from the Board of Directors of Alphabet. Our repurchase program does not have an expiration date and does not obligate Alphabet to repurchase any specific dollar amount or to acquire any specific number of shares. Further, our share repurchases could affect our share trading prices, increase their volatility, reduce our cash reserves and may be suspended or terminated at any time, which may result in a decrease in the trading prices of our stock.

~~The concentration of our stock ownership limits our stockholders’ ability to influence corporate matters.~~

Our Class B common stock has 10 votes per share, our Class A common stock has one vote per share, and our Class C capital stock has no voting rights. As of June 30, 2021, Larry Page and Sergey Brin beneficially owned approximately 85.3% of our outstanding Class B common stock, which represented approximately 51.5% of the voting power of our outstanding common stock. Through their stock ownership, Larry and Sergey have significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets, for the foreseeable future. In addition, because our Class C capital stock carries no voting rights (except as required by applicable law), the issuance of the Class C capital stock, including in future stock-based acquisition transactions and to fund employee equity incentive programs, could continue Larry and Sergey’s current relative voting power and their ability to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders. The share repurchases made pursuant to our repurchase program may also affect Larry and Sergey’s relative voting power. This concentrated control limits or severely restricts other stockholders’ ability to influence corporate matters and we may take actions that some of our stockholders do not view as beneficial, which could reduce the market price of our Class A common stock and our Class C capital stock.


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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table presents information with respect to Alphabet's repurchases of Class A and Class C ~~capital~~ stock during the quarter ended ~~June 30, 2021.~~

Period
Total Number of Shares Purchased
(in thousands) (1)
Average Price Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Programs
(in thousands) (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions)
April 1 - 30 1,599 $ 2,279.07 1,599 $ 52,605
May 1 - 31 1,918 $ 2,351.68 1,918 $ 48,095
June 1 - 30 1,859 $ 2,496.57 1,859 $ 43,454
Total 5,376 5,376
March 31, 2022.


Period	Total Number of Class A Shares Purchased (in thousands) (1)	Total Number of Class C Shares Purchased (in thousands) (1)	Average Price Paid per Class A Share (2)		Average Price Paid per Class C Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
January 1 - 31	81	1,642	$	2,758.20	$	2,722.40	1,723	$	12,679
February 1 - 28	4	1,469	$	2,666.27	$	2,719.33	1,473	$	8,672
March 1 - 31	160	1,557	$	2,665.14	$	2,681.53	1,717	$	4,071
Total	245	4,668					4,913

(1) ~~The repurchases~~Repurchases are ~~being~~ 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. The repurchase program does not have an expiration date. See Note 10 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information related to share repurchases.

(2) Average price paid per share includes costs associated with the repurchases.


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ITEM 6.EXHIBITS

Exhibit

Number

Description

Incorporated by reference herein

Form

Date

~~10.01~~

⬥

~~Alphabet Inc. 2021 Stock Plan~~

~~Current Report on Form 8-K (File No. 001-37580)~~

~~June 4, 2021~~

~~10.01.1~~

⬥ *

~~Alphabet Inc. 2021 Stock Plan - Form of Alphabet Restricted Stock Unit Agreement~~

~~10.01.2~~

⬥ *

~~Alphabet Inc. 2021 Stock Plan - Form of Alphabet Non-CEO Performance Stock Unit Agreement~~

31.01

Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02

Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01

‡

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document~~document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

__________________________



⬥			~~Indicates management compensatory plan, contract, or arrangement.~~
*			Filed herewith.
‡			Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ALPHABET INC.
~~July 27, 2021~~April 26, 2022	By:	/s/ RUTH M. PORAT
		Ruth M. Porat
		Senior Vice President and Chief Financial Officer


		ALPHABET INC.
~~July 27, 2021~~April 26, 2022	By:	/s/ AMIE THUENER O'TOOLE
		Amie Thuener O'Toole
		Vice President and Chief Accounting Officer

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	As of December 31, 2020		As of June 30, 2021
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	26,465	$	23,630
Marketable securities	110,229		112,233
Total cash, cash equivalents, and marketable securities	136,694		135,863
Accounts receivable, net	30,930		31,967
Income taxes receivable, net	454		884
Inventory	728		907
Other current assets	5,490		6,076
Total current assets	174,296		175,697
Non-marketable investments	20,703		25,532
Deferred income taxes	1,084		1,153
Property and equipment, net	84,749		91,697
Operating lease assets	12,211		12,978
Intangible assets, net	1,445		1,626
Goodwill	21,175		22,406
Other non-current assets	3,953		4,298
Total assets	$	319,616	$	335,387
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,589	$	4,708

Accrued compensation and benefits	11,086		10,088
Accrued expenses and other current liabilities	28,631		28,981
Accrued revenue share	7,500		7,438
Deferred revenue	2,543		2,715
Income taxes payable, net	1,485		1,811
Total current liabilities	56,834		55,741
Long-term debt	13,932		14,328
Deferred revenue, non-current	481		510
Income taxes payable, non-current	8,849		8,651
Deferred income taxes	3,561		4,703
Operating lease liabilities	11,146		11,619
Other long-term liabilities	2,269		2,270
Total liabilities	97,072		97,822
Contingencies (Note 9)	0		0
Stockholders’ equity:
Convertible preferred stock, $0.001 par value per share: 100,000 shares authorized; 0 shares issued and outstanding	0		0
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); 675,222 (Class A 300,730, Class B 45,843, Class C 328,649) and 667,637 (Class A 301,040, Class B 45,546, Class C 321,051) shares issued and outstanding	58,510		60,436
Accumulated other comprehensive income (loss)	633		190
Retained earnings	163,401		176,939
Total stockholders’ equity	222,544		237,565
Total liabilities and stockholders’ equity	$	319,616	$	335,387


	Three Months Ended June 30, 2020
	Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of March 31, 2020	683,972	$	53,688	$	(1,097)	$	151,068	$	203,659
Common and capital stock issued	2,391	37		0		0		37
Stock-based compensation expense	0	3,413		0		0		3,413
Tax withholding related to vesting of restricted stock units and other	0	(1,558)		0		0		(1,558)
Repurchases of capital stock	(5,148)	(506)		0		(6,346)		(6,852)
Sale of interest in consolidated entities	0	863		0		0		863
Net income	0	0		0		6,959		6,959
Other comprehensive income (loss)	0	0		801		0		801
Balance as of June 30, 2020	681,215	$	55,937	$	(296)	$	151,681	$	207,322


	Six Months Ended June 30, 2020
	Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2019	688,335	$	50,552	$	(1,232)	$	152,122	$	201,442
Common and capital stock issued	4,516	143		0		0		143
Stock-based compensation expense	0	6,635		0		0		6,635
Tax withholding related to vesting of restricted stock units and other	0	(2,737)		0		0		(2,737)
Repurchases of capital stock	(11,636)	(1,112)		0		(14,236)		(15,348)
Sale of interest in consolidated entities	0	2,456		0		0		2,456
Net income	0	0		0		13,795		13,795
Other comprehensive income (loss)	0	0		936		0		936
Balance as of June 30, 2020	681,215	$	55,937	$	(296)	$	151,681	$	207,322


	Three Months Ended June 30, 2021
	Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of March 31, 2021	671,094	$	59,436	$	(3)	$	170,580	$	230,013
Common and capital stock issued	1,919	1		0		0		1
Stock-based compensation expense	0	3,844		0		0		3,844
Tax withholding related to vesting of restricted stock units and other	0	(2,515)		0		0		(2,515)
Repurchases of capital stock	(5,376)	(630)		0		(12,166)		(12,796)
Sale of interest in consolidated entities	0	300		0		0		300
Net income	0	0		0		18,525		18,525
Other comprehensive income (loss)	0	0		193		0		193
Balance as of June 30, 2021	667,637	$	60,436	$	190	$	176,939	$	237,565


	Six Months Ended June 30, 2021
	Class A and Class B Common Stock, Class C Capital Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2020	675,222	$	58,510	$	633	$	163,401	$	222,544
Common and capital stock issued	3,488	7		0		0		7
Stock-based compensation expense	0	7,632		0		0		7,632
Tax withholding related to vesting of restricted stock units and other	0	(4,749)		0		0		(4,749)
Repurchases of capital stock	(11,073)	(1,274)		0		(22,917)		(24,191)
Sale of interest in consolidated entities	0	310		0		0		310
Net income	0	0		0		36,455		36,455
Other comprehensive income (loss)	0	0		(443)		0		(443)
Balance as of June 30, 2021	667,637	$	60,436	$	190	$	176,939	$	237,565


	As of June 30, 2021
	Marketable Securities(2)		Non-Marketable Securities		Total
Total initial cost	$	2,662	$	14,743	$	17,405
Cumulative net gain (loss)(1)	4,208		8,730		12,938
Carrying value(2)	$	6,870	$	23,473	$	30,343


		As of December 31, 2020
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	33	$	316	$	349
Other contracts	Other current and non-current assets	0		16		16
Total		$	33	$	332	$	365
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	395	$	185	$	580
Other contracts	Accrued expenses and other liabilities, current and non-current	0		942		942
Total		$	395	$	1,127	$	1,522


	Three Months Ended June 30,
	2020						2021
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	3,055	$	473	$	3,431	$	8,321	$	1,265	$	8,939

Denominator
Number of shares used in per share computation	299,308		46,355		336,105		300,485		45,692		322,781



Basic net income per share	$	10.21	$	10.21	$	10.21	$	27.69	$	27.69	$	27.69
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	3,055	$	473	$	3,431	$	8,321	$	1,265	$	8,939


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	473		0		0		1,265		0		0
Reallocation of undistributed earnings	(26)		(3)		26		(149)		(19)		149
Allocation of undistributed earnings	$	3,502	$	470	$	3,457	$	9,437	$	1,246	$	9,088




Denominator
Number of shares used in basic computation	299,308		46,355		336,105		300,485		45,692		322,781
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A common shares outstanding	46,355		0		0		45,692		0		0

Restricted stock units and other contingently issuable shares	92		0		5,164		15		0		10,639
Number of shares used in per share computation	345,755		46,355		341,269		346,192		45,692		333,420



Diluted net income per share	$	10.13	$	10.13	$	10.13	$	27.26	$	27.26	$	27.26


	Six Months Ended June 30,
	2020						2021
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	6,042	$	935	$	6,818	$	16,330	$	2,485	$	17,640

Denominator
Number of shares used in per share computation	299,642		46,383		338,092		300,610		45,742		324,737



Basic net income per share	$	20.16	$	20.16	$	20.16	$	54.32	$	54.32	$	54.32
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	6,042	$	935	$	6,818	$	16,330	$	2,485	$	17,640


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	935		0		0		2,485		0		0
Reallocation of undistributed earnings	(53)		(7)		53		(269)		(36)		269
Allocation of undistributed earnings	$	6,924	$	928	$	6,871	$	18,546	$	2,449	$	17,909




Denominator
Number of shares used in basic computation	299,642		46,383		338,092		300,610		45,742		324,737
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A common shares outstanding	46,383		0		0		45,742		0		0

Restricted stock units and other contingently issuable shares	135		0		5,394		17		0		9,736
Number of shares used in per share computation	346,160		46,383		343,486		346,369		45,742		334,473



Diluted net income per share	$	20.00	$	20.00	$	20.00	$	53.54	$	53.54	$	53.54


Period	Total Number of Shares Purchased (in thousands) (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
April 1 - 30	1,599	$	2,279.07	1,599	$	52,605
May 1 - 31	1,918	$	2,351.68	1,918	$	48,095
June 1 - 30	1,859	$	2,496.57	1,859	$	43,454
Total	5,376			5,376