クラス A、クラス b、およびクラス C 株および追加資本、$0.001株式の額面$あたり:300,000 承認株式シェア (クラス A 180,000Bクラス株式60,000、クラス C 60,000); 12,460 (クラス A) 5,899Bクラス株式870、クラス C 5,691) a第212,264 (クラス A) 5,844Bクラス株式865、クラス C 5,555)発行済み株式および未払株式
We designate foreign currency forward and option contracts (including collars) as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the United States (U.S.) dollar. These contracts have maturities of 24 months or less.
発行済みノートの合計見積もり公正価値は、2024年9月30日現在で約$10.3私たちの入力によると、この文書には数字がありません。9.5十分にミリアードです。 ¨ 関連する公正価値階層で、 less active markets における同一の金融商品の観測可能な市場価格に基づいて決定され、レベル2として分類されています。
Income (loss) and impairment from equity method investments, net
(215)
(107)
(372)
(101)
Other
120
70
346
465
Other income (expense), net
$
(146)
$
3,185
$
709
$
6,154
(1)Interest expense is net of interest capitalized of $47 million and $57 million for the three months ended September 30, 2023 and 2024, respectively, and $134 million and $143 million for the nine months ended September 30, 2023 and 2024, respectively.
24
Note 7. Business Combinations
character.ai
In accordance with the accounting requirements under Accounting Standards Codification Topic 805, during the three months ended September 30, 2024, we recorded $2.7 billion of goodwill and $413 million of intangible assets resulting from a transaction with character.ai (“Character”). In August 2024, we entered into a license agreement with Character pursuant to which we obtained a non-exclusive license to its current large language model technology. We paid Character $2.7 billion in cash and canceled our convertible instruments. We also hired certain employees of Character. Goodwill was recorded in Google Services and Google Cloud and is deductible for tax purposes.
Note 8. Goodwill
Goodwill
Changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows (in millions):
Google Services
Google Cloud
Other Bets
Total
Balance as of December 31, 2023
$
21,118
$
7,199
$
881
$
29,198
Additions
2,438
292
0
2,730
Foreign currency translation and other adjustments
7
1
(1)
7
Balance as of September 30, 2024
$
23,563
$
7,492
$
880
$
31,935
Note 9. Commitments and Contingencies
Commitments
We have content licensing agreements with future fixed or minimum guaranteed commitments of $9.2 billion as of September 30, 2024, of which the majority is paid quarterly through the first quarter of 2030.
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, 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, 2024, we did not have any material indemnification claims that were probable or reasonably possible.
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 seek speculative, substantial or indeterminate monetary amounts, substantial changes to our business practices and products, or structural remedies. 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
25
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 Matters
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. We appealed the EC decision and implemented product changes to bring shopping ads into compliance with the EC's decision. On September 10, 2024, the European Court of Justice rejected our appeal and upheld the €2.4 billion fine imposed in 2017. In the third quarter of 2024, we made a cash payment of $3.0 billion for the 2017 shopping fine.
•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 reduced the fine from €4.3 billion to €4.1 billion. We subsequently filed an appeal with the European Court of Justice. In 2018, we recognized a charge of $5.1 billion for the fine, which we reduced by $217 million in 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. We recognized a charge of $1.7 billion for the fine in the first quarter of 2019. On September 18, 2024, the European Union’s (EU) General Court overturned the EC decision and annulled the €1.5 billion fine. The EC has until November 28, 2024 to appeal the decision.
In addition, 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 September 2023, we reached a settlement in principle with 50 state Attorneys General and three territories. The U.S. District Court subsequently vacated the trial date with the states, and we expect any final approval of the settlement would come in 2024. In May 2024, we funded the settlement amount to an escrow agent.
In December 2023, a California jury delivered a verdict in a similar lawsuit in Epic Games v. Google. The jury found that Google violated antitrust laws related to Google Play's business. Epic did not seek monetary damages. The presiding judge issued a remedies decision on October 7, 2024, ordering a variety of alterations to our business models and operations and contractual agreements for Android and Google Play. We are appealing and have filed a motion to pause the implementation of some of the remedies pending the appeal. The trial court judge has temporarily paused the implementation of the remedies while the Court of Appeals considers our request to pause implementation of the remedies pending the duration of the appeal.
From time to time we are subject to formal and informal inquiries and investigations on various competition matters by regulatory authorities in the U.S., Europe, and other jurisdictions globally. Examples, for which given their nature we cannot estimate a possible loss include:
•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 in the U.S. District Court for the District of Columbia on October 20, 2020 alleging that Google violated U.S. antitrust laws relating to Search and Search advertising. The trial ended on November 16, 2023, and on August 5, 2024, the U.S. District Court for the District of Columbia ruled that Google violated such antitrust laws. A separate proceeding is being held to determine remedies, the range of which vary widely. The DOJ has proposed a high level remedy framework, which includes alterations to our products and services and our business models and operations, including structural remedies, and/or our distribution arrangements, among other changes, some of which could have a material adverse effect on our financial statements. Further, in June 2022, 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.
26
•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 deceptive trade laws relating to its advertising technology, and a trial is scheduled for March 2025. Additionally, on January 24, 2023, the DOJ, along with a number of state Attorneys General, filed an antitrust complaint in the U.S. District Court for the Eastern District of Virginia 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 trial ended on September 27, 2024, and we expect a decision in late 2024 or early 2025. 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. On June 14, 2023, the EC issued a Statement of Objections (SO) informing Google of its preliminary view that Google violated European antitrust laws relating to its advertising technology. We responded to the SO on December 1, 2023. On September 6, 2024, the CMA issued an SO informing Google of its preliminary view that Google violated UK competition laws relating to its advertising technology. We will respond to the SO.
•In May 2022, the EC and the CMA each opened investigations into Google Play’s business practices. The EC closed its initial investigation, but is now investigating Google Play’s compliance with certain provisions of EU’s Digital Markets Act. Korean regulators are investigating Google Play's billing practices, including a formal review in May 2022 of Google's compliance with the new app store billing regulations.
We believe we have strong arguments against these claims 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.
Privacy Matters
We are subject to a number of privacy-related laws and regulations, and we currently are party to a number of privacy investigations and lawsuits ongoing in multiple jurisdictions. For example, there are ongoing investigations and litigation in the U.S. and the EU, including those relating to our collection and use of location information, the choices we offer users, and advertising practices, which could result in significant fines, judgments, and product changes.
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 subject to claims, lawsuits, regulatory and government investigations, other proceedings, and consent orders involving competition, intellectual property, data 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 periodically have data incidents that we report to relevant regulators as required by law. Such claims, consent orders, lawsuits, regulatory and government investigations, and other proceedings could result in substantial fines and penalties, injunctive relief, ongoing monitoring and 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.
27
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.
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.
See Note 13 for information regarding income tax contingencies.
Note 10. Stockholders' Equity
Share Repurchases
In the three and nine months ended September 30, 2024, we continued to repurchase both Class A and Class C shares in a manner deemed in the best interest of the company and its stockholders, taking into account the economic cost and prevailing market conditions, including the relative trading prices and volumes of the Class A and Class C shares. During the three and nine months ended September 30, 2024, we repurchased $15.3 billion and $47.0 billion, respectively, of Alphabet's Class A and Class C shares.
In April 2023, the Board of Directors of Alphabet authorized the company to repurchase up to $70.0 billion of its Class A and Class C shares. Repurchases made pursuant to the April 2023 authorization were completed during the third quarter of 2024. In April 2024, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares. As of September 30, 2024, $59.7 billion remained available for Class A and Class C share repurchases.
The following table presents Class A and Class C shares repurchased and subsequently retired (in millions):
Three Months Ended September 30, 2024
Nine Months Ended September 30, 2024
Shares
Amount
Shares
Amount
Class A share repurchases
17
$
2,846
59
$
9,461
Class C share repurchases
73
12,453
234
37,493
Total share repurchases(1)
90
$
15,299
293
$
46,954
(1) Shares repurchased include unsettled repurchases as of September 30, 2024.
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.
Dividends
During the three and nine months ended September 30, 2024, total cash dividends were $1.2 billion and $2.3 billion for Class A, $173 million and $346 million for Class B, and $1.1 billion and $2.2 billion for Class C shares, respectively.
The company intends to pay quarterly cash dividends in the future, subject to review and approval by the company’s Board of Directors in its sole discretion.
28
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,
2023
2024
Class A
Class B
Class C
Consolidated
Class A
Class B
Class C
Consolidated
Basic net income per share:
Numerator
Allocation of distributed earnings (cash dividends paid)
$
0
$
0
$
0
$
0
$
1,170
$
173
$
1,112
$
2,455
Allocation of undistributed earnings
9,271
1,369
9,049
19,689
11,351
1,678
10,817
23,846
Net income
$
9,271
$
1,369
$
9,049
$
19,689
$
12,521
$
1,851
$
11,929
$
26,301
Denominator
Number of shares used in per share computation
5,924
875
5,782
12,581
5,850
865
5,575
12,290
Basic net income per share
$
1.56
$
1.56
$
1.56
$
1.56
$
2.14
$
2.14
$
2.14
$
2.14
Diluted net income per share:
Numerator
Allocation of total earnings for basic computation
$
9,271
$
1,369
$
9,049
$
19,689
$
12,521
$
1,851
$
11,929
$
26,301
Reallocation of total earnings as a result of conversion of Class B to Class A shares
1,369
0
0
_(1)
1,851
0
0
_(1)
Reallocation of undistributed earnings
(96)
(12)
96
_(1)
(135)
(17)
135
_(1)
Net income
$
10,544
$
1,357
$
9,145
$
19,689
$
14,237
$
1,834
$
12,064
26,301
Denominator
Number of shares used in basic computation
5,924
875
5,782
12,581
5,850
865
5,575
12,290
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding
875
0
0
_(1)
865
0
0
_(1)
Restricted stock units and other contingently issuable shares
0
0
115
115
0
0
129
129
Number of shares used in per share computation
6,799
875
5,897
12,696
6,715
865
5,704
12,419
Diluted net income per share
$
1.55
$
1.55
$
1.55
$
1.55
$
2.12
$
2.12
$
2.12
$
2.12
(1)Not applicable for consolidated net income per share.
29
Nine Months Ended September 30,
2023
2024
Class A
Class B
Class C
Consolidated
Class A
Class B
Class C
Consolidated
Basic net income per share:
Numerator
Allocation of distributed earnings (cash dividends paid)
$
0
$
0
$
0
$
0
$
2,343
$
346
$
2,232
$
4,921
Allocation of undistributed earnings
24,851
3,682
24,575
53,108
32,599
4,821
31,241
68,661
Net income
$
24,851
$
3,682
$
24,575
$
53,108
$
34,942
$
5,167
$
33,473
$
73,582
Denominator
Number of shares used in per share computation
5,932
879
5,866
12,677
5,863
867
5,619
12,349
Basic net income per share
$
4.19
$
4.19
$
4.19
$
4.19
$
5.96
$
5.96
$
5.96
$
5.96
Diluted net income per share:
Numerator
Allocation of total earnings for basic computation
$
24,851
$
3,682
$
24,575
$
53,108
$
34,942
$
5,167
$
33,473
$
73,582
Reallocation of total earnings as a result of conversion of Class B to Class A shares
3,682
0
0
_(1)
5,167
0
0
_(1)
Reallocation of undistributed earnings
(187)
(24)
187
_(1)
(394)
(51)
394
_(1)
Net income
$
28,346
$
3,658
$
24,762
$
53,108
$
39,715
$
5,116
$
33,867
$
73,582
Denominator
Number of shares used in basic computation
5,932
879
5,866
12,677
5,863
867
5,619
12,349
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding
879
0
0
_(1)
867
0
0
_(1)
Restricted stock units and other contingently issuable shares
0
0
84
84
0
0
131
131
Number of shares used in per share computation
6,811
879
5,950
12,761
6,730
867
5,750
12,480
Diluted net income per share
$
4.16
$
4.16
$
4.16
$
4.16
$
5.90
$
5.90
$
5.89
$
5.90
(1)Not applicable for consolidated net income per share.
For the periods presented above, 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. Holders of Alphabet unvested stock units are awarded dividend equivalents, which are subject to the same vesting conditions as the underlying award, and settled in Class C shares.
Immaterial differences in net income per share across our Class A, Class B, and Class C shares may arise due to the allocation of distributed earnings based on the holders as of the record date, compared with the allocation of undistributed earnings and number of shares based on weighted average over the periods.
30
Note 12. Compensation Plans
Stock-Based Compensation
For the three months ended September 30, 2023 and 2024, total stock based compensation (SBC) expense was $5.8 billion and $5.9 billion, including amounts associated with awards we expect to settle in Alphabet stock of $5.6 billion and $5.7 billion, respectively. For the nine months ended September 30, 2023 and 2024, total SBC expense was $16.5 billion and $17.0 billion, including amounts associated with awards we expect to settle in Alphabet stock of $16.3 billion and $16.4 billion, respectively.
Stock-Based Award Activities
The following table summarizes the activities for unvested Alphabet restricted stock units (RSUs), which include dividend equivalents awarded to holders of unvested stock, for the nine months ended September 30, 2024 (in millions, except per share amounts):
Number of Shares
Weighted- Average Grant-Date Fair Value
Unvested as of December 31, 2023
338
$
104.93
Granted
185
$
138.23
Vested
(150)
$
110.04
Forfeited/canceled
(29)
$
112.01
Unvested as of September 30, 2024
344
$
119.95
As of September 30, 2024, there was $39.6 billion of unrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of 2.6 years.
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
September 30,
September 30,
2023
2024
2023
2024
Income before provision for income taxes
$
21,197
$
31,706
$
61,305
$
87,572
Provision for income taxes
$
1,508
$
5,405
$
8,197
$
13,990
Effective tax rate
7.1
%
17.0
%
13.4
%
16.0
%
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. The total amount of gross unrecognized tax benefits was $9.4 billion and $12.0 billion, of which $7.4 billion and $9.5 billion, if recognized, would affect our effective tax rate, as of December 31, 2023 and September 30, 2024, respectively.
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, devices, Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; fees received for consumer subscription-based products such as YouTube TV, YouTube Music and Premium, and NFL Sunday Ticket, as well as Google One; the sale of apps and in-app purchases and devices.
•Google Cloud includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Google Cloud generates revenues primarily from consumption-based fees and subscriptions 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 healthcare-related services and internet services.
Revenues, certain costs, such as costs associated with content and traffic acquisition, certain engineering activities, and devices, 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
31
managed centrally at a consolidated level. These costs, including the associated depreciation and impairment, are allocated to operating segments as a service cost generally based on usage, headcount, or revenue.
As announced on April 18, 2024, we further consolidated teams that focus on building AI models across Google Research and Google DeepMind to further accelerate our progress in AI. AI model development teams previously under Google Research in our Google Services segment are included as part of Google DeepMind, reported within Alphabet-level activities, prospectively beginning in the second quarter of 2024.
Certain costs are not allocated to our segments because they represent Alphabet-level activities. These costs primarily include AI-focused shared R&D activities, including development costs of our general AI models; corporate initiatives such as our philanthropic activities; corporate shared costs such as certain finance, human resource, and legal costs, including certain fines and settlements. Charges associated with employee severance and office space reductions during 2023 and 2024 were also not allocated to our segments. Additionally, hedging gains (losses) related to revenue are not allocated to our segments.
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,
2023
2024
2023
2024
Revenues:
Google Services
$
67,986
$
76,510
$
196,232
$
220,836
Google Cloud
8,411
11,353
23,896
31,274
Other Bets
297
388
870
1,248
Hedging gains (losses)
(1)
17
86
191
Total revenues
$
76,693
$
88,268
$
221,084
$
253,549
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Operating income (loss):
Google Services
$
23,937
$
30,856
$
69,128
$
88,427
Google Cloud
266
1,947
852
4,019
Other Bets
(1,194)
(1,116)
(3,232)
(3,270)
Alphabet-level activities
(1,666)
(3,166)
(6,152)
(7,758)
Total income from operations
$
21,343
$
28,521
$
60,596
$
81,418
See Note 2 for information relating to revenues by geography.
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, 2023
As of September 30, 2024
Long-lived assets:
United States
$
110,053
$
129,318
International
38,383
45,513
Total long-lived assets
$
148,436
$
174,831
32
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, 2023, including Part I, Item 1A "Risk Factors," as updated in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and in this Quarterly Report on Form 10-Q.
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. 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.
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 fees received for subscription-based products, apps and in-app purchases, and devices. For additional information 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, 2023.
In addition to the long-term trends and their financial effect on our business discussed 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, 2023, 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 subscriptions, platforms, and devices 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 Google advertising as well as Google subscriptions, platforms, and devices 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-impression pertain to traffic on our Google Network properties.
インプレッションには、主にAdMob、AdSense、Google Ad Managerに参加しているGoogleネットワークプロパティでユーザーに表示されるインプレッションが含まれます。 インプレッションごとのコストは、インプレッションベースとクリックベースの収益を総インプレッション数で割ったもので、広告主に対して表示される各インプレッションごとに請求する平均金額を表します。
•changes in advertising quality, formats, delivery or policy;
•changes in device mix;
•seasonal fluctuations in internet usage, advertising expenditures, and underlying business trends, such as traditional retail seasonality; and
•traffic growth in emerging markets compared to more mature markets and across various verticals and channels.
Google subscriptions, platforms, and devices
Google subscriptions, platforms, and devices revenues are comprised of the following:
•consumer subscriptions, which primarily include revenues from YouTube services, such as YouTube TV, YouTube Music and Premium, and NFL Sunday Ticket, as well as Google One;
•platforms, which primarily include revenues from Google Play from the sales of apps and in-app purchases;
•devices, which primarily include sales of the Pixel family of devices; and
•other products and services.
Fluctuations in our Google subscriptions, platforms, and devices revenues have been, and may continue to be, affected by factors in addition to the general factors described above, 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 generates consumption-based fees and subscriptions for infrastructure, platform, and other services. These services provide access to solutions such as cybersecurity, databases, analytics, and AI offerings including our AI infrastructure, Vertex AI platform, and Gemini for Google Cloud;
•Google Workspace, which includes subscriptions for cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet, with integrated features like Gemini for Google Workspace; and
•other enterprise services.
Fluctuations in our Google Cloud revenues have been, and may continue to be, affected by factors in addition to the general factors described above, such as customer usage.
Other Bets
Revenues from Other Bets are generated primarily from the sale of healthcare-related services and internet services.
34
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 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 changes in revenue. Additionally, fluctuations in compensation expenses may not directly correlate with changes in headcount, in particular due to annual SBC awards that generally vest over four years.
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; and
◦amounts paid to Google Network partners primarily for ads displayed on their properties.
•Other cost of revenues primarily includes:
◦compensation expense related to our technical infrastructure and other operations such as content review and customer and product support;
◦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);
◦depreciation expense related to our technical infrastructure;
◦inventory and other costs related to the devices we sell; and
◦other technical infrastructure operations costs, including bandwidth, energy, and equipment costs.
TAC as a percentage of revenues generated from ads placed on Google Network properties are significantly higher than 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
•third-party services fees primarily relating to consulting and 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 relating to legal matters, including certain fines and settlements; and
•third-party services fees, including audit, consulting, outside legal, and other outsourced administrative services.
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Other Income (Expense), Net
OI&E, 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 information, including how we account for our investments and factors that can drive fluctuations in the value of our investments, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 and Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 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 information, 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, 2023 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
September 30,
2023
2024
$ Change
% Change
Consolidated revenues
$
76,693
$
88,268
$
11,575
15
%
Change in consolidated constant currency revenues(1)
16
%
Cost of revenues
$
33,229
$
36,474
$
3,245
10
%
Operating expenses
$
22,121
$
23,273
$
1,152
5
%
Operating income
$
21,343
$
28,521
$
7,178
34
%
Operating margin
28
%
32
%
4
%
Other income (expense), net
$
(146)
$
3,185
$
3,331
NM
Net Income
$
19,689
$
26,301
$
6,612
34
%
Diluted EPS(2)
$
1.55
$
2.12
$
0.57
37
%
NM = Not Meaningful
(1) See "Use of Non-GAAP Constant Currency Measures" below for details relating to our use of constant currency information.
(2) For additional information on the calculation of diluted EPS, see Note 11 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Revenues were $88.3 billion, an increase of 15% year over year, primarily driven by an increase in Google Services revenues of $8.5 billion, or 13%, and an increase in Google Cloud revenues of $2.9 billion, or 35%.
•Total constant currency revenues, which exclude the effect of hedging, increased 16% year over year.
•Cost of revenues was $36.5 billion, an increase of 10% year over year, primarily driven by increases in TAC, content acquisition costs, depreciation expense, and devices costs due to Pixel family product launch timing in the third quarter this year as compared to the fourth quarter last year.
•Operating expenses were $23.3 billion, an increase of 5% year over year, primarily driven by charges related to our office space optimization efforts and increases in depreciation expense, compensation
36
expenses, and advertising and promotional activities. These increases were partially offset by a reduction in charges related to legal and other matters.
Other Information
•Dividend payments to stockholders of Class A, Class B, and Class C shares were $1.2 billion, $173 million, and $1.1 billion, respectively, totaling $2.5 billion for the three months ended September 30, 2024. On October 29, 2024, Alphabet announced a cash dividend of $0.20 per share that will be paid on December 16, 2024, to stockholders of record as of December 9, 2024, on each of the company’s Class A, Class B, and Class C shares. For additional information, see Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Repurchases of Class A and Class C shares were $2.8 billion and $12.5 billion, respectively, totaling $15.3 billion for the three months ended September 30, 2024. For additional information, see Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Operating cash flow was $30.7 billion for the three months ended September 30, 2024, including a cash payment of $3.0 billion for the 2017 EC shopping fine, which included accrued interest. For additional information related to 2017 EC shopping fine, see Note 9 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Capital expenditures, which primarily reflected investments in technical infrastructure, were $13.1 billion for the three months ended September 30, 2024.
•As of September 30, 2024, we had 181,269 employees.
Financial Results
Revenues
The following table presents revenues by type (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Google Search & other
$
44,026
$
49,385
$
127,013
$
144,050
YouTube ads
7,952
8,921
22,310
25,674
Google Network
7,669
7,548
23,015
22,405
Google advertising
59,647
65,854
172,338
192,129
Google subscriptions, platforms, and devices
8,339
10,656
23,894
28,707
Google Services total
67,986
76,510
196,232
220,836
Google Cloud
8,411
11,353
23,896
31,274
Other Bets
297
388
870
1,248
Hedging gains (losses)
(1)
17
86
191
Total revenues
$
76,693
$
88,268
$
221,084
$
253,549
Google Services
Google advertising revenues
Google Search & other
Google Search & other revenues increased $5.4 billion and $17.0 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The overall growth was driven by interrelated factors including increases in search queries resulting from growth in user adoption and usage on mobile devices; growth in advertiser spending; and improvements we have made in ad formats and delivery.
YouTube ads
YouTube ads revenues increased $969 million and $3.4 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The growth was driven by our brand advertising products followed by our direct response advertising products, both of which benefited from increased spending by our advertisers.
37
Google Network
Google Network revenues decreased $121 million from the three months ended September 30, 2023 to the three months ended September 30, 2024, primarily driven by the unfavorable effect of foreign currency exchange rates, partially offset by an increase in AdSense revenues.
Google Network revenues decreased $610 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 primarily driven by the unfavorable effect of foreign currency exchange rates as well as a decrease in AdMob revenues.
Monetization Metrics
The following table presents changes in monetization metrics for Google Search & other revenues (paid clicks and cost-per-click) and Google Network revenues (impressions and cost-per-impression), expressed as a percentage, from three and nine months ended September 30, 2023 to three and nine months ended September 30, 2024:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2024
Google Search & other
Paid clicks change
4
%
5
%
Cost-per-click change
8
%
8
%
Google Network
Impressions change
(14)
%
(15)
%
Cost-per-impression change
15
%
14
%
Changes in paid clicks and impressions are driven by a number of interrelated factors, including changes in advertiser spending; ongoing product and policy changes; and, as it relates to paid clicks, fluctuations in search queries resulting from changes in user adoption and usage, primarily on mobile devices.
Changes in cost-per-click and cost-per-impression are driven by a number of interrelated factors including changes in device mix, geographic mix, advertiser spending, ongoing product and policy changes, product mix, property mix, and changes in foreign currency exchange rates.
Google subscriptions, platforms, and devices
Google subscriptions, platforms, and devices revenues increased $2.3 billion and $4.8 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The growth was primarily driven by increases in subscriptions and devices revenues. The increase in subscriptions revenues was largely from growth in the number of paid subscribers for YouTube services and to a lesser extent for Google One. The increase in devices revenues was primarily driven by increased sales of Pixel devices, due to Pixel family product launch timing in the third quarter this year as compared to the fourth quarter last year.
Google Cloud
Google Cloud revenues increased $2.9 billion and $7.4 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The growth was primarily driven by Google Cloud Platform followed by Google Workspace offerings. Google Cloud's infrastructure and platform services were the largest drivers of growth in Google Cloud Platform.
38
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
September 30,
September 30,
2023
2024
2023
2024
United States
47
%
49
%
47
%
49
%
EMEA
30
%
29
%
30
%
29
%
APAC
17
%
16
%
17
%
16
%
Other Americas
6
%
6
%
6
%
6
%
Hedging gains (losses)
0
%
0
%
0
%
0
%
For additional information, 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 Information
International revenues, which represent a significant portion of our revenues, are generally transacted in multiple currencies and 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 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 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 revenues excluding the effect of foreign currency exchange rate movements ("FX Effect") as well as hedging activities, which are recognized at the consolidated level. We use constant 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 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.
39
The following table presents the foreign currency exchange effect on international revenues and total revenues (in millions, except percentages):
Three Months Ended September 30, 2024
% Change from Prior Period
Three Months Ended September 30,
Less FX Effect
Constant Currency Revenues
As Reported
Less Hedging Effect
Less FX Effect
Constant Currency Revenues
2023
2024
United States
$
36,354
$
43,139
$
0
$
43,139
19
%
0
%
19
%
EMEA
22,661
25,472
(146)
25,618
12
%
(1)
%
13
%
APAC
13,126
14,547
(285)
14,832
11
%
(2)
%
13
%
Other Americas
4,553
5,093
(586)
5,679
12
%
(13)
%
25
%
Revenues, excluding hedging effect
76,694
88,251
(1,017)
89,268
15
%
(1)
%
16
%
Hedging gains (losses)
(1)
17
Total revenues(1)
$
76,693
$
88,268
$
89,268
15
%
0
%
(1)
%
16
%
(1)Total constant currency revenues of $89.3 billion for the three months ended September 30, 2024 increased $12.6 billion compared to $76.7 billion in revenues, excluding hedging effect, for the three months ended September 30, 2023.
EMEA revenue growth was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Turkish lira.
APAC revenue growth 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 was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Argentine peso and the Brazilian real.
Nine Months Ended September 30, 2024
% Change from Prior Period
Nine Months Ended September 30,
Less FX Effect
Constant Currency Revenues
As Reported
Less Hedging Effect
Less FX Effect
Constant Currency Revenues
2023
2024
United States
$
104,291
$
123,072
$
0
$
123,072
18
%
0
%
18
%
EMEA
66,028
73,943
(309)
74,252
12
%
0
%
12
%
APAC
37,535
41,659
(1,319)
42,978
11
%
(4)
%
15
%
Other Americas
13,144
14,684
(1,043)
15,727
12
%
(8)
%
20
%
Revenues, excluding hedging effect
220,998
253,358
(2,671)
256,029
15
%
(1)
%
16
%
Hedging gains (losses)
86
191
Total revenues(1)
$
221,084
$
253,549
$
256,029
15
%
0
%
(1)
%
16
%
(1)Total constant currency revenues of $256.0 billion for the nine months ended September 30, 2024 increased $35.0 billion compared to $221.1 billion in revenues, excluding hedging effect, for the nine months ended September 30, 2023.
EMEA revenue growth was not materially affected by changes in foreign currency exchange rates, as the effect of the U.S. dollar strengthening relative to the Turkish lira was largely offset by the U.S. dollar weakening relative to the British pound.
APAC revenue growth 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 was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Argentine peso.
Costs and Expenses
40
Cost of Revenues
The following table presents cost of revenues, including TAC (in millions, except percentages):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
TAC
$
12,642
$
13,719
$
36,900
$
40,052
Other cost of revenues
20,587
22,755
58,857
65,641
Total cost of revenues
$
33,229
$
36,474
$
95,757
$
105,693
Total cost of revenues as a percentage of revenues
43
%
41
%
43
%
42
%
Cost of revenues increased $3.2 billion from the three months ended September 30, 2023 to the three months ended September 30, 2024 due to an increase in other cost of revenues and TAC of $2.2 billion and $1.1 billion, respectively. Cost of revenues increased $9.9 billion from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 due to an increase in other cost of revenues and TAC of $6.8 billion and $3.2 billion, respectively.
The increase in TAC from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024 was largely due to an increase in TAC paid to distribution partners, primarily driven by growth in revenues subject to TAC. The TAC rate decreased from 21.2% to 20.8% from the three months ended September 30, 2023 to the three months ended September 30, 2024 and decreased from 21.4% to 20.8% from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily due to a revenue mix shift from Google Network properties to Google Search & other properties. The TAC rate on Google Search & other revenues increased from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024 primarily due to increases related to mobile searches, which carries higher TAC because more mobile searches are channeled through paid access points. The TAC rate on Google Network revenues was substantially consistent from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024.
The increase in other cost of revenues from the three months ended September 30, 2023 to the three months ended September 30, 2024 was primarily due to increases in content acquisition costs, largely for YouTube, depreciation expense, and devices costs, due to Pixel family product launch timing in the third quarter this year as compared to the fourth quarter last year.
The increase in other cost of revenues from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 was primarily due to increases in content acquisition costs, largely for YouTube, depreciation expense, other technical infrastructure operations costs, and third-party service fees. Additionally, devices costs contributed to the increase in other cost of revenues due to the Pixel family product launch timing in the third quarter this year as compared to the fourth quarter last year.
Research and Development
The following table presents R&D expenses (in millions, except percentages):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Research and development expenses
$
11,258
$
12,447
$
33,314
$
36,210
Research and development expenses as a percentage of revenues
15
%
14
%
15
%
14
%
R&D expenses increased $1.2 billion from the three months ended September 30, 2023 to the three months ended September 30, 2024, primarily driven by increases in compensation expenses of $358 million, depreciation expense of $353 million, and charges related to our office space optimization efforts of $188 million. The increase in compensation expenses was largely due to an increase in SBC expense of $214 million.
R&D expenses increased $2.9 billion from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, primarily driven by increases in depreciation expense of $993 million, compensation expenses of $879 million, and third-party services fees of $597 million. The increase in compensation expenses was primarily driven by a $1.0 billion increase in SBC expenses, which reflects the reduction in valuation-based compensation liabilities related to certain Other Bets recognized in the prior year comparable period, partially offset by a $554 million decrease in severance and related charges.
41
Sales and Marketing
The following table presents sales and marketing expenses (in millions, except percentages):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Sales and marketing expenses
$
6,884
$
7,227
$
20,198
$
20,445
Sales and marketing expenses as a percentage of revenues
9
%
8
%
9
%
8
%
Sales and marketing expenses increased $343 million from the three months ended September 30, 2023 to the three months ended September 30, 2024, primarily driven by an increase in advertising and promotional activities of $206 million.
Sales and marketing expenses increased $247 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024, due to a combination of factors, none of which were individually significant.
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,
2023
2024
2023
2024
General and administrative expenses
$
3,979
$
3,599
$
11,219
$
9,783
General and administrative expenses as a percentage of revenues
5
%
4
%
5
%
4
%
General and administrative expenses decreased $380 million and $1.4 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, primarily driven by a reduction in charges related to legal and other matters of $693 million and $1.4 billion, respectively, partially offset by a combination of factors, none of which were individually significant.
Segment Profitability
The following table presents segment operating income (loss) (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Operating income (loss):
Google Services
$
23,937
$
30,856
$
69,128
$
88,427
Google Cloud
266
1,947
852
4,019
Other Bets
(1,194)
(1,116)
(3,232)
(3,270)
Alphabet-level activities(1)
(1,666)
(3,166)
(6,152)
(7,758)
Total income from operations
$
21,343
$
28,521
$
60,596
$
81,418
(1)In addition to the costs included in Alphabet-level activities, hedging gains (losses) related to revenue were $(1) million and $17 million for the three months ended September 30, 2023 and 2024, respectively, and $86 million and $191 million for the nine months ended September 30, 2023 and 2024, respectively. For the three and nine months ended September 30, 2023 and 2024, Alphabet-level activities included substantially all of the charges related to employee severance and our office space optimization efforts. During the quarter ended September 30, 2024, we incurred office space charges totaling $607 million. For additional information relating to our segments, see Note 14 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
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Google Services
Google Services operating income increased $6.9 billion and $19.3 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The increase in operating income was primarily driven by an increase in revenues, partially offset by increases in TAC and content acquisition costs. Additionally, a reduction in compensation expenses contributed to the increase in operating income.
Google Cloud
Google Cloud operating income increased $1.7 billion and $3.2 billion from the three and nine months ended September 30, 2023 to the three and nine months ended September 30, 2024, respectively. The increase in operating income was primarily driven by an increase in revenues, partially offset by increases in usage costs for technical infrastructure assets as well as compensation expenses, largely driven by headcount growth.
Other Bets
Other Bets operating loss decreased $78 million from the three months ended September 30, 2023 to the three months ended September 30, 2024, due to a combination of factors, none of which were individually significant.
Other Bets operating loss increased $38 million from the nine months ended September 30, 2023 to the nine months ended September 30, 2024. The increase in operating loss was primarily due to an increase in expenses, largely driven by compensation expenses, partially offset by an increase in revenues. The increase in compensation expenses was primarily as a result of the reduction in valuation-based compensation liabilities related to certain Other Bets recognized in the prior year comparable period.
Other Income (Expense), Net
The following table presents OI&E (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Interest income
$
1,066
$
1,243
$
2,755
$
3,394
Interest expense
(116)
(54)
(239)
(215)
Foreign currency exchange gain (loss), net
(311)
23
(789)
(388)
Gain (loss) on debt securities, net
(503)
160
(1,100)
(612)
Gain (loss) on equity securities, net
(366)
1,821
(194)
3,350
Performance fees
179
29
302
261
Income (loss) and impairment from equity method investments, net
(215)
(107)
(372)
(101)
Other
120
70
346
465
Other income (expense), net
$
(146)
$
3,185
$
709
$
6,154
OI&E increased $3.3 billion from the three months ended September 30, 2023 to the three months ended September 30, 2024. The increase was primarily due to an increase in net unrealized gains on equity securities driven by fair value adjustments related to observable transactions and market driven changes, and increased net gains on debt securities.
OI&E increased $5.4 billion from the nine months ended September 30, 2023 to the nine months ended September 30, 2024. The increase was primarily due to an increase in net unrealized gains on non-marketable equity securities driven by fair value adjustments related to observable transactions and increased interest income related to higher interest rates.
For additional information, see Note 6 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
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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
Nine Months Ended
September 30,
September 30,
2023
2024
2023
2024
Income before provision for income taxes
$
21,197
$
31,706
$
61,305
$
87,572
Provision for income taxes
$
1,508
$
5,405
$
8,197
$
13,990
Effective tax rate
7.1
%
17.0
%
13.4
%
16.0
%
The effective tax rate increased from the three months ended September 30, 2023 to the three months ended September 30, 2024. This increase was primarily due to a cumulative one-time adjustment recorded for tax rule changes issued by the Internal Revenue Service (IRS) in the third quarter of 2023. Additionally, a decrease in the U.S. federal Foreign Derived Intangible Income tax deduction in 2024 contributed to the higher effective tax rate.
The effective tax rate increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024. This increase was primarily due to a one-time adjustment for tax rule changes issued by the IRS in the third quarter of 2023. Additionally, a decrease in the 2024 U.S. federal Foreign Derived Intangible Income tax deduction contributed to an increase in the effective tax rate. These factors were partially offset by an increase in stock-based compensation-related tax benefits in 2024.
The OECD is coordinating negotiations among more than 140 countries with the goal of achieving consensus around substantial changes to international tax policies, including the implementation of a minimum global effective tax rate of 15%. Some countries have already implemented the legislation effective January 1, 2024, and we expect others to follow, however we do not expect a material change to our income tax provision for the 2024 fiscal year. As additional jurisdictions enact such legislation, transitional rules lapse, and other provisions of the minimum tax legislation become effective, we expect our effective tax rate and cash tax payments could increase in future years.
Financial Condition
Cash, Cash Equivalents, and Marketable Securities
As of September 30, 2024, we had $93.2 billion in cash, cash equivalents, and short-term marketable securities. Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities, and marketable equity securities.
Sources, Uses of Cash and Related Trends
Our principal sources of liquidity are 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
September 30,
2023
2024
Net cash provided by operating activities
$
82,831
$
86,186
Net cash used in investing activities
$
(20,896)
$
(29,356)
Net cash used in financing activities
$
(52,785)
$
(60,697)
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 properties. In Google Services, we also generate cash through consumer subscriptions, the sale of apps and in-app purchases, and devices. In Google Cloud, we generate cash through consumption-based fees and subscriptions for infrastructure, platform, collaboration tools, and other cloud services.
Our primary uses of cash from operating activities include payments to distribution and Google Network partners, to employees for compensation, and to content providers. Other uses of cash from operating activities
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include payments to suppliers for devices, to tax authorities for income taxes, and other general corporate expenditures.
Net cash provided by operating activities increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 due to an increase in cash received from customers, partially offset by an increase in tax payments and a cash payment for the 2017 EC shopping fine. The increase in tax payments in comparison to the prior year comparable period was primarily due to the 2023 IRS payment deferral relief made available to taxpayers headquartered in designated counties in California.
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 and purchases of intangible assets.
Net cash used in investing activities increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 primarily due to an increase in purchases of property and equipment and purchases of marketable securities, partially offset by increases in maturities and sales of marketable securities.
Cash Used in Financing Activities
Cash provided by financing activities consists primarily of proceeds from issuance of debt and proceeds from the sale of interests in consolidated entities. Cash used in financing activities consists primarily of repurchases of stock, net payments related to stock-based award activities, payment of dividends, and repayments of debt.
Net cash used in financing activities increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 due to dividend payments and net payments related to stock-based award activities.
Liquidity and Material Cash Requirements
We expect existing cash, cash equivalents, short-term marketable securities, and cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months, and thereafter for the foreseeable future.
Capital Expenditures and Leases
We make investments in land and buildings for data centers and offices and information technology assets through purchases of property and equipment and lease arrangements to provide capacity for the growth of our services and products.
Capital Expenditures
Our capital investments in property and equipment consist primarily of the following major categories:
•technical infrastructure, which consists of our investments in servers and network equipment for computing, storage, and networking requirements for ongoing business activities, including AI, (collectively referred to as our information technology assets) and data center land and building construction; and
•office facilities, ground-up development projects, and building 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. 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 land and buildings, construct buildings, and secure and install information technology assets.
During the nine months ended September 30, 2023 and 2024, we spent $21.2 billion and $38.3 billion on capital expenditures, respectively. We expect to increase, relative to 2023, our investment in our technical infrastructure, including servers, network equipment, and data centers, to support the growth of our business and our long-term initiatives, in particular in support of AI products and services. 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 months ended September 30, 2023 and 2024, our depreciation on property and equipment was $8.6 billion and $11.1 billion, respectively.
Leases
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For the nine months ended September 30, 2023 and 2024, we recognized total operating lease assets of $2.4 billion and $1.6 billion, respectively. As of September 30, 2024, the amount of total future lease payments under operating leases, which had a weighted average remaining lease term of 7.8 years, was $17.1 billion.
As of September 30, 2024, we have entered into leases that have not yet commenced with future lease payments of $6.1 billion, that are not yet recorded on our Consolidated Balance Sheets. These leases will commence between 2024 and 2027 with non-cancelable lease terms of one to 25 years.
For the nine months ended September 30, 2023 and 2024, our operating lease expenses (including variable lease costs) were $3.4 billion and $3.5 billion, respectively. Finance lease costs were not material for the nine months ended September 30, 2023 and 2024.
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, 2024, we had $1.0 billion of short-term commercial paper outstanding.
As of September 30, 2024, we had $10.0 billion of revolving credit facilities, $4.0 billion expiring in April 2025 and $6.0 billion 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 have been borrowed under the credit facilities.
As of September 30, 2024, we had senior unsecured notes outstanding with a total carrying value of $11.9 billion. For additional information, see Note 5 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
We primarily utilize contract manufacturers for the assembly of our servers used in our technical infrastructure and devices 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 devices. 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
During the three and nine months ended September 30, 2024, we repurchased and subsequently retired 90 million and 293 million shares for $15.3 billion and $47.0 billion, respectively.
In April 2023, the Board of Directors of Alphabet authorized the company to repurchase up to $70.0 billion of its Class A and Class C shares. Repurchases made pursuant to the April 2023 authorization were completed during the third quarter of 2024. In April 2024, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares. As of September 30, 2024, $59.7 billion remained available for Class A and Class C share repurchases.
The following table presents Class A and Class C shares repurchased and subsequently retired (in millions):
Three Months Ended September 30, 2024
Nine Months Ended September 30, 2024
Shares
Amount
Shares
Amount
Class A share repurchases
17
$
2,846
59
$
9,461
Class C share repurchases
73
12,453
234
37,493
Total share repurchases(1)
90
$
15,299
293
$
46,954
(1)Shares repurchased include unsettled repurchases as of September 30, 2024.
For additional information, see Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Dividend Program
During the three and nine months ended September 30, 2024, total cash dividends were $1.2 billion and $2.3 billion for Class A, $173 million and $346 million for Class B, and $1.1 billion and $2.2 billion for Class C shares, respectively.
The company intends to pay quarterly cash dividends in the future, subject to review and approval by the company’s Board of Directors in its sole discretion.
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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 reduced the 2018 fine from €4.3 billion to €4.1 billion. We subsequently appealed the General Court's decision to the European Court of Justice.
On September 10, 2024, the European Court of Justice rejected our appeal of the 2017 decision and upheld the €2.4 billion fine. In the third quarter of 2024, we made a cash payment of $3.0 billion for the 2017 shopping fine.
On September 18, 2024, the EU's General Court overturned the 2019 decision and annulled the €1.5 billion fine. The EC has until November 28, 2024 to appeal the decision.
We included the EC fines, including any under appeal, 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 additional information, 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, 2024, we had short-term income taxes payable of $2.7 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 remaining transition tax installment in 2025. We also have long-term taxes payable of $8.2 billion primarily related to uncertain tax positions as of September 30, 2024.
Purchase Commitments and Other Contractual Obligations
As of September 30, 2024, we had material purchase commitments and other contractual obligations of $50.8 billion, of which $31.1 billion was short-term. These amounts primarily consist of purchase orders for certain technical infrastructure as well as the non-cancelable portion or the minimum cancellation fee in certain agreements related to commitments to purchase licenses, including content licenses, inventory, and network capacity. For those agreements with variable terms, we do not estimate the non-cancelable obligation beyond any minimum quantities and/or pricing as of September 30, 2024. In certain instances, the amount of our contractual obligations may change based on the expected timing of order fulfillment from our suppliers. For more information related to our content licenses, see Note 9 of the Notes to Consolidated Financial Statements included in Item I of this Quarterly Report on Form 10-Q.
In addition, we regularly enter into multi-year, non-cancellable agreements to purchase renewable energy and energy attributes, such as renewable energy certificates. These agreements do not include a minimum dollar commitment. The amounts to be paid under these agreements are based on the actual volumes to be generated and are not readily determinable.
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, 2023.
Available Information
Our website is located at www.abc.xyz, and our investor relations website is located at www.abc.xyz/investor. 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, is available on our investor relations website, free of charge, after we file or furnish them with the SEC and they are available on the SEC's website at www.sec.gov.
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 "Governance." The content of our websites is 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.
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項目3。市場リスクに関する定量的・質的事項の開示
市場リスクに関する数量および質的な開示については、2023年12月31日に終了した年度のForm 10-kに関する我々の年次報告書のPart II、Item 7A、Quantitative and Qualitative Disclosures About Market Riskを参照してください。
On April 16, 2024, the Leadership Development, Inclusion and Compensation Committee of the Board of Directors of Alphabet approved the accrual of dividend equivalent units to holders of all unvested stock units, subject to the approval of a dividend declaration by the Board of Directors of the company (which was announced