☒
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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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Title of each class
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None
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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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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the potential for declines in our revenue growth rate and operating margin;
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•
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our expectation that the shift from an offline to online world will continue to benefit our business;
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•
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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 affect our margins;
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•
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our expectation that our traffic acquisition costs (TAC) and the associated TAC rates will fluctuate, which could affect our overall margins;
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•
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our expectation that our monetization trends will fluctuate, which could affect our revenues and margins;
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•
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fluctuations in our revenue growth, as well as the change in paid clicks and cost-per-click on Google properties and the change in impressions and cost-per-impression on Google Network Members’ properties, and various factors contributing to such fluctuations;
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•
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our expectation that we will continue to periodically review, refine, and update our methodologies for monitoring, gathering, and counting the number of paid clicks on Google properties and impressions on Google Network Members’ properties;
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our expectation that our results will be affected by our performance in international markets as users in developing economies increasingly come online;
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•
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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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•
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the expected variability of gains and losses related to hedging activities under our foreign exchange risk management program;
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•
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the amount and timing of revenue recognition for commitments in customer contracts with performance obligations, which could impact our estimate of the remaining amount of commitments and when we expect to recognize revenue;
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•
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fluctuations in our capital expenditures;
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•
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our plans to continue to invest in new businesses, products, services and technologies, systems, land and buildings for data centers and offices, 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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•
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our expectation that our cost of revenues, research and development (R&D) expenses, sales and marketing expenses, and general and administrative expenses will increase in amount and may increase as a percentage of revenues may be affected by a number of factors;
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•
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estimates of our future compensation expenses;
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•
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our expectation that our other income (expense), net (OI&E), will fluctuate in the future, as it is largely driven by market dynamics;
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fluctuations in our effective tax rate;
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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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•
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the sufficiency of our sources of funding;
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our potential exposure in connection with pending investigations, proceedings, and other contingencies;
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the sufficiency and timing of our proposed remedies in response to the European Commission's (EC) and others' decisions;
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our expectations regarding the timing, design and implementation of our new global enterprise resource planning (ERP) system;
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Alphabet Inc.
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the expected timing and amount of Alphabet Inc.'s share repurchases;
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our long-term sustainability goals;
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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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Performance 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. Our ads tools allow performance advertisers to create simple text-based ads that appear on Google properties and the properties of Google Network Members. In addition, Google Network Members use our platforms to display relevant ads on their properties, generating revenues when site visitors view or click on the ads. We continue to invest in our advertising programs and make significant upgrades.
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•
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Brand advertising helps enhance users' awareness of and affinity with advertisers' products and services, through videos, 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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•
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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), Booking's Kayak (travel queries), Microsoft's 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, Snapchat, 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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•
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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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•
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Other online advertising platforms and networks, including Amazon, AppNexus, Criteo, and Facebook, that compete for advertisers that use Google Ads, our primary auction-based advertising platform.
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Providers of digital video services, such as Amazon, Apple, AT&T, Disney, Facebook, Hulu, Netflix and TikTok.
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Other digital content and application platform providers, such as Amazon and Apple.
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•
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Companies that design, manufacture, and market consumer hardware products, including businesses that have developed proprietary platforms.
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•
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Providers of enterprise cloud services, including Alibaba, Amazon, and Microsoft.
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Digital assistant providers, such as Amazon and Apple.
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Users, for whom other products and services are literally one click away, largely on the basis of the relevance of our advertising, as well as the general usefulness, security and availability 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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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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•
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We made our largest corporate purchase of renewable energy: 18 new energy deals totaling 1,600 megawatts, which is anticipated to spur the construction of more than $2 billion in new energy infrastructure.
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•
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100% of Nest products launched in 2019 include recycled plastic content and we launched carbon neutral shipping for Google’s direct customers who buy a product on Google Shopping or purchase Made by Google hardware.
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The Environmental Insights Explorer is enabling municipalities — which represent more than 70% of global greenhouse gas emissions according to the 2016 United Nations Habitat World Cities Report — to estimate emissions and develop climate action plans. In 2019, we expanded this tool to more than 100 cities worldwide.
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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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Alphabet Inc.
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Alphabet Inc.
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•
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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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Alphabet Inc.
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•
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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, or that could limit our ability to source assemblies and finished products from a particular market, and may increase our operating costs.
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•
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Longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud.
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•
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Evolving foreign events, including Brexit, the United Kingdom's withdrawal from the European Union (EU). Brexit may adversely affect our revenues and could subject us to new regulatory costs and challenges (including the transfer of personal data between the EU and the United Kingdom), in addition to other adverse effects that we are unable to effectively anticipate.
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•
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Anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, and other local laws prohibiting certain payments to government officials, violations of which could result in civil and criminal penalties.
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•
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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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•
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Different employee/employer relationships, existence of works 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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Alphabet Inc.
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•
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Competition laws and regulations around the world.
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•
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Privacy laws, such as the California Consumer Privacy Act of 2018 that came into effect in January of 2020, which gives new data privacy rights to California residents, and SB-327 in California, which regulates the security of data in connection with internet connected devices.
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Data protection laws passed by many states within the U.S. and by certain countries regarding notification to data subjects and/or regulators when there is a security breach of personal data.
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•
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Copyright laws, such as the EU Directive on Copyright in the Digital Single Market (EUCD) of April 17, 2019, which increases the liability of content-sharing services with respect to content uploaded by their users. It has also created a new property right in news publications that will limit the ability of some online services to interact with or present such content. Each EU Member State must implement the EUCD by June 7, 2021. In addition, there are new constraining licensing regimes that limit our ability to operate with respect to copyright protected works.
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•
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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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Alphabet Inc.
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•
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Various U.S. and international laws that govern the distribution of certain materials to children and regulate the ability of online services to collect information from minors.
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•
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Various laws with regard to content removal and disclosure obligations, such as the Network Enforcement Act in Germany, which may affect 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 or when we may not proactively discover such content due to the scale of third-party content and the limitations of existing technologies. Other countries, including Singapore, Australia, and the United Kingdom, have implemented or are considering similar legislation imposing penalties for failure to remove certain types of content.
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•
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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 affecting these safe harbors may adversely affect us.
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•
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Court decisions such as the judgment of the Court of Justice of the European Union (CJEU) on May 13, 2014 on the ‘right to be forgotten,’ which allows individuals to demand that Google remove search results about them in certain instances, may limit the content we can show to our users and impose significant operational burdens.
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•
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Court decisions that require Google to remove links not just in the jurisdiction of the issuing court, but for all versions of the search engine worldwide, including in locations where the content at issue is lawful, may limit the content we can show to our users and impose significant operational burdens. The Supreme Court of Canada issued such a decision against Google in June 2017, and others could treat its decision as persuasive. With respect to the ‘right to be forgotten,’ a follow-up case of the CJEU on September 24, 2019 ruled that a search engine operator is not required to remove links from all versions of the search engine worldwide, but the court also noted in some cases, removal of links from all versions of the search engine available from the EU (including non-EU specific versions) may be required.
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Alphabet Inc.
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Alphabet Inc.
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•
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Our certificate of incorporation provides for a tri-class capital stock structure. As a result of this structure, Larry and Sergey have significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. 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 continuing the influence of Larry and Sergey.
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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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•
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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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Alphabet Inc.
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•
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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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•
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Our ability to continue to attract and retain users and customers to our products and services.
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Our ability to attract user and/or customer 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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•
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Our ability to monetize traffic on Google properties and our Google Network Members' properties across various devices.
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•
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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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•
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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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•
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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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•
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Our focus on long-term goals over short-term results.
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•
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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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•
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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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•
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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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•
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Geopolitical events, including trade disputes.
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•
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Changes in global business or macroeconomic conditions.
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•
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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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•
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Failure to successfully integrate and further develop the acquired business or technology.
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Alphabet Inc.
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•
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Implementation or remediation of controls, procedures, and policies at the acquired company.
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•
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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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•
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Transition of operations, users, and customers onto our existing platforms.
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•
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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 a transaction.
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•
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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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•
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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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•
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Liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities.
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•
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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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•
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Quarterly variations in our operating results or those of our competitors.
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•
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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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•
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Recommendations by securities analysts or changes in earnings estimates.
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•
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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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•
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Announcements by our competitors of their earnings that are not in line with analyst expectations.
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Alphabet Inc.
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•
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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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•
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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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•
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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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•
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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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•
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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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•
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Any share repurchase program.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
|
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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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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1,970
|
|
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$
|
1,229.02
|
|
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1,970
|
|
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$
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24,470
|
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November 1 - 30
|
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1,626
|
|
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$
|
1,304.00
|
|
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1,626
|
|
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$
|
22,350
|
|
December 1 - 31
|
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1,164
|
|
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$
|
1,337.16
|
|
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1,164
|
|
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$
|
20,793
|
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Total
|
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4,760
|
|
|
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4,760
|
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(1)
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In January and July 2019, the board of directors of Alphabet authorized the company to repurchase up to an additional $12.5 billion and $25.0 billion of its Class C capital stock, respectively. Share repurchases pursuant to the January 2019 authorization were completed during the fourth quarter of 2019. 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. Please refer to Note 11 of the Notes to Consolidated Financial Statements included 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.
|
Alphabet Inc.
|
Alphabet Inc.
|
Alphabet Inc.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
As of December 31,
|
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|
2015
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|
2016
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2017
|
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2018
|
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2019
|
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(in millions)
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Consolidated Balance Sheet Data:
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|||||||||||||||||||
Cash, cash equivalents, and marketable securities
|
$
|
73,066
|
|
|
$
|
86,333
|
|
|
$
|
101,871
|
|
|
$
|
109,140
|
|
|
$
|
119,675
|
|
Total assets
|
$
|
147,461
|
|
|
$
|
167,497
|
|
|
$
|
197,295
|
|
|
$
|
232,792
|
|
|
$
|
275,909
|
|
Total long-term liabilities
|
$
|
7,820
|
|
|
$
|
11,705
|
|
|
$
|
20,610
|
|
|
$
|
20,544
|
|
|
$
|
29,246
|
|
Total stockholders’ equity
|
$
|
120,331
|
|
|
$
|
139,036
|
|
|
$
|
152,502
|
|
|
$
|
177,628
|
|
|
$
|
201,442
|
|
Alphabet Inc.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Alphabet Inc.
|
•
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Our employees are critical to our success and we expect to continue investing in them.
|
•
|
Revenues of $161.9 billion and revenue growth of 18% year over year, constant currency revenue growth of 20% year over year.
|
•
|
Google segment revenues of $160.7 billion with revenue growth of 18% year over year and Other Bets revenues of $659 million with revenue growth of 11% year over year.
|
•
|
Revenues from the United States, EMEA, APAC, and Other Americas were $74.8 billion, $50.6 billion, $26.9 billion, and $9.0 billion, respectively.
|
•
|
Cost of revenues was $71.9 billion, consisting of TAC of $30.1 billion and other cost of revenues of $41.8 billion. Our TAC as a percentage of advertising revenues (TAC rate) was 22.3%.
|
•
|
Operating expenses (excluding cost of revenues) were $55.7 billion.
|
•
|
Income from operations was $34.2 billion.
|
•
|
Other income (expense), net, was $5.4 billion.
|
•
|
Effective tax rate was 13%.
|
•
|
Net income was $34.3 billion with diluted net income per share of $49.16.
|
•
|
Operating cash flow was $54.5 billion.
|
•
|
Capital expenditures were $23.5 billion.
|
•
|
Number of employees was 118,899 as of December 31, 2019. The majority of new hires during the year were engineers and product managers. By product area, the largest headcount additions were in Google Cloud and Search.
|
Alphabet Inc.
|
•
|
Google – Google includes our main products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube. Our technical infrastructure is 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 and subscription-based products.
|
•
|
Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Revenues from the Other Bets are derived primarily through the sales of internet and TV services through Access as well as licensing and R&D services through Verily.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Google Search & other
|
$
|
69,811
|
|
|
$
|
85,296
|
|
|
$
|
98,115
|
|
YouTube ads(1)
|
8,150
|
|
|
11,155
|
|
|
15,149
|
|
|||
Google properties
|
77,961
|
|
|
96,451
|
|
|
113,264
|
|
|||
Google Network Members' properties
|
17,616
|
|
|
20,010
|
|
|
21,547
|
|
|||
Google advertising
|
95,577
|
|
|
116,461
|
|
|
134,811
|
|
|||
Google Cloud
|
4,056
|
|
|
5,838
|
|
|
8,918
|
|
|||
Google other(1)
|
10,914
|
|
|
14,063
|
|
|
17,014
|
|
|||
Google revenues
|
110,547
|
|
|
136,362
|
|
|
160,743
|
|
|||
Other Bets revenues
|
477
|
|
|
595
|
|
|
659
|
|
|||
Hedging gains (losses)
|
(169
|
)
|
|
(138
|
)
|
|
455
|
|
|||
Total revenues
|
$
|
110,855
|
|
|
$
|
136,819
|
|
|
$
|
161,857
|
|
(1)
|
YouTube non-advertising revenues are included in Google other revenues.
|
•
|
advertiser competition for keywords;
|
•
|
changes in advertising quality, formats, delivery or policy;
|
•
|
changes in device mix;
|
•
|
changes in foreign currency exchange rates;
|
•
|
fees advertisers are willing to pay based on how they manage their advertising costs;
|
•
|
general economic conditions;
|
•
|
seasonality; and
|
•
|
traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Google Search & other
|
$
|
69,811
|
|
|
$
|
85,296
|
|
|
$
|
98,115
|
|
YouTube ads(1)
|
8,150
|
|
|
11,155
|
|
|
15,149
|
|
|||
Google Network Members' properties
|
17,616
|
|
|
20,010
|
|
|
21,547
|
|
|||
Google advertising
|
$
|
95,577
|
|
|
$
|
116,461
|
|
|
$
|
134,811
|
|
Google advertising revenues as a percentage of Google segment revenues
|
86.5
|
%
|
|
85.4
|
%
|
|
83.9
|
%
|
•
|
Google Search & other consists of revenues generated on Google search properties (including revenues from traffic generated by search distribution partners who use Google.com as their default search in browsers, toolbars, etc.) and other Google owned and operated properties like Gmail, Google Maps, and Google Play;
|
•
|
YouTube ads consists of revenues generated primarily on YouTube properties; and
|
•
|
Google Network Members' properties consist of revenues generated primarily on Google Network Members' properties participating in AdMob, AdSense, and Google Ad Manager.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Paid clicks change
|
62
|
%
|
|
23
|
%
|
Cost-per-click change
|
(25
|
)%
|
|
(7
|
)%
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2019
|
||
Impressions change
|
2
|
%
|
|
9
|
%
|
Cost-per-impression change
|
12
|
%
|
|
1
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Google Cloud
|
$
|
4,056
|
|
|
$
|
5,838
|
|
|
$
|
8,918
|
|
Google Cloud revenues as a percentage of Google segment revenues
|
3.7
|
%
|
|
4.3
|
%
|
|
5.5
|
%
|
•
|
Google Cloud Platform (GCP), which includes infrastructure, data and analytics, and other services
|
•
|
G Suite productivity tools; and
|
•
|
other enterprise cloud services.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2018
|
|
2019
|
|||
Google other
|
10,914
|
|
|
14,063
|
|
|
17,014
|
|
Google other revenues as a percentage of Google segment revenues
|
9.9
|
%
|
|
10.3
|
%
|
|
10.6
|
%
|
•
|
Google Play, which includes revenues from sales of apps and in-app purchases (which we recognize net of payout to developers) and digital content sold in the Google Play store;
|
•
|
hardware, including Google Nest home products, Pixelbooks, Pixel phones and other devices;
|
•
|
YouTube non-advertising, including YouTube Premium and YouTube TV subscriptions and other services; and
|
•
|
other products and services.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Other Bets revenues
|
$
|
477
|
|
|
$
|
595
|
|
|
$
|
659
|
|
Other Bets revenues as a percentage of total revenues
|
0.4
|
%
|
|
0.4
|
%
|
|
0.4
|
%
|
Alphabet Inc.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
EMEA revenues
|
$
|
44,739
|
|
|
$
|
50,645
|
|
Exclude foreign exchange effect on current period revenues using prior year rates
|
(1,325
|
)
|
|
2,397
|
|
||
EMEA constant currency revenues
|
$
|
43,414
|
|
|
$
|
53,042
|
|
Prior period EMEA revenues
|
$
|
36,236
|
|
|
$
|
44,739
|
|
EMEA revenue growth
|
23
|
%
|
|
13
|
%
|
||
EMEA constant currency revenue growth
|
20
|
%
|
|
19
|
%
|
||
|
|
|
|
||||
APAC revenues
|
$
|
21,341
|
|
|
$
|
26,928
|
|
Exclude foreign exchange effect on current period revenues using prior year rates
|
(49
|
)
|
|
388
|
|
||
APAC constant currency revenues
|
$
|
21,292
|
|
|
$
|
27,316
|
|
Prior period APAC revenues
|
$
|
16,192
|
|
|
$
|
21,341
|
|
APAC revenue growth
|
32
|
%
|
|
26
|
%
|
||
APAC constant currency revenue growth
|
31
|
%
|
|
28
|
%
|
||
|
|
|
|
||||
Other Americas revenues
|
$
|
7,608
|
|
|
$
|
8,986
|
|
Exclude foreign exchange effect on current period revenues using prior year rates
|
404
|
|
|
541
|
|
||
Other Americas constant currency revenues
|
$
|
8,012
|
|
|
$
|
9,527
|
|
Prior period Other Americas revenues
|
$
|
6,147
|
|
|
$
|
7,608
|
|
Other Americas revenue growth
|
24
|
%
|
|
18
|
%
|
||
Other Americas constant currency revenue growth
|
30
|
%
|
|
25
|
%
|
||
|
|
|
|
||||
United States revenues
|
$
|
63,269
|
|
|
$
|
74,843
|
|
United States revenue growth
|
21
|
%
|
|
18
|
%
|
||
|
|
|
|
||||
Hedging gains (losses)
|
(138
|
)
|
|
455
|
|
||
Total revenues
|
$
|
136,819
|
|
|
$
|
161,857
|
|
Total constant currency revenues
|
$
|
135,987
|
|
|
$
|
164,728
|
|
Prior period revenues, excluding hedging effect(1)
|
$
|
111,024
|
|
|
$
|
136,957
|
|
Total revenue growth
|
23
|
%
|
|
18
|
%
|
||
Total constant currency revenue growth
|
22
|
%
|
|
20
|
%
|
(1)
|
Total revenues and hedging gains (losses) for the year ended December 31, 2017 were $110,855 million and $(169) million, respectively.
|
Alphabet Inc.
|
•
|
Content acquisition costs primarily related to payments to content providers from whom we license video and other content for distribution on YouTube advertising and subscription services and Google Play (we pay fees to these content providers based on revenues generated or a flat fee);
|
•
|
Expenses associated with our data centers and other operations (including bandwidth, compensation expenses (including stock-based compensation (SBC)), depreciation, energy, and other equipment costs); and
|
•
|
Inventory related costs for hardware we sell.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
TAC
|
$
|
26,726
|
|
|
$
|
30,089
|
|
Other cost of revenues
|
32,823
|
|
|
41,807
|
|
||
Total cost of revenues
|
$
|
59,549
|
|
|
$
|
71,896
|
|
Total cost of revenues as a percentage of revenues
|
43.5
|
%
|
|
44.4
|
%
|
•
|
The amount of TAC paid to Google Network Members, which is affected by a combination of factors such as geographic mix, product mix, revenue share terms, and fluctuations of the U.S. dollar compared to certain foreign currencies;
|
•
|
The amount of TAC paid to distribution partners, which is affected by changes in device mix, geographic mix, partner mix, partner agreement terms such as revenue share arrangements, and the percentage of queries channeled through paid access points;
|
•
|
Relative revenue growth rates of Google properties and Google Network Members' properties;
|
•
|
Costs associated with our data centers and other operations to support ads, Google Cloud, Search, YouTube and other products;
|
•
|
Content acquisition costs, which are primarily affected by the relative growth rates in our YouTube advertising and subscription revenues;
|
•
|
Costs related to hardware sales; and
|
•
|
Increased proportion of non-advertising revenues, which generally have higher costs of revenues, relative to our advertising revenues.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Research and development expenses
|
$
|
21,419
|
|
|
$
|
26,018
|
|
Research and development expenses as a percentage of revenues
|
15.7
|
%
|
|
16.1
|
%
|
•
|
Compensation expenses (including SBC) and facilities-related costs for engineering and technical employees responsible for R&D of our existing and new products and services;
|
•
|
Depreciation expenses;
|
•
|
Equipment-related expenses; and
|
•
|
Professional services fees primarily related to consulting and outsourcing services.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Sales and marketing expenses
|
$
|
16,333
|
|
|
$
|
18,464
|
|
Sales and marketing expenses as a percentage of revenues
|
11.9
|
%
|
|
11.4
|
%
|
•
|
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.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
General and administrative expenses
|
$
|
6,923
|
|
|
$
|
9,551
|
|
General and administrative expenses as a percentage of revenues
|
5.1
|
%
|
|
5.9
|
%
|
•
|
Compensation expenses (including SBC) and facilities-related costs for employees in our finance, human resources, information technology, and legal organizations;
|
•
|
Depreciation expenses;
|
•
|
Equipment-related expenses;
|
•
|
Legal-related expenses; and
|
Alphabet Inc.
|
•
|
Professional services fees primarily related to audit, information technology consulting, outside legal, and outsourcing services.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Other income (expense), net
|
$
|
7,389
|
|
|
$
|
5,394
|
|
Other income (expense), net, as a percentage of revenues
|
5.4
|
%
|
|
3.3
|
%
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Provision for income taxes
|
$
|
4,177
|
|
|
$
|
5,282
|
|
Effective tax rate
|
12.0
|
%
|
|
13.3
|
%
|
Alphabet Inc.
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
Mar 31,
2018 |
|
Jun 30,
2018 |
|
Sept 30,
2018 |
|
Dec 31,
2018 |
|
Mar 31,
2019 |
|
Jun 30,
2019 |
|
Sept 30,
2019 |
|
Dec 31,
2019 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(In millions, except per share amounts) (unaudited)
|
||||||||||||||||||||||||||||||
Consolidated Statements of Income Data:
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Revenues
|
$
|
31,146
|
|
|
$
|
32,657
|
|
|
$
|
33,740
|
|
|
$
|
39,276
|
|
|
$
|
36,339
|
|
|
$
|
38,944
|
|
|
$
|
40,499
|
|
|
$
|
46,075
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of revenues
|
13,467
|
|
|
13,883
|
|
|
14,281
|
|
|
17,918
|
|
|
16,012
|
|
|
17,296
|
|
|
17,568
|
|
|
21,020
|
|
||||||||
Research and development
|
5,039
|
|
|
5,114
|
|
|
5,232
|
|
|
6,034
|
|
|
6,029
|
|
|
6,213
|
|
|
6,554
|
|
|
7,222
|
|
||||||||
Sales and marketing
|
3,604
|
|
|
3,780
|
|
|
3,849
|
|
|
5,100
|
|
|
3,905
|
|
|
4,212
|
|
|
4,609
|
|
|
5,738
|
|
||||||||
General and administrative
|
1,403
|
|
|
1,764
|
|
|
1,753
|
|
|
2,003
|
|
|
2,088
|
|
|
2,043
|
|
|
2,591
|
|
|
2,829
|
|
||||||||
European Commission fines
|
0
|
|
|
5,071
|
|
|
0
|
|
|
0
|
|
|
1,697
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||||
Total costs and expenses
|
23,513
|
|
|
29,612
|
|
|
25,115
|
|
|
31,055
|
|
|
29,731
|
|
|
29,764
|
|
|
31,322
|
|
|
36,809
|
|
||||||||
Income from operations
|
7,633
|
|
|
3,045
|
|
|
8,625
|
|
|
8,221
|
|
|
6,608
|
|
|
9,180
|
|
|
9,177
|
|
|
9,266
|
|
||||||||
Other income (expense), net
|
2,910
|
|
|
1,170
|
|
|
1,458
|
|
|
1,851
|
|
|
1,538
|
|
|
2,967
|
|
|
(549
|
)
|
|
1,438
|
|
||||||||
Income from continuing operations before income taxes
|
10,543
|
|
|
4,215
|
|
|
10,083
|
|
|
10,072
|
|
|
8,146
|
|
|
12,147
|
|
|
8,628
|
|
|
10,704
|
|
||||||||
Provision for income taxes
|
1,142
|
|
|
1,020
|
|
|
891
|
|
|
1,124
|
|
|
1,489
|
|
|
2,200
|
|
|
1,560
|
|
|
33
|
|
||||||||
Net income
|
$
|
9,401
|
|
|
$
|
3,195
|
|
|
$
|
9,192
|
|
|
$
|
8,948
|
|
|
$
|
6,657
|
|
|
$
|
9,947
|
|
|
$
|
7,068
|
|
|
$
|
10,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic net income per share of Class A and B common stock and Class C capital stock
|
$
|
13.53
|
|
|
$
|
4.60
|
|
|
$
|
13.21
|
|
|
$
|
12.87
|
|
|
$
|
9.58
|
|
|
$
|
14.33
|
|
|
$
|
10.20
|
|
|
$
|
15.49
|
|
Diluted net income per share of Class A and B common stock and Class C capital stock
|
$
|
13.33
|
|
|
$
|
4.54
|
|
|
$
|
13.06
|
|
|
$
|
12.77
|
|
|
$
|
9.50
|
|
|
$
|
14.21
|
|
|
$
|
10.12
|
|
|
$
|
15.35
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
47,971
|
|
|
$
|
54,520
|
|
Net cash used in investing activities
|
$
|
(28,504
|
)
|
|
$
|
(29,491
|
)
|
Net cash used in financing activities
|
$
|
(13,179
|
)
|
|
$
|
(23,209
|
)
|
Alphabet Inc.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
||||||||||
Operating lease obligations(1)
|
$
|
13,854
|
|
|
$
|
1,757
|
|
|
$
|
3,525
|
|
|
$
|
2,809
|
|
|
$
|
5,763
|
|
Obligations for leases that have not yet commenced(1)
|
7,418
|
|
|
249
|
|
|
850
|
|
|
1,314
|
|
|
5,005
|
|
|||||
Purchase obligations(2)
|
5,660
|
|
|
4,212
|
|
|
933
|
|
|
202
|
|
|
313
|
|
|||||
Long-term debt obligations(3)
|
5,288
|
|
|
227
|
|
|
1,258
|
|
|
1,224
|
|
|
2,579
|
|
|||||
Tax payable(4)
|
7,315
|
|
|
0
|
|
|
1,166
|
|
|
3,661
|
|
|
2,488
|
|
|||||
Other long-term liabilities reflected on our balance sheet(5)
|
1,484
|
|
|
245
|
|
|
643
|
|
|
367
|
|
|
229
|
|
|||||
Total contractual obligations
|
$
|
41,019
|
|
|
$
|
6,690
|
|
|
$
|
8,375
|
|
|
$
|
9,577
|
|
|
$
|
16,377
|
|
(1)
|
For further information, refer to Note 4 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
|
(2)
|
Represents non-cancelable contractual obligations primarily related to information technology assets and data center operation costs; purchases of inventory; and digital media content licensing arrangements. 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, 2019. 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, Item 8 of this Annual Report on Form 10-K.
|
(4)
|
Represents one-time transition tax payable incurred 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, Item 8 of this Annual Report on Form 10-K. Excluded from the table above are long-term taxes payable of $2.6 billion as of December 31, 2019 primarily related to uncertain tax positions, for which we are unable to make a reasonably reliable estimate of the timing of payments 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, primarily for the construction of offices and certain commercial agreements. These amounts do not include the EC fines which are classified as current liabilities on our Consolidated Balance Sheets. For further information regarding the EC fines, refer to Note 10 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
|
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,
|
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Risk Category - Interest Rate
|
$
|
58
|
|
|
$
|
104
|
|
|
$
|
66
|
|
|
$
|
90
|
|
Alphabet Inc.
|
Alphabet Inc.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
Page
|
Financial Statements:
|
|
Alphabet Inc.
|
Alphabet Inc.
|
Description of the Matter
|
The Company is regularly subject to claims, suits, and government investigations involving competition, intellectual property, privacy, consumer protection, tax, labor and employment, commercial disputes, content generated by its users, goods and services offered by advertisers or publishers using their platforms, and other matters. As described in Note 10 to the financial statements “Commitments and Contingencies” such claims could result in adverse consequences.
Significant judgment is required to determine both the likelihood, and the estimated amount, of a loss related to such matters. Auditing management’s accounting for and disclosure of loss contingencies from these matters involved challenging and subjective auditor judgement in assessing the Company’s evaluation of the probability of a loss, and the estimated amount or range of loss.
|
How We Addressed the Matter in Our Audit
|
We tested relevant controls over the identified risks associated with management’s accounting for and disclosure of these matters. This included controls over management’s assessment of the probability of incurrence of a loss and whether the loss or range of loss was reasonably estimable and the development of related disclosures.
Our audit procedures included gaining an understanding of previous rulings issued by regulators and the status of ongoing lawsuits, reviewing letters addressing the matters from internal and external legal counsel, meeting with internal legal counsel to discuss the allegations, and obtaining a representation letter from management on these matters. We also evaluated the Company’s disclosures in relation to these matters.
|
/s/ Ernst & Young LLP
|
|
|
|
We have served as the Company's auditor since 1999.
|
|
|
|
San Jose, California
|
|
February 3, 2020
|
|
Alphabet Inc.
|
/s/ Ernst & Young LLP
|
|
|
|
San Jose, California
|
|
February 3, 2020
|
|
Alphabet Inc.
|
|
As of
December 31, 2018 |
|
As of
December 31, 2019 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
16,701
|
|
|
$
|
18,498
|
|
Marketable securities
|
92,439
|
|
|
101,177
|
|
||
Total cash, cash equivalents, and marketable securities
|
109,140
|
|
|
119,675
|
|
||
Accounts receivable, net of allowance of $729 and $753
|
20,838
|
|
|
25,326
|
|
||
Income taxes receivable, net
|
355
|
|
|
2,166
|
|
||
Inventory
|
1,107
|
|
|
999
|
|
||
Other current assets
|
4,236
|
|
|
4,412
|
|
||
Total current assets
|
135,676
|
|
|
152,578
|
|
||
Non-marketable investments
|
13,859
|
|
|
13,078
|
|
||
Deferred income taxes
|
737
|
|
|
721
|
|
||
Property and equipment, net
|
59,719
|
|
|
73,646
|
|
||
Operating lease assets
|
0
|
|
|
10,941
|
|
||
Intangible assets, net
|
2,220
|
|
|
1,979
|
|
||
Goodwill
|
17,888
|
|
|
20,624
|
|
||
Other non-current assets
|
2,693
|
|
|
2,342
|
|
||
Total assets
|
$
|
232,792
|
|
|
$
|
275,909
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,378
|
|
|
$
|
5,561
|
|
Accrued compensation and benefits
|
6,839
|
|
|
8,495
|
|
||
Accrued expenses and other current liabilities
|
16,958
|
|
|
23,067
|
|
||
Accrued revenue share
|
4,592
|
|
|
5,916
|
|
||
Deferred revenue
|
1,784
|
|
|
1,908
|
|
||
Income taxes payable, net
|
69
|
|
|
274
|
|
||
Total current liabilities
|
34,620
|
|
|
45,221
|
|
||
Long-term debt
|
4,012
|
|
|
4,554
|
|
||
Deferred revenue, non-current
|
396
|
|
|
358
|
|
||
Income taxes payable, non-current
|
11,327
|
|
|
9,885
|
|
||
Deferred income taxes
|
1,264
|
|
|
1,701
|
|
||
Operating lease liabilities
|
0
|
|
|
10,214
|
|
||
Other long-term liabilities
|
3,545
|
|
|
2,534
|
|
||
Total liabilities
|
55,164
|
|
|
74,467
|
|
||
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); 695,556 (Class A 299,242, Class B 46,636, Class C 349,678) and 688,335 (Class A 299,828, Class B 46,441, Class C 342,066) shares issued and outstanding
|
45,049
|
|
|
50,552
|
|
||
Accumulated other comprehensive loss
|
(2,306
|
)
|
|
(1,232
|
)
|
||
Retained earnings
|
134,885
|
|
|
152,122
|
|
||
Total stockholders’ equity
|
177,628
|
|
|
201,442
|
|
||
Total liabilities and stockholders’ equity
|
$
|
232,792
|
|
|
$
|
275,909
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Revenues
|
$
|
110,855
|
|
|
$
|
136,819
|
|
|
$
|
161,857
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of revenues
|
45,583
|
|
|
59,549
|
|
|
71,896
|
|
|||
Research and development
|
16,625
|
|
|
21,419
|
|
|
26,018
|
|
|||
Sales and marketing
|
12,893
|
|
|
16,333
|
|
|
18,464
|
|
|||
General and administrative
|
6,840
|
|
|
6,923
|
|
|
9,551
|
|
|||
European Commission fines
|
2,736
|
|
|
5,071
|
|
|
1,697
|
|
|||
Total costs and expenses
|
84,677
|
|
|
109,295
|
|
|
127,626
|
|
|||
Income from operations
|
26,178
|
|
|
27,524
|
|
|
34,231
|
|
|||
Other income (expense), net
|
1,015
|
|
|
7,389
|
|
|
5,394
|
|
|||
Income before income taxes
|
27,193
|
|
|
34,913
|
|
|
39,625
|
|
|||
Provision for income taxes
|
14,531
|
|
|
4,177
|
|
|
5,282
|
|
|||
Net income
|
$
|
12,662
|
|
|
$
|
30,736
|
|
|
$
|
34,343
|
|
|
|
|
|
|
|
||||||
Basic net income per share of Class A and B common stock and Class C capital stock
|
$
|
18.27
|
|
|
$
|
44.22
|
|
|
$
|
49.59
|
|
Diluted net income per share of Class A and B common stock and Class C capital stock
|
$
|
18.00
|
|
|
$
|
43.70
|
|
|
$
|
49.16
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Net income
|
$
|
12,662
|
|
|
$
|
30,736
|
|
|
$
|
34,343
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in foreign currency translation adjustment
|
1,543
|
|
|
(781
|
)
|
|
(119
|
)
|
|||
Available-for-sale investments:
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses)
|
307
|
|
|
88
|
|
|
1,611
|
|
|||
Less: reclassification adjustment for net (gains) losses included in net income
|
105
|
|
|
(911
|
)
|
|
(111
|
)
|
|||
Net change (net of tax effect of $0, $156, and $221)
|
412
|
|
|
(823
|
)
|
|
1,500
|
|
|||
Cash flow hedges:
|
|
|
|
|
|
||||||
Change in net unrealized gains (losses)
|
(638
|
)
|
|
290
|
|
|
22
|
|
|||
Less: reclassification adjustment for net (gains) losses included in net income
|
93
|
|
|
98
|
|
|
(299
|
)
|
|||
Net change (net of tax effect of $247, $103, and $42)
|
(545
|
)
|
|
388
|
|
|
(277
|
)
|
|||
Other comprehensive income (loss)
|
1,410
|
|
|
(1,216
|
)
|
|
1,104
|
|
|||
Comprehensive income
|
$
|
14,072
|
|
|
$
|
29,520
|
|
|
$
|
35,447
|
|
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, 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 interest in consolidated entities
|
0
|
|
|
722
|
|
|
0
|
|
|
0
|
|
|
722
|
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
12,662
|
|
|
12,662
|
|
||||
Other comprehensive income (loss)
|
0
|
|
|
0
|
|
|
1,410
|
|
|
0
|
|
|
1,410
|
|
||||
Balance as of December 31, 2017
|
694,783
|
|
|
40,247
|
|
|
(992
|
)
|
|
113,247
|
|
|
152,502
|
|
||||
Cumulative effect of accounting change
|
0
|
|
|
0
|
|
|
(98
|
)
|
|
(599
|
)
|
|
(697
|
)
|
||||
Common and capital stock issued
|
8,975
|
|
|
148
|
|
|
0
|
|
|
0
|
|
|
148
|
|
||||
Stock-based compensation expense
|
0
|
|
|
9,353
|
|
|
0
|
|
|
0
|
|
|
9,353
|
|
||||
Tax withholding related to vesting of restricted stock units and other
|
0
|
|
|
(4,782
|
)
|
|
0
|
|
|
0
|
|
|
(4,782
|
)
|
||||
Repurchases of capital stock
|
(8,202
|
)
|
|
(576
|
)
|
|
0
|
|
|
(8,499
|
)
|
|
(9,075
|
)
|
||||
Sale of interest in consolidated entities
|
0
|
|
|
659
|
|
|
0
|
|
|
0
|
|
|
659
|
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
30,736
|
|
|
30,736
|
|
||||
Other comprehensive income (loss)
|
0
|
|
|
0
|
|
|
(1,216
|
)
|
|
0
|
|
|
(1,216
|
)
|
||||
Balance as of December 31, 2018
|
695,556
|
|
|
45,049
|
|
|
(2,306
|
)
|
|
134,885
|
|
|
177,628
|
|
||||
Cumulative effect of accounting change
|
0
|
|
|
0
|
|
|
(30
|
)
|
|
(4
|
)
|
|
(34
|
)
|
||||
Common and capital stock issued
|
8,120
|
|
|
202
|
|
|
0
|
|
|
0
|
|
|
202
|
|
||||
Stock-based compensation expense
|
0
|
|
|
10,890
|
|
|
0
|
|
|
0
|
|
|
10,890
|
|
||||
Tax withholding related to vesting of restricted stock units and other
|
0
|
|
|
(4,455
|
)
|
|
0
|
|
|
0
|
|
|
(4,455
|
)
|
||||
Repurchases of capital stock
|
(15,341
|
)
|
|
(1,294
|
)
|
|
0
|
|
|
(17,102
|
)
|
|
(18,396
|
)
|
||||
Sale of interest in consolidated entities
|
0
|
|
|
160
|
|
|
0
|
|
|
0
|
|
|
160
|
|
||||
Net income
|
0
|
|
|
0
|
|
|
0
|
|
|
34,343
|
|
|
34,343
|
|
||||
Other comprehensive income (loss)
|
0
|
|
|
0
|
|
|
1,104
|
|
|
0
|
|
|
1,104
|
|
||||
Balance as of December 31, 2019
|
688,335
|
|
|
$
|
50,552
|
|
|
$
|
(1,232
|
)
|
|
$
|
152,122
|
|
|
$
|
201,442
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
12,662
|
|
|
$
|
30,736
|
|
|
$
|
34,343
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and impairment of property and equipment
|
6,103
|
|
|
8,164
|
|
|
10,856
|
|
|||
Amortization and impairment of intangible assets
|
812
|
|
|
871
|
|
|
925
|
|
|||
Stock-based compensation expense
|
7,679
|
|
|
9,353
|
|
|
10,794
|
|
|||
Deferred income taxes
|
258
|
|
|
778
|
|
|
173
|
|
|||
(Gain) loss on debt and equity securities, net
|
37
|
|
|
(6,650
|
)
|
|
(2,798
|
)
|
|||
Other
|
294
|
|
|
(189
|
)
|
|
(592
|
)
|
|||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(3,768
|
)
|
|
(2,169
|
)
|
|
(4,340
|
)
|
|||
Income taxes, net
|
8,211
|
|
|
(2,251
|
)
|
|
(3,128
|
)
|
|||
Other assets
|
(2,164
|
)
|
|
(1,207
|
)
|
|
(621
|
)
|
|||
Accounts payable
|
731
|
|
|
1,067
|
|
|
428
|
|
|||
Accrued expenses and other liabilities
|
4,891
|
|
|
8,614
|
|
|
7,170
|
|
|||
Accrued revenue share
|
955
|
|
|
483
|
|
|
1,273
|
|
|||
Deferred revenue
|
390
|
|
|
371
|
|
|
37
|
|
|||
Net cash provided by operating activities
|
37,091
|
|
|
47,971
|
|
|
54,520
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(13,184
|
)
|
|
(25,139
|
)
|
|
(23,548
|
)
|
|||
Purchases of marketable securities
|
(92,195
|
)
|
|
(50,158
|
)
|
|
(100,315
|
)
|
|||
Maturities and sales of marketable securities
|
73,959
|
|
|
48,507
|
|
|
97,825
|
|
|||
Purchases of non-marketable investments
|
(1,745
|
)
|
|
(2,073
|
)
|
|
(1,932
|
)
|
|||
Maturities and sales of non-marketable investments
|
533
|
|
|
1,752
|
|
|
405
|
|
|||
Acquisitions, net of cash acquired, and purchases of intangible assets
|
(287
|
)
|
|
(1,491
|
)
|
|
(2,515
|
)
|
|||
Proceeds from collection of notes receivable
|
1,419
|
|
|
0
|
|
|
0
|
|
|||
Other investing activities
|
99
|
|
|
98
|
|
|
589
|
|
|||
Net cash used in investing activities
|
(31,401
|
)
|
|
(28,504
|
)
|
|
(29,491
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net payments related to stock-based award activities
|
(4,166
|
)
|
|
(4,993
|
)
|
|
(4,765
|
)
|
|||
Repurchases of capital stock
|
(4,846
|
)
|
|
(9,075
|
)
|
|
(18,396
|
)
|
|||
Proceeds from issuance of debt, net of costs
|
4,291
|
|
|
6,766
|
|
|
317
|
|
|||
Repayments of debt
|
(4,377
|
)
|
|
(6,827
|
)
|
|
(585
|
)
|
|||
Proceeds from sale of interest in consolidated entities
|
800
|
|
|
950
|
|
|
220
|
|
|||
Net cash used in financing activities
|
(8,298
|
)
|
|
(13,179
|
)
|
|
(23,209
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
405
|
|
|
(302
|
)
|
|
(23
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(2,203
|
)
|
|
5,986
|
|
|
1,797
|
|
|||
Cash and cash equivalents at beginning of period
|
12,918
|
|
|
10,715
|
|
|
16,701
|
|
|||
Cash and cash equivalents at end of period
|
$
|
10,715
|
|
|
$
|
16,701
|
|
|
$
|
18,498
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid for taxes, net of refunds
|
$
|
6,191
|
|
|
$
|
5,671
|
|
|
$
|
8,203
|
|
Alphabet Inc.
|
•
|
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);
|
•
|
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.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Google Search & other
|
$
|
69,811
|
|
|
$
|
85,296
|
|
|
$
|
98,115
|
|
YouTube ads(1)
|
8,150
|
|
|
11,155
|
|
|
15,149
|
|
|||
Google properties
|
77,961
|
|
|
96,451
|
|
|
113,264
|
|
|||
Google Network Members' properties
|
17,616
|
|
|
20,010
|
|
|
21,547
|
|
|||
Google advertising
|
95,577
|
|
|
116,461
|
|
|
134,811
|
|
|||
Google Cloud
|
4,056
|
|
|
5,838
|
|
|
8,918
|
|
|||
Google other(1)
|
10,914
|
|
|
14,063
|
|
|
17,014
|
|
|||
Google revenues
|
110,547
|
|
|
136,362
|
|
|
160,743
|
|
|||
Other Bets revenues
|
477
|
|
|
595
|
|
|
659
|
|
|||
Hedging gains (losses)
|
(169
|
)
|
|
(138
|
)
|
|
455
|
|
|||
Total revenues
|
$
|
110,855
|
|
|
$
|
136,819
|
|
|
$
|
161,857
|
|
(1)
|
YouTube non-advertising revenues are included in Google other revenues.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2017
|
|
2018
|
|
2019
|
|||||||||||||||
United States
|
$
|
52,449
|
|
|
47
|
%
|
|
$
|
63,269
|
|
|
46
|
%
|
|
$
|
74,843
|
|
|
46
|
%
|
EMEA(1)
|
36,236
|
|
|
33
|
|
|
44,739
|
|
|
33
|
|
|
50,645
|
|
|
31
|
|
|||
APAC(1)
|
16,192
|
|
|
15
|
|
|
21,341
|
|
|
15
|
|
|
26,928
|
|
|
17
|
|
|||
Other Americas(1)
|
6,147
|
|
|
5
|
|
|
7,608
|
|
|
6
|
|
|
8,986
|
|
|
6
|
|
|||
Hedging gains (losses)
|
(169
|
)
|
|
0
|
|
|
(138
|
)
|
|
0
|
|
|
455
|
|
|
0
|
|
|||
Total revenues
|
$
|
110,855
|
|
|
100
|
%
|
|
$
|
136,819
|
|
|
100
|
%
|
|
$
|
161,857
|
|
|
100
|
%
|
(1)
|
Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America (Other Americas).
|
•
|
Google Play, which includes revenues from sale of apps and in-app purchases (which we recognize net of payout to developers) and digital content sold in the Google Play store;
|
•
|
hardware, including Google Nest home products, Pixelbooks, Pixel phones and other devices;
|
•
|
YouTube non-advertising including, YouTube premium and YouTube TV subscriptions and other services; and
|
•
|
other products and services.
|
Alphabet Inc.
|
|
As of December 31, 2018
|
||||||||||||||||||||||
|
Adjusted
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Cash and
Cash Equivalents |
|
Marketable
Securities |
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Time deposits(1)
|
$
|
2,202
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,202
|
|
|
$
|
2,202
|
|
|
$
|
0
|
|
Government bonds
|
53,634
|
|
|
71
|
|
|
(414
|
)
|
|
53,291
|
|
|
3,717
|
|
|
49,574
|
|
||||||
Corporate debt securities
|
25,383
|
|
|
15
|
|
|
(316
|
)
|
|
25,082
|
|
|
44
|
|
|
25,038
|
|
||||||
Mortgage-backed and asset-backed securities
|
16,918
|
|
|
11
|
|
|
(324
|
)
|
|
16,605
|
|
|
0
|
|
|
16,605
|
|
||||||
Total
|
$
|
98,137
|
|
|
$
|
97
|
|
|
$
|
(1,054
|
)
|
|
$
|
97,180
|
|
|
$
|
5,963
|
|
|
$
|
91,217
|
|
Alphabet Inc.
|
|
As of December 31, 2019
|
||||||||||||||||||||||
|
Adjusted
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized Losses |
|
Fair
Value |
|
Cash and
Cash
Equivalents
|
|
Marketable
Securities |
||||||||||||
Level 2:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Time deposits(1)
|
$
|
2,294
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,294
|
|
|
$
|
2,294
|
|
|
$
|
0
|
|
Government bonds
|
55,033
|
|
|
434
|
|
|
(30
|
)
|
|
55,437
|
|
|
4,518
|
|
|
50,919
|
|
||||||
Corporate debt securities
|
27,164
|
|
|
337
|
|
|
(3
|
)
|
|
27,498
|
|
|
44
|
|
|
27,454
|
|
||||||
Mortgage-backed and asset-backed securities
|
19,453
|
|
|
96
|
|
|
(41
|
)
|
|
19,508
|
|
|
0
|
|
|
19,508
|
|
||||||
Total
|
$
|
103,944
|
|
|
$
|
867
|
|
|
$
|
(74
|
)
|
|
$
|
104,737
|
|
|
$
|
6,856
|
|
|
$
|
97,881
|
|
(1)
|
The majority of our time deposits are domestic deposits.
|
|
As of
December 31, 2019 |
||
Due in 1 year
|
$
|
20,392
|
|
Due in 1 year through 5 years
|
63,151
|
|
|
Due in 5 years through 10 years
|
2,671
|
|
|
Due after 10 years
|
11,667
|
|
|
Total
|
$
|
97,881
|
|
|
As of December 31, 2018
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
|
Fair Value
|
|
Unrealized
Loss |
||||||||||||
Government bonds
|
$
|
12,019
|
|
|
$
|
(85
|
)
|
|
$
|
23,877
|
|
|
$
|
(329
|
)
|
|
$
|
35,896
|
|
|
$
|
(414
|
)
|
Corporate debt securities
|
10,171
|
|
|
(107
|
)
|
|
11,545
|
|
|
(209
|
)
|
|
21,716
|
|
|
(316
|
)
|
||||||
Mortgage-backed and asset-backed securities
|
5,534
|
|
|
(75
|
)
|
|
8,519
|
|
|
(249
|
)
|
|
14,053
|
|
|
(324
|
)
|
||||||
Total
|
$
|
27,724
|
|
|
$
|
(267
|
)
|
|
$
|
43,941
|
|
|
$
|
(787
|
)
|
|
$
|
71,665
|
|
|
$
|
(1,054
|
)
|
|
As of December 31, 2019
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss
|
|
Fair Value
|
|
Unrealized
Loss |
||||||||||||
Government bonds
|
$
|
6,752
|
|
|
$
|
(20
|
)
|
|
$
|
4,590
|
|
|
$
|
(10
|
)
|
|
$
|
11,342
|
|
|
$
|
(30
|
)
|
Corporate debt securities
|
1,665
|
|
|
(2
|
)
|
|
978
|
|
|
(1
|
)
|
|
2,643
|
|
|
(3
|
)
|
||||||
Mortgage-backed and asset-backed securities
|
4,536
|
|
|
(13
|
)
|
|
2,835
|
|
|
(28
|
)
|
|
7,371
|
|
|
(41
|
)
|
||||||
Total
|
$
|
12,953
|
|
|
$
|
(35
|
)
|
|
$
|
8,403
|
|
|
$
|
(39
|
)
|
|
$
|
21,356
|
|
|
$
|
(74
|
)
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Net gain (loss) on equity securities sold during the period
|
$
|
1,458
|
|
|
$
|
(301
|
)
|
Net unrealized gain (loss) on equity securities held as of the end of the period(1)
|
4,002
|
|
|
2,950
|
|
||
Total gain (loss) recognized in other income (expense), net
|
$
|
5,460
|
|
|
$
|
2,649
|
|
(1)
|
Includes net gains of $4.1 billion and $1.8 billion related to non-marketable equity securities for the years ended December 31, 2018 and 2019, respectively.
|
|
Equity Securities Sold During the Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Total sale price
|
$
|
1,965
|
|
|
$
|
3,134
|
|
Total initial cost
|
515
|
|
|
858
|
|
||
Cumulative net gains
|
$
|
1,450
|
|
|
$
|
2,276
|
|
Alphabet Inc.
|
|
As of December 31, 2018
|
||||||||||
|
Marketable Securities
|
|
Non-Marketable Securities
|
|
Total
|
||||||
Total initial cost
|
$
|
1,168
|
|
|
$
|
8,168
|
|
|
$
|
9,336
|
|
Cumulative net gain(1)
|
54
|
|
|
4,107
|
|
|
4,161
|
|
|||
Carrying value
|
$
|
1,222
|
|
|
$
|
12,275
|
|
|
$
|
13,497
|
|
(1)
|
Non-marketable securities cumulative net gain is comprised of $4.3 billion unrealized gains and $178 million unrealized losses (including impairment).
|
|
As of December 31, 2019
|
||||||||||
|
Marketable Securities
|
|
Non-Marketable Securities
|
|
Total
|
||||||
Total initial cost
|
$
|
1,935
|
|
|
$
|
8,297
|
|
|
$
|
10,232
|
|
Cumulative net gain(1)
|
1,361
|
|
|
3,056
|
|
|
4,417
|
|
|||
Carrying value
|
$
|
3,296
|
|
|
$
|
11,353
|
|
|
$
|
14,649
|
|
(1)
|
Non-marketable securities cumulative net gain is comprised of $3.5 billion unrealized gains and $445 million unrealized losses (including impairment).
|
|
|
As of December 31, 2018
|
|
As of December 31, 2019
|
||||||||||||
|
|
Cash and Cash Equivalents
|
|
Marketable
Securities |
|
Cash and Cash Equivalents
|
|
Marketable
Securities |
||||||||
Level 1:
|
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
|
$
|
3,493
|
|
|
$
|
0
|
|
|
$
|
4,604
|
|
|
$
|
0
|
|
Marketable equity securities(1)
|
|
0
|
|
|
994
|
|
|
0
|
|
|
3,046
|
|
||||
|
|
3,493
|
|
|
994
|
|
|
4,604
|
|
|
3,046
|
|
||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||||
Mutual funds
|
|
0
|
|
|
228
|
|
|
0
|
|
|
250
|
|
||||
Total
|
|
$
|
3,493
|
|
|
$
|
1,222
|
|
|
$
|
4,604
|
|
|
$
|
3,296
|
|
(1)
|
The balance as of December 31, 2019 includes investments that were reclassified from non-marketable equity securities following the initial public offering of the issuers.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2019
|
||||
Unrealized gains
|
$
|
4,285
|
|
|
$
|
2,163
|
|
Unrealized losses (including impairment)
|
(178
|
)
|
|
(372
|
)
|
||
Total unrealized gain (loss) for non-marketable equity securities
|
$
|
4,107
|
|
|
$
|
1,791
|
|
Alphabet Inc.
|
Alphabet Inc.
|
|
|
|
|
As of December 31, 2018
|
||||||||||
|
|
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
|
|
$
|
459
|
|
|
$
|
54
|
|
|
$
|
513
|
|
Total
|
|
|
|
$
|
459
|
|
|
$
|
54
|
|
|
$
|
513
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Accrued expenses and other liabilities, current and non-current
|
|
$
|
5
|
|
|
$
|
228
|
|
|
$
|
233
|
|
Total
|
|
|
|
$
|
5
|
|
|
$
|
228
|
|
|
$
|
233
|
|
|
|
|
|
As of December 31, 2019
|
||||||||||
|
|
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
|
|
$
|
91
|
|
|
$
|
253
|
|
|
$
|
344
|
|
Total
|
|
|
|
$
|
91
|
|
|
$
|
253
|
|
|
$
|
344
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
|
||||||
Level 2:
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
Accrued expenses and other liabilities, current and non-current
|
|
$
|
173
|
|
|
$
|
196
|
|
|
$
|
369
|
|
Total
|
|
|
|
$
|
173
|
|
|
$
|
196
|
|
|
$
|
369
|
|
Alphabet Inc.
|
|
|
Gains (Losses) Recognized in OCI
on Derivatives Before Tax Effect
|
||||||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2018
|
|
2019
|
||||||
Derivatives in Cash Flow Hedging Relationship:
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
|
|
|
|
|
||||||
Amount included in the assessment of effectiveness
|
|
$
|
(955
|
)
|
|
$
|
332
|
|
|
$
|
38
|
|
Amount excluded from the assessment of effectiveness
|
|
0
|
|
|
26
|
|
|
(14
|
)
|
|||
Derivatives in Net Investment Hedging Relationship:
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
|
|
|
|
|
||||||
Amount included in the assessment of effectiveness
|
|
0
|
|
|
136
|
|
|
131
|
|
|||
Total
|
|
$
|
(955
|
)
|
|
$
|
494
|
|
|
$
|
155
|
|
Alphabet Inc.
|
|
Gains (Losses) Recognized in Income
|
||||||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||||||||||||||
|
Revenues
|
|
Other income (expense), net
|
|
Revenues
|
|
Other income (expense), net
|
|
Revenues
|
|
Other income (expense), net
|
||||||||||||
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded
|
$
|
110,855
|
|
|
$
|
1,015
|
|
|
$
|
136,819
|
|
|
$
|
7,389
|
|
|
$
|
161,857
|
|
|
$
|
5,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount of gains (losses) reclassified from AOCI to income
|
$
|
(169
|
)
|
|
$
|
0
|
|
|
$
|
(139
|
)
|
|
$
|
0
|
|
|
$
|
367
|
|
|
$
|
0
|
|
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach
|
0
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
88
|
|
|
0
|
|
||||||
Amount excluded from the assessment of effectiveness
|
0
|
|
|
83
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
||||||
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Hedged items
|
0
|
|
|
197
|
|
|
0
|
|
|
(96
|
)
|
|
0
|
|
|
(19
|
)
|
||||||
Derivatives designated as hedging instruments
|
0
|
|
|
(197
|
)
|
|
0
|
|
|
96
|
|
|
0
|
|
|
19
|
|
||||||
Amount excluded from the assessment of effectiveness
|
0
|
|
|
23
|
|
|
0
|
|
|
37
|
|
|
0
|
|
|
25
|
|
||||||
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amount excluded from the assessment of effectiveness
|
0
|
|
|
0
|
|
|
0
|
|
|
78
|
|
|
0
|
|
|
243
|
|
||||||
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivatives not designated as hedging instruments
|
0
|
|
|
(230
|
)
|
|
0
|
|
|
54
|
|
|
0
|
|
|
(413
|
)
|
||||||
Total gains (losses)
|
$
|
(169
|
)
|
|
$
|
(124
|
)
|
|
$
|
(138
|
)
|
|
$
|
169
|
|
|
$
|
455
|
|
|
$
|
(145
|
)
|
Alphabet Inc.
|
|
As of December 31, 2018
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
$
|
569
|
|
|
$
|
(56
|
)
|
|
$
|
513
|
|
|
$
|
(90
|
)
|
(1)
|
$
|
(307
|
)
|
|
$
|
(14
|
)
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
As of December 31, 2019
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
$
|
365
|
|
|
$
|
(21
|
)
|
|
$
|
344
|
|
|
$
|
(88
|
)
|
(1)
|
$
|
(234
|
)
|
|
$
|
0
|
|
|
$
|
22
|
|
(1)
|
The balances as of December 31, 2018 and 2019 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, 2018
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
$
|
289
|
|
|
$
|
(56
|
)
|
|
$
|
233
|
|
|
$
|
(90
|
)
|
(2)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
As of December 31, 2019
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
$
|
390
|
|
|
$
|
(21
|
)
|
|
$
|
369
|
|
|
$
|
(88
|
)
|
(2)
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
281
|
|
(2)
|
The balances as of December 31, 2018 and 2019 were related to derivative assets which are allowed to be net settled against derivative liabilities in accordance with our master netting agreements.
|
|
Year Ended
|
||
|
December 31, 2019
|
||
Operating lease cost
|
$
|
1,820
|
|
Variable lease cost
|
541
|
|
|
Total operating lease cost
|
$
|
2,361
|
|
Alphabet Inc.
|
|
Year Ended
|
||
|
December 31, 2019
|
||
Cash payments for operating leases
|
$
|
1,661
|
|
New operating lease assets obtained in exchange for operating lease liabilities
|
$
|
4,391
|
|
2020
|
$
|
1,757
|
|
2021
|
1,845
|
|
|
2022
|
1,680
|
|
|
2023
|
1,508
|
|
|
2024
|
1,301
|
|
|
Thereafter
|
5,763
|
|
|
Total future lease payments
|
13,854
|
|
|
Less imputed interest
|
(2,441
|
)
|
|
Total lease liability balance
|
$
|
11,413
|
|
|
Operating Leases(1)
|
|
Sub-lease Income
|
|
Net Operating Leases
|
||||||
2019
|
$
|
1,319
|
|
|
$
|
16
|
|
|
$
|
1,303
|
|
2020
|
1,397
|
|
|
13
|
|
|
1,384
|
|
|||
2021
|
1,337
|
|
|
10
|
|
|
1,327
|
|
|||
2022
|
1,153
|
|
|
8
|
|
|
1,145
|
|
|||
2023
|
980
|
|
|
3
|
|
|
977
|
|
|||
Thereafter
|
3,916
|
|
|
5
|
|
|
3,911
|
|
|||
Total minimum payments
|
$
|
10,102
|
|
|
$
|
55
|
|
|
$
|
10,047
|
|
(1)
|
Includes future minimum payments for leases which have not yet commenced.
|
Alphabet Inc.
|
Alphabet Inc.
|
|
As of
December 31, 2018 |
|
As of
December 31, 2019 |
||||
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
|
(50
|
)
|
|
(42
|
)
|
||
Subtotal(1)
|
3,950
|
|
|
3,958
|
|
||
Total future finance lease payments
|
62
|
|
|
685
|
|
||
Less: imputed interest for finance leases
|
0
|
|
|
(89
|
)
|
||
Total long-term debt
|
$
|
4,012
|
|
|
$
|
4,554
|
|
(1)
|
Includes the outstanding (and unexchanged) Google Notes issued in 2011 and 2014 and the Alphabet notes exchanged in 2016.
|
2020
|
|
$
|
0
|
|
2021
|
|
1,046
|
|
|
2022
|
|
46
|
|
|
2023
|
|
46
|
|
|
2024
|
|
1,047
|
|
|
Thereafter
|
|
2,500
|
|
|
Total
|
|
$
|
4,685
|
|
Alphabet Inc.
|
|
As of
December 31, 2018 |
|
As of
December 31, 2019 |
||||
Land and buildings
|
$
|
30,179
|
|
|
$
|
39,865
|
|
Information technology assets
|
30,119
|
|
|
36,840
|
|
||
Construction in progress
|
16,838
|
|
|
21,036
|
|
||
Leasehold improvements
|
5,310
|
|
|
6,310
|
|
||
Furniture and fixtures
|
61
|
|
|
156
|
|
||
Property and equipment, gross
|
82,507
|
|
|
104,207
|
|
||
Less: accumulated depreciation
|
(22,788
|
)
|
|
(30,561
|
)
|
||
Property and equipment, net
|
$
|
59,719
|
|
|
$
|
73,646
|
|
|
As of
December 31, 2018 |
|
As of
December 31, 2019 |
||||
European Commission fines(1)
|
$
|
7,754
|
|
|
$
|
9,405
|
|
Accrued customer liabilities
|
1,810
|
|
|
2,245
|
|
||
Accrued purchases of property and equipment
|
1,603
|
|
|
2,411
|
|
||
Current operating lease liabilities
|
0
|
|
|
1,199
|
|
||
Other accrued expenses and current liabilities
|
5,791
|
|
|
7,807
|
|
||
Accrued expenses and other current liabilities
|
$
|
16,958
|
|
|
$
|
23,067
|
|
(1)
|
Includes the effects of foreign exchange and interest. See Note 10 for further details.
|
Alphabet Inc.
|
|
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, 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
|
)
|
||||
Cumulative effect of accounting change
|
0
|
|
|
(98
|
)
|
|
0
|
|
|
(98
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
(781
|
)
|
|
88
|
|
|
264
|
|
|
(429
|
)
|
||||
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI
|
0
|
|
|
0
|
|
|
26
|
|
|
26
|
|
||||
Amounts reclassified from AOCI
|
0
|
|
|
(911
|
)
|
|
98
|
|
|
(813
|
)
|
||||
Other comprehensive income (loss)
|
(781
|
)
|
|
(823
|
)
|
|
388
|
|
|
(1,216
|
)
|
||||
Balance as of December 31, 2018
|
(1,884
|
)
|
|
(688
|
)
|
|
266
|
|
|
(2,306
|
)
|
||||
Cumulative effect of accounting change
|
0
|
|
|
0
|
|
|
(30
|
)
|
|
(30
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
(119
|
)
|
|
1,611
|
|
|
36
|
|
|
1,528
|
|
||||
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI
|
0
|
|
|
0
|
|
|
(14
|
)
|
|
(14
|
)
|
||||
Amounts reclassified from AOCI
|
0
|
|
|
(111
|
)
|
|
(299
|
)
|
|
(410
|
)
|
||||
Other comprehensive income (loss)
|
(119
|
)
|
|
1,500
|
|
|
(277
|
)
|
|
1,104
|
|
||||
Balance as of December 31, 2019
|
$
|
(2,003
|
)
|
|
$
|
812
|
|
|
$
|
(41
|
)
|
|
$
|
(1,232
|
)
|
|
|
|
|
Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income
|
||||||||||
|
|
|
|
Year Ended December 31,
|
||||||||||
AOCI Components
|
|
Location
|
|
2017
|
|
2018
|
|
2019
|
||||||
Unrealized gains (losses) on available-for-sale investments
|
|
|
|
|
|
|
||||||||
|
|
Other income (expense), net
|
|
$
|
(105
|
)
|
|
$
|
1,190
|
|
|
$
|
149
|
|
|
|
Benefit (provision) for income taxes
|
|
0
|
|
|
(279
|
)
|
|
(38
|
)
|
|||
|
|
Net of tax
|
|
(105
|
)
|
|
911
|
|
|
111
|
|
|||
Unrealized gains (losses) on cash flow hedges
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Revenue
|
|
(169
|
)
|
|
(139
|
)
|
|
367
|
|
|||
Interest rate contracts
|
|
Other income (expense), net
|
|
5
|
|
|
6
|
|
|
6
|
|
|||
|
|
Benefit (provision) for income taxes
|
|
71
|
|
|
35
|
|
|
(74
|
)
|
|||
|
|
Net of tax
|
|
(93
|
)
|
|
(98
|
)
|
|
299
|
|
|||
Total amount reclassified, net of tax
|
|
|
|
$
|
(198
|
)
|
|
$
|
813
|
|
|
$
|
410
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Interest income
|
$
|
1,312
|
|
|
$
|
1,878
|
|
|
$
|
2,427
|
|
Interest expense(1)
|
(109
|
)
|
|
(114
|
)
|
|
(100
|
)
|
|||
Foreign currency exchange gain (loss), net (2)
|
(121
|
)
|
|
(80
|
)
|
|
103
|
|
|||
Gain (loss) on debt securities, net(3)
|
(110
|
)
|
|
1,190
|
|
|
149
|
|
|||
Gain (loss) on equity securities, net
|
73
|
|
|
5,460
|
|
|
2,649
|
|
|||
Performance fees(4)
|
(32
|
)
|
|
(1,203
|
)
|
|
(326
|
)
|
|||
Gain (loss) and impairment from equity method investments, net
|
(156
|
)
|
|
(120
|
)
|
|
390
|
|
|||
Other
|
158
|
|
|
378
|
|
|
102
|
|
|||
Other income (expense), net
|
$
|
1,015
|
|
|
$
|
7,389
|
|
|
$
|
5,394
|
|
(1)
|
Interest expense is net of interest capitalized of $48 million, $92 million, and $167 million for the years ended December 31, 2017, 2018, and 2019, respectively.
|
(2)
|
Our foreign currency exchange gain (loss), net, are related to the option premium costs and forwards 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 $226 million, $195 million, and $166 million for the years ended December 31, 2017, 2018, and 2019, respectively.
|
(3)
|
During the year ended December 31, 2018, the terms of a non-marketable debt security were modified resulting in an unrealized $1.3 billion gain.
|
(4)
|
Performance fees were reclassified for prior periods from general and administrative expenses to other income (expense), net to conform with current period presentation.
|
Alphabet Inc.
|
|
Google
|
|
Other Bets
|
|
Total Consolidated
|
||||||
Balance as of December 31, 2017
|
$
|
16,295
|
|
|
$
|
452
|
|
|
$
|
16,747
|
|
Acquisitions
|
1,227
|
|
|
0
|
|
|
1,227
|
|
|||
Transfers
|
80
|
|
|
(80
|
)
|
|
0
|
|
|||
Foreign currency translation and other adjustments
|
(81
|
)
|
|
(5
|
)
|
|
(86
|
)
|
|||
Balance as of December 31, 2018
|
17,521
|
|
|
367
|
|
|
17,888
|
|
|||
Acquisitions
|
2,353
|
|
|
475
|
|
|
2,828
|
|
|||
Transfers
|
9
|
|
|
(9
|
)
|
|
0
|
|
|||
Foreign currency translation and other adjustments
|
38
|
|
|
(130
|
)
|
|
(92
|
)
|
|||
Balance as of December 31, 2019
|
$
|
19,921
|
|
|
$
|
703
|
|
|
$
|
20,624
|
|
|
As of December 31, 2018
|
||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
Patents and developed technology
|
$
|
5,125
|
|
|
$
|
3,394
|
|
|
$
|
1,731
|
|
Customer relationships
|
349
|
|
|
308
|
|
|
41
|
|
|||
Trade names and other
|
703
|
|
|
255
|
|
|
448
|
|
|||
Total
|
$
|
6,177
|
|
|
$
|
3,957
|
|
|
$
|
2,220
|
|
|
As of December 31, 2019
|
||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||
Patents and developed technology
|
$
|
4,972
|
|
|
$
|
3,570
|
|
|
$
|
1,402
|
|
Customer relationships
|
254
|
|
|
30
|
|
|
224
|
|
|||
Trade names and other
|
703
|
|
|
350
|
|
|
353
|
|
|||
Total
|
$
|
5,929
|
|
|
$
|
3,950
|
|
|
$
|
1,979
|
|
Alphabet Inc.
|
2020
|
$
|
749
|
|
2021
|
665
|
|
|
2022
|
317
|
|
|
2023
|
57
|
|
|
2024
|
45
|
|
|
Thereafter
|
146
|
|
|
|
$
|
1,979
|
|
Alphabet Inc.
|
Alphabet Inc.
|
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.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
||||||||||
|
Class A
|
|
Class B
|
|
Class C
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings
|
$
|
13,200
|
|
|
$
|
2,072
|
|
|
$
|
15,464
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in per share computation
|
298,548
|
|
|
46,864
|
|
|
349,728
|
|
|||
Basic net income per share
|
$
|
44.22
|
|
|
$
|
44.22
|
|
|
$
|
44.22
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings for basic computation
|
$
|
13,200
|
|
|
$
|
2,072
|
|
|
$
|
15,464
|
|
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares
|
2,072
|
|
|
0
|
|
|
0
|
|
|||
Reallocation of undistributed earnings
|
(146
|
)
|
|
(24
|
)
|
|
146
|
|
|||
Allocation of undistributed earnings
|
$
|
15,126
|
|
|
$
|
2,048
|
|
|
$
|
15,610
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in basic computation
|
298,548
|
|
|
46,864
|
|
|
349,728
|
|
|||
Weighted-average effect of dilutive securities
|
|
|
|
|
|
||||||
Add:
|
|
|
|
|
|
||||||
Conversion of Class B to Class A common shares outstanding
|
46,864
|
|
|
0
|
|
|
0
|
|
|||
Restricted stock units and other contingently issuable shares
|
689
|
|
|
0
|
|
|
7,456
|
|
|||
Number of shares used in per share computation
|
346,101
|
|
|
46,864
|
|
|
357,184
|
|
|||
Diluted net income per share
|
$
|
43.70
|
|
|
$
|
43.70
|
|
|
$
|
43.70
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
||||||||||
|
Class A
|
|
Class B
|
|
Class C
|
||||||
Basic net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings
|
$
|
14,846
|
|
|
$
|
2,307
|
|
|
$
|
17,190
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in per share computation
|
299,402
|
|
|
46,527
|
|
|
346,667
|
|
|||
Basic net income per share
|
$
|
49.59
|
|
|
$
|
49.59
|
|
|
$
|
49.59
|
|
Diluted net income per share:
|
|
|
|
|
|
||||||
Numerator
|
|
|
|
|
|
||||||
Allocation of undistributed earnings for basic computation
|
$
|
14,846
|
|
|
$
|
2,307
|
|
|
$
|
17,190
|
|
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares
|
2,307
|
|
|
0
|
|
|
0
|
|
|||
Reallocation of undistributed earnings
|
(126
|
)
|
|
(20
|
)
|
|
126
|
|
|||
Allocation of undistributed earnings
|
$
|
17,027
|
|
|
$
|
2,287
|
|
|
$
|
17,316
|
|
Denominator
|
|
|
|
|
|
||||||
Number of shares used in basic computation
|
299,402
|
|
|
46,527
|
|
|
346,667
|
|
|||
Weighted-average effect of dilutive securities
|
|
|
|
|
|
||||||
Add:
|
|
|
|
|
|
||||||
Conversion of Class B to Class A common shares outstanding
|
46,527
|
|
|
0
|
|
|
0
|
|
|||
Restricted stock units and other contingently issuable shares
|
413
|
|
|
0
|
|
|
5,547
|
|
|||
Number of shares used in per share computation
|
346,342
|
|
|
46,527
|
|
|
352,214
|
|
|||
Diluted net income per share
|
$
|
49.16
|
|
|
$
|
49.16
|
|
|
$
|
49.16
|
|
Alphabet Inc.
|
|
Unvested Restricted Stock Units
|
|||||
|
Number of
Shares
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|||
Unvested as of December 31, 2018
|
18,467,678
|
|
|
$
|
936.96
|
|
Granted
|
13,934,041
|
|
|
$
|
1,092.36
|
|
Vested
|
(11,576,766
|
)
|
|
$
|
919.28
|
|
Forfeited/canceled
|
(1,430,717
|
)
|
|
$
|
990.56
|
|
Unvested as of December 31, 2019
|
19,394,236
|
|
|
$
|
1,055.22
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Domestic operations
|
$
|
10,680
|
|
|
$
|
15,779
|
|
|
$
|
16,426
|
|
Foreign operations
|
16,513
|
|
|
19,134
|
|
|
23,199
|
|
|||
Total
|
$
|
27,193
|
|
|
$
|
34,913
|
|
|
$
|
39,625
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal and state
|
$
|
12,608
|
|
|
$
|
2,153
|
|
|
$
|
2,424
|
|
Foreign
|
1,746
|
|
|
1,251
|
|
|
2,713
|
|
|||
Total
|
14,354
|
|
|
3,404
|
|
|
5,137
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal and state
|
220
|
|
|
907
|
|
|
286
|
|
|||
Foreign
|
(43
|
)
|
|
(134
|
)
|
|
(141
|
)
|
|||
Total
|
177
|
|
|
773
|
|
|
145
|
|
|||
Provision for income taxes
|
$
|
14,531
|
|
|
$
|
4,177
|
|
|
$
|
5,282
|
|
Alphabet Inc.
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2018
|
|
2019
|
|||
U.S. federal statutory tax rate
|
35.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
Foreign income taxed at different rates
|
(14.2
|
)
|
|
(4.9
|
)
|
|
(5.6
|
)
|
Effect of the Tax Act
|
|
|
|
|
|
|
|
|
Transition tax
|
37.6
|
|
|
(0.1
|
)
|
|
(0.6
|
)
|
Deferred tax effects
|
(1.4
|
)
|
|
(1.2
|
)
|
|
0.0
|
|
Federal research credit
|
(1.8
|
)
|
|
(2.4
|
)
|
|
(2.5
|
)
|
Stock-based compensation expense
|
(4.5
|
)
|
|
(2.2
|
)
|
|
(0.7
|
)
|
European Commission fines
|
3.5
|
|
|
3.1
|
|
|
1.0
|
|
Deferred tax asset valuation allowance
|
0.9
|
|
|
(2.0
|
)
|
|
0.0
|
|
State and local income taxes
|
0.1
|
|
|
(0.4
|
)
|
|
1.1
|
|
Other adjustments
|
(1.8
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
Effective tax rate
|
53.4
|
%
|
|
12.0
|
%
|
|
13.3
|
%
|
Alphabet Inc.
|
|
As of December 31,
|
||||||
|
2018
|
|
2019
|
||||
Deferred tax assets:
|
|
|
|
||||
Stock-based compensation expense
|
$
|
291
|
|
|
$
|
421
|
|
Accrued employee benefits
|
387
|
|
|
463
|
|
||
Accruals and reserves not currently deductible
|
902
|
|
|
1,047
|
|
||
Tax credits
|
1,979
|
|
|
3,264
|
|
||
Basis difference in investment in Arris
|
657
|
|
|
0
|
|
||
Prepaid cost sharing
|
597
|
|
|
0
|
|
||
Net operating losses
|
557
|
|
|
771
|
|
||
Operating leases
|
160
|
|
|
1,876
|
|
||
Other
|
21
|
|
|
390
|
|
||
Total deferred tax assets
|
5,551
|
|
|
8,232
|
|
||
Valuation allowance
|
(2,817
|
)
|
|
(3,502
|
)
|
||
Total deferred tax assets net of valuation allowance
|
2,734
|
|
|
4,730
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment, net
|
(1,382
|
)
|
|
(1,798
|
)
|
||
Renewable energy investments
|
(500
|
)
|
|
(466
|
)
|
||
Foreign Earnings
|
(111
|
)
|
|
(373
|
)
|
||
Net investment gains
|
(1,143
|
)
|
|
(1,074
|
)
|
||
Operating leases
|
0
|
|
|
(1,619
|
)
|
||
Other
|
(125
|
)
|
|
(380
|
)
|
||
Total deferred tax liabilities
|
(3,261
|
)
|
|
(5,710
|
)
|
||
Net deferred tax assets (liabilities)
|
$
|
(527
|
)
|
|
$
|
(980
|
)
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Beginning gross unrecognized tax benefits
|
$
|
5,393
|
|
|
$
|
4,696
|
|
|
$
|
4,652
|
|
Increases related to prior year tax positions
|
685
|
|
|
321
|
|
|
938
|
|
|||
Decreases related to prior year tax positions
|
(257
|
)
|
|
(623
|
)
|
|
(143
|
)
|
|||
Decreases related to settlement with tax authorities
|
(1,875
|
)
|
|
(191
|
)
|
|
(2,886
|
)
|
|||
Increases related to current year tax positions
|
750
|
|
|
449
|
|
|
816
|
|
|||
Ending gross unrecognized tax benefits
|
$
|
4,696
|
|
|
$
|
4,652
|
|
|
$
|
3,377
|
|
•
|
Google – Google includes our main products such as ads, Android, Chrome, hardware, Google Cloud, Google Maps, Google Play, Search, and YouTube. Our technical infrastructure is 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 and subscription-based products.
|
•
|
Other Bets – Other Bets is a combination of multiple operating segments that are not individually material. Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Revenues from the Other Bets are derived primarily through the sales of internet and TV services through Access as well as licensing and R&D services through Verily.
|
Alphabet Inc.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Google
|
$
|
110,547
|
|
|
$
|
136,362
|
|
|
$
|
160,743
|
|
Other Bets
|
477
|
|
|
595
|
|
|
659
|
|
|||
Hedging gains (losses)
|
(169
|
)
|
|
(138
|
)
|
|
455
|
|
|||
Total revenues
|
$
|
110,855
|
|
|
$
|
136,819
|
|
|
$
|
161,857
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Google
|
$
|
32,456
|
|
|
$
|
36,655
|
|
|
$
|
41,673
|
|
Other Bets
|
(2,734
|
)
|
|
(3,358
|
)
|
|
(4,824
|
)
|
|||
Reconciling items(1)
|
(3,544
|
)
|
|
(5,773
|
)
|
|
(2,618
|
)
|
|||
Total income from operations
|
$
|
26,178
|
|
|
$
|
27,524
|
|
|
$
|
34,231
|
|
(1)
|
Reconciling items are generally comprised of corporate administrative costs, hedging gains (losses) and other miscellaneous items that are not allocated to individual segments. Reconciling items include the European Commission fines for the years ended December 31, 2017, 2018 and 2019, and a charge from a legal settlement for the year ended December 31, 2019. Performance fees previously included in reconciling items were reclassified for the years ended December 31, 2017 and 2018 from general and administrative expenses to other income (expense), net to conform with current period presentation. For further information on the reclassification, see Note 1.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Google
|
$
|
12,619
|
|
|
$
|
25,460
|
|
|
$
|
25,251
|
|
Other Bets
|
493
|
|
|
181
|
|
|
281
|
|
|||
Reconciling items(2)
|
72
|
|
|
(502
|
)
|
|
(1,984
|
)
|
|||
Total capital expenditures as presented on the Consolidated Statements of Cash Flows
|
$
|
13,184
|
|
|
$
|
25,139
|
|
|
$
|
23,548
|
|
(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,
|
||||||||||
|
2017
|
|
2018
|
|
2019
|
||||||
Stock-based compensation:
|
|
|
|
|
|
||||||
Google
|
$
|
7,168
|
|
|
$
|
8,755
|
|
|
$
|
10,185
|
|
Other Bets
|
363
|
|
|
489
|
|
|
474
|
|
|||
Reconciling items(3)
|
148
|
|
|
109
|
|
|
135
|
|
|||
Total stock-based compensation(4)
|
$
|
7,679
|
|
|
$
|
9,353
|
|
|
$
|
10,794
|
|
|
|
|
|
|
|
||||||
Depreciation, amortization, and impairment:
|
|
|
|
|
|
||||||
Google
|
$
|
6,608
|
|
|
$
|
8,708
|
|
|
$
|
11,158
|
|
Other Bets
|
307
|
|
|
327
|
|
|
566
|
|
|||
Reconciling items(3)
|
0
|
|
|
0
|
|
|
57
|
|
|||
Total depreciation, amortization, and impairment
|
$
|
6,915
|
|
|
$
|
9,035
|
|
|
$
|
11,781
|
|
(3)
|
Reconciling items relate to corporate administrative and other 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.
|
|
As of
December 31, 2018 |
|
As of
December 31, 2019 |
||||
Long-lived assets:
|
|
|
|
||||
United States
|
$
|
74,882
|
|
|
$
|
94,907
|
|
International
|
22,234
|
|
|
28,424
|
|
||
Total long-lived assets
|
$
|
97,116
|
|
|
$
|
123,331
|
|
Alphabet Inc.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
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, 2017
|
$
|
467
|
|
|
$
|
1,131
|
|
|
$
|
(924
|
)
|
|
$
|
674
|
|
Year ended December 31, 2018
|
$
|
674
|
|
|
$
|
1,115
|
|
|
$
|
(1,060
|
)
|
|
$
|
729
|
|
Year ended December 31, 2019
|
$
|
729
|
|
|
$
|
1,481
|
|
|
$
|
(1,457
|
)
|
|
$
|
753
|
|
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
|
|
4.14
|
|
*
|
|
|
|
|
|
10.01
|
|
u
|
|
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)
|
|
April 30, 2019
|
|
10.03
|
|
u
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
December 9, 2019
|
|
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. 001-37580)
|
|
October 2, 2015
|
|
10.06
|
|
u
|
|
Current Report on Form 8-K (File No. 001-37580)
|
|
October 2, 2015
|
|
10.07
|
|
u
|
|
Current Report on Form 8-K (File No. 000-50726)
|
|
June 7, 2011
|
|
10.07.1
|
|
u
|
|
Annual Report on Form 10-K
(File No. 000-50726)
|
|
March 30, 2005
|
|
10.07.2
|
|
u
|
|
Annual Report on Form 10-K
(File No. 000-50726)
|
|
March 30, 2005
|
|
10.07.3
|
|
u
|
|
Registration Statement on Form S-3
(File No. 333-142243)
|
|
April 20, 2007
|
|
10.08
|
|
u
|
|
Current Report on Form 8-K
(File No. 001-37580)
|
|
June 21, 2019
|
Alphabet Inc.
|
Exhibit
Number
|
|
|
Description
|
|
Incorporated by reference herein
|
||
|
Form
|
|
Date
|
||||
10.08.1
|
*
|
u
|
|
|
|
|
|
10.08.2
|
*
|
u
|
|
|
|
|
|
10.09
|
|
u
|
|
Registration Statement on Form S-8
(File No. 333-181661)
|
|
May 24, 2012
|
|
10.10
|
|
u
|
|
Registration Statement on Form S-8
(File No. 333-214573)
|
|
November 10, 2016
|
|
10.10.1
|
|
u
|
|
Registration Statement on Form S-8
(File No. 333-214573)
|
|
November 10, 2016
|
|
14.01
|
|
|
|
Annual Report on Form 10-K
(File No. 001-37580) |
|
February 6, 2018
|
|
21.01
|
|
*
|
|
|
|
|
|
23.01
|
|
*
|
|
|
|
|
|
24.01
|
|
*
|
|
|
|
|
|
31.01
|
|
*
|
|
|
|
|
|
31.02
|
|
*
|
|
|
|
|
|
32.01
|
|
‡
|
|
|
|
|
|
99.01
|
|
|
|
Current Report on Form 8-K
(File No. 001-37580)
|
|
March 20, 2019
|
|
99.02
|
|
|
|
Current Report on Form 8-K
(File No. 001-37580) |
|
December 4, 2019
|
|
101.INS
|
|
*
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
101.SCH
|
|
*
|
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
|
|
|
|
|
Alphabet Inc.
|
Exhibit
Number
|
|
|
Description
|
|
Incorporated by reference herein
|
||
|
Form
|
|
Date
|
||||
101.PRE
|
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
u
|
Indicates management compensatory plan, contract, or arrangement.
|
*
|
Filed herewith.
|
‡
|
Furnished herewith.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Alphabet Inc.
|
ALPHABET INC.
|
|
By:
|
/S/ SUNDAR PICHAI
|
|
Sundar Pichai
|
|
Chief Executive Officer
(Principal Executive Officer of the Registrant)
|
Alphabet Inc.
|
Signature
|
Title
|
Date
|
/S/ SUNDAR PICHAI
|
Chief Executive Officer and Director (Principal Executive Officer)
|
February 3, 2020
|
Sundar Pichai
|
|
|
/S/ RUTH M. PORAT
|
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 3, 2020
|
Ruth M. Porat
|
|
|
/S/ AMIE THUENER O'TOOLE
|
Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
February 3, 2020
|
Amie Thuener O'Toole
|
|
|
/S/ FRANCES H. ARNOLD
|
Director
|
February 3, 2020
|
Frances H. Arnold
|
|
|
/S/ SERGEY BRIN
|
Co-Founder and Director
|
February 3, 2020
|
Sergey Brin
|
|
|
/S/ L. JOHN DOERR
|
Director
|
February 3, 2020
|
L. John Doerr
|
|
|
/S/ ROGER W. FERGUSON, JR.
|
Director
|
February 3, 2020
|
Roger W. Ferguson, Jr.
|
|
|
/S/ JOHN L. HENNESSY
|
Director, Chair
|
February 3, 2020
|
John L. Hennessy
|
|
|
/S/ ANN MATHER
|
Director
|
February 3, 2020
|
Ann Mather
|
|
|
/S/ ALAN R. MULALLY
|
Director
|
February 3, 2020
|
Alan R. Mulally
|
|
|
/S/ LARRY PAGE
|
Co-Founder and Director
|
February 3, 2020
|
Larry Page
|
|
|
/S/ K. RAM SHRIRAM
|
Director
|
February 3, 2020
|
K. Ram Shriram
|
|
|
/S/ Robin L. Washington
|
Director
|
February 3, 2020
|
Robin L. Washington
|
|
|
|
•
|
9,000,000,000 shares are designated as Class A Common Stock;
|
|
•
|
3,000,000,000 shares are designated as Class B Common Stock;
|
|
•
|
3,000,000,000 shares are designated as Class C Capital Stock; and
|
|
•
|
100,000,000 shares are designated as preferred stock.
|
|
•
|
If we amended our Certificate of Incorporation to increase or decrease the par value of the shares of a class of stock, then the holders of the shares of that class would be required to vote separately to approve the proposed amendment.
|
|
•
|
If we amended our Certificate of Incorporation in a manner that altered or changed the powers, preferences, or special rights of the shares of a class of stock so as to affect them adversely, then the holders of the shares of that class would be required to vote separately to approve the proposed amendment.
|
|
•
|
Transfers between Larry Page and Sergey Brin, Google’s co-founders, subject to the requirements of the Transfer Restriction Agreements, as amended (as described below).
|
|
•
|
Transfers for tax and estate planning purposes, including to trusts, corporations, and partnerships established or controlled by a holder of Class B Common Stock.
|
|
•
|
the number of shares of the preferred stock being offered;
|
|
•
|
the title and liquidation preference per share of the preferred stock;
|
|
•
|
the purchase price of the preferred stock;
|
|
•
|
the dividend rate or method for determining the dividend rate;
|
|
•
|
the dates on which dividends will be paid;
|
|
•
|
whether dividends on the preferred stock will be cumulative or noncumulative and, if cumulative, the dates from which dividends shall commence to accumulate;
|
|
•
|
any redemption or sinking fund provisions applicable to the preferred stock;
|
|
•
|
any securities exchange on which the preferred stock may be listed; and
|
|
•
|
any additional dividend, liquidation, redemption, sinking fund and other rights and restrictions applicable to the preferred stock.
|
|
•
|
a majority of the voting power of our outstanding capital stock; and
|
|
•
|
60% of the voting power of the shares of capital stock present in person or represented by proxy at the stockholder meeting and entitled to vote.
|
|
•
|
prior to the date of the transaction, the Board of Directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
|
•
|
on or subsequent to the date of the transaction, the business combination is approved by the Board of Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2⁄3% of the outstanding voting stock which is not owned by the interested stockholder.
|
I.
|
GRANT OF AWARD
|
II.
|
TERMS OF GSUs
|
I.
|
GRANTS
|
Grant
|
Target Award
|
Performance Period
|
Tranche A
|
34,502 PSUs
|
January 1, 2020 – December 31, 2021
|
Tranche B
|
34,502 PSUs
|
January 1, 2020 – December 31, 2022
|
II.
|
TERMS OF PSUs
|
Performance Goals
|
Alphabet’s Percentile Rank Relative to Peer Companies
|
Percentage of Target Award Earned
(straight-line interpolation between Threshold and Target; and Target and Maximum)
|
Minimum
|
Below 25th percentile
|
0%
|
Threshold
|
At 25th percentile
|
50%
|
Target
|
At 50th percentile
|
100%
|
Maximum
|
At or above 75th percentile
|
200%
|
Merger with Company in Peer Group
|
In the event of a merger, acquisition or business combination transaction of a Peer Company with or by another Peer Company, the surviving entity shall remain a Peer Company.
|
Merger with Company not in Peer Group where Peer Company survives
|
In the event of a merger of a Peer Company with an entity that is not a Peer Company, or the acquisition or business combination transaction of a Peer Company by an entity that is not a Peer Company, in each case where the Peer Company is the surviving entity and remains publicly traded, the surviving entity shall remain a Peer Company.
|
Merger with Company not in Peer Group where Peer Company is not the survivor/Peer Company taken private
|
In the event of a merger or acquisition or business combination transaction of a Peer Company by or with an entity that is not a Peer Company or a “going private” transaction involving a Peer Company where the Peer Company is not the surviving entity or is otherwise no longer publicly traded, the company shall no longer be a Peer Company.
|
Bankruptcy, Liquidation or Delisting
|
In the event of a bankruptcy, liquidation or delisting of a Peer Company at any time during the Performance Period, such company shall remain a Peer Company and be assigned a TSR of -100%. Delisting shall mean that a company ceases to be publicly traded on a national securities exchange as a result of any involuntary failure to meet the listing requirements of such national securities exchange, but shall not include delisting as a result of any voluntary going private or similar transaction.
|
Spin-off Transaction
|
In the event of a stock distribution from a Peer Company consisting of the shares of a new publicly-traded company (a “spin-off”), the Peer Company shall remain a Peer Company and the stock distribution shall be treated as a dividend from the Peer Company based on the fair market value of the distribution on the date of such distribution; the performance of the shares of the spun-off company shall not thereafter be tracked for purposes of calculating TSR.
|
Name of Subsidiary
|
Jurisdiction of Incorporation or Organization
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Google LLC
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Delaware
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Google Ireland Holdings
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Ireland
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XXVI Holdings Inc.
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Delaware
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Alphabet Capital US LLC
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Delaware
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KHA Technologies Inc.
|
Delaware
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(1)
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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,
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(2)
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Registration Statement (Form S-8 No. 333-212914) pertaining to the Alphabet Inc. 2012 Stock Plan,
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(3)
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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,
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(4)
|
Registration Statement (Form S-8 No. 333-215873) pertaining to the Alphabet Inc. Deferred Compensation Plan,
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(5)
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Registration Statement (Form S-8 No. 333-219435) pertaining to the Alphabet Inc. 2012 Stock Plan,
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(6)
|
Registration Statement (Form S-8 No. 333-226309) pertaining to the Alphabet Inc. 2012 Stock Plan,
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(7)
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Registration Statement (Form S-3 No. 333-229513) of Alphabet Inc., and
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(8)
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Registration Statement (Form S-8 No. 333-232836) pertaining to the Alphabet Inc. Amended and Restated 2012 Stock Plan;
|
1.
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I have reviewed this Annual Report on Form 10-K of Alphabet Inc.;
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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;
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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;
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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
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(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
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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.
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/S/ SUNDAR PICHAI
|
Sundar Pichai
|
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/ RUTH PORAT
|
Ruth Porat
|
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
By:
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/S/ SUNDAR PICHAI
|
Name:
|
Sundar Pichai
|
Title:
|
Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/S/ RUTH PORAT
|
Name:
|
Ruth Porat
|
Title:
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|