Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts which are reflected in thousands and par value)
|
| | | | | | | |
| | As of December 31, 2015 | | As of
March 31,
2016 |
| | | | (unaudited) |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 16,549 |
| | $ | 15,111 |
|
| Marketable securities | 56,517 |
| | 60,153 |
|
| Total cash, cash equivalents, and marketable securities (including securities loaned of $4,531 and $3,851) | 73,066 |
| | 75,264 |
|
| Accounts receivable, net of allowance of $296 and $276 | 11,556 |
| | 10,818 |
|
| Receivable under reverse repurchase agreements | 450 |
| | 350 |
|
| Income taxes receivable, net | 1,903 |
| | 1,804 |
|
| Prepaid revenue share, expenses and other assets | 3,139 |
| | 2,719 |
|
| Total current assets | 90,114 |
| | 90,955 |
|
| Prepaid revenue share, expenses and other assets, non-current | 3,181 |
| | 3,297 |
|
| Non-marketable investments | 5,183 |
| | 5,577 |
|
| Deferred income taxes | 251 |
| | 233 |
|
| Property and equipment, net | 29,016 |
| | 30,162 |
|
| Intangible assets, net | 3,847 |
| | 3,657 |
|
| Goodwill | 15,869 |
| | 15,866 |
|
| Total assets | $ | 147,461 |
| | $ | 149,747 |
|
| Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 1,931 |
| | $ | 1,667 |
|
| Short-term debt | 3,225 |
| | 3,221 |
|
| Accrued compensation and benefits | 3,539 |
| | 2,618 |
|
| Accrued expenses and other current liabilities | 4,768 |
| | 4,517 |
|
| Accrued revenue share | 2,329 |
| | 2,227 |
|
| Securities lending payable | 2,428 |
| | 2,171 |
|
| Deferred revenue | 788 |
| | 933 |
|
| Income taxes payable, net | 302 |
| | 330 |
|
| Total current liabilities | 19,310 |
| | 17,684 |
|
| Long-term debt | 1,995 |
| | 1,987 |
|
| Deferred revenue, non-current | 151 |
| | 131 |
|
| Income taxes payable, non-current | 3,663 |
| | 3,812 |
|
| Deferred income taxes | 189 |
| | 599 |
|
| Other long-term liabilities | 1,822 |
| | 1,965 |
|
| Total liabilities | 27,130 |
| | 26,178 |
|
| Commitments and contingencies | | | |
|
| | | | | | | |
| Stockholders’ equity: | | | |
| Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding | 0 |
| | 0 |
|
| Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 687,348 (Class A 292,297, Class B 50,295, Class C 344,756) and 686,792 (Class A 293,573, Class B 49,536, Class C 343,683) shares issued and outstanding | 32,982 |
| | 33,695 |
|
| Accumulated other comprehensive loss | (1,874 | ) | | (1,294 | ) |
| Retained earnings | 89,223 |
| | 91,168 |
|
| Total stockholders’ equity | 120,331 |
| | 123,569 |
|
| Total liabilities and stockholders’ equity | $ | 147,461 |
| | $ | 149,747 |
|
Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| | (unaudited) |
| Revenues | $ | 17,258 |
| | $ | 20,257 |
|
| Costs and expenses: | | | |
| Cost of revenues | 6,356 |
| | 7,648 |
|
| Research and development | 2,753 |
| | 3,367 |
|
| Sales and marketing | 2,065 |
| | 2,387 |
|
| General and administrative | 1,637 |
| | 1,513 |
|
| Total costs and expenses | 12,811 |
| | 14,915 |
|
| Income from operations | 4,447 |
| | 5,342 |
|
| Other income (expense), net | 157 |
| | (213 | ) |
| Income before income taxes | 4,604 |
| | 5,129 |
|
| Provision for income taxes | 1,089 |
| | 922 |
|
| Net income | $ | 3,515 |
| | $ | 4,207 |
|
| | | | |
| Basic net income per share of Class A and B common stock and Class C capital stock | $ | 5.16 |
| | $ | 6.12 |
|
| Diluted net income per share of Class A and B common stock and Class C capital stock | $ | 5.10 |
| | $ | 6.02 |
|
Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| | (unaudited) |
| Operating activities | | | |
| Net income | $ | 3,515 |
| | $ | 4,207 |
|
| Adjustments: | | | |
| Depreciation and impairment of property and equipment | 938 |
| | 1,155 |
|
| Amortization and impairment of intangible assets | 239 |
| | 216 |
|
| Stock-based compensation expense | 1,203 |
| | 1,494 |
|
| Deferred income taxes | 71 |
| | 414 |
|
| Loss on marketable and non-marketable investments, net | 16 |
| | 280 |
|
| Other | 61 |
| | 64 |
|
| Changes in assets and liabilities, net of effects of acquisitions: | | | |
| Accounts receivable | 698 |
| | 818 |
|
| Income taxes, net | 827 |
| | 271 |
|
| Prepaid revenue share, expenses and other assets | 43 |
| | 185 |
|
| Accounts payable | (24 | ) | | (269 | ) |
| Accrued expenses and other liabilities | (601 | ) | | (1,064 | ) |
| Accrued revenue share | (205 | ) | | (131 | ) |
| Deferred revenue | (59 | ) | | 18 |
|
| Net cash provided by operating activities | 6,722 |
| | 7,658 |
|
| Investing activities | | | |
| Purchases of property and equipment | (2,927 | ) | | (2,428 | ) |
| Purchases of marketable securities | (12,558 | ) | | (20,748 | ) |
| Maturities and sales of marketable securities | 10,389 |
| | 17,443 |
|
| Purchases of non-marketable investments | (1,074 | ) | | (321 | ) |
| Cash collateral related to securities lending | (1,120 | ) | | (257 | ) |
| Investments in reverse repurchase agreements | 50 |
| | 100 |
|
| Acquisitions, net of cash acquired, and purchases of intangible assets | (64 | ) | | (34 | ) |
| Net cash used in investing activities | (7,304 | ) | | (6,245 | ) |
| Financing activities | | | |
| Net payments related to stock-based award activities | (493 | ) | | (807 | ) |
| Repurchases of capital stock | 0 |
| | (2,098 | ) |
| Proceeds from issuance of debt, net of costs | 3,305 |
| | 3,956 |
|
| Repayments of debt | (3,308 | ) | | (3,962 | ) |
| Net cash used in financing activities | (496 | ) | | (2,911 | ) |
| Effect of exchange rate changes on cash and cash equivalents | (293 | ) | | 60 |
|
| Net decrease in cash and cash equivalents | (1,371 | ) | | (1,438 | ) |
| Cash and cash equivalents at beginning of period | 18,347 |
| | 16,549 |
|
| Cash and cash equivalents at end of period | $ | 16,976 |
| | $ | 15,111 |
|
Other income (expense), net
The following table presents our other income (expense), net, (in millions, unaudited):
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| Interest income | $ | 226 |
| | $ | 270 |
|
| Interest expense | (26 | ) | | (30 | ) |
| Foreign currency exchange losses, net | (62 | ) | | (186 | ) |
| Gain (loss) on marketable securities, net | 32 |
| | (167 | ) |
| Loss on non-marketable investments, net | (48 | ) | | (113 | ) |
| Other | 35 |
| | 13 |
|
| Other income (expense), net | $ | 157 |
| | $ | (213 | ) |
Segment results
The following tables present our revenues, operating income, stock-based compensation, capital expenditures, and depreciation, amortization, and impairment by segment (in millions, unaudited):
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| Revenues: | | | |
| Google | $ | 17,178 |
| | $ | 20,091 |
|
| Other Bets | 80 |
| | 166 |
|
| Total revenues | $ | 17,258 |
| | $ | 20,257 |
|
| | | | |
Stock-based compensation(1): | | | |
| Google | $ | 1,055 |
| | $ | 1,316 |
|
| Other Bets | 117 |
| | 145 |
|
Reconciling items(2) | 31 |
| | 33 |
|
| Total stock-based compensation | $ | 1,203 |
| | $ | 1,494 |
|
| | | | |
| Operating income (loss): | | | |
| Google | $ | 5,188 |
| | $ | 6,272 |
|
| Other Bets | (633 | ) | | (802 | ) |
Reconciling items(2) | (108 | ) | | (128 | ) |
| Total income from operations | $ | 4,447 |
| | $ | 5,342 |
|
| | | | |
| Capital expenditures: | | | |
| Google | $ | 2,678 |
| | $ | 2,036 |
|
| Other Bets | 157 |
| | 280 |
|
Reconciling items(3) | 92 |
| | 112 |
|
| Total capital expenditures | $ | 2,927 |
| | $ | 2,428 |
|
| | | | |
| Depreciation, amortization and impairment: | | | |
| Google | $ | 1,137 |
| | $ | 1,317 |
|
| Other Bets | 40 |
| | 54 |
|
| Total depreciation, amortization and impairment | $ | 1,177 |
| | $ | 1,371 |
|
| |
(1) | For purposes of determining SBC for segment reporting, we define SBC as awards accounted for under FASB ASC Topic 718 that we expect to settle in stock. SBC does not include expenses related to awards that we will ultimately settle in cash. |
| |
(2) | Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments. |
| |
(3) | Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on Consolidated Statements of Cash Flow are on cash basis and other miscellaneous differences. |
Revenues by source
The following tables present our revenues by revenue source (in millions, unaudited):
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| Revenues: | | | |
| Google websites | $ | 11,932 |
| | $ | 14,328 |
|
| Google Network Members' websites | 3,576 |
| | 3,692 |
|
| Google advertising revenues | 15,508 |
| | 18,020 |
|
| Google other revenues | 1,670 |
| | 2,071 |
|
| Google segment revenues | 17,178 |
| | 20,091 |
|
| Other Bets revenues | 80 |
| | 166 |
|
| Total revenues | $ | 17,258 |
| | $ | 20,257 |
|
Traffic acquisition costs (TAC)
The following table presents our TAC to Google Network Members and distribution partners (in millions, unaudited):
|
| | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2016 |
| TAC to Google Network Members |
| $2,432 |
| |
| $2,571 |
|
| TAC to Google Network Members as % of Google Network Members' revenues | 68 | % | | 70 | % |
| TAC to distribution partners |
| $913 |
| |
| $1,217 |
|
| TAC to distribution partners as % of Google website revenues | 8 | % | | 8 | % |
| Total TAC |
| $3,345 |
| |
| $3,788 |
|
| Total TAC as % of Google advertising revenues | 22 | % | | 21 | % |
Stock repurchase
In Q1 2016, we repurchased 3.2 million shares of Alphabet Class C capital stock for an aggregate amount of $2.3 billion, of which $2.1 billion was paid during the quarter. The total remaining authorization for future repurchases is approximately $1.4 billion. The authorization has no expiration date.
Adoption of new accounting guidance
In Q1 2016, we early adopted Accounting Standards Update No. 2016-09 "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which changes several aspects of the accounting for share-based payments, including income tax consequences and classification on the consolidated statement of cash flows. Starting this quarter, certain tax benefits are reflected in our consolidated statement of income, whereas they were previously recognized in equity. Additionally, our consolidated statements of cash flows now present such tax benefits as an operating activity and the prior period is adjusted accordingly.
Headcount
Our headcount for the three months ended March 31, 2016 was 64,115, as compared to 55,419 for the three months ended March 31, 2015.
