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 ~~September 30, 2022~~March 31, 2023


☐			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 ~~October~~April 18, ~~2022,~~2023, there ~~were~~we ~~5,973~~re 5,941 million shares of Alphabet’s Class A stock outstanding, ~~884~~882 million shares of Alphabet's Class B stock outstanding, and ~~6,086~~5,874 million shares of Alphabet's Class C stock outstanding.


Table of Contents			Alphabet Inc.

Alphabet Inc.

Form 10-Q

For the Quarterly Period Ended ~~September 30, 2022~~March 31, 2023

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, ~~2021~~2022 and ~~September 30, 2022~~March 31, 2023	5
	Consolidated Statements of Income - Three ~~and Nine~~ Months Ended ~~September 30~~March 31, ~~2021~~2022 and ~~2022~~2023	6
	Consolidated Statements of Comprehensive Income - Three ~~and Nine~~ Months Ended ~~September 30~~March 31, ~~2021~~2022 and ~~2022~~2023	7
	Consolidated Statements of Stockholders' Equity - Three ~~and Nine~~ Months Ended ~~September 30~~March 31, ~~2021~~2022 and ~~2022~~2023	8
	Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30~~March 31, ~~2021~~2022 and ~~2022~~2023	109
	Notes to Consolidated Financial Statements	1110
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3430
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4743
Item 4	Controls and Procedures	4743

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	4944
Item 1A	Risk Factors	4944
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	5044


Item 5	Other Information	49
Item 6	Exhibits	5245
Signatures		5346


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 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;~~

•~~the~~ growth of our business and revenues and our expectations about the factors that influence our success and trends in our business;

•fluctuations in our ~~revenue growth rate~~revenues and ~~operating margin~~margins 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) 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,~~revenues, 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 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) 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), 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, 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;~~contingencies, including the possibility that certain legal proceedings to which we are a party could harm our business, financial condition, and operating results;

•our expectation that we will continue to face heightened regulatory scrutiny, and the sufficiency and timing of our proposed remedies in response to decisions from the European Commission (EC) and other regulators and governmental entities;


Table of Contents			Alphabet Inc.

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

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

•our long-term sustainability and diversity goals;

•the unpredictability of the ongoing broader economic effects resulting from the war in Ukraine on our future financial results;

•the expected financial effect of our announced workforce reduction and office space optimization;

•our expectation that the change in estimated useful life of servers and certain network equipment will have a favorable effect on our 2023 operating 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), 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, ~~2021, and including material changes reflected in this Quarterly Report on Form 10-Q.~~2022. 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, ~~2021, and including material changes reflected in this Quarterly Report on Form 10-Q,~~2022, 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 par value per share amounts)


		As of December 31, 2021		As of September 30, 2022			As of December 31, 2022		As of March 31, 2023
				(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	20,945	$	21,984	Cash and cash equivalents	$	21,879	$	25,924
Marketable securities	Marketable securities	118,704		94,275		Marketable securities	91,883		89,178
Total cash, cash equivalents, and marketable securities	Total cash, cash equivalents, and marketable securities	139,649		116,259		Total cash, cash equivalents, and marketable securities	113,762		115,102
Accounts receivable, net	Accounts receivable, net	39,304		34,697		Accounts receivable, net	40,258		36,036
Income taxes receivable, net		966		1,479
Inventory	Inventory	1,170		3,156		Inventory	2,670		2,315
Other current assets	Other current assets	7,054		10,518		Other current assets	8,105		8,532
Total current assets	Total current assets	188,143		166,109		Total current assets	164,795		161,985
Non-marketable securities	Non-marketable securities	29,549		30,419		Non-marketable securities	30,492		31,213
Deferred income taxes	Deferred income taxes	1,284		2,991		Deferred income taxes	5,261		6,885
Property and equipment, net	Property and equipment, net	97,599		108,363		Property and equipment, net	112,668		117,560
Operating lease assets	Operating lease assets	12,959		13,677		Operating lease assets	14,381		14,447
Intangible assets, net	Intangible assets, net	1,417		2,192		Intangible assets, net	2,084		1,968
Goodwill	Goodwill	22,956		28,834		Goodwill	28,960		28,994
Other non-current assets	Other non-current assets	5,361		5,670		Other non-current assets	6,623		6,439
Total assets	Total assets	$	359,268	$	358,255	Total assets	$	365,264	$	369,491
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	6,037	$	6,303	Accounts payable	$	5,128	$	4,184

Accrued compensation and benefits	Accrued compensation and benefits	13,889		12,366		Accrued compensation and benefits	14,028		9,954
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	31,236		35,038		Accrued expenses and other current liabilities	37,866		43,185
Accrued revenue share	Accrued revenue share	8,996		7,662		Accrued revenue share	8,370		7,816
Deferred revenue	Deferred revenue	3,288		3,585		Deferred revenue	3,908		3,715
Income taxes payable, net		808		1,025
Total current liabilities	Total current liabilities	64,254		65,979		Total current liabilities	69,300		68,854
Long-term debt	Long-term debt	14,817		14,653		Long-term debt	14,701		13,697
Deferred revenue, non-current	Deferred revenue, non-current	535		594		Deferred revenue, non-current	599		610
Income taxes payable, non-current	Income taxes payable, non-current	9,176		8,572		Income taxes payable, non-current	9,258		9,722
Deferred income taxes	Deferred income taxes	5,257		476		Deferred income taxes	514		542
Operating lease liabilities	Operating lease liabilities	11,389		11,984		Operating lease liabilities	12,501		12,799
Other long-term liabilities	Other long-term liabilities	2,205		2,371		Other long-term liabilities	2,247		2,373
Total liabilities	Total liabilities	107,633		104,629		Total liabilities	109,120		108,597
Contingencies (Note 9)
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100 shares authorized; no shares issued and outstanding	Preferred stock, $0.001 par value per share, 100 shares authorized; no shares issued and outstanding	0		0		Preferred stock, $0.001 par value per share, 100 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: 300,000 shares authorized (Class A 180,000, Class B 60,000, Class C 60,000); 13,242 (Class A 6,015, Class B 893, Class C 6,334) and 12,971 (Class A 5,978, Class B 884, Class C 6,109) shares issued and outstanding		61,774		66,258
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par value per share: 300,000 shares authorized (Class A 180,000, Class B 60,000, Class C 60,000); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,722 (Class A 5,943, Class B 883, Class C 5,896) shares issued and outstanding						Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par value per share: 300,000 shares authorized (Class A 180,000, Class B 60,000, Class C 60,000); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,722 (Class A 5,943, Class B 883, Class C 5,896) shares issued and outstanding	68,184		70,269
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,623)		(8,852)		Accumulated other comprehensive income (loss)	(7,603)		(6,000)
Retained earnings	Retained earnings	191,484		196,220		Retained earnings	195,563		196,625
Total stockholders’ equity	Total stockholders’ equity	251,635		253,626		Total stockholders’ equity	256,144		260,894
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	359,268	$	358,255	Total liabilities and stockholders’ equity	$	365,264	$	369,491

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
Revenues	Revenues	$	65,118	$	69,092	$	182,312	$	206,788	Revenues	$	68,011	$	69,787
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenues	Cost of revenues	27,621		31,158		77,951		90,861		Cost of revenues	29,599		30,612
Research and development	Research and development	7,694		10,273		22,854		29,233		Research and development	9,119		11,468
Sales and marketing	Sales and marketing	5,516		6,929		15,308		19,384		Sales and marketing	5,825		6,533
General and administrative	General and administrative	3,256		3,597		9,370		10,628		General and administrative	3,374		3,759
Total costs and expenses	Total costs and expenses	44,087		51,957		125,483		150,106		Total costs and expenses	47,917		52,372
Income from operations	Income from operations	21,031		17,135		56,829		56,682		Income from operations	20,094		17,415
Other income (expense), net	Other income (expense), net	2,033		(902)		9,503		(2,501)		Other income (expense), net	(1,160)		790
Income before income taxes	Income before income taxes	23,064		16,233		66,332		54,181		Income before income taxes	18,934		18,205
Provision for income taxes	Provision for income taxes	4,128		2,323		10,941		7,833		Provision for income taxes	2,498		3,154
Net income	Net income	$	18,936	$	13,910	$	55,391	$	46,348	Net income	$	16,436	$	15,051

Basic net income per share of Class A, Class B, and Class C stock	Basic net income per share of Class A, Class B, and Class C stock	$	1.42	$	1.07	$	4.14	$	3.53	Basic net income per share of Class A, Class B, and Class C stock	$	1.24	$	1.18

Diluted net income per share of Class A, Class B, and Class C stock	Diluted net income per share of Class A, Class B, and Class C stock	$	1.40	$	1.06	$	4.08	$	3.50	Diluted net income per share of Class A, Class B, and Class C stock	$	1.23	$	1.17

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions; unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
Net income	Net income	$	18,936	$	13,910	$	55,391	$	46,348	Net income	$	16,436	$	15,051
Other comprehensive loss:
Other comprehensive income (loss):										Other comprehensive income (loss):
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	(614)		(2,175)		(671)		(3,801)		Change in foreign currency translation adjustment	39		596
Available-for-sale investments:	Available-for-sale investments:									Available-for-sale investments:
Change in net unrealized gains (losses)	Change in net unrealized gains (losses)	(159)		(1,800)		(699)		(5,204)		Change in net unrealized gains (losses)	(2,478)		866
Less: reclassification adjustment for net (gains) losses included in net income	Less: reclassification adjustment for net (gains) losses included in net income	(57)		362		(121)		743		Less: reclassification adjustment for net (gains) losses included in net income	148		292
Net change, net of income tax benefit (expense) of $63, $409, $235 and $1,269		(216)		(1,438)		(820)		(4,461)
Net change, net of income tax benefit (expense) of $633 and $(330)										Net change, net of income tax benefit (expense) of $633 and $(330)	(2,330)		1,158
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Change in net unrealized gains (losses)	Change in net unrealized gains (losses)	292		1,136		429		2,165		Change in net unrealized gains (losses)	114		(74)
Less: reclassification adjustment for net (gains) losses included in net income	Less: reclassification adjustment for net (gains) losses included in net income	(60)		(547)		21		(1,132)		Less: reclassification adjustment for net (gains) losses included in net income	(249)		(77)
Net change, net of income tax benefit (expense) of $(54), $(159), $(89) and $(228)		232		589		450		1,033
Other comprehensive loss		(598)		(3,024)		(1,041)		(7,229)
Net change, net of income tax benefit (expense) of $44 and $30										Net change, net of income tax benefit (expense) of $44 and $30	(135)		(151)
Other comprehensive income (loss)										Other comprehensive income (loss)	(2,426)		1,603
Comprehensive income	Comprehensive income	$	18,338	$	10,886	$	54,350	$	39,119	Comprehensive income	$	14,010	$	16,654

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Inin millions; unaudited)

Three Months Ended September 30, 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 June 30, 2021 13,353 $ 60,436 $ 190 $ 176,939 $ 237,565
Stock issued 33 1 0 0 1
Stock-based compensation expense 0 3,914 0 0 3,914
Tax withholding related to vesting of restricted stock units and other 0 (2,641) 0 0 (2,641)
Repurchases of stock (92) (517) 0 (12,093) (12,610)
Sale of interest in consolidated entities 0 0 0 0 0
Net income 0 0 0 18,936 18,936
Other comprehensive income (loss) 0 0 (598) 0 (598)
Balance as of September 30, 2021 13,294 $ 61,193 $ (408) $ 183,782 $ 244,567


		Nine Months Ended September 30, 2021										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			Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount									Shares	Amount
Balance as of December 31, 2020		13,504	$	58,510	$	633	$	163,401	$	222,544
Balance as of December 31, 2021											Balance as of December 31, 2021	13,242	$	61,774	$	(1,623)	$	191,484	$	251,635
Stock issued	Stock issued	103	8		0		0		8		Stock issued	31	7		0		0		7
Stock-based compensation expense	Stock-based compensation expense	0	11,546		0		0		11,546		Stock-based compensation expense	0	4,547		0		0		4,547
Tax withholding related to vesting of restricted stock units and other	Tax withholding related to vesting of restricted stock units and other	0	(7,390)		0		0		(7,390)		Tax withholding related to vesting of restricted stock units and other	0	(2,895)		0		0		(2,895)
Repurchases of stock	Repurchases of stock	(313)	(1,791)		0		(35,010)		(36,801)		Repurchases of stock	(98)	(601)		0		(12,699)		(13,300)
Sale of interest in consolidated entities		0	310		0		0		310
Net income	Net income	0	0		0		55,391		55,391		Net income	0	0		0		16,436		16,436
Other comprehensive income (loss)	Other comprehensive income (loss)	0	0		(1,041)		0		(1,041)		Other comprehensive income (loss)	0	0		(2,426)		0		(2,426)
Balance as of September 30, 2021		13,294	$	61,193	$	(408)	$	183,782	$	244,567
Balance as of March 31, 2022											Balance as of March 31, 2022	13,175	$	62,832	$	(4,049)	$	195,221	$	254,004


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

Three Months Ended September 30, 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 June 30, 2022 13,078 $ 64,402 $ (5,828) $ 196,845 $ 255,419
Stock issued 31 0 0 0 0
Stock-based compensation expense 0 5,018 0 0 5,018
Tax withholding related to vesting of restricted stock units and other 0 (2,315) 0 0 (2,315)
Repurchases of stock (138) (857) 0 (14,535) (15,392)
Sale of interest in consolidated entities 0 10 0 0 10
Net income 0 0 0 13,910 13,910
Other comprehensive income (loss) 0 0 (3,024) 0 (3,024)
Balance as of September 30, 2022 12,971 $ 66,258 $ (8,852) $ 196,220 $ 253,626


		Nine Months Ended September 30, 2022										Three Months Ended March 31, 2023
		Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity			Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount									Shares	Amount
Balance as of December 31, 2021		13,242	$	61,774	$	(1,623)	$	191,484	$	251,635
Balance as of December 31, 2022											Balance as of December 31, 2022	12,849	$	68,184	$	(7,603)	$	195,563	$	256,144
Stock issued	Stock issued	98	8		0		0		8		Stock issued	30	0		0		0		0
Stock-based compensation expense	Stock-based compensation expense	0	14,388		0		0		14,388		Stock-based compensation expense	0	5,313		0		0		5,313
Tax withholding related to vesting of restricted stock units and other	Tax withholding related to vesting of restricted stock units and other	0	(7,644)		0		(1)		(7,645)		Tax withholding related to vesting of restricted stock units and other	0	(2,093)		0		0		(2,093)
Repurchases of stock	Repurchases of stock	(369)	(2,278)		0		(41,611)		(43,889)		Repurchases of stock	(157)	(1,135)		0		(13,989)		(15,124)
Sale of interest in consolidated entities		0	10		0		0		10
Net income	Net income	0	0		0		46,348		46,348		Net income	0	0		0		15,051		15,051
Other comprehensive income (loss)	Other comprehensive income (loss)	0	0		(7,229)		0		(7,229)		Other comprehensive income (loss)	0	0		1,603		0		1,603
Balance as of September 30, 2022		12,971	$	66,258	$	(8,852)	$	196,220	$	253,626
Balance as of March 31, 2023											Balance as of March 31, 2023	12,722	$	70,269	$	(6,000)	$	196,625	$	260,894

See accompanying notes.


Table of Contents			Alphabet Inc.

Alphabet Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2021		2022			2022		2023
Operating activities	Operating activities					Operating activities
Net income	Net income	$	55,391	$	46,348	Net income	$	16,436	$	15,051
Adjustments:	Adjustments:					Adjustments:
Depreciation and impairment of property and equipment	Depreciation and impairment of property and equipment	8,340		11,222		Depreciation and impairment of property and equipment	3,591		3,060
Amortization and impairment of intangible assets	Amortization and impairment of intangible assets	662		505		Amortization and impairment of intangible assets	191		126
Stock-based compensation expense	Stock-based compensation expense	11,422		14,262		Stock-based compensation expense	4,504		5,284
Deferred income taxes	Deferred income taxes	192		(6,157)		Deferred income taxes	(2,090)		(1,854)
(Gain) loss on debt and equity securities, net		(9,792)		3,856
Loss (gain) on debt and equity securities, net						Loss (gain) on debt and equity securities, net	1,437		(84)
Other	Other	(199)		369		Other	140		553
Changes in assets and liabilities, net of effects of acquisitions:	Changes in assets and liabilities, net of effects of acquisitions:					Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(3,276)		2,298
Accounts receivable, net						Accounts receivable, net	4,364		4,454
Income taxes, net	Income taxes, net	2,744		(862)		Income taxes, net	3,820		4,069
Other assets	Other assets	(1,447)		(4,268)		Other assets	(776)		(746)
Accounts payable	Accounts payable	(874)		735		Accounts payable	(2,373)		(1,105)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	2,763		491		Accrued expenses and other liabilities	(3,216)		(4,496)
Accrued revenue share	Accrued revenue share	386		(1,022)		Accrued revenue share	(828)		(602)
Deferred revenue	Deferred revenue	406		104		Deferred revenue	(94)		(201)
Net cash provided by operating activities	Net cash provided by operating activities	66,718		67,881		Net cash provided by operating activities	25,106		23,509
Investing activities	Investing activities					Investing activities
Purchases of property and equipment	Purchases of property and equipment	(18,257)		(23,890)		Purchases of property and equipment	(9,786)		(6,289)
Purchases of marketable securities	Purchases of marketable securities	(95,106)		(67,253)		Purchases of marketable securities	(28,462)		(14,227)
Maturities and sales of marketable securities	Maturities and sales of marketable securities	92,126		84,087		Maturities and sales of marketable securities	29,779		18,327
Purchases of non-marketable securities	Purchases of non-marketable securities	(2,068)		(1,628)		Purchases of non-marketable securities	(776)		(626)
Maturities and sales of non-marketable securities	Maturities and sales of non-marketable securities	590		131		Maturities and sales of non-marketable securities	12		36

Acquisitions, net of cash acquired, and purchases of intangible assets	Acquisitions, net of cash acquired, and purchases of intangible assets	(2,233)		(6,885)		Acquisitions, net of cash acquired, and purchases of intangible assets	(173)		(42)
Other investing activities	Other investing activities	441		1,367		Other investing activities	355		(125)

Net cash used in investing activities	Net cash used in investing activities	(24,507)		(14,071)		Net cash used in investing activities	(9,051)		(2,946)
Financing activities	Financing activities					Financing activities
Net payments related to stock-based award activities	Net payments related to stock-based award activities	(7,239)		(7,221)		Net payments related to stock-based award activities	(2,916)		(1,989)

Repurchases of stock	Repurchases of stock	(36,801)		(43,889)		Repurchases of stock	(13,300)		(14,557)
Proceeds from issuance of debt, net of costs	Proceeds from issuance of debt, net of costs	13,949		44,322		Proceeds from issuance of debt, net of costs	16,422		6,927
Repayments of debt	Repayments of debt	(15,070)		(45,350)		Repayments of debt	(16,420)		(6,952)
Proceeds from sale of interest in consolidated entities, net	Proceeds from sale of interest in consolidated entities, net	310		10		Proceeds from sale of interest in consolidated entities, net	0		3
Net cash used in financing activities	Net cash used in financing activities	(44,851)		(52,128)		Net cash used in financing activities	(16,214)		(16,568)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(106)		(643)		Effect of exchange rate changes on cash and cash equivalents	100		50
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(2,746)		1,039		Net increase (decrease) in cash and cash equivalents	(59)		4,045
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	26,465		20,945		Cash and cash equivalents at beginning of period	20,945		21,879
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	23,719	$	21,984	Cash and cash equivalents at end of period	$	20,886	$	25,924

See accompanying notes.

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Table of Contents			Alphabet Inc.

Alphabet Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. 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; cloud-based solutions that provide enterprise customers with infrastructure and platform services as well as communication and collaboration tools; sales of other products and services, such as apps and in-app purchases, ~~digital content products,~~ and hardware; and fees received for subscription-based ~~products such as YouTube Premium and YouTube TV.~~products.

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~~Intercompany balances and transactions have been eliminated.

Unaudited Interim Financial Information

These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and in our opinion, include all adjustments of a normal recurring nature necessary for fair financial statement presentation. Interim results are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2022.~~2023. 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 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, ~~2021~~2022 filed with the SEC.

Change in Accounting Estimate

In January 2023, we completed an assessment of the useful lives of our servers and network equipment and adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal year 2023. Based on the carrying value of servers and certain network equipment as of December 31, 2022, and those placed in service during the quarter ended March 31, 2023, the effect of this change in estimate was a reduction in depreciation expense of $988 million and an increase in net income of $770 million, or $0.06 per basic and $0.06 per diluted share, for the three months ended March 31, 2023.

Stock Split Effected in the Form of a Stock Dividend (“Stock Split”)

On ~~February 1,~~July 15, 2022, ~~the company announced that the Board of Directors had approved and declared~~we executed 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. The Stock Split had a record date of July 1, 2022 and an effective date of July 15, 2022. The par value per share of our Class A, Class B, and Class C ~~stock remains unchanged at $0.001 per share after the Stock Split.~~stock. All prior period references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures prior to the effective date have been retroactively adjusted to reflect the effects of the Stock Split.

Prior Period Reclassifications

Certain amounts in prior periods have been reclassified to conform with current period presentation.


Table of Contents			Alphabet Inc.

Note 2. Revenues

Disaggregated Revenues

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
Google Search & other	Google Search & other	$	37,926	$	39,539	$	105,650	$	119,846	Google Search & other	$	39,618	$	40,359
YouTube ads	YouTube ads	7,205		7,071		20,212		21,280		YouTube ads	6,869		6,693
Google Network	Google Network	7,999		7,872		22,396		24,305		Google Network	8,174		7,496
Google advertising	Google advertising	53,130		54,482		148,258		165,431		Google advertising	54,661		54,548
Google other	Google other	6,754		6,895		19,871		20,259		Google other	6,811		7,413
Google Services total	Google Services total	59,884		61,377		168,129		185,690		Google Services total	61,472		61,961
Google Cloud	Google Cloud	4,990		6,868		13,665		18,965		Google Cloud	5,821		7,454
Other Bets	Other Bets	182		209		572		842		Other Bets	440		288
Hedging gains (losses)	Hedging gains (losses)	62		638		(54)		1,291		Hedging gains (losses)	278		84
Total revenues	Total revenues	$	65,118	$	69,092	$	182,312	$	206,788	Total revenues	$	68,011	$	69,787

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


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,								September 30,									March 31,
		2021				2022				2021				2022					2022				2023
United States	United States	$	29,824	46	%	$	33,372	48	%	$	83,064	46	%	$	97,832	47	%	United States	$	31,733	47	%	$	32,864	47	%
EMEA(1)	EMEA(1)	19,839		30		19,450		28		55,954		31		60,300		29		EMEA(1)	20,317		30		21,078		30
APAC(1)	APAC(1)	11,705		18		11,494		17		33,391		18		35,045		17		APAC(1)	11,841		17		11,681		17
Other Americas(1)	Other Americas(1)	3,688		6		4,138		6		9,957		5		12,320		6		Other Americas(1)	3,842		6		4,080		6
Hedging gains (losses)	Hedging gains (losses)	62		0		638		1		(54)		0		1,291		1		Hedging gains (losses)	278		0		84		0
Total revenues	Total revenues	$	65,118	100	%	$	69,092	100	%	$	182,312	100	%	$	206,788	100	%	Total revenues	$	68,011	100	%	$	69,787	100	%

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

Revenue Backlog ~~and Deferred Revenues~~

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$52.4~~$61.7 billion of remaining performance obligations (“revenue backlog”), primarily related to Google ~~Cloud, and expect to recognize approximately half of this amount as revenues over the next 24 months with the remaining to be recognized thereafter.~~Cloud. Our revenue backlog represents commitments in customer contracts for future services that have not yet been recognized as ~~revenues.~~revenue. 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 and when our customers utilize services, which could affect our estimate of revenue backlog and when we expect to recognize such as ~~revenues.~~revenue. We expect to recognize approximately half of the revenue backlog as revenues over the next 24 months with the remaining to be recognized thereafter. 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.

Deferred Revenues

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. Total deferred revenue as of December 31, ~~2021~~2022 was ~~$3.8~~$4.5 billion, of which ~~$2.4~~$1.6 billion was recognized as revenues during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.


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Note 3. Financial Instruments

Fair Value Measurements

Investments Measured at Fair Value on a Recurring Basis

Cash, cash equivalents, and marketable equity securities are measured at fair value and classified within Level 1 and Level 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.

Debt ~~Securities~~

~~We classify our marketable debt~~ securities ~~which~~ are ~~accounted for as available-for-sale,~~measured at fair value and classified 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.


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

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 losses related to debt securities still held where we have elected the fair value option were~~ ~~$35 million~~ and $779 million as of December 31, 2021 and September 30, 2022, respectively. As of December 31, 2021 and September 30, 2022, the fair value of these debt securities was $4.7 billion and $6.6 billion, respectively.

The following tables summarize ~~debt~~our cash, cash equivalents, and marketable securities ~~for which we did not elect the~~measured at fair value ~~option, by significant investment categories~~on a recurring basis (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 September 30, 2022														As of December 31, 2022
		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities			Fair Value Hierarchy	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Fair value changes recorded in other comprehensive income														Fair value changes recorded in other comprehensive income
Time deposits(1)	Time deposits(1)	$	4,925	$	0	$	0	$	4,925	$	4,920	$	5	Time deposits(1)	Level 2	$	5,297	$	0	$	0	$	5,297	$	5,293	$	4
Government bonds	Government bonds	42,863		0		(2,523)		40,340		93		40,247		Government bonds	Level 2	41,036		64		(2,045)		39,055		283		38,772
Corporate debt securities	Corporate debt securities	29,397		0		(1,833)		27,564		179		27,385		Corporate debt securities	Level 2	28,578		8		(1,569)		27,017		1		27,016
Mortgage-backed and asset-backed securities	Mortgage-backed and asset-backed securities	16,599		0		(1,376)		15,223		0		15,223		Mortgage-backed and asset-backed securities	Level 2	16,176		5		(1,242)		14,939		0		14,939
Total investments with fair value change reflected in other comprehensive income(2)														Total investments with fair value change reflected in other comprehensive income(2)		$	91,087	$	77	$	(4,856)	$	86,308	$	5,577	$	80,731
Fair value adjustments recorded in net income														Fair value adjustments recorded in net income
Money market funds														Money market funds	Level 1							$	7,234	$	7,234	$	0
Current marketable equity securities(3)														Current marketable equity securities(3)	Level 1							4,013		0		4,013
Mutual funds														Mutual funds	Level 2							339		0		339
Government bonds														Government bonds	Level 2							1,877		440		1,437
Corporate debt securities														Corporate debt securities	Level 2							3,744		65		3,679
Mortgage-backed and asset-backed securities														Mortgage-backed and asset-backed securities	Level 2							1,686		2		1,684
Total investments with fair value change recorded in net income														Total investments with fair value change recorded in net income								$	18,893	$	7,741	$	11,152
Cash														Cash								0		8,561		0
Total	Total	$	93,784	$	0	$	(5,732)	$	88,052	$	5,192	$	82,860	Total		$	91,087	$	77	$	(4,856)	$	105,201	$	21,879	$	91,883

(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~~(2)Represents gross realized gains of $109 million and $14 million for the three months ended September 30, 2021 and 2022, respectively, and $360 million and $83 million for the nine months ended September 30, 2021 and 2022, respectively. We recognized gross realized losses of $29 million and $551 million for the three months ended September 30, 2021 and 2022, respectively, and $180 million and $1.2 billion for the nine months ended September 30, 2021 and 2022, respectively. We reflect theseunrealized gains and losses ~~as a component of other income (expense), net.~~

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


	As of September 30, 2022
~~Due in 1 year or less~~	$	~~7,998~~
~~Due in 1 year through 5 years~~	~~58,061~~
~~Due in 5 years through 10 years~~	~~11,848~~
~~Due after 10 years~~	~~11,353~~
~~Total~~	$	~~89,260~~

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

1312


Table of Contents			Alphabet Inc.

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 September 30, 2022
Less than 12 Months 12 Months or Greater Total
Fair Value Unrealized
Loss Fair Value Unrealized
Loss Fair Value Unrealized
Loss
Government bonds $ 31,685 $ (1,864) $ 8,064 $ (659) $ 39,749 $ (2,523)
Corporate debt securities 19,378 (1,042) 7,431 (697) 26,809 (1,739)
Mortgage-backed and asset-backed securities 11,316 (992) 3,886 (384) 15,202 (1,376)
Total $ 62,379 $ (3,898) $ 19,381 $ (1,740) $ 81,760 $ (5,638)

~~During the three and nine months ended September 30, 2021 and 2022, we did not recognize significant credit losses, and the ending allowance balances for credit losses were immaterial~~(3)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $803 million as of December 31, ~~2021~~2022 is included within other non-current assets.


		As of March 31, 2023
	Fair Value Hierarchy	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Fair value changes recorded in other comprehensive income
Time deposits	Level 2	$	2,880	$	0	$	0	$	2,880	$	2,880	$	0
Government bonds	Level 2	40,970		179		(1,230)		39,919		2,045		37,874
Corporate debt securities	Level 2	26,301		28		(1,244)		25,085		1		25,084
Mortgage-backed and asset-backed securities	Level 2	16,371		15		(1,039)		15,347		0		15,347
Total investments with fair value change reflected in other comprehensive income(1)		$	86,522	$	222	$	(3,513)	$	83,231	$	4,926	$	78,305
Fair value adjustments recorded in net income
Money market funds	Level 1							$	10,604	$	10,604	$	0
Current marketable equity securities(2)	Level 1							3,907		0		3,907
Mutual funds	Level 2							315		0		315
Government bonds	Level 2							2,006		672		1,334
Corporate debt securities	Level 2							3,660		31		3,629
Mortgage-backed and asset-backed securities	Level 2							1,688		0		1,688
Total investments with fair value change recorded in net income								$	22,180	$	11,307	$	10,873
Cash								0		9,691		0
Total		$	86,522	$	222	$	(3,513)	$	105,411	$	25,924	$	89,178

(1)Represents gross unrealized gains and ~~September 30, 2022. See Note 6~~losses for ~~further details on other income (expense), net.~~debt securities recorded to AOCI.

~~Equity Investments~~

(2)The ~~following discusses our~~long-term portion of marketable equity securities ~~non-marketable equity securities, gains and losses~~(subject to long-term lock-up restrictions) of $920 million as of March 31, 2023 is included within other non-current assets

Investments Measured at Fair Value on ~~marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method.~~a Nonrecurring Basis

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).~~impairment. 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.

~~Gains~~As of March 31, 2023 the carrying value of our non-marketable equity securities was $29.1 billion, of which $10.7 billion were re-measured at fair value during the three months ended March 31, 2023 and primarily classified as Level 2 investments.


Table of Contents			Alphabet Inc.

Debt Securities

The following table summarizes the estimated fair value of investments in available-for-sale marketable debt securities by effective contractual maturity dates (in millions):


	As of March 31, 2023
Due in 1 year or less	$	11,712
Due in 1 year through 5 years	46,052
Due in 5 years through 10 years	15,228
Due after 10 years	11,964
Total	$	84,956

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, 2022
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	21,039	$	(1,004)	$	13,438	$	(1,041)	$	34,477	$	(2,045)
Corporate debt securities	11,228		(440)		15,125		(1,052)		26,353		(1,492)
Mortgage-backed and asset-backed securities	7,725		(585)		6,964		(657)		14,689		(1,242)
Total	$	39,992	$	(2,029)	$	35,527	$	(2,750)	$	75,519	$	(4,779)


	As of March 31, 2023
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	12,234	$	(312)	$	14,159	$	(918)	$	26,393	$	(1,230)
Corporate debt securities	4,427		(93)		19,011		(1,072)		23,438		(1,165)
Mortgage-backed and asset-backed securities	2,597		(94)		11,212		(944)		13,809		(1,038)
Total	$	19,258	$	(499)	$	44,382	$	(2,934)	$	63,640	$	(3,433)

We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. The following table summarizes gains and losses ~~on marketable and non-marketable equity~~for debt securities,

~~Gains and losses (including impairments)~~ reflected inas a component of other income (expense), net (in millions):


	Three Months Ended
	March 31,
	2022		2023
Unrealized gain (loss) on fair value option debt securities	$	(202)	$	145
Gross realized gain on debt securities	40		57
Gross realized loss on debt securities	(271)		(492)
(Increase)/decrease in allowance for credit losses	66		(3)
Total gain (loss) on debt securities recognized in other income (expense), net	$	(367)	$	(293)


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Equity Investments

The carrying value of equity securities is measured as the total initial cost plus the cumulative net gain (loss). Our share of gains and losses, including 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.

The carrying values for marketable and non-marketable equity securities are summarized below (in millions):


	As of December 31, 2022						As of March 31, 2023
	Marketable Equity Securities		Non-Marketable Equity Securities		Total		Marketable Equity Securities		Non-Marketable Equity Securities		Total
Total initial cost	$	5,764	$	16,157	$	21,921	$	5,720	$	16,509	$	22,229
Cumulative net gain (loss)(1)	(608)		12,372		11,764		(578)		12,613		12,035
Carrying value	$	5,156	$	28,529	$	33,685	$	5,142	$	29,122	$	34,264

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Net gain (loss) on equity securities sold during the period $ (36) $ (73) $ 545 $ (355)
Net unrealized gain (loss) on equity securities held as of the end of the period 2,157 (574) 9,185 (1,613)
Total gain (loss) recognized in other income (expense), net $ 2,121 $ (647) $ 9,730 $ (1,968)
(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $16.8 billion gains and $4.5 billion losses (including impairments) as of December 31, 2022 and $17.8 billion gains and $5.1 billion losses (including impairments) as of March 31, 2023.

Gains and Losses on Marketable and Non-marketable Equity Securities

Gains and losses (including impairments), net, for marketable and non-marketable equity securities included in other income (expense), net are summarized below (in millions):


	Three Months Ended
	March 31,
	2022		2023
Realized net gain (loss) on equity securities sold during the period	$	(74)	$	105
Unrealized net gain (loss) on marketable equity securities	(1,456)		51
Unrealized net gain (loss) on non-marketable equity securities(1)	460		221
Total gain (loss) on equity securities in other income (expense), net	$	(1,070)	$	377

(1)Unrealized gain (loss) on non-marketable equity securities accounted for under the measurement alternative is comprised of $838 million and $915 million of upward adjustments for three months ended March 31, 2022 and 2023, respectively, and $378 million and $694 million of downward adjustments (including impairments) for three months ended March 31, 2022 and 2023, respectively.

In the table above, realized 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.


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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.~~security sold during the period. While these net gains (losses) may have been reflected in periods prior to the period of sale, we believe they are important supplemental information as they reflect the economic net gains (losses) on the securities sold during the period. Cumulative net gains (losses) 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 Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Total sale price $ 1,199 $ 296 $ 4,553 $ 1,631
Total initial cost 188 310 955 738
Cumulative net gain (loss)(1)
$ 1,011 $ (14) $ 3,598 $ 893

~~(1)~~Cumulative net gains for the nine months ended September 30, 2021 excludes cumulative losses of $684 million resulting from our equity derivatives, which hedged the changes in fair value of certain marketable equity securities sold. 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 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 $14.1 billion gains and $1.7 billion losses (including impairments).~~

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

As of September 30, 2022
Marketable Securities Non-Marketable Securities Total
Total initial cost $ 5,752 $ 15,540 $ 21,292
Cumulative net gain (loss)(1)
104 13,104 13,208
Carrying value(2)
$ 5,856 $ 28,644 $ 34,500

~~(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $16.9 billion gains and $3.8 billion losses (including impairments).~~

~~(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $841 million is included within other non-current assets.~~


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~~Marketable equity securities~~

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

As of December 31, 2021 As of September 30, 2022
Cash and Cash Equivalents Marketable
Securities Cash and Cash Equivalents Marketable
Securities
Level 1:
Money market funds $ 7,499 $ 0 $ 8,318 $ 0
Marketable equity securities(1)(2)
0 7,447 0 5,509
7,499 7,447 8,318 5,509
Level 2:
Mutual funds 0 351 0 347
Total $ 7,499 $ 7,798 $ 8,318 $ 5,856

~~(1)~~The balance as of December 31, 2021 and September 30, 2022 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 investments are subject to short-term lock-up restrictions).

~~(2)~~As of December 31, 2021 and September 30, 2022 the long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $1.4 billion and $841 million, respectively, is included within other non-current assets.

~~Non-marketable equity securities~~

The following is a summary of unrealized gains and losses (including impairments) recorded in other income (expense), net, 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 Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Unrealized gains on non-marketable equity securities $ 1,260 $ 219 $ 6,245 $ 3,234
Unrealized losses on non-marketable equity securities (including impairments) (37) (707) (98) (2,353)
Total unrealized gain (loss) recognized on non-marketable equity securities $ 1,223 $ (488) $ 6,147 $ 881

During the three months ended September 30, 2022, included in the $28.6 billion of non-marketable equity securities held as of the end of the period, $1.7 billion were measured at fair value resulting in a net unrealized loss of $488 million.


	Equity Securities Sold
	Three Months Ended
	March 31,
	2022		2023
Total sale price	$	364	$	312
Total initial cost	260		211
Cumulative net gain (loss)	$	104	$	101

Equity ~~securities accounted~~Securities Accounted for ~~under~~Under the Equity Method

As of December 31, ~~2021~~2022 and ~~September 30, 2022,~~March 31, 2023 equity securities accounted for under the equity method had a carrying value of approximately $$1.5 billion and ~~$1.3~~$1.6 billion, respectively. Our share of gains and losses, including 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.


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Derivative Financial Instruments

We ~~enter into~~use 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 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~~present all other ~~derivative contracts, we present~~derivatives at gross


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

fair values. ~~We primarily record changes in~~The accounting treatment for derivatives is based on 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. Cashintended use and ~~non-cash collateral pledged related to derivative instruments under our collateral security arrangements are included in other current assets.~~hedge designation.

Cash Flow Hedges

We designate foreign currency forward and option contracts (including collars) as cash flow hedges to hedge certain f~~orecasted~~forecasted revenue transactions denominated in currencies other than the U.S. dollar. These contracts have 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~~effectiveness and amortize them 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 ~~September 30, 2022, the~~March 31, 2023 the net accumulated ~~gain~~loss on our foreign currency cash flow hedges before tax effect ~~was~~ w~~$1.9 billion,~~as $55 million, which is expected to be reclassified from AOCI into ~~earnings~~revenues within the next 12 months.

Fair Value Hedges

We designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for our ~~investments~~marketable securities 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~~We enter into foreign currency forward and option contracts that are 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,~~derivatives that are not designated as ~~well as the related costs,~~accounting hedges are ~~recognized~~primarily recorded 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~~From time to time, we enter into derivatives to hedge the market price risk on certain of our marketable equity securities. Gains ~~(losses)~~and losses arising from ~~these~~other derivatives are primarily 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~~“other” component of other income (expense), net. See Note 6 for further ~~details on other income (expense), net.~~details.

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


		As of December 31, 2021		As of September 30, 2022			As of December 31, 2022		As of March 31, 2023
Derivatives Designated as Hedging Instruments:
Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts					Foreign exchange contracts
Cash flow hedges	Cash flow hedges	$	16,362	$	17,513	Cash flow hedges	$	15,972	$	17,140
Fair value hedges	Fair value hedges	$	2,556	$	2,435	Fair value hedges	$	2,117	$	1,439
Net investment hedges	Net investment hedges	$	10,159	$	8,993	Net investment hedges	$	8,751	$	9,036
Derivatives Not Designated as Hedging Instruments:
Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts	$	41,031	$	36,988	Foreign exchange contracts	$	34,979	$	33,715
Other contracts	Other contracts	$	4,275	$	6,728	Other contracts	$	7,932	$	8,423

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


			As of December 31, 2021							As of December 31, 2022				As of March 31, 2023
		Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value			Assets(1)		Liabilities(2)		Assets(1)		Liabilities(2)
Derivative Assets:
Level 2:
Derivatives designated as hedging instruments:									Derivatives designated as hedging instruments:
Foreign exchange contracts									Foreign exchange contracts	$	271	$	556	$	111	$	510

Derivatives not designated as hedging instruments:									Derivatives not designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts	Other current and non-current assets	$	867	$	42	$	909	Foreign exchange contracts	365		207		284		201
Other contracts	Other contracts	Other current and non-current assets	0		52		52		Other contracts	40		47		48		65
Total derivatives not designated as hedging instruments									Total derivatives not designated as hedging instruments	405		254		332		266
Total	Total		$	867	$	94	$	961	Total	$	676	$	810	$	443	$	776
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 September 30, 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 $ 2,317 $ 226 $ 2,543
Other contracts Other current and non-current assets 0 46 46
Total $ 2,317 $ 272 $ 2,589
Derivative Liabilities:
Level 2:
Foreign exchange contracts Accrued expenses and other liabilities, current and non-current $ 13 $ 820 $ 833
Other contracts Accrued expenses and other liabilities, current and non-current 0 45 45
Total $ 13 $ 865 $ 878
(1) Derivative assets are recorded as other current and non-current assets in the Consolidated Balance Sheets.

(2) Derivative liabilities are recorded as accrued expenses and other liabilities, current and non-current in the Consolidated Balance Sheets.

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


	Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
	Three Months Ended
	March 31,
	2022		2023
Derivatives in cash flow hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	135	$	(138)
Amount excluded from the assessment of effectiveness	(15)		47

Derivatives in net investment hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	149		(215)
Total	$	269	$	(306)

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The table below presents the gains (losses) of our derivatives on ~~derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income (OCI) are summarized below~~the Consolidated Statements of Income: (in millions):
Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness $ 336 $ 1,486 $ 438 $ 2,752
Amount excluded from the assessment of effectiveness 18 (77) 63 (131)
Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness 212 760 411 1,418
Total $ 566 $ 2,169 $ 912 $ 4,039


	Gains (Losses) Recognized in Income
	Three Months Ended
	March 31,
	2022				2023
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts in the Consolidated Statements of Income	$	68,011	$	(1,160)	$	69,787	$	790

Effect of cash flow hedges:
Foreign exchange contracts
Amount reclassified from AOCI to income	$	297	$	0	$	88	$	0
Amount excluded from the assessment of effectiveness (amortized)	(19)		0		(4)		0
Effect of fair value hedges:
Foreign exchange contracts
Hedged items	0		13		0		32
Derivatives designated as hedging instruments	0		(12)		0		(32)
Amount excluded from the assessment of effectiveness	0		1		0		5
Effect of net investment hedges:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		12		0		51
Effect of non designated hedges:
Foreign exchange contracts	0		(247)		0		30
Other contracts	0		38		0		3
Total gains (losses)	$	278	$	(195)	$	84	$	89

~~The effect of derivative instruments on income is summarized below (in millions):~~
Gains (Losses) Recognized in Income
Three Months Ended
September 30,
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 $ 65,118 $ 2,033 $ 69,092 $ (902)
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income $ 65 $ 0 $ 658 $ 0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach (3) 0 (20) 0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items 0 (69) 0 (226)
Derivatives designated as hedging instruments 0 69 0 226
Amount excluded from the assessment of effectiveness 0 2 0 6
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness 0 19 0 59
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts 0 (148) 0 (495)
Other Contracts 0 (88) 0 34
Total gains (losses) $ 62 $ (215) $ 638 $ (396)


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Gains (Losses) Recognized in Income
Nine Months Ended
September 30,
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 $ 182,312 $ 9,503 $ 206,788 $ (2,501)
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income $ (43) $ 0 $ 1,355 $ 0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach (11) 0 (63) 0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items 0 (41) 0 (349)
Derivatives designated as hedging instruments 0 41 0 350
Amount excluded from the assessment of effectiveness 0 6 0 9
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness 0 60 0 99
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts 0 (552) 0 (891)
Other Contracts 0 93 0 158
Total gains (losses) $ (54) $ (393) $ 1,292 $ (624)


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Offsetting of Derivatives

We enter into master netting arrangements and collateral security arrangements to reduce credit risk. 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.

The gross amounts of 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, 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 September 30, 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 $ 2,639 $ (50) $ 2,589 $ (755) (1) $ (1,609) $ (32) $ 193


	As of December 31, 2022
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments(1)		Cash and Non-Cash Collateral Received or Pledged		Net Amounts
Derivatives assets	$	760	$	(84)	$	676	$	(463)	$	(132)	$	81
Derivatives liabilities	$	894	$	(84)	$	810	$	(463)	$	(28)	$	319

~~(1)~~The balances as of December 31, 2021 and September 30, 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, 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 September 30, 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 $ 928 $ (50) $ 878 $ (755) (2) $ (15) $ (2) $ 106

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

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	As of March 31, 2023
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments(1)		Cash and Non-Cash Collateral Received or Pledged		Net Amounts
Derivatives assets	$	525	$	(82)	$	443	$	(368)	$	(34)	$	41
Derivatives liabilities	$	858	$	(82)	$	776	$	(368)	$	(24)	$	384

(1)The balances as of December 31, 2022 and March 31, 2023 were related to derivative allowed to be net settled 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~~2022 and ~~September 30, 2022,~~March 31, 2023, assets that can only be used to settle obligations of these VIEs were ~~$6.0~~$4.1 billion and ~~$4.8~~$3.2 billion, respectively, and the liabilities for which creditors only have recourse to the VIEs were $2.6 billion and $2.5 billion, ~~and $2.7 billion,~~ respectively. We may continue to fund ongoing operations of certain VIEs that are included within Other Bets.

~~As of December 31, 2021 and September 30, 2022, total~~Total noncontrolling interests (NCI)~~, including redeemable noncontrolling interests (RNCI),~~ in our consolidated subsidiaries were ~~$4.3~~$3.8 billion and ~~$3.9~~$3.7 billion ~~respectively.~~as of December 31, 2022 and March 31, 2023, respectively, of which $1.1 billion is redeemable noncontrolling interest (RNCI) for both periods. NCI and RNCI are included within additional paid-in capital. Net loss attributable to noncontrolling interests was not material for any period presented and is included within the "other" component of ~~other income (expense), net.~~OI&E. See Note 6 for further details on ~~other income (expense), net.~~OI&E.

Unconsolidated VIEs

We have investments in 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 securities or equity method investments.

The maximum exposure of these unconsolidated VIEs 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 $2.7 billion and ~~$2.9~~$2.8 billion, respectively, as of December 31, ~~2021~~2022 and $2.6 billion and ~~$2.6~~$2.7 billion, respectively, as of ~~September 30, 2022.~~March 31, 2023.

Note 5. Debt

Short-Term Debt

We have a 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. We had no commercial paper outstanding as of December 31, ~~2021~~2022 and ~~September 30, 2022.~~March 31, 2023.

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


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Long-Term Debt

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


		Maturity	Coupon Rate	Effective Interest Rate	As of December 31, 2021		As of September 30, 2022			Maturity	Coupon Rate	Effective Interest Rate	As of December 31, 2022		As of March 31, 2023
Debt	Debt								Debt
2014-2020 Notes Issuances		2024 - 2060	0.45% - 3.38%	0.57% - 3.38%	$	13,000	$	13,000
2014-2020 Notes issuances									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)	Future finance lease payments, net and other (1)				2,086		2,213		Future finance lease payments, net and other (1)				2,142		2,208
Total debt	Total debt				15,086		15,213		Total debt				15,142		15,208
Unamortized discount and debt issuance costs	Unamortized discount and debt issuance costs				(156)		(146)		Unamortized discount and debt issuance costs				(143)		(140)
Less: Current portion of long-term notes(2)									Less: Current portion of long-term notes(2)				0		(999)
Less: Current portion future finance lease payments, net and other current debt(1)(2)	Less: Current portion future finance lease payments, net and other current debt(1)(2)				(113)		(414)		Less: Current portion future finance lease payments, net and other current debt(1)(2)				(298)		(372)
Total long-term debt	Total long-term debt				$	14,817	$	14,653	Total long-term debt				$	14,701	$	13,697

(1)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 for further details.


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The notes in the table above are 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 was approximately ~~$12.4~~$9.9 billion and ~~$9.7~~$10.2 billion as of December 31, ~~2021~~2022 and ~~September 30, 2022,~~March 31, 2023, 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 ~~September 30, 2022,~~March 31, 2023, we had $10.0 billion of revolving credit facilities, $4.0 billion expiring in April 2023 and $6.0 billion expiring in April 2026. In April 2023, we entered into a new $4.0 billion revolving credit facility expiring in April 2024. We also terminated the existing $6.0 billion revolving credit facility expiring in April 2026 and entered into a new $6.0 billion revolving credit facility expiring in April 2028. 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 were outstanding under the credit facilities as of December 31, ~~2021~~2022 and ~~September 30, 2022.~~March 31, 2023.

Note 6. Supplemental Financial Statement Information

Accounts Receivable

The allowance for credit losses on accounts receivable was $~~550~~754 million and $~~731~~743 million as of December 31, ~~2021~~2022 and ~~September 30, 2022,~~March 31, 2023, respectively.

~~Property and Equipment, Net~~

~~Property and equipment, net, consisted of the following (in millions):~~
As of
December 31, 2021 As of
September 30, 2022
Land and buildings $ 58,881 $ 64,679
Information technology assets 55,606 61,938
Construction in progress 23,172 26,899
Leasehold improvements 9,146 10,062
Furniture and fixtures 208 297
Property and equipment, gross 147,013 163,875
Less: accumulated depreciation (49,414) (55,512)
Property and equipment, net $ 97,599 $ 108,363

~~Accrued expenses and other current liabilities~~

~~Accrued expenses and other current liabilities consisted of the following (in millions):~~
As of
December 31, 2021 As of
September 30, 2022
European Commission fines(1)
$ 9,799 $ 8,264
Accrued customer liabilities 3,505 2,943
Accrued purchases of property and equipment 2,415 3,255
Current operating lease liabilities 2,189 2,285
Other accrued expenses and current liabilities 13,328 18,291
Accrued expenses and other current liabilities $ 31,236 $ 35,038

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

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Property and Equipment, Net

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


	As of December 31, 2022		As of March 31, 2023
Land and buildings	$	66,897	$	67,948
Information technology assets	66,267		68,577
Construction in progress	27,657		30,573
Leasehold improvements	10,575		11,011
Furniture and fixtures	314		326
Property and equipment, gross	171,710		178,435
Less: accumulated depreciation	(59,042)		(60,875)
Property and equipment, net	$	112,668	$	117,560

Accrued Expenses and Other Current Liabilities

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


	As of December 31, 2022		As of March 31, 2023
European Commission fines(1)	$	9,106	$	9,354
Income taxes payable, net	1,632		5,217
Accrued customer liabilities	3,619		3,486
Accrued purchases of property and equipment	3,019		3,807
Current operating lease liabilities	2,477		2,625
Other accrued expenses and current liabilities	18,013		18,696
Accrued expenses and other current liabilities	$	37,866	$	43,185

(1) While each EC decision is under appeal, the fines are included 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. Amounts include 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 (671) (699) 366 (1,004)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI 0 0 63 63
Amounts reclassified from AOCI 0 (121) 21 (100)
Other comprehensive income (loss) (671) (820) 450 (1,041)
Balance as of September 30, 2021 $ (1,535) $ 792 $ 335 $ (408)

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, 2021 $ (2,306) $ 236 $ 447 $ (1,623)
Other comprehensive income (loss) before reclassifications (3,801) (5,204) 2,296 (6,709)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI 0 0 (131) (131)
Amounts reclassified from AOCI 0 743 (1,132) (389)
Other comprehensive income (loss) (3,801) (4,461) 1,033 (7,229)
Balance as of September 30, 2022 $ (6,107) $ (4,225) $ 1,480 $ (8,852)

~~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
Three Months Ended Nine Months Ended
September 30, September 30,
AOCI Components Location 2021 2022 2021 2022
Unrealized gains (losses) on available-for-sale investments
Other income (expense), net $ 73 $ (464) $ 155 $ (953)
Benefit (provision) for income taxes (16) 102 (34) 210
Net of income tax 57 (362) 121 (743)
Unrealized gains (losses) on cash flow hedges
Foreign exchange contracts Revenue 65 658 (43) 1,355
Interest rate contracts Other income (expense), net 1 2 4 5
Benefit (provision) for income taxes (6) (113) 18 (228)
Net of income tax 60 547 (21) 1,132
Total amount reclassified, net of income tax $ 117 $ 185 $ 100 $ 389


	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, 2021	$	(2,306)	$	236	$	447	$	(1,623)
Other comprehensive income (loss) before reclassifications	39		(2,478)		129		(2,310)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		(15)		(15)
Amounts reclassified from AOCI	0		148		(249)		(101)
Other comprehensive income (loss)	39		(2,330)		(135)		(2,426)
Balance as of March 31, 2022	$	(2,267)	$	(2,094)	$	312	$	(4,049)

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	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, 2022	$	(4,142)	$	(3,477)	$	16	$	(7,603)
Other comprehensive income (loss) before reclassifications	596		866		(121)		1,341
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		47		47
Amounts reclassified from AOCI	0		292		(77)		215
Other comprehensive income (loss)	596		1,158		(151)		1,603
Balance as of March 31, 2023	$	(3,546)	$	(2,319)	$	(135)	$	(6,000)

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
		Three Months Ended
		March 31,
AOCI Components	Location	2022		2023
Unrealized gains (losses) on available-for-sale investments
	Other income (expense), net	$	(190)	$	(374)
	Benefit (provision) for income taxes	42		82
	Net of income tax	(148)		(292)
Unrealized gains (losses) on cash flow hedges
Foreign exchange contracts	Revenue	297		88
Interest rate contracts	Other income (expense), net	2		2
	Benefit (provision) for income taxes	(50)		(13)
	Net of income tax	249		77
Total amount reclassified, net of income tax		$	101	$	(215)

Other Income (Expense), Net

Components of ~~other income (expense), net,~~OI&E were as follows (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
Interest income	Interest income	$	387	$	615	$	1,121	$	1,515	Interest income	$	414	$	797
Interest expense(1)	Interest expense(1)	(77)		(101)		(229)		(267)		Interest expense(1)	(83)		(80)
Foreign currency exchange gain (loss), net	Foreign currency exchange gain (loss), net	(139)		(136)		(77)		(469)		Foreign currency exchange gain (loss), net	(73)		(210)
Gain (loss) on debt securities, net	Gain (loss) on debt securities, net	37		(731)		62		(1,888)		Gain (loss) on debt securities, net	(367)		(293)
Gain (loss) on equity securities, net	Gain (loss) on equity securities, net	2,121		(647)		9,730		(1,968)		Gain (loss) on equity securities, net	(1,070)		377
Performance fees	Performance fees	(492)		54		(1,680)		605		Performance fees	233		118
Income (loss) and impairment from equity method investments, net	Income (loss) and impairment from equity method investments, net	188		(99)		285		(306)		Income (loss) and impairment from equity method investments, net	(89)		(51)
Other	Other	8		143		291		277		Other	(125)		132
Other income (expense), net	Other income (expense), net	$	2,033	$	(902)	$	9,503	$	(2,501)	Other income (expense), net	$	(1,160)	$	790

(1)Interest expense is net of interest capitalized of ~~$40~~$34 million and ~~$28~~$40 million for the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022, respectively, and $132 million and $99 million for the nine months ended September 30, 2021 and 2022,~~2023, respectively.

~~Note 7. Acquisitions~~

~~Mandiant Acquisition~~

On September 12, 2022 we closed the acquisition of Mandiant for a total purchase price of $6.1 billion, including cash and debt. The purchase price excludes post acquisition compensation arrangements. Mandiant's dynamic cyber defense, threat intelligence and incident response services are expected to enhanc~~e Google Cloud's security offerings. The financial results of Mandiant have been included within the Google Cloud segment as of the close of the acquisition.~~

~~The purchase price was allocated as follows (in millions):~~


~~Intangible assets~~	$	~~840~~
~~Goodwill(1)~~	~~4,772~~
~~Net assets acquired(2)~~	~~489~~
~~Total purchase price~~	$	~~6,101~~

~~(1)Goodwill was recorded in the Google Cloud segment and primarily attributable to synergies expected to arise after the acquisition. Goodwill is not deductible for tax purposes.~~

~~(2)Includes $706 million of acquired cash.~~

~~Intangible assets acquired as of the acquisition date were as follows:~~

Amount
(in millions) Weighted-Average Useful Life
(in years)
Patents and developed technology $ 349 4.8
Customer relationships 366 8.0
Trade names and other 125 5.9
Total intangible assets $ 840

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Note 7. Workforce Reduction and Other Initiatives

We have a company-wide effort underway to re-engineer our cost base. As part of this program, in January 2023 we announced a reduction of our workforce, and as a result in the first quarter of 2023 we recorded employee severance and related charges of $2.0 billion, representing the majority of expected costs associated with this action. In addition, we are taking actions to optimize our global office space, and as a result, we recorded charges related to office space reductions of $564 million in the first quarter of 2023. We may incur additional charges in the future as we further evaluate our real estate needs.

These severance and office space charges are included within our consolidated statements of income for the three months ended March 31, 2023 as follows (in millions):


	Severance and Related (1)		Office Space		Total
Cost of revenues	$	461	$	220	$	681
Research and development	835		247		1,082
Sales and marketing	445		35		480
General and administrative	253		62		315
Total charges	$	1,994	$	564	$	2,558

(1)Severance includes amounts to be settled in cash, accounted for as one-time involuntary employee termination benefits, and stock based compensation

For segment reporting, the substantial majority of these charges are included within unallocated corporate costs in our segment results.

For the three months ended March 31, 2023, changes in liabilities resulting from the severance charges and related accruals were as follows (in millions):


	Severance and Related
Balance as of December 31, 2022	$	0
Charges(1)	1,582
Cash payments	(396)
Balance as of March 31, 2023(2)	$	1,186

(1)Excludes non-cash stock-based compensation of $412 million.

(2)Included in Accrued compensation and benefits on the consolidated balance sheets.

Note 8. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows (in millions):

Google Services Google Cloud Other Bets Total
Balance as of December 31, 2021 $ 19,826 $ 2,337 $ 793 $ 22,956
Acquisitions 1,146 4,875 113 6,134
Foreign currency translation and other adjustments (227) (23) (6) (256)
Balance as of September 30, 2022 $ 20,745 $ 7,189 $ 900 $ 28,834

~~Other Intangible Assets~~

~~Information regarding purchased intangible assets 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 0 138
Total intangible assets $ 5,964 $ 4,547 $ 1,417

As of September 30, 2022
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Patents and developed technology $ 1,364 $ 491 $ 873
Customer relationships 891 224 667
Trade names and other 528 110 418
Total definite-lived intangible assets 2,783 825 1,958
Indefinite-lived intangible assets 234 0 234
Total intangible assets $ 3,017 $ 825 $ 2,192

~~For the nine months ended September 30, 2022,~~ ~~$4.2 billion~~ ~~of intangible assets that were fully amortized have been removed from gross intangible assets and accumulated amortization.~~

~~Amortization expense relating to purchased intangible assets was $219 million and~~ ~~$113 million~~ ~~for the three months ended September 30, 2021 and 2022, respectively, and $651 million and~~ ~~$505 million~~ ~~for the nine months ended September 30, 2021 and 2022, respectively.~~

~~Expected amortization expense related to purchased intangible assets held as of September 30, 2022 was as follows (in millions):~~

Remainder of 2022 $ 134
2023 458
2024 439
2025 309
2026 232
Thereafter 386
Total $ 1,958


	Google Services		Google Cloud		Other Bets		Total
Balance as of December 31, 2022	$	20,847	$	7,205	$	908	$	28,960
Acquisitions	11		0		0		11
Foreign currency translation and other adjustments	50		2		(29)		23
Balance as of March 31, 2023	$	20,908	$	7,207	$	879	$	28,994

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Other Intangible Assets

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


	As of December 31, 2022						As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents and developed technology	$	1,164	$	354	$	810	$	1,110	$	366	$	744
Customer relationships	862		235		627		862		270		592
Trade names and other	527		120		407		528		138		390
Total definite-lived intangible assets	2,553		709		1,844		2,500		774		1,726
Indefinite-lived intangible assets	240		0		240		242		0		242
Total intangible assets	$	2,793	$	709	$	2,084	$	2,742	$	774	$	1,968

Amortization expense relating to intangible assets was $191 million and $126 million for the three months ended March 31, 2022 and 2023, respectively.

Expected amortization expense of definite-lived intangible assets held as of March 31, 2023 was as follows (in millions):


Remainder of 2023	$	343
2024	443
2025	314
2026	236
2027	153
Thereafter	237
Total	$	1,726

Note 9. Commitments and Contingencies

Commitments

We have content licensing agreements with future fixed or minimum guaranteed commitments of $11.9 billion as of March 31, 2023, of which the majority is paid over seven years beginning in the first quarter of 2023.

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, distribution partners, customers of Google Cloud offerings, lessors, and service providers with respect to certain matters. We have agreed to defend and/or 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 ~~September 30, 2022,~~March 31, 2023, we did not have any material indemnification claims that were probable or reasonably possible.


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Legal Matters

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.

Certain outstanding matters include speculative, substantial or indeterminate monetary amounts. Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of a loss related to such matters, and we may be unable to estimate the reasonably possible loss or range of losses. The outcomes of outstanding legal matters are inherently unpredictable and subject to significant uncertainties, and could, either individually or in aggregate, have a material adverse effect.

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

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. 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, and on October 29, 2018, we implemented changes to certain of our Android distribution practices. On September 14, 2022, the General Court ~~rejected our appeal on three claims, accepted our appeal on one claim, and~~ reduced the fine from €4.3 billion to €4.1 billion. We ~~are preparing to~~subsequently filed an appeal towith the European Court of Justice. In ~~the second quarter of~~ 2018, we recognized a charge of $5.1 billion for the fine, which we reduced by $217 million in ~~the third quarter of~~ 2022.

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, which remains pending. We recognized a charge of $1.7 billion for the fine in the first quarter of 2019.

From time to time we are subject to formal and informal inquiries and investigations on various competition matters by regulatory authorities in the ~~United States (U.S.)~~U.S., Europe, and other jurisdictions globally. For example:

•In August 2019, we began receiving civil investigative demands from the U.S. Department of Justice (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. Further, in June2022, the Australian Competition and Consumer Commission (ACCC) and the United Kingdom's Competition and Markets Authority (CMA) each opened an investigation into Search distribution practices.

•On December 16, 2020, a number of state Attorneys General filed an antitrust complaint in the U.S. District Court for the Eastern District of Texas, alleging that Google violated U.S. antitrust laws as well as state


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deceptive trade laws relating to its advertising technology. ~~The DOJ's investigation~~Additionally, on January 24, 2023, the DOJ, along with a number of ~~similar issues remains ongoing.~~state Attorneys General, filed an antitrust complaint alleging that Google’s digital advertising technology products violate U.S. antitrust laws, and on April 17, 2023, a number of additional state Attorneys General joined the complaint. The EC, the CMA, and the ACCC each opened a formal investigation into Google's advertising technology business practices on June 22, 2021, May 25, 2022, and June 29, 2022, respectively.


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•On July 7, 2021, a number of state Attorneys General filed an antitrust complaint in the 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. In May 2022, the EC and the CMA each opened ~~a formal investigation~~investigations into Google Play’s business practices. Korean regulators are investigating Google Play's billing practices, most recently opening a formal review in May 2022 of Google's compliance with the new app store billing regulations.

We believe these complaints are without merit and will defend ourselves vigorously. We continue to cooperate with federal and state regulators in the 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) 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.

Other

We are ~~also regularly~~ subject to claims, ~~suits,~~lawsuits, regulatory and government investigations, other proceedings, and consent ~~decrees~~orders involving competition, intellectual property, data privacy and ~~cybersecurity,~~security, 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~~lawsuits ongoing in multiple jurisdictions. We also periodically have data incidents that we report to relevant regulators as required by law. Such claims, ~~suits,~~lawsuits, regulatory and government investigations, other proceedings, and consent ~~decrees~~orders could result in substantial fines and penalties, injunctive relief, ongoing ~~auditing~~monitoring and ~~monitoring~~auditing 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.

We have ongoing legal matters relating to Russia. For example, civil judgments that include compounding penalties have been imposed upon us in connection with disputes regarding the termination of accounts, including those of sanctioned parties. We do not believe these ongoing legal matters will have a material adverse ~~effect on our business, consolidated financial position, results of 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.~~effect.

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.


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Note 10. Stockholders' Equity

~~Stock Split~~

On July 15, 2022, the company executed a 20-for-one stock split with a record date of July 1, 2022, effected 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. All prior period references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split. See Note 1 for further details.

Share Repurchases

The following table presents Class A and Class C shares repurchased and subsequently retired (in millions):


	Three Months Ended March 31, 2023
	Shares	Amount
Class A share repurchases	21	$	2,011
Class C share repurchases	136	13,113
Total share repurchases(1)	157	$	15,124

(1) Shares repurchased include unsettled repurchases as of March 31, 2023.

Class A and Class C shares are repurchased 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.

In accordance with the authorization of the Board of Directors of Alphabet, during the three and nine months ended September 30, 2022, we repurchased and subsequently retired 138 million and 369 million aggregate shares for $15.4 billion and $43.9 billion, respectively. Of the aggregate amount repurchased and subsequently retired during the three months ended September 30, 2022, 25 million shares were Class A stock for $2.7 billion and 113 million shares were Class C stock for $12.7 billion. Of the aggregate amount repurchased and subsequently retired during the nine months ended September 30, 2022, 46 million shares were Class A stock for $5.2 billion and 323 million shares were Class C stock for $38.7 billion.

Repurchases are 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.


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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, Class B, and Class C stock (in millions, except per share amounts):
Three Months Ended September 30,
2021 2022
Class A Class B Class C Class A Class B Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings $ 8,548 $ 1,291 $ 9,097 $ 6,393 $ 946 $ 6,571
Denominator
Number of shares used in per share computation 6,010 908 6,397 5,983 885 6,150
Basic net income per share $ 1.42 $ 1.42 $ 1.42 $ 1.07 $ 1.07 $ 1.07
Diluted net income per share:
Numerator
Allocation of undistributed earnings for basic computation $ 8,548 $ 1,291 $ 9,097 $ 6,393 $ 946 $ 6,571
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares 1,291 0 0 946 0 0
Reallocation of undistributed earnings (156) (20) 156 (45) (6) 45
Allocation of undistributed earnings $ 9,683 $ 1,271 $ 9,253 $ 7,294 $ 940 $ 6,616
Denominator
Number of shares used in basic computation 6,010 908 6,397 5,983 885 6,150
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding 908 0 0 885 0 0
Restricted stock units and other contingently issuable shares 0 0 215 0 0 79
Number of shares used in per share computation 6,918 908 6,612 6,868 885 6,229
Diluted net income per share $ 1.40 $ 1.40 $ 1.40 $ 1.06 $ 1.06 $ 1.06


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		Nine Months Ended September 30,													Three Months Ended March 31,
		2021						2022							2022						2023
		Class A		Class B		Class C		Class A		Class B		Class C			Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:	Basic net income per share:													Basic net income per share:
Numerator	Numerator													Numerator
Allocation of undistributed earnings	Allocation of undistributed earnings	$	24,867	$	3,776	$	26,748	$	21,213	$	3,137	$	21,998	Allocation of undistributed earnings	$	7,481	$	1,109	$	7,846	$	7,006	$	1,040	$	7,005

Denominator	Denominator													Denominator
Number of shares used in per share computation	Number of shares used in per share computation	6,010		912		6,464		6,004		888		6,226		Number of shares used in per share computation	6,009		891		6,303		5,949		883		5,949

Basic net income per share	Basic net income per share	$	4.14	$	4.14	$	4.14	$	3.53	$	3.53	$	3.53	Basic net income per share	$	1.24	$	1.24	$	1.24	$	1.18	$	1.18	$	1.18
Diluted net income per share:	Diluted net income per share:													Diluted net income per share:
Numerator	Numerator													Numerator

Allocation of undistributed earnings for basic computation	Allocation of undistributed earnings for basic computation	$	24,867	$	3,776	$	26,748	$	21,213	$	3,137	$	21,998	Allocation of undistributed earnings for basic computation	$	7,481	$	1,109	$	7,846	$	7,006	$	1,040	$	7,005

Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	3,776		0		0		3,137		0		0		Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	1,109		0		0		1,040		0		0
Reallocation of undistributed earnings	Reallocation of undistributed earnings	(424)		(56)		424		(204)		(26)		204		Reallocation of undistributed earnings	(95)		(12)		95		(27)		(4)		27
Allocation of undistributed earnings	Allocation of undistributed earnings	$	28,219	$	3,720	$	27,172	$	24,146	$	3,111	$	22,202	Allocation of undistributed earnings	$	8,495	$	1,097	$	7,941	$	8,019	$	1,036	$	7,032

Denominator	Denominator													Denominator
Number of shares used in basic computation	Number of shares used in basic computation	6,010		912		6,464		6,004		888		6,226		Number of shares used in basic computation	6,009		891		6,303		5,949		883		5,949
Weighted-average effect of dilutive securities	Weighted-average effect of dilutive securities													Weighted-average effect of dilutive securities
Add:	Add:													Add:
Conversion of Class B to Class A shares outstanding	Conversion of Class B to Class A shares outstanding	912		0		0		888		0		0		Conversion of Class B to Class A shares outstanding	891		0		0		883		0		0

Restricted stock units and other contingently issuable shares	Restricted stock units and other contingently issuable shares	0		0		202		0		0		111		Restricted stock units and other contingently issuable shares	0		0		148		0		0		42
Number of shares used in per share computation	Number of shares used in per share computation	6,922		912		6,666		6,892		888		6,337		Number of shares used in per share computation	6,900		891		6,451		6,832		883		5,991

Diluted net income per share	Diluted net income per share	$	4.08	$	4.08	$	4.08	$	3.50	$	3.50	$	3.50	Diluted net income per share	$	1.23	$	1.23	$	1.23	$	1.17	$	1.17	$	1.17

For the periods presented above, the net income per share amounts are the same for Class A, Class B, and Class C 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.


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Note 12. Compensation Plans

Stock-Based Compensation

For the three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022,~~2023, total stock-based compensation (SBC) expense was ~~$3.9~~$4.5 billion and ~~$5.0~~$5.3 billion, including amounts associated with awards we expect to settle in Alphabet stock of ~~$3.8~~$4.4 billion and ~~$4.8~~$5.1 billion, respectively. For the ~~nine~~three months ended ~~September 30, 2021 and 2022,~~March 31, 2023 total SBC expense ~~was $11.7 billion and $14.4 billion, including amounts~~includes $412 million associated with ~~awards we expect to settle in Alphabet stock of $11.2 billion and $13.8 billion, respectively.~~workforce reduction costs. See Note 7 for further information.

Stock-Based Award Activities

The following table summarizes the activities for unvested Alphabet restricted stock units (RSUs) for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in millions, except per share amounts):


		Unvested Restricted Stock Units				Unvested Restricted Stock Units
		Number of Shares	Weighted- Average Grant-Date Fair Value			Number of Shares	Weighted- Average Grant-Date Fair Value
Unvested as of December 31, 2021		338	$	81.31
Unvested as of December 31, 2022					Unvested as of December 31, 2022	324	$	107.98
Granted	Granted	199	$	131.77	Granted	234	$	94.51
Vested	Vested	(152)	$	87.13	Vested	(48)	$	100.25
Forfeited/canceled	Forfeited/canceled	(25)	$	96.04	Forfeited/canceled	(10)	$	110.60
Unvested as of September 30, 2022		360	$	105.70
Unvested as of March 31, 2023					Unvested as of March 31, 2023	500	$	102.36

As of ~~September 30, 2022,~~March 31, 2023, there was ~~$35.7~~$48.6 billion of unrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of ~~2.7~~2.9 years.


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Note 13. Income Taxes

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2021			2022			2021			2022				2022			2023
Income before provision for income taxes	Income before provision for income taxes	$	23,064		$	16,233		$	66,332		$	54,181		Income before provision for income taxes	$	18,934		$	18,205
Provision for income taxes	Provision for income taxes	$	4,128		$	2,323		$	10,941		$	7,833		Provision for income taxes	$	2,498		$	3,154
Effective tax rate	Effective tax rate	17.9		%	14.3		%	16.5		%	14.5		%	Effective tax rate	13.2		%	17.3		%

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. ~~Total~~The total amount of gross unrecognized tax benefits ~~were $5.2~~was $7.1 billion and ~~$6.3~~$7.5 billion as of December 31, ~~2021~~2022 and ~~September 30, 2022, respectively. Total unrecognized tax benefits that,~~ March 31, 2023, respectively, of which $5.3 billion and $5.7 billion, if recognized, would affect our effective tax rate, ~~were $3.7 billion and $4.6 billion as of December 31, 2021 and September 30, 2022,~~ respectively.

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

Note 14. Information about Segments and Geographic Areas

We report our segment results as Google Services, Google Cloud, and Other Bets:

•Google Services includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; sales of apps and in-app purchases, ~~digital content products,~~ and hardware; and fees received for subscription-based products such as YouTube Premium and YouTube TV.

•Google Cloud includes ~~Google’s~~ infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues from fees received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services.

•Other Bets is a combination of multiple operating segments that are not individually material. Revenues from Other Bets are generated primarily from the sale of health technology and internet services.

Revenues, certain costs, such as costs associated with content and traffic acquisition, certain engineering activities, and hardware, 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~~These costs, including the associated depreciation and impairment, are allocated to operating segments as a service cost generally based on usage, headcount, 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 R&D activities. Additionally, hedging gains (losses) related to revenue are included in corporate costs.

~~Our operating segments are not evaluated using asset information.~~

~~The following table presents information about our segments (in millions):~~
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Revenues:
Google Services $ 59,884 $ 61,377 $ 168,129 $ 185,690
Google Cloud 4,990 6,868 13,665 18,965
Other Bets 182 209 572 842
Hedging gains (losses) 62 638 (54) 1,291
Total revenues $ 65,118 $ 69,092 $ 182,312 $ 206,788
revenue.

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Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Operating income (loss):
Google Services $ 23,973 $ 19,781 $ 65,862 $ 65,471
Google Cloud (644) (699) (2,209) (2,488)
Other Bets (1,288) (1,611) (3,831) (4,452)
Corporate costs, unallocated (1,010) (336) (2,993) (1,849)
Total income from operations $ 21,031 $ 17,135 $ 56,829 $ 56,682
Reflecting DeepMind's increasing collaboration with Google Services, Google Cloud, and Other Bets, beginning in the first quarter of 2023 DeepMind is reported as part of Alphabet's unallocated corporate costs instead of within Other Bets. Additionally, beginning in the first quarter of 2023, we updated and simplified our cost allocation methodologies to provide our business leaders with increased transparency for decision-making.

After the segment reporting changes discussed above, unallocated corporate costs primarily include AI-focused shared R&D activities; corporate initiatives such as our philanthropic activities; and corporate shared costs such as finance, certain human resource costs, and legal, including certain fines and settlements. In the first quarter of 2023, unallocated corporate costs also include charges associated with reductions in our workforce and office space. Additionally, hedging gains (losses) related to revenue are included in unallocated corporate costs.

Prior periods have been recast to conform to the current presentation.

Our operating segments are not evaluated using asset information.

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


	Three Months Ended
	March 31,
	2022		2023
Revenues:
Google Services	$	61,472	$	61,961
Google Cloud	5,821		7,454
Other Bets	440		288
Hedging gains (losses)	278		84
Total revenues	$	68,011	$	69,787


	Three Months Ended
	March 31,
	2022		2023
Operating income (loss):
Google Services	$	21,973	$	21,737
Google Cloud	(706)		191
Other Bets	(835)		(1,225)
Corporate costs, unallocated	(338)		(3,288)
Total income from operations	$	20,094	$	17,415

For revenues by geography, see Note 2.

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


		As of December 31, 2021		As of September 30, 2022			As of December 31, 2022		As of March 31, 2023
Long-lived assets:	Long-lived assets:					Long-lived assets:
United States	United States	$	80,207	$	91,632	United States	$	93,565	$	96,519
International	International	30,351		30,408		International	33,484		35,488
Total long-lived assets	Total long-lived assets	$	110,558	$	122,040	Total long-lived assets	$	127,049	$	132,007

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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,~~2022, 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.

~~Seasonality and other~~

Our advertising revenues are affected by seasonal fluctuations in internet usage, advertising expenditures, and 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 fluctuations driven by changes in pricing, digital content releases, fee structures, new product and service launches, and other market dynamics, as well as seasonality.

Revenues and Monetization Metrics

We generate revenues by delivering relevant, cost-effective online advertising; cloud-based solutions that provide enterprise customers of all sizes with infrastructure and platform services as well as communication and collaboration tools; sales of other products and services, such as apps and in-app purchases, and hardware; and fees received for subscription-based products. For 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, 2022.

In addition to the long-term trends and their financial effect on our business noted in "Trends in Our Business and Financial Effect" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, fluctuations in our revenues have been and may continue to be affected by a combination of factors, including:

•changes in foreign currency exchange rates;

•changes in pricing, such as those resulting from changes in fee structures, discounts, and customer incentives;

•general economic conditions and various external dynamics, including geopolitical events, regulations, and other measures and their effect on advertiser, consumer, and enterprise spending;

•new product and service launches; and

•seasonality.

Additionally, fluctuations in our revenues generated from advertising ("Google advertising"), revenues from other sources ("Google other revenues"), Google Cloud, and Other Bets revenues have been and may continue to be affected by other factors unique to each set of revenues, as described below.

Google Services

Google Services revenues consist of ~~revenues generated from~~Google advertising ~~(“Google advertising”)~~ as well as ~~revenues from other sources (“~~Google other ~~revenues”).~~revenues.

Google Advertising

Google advertising revenues are comprised of the following:

•Google Search & other, 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, which includes revenues generated on YouTube properties; and

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

We use certain metrics to track how well traffic across various properties is monetized as it relates to our advertising revenues: paid clicks and cost-per-click pertain to traffic on Google Search & other properties, while impressions and ~~cost-per-impressions~~cost-per-impression pertain to traffic on our Google 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


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Play. 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~~Fluctuations in our advertising ~~revenue growth,~~revenues, as well as the change in paid clicks and cost-per-click on Google Search & other properties and the 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~~additional factors, ~~including:~~such as:

•advertiser competition for keywords;


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

•changes in device mix;

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

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

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

•underlying business trends, such as traditional retail 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;~~purchases;

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

•YouTube non-advertising, which includes subscription revenues from services such as YouTube Premium and YouTube ~~TV subscriptions;~~TV; and

•other products and services.

Fluctuations in our Google other revenues have been and may continue to be affected by additional factors, such as changes in customer usage and demand, number of subscribers, and fluctuations in the timing of product launches.

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 communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar and Meet; and

•other enterprise services.

Fluctuations in our Google Cloud revenues have been and may continue to be affected by additional factors, such as customer usage.

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~~our costs and 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.


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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 ("hardware costs").~~sell.

~~The cost of revenues~~TAC as a percentage of revenues generated from ads placed on Google Network properties are significantly higher than ~~the cost of revenues~~TAC 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~~third-party services fees primarily ~~related~~relating to consulting and ~~outsourcing services.~~outsourced services in support of our engineering and product development efforts.

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~~relating to legal matters, including fines and settlements; and

•~~professional~~third-party services fees, including audit, consulting, outside legal, and ~~outsourcing~~other outsourced administrative 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


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the fiscal year ended December 31, ~~2021~~2022 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~~2022 as well as Note 13 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

Executive Overview

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


		Three Months Ended
	March 31,
		2022			2023			$ Change		% Change
Consolidated revenues		$	68,011		$	69,787		$	1,776	3	%
Change in consolidated constant currency revenues(1)										6	%

Cost of revenues		$	29,599		$	30,612		$	1,013	3	%
Operating expenses		$	18,318		$	21,760		$	3,442	19	%

Operating income		$	20,094		$	17,415		$	(2,679)	(13)	%
Operating margin		30		%	25		%			(5)	%

Other income (expense), net		$	(1,160)		$	790		$	1,950	NM

Net Income		$	16,436		$	15,051		$	(1,385)	(8)	%
Diluted EPS		$	1.23		$	1.17		$	(0.06)	(5)	%

NM = Not Meaningful

(1) See "Use of Non-GAAP Constant Currency Measures" below for details relating to our use of constant currency information.

•Revenues were $69.8 billion, an increase of 3% year over year, primarily driven by an increase in Google Cloud revenues of $1.6 billion, or 28%.

•Total constant currency revenues, which exclude the effect of hedging, increased 6% year over year.

•Cost of revenues was $30.6 billion, an increase of 3% year over year, affected by compensation costs related to employee severance charges associated with the reduction in our workforce, charges related to our office space optimization efforts, and a reduction in depreciation expense due to the change in estimated useful life of our servers and certain network equipment.

•Operating expenses were $21.8 billion, an increase of 19% year over year, affected by compensation costs related to employee severance charges associated with the reduction in our workforce as well as the effect of a shift in timing of our annual employee stock-based compensation awards.

Other Information

•In January 2023, we announced a reduction of our workforce, and as a result in the first quarter of 2023 we recorded employee severance and related charges of $2.0 billion, representing the majority of expected costs associated with this action. In addition, we are taking actions to optimize our global office space, and as a result we recorded charges related to office space reductions of $564 million in the first quarter of 2023. We may incur additional charges in the future as we further evaluate our real estate needs. For


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~~Executive Overview~~

~~The following table summarizes consolidated financial results (in millions, except per share~~additional information, ~~percentages, and number of employees):~~
Three Months Ended
September 30,
2021 2022 $ Change % Change
Consolidated revenues $ 65,118 $ 69,092 $ 3,974 6 %
Change in consolidated constant currency revenues 11 %
Cost of revenues $ 27,621 $ 31,158 $ 3,537 13 %
Operating expenses $ 16,466 $ 20,799 $ 4,333 26 %
Operating income $ 21,031 $ 17,135 $ (3,896) (19) %
Operating margin 32 % 25 % (7) %
Other income (expense), net $ 2,033 $ (902) $ (2,935) (144) %
Net Income $ 18,936 $ 13,910 $ (5,026) (27) %
Diluted EPS $ 1.40 $ 1.06 $ (0.34) (24) %
Number of Employees 150,028 186,779 36,751 24 %

•Revenues were $69.1 billion, an increase of 6% year over year, primarily driven by an increase in Google Cloud segment revenues of $1.9 billion, or 38%, and an increase in Google Services segment revenues of $1.5 billion, or 2%. Hedging gains contributed approximately one percentage point to consolidated revenue growth.

•~~Total constant currency revenues, which exclude the effect of hedging, increased 11% year over year reflecting the strengthening of the U.S. dollar.~~

•~~Cost of revenues was $31.2 billion, an increase of 13% year over year, primarily driven by an increase in other costs of revenues.~~

•~~Operating expenses were $20.8 billion, an increase of 26% year over year, primarily driven by increases in compensation expenses due to headcount growth and advertising and promotional expenses.~~

~~Other information~~

•On September 12, 2022 we closed the acquisition of Mandiant for a total purchase price of $6.1 billion and added over 2,600 employees. Mandiant's financial results are reported within Google Cloud as of the acquisition date. Seesee Note 7 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form ~~10-Q for~~10-Q.

•In January 2023, we completed an assessment of the useful lives of our servers and network equipment, resulting in a change in the estimated useful life of our servers and certain network equipment to six years. The effect of this change was a reduction in depreciation expense of $988 million for the first quarter of 2023, recognized primarily in cost of revenues and R&D expenses. For additional ~~information.~~information, see Note 1 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

•Beginning in the first quarter of ~~2022,~~2023, our segment reporting reflects two changes: (i) DeepMind, previously reported within Other Bets, is reported as part of Alphabet's unallocated corporate costs, and (ii) we ~~suspended~~updated and simplified our cost allocation methodologies to provide our business leaders with increased transparency for decision-making. Prior periods have been recast to conform to the ~~vast majority~~current presentation. For additional information, see Note 14 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

•Beginning in 2023, the timing of our ~~commercial activities~~annual employee stock-based compensation awards shifted from January to March. While the shift in ~~Russia and effectively ceased business activities~~timing itself will not affect the amount of ~~our Russian entity. The ongoing effect~~stock-based compensation expense over the full fiscal year 2023, it results in relatively less expense recognized in the first quarter compared to the remaining quarters of ~~these direct actions on our financial results was not material. The broader economic effects resulting from~~ the ~~war in Ukraine on our future financial results may be unpredictable.~~year.

•Repurchases of Class A and Class C shares were ~~$15.4~~$15.1 billion for the three months ended ~~September 30, 2022.~~March 31, 2023. 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 ~~$23.4~~$23.5 billion for the three months ended ~~September 30, 2022.~~March 31, 2023.

•Capital expenditures, ~~of $7.3~~which primarily reflected investments in technical infrastructure, were $6.3 billion for the three months ended ~~September 30, 2022 primarily relate~~March 31, 2023.

•As of March 31, 2023, we had 190,711 employees, which includes almost all of the employees affected by the reduction of our workforce. We expect most of those affected will no longer be reflected in our headcount by the end of the second quarter of 2023, subject to ~~investments in technical infrastructure.~~local law and consultation requirements.

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Financial Results

Revenues

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
Google Search & other	Google Search & other	$	37,926	$	39,539	$	105,650	$	119,846	Google Search & other	$	39,618	$	40,359
YouTube ads	YouTube ads	7,205		7,071		20,212		21,280		YouTube ads	6,869		6,693
Google Network	Google Network	7,999		7,872		22,396		24,305		Google Network	8,174		7,496
Google advertising	Google advertising	53,130		54,482		148,258		165,431		Google advertising	54,661		54,548
Google other	Google other	6,754		6,895		19,871		20,259		Google other	6,811		7,413
Google Services total	Google Services total	59,884		61,377		168,129		185,690		Google Services total	61,472		61,961
Google Cloud	Google Cloud	4,990		6,868		13,665		18,965		Google Cloud	5,821		7,454
Other Bets	Other Bets	182		209		572		842		Other Bets	440		288
Hedging gains (losses)	Hedging gains (losses)	62		638		(54)		1,291		Hedging gains (losses)	278		84
Total revenues	Total revenues	$	65,118	$	69,092	$	182,312	$	206,788	Total revenues	$	68,011	$	69,787

Google Services

Google advertising revenues

Google Search & other

Google Search & other revenues increased ~~$1.6 billion and $14.2 billion~~$741 million from the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 to the three ~~and nine~~ months ended ~~September 30, 2022, respectively.~~March 31, 2023. 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,~~devices; growth in advertiser ~~spending,~~spending; and improvements we have made in ad formats and delivery. Growth was ~~partially offset~~adversely affected by ~~the unfavorable effect of~~changes in foreign currency exchange rates.

YouTube ads

YouTube ads revenues decreased ~~$134~~$176 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022, as~~March 31, 2023 primarily driven by the ~~unfavorable~~adverse effect of ~~foreign currency exchange rates more than offset growth~~changes in ~~our brand and direct response advertising products.~~

YouTube ads revenues increased $1.1 billion from the nine months ended September 30, 2021 to the nine months ended September 30, 2022. The growth was driven by our brand and direct response advertising products, both of which benefited from increased spending by our advertisers as well as improvements to ad formats and delivery. Growth was partially offset by the unfavorable effect of foreign currency exchange rates.

Google Network

Google Network revenues decreased ~~$127~~$678 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022,~~March 31, 2023 primarily driven by a decrease in AdMob and Google Ad Manager revenues as well as the ~~unfavorable~~adverse effect of changes in foreign currency exchange ~~rates more than offset strength~~rates.

Monetization Metrics

Paid clicks and cost-per-click

The following table presents changes in ~~AdSense.~~

~~Google Network revenues increased $1.9 billion~~paid clicks and cost-per-click (expressed as a percentage) from the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 to the ~~nine~~three months ended ~~September 30, 2022. The growth was primarily~~March 31, 2023:




Paid clicks change			8%
Cost-per-click change			(7)%

Paid clicks increased from the three months ended March 31, 2022 to the three months ended March 31, 2023 driven by ~~strength~~a number of interrelated factors, including an increase in ~~AdSense~~search queries resulting from growth in user adoption and ~~AdMob, partially offset~~usage on mobile devices; growth in advertiser spending; and ongoing product and policy changes.

Cost-per-click decreased from the three months ended March 31, 2022 to the three months ended March 31, 2023 driven by a number of interrelated factors including changes in device mix, geographic mix, advertiser spending, ongoing product and policy changes, and property mix, as well as the ~~unfavorable~~adverse effect of changes in foreign currency exchange rates.

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~~Monetization Metrics~~Impressions and cost-per-impression

~~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 September 30, Nine Months Ended September 30,
2022 2022
Paid clicks change 8% 12%
Cost-per-click change (5)% 1%

Paid clicks increased from the three and nine months ended September 30, 2021 to the three and nine months ended September 30, 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; growth in advertiser spending; and improvements we have made in ad formats and delivery. The increase in clicks for the three months ended September 30, 2022 was partially offset by a decrease in clicks relating to ads on Google Play.

Cost-per-click decreased from the three months ended September 30, 2021 to the three months ended September 30, 2022 and increased from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 due to a number of interrelated factors including changes in device mix, geographic mix, advertiser spending, ongoing product changes, and property mix, as well as the unfavorable effect of foreign currency exchange rates.

~~Impressions and cost-per-impression~~

~~The following table presents year-over-year~~ changes in impressions and cost-per-impression (expressed as a percentage):
Three Months Ended September 30, Nine Months Ended September 30,
2022 2022
Impressions change 3% 5%
Cost-per-impression change (5)% 4%

~~Impressions increased~~ from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30,~~March 31, 2023:



Impressions change			(5)%
Cost-per-impression change			(5)%

Impressions decreased from the three months ended March 31, 2022 ~~primarily~~to the three months ended March 31, 2023 driven by ~~growth in~~ Google Ad Manager and ~~AdSense, partially offset by a decline in impressions related to AdMob.~~AdSense. The decrease in cost-per-impression from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022 was primarily driven by the unfavorable effect of foreign currency exchange rates.~~

Impressions increased from the nine months ended September 30, 2021 to the nine months ended September 30, 2022, driven by growth across Google Ad Manager, AdMob, and AdSense. The increase in cost-per-impression from the nine months ended September 30, 2021 to the nine months ended September 30, 2022March 31, 2023 was driven by a number of interrelated factors including ongoing product and policy changes, ~~improvements we have made in ad formats and delivery,~~ changes in device mix, geographic mix, product mix, and property mix, ~~partially offset by~~as well as the ~~unfavorable~~adverse effect of changes in foreign currency exchange rates.

Google other revenues

Google other revenues increased ~~$141~~$602 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022~~March 31, 2023 primarily driven by growth in YouTube non-advertising, ~~followed by growth in hardware revenues, partially offset by a decrease in Google Play revenues. The growth in YouTube non-advertising was~~ largely due to an increase in paid subscribers. ~~The growth~~Growth was adversely affected by changes in hardware was primarily driven by an increase in phone sales. The decrease in Google Play revenues was primarily driven by a decrease in buyer spending. Additionally, the overall increase was partially offset by the unfavorable effect of foreign currency exchange rates.

Google other revenues increased $388 million from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 primarily driven by growth in YouTube non-advertising, partially offset by a decrease in Google Play revenues. The growth in YouTube non-advertising was largely due to an increase in paid subscribers. The decrease in Google Play revenues was primarily driven by the fee structure changes we


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

~~announced in 2021 as well as a decrease in buyer spending. Additionally, the overall increase was partially offset by the unfavorable effect of~~ foreign currency exchange rates.

Google Cloud

Google Cloud revenues increased ~~$1.9 billion and $5.3~~$1.6 billion from the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 to the three ~~and nine~~ months ended ~~September 30, 2022, respectively. The growth~~March 31, 2023. Growth was primarily driven by ~~GCP~~Google Cloud Platform followed by Google Workspace offerings. Google Cloud's infrastructure and platform services were the largest drivers of growth in ~~GCP.~~Google Cloud Platform.

Revenues by Geography

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2022		2021		2022			2022		2023
United States	United States	46	%	48	%	46	%	47	%	United States	47	%	47	%
EMEA	EMEA	30	%	28	%	31	%	29	%	EMEA	30	%	30	%
APAC	APAC	18	%	17	%	18	%	17	%	APAC	17	%	17	%
Other Americas	Other Americas	6	%	6	%	5	%	6	%	Other Americas	6	%	6	%
Hedging gains (losses)		0	%	1	%	0	%	1	%

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

Use of Non-GAAP Constant Currency ~~Revenues~~Information

International revenues, which represent a significant portion of our revenues, are generally transacted in multiple currencies and ~~Constant Currency Revenue Percentage Change~~therefore are affected by fluctuations in foreign currency exchange rates.

The effect of currency exchange rates on our business is an important factor in understanding ~~period to period~~period-to-period comparisons. We use non-GAAP constant currency revenues ("constant currency revenues") and non-GAAP percentage change in constant currency revenues ("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~~U.S. Generally Accepted Accounting Principles (GAAP) results helps improve the ability to understand our performance, because 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~~("FX Effect") as well as hedging activities, ~~and~~which are recognized at the consolidated level. We use itconstant currency revenues to determine the constant currency revenue percentage change on a 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.

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


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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.


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~~The~~The following table presents the foreign exchange effect on international revenues and total revenues (in millions, except percentages):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 % Change from Prior Year 2021 2022 % Change from Prior Year
EMEA revenues $ 19,839 $ 19,450 (2) % $ 55,954 $ 60,300 8 %
EMEA constant currency revenues 22,093 11 % $ 66,210 18 %
APAC revenues 11,705 11,494 (2) % $ 33,391 $ 35,045 5 %
APAC constant currency revenues 12,604 8 % $ 37,510 12 %
Other Americas revenues 3,688 4,138 12 % $ 9,957 $ 12,320 24 %
Other Americas constant currency revenues 4,303 17 % $ 12,536 26 %
United States revenues 29,824 33,372 12 % $ 83,064 $ 97,832 18 %
Hedging gains (losses) 62 638 $ (54) $ 1,291
Total revenues $ 65,118 $ 69,092 6 % $ 182,312 $ 206,788 13 %
Revenues, excluding hedging effect $ 65,056 $ 68,454 $ 182,366 $ 205,497
Exchange rate effect 3,918 8,591
Total constant currency revenues $ 72,372 11 % $ 214,088 17 %


					Three Months Ended March 31, 2023
									% Change from Prior Period
	Three Months Ended March 31,				Less FX Effect		Constant Currency Revenues		As Reported		Less Hedging Effect		Less FX Effect		Constant Currency Revenues
	2022		2023
United States	$	31,733	$	32,864	$	0	$	32,864	4	%			0	%	4	%
EMEA	20,317		21,078		(1,173)		22,251		4	%			(6)	%	10	%
APAC	11,841		11,681		(834)		12,515		(1)	%			(7)	%	6	%
Other Americas	3,842		4,080		(167)		4,247		6	%			(5)	%	11	%
Revenues, excluding hedging effect	67,733		69,703		(2,174)		71,877		3	%			(3)	%	6	%
Hedging gains (losses)	278		84
Total revenues(1)	$	68,011	$	69,787			$	71,877	3	%	0	%	(3)	%	6	%

~~EMEA re~~(1)~~venue growth from~~Total constant currency revenues of $71.9 billion for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2023 increased $4.1 billion compared to $67.7 billion in revenues, excluding hedging effect, for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2022.

EMEA revenue growth was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Euro and the British pound.

APAC revenue growth ~~from the three and nine months ended September 30, 2021 to the three and nine months ended September 30, 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 and nine months ended September 30, 2021 to the three and nine months ended September 30, 2022~~ was unfavorably affected by ~~the general strengthening of~~changes in foreign currency exchange rates, primarily due to the U.S. ~~dollar.~~dollar strengthening relative to the Argentine peso.

Costs and Expenses

Cost of Revenues

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2021			2022			2021			2022				2022			2023
TAC	TAC	$	11,498		$	11,826		$	32,139		$	36,030		TAC	$	11,990		$	11,721
Other cost of revenues	Other cost of revenues	16,123			19,332			45,812			54,831			Other cost of revenues	17,609			18,891
Total cost of revenues	Total cost of revenues	$	27,621		$	31,158		$	77,951		$	90,861		Total cost of revenues	$	29,599		$	30,612
Total cost of revenues as a percentage of revenues	Total cost of revenues as a percentage of revenues	42.4		%	45.1		%	42.8		%	43.9		%	Total cost of revenues as a percentage of revenues	44		%	44		%

Cost of revenues increased ~~$3.5~~$1.0 billion from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022~~March 31, 2023 due to an increase in other cost of revenues ~~and~~of $1.3 billion, partially offset by a decrease in TAC of ~~$3.2 billion and $328 million, respectively. Cost of revenues increased $12.9 billion from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 due to increases~~$269 million.

The decrease in ~~other cost of revenues and TAC of $9.0 billion and $3.9 billion, respectively.~~

~~The increase in~~ TAC from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022~~March 31, 2023 was ~~primarily~~largely due to ~~increases~~a decrease in TAC paid to ~~distribution~~Google Network partners, primarily driven by ~~growth~~a decrease in revenues subject to TAC. The TAC rate decreased from 21.9% to 21.5% from the three months ended March 31, 2022 to the three months ended March 31, 2023 primarily due to a revenue mix shift from Google Network properties to Google Search & other properties. The TAC rate on Google Search & other revenues and the TAC rate on Google Network revenues were both substantially consistent from three months ended March 31, 2022 to the three months ended March 31, 2023.

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~~subject to TAC. The increase in~~ TAC from the nine months ended September 30, 2021 to the nine months ended September 30, 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 increased from 21.6% to 21.7% from the three months ended September 30, 2021 to the three months ended September 30, 2022 and increased from 21.7% to 21.8% from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 due to a combination of factors, none of which were individually significant. The TAC rate on Google Search & other revenues and the TAC rate on Google Network revenues were both substantially consistent from three and nine months ended September 30, 2021 to the three and nine months ended September 30, 2022.

The increase in other cost of revenues from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022~~March 31, 2023 was primarily due to increases in data center and other operations costs ~~as well as hardware costs. The increase~~which includes $681 million of charges related to employee severance associated with the reduction of our workforce and our office space optimization efforts, partially offset by a reduction in ~~other cost of revenues from the nine months ended September 30, 2021 to the nine months ended September 30, 2022 was primarily~~depreciation expense due to the ~~increases~~change in ~~data center~~the estimated useful life of our servers and ~~other operations costs followed by hardware costs and content acquisition costs.~~certain network equipment.

Research and Development

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2021			2022			2021			2022				2022			2023
Research and development expenses	Research and development expenses	$	7,694		$	10,273		$	22,854		$	29,233		Research and development expenses	$	9,119		$	11,468
Research and development expenses as a percentage of revenues	Research and development expenses as a percentage of revenues	11.8		%	14.9		%	12.5		%	14.1		%	Research and development expenses as a percentage of revenues	13		%	16		%

R&D expenses increased ~~$2.6~~$2.3 billion from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022. The increase was~~March 31, 2023 primarily driven by an increase in compensation expenses of ~~$1.8~~$1.7 billion ~~largely resulting from a 24%~~and an increase in ~~headcount.~~

~~R&D expenses increased $6.4 billion from the nine months ended September 30, 2021~~facilities costs due to the ~~nine months ended September 30, 2022.~~$247 million in charges related to our office space optimization efforts. The ~~increase was primarily driven by an~~$1.7 billion increase in compensation expenses was largely the result of ~~$4.2 billion, largely resulting from an 19%~~a 14% increase in average headcount, after adjusting for roles affected by the reduction in workforce for the quarter ended March 31, 2023, and$835 million in employee severance charges associated with the reduction of our workforce, partially offset by the effect of the shift in timing of our annual employee stock-based compensation awards. Additionally, an increase in ~~professional services fees~~depreciation of ~~$619 million.~~$126 million includes the effect of the change in the estimated useful lives of our servers and network equipment.

Sales and Marketing

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		September 30,						September 30,							March 31,
		2021			2022			2021			2022				2022			2023
Sales and marketing expenses	Sales and marketing expenses	$	5,516		$	6,929		$	15,308		$	19,384		Sales and marketing expenses	$	5,825		$	6,533
Sales and marketing expenses as a percentage of revenues	Sales and marketing expenses as a percentage of revenues	8.5		%	10.0		%	8.4		%	9.4		%	Sales and marketing expenses as a percentage of revenues	9		%	9		%

Sales and marketing expenses increased ~~$1.4 billion~~$708 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022. The increase was~~March 31, 2023 primarily driven by an increase in ~~advertising~~compensation expenses of $734 million, largely resulting from $445 million in employee severance charges associated with the reduction in our workforce and ~~promotional activities~~a 7% increase in average headcount, after adjusting for roles affected by the reduction in workforce for the quarter ended March 31, 2023, partially offset by the effect of ~~$708~~the shift in timing of our annual employee stock-based compensation awards.

General and Administrative

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


	Three Months Ended
	March 31,
	2022			2023
General and administrative expenses	$	3,374		$	3,759
General and administrative expenses as a percentage of revenues	5		%	5		%

General and administrative expenses increased $385 million ~~and~~from the three months ended March 31, 2022 to the three months ended March 31, 2023, primarily driven by an increase in compensation expenses of ~~$515~~$293 million, largely resulting from ~~a 19% increase~~$253 million in ~~headcount.~~

~~Sales and marketing expenses increased $4.1 billion from~~employee severance charges associated with the ~~nine months ended September 30, 2021 to the nine months ended September 30, 2022 primarily driven by an increase~~reduction in ~~advertising and promotional activities of $1.8 billion~~our workforce and an 6% increase in average headcount, after adjusting for roles affected by the reduction in workforce for the quarter ended March 31, 2023, partially offset by the effect of the shift in timing of our annual employee stock-based compensation ~~expenses of $1.7 billion, largely resulting from a 20% increase in headcount.~~awards.

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~~General and Administrative~~

~~The following table presents general and administrative expenses (in millions, except percentages):~~
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
General and administrative expenses $ 3,256 $ 3,597 $ 9,370 $ 10,628
General and administrative expenses as a percentage of revenues 5.0 % 5.2 % 5.1 % 5.1 %

General and administrative expenses increased $341 million from the three months ended September 30, 2021 to the three months ended September 30, 2022. The increase was primarily driven by an increase in compensation expenses of $385 million, largely resulting from a 23% increase in headcount, and an increase in professional services fees of $214 million. The overall increase was partially offset by a decrease in charges related to legal matters of $228 million, including the $217 million reduction of the EC fine imposed in 2018. For further details on the EC fine imposed in 2018, see Note 9 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

General and administrative expenses increased $1.3 billion from the nine months ended September 30, 2021 to the nine months ended September 30, 2022. The increase was primarily driven by an increase in compensation expenses of $985 million, largely resulting from a 21% increase in headcount, and an increase in professional services fees of $811 million. The overall increase was partially offset by a decrease in charges related to legal matters of $1.0 billion.

Segment Profitability

The following table presents segment operating income (loss) (in millions).
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Operating income (loss):
Google Services $ 23,973 $ 19,781 $ 65,862 $ 65,471
Google Cloud (644) (699) (2,209) (2,488)
Other Bets (1,288) (1,611) (3,831) (4,452)
Corporate costs, unallocated(1)
(1,010) (336) (2,993) (1,849)
Total income from operations $ 21,031 $ 17,135 $ 56,829 $ 56,682


	Three Months Ended
	March 31,
	2022		2023








Operating income (loss):
Google Services	$	21,973	$	21,737
Google Cloud	(706)		191
Other Bets	(835)		(1,225)
Corporate costs, unallocated(1)	(338)		(3,288)
Total income from operations	$	20,094	$	17,415

(1)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, hedgingHedging gains (losses) related to revenue ~~are~~ included in unallocated corporate ~~costs.~~costs were$278 million and $84 million for the three months ended March 31, 2022 and 2023, respectively. For the three months ended March 31, 2023, unallocated corporate costs include charges related to the reductions in our workforce and office space totaling $2.5 billion.

Google Services

Google Services operating income decreased ~~$4.2 billion~~$236 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022.~~March 31, 2023. The decrease in operating income was primarily driven by ~~increases~~an increase in compensation expenses, ~~hardware costs, and advertising and promotional activities,~~ partially offset by ~~growth~~the effect of the shift in ~~revenues.~~

~~Google Services operating income decreased $391 million from the nine months ended September 30, 2021 to the nine months ended September 30, 2022. The decrease~~timing of our annual employee stock-based compensation awards, a reduction in ~~operating income was primarily~~costs driven by ~~increases~~the change in ~~compensation expenses~~the estimated useful life of our servers and ~~TAC, partially offset by~~certain network equipment, and growth in revenues.

Google Cloud

Google Cloud operating ~~loss increased $55~~income of $191 million ~~and $279 million from~~for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2023 compared to an operating loss of $706 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 ~~respectively.~~ represents an increase of $897 million.The increase ~~in operating loss~~ was primarily driven by revenue growth, partially offset by an increase in ~~expenses, primarily~~compensation expenses. Additionally, operating income benefited from a reduction in costs driven by the change in the estimated useful life of our servers and certain network equipment and the effect of the shift in timing of our annual employee stock-based compensation ~~expenses, partially offset by growth in revenues.~~


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Other Bets

Other Bets operating loss increased ~~$323~~$390 million from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022. The increase in operating loss was primarily driven by an increase in compensation expenses.~~

~~Other Bets operating loss increased $621 million from the nine months ended September 30, 2021~~March 31, 2023 due to ~~the nine months ended September 30, 2022. The increase in operating loss was primarily driven by increases in compensation expenses, partially offset by growth in revenues.~~a combination of factors none of which were individually significant.

Other Income (Expense), Net

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

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Other income (expense), net $ 2,033 $ (902) $ 9,503 $ (2,501)


	Three Months Ended
	March 31,
	2022		2023
Other income (expense), net	$	(1,160)	$	790

Other income (e~~xpense)~~(expense), net, ~~decreased $2.9~~increased $2.0 billion from the three months ended ~~September 30, 2021~~March 31, 2022 to the three months ended ~~September 30, 2022~~March 31, 2023 primarily due to ~~changes in~~unrealized gains and losses on equity securities and ~~debt securities.~~changes in interest income. In the three months ended ~~September 30, 2022, $731~~March 31, 2023, $797 million of ~~net losses were recognized on debt securities, and $492 million of net unrealized losses were recognized on non-marketable equity securities. These losses were partially offset by~~ interest income was recognized ~~of $615 million. In the three months ended September 30, 2021, $2.2 billion~~and $221 million and $51 million of net unrealized gains were recognized on ~~marketable~~non-marketable and ~~non-marketable~~marketable equity securities, ~~partially offset by $492 million of accrued performance fees related to certain investments.~~

~~Other income (expense), net, decreased $12.0 billion from~~respectively. In the ~~nine~~three months ended ~~September 30, 2021 to the nine months ended September 30,~~March 31, 2022, ~~primarily due changes in gains and losses on equity securities and performance fees. In the nine months ended September 30, 2022, $2.5~~$1.5 billion of net unrealized losses were recognized on marketable equity securities, ~~and $1.9 billion of net losses were recognized on debt securities. These losses were~~ partially offset by ~~interest income recognized of $1.5 billion and $879~~$460 million of net unrealized gains on non-marketable equity ~~securities. In the nine months ended September 30, 2021, $9.2 billion~~securities and $414 million of ~~net unrealized gains were recognized on marketable and non-marketable equity securities, partially offset by $1.7 billion of accrued performance fees related to certain investments.~~interest income.

See Note 36 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information.

~~Provision for Income Taxes~~

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

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2022 2021 2022
Income before provision for income taxes $ 23,064 $ 16,233 $ 66,332 $ 54,181
Provision for income taxes $ 4,128 $ 2,323 $ 10,941 $ 7,833
Effective tax rate 17.9 % 14.3 % 16.5 % 14.5 %

The effective tax rate decreased by 3.6 percentage points from the three months ended September 30, 2021 to the three months ended September 30, 2022.The decrease was primarily driven by a change in unrecognized tax benefits and the effects of capitalization and amortization of R&D expenses starting in 2022 as required by the 2017 Tax Cuts and Jobs Act generating an increase in the U.S. federal Foreign-Derived Intangible Income tax deduction. These decreases were partially offset by a decrease in pre-tax earnings, including in countries that have lower statutory rates and a decrease in the stock-based compensation-related tax benefit.

The effective tax rate decreased by 2.0 percentage points from the nine months ended September 30, 2021 to the nine months ended September 30, 2022. The decrease was primarily driven by the effects of capitalization and amortization of R&D expenses starting in 2022 as required by the 2017 Tax Cuts and Jobs Act generating an increase in the U.S. federal Foreign-Derived Intangible Income tax deduction and a change in unrecognized tax benefits. These decreases were partially offset by a decrease in pre-tax earnings, including in countries that have lower statutory rates and a decrease in the stock-based compensation-related tax benefit.

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Provision for Income Taxes

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


	Three Months Ended
	March 31,
	2022			2023
Income before provision for income taxes	$	18,934		$	18,205
Provision for income taxes	$	2,498		$	3,154
Effective tax rate	13.2		%	17.3		%

The effective tax rate increased from the three months ended March 31, 2022 to the three months ended March 31, 2023, primarily driven by a decrease in the stock-based compensation-related tax benefit and proportionally less pre-tax earnings generated in countries that have lower statutory tax rates.

Financial Condition

Cash, Cash Equivalents, and Marketable Securities

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$116.3~~$115.1 billion in cash, cash equivalents, and short-term marketable securities. CashCash equivalents and marketable securities areare 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 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.

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


		Nine Months Ended					Three Months Ended
		September 30,					March 31,
		2021		2022			2022		2023
Net cash provided by operating activities	Net cash provided by operating activities	$	66,718	$	67,881	Net cash provided by operating activities	$	25,106	$	23,509
Net cash used in investing activities	Net cash used in investing activities	$	(24,507)	$	(14,071)	Net cash used in investing activities	$	(9,051)	$	(2,946)
Net cash used in financing activities	Net cash used in financing activities	$	(44,851)	$	(52,128)	Net cash used in financing activities	$	(16,214)	$	(16,568)

Cash Provided by Operating Activities

Our largest source of cash provided by operations are advertising revenues generated by Google Search & other properties, Google Network properties, and YouTube ~~ads.~~properties. 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 distribution and Google Network partners, to employees for compensation, and ~~related costs, and for~~to content ~~acquisition costs. In addition,~~providers. Other uses of cash from operating activities include payments to suppliers for hardware, ~~costs,~~to tax authorities for income taxes, and other general corporate expenditures.

Net cash provided by operating activities ~~increased~~decreased from the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 ~~primarily~~ due to ~~increases~~increased cash payments for costs and expenses, partially offset by an increase in cash received from revenues, partially offset by increases in cash paid for cost of revenues and operating expenses, and an increase in tax payments driven by the effects of capitalization and amortization of R&D expenses beginning in 2022 as required by the 2017 Tax Cuts and Jobs Act, and other working capital.revenues.

Cash Used in Investing Activities

Cash provided by investing activities consists primarily of maturities and sales of 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 decreased from the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to a ~~net~~ decrease in ~~cash used for purchases, sales and maturities of marketable securities, partially offset by an increase of~~ purchases of property and ~~equipment.~~equipment and a decrease in net purchases of and maturities and sales of marketable securities.


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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 stock, net payments related to stock-based award activities, and repayments of debt.

Net cash used in financing activities increased from the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to an increase in repurchases of ~~stock.~~stock partially offset by a decrease in net payments related to stock-based award activities.

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.


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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 our investments in servers and network equipment for computing, storage, and networking requirements for ongoing business activities, including ~~machine learning~~AI, (collectively referred to as our information technology assets) and data center land and building construction; and

•office facilities, ~~ground up~~ground-up development projects, and ~~related~~ building ~~improvements.~~improvements (also referred to as "fit-outs").

Construction in progress consists primarily of technical infrastructure and office facilities which have not yet been placed in ~~service for our intended use.~~service. 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 ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022, capital expenditures were $18.3~~2023, we spent $9.8 billion and ~~$23.9~~$6.3 billion on capital expenditures, 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 ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022,~~2023, our depreciation and impairment expenses on property and equipment were ~~$8.3~~$3.6 billion and ~~$11.2~~$3.1 billion, respectively.

Leases

For the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022,~~2023, we recognized total operating lease assets of ~~$2.2~~$915 million and $1.1 billion, ~~and~~ ~~$3.4 billion~~, respectively. As of ~~September 30, 2022,~~March 31, 2023, the amount of total future ~~lease~~lease payments under operating leases, which had a weighted average remaining lease term of 98.4 years, was $18.0 billion. ~~$16.8 billion~~. As of ~~September 30, 2022,~~March 31, 2023, we have entered into leases that have not yet commenced with future lease payments of ~~$4.1~~$3.0 billion, ~~excluding purchase options,~~ that are not yet recorded on our Consolidated Balance Sheets. These leases will commence ~~between 2022~~between 2023 and 2026 with non-cancelable lease ~~term~~sterms of 1 to 25 years. As of March 31, 2023 our actions to optimize our office space did not affect our operating lease obligations.

For the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022,~~2023, our operating lease expenses (including variable lease costs) were ~~$2.5~~$880 million and $1.1 billion, ~~and~~ ~~$2.7 billion~~, respectively. Finance lease costs were not material for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2022.~~2023.

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 ~~September 30, 2022,~~March 31, 2023, we had no commercial paper outstanding.


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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 ~~September 30, 2022,~~March 31, 2023, we had senior unsecured notes outstanding with a total carrying value of $12.9 billion. See Note 5 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further information on our debt.

We primarily utilize contract manufacturers for the assembly of our servers used in our technical infrastructure and hardware products we sell. We have agreements where we may purchase components directly from suppliers and then supply these components to contract manufacturers for use in the assembly of the servers and hardware products. Certain of these arrangements result in a portion of the cash received from and paid to the contract manufacturers to be presented as financing activities in the Consolidated Statements of Cash Flows included in Item 1 of this Quarterly Report on Form 10-Q.

Share Repurchase Program

In April 2022, the Board of Directors of Alphabet authorized the company to repurchase up to $70.0 billion of its Class A and Class C shares. As of ~~September 30, 2022, $43.5~~March 31, 2023, $13.1 billion remains available for Class A and Class C share repurchases. ~~In accordance with the authorization of the Board of Directors of Alphabet, during~~During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we repurchased and subsequently retired ~~138~~157 million ~~and 369 million aggregate~~ shares for ~~$15.4 billion and $43.9 billion, respectively.~~$15.1 billion. Of the aggregate amount repurchased and subsequently retired, ~~during the three months ended September 30, 2022, 25~~21 million shares were Class A stock for ~~$2.7~~$2.0 billion and ~~113~~136 million shares were Class C stock for ~~$12.7~~$13.1 billion. Of

In April 2023, the ~~aggregate amount repurchased and~~


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~~subsequently retired during~~Board of Directors of Alphabet authorized the ~~nine months ended September 30, 2022, 46 million shares were~~company to repurchase up to an additional $70.0 billion of its Class A ~~stock for $5.2 billion~~ and ~~323 million shares were~~ Class C ~~stock~~shares. See Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

The U.S. Inflation Reduction Act of 2022 was enacted on August 16, 2022 and requires a one percent excise tax on certain share repurchases in excess of shares issued for ~~$38.7 billion.~~employee compensation made after December 31, 2022. We do not expect this provision to have a material effect on our consolidated financial statements.

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. On September 14, 2022, the General Court ~~rejected our appeal on three claims, accepted our appeal on one claim, and~~ reduced the 2018 fine from €4.3 billion to €4.1 billion. We ~~are preparing to~~subsequently filed an appeal to the European Court of Justice. ~~In the second quarter of 2018 we recognized a charge of $5.1 billion for the fine, which we reduced by $217 million in the third quarter of 2022.~~

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. For further details, see Note 9 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

Taxes

As of ~~September 30, 2022,~~March 31, 2023, we had short-term and long-term income taxes payable of $1.6 billion and $4.2 billion related to a one-time transition tax payable incurred as a result of the 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 ~~$4.4~~$5.5 billion primarily related to uncertain tax positions as of ~~September 30, 2022.~~March 31, 2023. Additionally, we are currently evaluating the timing of our 2023 federal tax payments due to payment deferral relief made available by the Internal Revenue Service to taxpayers headquartered in designated counties affected by flooding in California.

Other

We expect the substantial majority of the $1.2 billion liability related to our January 2023 workforce reduction to be settled in fiscal year 2023, subject to local law and consultation requirements. See Note 7 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Estimates

See Part II, Item 7, "Critical Accounting Estimates" in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.


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Available Information

Our website is located at www.abc.xyz, and our investor relations website is located at www.abc.xyz/investor. ~~Our~~Access to 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~~is available via a link through our investor relations website, free of charge, after we file or furnish them with the ~~SEC. We also provide a link to the section of~~SEC and they are available on the SEC's website at www.sec.gov ~~that has all of the reports that we file or furnish with the SEC.~~.

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, 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

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, ~~2021.~~2022.

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 ~~September 30, 2022,~~March 31, 2023, 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,


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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) system, which replaced 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. We have now completed implementation of the most significant modules planned to date. There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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~~“Commitments and 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, ~~2021,~~2022, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our stock. ~~Below are material changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2021.~~

~~A variety of new and existing laws and/or interpretations could harm our business.~~

We are subject to numerous U.S. and foreign laws and regulations covering a wide variety of subject matters. New laws and regulations, or new interpretations or applications of existing laws and regulations in a manner inconsistent with our practices, have made, and may continue to make, our products and services less useful, limit our ability to pursue certain business models or offer certain products and services in certain jurisdictions, require us to incur substantial costs, expose us to civil or criminal liability, or cause us to change our business practices. These laws and regulations are evolving and involve matters central to our business, including, among others:

•Laws and regulations around the world focused on large technology platforms, including the Digital Markets Act in the European Union and proposed antitrust legislation on self-preferencing and mergers and acquisitions in the U.S., which may limit certain business practices, and in some cases, create the risk of significant penalties.

•~~Privacy laws, such as the GDPR, CCPA, CPRA, Virginia CDPA, and ColoPA (as defined and discussed further below).~~

•~~Data protection laws passed by many states within the U.S. and by certain countries regarding notification to data subjects and/or regulators when there is a security breach of personal data.~~

•~~Consumer protection laws, including EU’s New Deal for Consumers, which could result in monetary penalties and create a range of new compliance obligations.~~

•New laws further restricting the collection, processing and/or sharing of advertising-related data. Copyright or similar laws around the world, including the EU Directive on Copyright in the Digital Single Market (EUCD) and EU member state transpositions. These and similar laws that have been adopted or proposed introduce new licensing regimes that could affect our ability to operate. The EUCD and similar laws could also increase the liability of some content-sharing services with respect to content uploaded by their users. Some of these laws, as well as follow-on administrative or judicial actions, have also created or may create a new property right in news publications that limits the ability of some online services to link to, interact with, or present such content. They may also require individual or collective compensation negotiations with news agencies and publishers for the use of such content, which may result in payment obligations that significantly exceed the value that such content provides to Google and its users, potentially harming our services, commercial operations, and business results.

•~~Data localization laws, which generally mandate that certain types of data collected in a particular country be stored and/or processed within that country.~~

•Various U.S. and international laws that govern the distribution of certain materials to children and regulate the ability of online services to collect information from minors, including the Children’s Online Privacy Protection Act of 1998 and the United Kingdom’s Age-Appropriate Design Code.

•Various laws with regard to content moderation and removal, and related disclosure obligations, such as Germany's Network Enforcement Act, the European Union's Digital Services Act, Florida's Senate Bill 7072 and Texas' House Bill 20, which may affect our businesses and operations and may subject us to significant litigation, damage claims, and fines if they are interpreted and applied in a manner inconsistent with our practices and policies, or if we remove or promote (or fail to remove or promote) content in ways inconsistent with those laws. Other countries, including Singapore, Australia, and the United Kingdom, have implemented or are considering similar legislation imposing penalties for failure to remove certain types of content.


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•~~Various legislative, litigation, and regulatory activity regarding our Google Play billing policies and business model, which could result in monetary penalties, damages and/or prohibition.~~

•Various legislative and regulatory activity requiring disclosure of information about the operation of our services and algorithms, which may make it easier for websites to artificially promote low-quality, deceptive, or harmful content on services like Google Search and YouTube, potentially harming the quality of our services.

~~In addition, the applicability and scope of these and other laws, as interpreted by the courts, remain uncertain and could be interpreted in ways that harm our business. For example:~~

•We rely on statutory safe harbors, like those set forth in the Digital Millennium Copyright Act and Section 230 of the Communications Decency Act in the U.S. and the E-Commerce Directive in Europe, against liability for various linking, caching, ranking, recommending, and hosting activities. Any legislation or court rulings affecting these safe harbors may adversely affect us and may impose significant operational challenges. There are legislative proposals and pending litigation in both the U.S. (such as Gonzalez v. Google) and EU that could diminish or eliminate safe harbor protection for websites and online platforms.

•Court decisions such as the judgment of the Court of Justice of the European Union (CJEU) on May 13, 2014 on the ‘right to be forgotten,’ which allows individuals to demand that Google remove search results about them in certain instances, may limit the content we can show to our users and impose significant operational burdens.

The introduction of new businesses, products, services, and technologies, our activities in certain jurisdictions, or other actions we take have subjected us, and will likely continue to subject us, to additional laws and regulations. Our investment in a variety of new fields, such as healthcare and payment services, has expanded, and will continue to expand, the scope of regulations that apply to our business. The costs of compliance with these laws and regulations are high and are likely to increase in the future. Any failure on our part to comply with laws and regulations can result in negative publicity and diversion of management time and effort and may subject us to significant liabilities and other penalties.

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 stock during the quarter ended ~~September 30, 2022.~~March 31, 2023.
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)
July 1 - 31 8,479 37,461 $ 112.62 $ 113.29 45,940 $ 53,675
August 1 - 31 8,477 39,176 $ 115.95 $ 117.10 47,653 $ 48,104
September 1 - 30 7,583 36,588 $ 104.57 $ 104.66 44,171 $ 43,482
Total 24,539 113,225 137,764


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	10,755	44,981	$	93.98	$	94.17	55,736	$	22,877
February 1 - 28	3,820	41,996	$	96.98	$	95.84	45,816	$	18,519
March 1 - 31	6,290	49,352	$	100.21	$	98.30	55,642	$	13,077
Total	20,865	136,329					157,194

(1) 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.

5044


Table of Contents			Alphabet Inc.

~~ITEM 5.OTHER INFORMATION~~

Under Section 13(r) of the Exchange Act, we are required to disclose if we or any of our affiliates knowingly conducted a transaction or dealing with entities or individuals designated pursuant to certain Executive Orders. The U.S. government has designated the Russian Federal Security Service (the “FSB”) pursuant to one of those Executive Orders, and the U.S. Department of the Treasury’s Office of Foreign Assets Control has accordingly updated General License No. 1B (the “OFAC General License”), which generally permits U.S. persons to engage in transactions and activities prohibited by the relevant Executive Order involving the FSB that are necessary and ordinarily incident to requesting, receiving, utilizing, paying for or dealing in licenses, permits, certifications, or notifications issued or registered by the FSB for the importation, distribution, or use of information technology products in Russia.

In the past year and during the quarter ended September 30, 2022, Google LLC, a subsidiary of Alphabet, filed notifications with the FSB as required pursuant to Russian encryption product import controls for the purpose of enabling the import of certain software in Russia. Neither we nor our subsidiaries generated any gross revenues or net profits directly from such approval activity and neither we nor our subsidiaries sell to the FSB. Alphabet expects that Google LLC will continue to file these notifications as required under Russia law.


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

ITEM 6.EXHIBITS

Exhibit
Number

Description

Incorporated by reference herein

Form

Date

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.

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)

__________________________




*			Filed herewith.
‡			Furnished herewith.

5245


Table of Contents			Alphabet Inc.

SIGNATURES

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.
~~October~~April 25, ~~2022~~2023	By:	/s/ RUTH M. PORAT
		Ruth M. Porat
		Senior Vice President and Chief Financial Officer


		ALPHABET INC.
~~October~~April 25, ~~2022~~2023	By:	/s/ AMIE THUENER O'TOOLE
		Amie Thuener O'Toole
		Vice President and ~~Chief~~Principal Accounting Officer


	Three Months Ended September 30, 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 June 30, 2021	13,353	$	60,436	$	190	$	176,939	$	237,565
Stock issued	33	1		0		0		1
Stock-based compensation expense	0	3,914		0		0		3,914
Tax withholding related to vesting of restricted stock units and other	0	(2,641)		0		0		(2,641)
Repurchases of stock	(92)	(517)		0		(12,093)		(12,610)
Sale of interest in consolidated entities	0	0		0		0		0
Net income	0	0		0		18,936		18,936
Other comprehensive income (loss)	0	0		(598)		0		(598)
Balance as of September 30, 2021	13,294	$	61,193	$	(408)	$	183,782	$	244,567


	Three Months Ended September 30, 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 June 30, 2022	13,078	$	64,402	$	(5,828)	$	196,845	$	255,419
Stock issued	31	0		0		0		0
Stock-based compensation expense	0	5,018		0		0		5,018
Tax withholding related to vesting of restricted stock units and other	0	(2,315)		0		0		(2,315)
Repurchases of stock	(138)	(857)		0		(14,535)		(15,392)
Sale of interest in consolidated entities	0	10		0		0		10
Net income	0	0		0		13,910		13,910
Other comprehensive income (loss)	0	0		(3,024)		0		(3,024)
Balance as of September 30, 2022	12,971	$	66,258	$	(8,852)	$	196,220	$	253,626


	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 September 30, 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	$	2,639	$	(50)	$	2,589	$	(755)	(1)	$	(1,609)	$	(32)	$	193


	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 September 30, 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	$	928	$	(50)	$	878	$	(755)	(2)	$	(15)	$	(2)	$	106


	Amount (in millions)		Weighted-Average Useful Life (in years)
Patents and developed technology	$	349	4.8
Customer relationships	366		8.0
Trade names and other	125		5.9
Total intangible assets	$	840


Remainder of 2022	$	134
2023	458
2024	439
2025	309
2026	232
Thereafter	386
Total	$	1,958


	Three Months Ended September 30,
	2021						2022
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	8,548	$	1,291	$	9,097	$	6,393	$	946	$	6,571

Denominator
Number of shares used in per share computation	6,010		908		6,397		5,983		885		6,150



Basic net income per share	$	1.42	$	1.42	$	1.42	$	1.07	$	1.07	$	1.07
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	8,548	$	1,291	$	9,097	$	6,393	$	946	$	6,571


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	1,291		0		0		946		0		0
Reallocation of undistributed earnings	(156)		(20)		156		(45)		(6)		45
Allocation of undistributed earnings	$	9,683	$	1,271	$	9,253	$	7,294	$	940	$	6,616




Denominator
Number of shares used in basic computation	6,010		908		6,397		5,983		885		6,150
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding	908		0		0		885		0		0

Restricted stock units and other contingently issuable shares	0		0		215		0		0		79
Number of shares used in per share computation	6,918		908		6,612		6,868		885		6,229



Diluted net income per share	$	1.40	$	1.40	$	1.40	$	1.06	$	1.06	$	1.06