ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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61-1767919
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1600 Amphitheatre Parkway
Mountain View, CA 94043
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(Address of principal executive offices) (Zip Code)
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(650) 253-0000
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(Registrant’s telephone number, including area code)
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Title of each class
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Name of each exchange on which registered
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Class A Common Stock, $0.001 par value
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Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
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Class C Capital Stock, $0.001 par value
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Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
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Title of each class
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None
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer (Do not check if a smaller reporting company)
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Alphabet Inc.
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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Alphabet Inc.
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•
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the growth of our business and revenues and our expectations about the factors that influence our success and trends in our business;
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•
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our plans to continue to invest in new businesses, products, services and technologies, systems, facilities, and infrastructure, to continue to hire aggressively and provide competitive compensation programs, as well as to continue to invest in acquisitions;
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seasonal fluctuations in internet usage and advertiser expenditures, underlying business trends such as traditional retail seasonality, and macroeconomic conditions, which are likely to cause fluctuations in our quarterly results;
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our expectation related to our renewable energy efforts;
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the potential for declines in our revenue growth rate;
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•
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our expectation that we will continue to take steps to improve the relevance of the ads we deliver and to reduce the number of accidental clicks;
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•
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fluctuations in the rate of change in revenue and revenue growth, as well as the rate of change in paid clicks and average cost-per-click and various factors contributing to such fluctuations;
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our expectation that our foreign exchange risk management program will not fully offset our net exposure to fluctuations in foreign currency exchange rates;
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the expected variability of costs related to hedging activities under our foreign exchange risk management program;
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our expectation that our cost of revenues, research and development expenses, sales and marketing expenses, and general and administrative expenses will increase in dollars and may increase as a percentage of revenues;
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our potential exposure in connection with pending investigations, proceedings, and other contingencies;
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our expectation that our monetization trends will fluctuate, which could affect our revenues and margins in the future;
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•
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our expectation that our traffic acquisition costs (TAC) and the associated TAC rates will increase in the future;
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•
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our expectation that our results will be impacted by our performance in international markets as users in developing economies increasingly come online;
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our expectation that the portion of our revenues that we derive from non-advertising revenues will continue to increase and may impact margins;
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our expectation that our other income (expense), net, will fluctuate in the future, as it is largely driven by market dynamics;
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estimates of our future compensation expenses;
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fluctuations in our effective tax rate;
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the impact of the U.S. Tax Cuts and Jobs Act (Tax Act);
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the sufficiency of our sources of funding;
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our payment terms to certain advertisers, which may increase our working capital requirements;
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fluctuations in our capital expenditures;
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our expectations related to the operating structure implemented pursuant to the Alphabet holding company reorganization;
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the expected timing and amount of Alphabet Inc.'s share repurchases;
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Alphabet Inc.
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Alphabet Inc.
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ITEM 1.
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BUSINESS
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Alphabet Inc.
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•
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Perf
ormance advertising
creates and delivers relevant ads that users will click on, leading to direct engagement with advertisers. Most of our performance advertisers pay us when a user engages in their ads. Performance advertising lets our advertisers connect with users while driving measurable results.
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•
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Brand advertising
helps enhance users' awareness of and affinity with advertisers' products and services, through v
ideos, text, images, and other interactive ads that run across various devices. We help brand advertisers deliver digital videos and other types of ads to specific audiences for their brand-building marketing campaigns.
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Alphabet Inc.
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General purpose search engines and information services, such as Baidu, Microsoft's Bing, Naver, Seznam, Verizon's Yahoo, and Yandex.
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Vertical search engines and e-commerce websites, such as Amazon and eBay (e-commerce), Kayak (travel queries), LinkedIn (job queries), and WebMD (health queries). Some users will navigate directly to such content, websites, and apps rather than go through Google.
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•
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Social networks, such as Facebook, Snap, and Twitter. Some users increasingly rely on social networks for product or service referrals, rather than seeking information through traditional search engines.
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Other forms of advertising, such as billboards, magazines, newspapers, radio, and television. Our advertisers typically advertise in multiple media, both online and offline.
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Other online advertising platforms and networks, including Amazon, AppNexus, Criteo, and Facebook, that compete for advertisers that use AdWords, our primary auction-based advertising platform.
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Providers of digital video services, such as Amazon, Facebook, Hulu, and Netflix.
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Companies that design, manufacture, and market consumer electronics products, including businesses that have developed proprietary platforms.
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Providers of enterprise cloud services, including Alibaba, Amazon, and Microsoft.
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Digital assistant providers, such as Amazon, Apple, and Microsoft.
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Users, for whom other products and services are literally one click away, primarily on the basis of the relevance and usefulness of our search results and the features, availability, and ease of use of our products and services.
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Advertisers, primarily based on our ability to generate sales leads, and ultimately customers, and to deliver their advertisements in an efficient and effective manner across a variety of distribution channels.
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Alphabet Inc.
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Content providers, primarily based on
the quality of our advertiser base, our ability to help these partners generate revenues from advertising, and the terms of our agreements with them.
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Alphabet Inc.
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ITEM 1A.
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RISK FACTORS
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Alphabet Inc.
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•
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increasing competition,
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changes in device mix, geographic mix, ongoing product and policy changes, product mix, and property mix,
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•
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the challenges in maintaining our growth rate as our revenues increase to higher levels,
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the evolution of the online advertising market, including the increasing variety of online platforms for advertising, and the other markets in which we participate, and
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the rate of user adoption of our products, services, and technologies.
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Alphabet Inc.
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We rely
on statutory safe harbors, as set forth in the Digital Millennium Copyright Act in the United States and the E-Commerce Directive in Europe, against copyright liability for various linking, caching, and hosting activities. Any legislation or court rulings impacting these safe harbors may adversely impact us.
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The General Data Protection Regulation, coming into effect in the European Union in May of 2018, which creates a range of new compliance obligations, which could cause us to change our business practices, and will increase financial penalties for noncompliance significantly.
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Court decisions such as the judgment of the Court of Justice of the European Union on May 13, 2014 on the ‘right to be forgotten,’ which allows individuals to demand that Google remove search results about them in certain instances, may limit the content we can show to our users and impose significant operational burdens.
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Court decisions that require Google to suppress content not just in the jurisdiction of the issuing court, but for all of our users worldwide, including locations where the content at issue is lawful. The Supreme Court of Canada issued such a decision against Google in June 2017, and others could treat its decision as persuasive. For instance, with respect to the ‘right to be forgotten,’ a follow-up case is pending before the Court of Justice of the European Union, which could result in an order to apply delisting actions under the ‘right to be forgotten’ worldwide.
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Various U.S. and international laws that restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors.
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Alphabet Inc.
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Various laws with regards to content removal and disclosure obligations, such as the recently enacted Network Enforcement Act in Germany, which may impact our businesses and operations and may subject us to significant fines if such laws are interpreted and applied in a manner inconsistent with our practices.
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Data protection laws passed by many states within the U.S. and by certain countries that require notification to users when there is a security breach of personal data.
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Data localization laws, which generally mandate that certain types of data collected in a particular country be stored and/or processed within that country.
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Privacy laws, which could b
e interpreted over-broadly to limit some product offerings and increase costs.
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Alphabet Inc.
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Alphabet Inc.
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Alphabet Inc.
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Diversion of management time and focus from operating our business to challenges related to acquisitions and other strategic transactions.
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Failure to successfully further develop the acquired business or technology.
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Implementation or remediation of controls, procedures, and policies at the acquired company.
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Integration of the acquired company's accounting, human resource, and other administrative systems, and coordination of product, engineering, and sales and marketing functions.
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Transition of operations, users, and customers onto our existing platforms.
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Failure to obtain required approvals on a timely basis, if at all, from governmental authorities, or conditions placed upon approval that could, among other things, delay or prevent us from completing a transaction, or otherwise restrict our ability to realize the expected financial or strategic goals of an acquisition or other strategic transaction.
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In the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries.
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Cultural challenges associated with integrating employees from the acquired company into our organization, and retention of employees from the businesses we acquire.
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Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, privacy issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities.
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Litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders, or other third parties.
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Alphabet Inc.
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Alphabet Inc.
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Restrictions on foreign ownership and investments, and stringent foreign exchange controls that might prevent us from repatriating cash earned in countries outside the U.S.
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Import and export requirements, tariffs, trade disputes and barriers, and customs classifications that may prevent us from offering products or providing services to a particular market and may increase our operating costs.
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Longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud.
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Evolving foreign laws and legal systems.
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Uncertainty regarding liability for services and content, including uncertainty as a result of local laws and lack of legal precedent.
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Different employee/employer relationships, existence of workers' councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain jurisdictions.
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Alphabet Inc.
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Our ability to continue to attract and retain users to our products and services.
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Our ability to monetize (or generate revenues from) traffic on Google properties and our Google Network Members' properties across various devices.
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Revenue fluctuations caused by changes in device mix, geographic mix, ongoing product and policy changes, product mix, and property mix.
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The amount of revenues and expenses generated and incurred in currencies other than U.S. dollars, and our ability to manage the resulting risk through our foreign exchange risk management program.
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The amount and timing of operating costs and expenses and capital expenditures related to the maintenance and expansion of our businesses, operations, and infrastructure.
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Our focus on long-term goals over short-term results.
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The results of our acquisitions, divestitures, and our investments in risky projects, including new businesses, products, services, and technologies.
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Our ability to keep our products and services operational at a reasonable cost and without service interruptions.
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Our ability to attract user adoption of and generate significant revenues from new products, services, and technologies in which we have invested considerable time and resources.
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The seasonal fluctuations in Internet usage, advertising spending, and underlying business trends such as traditional retail seasonality. Our rapid growth has tended to mask the cyclicality and seasonality of our business. As our growth rate has slowed, the cyclicality and seasonality in our business has become more pronounced and caused our operating results to fluctuate.
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Alphabet Inc.
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Alphabet Inc.
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•
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Quarterly variations in our results of operations or those of our competitors.
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Announcements by us or our competitors of acquisitions, divestitures, investments, new products, significant contracts, commercial relationships, or capital commitments.
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Recommendations by securities analysts or changes in earnings estimates.
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Announcements about our earnings that are not in line with analyst expectations, the risk of which is enhanced because it is our policy not to give guidance on earnings.
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Announcements by our competitors of their earnings that are not in line with analyst expectations.
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Commentary by industry and market professionals about our products, strategies, and other matters affecting our business and results, regardless of its accuracy.
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The volume of shares of Class A common stock and Class C capital stock available for public sale.
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Sales of Class A common stock and Class C capital stock by us or by our stockholders (including sales by our directors, executive officers, and other employees).
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Short sales, hedging, and other derivative transactions on shares of our Class A common stock and Class C capital stock.
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The perceived values of Class A common stock and Class C capital stock relative to one another.
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Our share repurchase program.
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Alphabet Inc.
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Our certificate of incorporation provides for a tri-class capital stock structure. As a result of this structure, Larry, Sergey, and Eric have significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. This concentrated control could discourage others from initiating any potential merger, takeover, or other change of control transaction that other stockholders may view as beneficial. As noted above, the issuance of the Class C capital stock could have the effect of prolonging the influence of Larry, Sergey, and Eric.
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•
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Our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors.
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Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions without holding a stockholders' meeting.
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Our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates.
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Stockholders must provide advance notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting. These provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company.
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Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
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Alphabet Inc.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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Alphabet Inc.
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Fiscal Year 2017 Quarters Ended:
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High
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Low
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||||
March 31, 2017
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$
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872.37
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$
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807.77
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June 30, 2017
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$
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1,004.28
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$
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839.88
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September 30, 2017
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$
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998.31
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$
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919.46
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December 31, 2017
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$
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1,085.09
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$
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966.78
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Fiscal Year 2016 Quarters Ended:
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High
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Low
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||||
March 31, 2016
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$
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780.91
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$
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701.02
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June 30, 2016
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$
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787.68
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$
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681.14
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September 30, 2016
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$
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815.95
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$
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704.89
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December 31, 2016
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$
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835.74
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$
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753.22
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Fiscal Year 2017 Quarters Ended:
|
High
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Low
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||||
March 31, 2017
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$
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852.12
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$
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786.14
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June 30, 2017
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$
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983.68
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$
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823.35
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September 30, 2017
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$
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980.34
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$
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898.70
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December 31, 2017
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$
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1,077.14
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$
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951.68
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Fiscal Year 2016 Quarters Ended:
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High
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Low
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||||
March 31, 2016
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$
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764.65
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$
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678.11
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June 30, 2016
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$
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766.61
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$
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668.26
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September 30, 2016
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$
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787.21
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$
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694.49
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December 31, 2016
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$
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813.11
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$
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736.08
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Alphabet Inc.
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Period
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Total Number of Shares Purchased
(in thousands) (1) |
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Average Price Paid per Share
(2)
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Total Number of Shares Purchased as Part of Publicly Announced Programs
(in thousands) (1) |
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions) |
||||||
October 1 - 31
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0
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$
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0.00
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0
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$
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4,274
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November 1 - 30
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1,231
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$
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1,028.78
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1,231
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$
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3,008
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December 1 - 31
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806
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$
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1,035.28
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806
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$
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2,173
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Total
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2,037
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$
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1,031.35
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2,037
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(1)
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In October 2016, the board of directors of Alphabet authorized the company to repurchase up to
$7.0 billion
of its Class C capital stock.
The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. The repurchase program does not have an expiration date. See
Note 11
in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to share repurchases.
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(2)
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Average price paid per share includes costs associated with the repurchases.
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Alphabet Inc.
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Alphabet Inc.
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Alphabet Inc.
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ITEM 6.
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SELECTED FINANCIAL DATA
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As of December 31,
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||||||||||||||||||
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2013
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2014
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2015
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2016
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2017
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||||||||||
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(in millions)
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||||||||||||||||||
Consolidated Balance Sheet Data:
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|||||||||||||||||||
Cash, cash equivalents, and marketable securities
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$
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58,717
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|
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$
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64,395
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|
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$
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73,066
|
|
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$
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86,333
|
|
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$
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101,871
|
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Total assets
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$
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109,050
|
|
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$
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129,187
|
|
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$
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147,461
|
|
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$
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167,497
|
|
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$
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197,295
|
|
Total long-term liabilities
|
$
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6,165
|
|
|
$
|
8,548
|
|
|
$
|
7,820
|
|
|
$
|
11,705
|
|
|
$
|
20,610
|
|
Total stockholders’ equity
|
$
|
86,977
|
|
|
$
|
103,860
|
|
|
$
|
120,331
|
|
|
$
|
139,036
|
|
|
$
|
152,502
|
|
Alphabet Inc.
|
ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Alphabet Inc.
|
•
|
Our employees are critical to our success and we expect to continue investing in them.
|
•
|
Revenues of
$110.9 billion
and revenue growth of
23%
year over year, constant currency revenue growth of
24%
year over year.
|
•
|
Google segment revenues of
$109.7 billion
with revenue growth of
23%
year over year and Other Bets revenues of
$1.2 billion
with revenue growth of
49%
year over year.
|
•
|
Revenues from the
United States
,
EMEA
,
APAC
, and
Other Americas
were
$52.4 billion
,
$36.0 billion
,
$16.2 billion
, and
$6.1 billion
, respectively.
|
•
|
Cost of revenues was
$45.6 billion
, consisting of TAC of
$21.7 billion
and other cost of revenues of
$23.9 billion
. Our TAC as a percentage of advertising revenues was
23%
.
|
•
|
Operating expenses (excluding cost of revenues) were
$39.1 billion
.
|
•
|
Income from operations was
$26.1 billion
.
|
•
|
Effective tax rate was
53%
.
|
•
|
Net income was
$12.7 billion
with diluted net income per share of
$18.00
.
|
•
|
Operating cash flow was
$37.1 billion
.
|
•
|
Capital expenditures were
$13.2 billion
.
|
•
|
Number of employees was
80,110
as of
December 31, 2017
.
|
•
|
Google – Google includes our main products such as Ads, Android, Chrome, Commerce, Google Cloud, Google Maps, Google Play, Hardware, Search, and YouTube. Our technical infrastructure and some newer efforts like virtual reality are also included in Google. Google generates revenues primarily from advertising; sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including fees received for Google Cloud offerings.
|
•
|
Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes businesses such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.
Revenues from the Other Bets are derived primarily through the sales of internet and TV services through Fiber, sales of Nest products and services, and licensing and R&D services through Verily.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Google segment
|
|
|
|
|
|
||||||
Google properties revenues
|
$
|
52,357
|
|
|
$
|
63,785
|
|
|
$
|
77,788
|
|
Google Network Members' properties revenues
|
15,033
|
|
|
15,598
|
|
|
17,587
|
|
|||
Google advertising revenues
|
67,390
|
|
|
79,383
|
|
|
95,375
|
|
|||
Google other revenues
|
7,154
|
|
|
10,080
|
|
|
14,277
|
|
|||
Google segment revenues
|
$
|
74,544
|
|
|
$
|
89,463
|
|
|
$
|
109,652
|
|
|
|
|
|
|
|
||||||
Other Bets
|
|
|
|
|
|
||||||
Other Bets revenues
|
$
|
445
|
|
|
$
|
809
|
|
|
$
|
1,203
|
|
|
|
|
|
|
|
||||||
Revenues
|
$
|
74,989
|
|
|
$
|
90,272
|
|
|
$
|
110,855
|
|
Alphabet Inc.
|
|
Three Months Ended
|
|
Year Ended
|
|||||||||||
|
Mar 31, 2016
|
|
Jun 30, 2016
|
|
Sep 30, 2016
|
|
Dec 31, 2016
|
|
Dec 31, 2016
|
|||||
Year-over-year change
|
|
|
|
|
|
|
|
|
|
|||||
Aggregate paid clicks
|
29
|
%
|
|
28
|
%
|
|
32
|
%
|
|
39
|
%
|
|
34
|
%
|
Paid clicks on Google properties
|
38
|
%
|
|
36
|
%
|
|
41
|
%
|
|
47
|
%
|
|
43
|
%
|
Paid clicks on Google Network Members' properties
|
2
|
%
|
|
0
|
%
|
|
1
|
%
|
|
7
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
Aggregate cost-per-click
|
(8
|
)%
|
|
(6
|
)%
|
|
(10
|
)%
|
|
(17
|
)%
|
|
(11
|
)%
|
Cost-per-click on Google properties
|
(11
|
)%
|
|
(8
|
)%
|
|
(12
|
)%
|
|
(18
|
)%
|
|
(13
|
)%
|
Cost-per-click on Google Network Members' properties
|
(8
|
)%
|
|
(8
|
)%
|
|
(14
|
)%
|
|
(19
|
)%
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|||||
Quarter-over-quarter change
|
|
|
|
|
|
|
|
|
|
|||||
Aggregate paid clicks
|
(2
|
)%
|
|
7
|
%
|
|
9
|
%
|
|
22
|
%
|
|
N/A
|
|
Paid clicks on Google properties
|
(3
|
)%
|
|
9
|
%
|
|
11
|
%
|
|
25
|
%
|
|
N/A
|
|
Paid clicks on Google Network Members' properties
|
4
|
%
|
|
(3
|
)%
|
|
1
|
%
|
|
6
|
%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Aggregate cost-per-click
|
(1
|
)%
|
|
(1
|
)%
|
|
(5
|
)%
|
|
(10
|
)%
|
|
N/A
|
|
Cost-per-click on Google properties
|
1
|
%
|
|
(2
|
)%
|
|
(6
|
)%
|
|
(12
|
)%
|
|
N/A
|
|
Cost-per-click on Google Network Members' properties
|
(12
|
)%
|
|
(2
|
)%
|
|
(6
|
)%
|
|
0
|
%
|
|
N/A
|
|
•
|
advertiser competition for keywords;
|
•
|
changes in advertising quality or formats;
|
•
|
changes in device mix;
|
•
|
changes in foreign currency exchange rates;
|
•
|
fees advertisers are willing to pay based on how they manage their advertising costs;
|
•
|
general economic conditions;
|
•
|
growth rates of revenues from Google properties, including YouTube, compared to growth rates of revenues from Google Network Members' properties;
|
•
|
seasonality;
|
•
|
shift in the proportion of non-click based revenues generated on Google properties and Google Network Members' properties, including an increase in programmatic and reservation based advertising buying; and
|
•
|
traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels.
|
Alphabet Inc.
|
•
|
Google search properties which includes 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, Google Play, and YouTube.
|
Alphabet Inc.
|
•
|
AdMob;
|
•
|
AdSense (such as AdSense for Content, AdSense for Search, etc.); and
|
•
|
DoubleClick AdExchange.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Google other revenues
|
$
|
7,154
|
|
|
$
|
10,080
|
|
|
$
|
14,277
|
|
Google other revenues as a percentage of Google segment revenues
|
9.6
|
%
|
|
11.3
|
%
|
|
13.0
|
%
|
•
|
Apps, in-app purchases, and digital content in the Google Play store;
|
•
|
Google Cloud offerings; and
|
•
|
Hardware.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Other Bets revenues
|
$
|
445
|
|
|
$
|
809
|
|
|
$
|
1,203
|
|
Other Bets revenues as a percentage of total revenues
|
0.6
|
%
|
|
0.9
|
%
|
|
1.1
|
%
|
•
|
Internet and TV services;
|
•
|
Licensing and R&D services; and
|
•
|
Nest branded hardware.
|
Alphabet Inc.
|
Alphabet Inc.
|
|
Twelve Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
EMEA revenues
|
$
|
26,368
|
|
|
$
|
30,304
|
|
|
$
|
36,046
|
|
Exclude foreign exchange impact on current period revenues using prior year rates
|
3,802
|
|
|
1,291
|
|
|
(5
|
)
|
|||
Exclude hedging impact recognized in current period
|
(989
|
)
|
|
(479
|
)
|
|
190
|
|
|||
EMEA constant currency revenues
|
$
|
29,181
|
|
|
$
|
31,116
|
|
|
$
|
36,231
|
|
Prior period EMEA revenues, excluding hedging impact
|
$
|
24,497
|
|
|
$
|
25,379
|
|
|
$
|
29,825
|
|
EMEA revenue growth
|
|
|
15
|
%
|
|
19
|
%
|
||||
EMEA constant currency revenue growth
|
|
|
23
|
%
|
|
21
|
%
|
||||
|
|
|
|
|
|
||||||
APAC revenues
|
$
|
9,887
|
|
|
$
|
12,559
|
|
|
$
|
16,235
|
|
Exclude foreign exchange impact on current period revenues using prior year rates
|
1,076
|
|
|
(362
|
)
|
|
26
|
|
|||
Exclude hedging impact recognized in current period
|
(323
|
)
|
|
(31
|
)
|
|
(43
|
)
|
|||
APAC constant currency revenues
|
$
|
10,640
|
|
|
$
|
12,166
|
|
|
$
|
16,218
|
|
Prior period APAC revenues, excluding hedging impact
|
$
|
8,169
|
|
|
$
|
9,564
|
|
|
$
|
12,528
|
|
APAC revenue growth
|
|
|
27
|
%
|
|
29
|
%
|
||||
APAC constant currency revenue growth
|
|
|
27
|
%
|
|
29
|
%
|
||||
|
|
|
|
|
|
||||||
Other Americas revenues
|
$
|
3,924
|
|
|
$
|
4,628
|
|
|
$
|
6,125
|
|
Exclude foreign exchange impact on current period revenues using prior year rates
|
712
|
|
|
344
|
|
|
(148
|
)
|
|||
Exclude hedging impact recognized in current period
|
(88
|
)
|
|
(29
|
)
|
|
22
|
|
|||
Other Americas constant currency revenues
|
$
|
4,548
|
|
|
$
|
4,943
|
|
|
$
|
5,999
|
|
Prior period Other Americas revenues, excluding hedging impact
|
$
|
3,681
|
|
|
$
|
3,836
|
|
|
$
|
4,599
|
|
Other Americas revenue growth
|
|
|
18
|
%
|
|
32
|
%
|
||||
Other Americas constant currency revenue growth
|
|
|
29
|
%
|
|
30
|
%
|
||||
|
|
|
|
|
|
||||||
United States revenues
|
$
|
34,810
|
|
|
$
|
42,781
|
|
|
$
|
52,449
|
|
United States revenue growth
|
|
|
23
|
%
|
|
23
|
%
|
||||
|
|
|
|
|
|
||||||
Total revenues
|
$
|
74,989
|
|
|
$
|
90,272
|
|
|
$
|
110,855
|
|
Total constant currency revenues
|
$
|
79,179
|
|
|
$
|
91,006
|
|
|
$
|
110,897
|
|
Total revenue growth
|
|
|
20
|
%
|
|
23
|
%
|
||||
Total constant currency revenue growth
|
|
|
24
|
%
|
|
24
|
%
|
Alphabet Inc.
|
•
|
Amortization of certain intangible assets;
|
•
|
Content acquisition costs primarily related to 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);
|
•
|
Credit card and other transaction fees related to processing customer transactions;
|
•
|
Expenses associated with our data center and other operations (including bandwidth, compensation expenses (including SBC), depreciation, energy, and other equipment costs); and
|
•
|
Inventory related costs for hardware we sell.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
TAC
|
$
|
14,343
|
|
|
$
|
16,793
|
|
|
$
|
21,672
|
|
Other cost of revenues
|
13,821
|
|
|
18,345
|
|
|
23,911
|
|
|||
Total cost of revenues
|
$
|
28,164
|
|
|
$
|
35,138
|
|
|
$
|
45,583
|
|
Total cost of revenues as a percentage of revenues
|
37.6
|
%
|
|
38.9
|
%
|
|
41.1
|
%
|
|||
|
|
|
|
|
|
||||||
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
TAC to distribution partners
|
$
|
4,101
|
|
|
$
|
5,894
|
|
|
$
|
9,031
|
|
TAC to distribution partners as a percentage of Google properties revenues
(1)
(Google properties TAC rate)
|
7.8
|
%
|
|
9.2
|
%
|
|
11.6
|
%
|
|||
|
|
|
|
|
|
||||||
TAC to Google Network Members
|
$
|
10,242
|
|
|
$
|
10,899
|
|
|
$
|
12,641
|
|
TAC to Google Network Members as a percentage of Google Network Members' properties revenues
(1)
(Network Members TAC rate)
|
68.1
|
%
|
|
69.9
|
%
|
|
71.9
|
%
|
|||
|
|
|
|
|
|
||||||
TAC
|
$
|
14,343
|
|
|
$
|
16,793
|
|
|
$
|
21,672
|
|
TAC as a percentage of advertising revenues
(1)
(Aggregate TAC rate)
|
21.3
|
%
|
|
21.2
|
%
|
|
22.7
|
%
|
(1)
|
Revenues include hedging gains(losses) which impact TAC rates.
|
Alphabet Inc.
|
•
|
Google Network Members TAC rates, which are affected by the continued underlying shift in advertising buying from our traditional network business to programmatic advertising buying which carries higher TAC;
|
•
|
Google properties TAC rates, which are affected by changes in device mix between mobile, desktop, and tablet, partner mix, partner agreement terms such as revenue share arrangements, and the percentage of queries channeled through paid access points;
|
•
|
Growth rates of expenses associated with our data center and other operations, content acquisition costs, as well as our hardware inventory and related costs;
|
•
|
Increased proportion of non-advertising revenues, whose costs are generally higher in relation to our advertising revenues;
|
•
|
Relative revenue growth rates of Google properties and our Google Network Members' properties.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Research and development expenses
|
$
|
12,282
|
|
|
$
|
13,948
|
|
|
$
|
16,625
|
|
Research and development expenses as a percentage of revenues
|
16.4
|
%
|
|
15.5
|
%
|
|
15.0
|
%
|
•
|
Compensation expenses, including SBC, and facilities-related costs for employees responsible for R&D of our existing and new products and services; and
|
•
|
Depreciation and equipment-related expenses.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Sales and marketing expenses
|
$
|
9,047
|
|
|
$
|
10,485
|
|
|
$
|
12,893
|
|
Sales and marketing expenses as a percentage of revenues
|
12.1
|
%
|
|
11.6
|
%
|
|
11.6
|
%
|
•
|
Advertising and promotional expenditures related to our products and services; and
|
•
|
Compensation expenses, including SBC, and facilities-related costs for employees engaged in sales and marketing, sales support, and certain customer service functions.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
General and administrative expenses
|
$
|
6,136
|
|
|
$
|
6,985
|
|
|
$
|
6,872
|
|
General and administrative expenses as a percentage of revenues
|
8.2
|
%
|
|
7.7
|
%
|
|
6.2
|
%
|
•
|
Amortization of certain intangible assets;
|
•
|
Compensation expenses, including SBC, and facilities-related costs for employees in our facilities, finance, human resources, information technology, and legal organizations;
|
•
|
Depreciation and equipment-related expenses; and
|
•
|
Professional services fees primarily related to audit, information technology consulting, outside legal, and outsourcing services.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Other income (expense), net
|
$
|
291
|
|
|
$
|
434
|
|
|
$
|
1,047
|
|
Other income (expense), net, as a percentage of revenues
|
0.4
|
%
|
|
0.5
|
%
|
|
0.9
|
%
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Provision for income taxes
|
$
|
3,303
|
|
|
$
|
4,672
|
|
|
$
|
14,531
|
|
Effective tax rate
|
16.8
|
%
|
|
19.3
|
%
|
|
53.4
|
%
|
Alphabet Inc.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
Mar 31,
2016 |
|
Jun 30,
2016 |
|
Sep 30,
2016 |
|
Dec 31,
2016 |
|
Mar 31,
2017 |
|
Jun 30,
2017 |
|
Sep 30,
2017 |
|
Dec 31,
2017 |
||||||||||||||||
|
(In millions, except per share amounts) (unaudited)
|
||||||||||||||||||||||||||||||
Consolidated Statements of Income Data:
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Revenues
|
$
|
20,257
|
|
|
$
|
21,500
|
|
|
$
|
22,451
|
|
|
$
|
26,064
|
|
|
$
|
24,750
|
|
|
$
|
26,010
|
|
|
$
|
27,772
|
|
|
$
|
32,323
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenues
|
7,648
|
|
|
8,130
|
|
|
8,699
|
|
|
10,661
|
|
|
9,795
|
|
|
10,373
|
|
|
11,148
|
|
|
14,267
|
|
||||||||
Research and development
|
3,367
|
|
|
3,363
|
|
|
3,596
|
|
|
3,622
|
|
|
3,942
|
|
|
4,172
|
|
|
4,205
|
|
|
4,306
|
|
||||||||
Sales and marketing
|
2,387
|
|
|
2,415
|
|
|
2,565
|
|
|
3,118
|
|
|
2,644
|
|
|
2,897
|
|
|
3,042
|
|
|
4,310
|
|
||||||||
General and administrative
|
1,513
|
|
|
1,624
|
|
|
1,824
|
|
|
2,024
|
|
|
1,801
|
|
|
1,700
|
|
|
1,595
|
|
|
1,776
|
|
||||||||
European Commission fine
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,736
|
|
|
0
|
|
|
0
|
|
||||||||
Total costs and expenses
|
14,915
|
|
|
15,532
|
|
|
16,684
|
|
|
19,425
|
|
|
18,182
|
|
|
21,878
|
|
|
19,990
|
|
|
24,659
|
|
||||||||
Income from operations
|
5,342
|
|
|
5,968
|
|
|
5,767
|
|
|
6,639
|
|
|
6,568
|
|
|
4,132
|
|
|
7,782
|
|
|
7,664
|
|
||||||||
Other income (expense), net
|
(213
|
)
|
|
151
|
|
|
278
|
|
|
218
|
|
|
251
|
|
|
245
|
|
|
197
|
|
|
354
|
|
||||||||
Income from continuing operations before income taxes
|
5,129
|
|
|
6,119
|
|
|
6,045
|
|
|
6,857
|
|
|
6,819
|
|
|
4,377
|
|
|
7,979
|
|
|
8,018
|
|
||||||||
Provision for income taxes
|
922
|
|
|
1,242
|
|
|
984
|
|
|
1,524
|
|
|
1,393
|
|
|
853
|
|
|
1,247
|
|
|
11,038
|
|
||||||||
Net income
|
$
|
4,207
|
|
|
$
|
4,877
|
|
|
$
|
5,061
|
|
|
$
|
5,333
|
|
|
$
|
5,426
|
|
|
$
|
3,524
|
|
|
$
|
6,732
|
|
|
$
|
(3,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic net income per share of Class A and B common stock and Class C capital stock
|
$
|
6.12
|
|
|
$
|
7.11
|
|
|
$
|
7.36
|
|
|
$
|
7.73
|
|
|
$
|
7.85
|
|
|
$
|
5.09
|
|
|
$
|
9.71
|
|
|
$
|
(4.35
|
)
|
Diluted net income per share of Class A and B common stock and Class C capital stock
|
$
|
6.02
|
|
|
$
|
7.00
|
|
|
$
|
7.25
|
|
|
$
|
7.56
|
|
|
$
|
7.73
|
|
|
$
|
5.01
|
|
|
$
|
9.57
|
|
|
$
|
(4.35
|
)
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
26,572
|
|
|
$
|
36,036
|
|
|
$
|
37,091
|
|
Net cash used in investing activities
|
$
|
(23,711
|
)
|
|
$
|
(31,165
|
)
|
|
$
|
(31,401
|
)
|
Net cash used in financing activities
|
$
|
(4,225
|
)
|
|
$
|
(8,332
|
)
|
|
$
|
(8,298
|
)
|
Alphabet Inc.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
||||||||||
Operating lease obligations, net of sublease income amounts
(1)
|
$
|
8,753
|
|
|
$
|
1,160
|
|
|
$
|
2,182
|
|
|
$
|
1,796
|
|
|
$
|
3,615
|
|
Purchase obligations
(2)
|
7,154
|
|
|
4,548
|
|
|
1,910
|
|
|
241
|
|
|
455
|
|
|||||
Long-term debt obligations
(3)
|
4,744
|
|
|
112
|
|
|
224
|
|
|
1,170
|
|
|
3,238
|
|
|||||
Tax payable
(4)
|
10,233
|
|
|
890
|
|
|
1,746
|
|
|
1,746
|
|
|
5,851
|
|
|||||
Other long-term liabilities reflected on our balance sheet
(5)
|
2,416
|
|
|
348
|
|
|
619
|
|
|
511
|
|
|
938
|
|
|||||
Total contractual obligations
|
$
|
33,300
|
|
|
$
|
7,058
|
|
|
$
|
6,681
|
|
|
$
|
5,464
|
|
|
$
|
14,097
|
|
(1)
|
For further information, refer to
Note 10
of the Notes to Consolidated Financial Statements included in Part II of this Annual Report on Form 10-K.
|
(2)
|
Represents non-cancelable contractual obligations primarily related to data center operations and build-outs; digital media content licensing arrangements; and purchases of inventory. The amounts included above represent the non-cancelable portion of agreements or the minimum cancellation fee. For those agreements with variable terms, we do not estimate the non-cancelable obligation beyond any minimum quantities and/or pricing as of
December 31, 2017
. Excluded from the table above are open orders for purchases that support normal operations.
|
(3)
|
Represents our principal and interest payments. For further information on long-term debt, refer to
Note 6
of the Notes to Consolidated Financial Statements included in Part II of this Annual Report on Form 10-K.
|
(4)
|
Represents one-time transition tax payable related to known amounts of cash taxes payable in future years as a result of the Tax Act. For further information, refer to
Note 14
of the Notes to Consolidated Financial Statements included in Part II of this Annual Report on Form 10-K. Excluded from the table above are long-term taxes payable of
$3.5 billion
as of
December 31, 2017
related to uncertain tax positions. At this time, we are unable to make a reasonably reliable estimate of the timing of payments for uncertain tax positions in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes.
|
(5)
|
Represents cash obligations recorded on our consolidated balance sheets, including the short-term portion of these long-term liabilities, and consist primarily of facility build-outs and payments owed in connection with certain commercial agreements.
|
Alphabet Inc.
|
Alphabet Inc.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Alphabet Inc.
|
|
As of December 31,
|
|
12-Month Average
As of December 31,
|
||||||||||||
|
2016
|
|
2017
|
|
2016
|
|
2017
|
||||||||
Risk Category - Interest Rate
|
$
|
107
|
|
|
$
|
84
|
|
|
$
|
99
|
|
|
$
|
87
|
|
Alphabet Inc.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
Page
|
Financial Statements:
|
|
Alphabet Inc.
|
/s/ Ernst & Young LLP
|
|
|
|
We have served as the Company's auditor since 1999.
|
|
|
|
San Jose, California
|
|
February 5, 2018
|
|
Alphabet Inc.
|
/s/ Ernst & Young LLP
|
|
|
|
San Jose, California
|
|
February 5, 2018
|
|
Alphabet Inc.
|
|
As of
December 31, 2016 |
|
As of
December 31, 2017 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,918
|
|
|
$
|
10,715
|
|
Marketable securities
|
73,415
|
|
|
91,156
|
|
||
Total cash, cash equivalents, and marketable securities
|
86,333
|
|
|
101,871
|
|
||
Accounts receivable, net of allowance of $467 and $674
|
14,137
|
|
|
18,336
|
|
||
Income taxes receivable, net
|
95
|
|
|
369
|
|
||
Inventory
|
268
|
|
|
749
|
|
||
Other current assets
|
4,575
|
|
|
2,983
|
|
||
Total current assets
|
105,408
|
|
|
124,308
|
|
||
Non-marketable investments
|
5,878
|
|
|
7,813
|
|
||
Deferred income taxes
|
383
|
|
|
680
|
|
||
Property and equipment, net
|
34,234
|
|
|
42,383
|
|
||
Intangible assets, net
|
3,307
|
|
|
2,692
|
|
||
Goodwill
|
16,468
|
|
|
16,747
|
|
||
Other non-current assets
|
1,819
|
|
|
2,672
|
|
||
Total assets
|
$
|
167,497
|
|
|
$
|
197,295
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,041
|
|
|
$
|
3,137
|
|
Accrued compensation and benefits
|
3,976
|
|
|
4,581
|
|
||
Accrued expenses and other current liabilities
|
6,144
|
|
|
10,177
|
|
||
Accrued revenue share
|
2,942
|
|
|
3,975
|
|
||
Deferred revenue
|
1,099
|
|
|
1,432
|
|
||
Income taxes payable, net
|
554
|
|
|
881
|
|
||
Total current liabilities
|
16,756
|
|
|
24,183
|
|
||
Long-term debt
|
3,935
|
|
|
3,969
|
|
||
Deferred revenue, non-current
|
202
|
|
|
340
|
|
||
Income taxes payable, non-current
|
4,677
|
|
|
12,812
|
|
||
Deferred income taxes
|
226
|
|
|
430
|
|
||
Other long-term liabilities
|
2,665
|
|
|
3,059
|
|
||
Total liabilities
|
28,461
|
|
|
44,793
|
|
||
Commitments and Contingencies (Note 10)
|
|
|
|
|
|||
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); 691,293 (Class A 296,992, Class B 47,437, Class C 346,864) and 694,783 (Class A 298,470, Class B 46,972, Class C 349,341) shares issued and outstanding
|
36,307
|
|
|
40,247
|
|
||
Accumulated other comprehensive loss
|
(2,402
|
)
|
|
(992
|
)
|
||
Retained earnings
|
105,131
|
|
|
113,247
|
|
||
Total stockholders’ equity
|
139,036
|
|
|
152,502
|
|
||
Total liabilities and stockholders’ equity
|
$
|
167,497
|
|
|
$
|
197,295
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Revenues
|
$
|
74,989
|
|
|
$
|
90,272
|
|
|
$
|
110,855
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of revenues
|
28,164
|
|
|
35,138
|
|
|
45,583
|
|
|||
Research and development
|
12,282
|
|
|
13,948
|
|
|
16,625
|
|
|||
Sales and marketing
|
9,047
|
|
|
10,485
|
|
|
12,893
|
|
|||
General and administrative
|
6,136
|
|
|
6,985
|
|
|
6,872
|
|
|||
European Commission fine
|
0
|
|
|
0
|
|
|
2,736
|
|
|||
Total costs and expenses
|
55,629
|
|
|
66,556
|
|
|
84,709
|
|
|||
Income from operations
|
19,360
|
|
|
23,716
|
|
|
26,146
|
|
|||
Other income (expense), net
|
291
|
|
|
434
|
|
|
1,047
|
|
|||
Income before income taxes
|
19,651
|
|
|
24,150
|
|
|
27,193
|
|
|||
Provision for income taxes
|
3,303
|
|
|
4,672
|
|
|
14,531
|
|
|||
Net income
|
$
|
16,348
|
|
|
$
|
19,478
|
|
|
$
|
12,662
|
|
Less: Adjustment Payment to Class C capital stockholders
|
522
|
|
|
0
|
|
|
0
|
|
|||
Net income available to all stockholders
|
$
|
15,826
|
|
|
$
|
19,478
|
|
|
$
|
12,662
|
|
|
|
|
|
|
|
||||||
Basic net income per share of Class A and B common stock
|
$
|
23.11
|
|
|
$
|
28.32
|
|
|
$
|
18.27
|
|
Basic net income per share of Class C capital stock
|
$
|
24.63
|
|
|
$
|
28.32
|
|
|
$
|
18.27
|
|
|
|
|
|
|
|
||||||
Diluted net income per share of Class A and B common stock
|
$
|
22.84
|
|
|
$
|
27.85
|
|
|
$
|
18.00
|
|
Diluted net income per share of Class C capital stock
|
$
|
24.34
|
|
|
$
|
27.85
|
|
|
$
|
18.00
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Net income
|
$
|
16,348
|
|
|
$
|
19,478
|
|
|
$
|
12,662
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in foreign currency translation adjustment
|
(1,067
|
)
|
|
(599
|
)
|
|
1,543
|
|
|||
Available-for-sale investments:
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses)
|
(715
|
)
|
|
(314
|
)
|
|
307
|
|
|||
Less: reclassification adjustment for net (gains) losses included in net income
|
208
|
|
|
221
|
|
|
105
|
|
|||
Net change (net of tax effect of $29, $0, and $0)
|
(507
|
)
|
|
(93
|
)
|
|
412
|
|
|||
Cash flow hedges:
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses)
|
676
|
|
|
515
|
|
|
(638
|
)
|
|||
Less: reclassification adjustment for net (gains) losses included in net income
|
(1,003
|
)
|
|
(351
|
)
|
|
93
|
|
|||
Net change (net of tax effect of $115, $64, and $247)
|
(327
|
)
|
|
164
|
|
|
(545
|
)
|
|||
Other comprehensive income (loss)
|
(1,901
|
)
|
|
(528
|
)
|
|
1,410
|
|
|||
Comprehensive income
|
$
|
14,447
|
|
|
$
|
18,950
|
|
|
$
|
14,072
|
|
Alphabet Inc.
|
|
Class A and Class B
Common Stock, Class C Capital Stock and
Additional Paid-In Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Total
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
Balance as of December 31, 2014
|
680,172
|
|
|
$
|
28,767
|
|
|
$
|
27
|
|
|
$
|
75,066
|
|
|
$
|
103,860
|
|
Common and capital stock issued
|
8,714
|
|
|
664
|
|
|
0
|
|
|
0
|
|
|
664
|
|
||||
Stock-based compensation expense
|
0
|
|
|
5,151
|
|
|
0
|
|
|
0
|
|
|
5,151
|
|
||||
Stock-based compensation tax benefits
|
0
|
|
|
815
|
|
|
0
|
|
|
0
|
|
|
815
|
|
||||
Tax withholding related to vesting of restricted stock units
|
0
|
|
|
(2,779
|
)
|
|
0
|
|
|
0
|
|
|
(2,779
|
)
|
||||
Repurchases of capital stock
|
(2,391
|
)
|
|
(111
|
)
|
|
0
|
|
|
(1,669
|
)
|
|
(1,780
|
)
|
||||
Adjustment Payment to Class C capital stockholders
|
853
|
|
|
475
|
|
|
0
|
|
|
(522
|
)
|
|
(47
|
)
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
16,348
|
|
|
16,348
|
|
||||
Other comprehensive loss
|
0
|
|
|
0
|
|
|
(1,901
|
)
|
|
0
|
|
|
(1,901
|
)
|
||||
Balance as of December 31, 2015
|
687,348
|
|
|
32,982
|
|
|
(1,874
|
)
|
|
89,223
|
|
|
120,331
|
|
||||
Cumulative effect of accounting change
|
0
|
|
|
180
|
|
|
0
|
|
|
(133
|
)
|
|
47
|
|
||||
Common and capital stock issued
|
9,106
|
|
|
298
|
|
|
0
|
|
|
0
|
|
|
298
|
|
||||
Stock-based compensation expense
|
0
|
|
|
6,700
|
|
|
0
|
|
|
0
|
|
|
6,700
|
|
||||
Tax withholding related to vesting of restricted stock units
|
0
|
|
|
(3,597
|
)
|
|
0
|
|
|
0
|
|
|
(3,597
|
)
|
||||
Repurchases of capital stock
|
(5,161
|
)
|
|
(256
|
)
|
|
0
|
|
|
(3,437
|
)
|
|
(3,693
|
)
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
19,478
|
|
|
19,478
|
|
||||
Other comprehensive loss
|
0
|
|
|
0
|
|
|
(528
|
)
|
|
0
|
|
|
(528
|
)
|
||||
Balance as of December 31, 2016
|
691,293
|
|
|
36,307
|
|
|
(2,402
|
)
|
|
105,131
|
|
|
139,036
|
|
||||
Cumulative effect of accounting change
|
0
|
|
|
0
|
|
|
0
|
|
|
(15
|
)
|
|
(15
|
)
|
||||
Common and capital stock issued
|
8,652
|
|
|
212
|
|
|
0
|
|
|
0
|
|
|
212
|
|
||||
Stock-based compensation expense
|
0
|
|
|
7,694
|
|
|
0
|
|
|
0
|
|
|
7,694
|
|
||||
Tax withholding related to vesting of restricted stock units
|
0
|
|
|
(4,373
|
)
|
|
0
|
|
|
0
|
|
|
(4,373
|
)
|
||||
Repurchases of capital stock
|
(5,162
|
)
|
|
(315
|
)
|
|
0
|
|
|
(4,531
|
)
|
|
(4,846
|
)
|
||||
Sale of subsidiary shares
|
0
|
|
|
722
|
|
|
0
|
|
|
0
|
|
|
722
|
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
12,662
|
|
|
12,662
|
|
||||
Other comprehensive income
|
0
|
|
|
0
|
|
|
1,410
|
|
|
0
|
|
|
1,410
|
|
||||
Balance as of December 31, 2017
|
694,783
|
|
|
$
|
40,247
|
|
|
$
|
(992
|
)
|
|
$
|
113,247
|
|
|
$
|
152,502
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
16,348
|
|
|
$
|
19,478
|
|
|
$
|
12,662
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and impairment of property and equipment
|
4,132
|
|
|
5,267
|
|
|
6,103
|
|
|||
Amortization and impairment of intangible assets
|
931
|
|
|
877
|
|
|
812
|
|
|||
Stock-based compensation expense
|
5,203
|
|
|
6,703
|
|
|
7,679
|
|
|||
Deferred income taxes
|
(179
|
)
|
|
(38
|
)
|
|
258
|
|
|||
Loss on marketable and non-marketable investments, net
|
334
|
|
|
275
|
|
|
194
|
|
|||
Other
|
212
|
|
|
174
|
|
|
137
|
|
|||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(2,094
|
)
|
|
(2,578
|
)
|
|
(3,768
|
)
|
|||
Income taxes, net
|
(179
|
)
|
|
3,125
|
|
|
8,211
|
|
|||
Other assets
|
(318
|
)
|
|
312
|
|
|
(2,164
|
)
|
|||
Accounts payable
|
203
|
|
|
110
|
|
|
731
|
|
|||
Accrued expenses and other liabilities
|
1,597
|
|
|
1,515
|
|
|
4,891
|
|
|||
Accrued revenue share
|
339
|
|
|
593
|
|
|
955
|
|
|||
Deferred revenue
|
43
|
|
|
223
|
|
|
390
|
|
|||
Net cash provided by operating activities
|
26,572
|
|
|
36,036
|
|
|
37,091
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(9,950
|
)
|
|
(10,212
|
)
|
|
(13,184
|
)
|
|||
Proceeds from disposals of property and equipment
|
35
|
|
|
240
|
|
|
99
|
|
|||
Purchases of marketable securities
|
(74,368
|
)
|
|
(84,509
|
)
|
|
(92,195
|
)
|
|||
Maturities and sales of marketable securities
|
62,905
|
|
|
66,895
|
|
|
73,959
|
|
|||
Purchases of non-marketable investments
|
(2,326
|
)
|
|
(1,109
|
)
|
|
(1,745
|
)
|
|||
Maturities and sales of non-marketable investments
|
154
|
|
|
494
|
|
|
533
|
|
|||
Cash collateral related to securities lending
|
(350
|
)
|
|
(2,428
|
)
|
|
0
|
|
|||
Investments in reverse repurchase agreements
|
425
|
|
|
450
|
|
|
0
|
|
|||
Acquisitions, net of cash acquired, and purchases of intangible assets
|
(236
|
)
|
|
(986
|
)
|
|
(287
|
)
|
|||
Proceeds from collection of notes receivable
|
0
|
|
|
0
|
|
|
1,419
|
|
|||
Net cash used in investing activities
|
(23,711
|
)
|
|
(31,165
|
)
|
|
(31,401
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net payments related to stock-based award activities
|
(2,375
|
)
|
|
(3,304
|
)
|
|
(4,166
|
)
|
|||
Adjustment Payment to Class C capital stockholders
|
(47
|
)
|
|
0
|
|
|
0
|
|
|||
Repurchases of capital stock
|
(1,780
|
)
|
|
(3,693
|
)
|
|
(4,846
|
)
|
|||
Proceeds from issuance of debt, net of costs
|
13,705
|
|
|
8,729
|
|
|
4,291
|
|
|||
Repayments of debt
|
(13,728
|
)
|
|
(10,064
|
)
|
|
(4,377
|
)
|
|||
Proceeds from sale of subsidiary shares
|
0
|
|
|
0
|
|
|
800
|
|
|||
Net cash used in financing activities
|
(4,225
|
)
|
|
(8,332
|
)
|
|
(8,298
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(434
|
)
|
|
(170
|
)
|
|
405
|
|
|||
Net decrease in cash and cash equivalents
|
(1,798
|
)
|
|
(3,631
|
)
|
|
(2,203
|
)
|
|||
Cash and cash equivalents at beginning of period
|
18,347
|
|
|
16,549
|
|
|
12,918
|
|
|||
Cash and cash equivalents at end of period
|
$
|
16,549
|
|
|
$
|
12,918
|
|
|
$
|
10,715
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for taxes, net of refunds
|
$
|
3,651
|
|
|
$
|
1,643
|
|
|
$
|
6,191
|
|
Cash paid for interest, net of amounts capitalized
|
$
|
96
|
|
|
$
|
84
|
|
|
$
|
84
|
|
Alphabet Inc.
|
•
|
Amortization of certain intangible assets;
|
•
|
Content acquisition costs primarily related to 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);
|
•
|
Credit card and other transaction fees related to processing customer transactions;
|
•
|
Expenses associated with our data centers and other operations (including bandwidth, compensation expense (including SBC), depreciation, energy, and other equipment costs); and
|
•
|
Inventory related costs for hardware we sell.
|
Alphabet Inc.
|
Alphabet Inc.
|
Alphabet Inc.
|
Alphabet Inc.
|
|
Twelve Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2015
(1)
|
|
2016
(1)
|
|
2017
|
||||||
Google properties
|
$
|
52,357
|
|
|
$
|
63,785
|
|
|
$
|
77,788
|
|
Google Network Members' properties
|
15,033
|
|
|
15,598
|
|
|
17,587
|
|
|||
Google advertising revenues
|
67,390
|
|
|
79,383
|
|
|
95,375
|
|
|||
Google other revenues
|
7,154
|
|
|
10,080
|
|
|
14,277
|
|
|||
Other Bets revenues
|
445
|
|
|
809
|
|
|
1,203
|
|
|||
Total revenues
(2)
|
$
|
74,989
|
|
|
$
|
90,272
|
|
|
$
|
110,855
|
|
(1)
|
As noted above, prior period amounts have not been adjusted under the modified retrospective method.
|
(2)
|
Revenues include hedging gains (losses) of
$1.4 billion
,
$539 million
, and
$(169) million
for the years ended
December 31, 2015
,
2016
, and
2017
, respectively, which do not represent revenues recognized from contracts with customers.
|
Alphabet Inc.
|
|
Twelve Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
United States
|
$
|
34,810
|
|
|
$
|
42,781
|
|
|
$
|
52,449
|
|
EMEA
(1)
|
26,368
|
|
|
30,304
|
|
|
36,046
|
|
|||
APAC
(1)
|
9,887
|
|
|
12,559
|
|
|
16,235
|
|
|||
Other Americas
(1)
|
3,924
|
|
|
4,628
|
|
|
6,125
|
|
|||
Total revenues
(2)
|
$
|
74,989
|
|
|
$
|
90,272
|
|
|
$
|
110,855
|
|
(1)
|
Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America (Other Americas).
|
(2)
|
Revenues include hedging gains (losses) for the the years ended
December 31, 2015
,
2016
, and
2017
.
|
•
|
Apps, in-app purchases, and digital content in the Google Play store;
|
•
|
Google Cloud offerings;
|
•
|
Hardware; and
|
•
|
Other miscellaneous products and services.
|
Alphabet Inc.
|
Alphabet Inc.
|
|
As of December 31, 2016
|
||||||||||||||||||||||
|
Adjusted
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Cash and
Cash Equivalents |
|
Marketable
Securities |
||||||||||||
Cash
|
$
|
7,078
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
7,078
|
|
|
$
|
7,078
|
|
|
$
|
0
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market and other funds
|
4,783
|
|
|
0
|
|
|
0
|
|
|
4,783
|
|
|
4,783
|
|
|
0
|
|
||||||
U.S. government notes
|
38,454
|
|
|
46
|
|
|
(215
|
)
|
|
38,285
|
|
|
613
|
|
|
37,672
|
|
||||||
Marketable equity securities
|
160
|
|
|
133
|
|
|
0
|
|
|
293
|
|
|
0
|
|
|
293
|
|
||||||
|
43,397
|
|
|
179
|
|
|
(215
|
)
|
|
43,361
|
|
|
5,396
|
|
|
37,965
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Time deposits
(1)
|
142
|
|
|
0
|
|
|
0
|
|
|
142
|
|
|
140
|
|
|
2
|
|
||||||
Mutual funds
(2)
|
204
|
|
|
7
|
|
|
0
|
|
|
211
|
|
|
0
|
|
|
211
|
|
||||||
U.S. government agencies
|
1,826
|
|
|
0
|
|
|
(11
|
)
|
|
1,815
|
|
|
300
|
|
|
1,515
|
|
||||||
Foreign government bonds
|
2,345
|
|
|
18
|
|
|
(7
|
)
|
|
2,356
|
|
|
0
|
|
|
2,356
|
|
||||||
Municipal securities
|
4,757
|
|
|
15
|
|
|
(65
|
)
|
|
4,707
|
|
|
2
|
|
|
4,705
|
|
||||||
Corporate debt securities
|
12,993
|
|
|
114
|
|
|
(116
|
)
|
|
12,991
|
|
|
2
|
|
|
12,989
|
|
||||||
Mortgage-backed securities
|
12,006
|
|
|
26
|
|
|
(216
|
)
|
|
11,816
|
|
|
0
|
|
|
11,816
|
|
||||||
Asset-backed securities
|
1,855
|
|
|
2
|
|
|
(1
|
)
|
|
1,856
|
|
|
0
|
|
|
1,856
|
|
||||||
|
36,128
|
|
|
182
|
|
|
(416
|
)
|
|
35,894
|
|
|
444
|
|
|
35,450
|
|
||||||
Total
|
$
|
86,603
|
|
|
$
|
361
|
|
|
$
|
(631
|
)
|
|
$
|
86,333
|
|
|
$
|
12,918
|
|
|
$
|
73,415
|
|
|
As of December 31, 2017
|
||||||||||||||||||||||
|
Adjusted
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Cash and
Cash
Equivalents
|
|
Marketable
Securities |
||||||||||||
Cash
|
$
|
7,158
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
7,158
|
|
|
$
|
7,158
|
|
|
$
|
0
|
|
Level 1:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market and other funds
|
1,833
|
|
|
0
|
|
|
0
|
|
|
1,833
|
|
|
1,833
|
|
|
0
|
|
||||||
U.S. government notes
|
37,256
|
|
|
2
|
|
|
(310
|
)
|
|
36,948
|
|
|
1,241
|
|
|
35,707
|
|
||||||
Marketable equity securities
|
242
|
|
|
100
|
|
|
(2
|
)
|
|
340
|
|
|
0
|
|
|
340
|
|
||||||
|
39,331
|
|
|
102
|
|
|
(312
|
)
|
|
39,121
|
|
|
3,074
|
|
|
36,047
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Time deposits
(1)
|
359
|
|
|
0
|
|
|
0
|
|
|
359
|
|
|
357
|
|
|
2
|
|
||||||
Mutual funds
(2)
|
232
|
|
|
20
|
|
|
0
|
|
|
252
|
|
|
0
|
|
|
252
|
|
||||||
U.S. government agencies
|
3,713
|
|
|
0
|
|
|
(29
|
)
|
|
3,684
|
|
|
0
|
|
|
3,684
|
|
||||||
Foreign government bonds
|
2,948
|
|
|
6
|
|
|
(14
|
)
|
|
2,940
|
|
|
0
|
|
|
2,940
|
|
||||||
Municipal securities
|
7,631
|
|
|
2
|
|
|
(53
|
)
|
|
7,580
|
|
|
0
|
|
|
7,580
|
|
||||||
Corporate debt securities
|
24,269
|
|
|
21
|
|
|
(135
|
)
|
|
24,155
|
|
|
126
|
|
|
24,029
|
|
||||||
Mortgage-backed securities
|
11,157
|
|
|
9
|
|
|
(163
|
)
|
|
11,003
|
|
|
0
|
|
|
11,003
|
|
||||||
Asset-backed securities
|
5,632
|
|
|
4
|
|
|
(17
|
)
|
|
5,619
|
|
|
0
|
|
|
5,619
|
|
||||||
|
55,941
|
|
|
62
|
|
|
(411
|
)
|
|
55,592
|
|
|
483
|
|
|
55,109
|
|
||||||
Total
|
$
|
102,430
|
|
|
$
|
164
|
|
|
$
|
(723
|
)
|
|
$
|
101,871
|
|
|
$
|
10,715
|
|
|
$
|
91,156
|
|
(1)
|
The majority of our time deposits are foreign deposits.
|
(2)
|
The fair value option was elected for mutual funds with gains (losses) recognized in other income (expense), net.
|
Alphabet Inc.
|
|
As of
December 31, 2017 |
||
Due in 1 year
|
$
|
19,486
|
|
Due in 1 year through 5 years
|
56,056
|
|
|
Due in 5 years through 10 years
|
2,676
|
|
|
Due after 10 years
|
12,346
|
|
|
Total
|
$
|
90,564
|
|
|
|
As of December 31, 2016
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
||||||||||||
U.S. government notes
|
|
$
|
26,411
|
|
|
$
|
(215
|
)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
26,411
|
|
|
$
|
(215
|
)
|
U.S. government agencies
|
|
1,014
|
|
|
(11
|
)
|
|
0
|
|
|
0
|
|
|
1,014
|
|
|
(11
|
)
|
||||||
Foreign government bonds
|
|
956
|
|
|
(7
|
)
|
|
0
|
|
|
0
|
|
|
956
|
|
|
(7
|
)
|
||||||
Municipal securities
|
|
3,461
|
|
|
(63
|
)
|
|
46
|
|
|
(2
|
)
|
|
3,507
|
|
|
(65
|
)
|
||||||
Corporate debt securities
|
|
6,184
|
|
|
(111
|
)
|
|
166
|
|
|
(5
|
)
|
|
6,350
|
|
|
(116
|
)
|
||||||
Mortgage-backed securities
|
|
10,184
|
|
|
(206
|
)
|
|
259
|
|
|
(10
|
)
|
|
10,443
|
|
|
(216
|
)
|
||||||
Asset-backed securities
|
|
391
|
|
|
(1
|
)
|
|
0
|
|
|
0
|
|
|
391
|
|
|
(1
|
)
|
||||||
Total
|
|
$
|
48,601
|
|
|
$
|
(614
|
)
|
|
$
|
471
|
|
|
$
|
(17
|
)
|
|
$
|
49,072
|
|
|
$
|
(631
|
)
|
|
|
As of December 31, 2017
|
||||||||||||||||||||||
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss |
||||||||||||
U.S. government notes
|
|
$
|
18,325
|
|
|
$
|
(134
|
)
|
|
$
|
16,136
|
|
|
$
|
(176
|
)
|
|
$
|
34,461
|
|
|
$
|
(310
|
)
|
U.S. government agencies
|
|
2,913
|
|
|
(22
|
)
|
|
767
|
|
|
(7
|
)
|
|
3,680
|
|
|
(29
|
)
|
||||||
Foreign government bonds
|
|
1,932
|
|
|
(8
|
)
|
|
342
|
|
|
(6
|
)
|
|
2,274
|
|
|
(14
|
)
|
||||||
Municipal securities
|
|
5,666
|
|
|
(47
|
)
|
|
415
|
|
|
(6
|
)
|
|
6,081
|
|
|
(53
|
)
|
||||||
Corporate debt securities
|
|
18,300
|
|
|
(114
|
)
|
|
1,710
|
|
|
(21
|
)
|
|
20,010
|
|
|
(135
|
)
|
||||||
Mortgage-backed securities
|
|
7,261
|
|
|
(89
|
)
|
|
3,314
|
|
|
(74
|
)
|
|
10,575
|
|
|
(163
|
)
|
||||||
Asset-backed securities
|
|
3,800
|
|
|
(16
|
)
|
|
135
|
|
|
(1
|
)
|
|
3,935
|
|
|
(17
|
)
|
||||||
Marketable equity securities
|
|
39
|
|
|
(2
|
)
|
|
0
|
|
|
0
|
|
|
39
|
|
|
(2
|
)
|
||||||
Total
|
|
$
|
58,236
|
|
|
$
|
(432
|
)
|
|
$
|
22,819
|
|
|
$
|
(291
|
)
|
|
$
|
81,055
|
|
|
$
|
(723
|
)
|
Alphabet Inc.
|
Alphabet Inc.
|
|
|
|
|
As of December 31, 2016
|
||||||||||
|
|
Balance Sheet Location
|
|
Fair Value of
Derivatives Designated as Hedging Instruments |
|
Fair Value of
Derivatives Not Designated as Hedging Instruments |
|
Total Fair
Value |
||||||
Derivative Assets:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Other current and non-current assets
|
|
$
|
539
|
|
|
$
|
57
|
|
|
$
|
596
|
|
Total
|
|
|
|
$
|
539
|
|
|
$
|
57
|
|
|
$
|
596
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Accrued expenses and other liabilities, current and non-current
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
13
|
|
Total
|
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
13
|
|
|
|
|
|
As of December 31, 2017
|
||||||||||
|
|
Balance Sheet Location
|
|
Fair Value of
Derivatives Designated as Hedging Instruments |
|
Fair Value of
Derivatives Not Designated as Hedging Instruments |
|
Total Fair
Value |
||||||
Derivative Assets:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Other current and non-current assets
|
|
$
|
51
|
|
|
$
|
29
|
|
|
$
|
80
|
|
Total
|
|
|
|
$
|
51
|
|
|
$
|
29
|
|
|
$
|
80
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Accrued expenses and other liabilities, current and non-current
|
|
$
|
230
|
|
|
$
|
122
|
|
|
$
|
352
|
|
Total
|
|
|
|
$
|
230
|
|
|
$
|
122
|
|
|
$
|
352
|
|
|
|
Gains (Losses) Recognized in OCI
on Derivatives Before Tax Effect (Effective Portion)
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
2015
|
|
2016
|
|
2017
|
||||||
Foreign exchange contracts
|
|
$
|
964
|
|
|
$
|
773
|
|
|
$
|
(955
|
)
|
|
|
Gains (Losses) Reclassified from AOCI into Income (Effective Portion)
|
||||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
Location
|
|
2015
|
|
2016
|
|
2017
|
||||||
Foreign exchange contracts
|
|
Revenues
|
|
$
|
1,399
|
|
|
$
|
539
|
|
|
$
|
(169
|
)
|
Interest rate contracts
|
|
Other income (expense), net
|
|
5
|
|
|
5
|
|
|
5
|
|
|||
Total
|
|
|
|
$
|
1,404
|
|
|
$
|
544
|
|
|
$
|
(164
|
)
|
Alphabet Inc.
|
|
|
Gains (Losses) Recognized in Income on Derivatives (Amount
Excluded from Effectiveness Testing and Ineffective Portion)
(1)
|
||||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
Location
|
|
2015
|
|
2016
|
|
2017
|
||||||
Foreign exchange contracts
|
|
Other income (expense), net
|
|
$
|
(297
|
)
|
|
$
|
(381
|
)
|
|
$
|
83
|
|
(1)
|
Gains (losses) related to the ineffective portion of the hedges were not material in all periods presented.
|
|
|
Gains (Losses) Recognized in Income on Derivatives
(2)
|
||||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
Derivatives in Fair Value Hedging Relationship
|
|
Location
|
|
2015
|
|
2016
|
|
2017
|
||||||
Foreign Exchange Hedges:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Other income (expense), net
|
|
$
|
170
|
|
|
$
|
145
|
|
|
$
|
(174
|
)
|
Hedged item
|
|
Other income (expense), net
|
|
(176
|
)
|
|
(139
|
)
|
|
197
|
|
|||
Total
|
|
|
|
$
|
(6
|
)
|
|
$
|
6
|
|
|
$
|
23
|
|
(2)
|
Amounts excluded from effectiveness testing and the ineffective portion of the fair value hedging relationships were not material in all periods presented.
|
Alphabet Inc.
|
|
As of December 31, 2016
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
|
|
|
||||||||||||||||||
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Non-Cash Collateral Received
|
|
Net Assets Exposed
|
||||||||||||||
Derivatives
|
$
|
596
|
|
|
$
|
0
|
|
|
$
|
596
|
|
|
$
|
(11
|
)
|
(1)
|
$
|
(337
|
)
|
|
$
|
(73
|
)
|
|
$
|
175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
As of December 31, 2017
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
|
|
|
||||||||||||||||||
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Non-Cash Collateral Received
|
|
Net Assets Exposed
|
||||||||||||||
Derivatives
|
$
|
102
|
|
|
$
|
(22
|
)
|
|
$
|
80
|
|
|
$
|
(64
|
)
|
(1)
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
$
|
10
|
|
(1)
|
The balances as of
December 31, 2016
and
2017
were related to derivative liabilities which are allowed to be net settled against derivative assets in accordance with our master netting agreements.
|
|
As of December 31, 2016
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
|
|
|
||||||||||||||||||
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Pledged
|
|
Non-Cash Collateral Pledged
|
|
Net Liabilities
|
||||||||||||||
Derivatives
|
$
|
13
|
|
|
$
|
0
|
|
|
$
|
13
|
|
|
$
|
(11
|
)
|
(2)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
As of December 31, 2017
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
|
|
|||||||||||||||||||
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Pledged
|
|
Non-Cash Collateral Pledged
|
|
Net Liabilities
|
||||||||||||||
Derivatives
|
$
|
374
|
|
|
$
|
(22
|
)
|
|
$
|
352
|
|
|
$
|
(64
|
)
|
(2)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
288
|
|
(2)
|
The balances as of
December 31, 2016
and
2017
were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
2016
|
|
2017
|
|||||
Beginning balance
|
$
|
1,024
|
|
|
$
|
1,165
|
|
Total net gains (losses)
|
|
|
|
||||
Included in earnings
|
0
|
|
|
(10
|
)
|
||
Included in other comprehensive income
|
106
|
|
|
707
|
|
||
Purchases
|
78
|
|
|
88
|
|
||
Sales
|
(18
|
)
|
|
(2
|
)
|
||
Settlements
|
(25
|
)
|
|
(54
|
)
|
||
Ending balance
|
$
|
1,165
|
|
|
$
|
1,894
|
|
Alphabet Inc.
|
|
As of
December 31, 2016 |
|
As of
December 31, 2017 |
||||
3.625% Notes due on May 19, 2021
|
$
|
1,000
|
|
|
$
|
1,000
|
|
3.375% Notes due on February 25, 2024
|
1,000
|
|
|
1,000
|
|
||
1.998% Notes due on August 15, 2026
|
2,000
|
|
|
2,000
|
|
||
Unamortized discount for the Notes above
|
(65
|
)
|
|
(57
|
)
|
||
Subtotal
(1)
|
$
|
3,935
|
|
|
$
|
3,943
|
|
Capital lease obligation
|
0
|
|
|
26
|
|
||
Total long-term debt
|
$
|
3,935
|
|
|
$
|
3,969
|
|
(1)
|
Includes the outstanding (and unexchanged) Google Notes issued in 2011 and 2014 and the Alphabet notes exchanged in 2016.
|
Alphabet Inc.
|
2018
|
|
$
|
0
|
|
2019
|
|
1
|
|
|
2020
|
|
1
|
|
|
2021
|
|
1,001
|
|
|
2022
|
|
1
|
|
|
Thereafter
|
|
3,022
|
|
|
Total
|
|
$
|
4,026
|
|
|
As of
December 31, 2016 |
|
As of
December 31, 2017 |
||||
Land and buildings
|
$
|
19,804
|
|
|
$
|
23,183
|
|
Information technology assets
|
16,084
|
|
|
21,429
|
|
||
Construction in progress
|
8,166
|
|
|
10,491
|
|
||
Leasehold improvements
|
3,415
|
|
|
4,496
|
|
||
Furniture and fixtures
|
58
|
|
|
48
|
|
||
Property and equipment, gross
|
47,527
|
|
|
59,647
|
|
||
Less: accumulated depreciation
|
(13,293
|
)
|
|
(17,264
|
)
|
||
Property and equipment, net
|
$
|
34,234
|
|
|
$
|
42,383
|
|
Alphabet Inc.
|
|
As of
December 31, 2016 |
|
As of
December 31, 2017 |
||||
European Commission fine
(1)
|
$
|
0
|
|
|
$
|
2,874
|
|
Accrued customer liabilities
|
1,256
|
|
|
1,489
|
|
||
Other accrued expenses and current liabilities
|
4,888
|
|
|
5,814
|
|
||
Accrued expenses and other current liabilities
|
$
|
6,144
|
|
|
$
|
10,177
|
|
(1)
|
Includes the effects of foreign exchange and interest.
|
|
Foreign Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Total
|
||||||||
Balance as of December 31, 2014
|
$
|
(980
|
)
|
|
$
|
421
|
|
|
$
|
586
|
|
|
$
|
27
|
|
Other comprehensive income (loss) before reclassifications
|
(1,067
|
)
|
|
(715
|
)
|
|
676
|
|
|
(1,106
|
)
|
||||
Amounts reclassified from AOCI
|
0
|
|
|
208
|
|
|
(1,003
|
)
|
|
(795
|
)
|
||||
Other comprehensive income (loss)
|
(1,067
|
)
|
|
(507
|
)
|
|
(327
|
)
|
|
(1,901
|
)
|
||||
Balance as of December 31, 2015
|
$
|
(2,047
|
)
|
|
$
|
(86
|
)
|
|
$
|
259
|
|
|
$
|
(1,874
|
)
|
Other comprehensive income (loss) before reclassifications
|
(599
|
)
|
|
(314
|
)
|
|
515
|
|
|
(398
|
)
|
||||
Amounts reclassified from AOCI
|
0
|
|
|
221
|
|
|
(351
|
)
|
|
(130
|
)
|
||||
Other comprehensive income (loss)
|
(599
|
)
|
|
(93
|
)
|
|
164
|
|
|
(528
|
)
|
||||
Balance as of December 31, 2016
|
$
|
(2,646
|
)
|
|
$
|
(179
|
)
|
|
$
|
423
|
|
|
$
|
(2,402
|
)
|
Other comprehensive income (loss) before reclassifications
|
1,543
|
|
|
307
|
|
|
(638
|
)
|
|
1,212
|
|
||||
Amounts reclassified from AOCI
|
0
|
|
|
105
|
|
|
93
|
|
|
198
|
|
||||
Other comprehensive income (loss)
|
1,543
|
|
|
412
|
|
|
(545
|
)
|
|
1,410
|
|
||||
Balance as of December 31, 2017
|
$
|
(1,103
|
)
|
|
$
|
233
|
|
|
$
|
(122
|
)
|
|
$
|
(992
|
)
|
|
|
|
|
Gains (Losses) Reclassified from AOCI to the Consolidated Statement of Income
|
||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
AOCI Components
|
|
Location
|
|
2015
|
|
2016
|
|
2017
|
||||||
Unrealized gains (losses) on available-for-sale investments
|
|
|
|
|
|
|
||||||||
|
|
Other income (expense), net
|
|
$
|
(208
|
)
|
|
$
|
(221
|
)
|
|
$
|
(105
|
)
|
|
|
Provision for income taxes
|
|
0
|
|
|
0
|
|
|
0
|
|
|||
|
|
Net of tax
|
|
$
|
(208
|
)
|
|
$
|
(221
|
)
|
|
$
|
(105
|
)
|
Unrealized gains (losses) on cash flow hedges
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Revenue
|
|
$
|
1,399
|
|
|
$
|
539
|
|
|
$
|
(169
|
)
|
Interest rate contracts
|
|
Other income (expense), net
|
|
5
|
|
|
5
|
|
|
5
|
|
|||
|
|
Benefit (provision) for income taxes
|
|
(401
|
)
|
|
(193
|
)
|
|
71
|
|
|||
|
|
Net of tax
|
|
$
|
1,003
|
|
|
$
|
351
|
|
|
$
|
(93
|
)
|
Total amount reclassified, net of tax
|
|
|
|
$
|
795
|
|
|
$
|
130
|
|
|
$
|
(198
|
)
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Interest income
|
$
|
999
|
|
|
$
|
1,220
|
|
|
$
|
1,312
|
|
Interest expense
(1)
|
(104
|
)
|
|
(124
|
)
|
|
(109
|
)
|
|||
Foreign currency exchange losses, net
(2)
|
(422
|
)
|
|
(475
|
)
|
|
(121
|
)
|
|||
Loss on marketable securities, net
|
(208
|
)
|
|
(210
|
)
|
|
(80
|
)
|
|||
Loss on non-marketable investments, net
|
(126
|
)
|
|
(65
|
)
|
|
(114
|
)
|
|||
Other
|
152
|
|
|
88
|
|
|
159
|
|
|||
Other income (expense), net
|
$
|
291
|
|
|
$
|
434
|
|
|
$
|
1,047
|
|
(1)
|
Interest expense is net of interest capitalized of
$0 million
,
$0 million
, and
$48 million
for the years ended
December 31, 2015
,
2016
, and
2017
, respectively.
|
(2)
|
Our foreign currency exchange losses, net, are related to the option premium costs and forward points for our foreign currency hedging contracts, our foreign exchange transaction gains and losses from the conversion of the transaction currency to the functional currency, offset by the foreign currency hedging contract losses and gains. The net foreign currency transaction losses were
$123 million
,
$112 million
, and
$226 million
for the years ended December 31,
2015
,
2016
, and
2017
, respectively.
|
Alphabet Inc.
|
|
Google
|
|
Other Bets
|
|
Total Consolidated
|
||||||
Balance as of December 31, 2015
|
$
|
15,456
|
|
|
$
|
413
|
|
|
$
|
15,869
|
|
Acquisitions
|
625
|
|
|
39
|
|
|
664
|
|
|||
Foreign currency translation and other adjustments
|
(54
|
)
|
|
(11
|
)
|
|
(65
|
)
|
|||
Balance as of December 31, 2016
|
$
|
16,027
|
|
|
$
|
441
|
|
|
$
|
16,468
|
|
Acquisitions
|
212
|
|
|
9
|
|
|
221
|
|
|||
Foreign currency translation and other adjustments
|
56
|
|
|
2
|
|
|
58
|
|
|||
Balance as of December 31, 2017
|
$
|
16,295
|
|
|
$
|
452
|
|
|
$
|
16,747
|
|
|
As of December 31, 2016
|
||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
Patents and developed technology
|
$
|
5,542
|
|
|
$
|
2,710
|
|
|
$
|
2,832
|
|
Customer relationships
|
352
|
|
|
197
|
|
|
155
|
|
|||
Trade names and other
|
463
|
|
|
143
|
|
|
320
|
|
|||
Total
|
$
|
6,357
|
|
|
$
|
3,050
|
|
|
$
|
3,307
|
|
|
As of December 31, 2017
|
||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||
Patents and developed technology
|
$
|
5,260
|
|
|
$
|
3,040
|
|
|
$
|
2,220
|
|
Customer relationships
|
359
|
|
|
263
|
|
|
96
|
|
|||
Trade names and other
|
544
|
|
|
168
|
|
|
376
|
|
|||
Total
|
$
|
6,163
|
|
|
$
|
3,471
|
|
|
$
|
2,692
|
|
Alphabet Inc.
|
2018
|
$
|
728
|
|
2019
|
615
|
|
|
2020
|
493
|
|
|
2021
|
459
|
|
|
2022
|
212
|
|
|
Thereafter
|
185
|
|
|
|
$
|
2,692
|
|
|
Operating
Leases
(1)
|
|
Sub-lease
Income
|
|
Net Operating Leases
|
||||||
2018
|
$
|
1,175
|
|
|
$
|
15
|
|
|
$
|
1,160
|
|
2019
|
1,133
|
|
|
13
|
|
|
1,120
|
|
|||
2020
|
1,073
|
|
|
11
|
|
|
1,062
|
|
|||
2021
|
975
|
|
|
7
|
|
|
968
|
|
|||
2022
|
831
|
|
|
3
|
|
|
828
|
|
|||
Thereafter
|
3,616
|
|
|
1
|
|
|
3,615
|
|
|||
Total minimum payments
|
$
|
8,803
|
|
|
$
|
50
|
|
|
$
|
8,753
|
|
(1)
|
Includes future minimum payments for leases which have not yet commenced.
|
Alphabet Inc.
|
Alphabet Inc.
|
Alphabet Inc.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
||||||||||
|
Class A
|
|
Class B
|
|
Class C
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Adjustment Payment to Class C capital stockholders
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
522
|
|
Allocation of undistributed earnings
|
6,695
|
|
|
1,196
|
|
|
7,935
|
|
|||
Total
|
$
|
6,695
|
|
|
$
|
1,196
|
|
|
$
|
8,457
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in per share computation
|
289,640
|
|
|
51,745
|
|
|
343,241
|
|
|||
Basic net income per share
|
$
|
23.11
|
|
|
$
|
23.11
|
|
|
$
|
24.63
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Adjustment Payment to Class C capital stockholders
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
522
|
|
Allocation of undistributed earnings for basic computation
|
$
|
6,695
|
|
|
$
|
1,196
|
|
|
$
|
7,935
|
|
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares
|
1,196
|
|
|
0
|
|
|
0
|
|
|||
Reallocation of undistributed earnings
|
(39
|
)
|
|
(14
|
)
|
|
39
|
|
|||
Allocation of undistributed earnings
|
$
|
7,852
|
|
|
$
|
1,182
|
|
|
$
|
7,974
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in basic computation
|
289,640
|
|
|
51,745
|
|
|
343,241
|
|
|||
Weighted-average effect of dilutive securities
|
|
|
|
|
|
||||||
Add:
|
|
|
|
|
|
||||||
Conversion of Class B to Class A common shares outstanding
|
51,745
|
|
|
0
|
|
|
0
|
|
|||
Restricted stock units and other contingently issuable shares
|
2,395
|
|
|
0
|
|
|
5,909
|
|
|||
Number of shares used in per share computation
|
343,780
|
|
|
51,745
|
|
|
349,150
|
|
|||
Diluted net income per share
|
$
|
22.84
|
|
|
$
|
22.84
|
|
|
$
|
24.34
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
||||||||||
|
Class A
|
|
Class B
|
|
Class C
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings
|
$
|
8,332
|
|
|
$
|
1,384
|
|
|
$
|
9,762
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in per share computation
|
294,217
|
|
|
48,859
|
|
|
344,702
|
|
|||
Basic net income per share
|
$
|
28.32
|
|
|
$
|
28.32
|
|
|
$
|
28.32
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings for basic computation
|
$
|
8,332
|
|
|
$
|
1,384
|
|
|
$
|
9,762
|
|
Effect of dilutive securities in equity method investments and subsidiaries
|
(9
|
)
|
|
(2
|
)
|
|
(10
|
)
|
|||
Allocation of undistributed earnings for diluted computation
|
8,323
|
|
|
1,382
|
|
|
9,752
|
|
|||
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares
|
1,382
|
|
|
0
|
|
|
0
|
|
|||
Reallocation of undistributed earnings
|
(94
|
)
|
|
(21
|
)
|
|
94
|
|
|||
Allocation of undistributed earnings
|
$
|
9,611
|
|
|
$
|
1,361
|
|
|
$
|
9,846
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in basic computation
|
294,217
|
|
|
48,859
|
|
|
344,702
|
|
|||
Weighted-average effect of dilutive securities
|
|
|
|
|
|
||||||
Add:
|
|
|
|
|
|
||||||
Conversion of Class B to Class A common shares outstanding
|
48,859
|
|
|
0
|
|
|
0
|
|
|||
Restricted stock units and other contingently issuable shares
|
2,055
|
|
|
0
|
|
|
8,873
|
|
|||
Number of shares used in per share computation
|
345,131
|
|
|
48,859
|
|
|
353,575
|
|
|||
Diluted net income per share
|
$
|
27.85
|
|
|
$
|
27.85
|
|
|
$
|
27.85
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
||||||||||
|
Class A
|
|
Class B
|
|
Class C
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings
|
$
|
5,438
|
|
|
$
|
862
|
|
|
$
|
6,362
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in per share computation
|
297,604
|
|
|
47,146
|
|
|
348,151
|
|
|||
Basic net income per share
|
$
|
18.27
|
|
|
$
|
18.27
|
|
|
$
|
18.27
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings for basic computation
|
$
|
5,438
|
|
|
$
|
862
|
|
|
$
|
6,362
|
|
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares
|
862
|
|
|
0
|
|
|
0
|
|
|||
Reallocation of undistributed earnings
|
(74
|
)
|
|
(14
|
)
|
|
74
|
|
|||
Allocation of undistributed earnings
|
$
|
6,226
|
|
|
$
|
848
|
|
|
$
|
6,436
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in basic computation
|
297,604
|
|
|
47,146
|
|
|
348,151
|
|
|||
Weighted-average effect of dilutive securities
|
|
|
|
|
|
||||||
Add:
|
|
|
|
|
|
||||||
Conversion of Class B to Class A common shares outstanding
|
47,146
|
|
|
0
|
|
|
0
|
|
|||
Restricted stock units and other contingently issuable shares
|
1,192
|
|
|
0
|
|
|
9,491
|
|
|||
Number of shares used in per share computation
|
345,942
|
|
|
47,146
|
|
|
357,642
|
|
|||
Diluted net income per share
|
$
|
18.00
|
|
|
$
|
18.00
|
|
|
$
|
18.00
|
|
Alphabet Inc.
|
|
Unvested Restricted Stock Units
|
|||||
|
Number of
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|||
Unvested as of December 31, 2016
|
25,348,955
|
|
|
$
|
624.92
|
|
Granted
|
8,097,708
|
|
|
$
|
845.06
|
|
Vested
|
(12,071,413
|
)
|
|
$
|
623.94
|
|
Forfeited/canceled
|
(1,297,904
|
)
|
|
$
|
659.61
|
|
Unvested as of December 31, 2017
|
20,077,346
|
|
|
$
|
712.45
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal and state
|
$
|
2,838
|
|
|
$
|
3,826
|
|
|
$
|
12,608
|
|
Foreign
|
723
|
|
|
966
|
|
|
1,746
|
|
|||
Total
|
3,561
|
|
|
4,792
|
|
|
14,354
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal and state
|
(241
|
)
|
|
(70
|
)
|
|
220
|
|
|||
Foreign
|
(17
|
)
|
|
(50
|
)
|
|
(43
|
)
|
|||
Total
|
(258
|
)
|
|
(120
|
)
|
|
177
|
|
|||
Provision for income taxes
|
$
|
3,303
|
|
|
$
|
4,672
|
|
|
$
|
14,531
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
|||||||
|
2015
|
|
2016
|
|
2017
|
|||
U.S. federal statutory tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign income taxed at different rates
|
(13.4
|
)%
|
|
(11.0
|
)%
|
|
(14.2
|
)%
|
Impact of the Tax Act
|
|
|
|
|
|
|
|
|
One-time transition tax
|
0.0
|
%
|
|
0.0
|
%
|
|
37.6
|
%
|
Deferred tax effects
|
0.0
|
%
|
|
0.0
|
%
|
|
(1.4
|
)%
|
Federal research credit
|
(2.1
|
)%
|
|
(2.0
|
)%
|
|
(1.8
|
)%
|
Stock-based compensation expense
|
0.3
|
%
|
|
(3.4
|
)%
|
|
(4.5
|
)%
|
European Commission Fine
|
0.0
|
%
|
|
0.0
|
%
|
|
3.5
|
%
|
Other adjustments
|
(3.0
|
)%
|
|
0.7
|
%
|
|
(0.8
|
)%
|
Effective tax rate
|
16.8
|
%
|
|
19.3
|
%
|
|
53.4
|
%
|
Alphabet Inc.
|
|
As of December 31,
|
||||||
|
2016
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Stock-based compensation expense
|
$
|
574
|
|
|
$
|
251
|
|
Accrued employee benefits
|
939
|
|
|
285
|
|
||
Accruals and reserves not currently deductible
|
500
|
|
|
717
|
|
||
Tax credits
|
631
|
|
|
1,187
|
|
||
Basis difference in investment of Arris
|
1,327
|
|
|
849
|
|
||
Prepaid cost sharing
|
4,409
|
|
|
498
|
|
||
Net Operating Losses
|
305
|
|
|
320
|
|
||
Other
|
621
|
|
|
379
|
|
||
Total deferred tax assets
|
9,306
|
|
|
4,486
|
|
||
Valuation allowance
|
(2,076
|
)
|
|
(2,531
|
)
|
||
Total deferred tax assets net of valuation allowance
|
7,230
|
|
|
1,955
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(877
|
)
|
|
(551
|
)
|
||
Identified intangibles
|
(844
|
)
|
|
(419
|
)
|
||
Renewable energy investments
|
(788
|
)
|
|
(531
|
)
|
||
Foreign earnings
|
(4,409
|
)
|
|
(68
|
)
|
||
Other
|
(155
|
)
|
|
(136
|
)
|
||
Total deferred tax liabilities
|
(7,073
|
)
|
|
(1,705
|
)
|
||
Net deferred tax assets
|
$
|
157
|
|
|
$
|
250
|
|
Alphabet Inc.
|
|
2015
|
|
2016
|
|
2017
|
||||||
Beginning gross unrecognized tax benefits
|
$
|
3,294
|
|
|
$
|
4,167
|
|
|
$
|
5,393
|
|
Increases related to prior year tax positions
|
224
|
|
|
899
|
|
|
685
|
|
|||
Decreases related to prior year tax positions
|
(176
|
)
|
|
(157
|
)
|
|
(257
|
)
|
|||
Decreases related to settlement with tax authorities
|
(27
|
)
|
|
(196
|
)
|
|
(1,875
|
)
|
|||
Increases related to current year tax positions
|
852
|
|
|
680
|
|
|
750
|
|
|||
Ending gross unrecognized tax benefits
|
$
|
4,167
|
|
|
$
|
5,393
|
|
|
$
|
4,696
|
|
•
|
Google – Google includes our main products such as Ads, Android, Chrome, Commerce, Google Cloud, Google Maps, Google Play, Hardware, Search, and YouTube. Our technical infrastructure and some newer efforts like virtual reality are also included in Google. Google generates revenues primarily from advertising; sales of apps, in-app purchases, digital content products, and hardware; and licensing and service fees, including fees received for Google Cloud offerings.
|
•
|
Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes businesses such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.
Revenues
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Google
|
$
|
23,319
|
|
|
$
|
27,892
|
|
|
$
|
32,908
|
|
Other Bets
|
(3,456
|
)
|
|
(3,578
|
)
|
|
(3,355
|
)
|
|||
Reconciling items
(1)
|
(503
|
)
|
|
(598
|
)
|
|
(3,407
|
)
|
|||
Total income from operations
|
$
|
19,360
|
|
|
$
|
23,716
|
|
|
$
|
26,146
|
|
(1)
|
Reconciling items are primarily comprised of the European Commission fine for the year ended December 31, 2017, as well as corporate administrative costs and other miscellaneous items that are not allocated to individual segments for all periods presented.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Google
|
$
|
8,868
|
|
|
$
|
9,417
|
|
|
$
|
12,605
|
|
Other Bets
|
850
|
|
|
1,385
|
|
|
507
|
|
|||
Reconciling items
(2)
|
232
|
|
|
(590
|
)
|
|
72
|
|
|||
Total capital expenditures as presented on the Consolidated Statements of Cash Flows
|
$
|
9,950
|
|
|
$
|
10,212
|
|
|
$
|
13,184
|
|
(2)
|
Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flow are on cash basis and other miscellaneous differences.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2016
|
|
2017
|
||||||
Stock-based compensation:
|
|
|
|
|
|
||||||
Google
|
$
|
4,610
|
|
|
$
|
5,926
|
|
|
$
|
7,038
|
|
Other Bets
|
475
|
|
|
647
|
|
|
493
|
|
|||
Reconciling items
(3)
|
118
|
|
|
130
|
|
|
148
|
|
|||
Total stock-based compensation
(4)
|
$
|
5,203
|
|
|
$
|
6,703
|
|
|
$
|
7,679
|
|
|
|
|
|
|
|
||||||
Depreciation, amortization, and impairment:
|
|
|
|
|
|
||||||
Google
|
$
|
4,839
|
|
|
$
|
5,800
|
|
|
$
|
6,520
|
|
Other Bets
|
203
|
|
|
340
|
|
|
395
|
|
|||
Reconciling items
(5)
|
21
|
|
|
4
|
|
|
—
|
|
|||
Total depreciation, amortization, and impairment as presented on the Consolidated Statements of Cash Flows
|
$
|
5,063
|
|
|
$
|
6,144
|
|
|
$
|
6,915
|
|
(3)
|
Reconciling items represent corporate administrative costs that are not allocated to individual segments.
|
(4)
|
For purposes of segment reporting, SBC represents awards
that we expect to settle in Alphabet stock.
|
(5)
|
Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments.
|
|
As of
December 31, 2016 |
|
As of
December 31, 2017 |
||||
Long-lived assets:
|
|
|
|
||||
United States
|
$
|
47,383
|
|
|
$
|
55,113
|
|
International
|
14,706
|
|
|
17,874
|
|
||
Total long-lived assets
|
$
|
62,089
|
|
|
$
|
72,987
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
Alphabet Inc.
|
ITEM 9B.
|
OTHER INFORMATION
|
Alphabet Inc.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Alphabet Inc.
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Financial Statements:
|
|
|
Balance at
Beginning of
Year
|
|
Additions
|
|
Usage
|
|
Balance at
End of Year
|
||||||||
Year ended December 31, 2015
|
$
|
225
|
|
|
$
|
579
|
|
|
$
|
(508
|
)
|
|
$
|
296
|
|
Year ended December 31, 2016
|
$
|
296
|
|
|
$
|
942
|
|
|
$
|
(771
|
)
|
|
$
|
467
|
|
Year ended December 31, 2017
|
$
|
467
|
|
|
$
|
1,131
|
|
|
$
|
(924
|
)
|
|
$
|
674
|
|
Note:
|
Additions to the allowance for doubtful accounts are charged to expense. Additions to the allowance for sales credits are charged against revenues.
|
Exhibit
Number
|
|
Description
|
|
Incorporated by reference herein
|
||
|
Form
|
|
Date
|
|||
2.01
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
3.01
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
3.02
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.01
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.02
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.03
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.04
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
Alphabet Inc.
|
Exhibit
Number
|
|
Description
|
|
Incorporated by reference herein
|
||
|
Form
|
|
Date
|
|||
4.05
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.06
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.07
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
4.08
|
|
|
Registration Statement on Form S-3
(File No. 333-209510)
|
|
February 12, 2016
|
|
4.09
|
|
|
Registration Statement on Form S-3
(File No. 333-209518)
|
|
February 12, 2016
|
|
4.10
|
|
|
Current Report on Form 8-K
(File No. 001-37580) |
|
April 27, 2016
|
|
4.11
|
|
|
|
|
|
|
4.12
|
|
|
|
|
|
|
4.13
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
August 9, 2016
|
|
10.01
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
10.02
|
u
|
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
10.03
|
u
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
10.04
|
u
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
10.05
|
u
|
|
Current Report on Form 8-K (File No. 000-50726)
|
|
June 7, 2011
|
|
10.05.1
|
u
|
|
Annual Report on Form 10-K
(File No. 000-50726)
|
|
March 30, 2005
|
|
10.05.2
|
u
|
|
Annual Report on Form 10-K
(File No. 000-50726)
|
|
March 30, 2005
|
|
10.05.3
|
u
|
|
Registration Statement on Form S-3
(File No. 333-142243)
|
|
April 20, 2007
|
|
10.06
|
u
|
|
Current Report on Form 8-K
(File No. 001-37580)
|
|
June 9, 2017
|
|
10.06.1
|
u
|
|
Quarterly Report on Form 10-Q
(File No. 001-37580)
|
|
November 3, 2016
|
|
10.07
|
u
|
|
Registration Statement on Form S-8
(File No. 333-181661)
|
|
May 24, 2012
|
Alphabet Inc.
|
Exhibit
Number
|
|
Description
|
|
Incorporated by reference herein
|
||
|
Form
|
|
Date
|
|||
10.08
|
u
|
|
Registration Statement on Form S-8
(File No. 333-167411)
|
|
June 9, 2010
|
|
10.09
|
u
|
|
Registration Statement on Form S-8
(File No. 333-214573)
|
|
November 10, 2016
|
|
10.09.1
|
u
|
|
Registration Statement on Form S-8
(File No. 333-214573)
|
|
November 10, 2016
|
|
12.01
|
*
|
|
|
|
|
|
14.01
|
*
|
|
|
|
|
|
21.01
|
*
|
|
|
|
|
|
23.01
|
*
|
|
|
|
|
|
24.01
|
*
|
|
|
|
|
|
31.01
|
*
|
|
|
|
|
|
31.02
|
*
|
|
|
|
|
|
32.01
|
‡
|
|
|
|
|
|
99.01
|
|
|
Current Report on Form 8-K
(File No. 001-37580)
|
|
June 27, 2017
|
|
101.INS
|
*
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
*
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
u
|
Indicates management compensatory plan, contract, or arrangement.
|
*
|
Filed herewith.
|
‡
|
Furnished herewith.
|
Alphabet Inc.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Alphabet Inc.
|
ALPHABET INC.
|
|
By:
|
/
S
/ L
ARRY
P
AGE
|
|
Larry Page
|
|
Chief Executive Officer
(Principal Executive Officer of the Registrant)
|
Alphabet Inc.
|
Signature
|
Title
|
Date
|
/
S
/ L
ARRY
P
AGE
|
Chief Executive Officer, Co-Founder, and Director (Principal Executive Officer)
|
February 5, 2018
|
Larry Page
|
|
|
/
S
/ R
UTH
M. P
ORAT
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 5, 2018
|
Ruth M. Porat
|
|
|
/
S
/ J
AMES
G. C
AMPBELL
|
Vice President, Corporate Controller, and Chief Accounting Officer (Principal Accounting Officer)
|
February 5, 2018
|
James G. Campbell
|
|
|
/S/ S
ERGEY
B
RIN
|
President, Co-Founder, and Director
|
February 5, 2018
|
Sergey Brin
|
|
|
/S/ J
OHN
L. H
ENNESSY
|
Director, Chair
|
February 5, 2018
|
John L. Hennessy
|
|
|
/s/ E
RIC
E. S
CHMIDT
|
Director
|
February 5, 2018
|
Eric E. Schmidt
|
|
|
/
S
/ L. J
OHN
D
OERR
|
Director
|
February 5, 2018
|
L. John Doerr
|
|
|
/
S
/ R
OGER
W. F
ERGUSON,
J
R
.
|
Director
|
February 5, 2018
|
Roger W. Ferguson, Jr.
|
|
|
/
S
/ D
IANE
B. G
REENE
|
Director
|
February 5, 2018
|
Diane B. Greene
|
|
|
/
S
/ A
NN
M
ATHER
|
Director
|
February 5, 2018
|
Ann Mather
|
|
|
/
S
/ A
LAN
R
.
M
ULALLY
|
Director
|
February 5, 2018
|
Alan R. Mulally
|
|
|
/s/ S
UNDAR
P
ICHAI
|
Director
|
February 5, 2018
|
Sundar Pichai
|
|
|
/
S
/ K. R
AM
S
HRIRAM
|
Director
|
February 5, 2018
|
K. Ram Shriram
|
|
|
/
S
/ S
HIRLEY
M. T
ILGHMAN
|
Director
|
February 5, 2018
|
Shirley M. Tilghman
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
(In millions, except ratios)
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pre-tax income from continuing operations
|
|
$
|
15,899
|
|
|
$
|
17,259
|
|
|
$
|
19,651
|
|
|
$
|
24,150
|
|
|
$
|
27,193
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Add: Fixed charges
|
|
258
|
|
|
307
|
|
|
349
|
|
|
423
|
|
|
534
|
|
|||||
Subtract: Capitalized interest
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(48
|
)
|
|||||
Earnings and fixed charges (net of capitalized interest)
|
|
$
|
16,157
|
|
|
$
|
17,566
|
|
|
$
|
20,000
|
|
|
$
|
24,573
|
|
|
$
|
27,679
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense and amortization of capitalized expenses related to indebtedness
|
|
$
|
83
|
|
|
$
|
101
|
|
|
$
|
104
|
|
|
$
|
124
|
|
|
$
|
109
|
|
Capitalized interest
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
48
|
|
|||||
Estimated interest component included in rent expense
|
|
175
|
|
|
206
|
|
|
245
|
|
|
299
|
|
|
377
|
|
|||||
Total fixed charges
|
|
$
|
258
|
|
|
$
|
307
|
|
|
$
|
349
|
|
|
$
|
423
|
|
|
$
|
534
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
63
|
|
|
57
|
|
|
57
|
|
|
58
|
|
|
52
|
|
•
|
importing and exporting goods to or from the United States and other countries
|
•
|
exporting services or providing services to non-U.S. persons
|
•
|
exporting technical data, especially data originating in the U.S.
|
•
|
a prohibition on hedging Alphabet stock
|
•
|
periodic blackout windows when you may not trade Alphabet stock
|
Name of Subsidiary
|
Jurisdiction of Incorporation or Organization
|
Google LLC
|
Delaware
|
Google Ireland Holdings
|
Ireland
|
XXVI Holdings Inc.
|
Delaware
|
(1)
|
Registration Statement (Form S-8 No. 333-207254) pertaining to the Google Inc. 2004 Stock Plan, Alphabet Inc. 2012 Stock Plan, AdMob, Inc. 2006 Stock Plan, UK Sub-Plan of the AdMob, Inc. 2006 Stock Plan, Motorola Mobility Holdings, Inc. 2011 Incentive Compensation Plan and Alphabet Inc. Deferred Compensation Plan,
|
(2)
|
Registration Statement (Form S-3 No. 333-209510) of Alphabet Inc.,
|
(3)
|
Registration Statement (Form S-8 No. 333-212914) pertaining to the Alphabet Inc. 2012 Stock Plan,
|
(4)
|
Registration Statement (Form S-8 No. 333-214573) pertaining to the Apigee Corporation 2015 Equity Incentive Plan and the Apigee Corporation 2005 Stock Incentive Plan,
|
(5)
|
Registration Statement (Form S-8 No. 333-219435) pertaining to the Alphabet Inc. 2012 Stock Plan, and
|
(6)
|
Registration Statement (Form S-8 No. 333-215873) pertaining to the Alphabet Inc. Deferred Compensation Plan;
|
1.
|
I have reviewed this
Annual Report on Form 10-K
of Alphabet Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ L
ARRY
P
AGE
|
Larry Page
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this
Annual Report on Form 10-K
of Alphabet Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/
S
/ R
UTH
P
ORAT
|
Ruth Porat
|
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
By:
|
/
S
/ L
ARRY
P
AGE
|
Name:
|
Larry Page
|
Title:
|
Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/
S
/ R
UTH
P
ORAT
|
Name:
|
Ruth Porat
|
Title:
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|