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Document
Exhibit 99.1
Alphabet Announces First Quarter 2020 Results
MOUNTAIN VIEW, Calif. – April 28, 2020 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2020.
“Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google. “People are relying on Google’s services more than ever and we’ve marshalled our resources and product development in this urgent moment.”
“Our business, led by Search, YouTube, and Cloud, drove Alphabet revenues to $41.2 billion, up 13% versus last year, or 15% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
Q1 2020 financial highlights
The following table summarizes our consolidated financial results for the quarters ended March 31, 2019 and 2020 (in millions, except for per share information and percentages; unaudited). Prior period results excluding the effect of the European Commission (EC) fine of $1.7 billion have been included to facilitate comparison to current quarter performance (labeled “Non-GAAP”).
Quarter Ended March 31,
2019 2020
Revenues $36,339    $41,159   
Increase in revenues year over year 17  % 13  %
Increase in constant currency revenues year over year 19  % 15  %
Operating income $6,608    $7,977   
Operating margin 18  % 19  %
Operating income (Non-GAAP)(1)
$8,305    $7,977   
Operating margin (Non-GAAP)(1)
23  % 19  %
Other income (expense), net
$1,538    ($220)  
Net income $6,657    $6,836   
Diluted EPS $9.50    $9.87   
Net income (Non-GAAP)(1)
$8,339    $6,836   
Diluted EPS (Non-GAAP)(1)
$11.90    $9.87   
(1)  Non-GAAP results presented for Q1 2019 exclude the EC fine. See the table captioned “Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures” for more details.


Q1 2020 supplemental information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC) and number of employees
The following table summarizes our revenues, total TAC and number of employees. Hedging gains, which were previously included in Google revenues, are presented separately.
Quarter Ended March 31,
2019 2020
Google Search & other $22,547    $24,502   
YouTube ads(1)
3,025    4,038   
Google properties 25,572    28,540   
Google Network Members' properties 5,015    5,223   
Google advertising 30,587    33,763   
Google Cloud 1,825    2,777   
Google other(1)
3,620    4,435   
Google revenues 36,032    40,975   
Other Bets revenues 170    135   
Hedging gains 137    49   
Total revenues $36,339    $41,159   
Total TAC $6,860    $7,452   
Number of employees 103,459    123,048   
(1)  YouTube non-advertising revenues are included in Google other revenues.
Segment operating results
Quarter Ended March 31,
2019 2020
Google operating income* $9,188    $9,270   
Other Bets operating loss ($868)   ($1,121)  
*The EC fine is included in reconciling items for the quarter ended March 31, 2019 as it is not allocated to Google for segment reporting purposes.
Webcast and conference call information
A live audio webcast of our first quarter 2020 earnings release call will be available at http://abc.xyz/investor. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available on that site.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
Forward-looking statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019, which is on file with the SEC and is available on our investor relations website at http://abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. All information provided in this release and in the attachments is as of April 28, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
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About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: operating income, excluding the EC fine; operating margin, excluding the EC fine; net income, excluding the EC fine; diluted earnings per share, excluding the EC fine; free cash flow; constant currency revenues; and constant currency revenue growth. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign exchange rate movements and hedging activities or our operating performance excluding extraordinary fines. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures,” “Reconciliation from net cash provided by operating activities to free cash flow” and “Reconciliation from GAAP revenues to non-GAAP constant currency revenues” included at the end of this release.
Contact
Investor relations
Media
investor-relations@abc.xyz press@abc.xyz   

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Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts which are reflected in thousands and par value per share amounts)
As of December 31, As of
March 31,
2019 2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 18,498    $ 19,644   
Marketable securities 101,177    97,585   
Total cash, cash equivalents, and marketable securities 119,675    117,229   
Accounts receivable, net 25,326    21,825   
Income taxes receivable, net 2,166    1,910   
Inventory 999    889   
Other current assets 4,412    5,165   
Total current assets 152,578    147,018   
Non-marketable investments 13,078    12,367   
Deferred income taxes 721    730   
Property and equipment, net 73,646    76,747   
Operating lease assets 10,941    11,219   
Intangible assets, net 1,979    1,840   
Goodwill 20,624    20,734   
Other non-current assets 2,342    2,748   
Total assets $ 275,909    $ 273,403   
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 5,561    $ 4,099   
Accrued compensation and benefits 8,495    5,656   
Accrued expenses and other current liabilities 23,067    22,601   
Accrued revenue share 5,916    4,982   
Deferred revenue 1,908    1,938   
Income taxes payable, net 274    913   
Total current liabilities 45,221    40,189   
Long-term debt 4,554    5,016   
Deferred revenue, non-current 358    350   
Income taxes payable, non-current 9,885    9,207   
Deferred income taxes 1,701    2,079   
Operating lease liabilities 10,214    10,476   
Other long-term liabilities 2,534    2,427   
Total liabilities 74,467    69,744   
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding 0    0   
Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 688,335 (Class A 299,828, Class B 46,441, Class C 342,066) and 683,972 (Class A 300,047, Class B 46,407, Class C 337,518) shares issued and outstanding
 50,552    53,688   
Accumulated other comprehensive loss (1,232)   (1,097)  
Retained earnings 152,122    151,068   
Total stockholders’ equity 201,442    203,659   
Total liabilities and stockholders’ equity $ 275,909    $ 273,403   

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except share amounts which are reflected in thousands and per share amounts)
Quarter Ended March 31,
2019 2020
(unaudited)
Revenues $ 36,339    $ 41,159   
Costs and expenses:
Cost of revenues 16,012    18,982   
Research and development 6,029    6,820   
Sales and marketing 3,905    4,500   
General and administrative 2,088    2,880   
European Commission fines 1,697    0   
Total costs and expenses 29,731    33,182   
Income from operations 6,608    7,977   
Other income (expense), net 1,538    (220)  
Income before income taxes 8,146    7,757   
Provision for income taxes 1,489    921   
Net income $ 6,657    $ 6,836   
Basic earnings per share of Class A and B common stock and Class C capital stock $ 9.58    $ 9.96   
Diluted earnings per share of Class A and B common stock and Class C capital stock $ 9.50    $ 9.87   
Number of shares used in basic earnings per share calculation 694,869    686,465   
Number of shares used in diluted earnings per share calculation 700,879    692,267   

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Quarter Ended March 31,
2019 2020
(unaudited)
Operating activities
Net income $ 6,657    $ 6,836   
Adjustments:
Depreciation and impairment of property and equipment 2,416    2,899   
Amortization and impairment of intangible assets 197    209   
Stock-based compensation expense 2,769    3,191   
Deferred income taxes (73)   175   
(Gain) loss on debt and equity securities, net (1,081)   802   
Other 22    297   
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable 1,172    2,602   
Income taxes, net 1,068    (245)  
Other assets (265)   (115)  
Accounts payable (425)   (835)  
Accrued expenses and other liabilities (229)   (3,531)  
Accrued revenue share (147)   (871)  
Deferred revenue (81)   37   
Net cash provided by operating activities 12,000    11,451   
Investing activities
Purchases of property and equipment (4,638)   (6,005)  
Purchases of marketable securities (20,883)   (37,563)  
Maturities and sales of marketable securities 21,006    41,811   
Purchases of non-marketable investments (907)   (572)  
Maturities and sales of non-marketable investments 99    260   
Acquisitions, net of cash acquired, and purchases of intangible assets (99)   (190)  
Other investing activities 34    412   
Net cash used in investing activities (5,388)   (1,847)  
Financing activities
Net payments related to stock-based award activities (1,175)   (1,241)  
Repurchases of capital stock (3,025)   (8,496)  
Proceeds from issuance of debt, net of costs 315    1,898   
Repayments of debt (345)   (1,947)  
Proceeds from sale of interest in consolidated entities 47    1,600   
Net cash used in financing activities (4,183)   (8,186)  
Effect of exchange rate changes on cash and cash equivalents 18    (272)  
Net increase in cash and cash equivalents 2,447    1,146   
Cash and cash equivalents at beginning of period 16,701    18,498   
Cash and cash equivalents at end of period $ 19,148    $ 19,644   


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Reconciliation of non-GAAP results of operations to the nearest comparable GAAP measures (in millions, except percentages, share amounts which are reflected in thousands and per share amounts; unaudited)
We provide non-GAAP consolidated results excluding certain charges because they allow investors to make meaningful comparisons between Alphabet's recurring core business operating results and those of other companies, as well as providing Alphabet's management with an important tool for financial and operational decision making and for evaluating Alphabet's own recurring core business operating results over different periods of time.
Quarter Ended March 31, 2019
Operating income (GAAP) $ 6,608   
     Add: EC fine* 1,697   
Operating income (Non-GAAP) $ 8,305   
Operating margin (GAAP) 18  %
Operating margin (Non-GAAP) 23  %
Net income (GAAP) $ 6,657   
     Add: EC fine, net of the foreign exchange gain* 1,682   
Net income (Non-GAAP) $ 8,339   
Diluted net income per share (GAAP) $ 9.50   
Diluted EPS (Non-GAAP) $ 11.90   
Shares used in diluted per share calculation (in thousands) 700,879   
*There is no tax effect as this charge is not tax deductible.
Non-GAAP operating income: We define non-GAAP operating income as operating income excluding certain charges.
Non-GAAP operating margin: We define non-GAAP operating margin as non-GAAP operating income divided by revenues.
Non-GAAP net income and diluted EPS: We define non-GAAP net income as net income excluding certain charges, less the related tax effects as applicable and non-GAAP diluted EPS as net income excluding certain charges, less the related tax effects as applicable, divided by total weighted average outstanding shares, on a fully-diluted basis.
Reconciliation from net cash provided by operating activities to free cash flow (in millions; unaudited):
We provide free cash flow because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet.
Quarter Ended
March 31, 2020
Net cash provided by operating activities $ 11,451   
Less: purchases of property and equipment (6,005)  
Free cash flow $ 5,446   
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
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Reconciliation from GAAP revenues to non-GAAP constant currency revenues (in millions, except percentages; unaudited):
We provide non-GAAP constant currency revenues and growth because they facilitate the comparison of current results to historic performance by excluding the effect of foreign exchange rate movements and hedging activities, which are not indicative of our core operating results.
Quarter Ended March 31, 2020
YoY
(using Q1'19's FX rates)		 QoQ
(using Q4'19's FX rates)
EMEA revenues (GAAP) $ 12,845    $ 12,845   
Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates 235    N/A   
Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates N/A    (63)  
EMEA constant currency revenues (non-GAAP) $ 13,080    $ 12,782   
Prior period EMEA revenues (GAAP) $ 11,668    $ 14,099   
EMEA revenue growth (GAAP) 10  % (9) %
EMEA constant currency revenue growth (non-GAAP) 12  % (9) %
APAC revenues (GAAP) $ 7,238    $ 7,238   
Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates 61    N/A   
Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates N/A    37   
APAC constant currency revenues (non-GAAP) $ 7,299    $ 7,275   
Prior period APAC revenues (GAAP) $ 6,096    $ 7,482   
APAC revenue growth (GAAP) 19  % (3) %
APAC constant currency revenue growth (non-GAAP) 20  % (3) %
Other Americas revenues (GAAP) $ 2,157    $ 2,157   
Exclude foreign exchange effect on Q1'20 revenues using Q1'19 rates 96    N/A   
Exclude foreign exchange effect on Q1'20 revenues using Q4'19 rates N/A    14   
Other Americas constant currency revenues (non-GAAP) $ 2,253    $ 2,171   
Prior period Other Americas revenues (GAAP) $ 1,906    $ 2,666   
Other Americas revenue growth (GAAP) 13  % (19) %
Other Americas constant currency revenue growth (non-GAAP) 18  % (19) %
United States revenues (GAAP) $ 18,870    $ 18,870   
United States revenue growth (GAAP) 14  % (13) %
Hedging gains $ 49    $ 49   
Revenues (GAAP) $ 41,159    $ 41,159   
Constant currency revenues (non-GAAP) $ 41,502    $ 41,098   
Prior period revenues, excluding hedging effect (non-GAAP)(1)
$ 36,202    $ 45,984   
Revenue growth (GAAP) 13  % (11) %
Constant currency revenue growth (non-GAAP) 15  % (11) %
(1)  Total revenues and hedging gains for the quarter ended March 31, 2019 were $36,339 million and $137 million, respectively. Total revenues and hedging gains for the quarter ended December 31, 2019 were $46,075 million and $91 million, respectively.
Non-GAAP constant currency revenues and growth: We define non-GAAP constant currency revenues as total revenues excluding the effect of foreign exchange rate movements and hedging activities, and we use it to determine the constant currency revenue growth on year-on-year and quarter-on-quarter basis. Non-GAAP constant currency revenues are calculated by translating current quarter revenues using prior period exchange rates and excluding any hedging effect recognized in the current quarter. Constant currency revenue growth (expressed as a percentage) is calculated by determining the increase in current quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging effect recognized in the prior period.
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Other income (expense), net
The following table presents our other income (expense), net (in millions; unaudited):
  Quarter Ended
March 31,
2019 2020
Interest income $ 522    $ 586   
Interest expense (35)   (21)  
Foreign currency exchange gain (loss), net 74    (81)  
Gain (loss) on debt securities, net (2)   12   
Gain (loss) on equity securities, net(1)(2)
1,083    (814)  
Performance fees (117)   6   
Gain (loss) and impairment from equity method investments, net (40)   74   
Other 53    18   
Other income (expense), net $ 1,538    $ (220)  
(1)  Includes unrealized losses on equity investments that we hold. Fluctuations in the value of our investments could significantly contribute to the volatility of OI&E in future periods.
(2)  All gains and losses, unrealized and realized, on equity security investments are recognized in OI&E. For Q1 2020, the net effect of the loss on equity securities of $814 million and the performance fees reversal of $6 million decreased income tax, net income, and diluted EPS by $170 million, $638 million, and $0.92, respectively.
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Segment results
The following table presents our revenues, operating income (loss), stock-based compensation (SBC), capital expenditures, and depreciation, amortization, and impairment by segment (in millions; unaudited):
  Quarter Ended
March 31,
2019 2020
Revenues:
Google(1)
$ 36,032    $ 40,975   
Other Bets 170    135   
Hedging gains(1)
137    49   
Total revenues $ 36,339    $ 41,159   
Operating income (loss):
Google(1)
$ 9,188    $ 9,270   
Other Bets (868)   (1,121)  
Reconciling items(1)(2)
(1,712)   (172)  
Total income from operations $ 6,608    $ 7,977   
Stock-based compensation(3):
Google $ 2,612    $ 2,988   
Other Bets 123    135   
Reconciling items(4)
34    67   
Total stock-based compensation $ 2,769    $ 3,190   
Capital expenditures:
Google $ 4,534    $ 5,663   
Other Bets 59    104   
Reconciling items(5)
45    238   
Total capital expenditures $ 4,638    $ 6,005   
Depreciation, amortization, and impairment:
Google $ 2,529    $ 3,013   
Other Bets 84    92   
 Reconciling items(4)
0    3   
Total depreciation, amortization, and impairment $ 2,613    $ 3,108   
(1) Hedging gains, which were previously included in Google revenues, are presented separately.
(2) Reconciling items are generally comprised of corporate administrative costs, hedging gains and other miscellaneous items that are not allocated to individual segments. Additionally, reconciling items for the quarter ended March 31, 2019 includes the EC fine of $1.7 billion.
(3) For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock.
(4) Reconciling items are primarily related to corporate administrative and other costs that are not allocated to individual segments.
(5) Reconciling items are related to timing differences of payments, as segment capital expenditures are on an accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flows are on a cash basis, and other miscellaneous differences.
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