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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_FORM 10-Q_(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June30,2023ORTRANSITION REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
2、1934For the transition period from _ to _Commission file number:001-37580_Alphabet Inc.(Exact name of registrant as specified in its charter)_Delaware61-1767919(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification Number)1600 Amphitheatre ParkwayMountain View,C
3、A 94043(Address of principal executive offices,including zip code)(650)253-0000(Registrants telephone number,including area code)Securities registered pursuant to Section12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredClassA Common Stock,$0.001 par valueG
4、OOGLNasdaq Stock Market LLC(Nasdaq Global Select Market)Class C Capital Stock,$0.001 par valueGOOGNasdaq Stock Market LLC(Nasdaq Global Select Market)_Indicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section13 or 15(d)of theSecurities Exchange Act of 193
5、4 during the preceding 12 months(or for such shorter period that the registrant was required tofile such reports),and(2)has been subject to such filing requirements for the past 90 days.YesNoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File requir
6、ed to be submittedpursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter periodthat the registrant was required to submit such files).YesNoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-
7、accelerated filer,a smallerreporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smallerreporting company,”and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller
8、 reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the ExchangeAct.Indicate by c
9、heck mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes NoAs of July18,2023,there were5,933 million shares of Alphabets ClassA stock outstanding,875 million shares of AlphabetsClassB stock outstanding,and 5,801 million shares of Alphabets Class C stock o
10、utstanding.Table of ContentsAlphabet Inc.Alphabet Inc.Form 10-QFor the Quarterly Period Ended June30,2023TABLE OF CONTENTSPageNo.Note About Forward-Looking Statements3PART I.FINANCIAL INFORMATIONItem1Financial Statements5Consolidated Balance Sheets-December31,2022 and June30,20235Consolidated Statem
11、ents of Income-Three and Six Months Ended June 30,2022 and20236Consolidated Statements of Comprehensive Income-Three and Six Months Ended June30,2022 and 20237Consolidated Statements of Stockholders Equity-Three and Six Months Ended June 30,2022 and 20238Consolidated Statements of Cash Flows-Six Mon
12、ths Ended June 30,2022 and 202310Notes to Consolidated Financial Statements11Item2Managements Discussion and Analysis of Financial Condition and Results of Operations33Item3Quantitative and Qualitative Disclosures About Market Risk48Item4Controls and Procedures48PART II.OTHER INFORMATIONItem1Legal P
13、roceedings50Item1A Risk Factors50Item 2Unregistered Sales of Equity Securities and Use of Proceeds50Item5Other Information49Item6Exhibits52Signatures532Table of ContentsAlphabet Inc.Note About Forward-Looking StatementsThis Quarterly Report on Form 10-Q contains forward-looking statements within the
14、 meaning of the PrivateSecurities Litigation Reform Act of 1995.These include,among other things,statements regarding:the growth of our business and revenues and our expectations about the factors that influence oursuccess and trends in our business;fluctuations in our revenues and margins and vario
15、us factors contributing to such fluctuations;our expectation that the continuing shift from an offline to online world will continue to benefit ourbusiness;our expectation that the portion of our revenues that we derive from non-advertising revenues willcontinue to increase and may affect our margin
16、s;our expectation that our traffic acquisition costs(TAC)and the associated TAC rate will fluctuate,whichcould affect our overall margins;our expectation that our monetization trends will fluctuate,which could affect our revenues and margins;fluctuations in our revenues,as well as the change in paid
17、 clicks and cost-per-click and the change inimpressions and cost-per-impression,and various factors contributing to such fluctuations;our expectation that we will continue to periodically review,refine,and update our methodologies formonitoring,gathering,and counting the number of paid clicks and im
18、pressions;our expectation that our results will be affected by our performance in international markets as users indeveloping economies increasingly come online;our expectation that our foreign exchange risk management program will not fully offset our net exposureto fluctuations in foreign currency
19、 exchange rates;the expected variability of gains and losses related to hedging activities under our foreign exchange riskmanagement program;the amount and timing of revenue recognition from customer contracts with commitments forperformance obligations,including our estimate of the remaining amount
20、 of commitments and when weexpect to recognize revenue;fluctuations in our capital expenditures;our expectation that we will continue to invest in our technical infrastructure;our plans to continue to invest in new businesses,products,services and technologies,systems,landand buildings for data cent
21、ers,and infrastructure,as well as to continue to invest in acquisitions andstrategic investments;our pace of hiring and our plans to provide competitive compensation programs;our expectation that our cost of revenues,research and development(R&D)expenses,sales andmarketing expenses,and general and a
22、dministrative expenses may increase in amount and/or mayincrease as a percentage of revenues and may be affected by a number of factors;estimates of our future compensation expenses;our expectation that our other income(expense),net(OI&E),will fluctuate in the future,as it is largelydriven by market
23、 dynamics;fluctuations in our effective tax rate;seasonal fluctuations in internet usage and advertiser expenditures,underlying business trends such astraditional retail seasonality,which are likely to cause fluctuations in our quarterly results;the sufficiency of our sources of funding;our potentia
24、l exposure in connection with new and pending investigations,proceedings,and othercontingencies,including the possibility that certain legal proceedings to which we are a party could harmour business,financial condition,and operating results;3Table of ContentsAlphabet Inc.our expectation that we wil
25、l continue to face heightened regulatory scrutiny,and the sufficiency andtiming of our proposed remedies in response to decisions from the European Commission(EC)and otherregulators and governmental entities;the expected timing,amount,and effect of Alphabet Inc.s share repurchases;our long-term sust
26、ainability and diversity goals;the unpredictability of the ongoing broader economic effects resulting from the war in Ukraine on ourfuture financial results;the expected financial effect of our announced workforce reduction and office space optimization;our expectation that the change in estimated u
27、seful lives of servers and certain network equipment willhave a favorable effect on our 2023 operating results;as well as other statements regarding our future operations,financial condition and prospects,and businessstrategies.Forward-looking statements may appear throughout this report and other d
28、ocuments we file with theSecurities and Exchange Commission(SEC),including without limitation,the following sections:Part I,Item 2,Managements Discussion and Analysis of Financial Condition and Results of Operations in this QuarterlyReport on Form 10-Q and Part I,Item 1A,“Risk Factors”in our Annual
29、Report on Form 10-K for the fiscal yearended December 31,2022.Forward-looking statements generally can be identified by words such asanticipates,believes,estimates,expects,intends,plans,predicts,projects,will be,will continue,may,could,will likely result,and similar expressions.These forward-looking
30、 statements are based on currentexpectations and assumptions that are subject to risks and uncertainties,which could cause our actual results todiffer materially from those reflected in the forward-looking statements.Factors that could cause or contribute tosuch differences include,but are not limit
31、ed to,those discussed in this Quarterly Report on Form 10-Q,and inparticular,the risks discussed in Part I,Item 1A,Risk Factors in our Annual Report on Form 10-K for the fiscalyear ended December31,2022,and those discussed in other documents we file with the SEC.We undertake noobligation to revise o
32、r publicly release the results of any revision to these forward-looking statements,except asrequired by law.Given these risks and uncertainties,readers are cautioned not to place undue reliance on suchforward-looking statements.As used herein,Alphabet,the company,we,us,our,and similar terms include
33、Alphabet Inc.and itssubsidiaries,unless the context indicates otherwise.Alphabet,Google,and other trademarks of ours appearing in this report are our property.We do notintend our use or display of other companies trade names or trademarks to imply an endorsement orsponsorship of us by such companies
34、,or any relationship with any of these companies.4Table of ContentsAlphabet Inc.PART I.FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSAlphabet Inc.CONSOLIDATED BALANCE SHEETS(in millions,except par value per share amounts)As ofDecember 31,2022As ofJune 30,2023(unaudited)AssetsCurrent assets:Cash an
35、d cash equivalents$21,879$25,929Marketable securities91,88392,403Total cash,cash equivalents,and marketable securities113,762118,332Accounts receivable,net40,25838,804Inventory2,6702,231Other current assets8,1059,421Total current assets164,795168,788Non-marketable securities30,49231,224Deferred inco
36、me taxes5,2619,357Property and equipment,net112,668121,208Operating lease assets14,38114,469Intangible assets,net2,0841,966Goodwill28,96029,210Other non-current assets6,6236,822Total assets$365,264$383,044Liabilities and Stockholders EquityCurrent liabilities:Accounts payable$5,128$5,313Accrued comp
37、ensation and benefits14,02811,260Accrued expenses and other current liabilities37,86649,300Accrued revenue share8,3707,990Deferred revenue3,9083,846Total current liabilities69,30077,709Long-term debt14,70113,705Deferred revenue,non-current599667Income taxes payable,non-current9,2588,753Deferred inco
38、me taxes514558Operating lease liabilities12,50112,746Other long-term liabilities2,2471,765Total liabilities109,120115,903Commitments and contingencies(Note 9)Stockholders equity:Preferred stock,$0.001 par value per share,100 shares authorized;noshares issued and outstanding00ClassA,Class B,and Class
39、 C stock and additional paid-in capital,$0.001 par value per share:300,000 shares authorized(ClassA180,000,Class B 60,000,Class C 60,000);12,849(ClassA 5,964,Class B 883,Class C 6,002)and 12,629(ClassA 5,934,Class B 876,Class C 5,819)shares issued and outstanding68,18472,248Accumulated other compreh
40、ensive income(loss)(7,603)(5,991)Retained earnings195,563200,884Total stockholders equity256,144267,141Total liabilities and stockholders equity$365,264$383,044See accompanying notes.5Table of ContentsAlphabet Inc.Alphabet Inc.CONSOLIDATED STATEMENTS OF INCOME(in millions,except per share amounts;un
41、audited)Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Revenues$69,685$74,604$137,696$144,391Costs and expenses:Cost of revenues30,10431,91659,70362,528Research and development9,84110,58818,96022,056Sales and marketing6,6306,78112,45513,314General and administrative3,6573,4817,031
42、7,240Total costs and expenses50,23252,76698,149105,138Income from operations19,45321,83839,54739,253Other income(expense),net(439)65(1,599)855Income before income taxes19,01421,90337,94840,108Provision for income taxes3,0123,5355,5106,689Net income$16,002$18,368$32,438$33,419Basic net income per sha
43、re of Class A,Class B,andClass C stock$1.22$1.45$2.46$2.63Diluted net income per share of Class A,Class B,andClass C stock$1.21$1.44$2.44$2.61See accompanying notes.6Table of ContentsAlphabet Inc.Alphabet Inc.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(in millions;unaudited)Three Months EndedSix
44、 Months EndedJune 30,June 30,2022202320222023Net income$16,002$18,368$32,438$33,419Other comprehensive income(loss):Change in foreign currency translation adjustment(1,665)235(1,626)831Available-for-sale investments:Change in net unrealized gains(losses)(926)(570)(3,404)296Less:reclassification adju
45、stment for net(gains)losses included in net income233198381490Net change,net of income tax benefit(expense)of$227,$106,$860 and$(224)(693)(372)(3,023)786Cash flow hedges:Change in net unrealized gains(losses)9151511,02977Less:reclassification adjustment for net(gains)losses included in net income(33
46、6)(5)(585)(82)Net change,net of income tax benefit(expense)of$(113),$(11),$(69)and$(5)Other comprehensive income(loss)(1,779)9(4,205)1,612Comprehensive income$14,223$18,377$28,233$35,031See accompanying notes.7Table of ContentsAlphabet Inc.Alphabet Inc.CONSOLIDATED STATEMENTS OF STOCKHOLD
47、ERS EQUITY(in millions;unaudited)Three Months Ended June 30,2022ClassA,ClassB,Class C Stockand AdditionalPaid-InCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotalStockholdersEquitySharesAmountBalance as of March 31,202213,175$62,832$(4,049)$195,221$254,004Stock issued361001Stock-b
48、ased compensationexpense04,823004,823Tax withholding related to vestingof restricted stock units and other0(2,434)0(1)(2,435)Repurchases of stock(133)(820)0(14,377)(15,197)Net income00016,00216,002Other comprehensive income(loss)00(1,779)0(1,779)Balance as of June 30,202213,078$64,402$(5,828)$196,84
49、5$255,419Six Months Ended June 30,2022ClassA,ClassB,Class C Stockand AdditionalPaid-InCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotalStockholdersEquitySharesAmountBalance as of December 31,202113,242$61,774$(1,623)$191,484$251,635Stock issued678008Stock-based compensationexpens
50、e09,370009,370Tax withholding related to vestingof restricted stock units and other0(5,329)0(1)(5,330)Repurchases of stock(231)(1,421)0(27,076)(28,497)Net income00032,43832,438Other comprehensive income(loss)00(4,205)0(4,205)Balance as of June 30,202213,078$64,402$(5,828)$196,845$255,4198Table of Co
51、ntentsAlphabet Inc.Three Months Ended June 30,2023ClassA,ClassB,Class C Stockand AdditionalPaid-InCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotalStockholdersEquitySharesAmountBalance as of March 31,202312,722$70,269$(6,000)$196,625$260,894Stock issued380000Stock-based compensat
52、ionexpense05,815005,815Tax withholding related to vestingof restricted stock units and other0(2,831)00(2,831)Repurchases of stock(131)(1,005)0(14,109)(15,114)Net income00018,36818,368Other comprehensive income(loss)00909Balance as of June 30,202312,629$72,248$(5,991)$200,884$267,141Six Months Ended
53、June 30,2023ClassA,ClassB,Class C Stockand AdditionalPaid-InCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotalStockholdersEquitySharesAmountBalance as of December 31,202212,849$68,184$(7,603)$195,563$256,144Stock issued680000Stock-based compensationexpense011,1280011,128Tax withho
54、lding related to vestingof restricted stock units and other0(4,924)00(4,924)Repurchases of stock(288)(2,140)0(28,098)(30,238)Net income00033,41933,419Other comprehensive income(loss)001,61201,612Balance as of June 30,202312,629$72,248$(5,991)$200,884$267,141See accompanying notes.9Table of ContentsA
55、lphabet Inc.Alphabet Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions;unaudited)Six Months EndedJune 30,20222023Operating activitiesNet income$32,438$33,419Adjustments:Depreciation and impairment of property and equipment7,2896,339Amortization and impairment of intangible assets392244Stock-base
56、d compensation expense9,28611,058Deferred income taxes(4,237)(4,269)Loss(gain)on debt and equity securities,net2,478425Other202650Changes in assets and liabilities,net of effects of acquisitions:Accounts receivable,net2,3951,506Income taxes,net(253)8,520Other assets(1,621)(1,259)Accounts payable(1,1
57、72)14Accrued expenses and other liabilities(1,719)(4,037)Accrued revenue share(942)(418)Deferred revenue(8)(17)Net cash provided by operating activities44,52852,175Investing activitiesPurchases of property and equipment(16,614)(13,177)Purchases of marketable securities(50,199)(35,589)Maturities and
58、sales of marketable securities55,37437,049Purchases of non-marketable securities(1,264)(1,513)Maturities and sales of non-marketable securities125181Acquisitions,net of cash acquired,and purchases of intangible assets(1,236)(340)Other investing activities576(357)Net cash used in investing activities
59、(13,238)(13,746)Financing activitiesNet payments related to stock-based award activities(5,180)(4,725)Repurchases of stock(28,497)(29,526)Proceeds from issuance of debt,net of costs29,2288,050Repayments of debt(29,582)(8,207)Proceeds from sale of interest in consolidated entities,net05Net cash used
60、in financing activities(34,031)(34,403)Effect of exchange rate changes on cash and cash equivalents(268)24Net increase(decrease)in cash and cash equivalents(3,009)4,050Cash and cash equivalents at beginning of period20,94521,879Cash and cash equivalents at end of period$17,936$25,929See accompanying
61、 notes.10Table of ContentsAlphabet Inc.Alphabet Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Note 1.Summary of Significant Accounting PoliciesNature of OperationsGoogle was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August2003.In 2015,we
62、implemented a holding company reorganization,and as a result,Alphabet Inc.(Alphabet)became the successor issuer to Google.We generate revenues by delivering relevant,cost-effective online advertising;cloud-based solutions thatprovide enterprise customers with infrastructure and platform services as
63、well as communication andcollaboration tools;sales of other products and services,such as apps and in-app purchases,and hardware;andfees received for subscription-based products.Basis of ConsolidationThe consolidated financial statements of Alphabet include the accounts of Alphabet and entitiesconso
64、lidated under the variable interest and voting models.Intercompany balances and transactions have beeneliminated.Unaudited Interim Financial InformationThese unaudited interim consolidated financial statements have been prepared in accordance with generallyaccepted accounting principles in the Unite
65、d States(GAAP),and in our opinion,include all adjustments of anormal recurring nature necessary for fair financial statement presentation.Interim results are not necessarilyindicative of the results to be expected for the full year ending December31,2023.We have made estimates andassumptions that af
66、fect the amounts reported and disclosed in the financial statements and the accompanyingnotes.Actual results could differ materially from these estimates.These consolidated financial statements and other information presented in this Form 10-Q should be readin conjunction with the consolidated finan
67、cial statements and the related notes included in our Annual Report onForm 10-K for the fiscal year ended December31,2022 filed with the SEC.Change in Accounting EstimateIn January 2023,we completed an assessment of the useful lives of our servers and network equipment andadjusted the estimated usef
68、ul life of our servers from four years to six years and the estimated useful life ofcertain network equipment from five years to six years.This change in accounting estimate was effectivebeginning in fiscal year 2023.Based on the carrying value of servers and certain network equipment as ofDecember
69、31,2022,and those placed in service during the six months ended June 30,2023,the effect of thischange in estimate was a reduction in depreciation expense of$966 million and$2.0 billion and an increase innet income of$752 million and$1.5 billion,or$0.06 and$0.12 per basic and$0.06 and$0.12 per dilute
70、d share,for the three and six months ended June 30,2023,respectively.Prior Period ReclassificationsCertain amounts in prior periods have been reclassified to conform with current period presentation.11Table of ContentsAlphabet Inc.Note 2.RevenuesDisaggregated RevenuesThe following table presents rev
71、enues disaggregated by type(in millions):Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Google Search&other$40,689$42,628$80,307$82,987YouTube ads7,3407,66514,20914,358Google Network8,2597,85016,43315,346Google advertising56,28858,143110,949112,691Google other6,5538,14213,36415,55
72、5Google Services total62,84166,285124,313128,246Google Cloud6,2768,03112,09715,485Other Bets3Hedging gains(losses)375365387Total revenues$69,685$74,604$137,696$144,391The following table presents revenues disaggregated by geography,based on the addresses of ourcustomers(in millions):Three
73、 Months EndedSix Months EndedJune 30,June 30,2022202320222023United States$32,72747%$35,07347%$64,46047%$67,93747%EMEA20,5332922,2893040,8503043,36730APAC11,7101712,7281723,5511724,40917Other Americas4,34064,51168,18268,5916Hedging gains(losses)3751306530870Total revenues$69,685100%$74,604100%$137,6
74、96100%$144,391100%Regions represent Europe,the Middle East,and Africa(EMEA);Asia-Pacific(APAC);and Canada and Latin America(Other Americas).Revenue BacklogAs of June 30,2023,we had$60.6 billion of remaining performance obligations(“revenue backlog”),primarily related to Google Cloud.Our revenue back
75、log represents commitments in customer contracts for futureservices that have not yet been recognized as revenue.The amount and timing of revenue recognition for thesecommitments is largely driven by our ability to deliver in accordance with relevant contract terms and when ourcustomers utilize serv
76、ices,which could affect our estimate of revenue backlog and when we expect to recognizesuch as revenue.We expect to recognize approximately half of the revenue backlog as revenues over the next24 months with the remaining to be recognized thereafter.Revenue backlog includes related deferred revenuec
77、urrently recorded as well as amounts that will be invoiced in future periods,and excludes contracts with anoriginal expected term of one year or less and cancellable contracts.Deferred RevenuesWe record deferred revenues when cash payments are received or due in advance of our performance,including
78、amounts which are refundable.Deferred revenues primarily relate to Google Cloud and Google other.Total deferred revenue as of December 31,2022 was$4.5 billion,of which$2.1 billion was recognized asrevenues during the six months ended June30,2023.(1)(1)(1)(1)12Table of ContentsAlphabet Inc.Note 3.Fin
79、ancial InstrumentsFair Value MeasurementsInvestments Measured at Fair Value on a Recurring BasisCash,cash equivalents,and marketable equity securities are measured at fair value and classified withinLevel 1 and Level 2 in the fair value hierarchy,because we use quoted prices for identical assets in
80、activemarkets or inputs that are based upon quoted prices for similar instruments in active markets.Debt securities are measured at fair value and classified within Level 2 in the fair value hierarchy,becausewe use quoted market prices to the extent available or alternative pricing sources and model
81、s utilizing marketobservable inputs to determine fair value.For certain marketable debt securities,we have elected the fair valueoption for which changes in fair value are recorded in other income(expense),net.The fair value option waselected for these securities to align with the unrealized gains a
82、nd losses from related derivative contracts.The following tables summarize our cash,cash equivalents,and marketable securities measured at fairvalue on a recurring basis(in millions):As of December 31,2022Fair ValueHierarchyAdjustedCostGrossUnrealizedGainsGrossUnrealizedLossesFair ValueCash andCashE
83、quivalentsMarketableSecuritiesFair value changesrecorded in othercomprehensiveincomeTime depositsLevel 2$5,297$0$0$5,297$5,293$4Government bondsLevel 241,03664(2,045)39,05528338,772Corporate debtsecuritiesLevel 228,5788(1,569)27,017127,016Mortgage-backedand asset-backedsecuritiesLevel 216,1765(1,242
84、)14,939014,939Total investmentswith fair valuechange reflectedin othercomprehensiveincome$91,087$77$(4,856)$86,308$5,577$80,731Fair valueadjustmentsrecorded in netincomeMoney market fundsLevel 1$7,234$7,234$0Current marketableequity securitiesLevel 14,01304,013Mutual fundsLevel 23390339Government bo
85、ndsLevel 21,8774401,437Corporate debtsecuritiesLevel 23,744653,679Mortgage-backedand asset-backedsecuritiesLevel 21,68621,684Total investmentswith fair valuechange recordedin net income$18,893$7,741$11,152Cash08,5610Total$91,087$77$(4,856)$105,201$21,879$91,883Represents gross unrealized gains and l
86、osses for debt securities recorded to accumulated other comprehensive income(AOCI).The long-term portion of marketable equity securities(subject to long-term lock-up restrictions)of$803 million as ofDecember31,2022 is included within other non-current assets.(1)(2)(1)(2)13Table of ContentsAlphabet I
87、nc.As of June 30,2023Fair ValueHierarchyAdjustedCostGrossUnrealizedGainsGrossUnrealizedLossesFair ValueCash andCashEquivalentsMarketableSecuritiesFair value changesrecorded in othercomprehensiveincomeTime depositsLevel 2$2,913$0$0$2,913$2,913$0Government bondsLevel 245,33949(1,588)43,8002,48141,319C
88、orporate debtsecuritiesLevel 223,4808(1,162)22,326022,326Mortgage-backedand asset-backedsecuritiesLevel 218,0474(1,092)16,959016,959Total investmentswith fair valuechange reflectedin othercomprehensiveincome$89,779$61$(3,842)$85,998$5,394$80,604Fair valueadjustmentsrecorded in netincomeMoney market
89、fundsLevel 1$9,472$9,472$0Current marketableequity securitiesLevel 14,08804,088Mutual fundsLevel 23150315Government bondsLevel 22,1585461,612Corporate debtsecuritiesLevel 23,83123,829Mortgage-backedand asset-backedsecuritiesLevel 21,95501,955Total investmentswith fair valuechange recordedin net inco
90、me$21,819$10,020$11,799Cash010,5150Total$89,779$61$(3,842)$107,817$25,929$92,403Represents gross unrealized gains and losses for debt securities recorded to AOCI.The long-term portion of marketable equity securities(subject to long-term lock-up restrictions)of$892 million as ofJune30,2023 is include
91、d within other non-current assetsInvestments Measured at Fair Value on a Nonrecurring BasisOur non-marketable equity securities are investments in privately held companies without readilydeterminable market values.The carrying value of our non-marketable equity securities is adjusted to fair valueup
92、on observable transactions for identical or similar investments of the same issuer or impairment.Non-marketable equity securities that have been remeasured during the period based on observable transactions areclassified within Level 2 or Level 3 in the fair value hierarchy because we estimate the v
93、alue based on valuationmethods which may include a combination of the observable transaction price at the transaction date and otherunobservable inputs including volatility,rights,and obligations of the securities we hold.The fair value of non-marketable equity securities that have been remeasured d
94、ue to impairment are classified within Level 3.As of June 30,2023 the carrying value of our non-marketable equity securities was$29.1 billion,of which$1.5 billion were remeasured at fair value during the three months ended June 30,2023 and primarily classifiedas Level 3.(1)(2)(1)(2)14Table of Conten
95、tsAlphabet Inc.Debt SecuritiesThe following table summarizes the estimated fair value of investments in available-for-sale marketabledebt securities by effective contractual maturity dates(in millions):As ofJune 30,2023Due in 1 year or less$15,403Due in 1 year through 5 years43,749Due in 5 years thr
96、ough 10 years15,162Due after 10 years13,686Total$88,000The following tables present fair values and gross unrealized losses recorded to AOCI,aggregated byinvestment category and the length of time that individual securities have been in a continuous loss position(inmillions):As of December 31,2022Le
97、ssthan12 Months12 Months or GreaterTotalFairValueUnrealizedLossFairValueUnrealizedLossFairValueUnrealizedLossGovernment bonds$21,039$(1,004)$13,438$(1,041)$34,477$(2,045)Corporate debt securities11,228(440)15,125(1,052)26,353(1,492)Mortgage-backed and asset-backedsecurities7,725(585)6,964(657)14,689
98、(1,242)Total$39,992$(2,029)$35,527$(2,750)$75,519$(4,779)As of June 30,2023Lessthan12 Months12 Months or GreaterTotalFairValueUnrealizedLossFairValueUnrealizedLossFairValueUnrealizedLossGovernment bonds$19,195$(580)$13,976$(1,008)$33,171$(1,588)Corporate debt securities3,915(69)17,573(1,008)21,488(1
99、,077)Mortgage-backed and asset-backedsecurities6,352(153)10,095(939)16,447(1,092)Total$29,462$(802)$41,644$(2,955)$71,106$(3,757)We determine realized gains or losses on the sale or extinguishment of debt securities on a specificidentification method.The following table summarizes gains and losses f
100、or debt securities,reflected as acomponent of other income(expense),net(in millions):Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Unrealized gain(loss)on fair value option debt securities$(367)$(24)$(569)$121Gross realized gain on debt securities29286985Gross realized loss on de
101、bt securities(368)(303)(639)(795)(Increase)decrease in allowance for credit losses(84)(5)(18)(8)Total gain(loss)on debt securities recognized inother income(expense),net$(790)$(304)$(1,157)$(597)15Table of ContentsAlphabet Inc.Equity InvestmentsThe carrying value of equity securities is measured as
102、the total initial cost plus the cumulative net gain(loss).Our share of gains and losses,including impairments,are included as a component of other income(expense),net,in the Consolidated Statements of Income.See Note 6 for further details on other income(expense),net.The carrying values for marketab
103、le and non-marketable equity securities are summarized below(inmillions):As of December 31,2022As of June 30,2023MarketableEquitySecuritiesNon-MarketableEquitySecuritiesTotalMarketableEquitySecuritiesNon-MarketableEquitySecuritiesTotalTotal initial cost$5,764$16,157$21,921$5,647$17,261$22,908Cumulat
104、ive net gain(loss)(608)12,37211,764(352)11,86811,516Carrying value$5,156$28,529$33,685$5,295$29,129$34,424Non-marketable equity securities cumulative net gain(loss)is comprised of$16.8 billion gains and$4.5 billion losses(including impairments)as of December31,2022 and$17.8 billion gains and$5.9 bil
105、lion losses(including impairments)as of June30,2023.Gains and Losses on Marketable and Non-marketable Equity SecuritiesGains and losses(including impairments),net,for marketable and non-marketable equity securities includedin other income(expense),net are summarized below(in millions):Three Months E
106、ndedSix Months EndedJune 30,June 30,2022202320222023Realized net gain(loss)on equity securities soldduring the period$26$87$(230)$292Unrealized net gain(loss)on marketable equitysecurities(1,188)397(2,462)349Unrealized net gain(loss)on non-marketable equitysecurities911(689)1,371(469)Total gain(loss
107、)on equity securities in otherincome(expense),net$(251)$(205)$(1,321)$172Unrealized gain(loss)on non-marketable equity securities accounted for under the measurement alternative iscomprised of$2.2 billion and$75 million of upward adjustments and$1.3 billion and$789 million of downwardadjustments(inc
108、luding impairments)for three months ended June 30,2022 and 2023,respectively,and$3.0 billion and$989 million of upward adjustments and$1.6 billion and$1.5 billion of downward adjustments(including impairments)for the six months ended June 30,2022 and 2023,respectively.In the table above,realized net
109、 gain(loss)on equity securities sold during the period reflects the differencebetween the sale proceeds and the carrying value of the equity securities at the beginning of the period or thepurchase date,if later.Cumulative net gains(losses)on equity securities sold during the period,which is summari
110、zed in thefollowing table(in millions),represents the total net gains(losses)recognized after the initial purchase date of theequity security sold during the period.While these net gains(losses)may have been reflected in periods prior tothe period of sale,we believe they are important supplemental i
111、nformation as they reflect the economic net gains(losses)on the securities sold during the period.Cumulative net gains(losses)are calculated as the differencebetween the sale price and the initial purchase price for the equity security sold during the period.Equity Securities SoldThree Months EndedS
112、ix Months EndedJune 30,June 30,2022202320222023Total sale price$645$427$1,335$739Total initial cost7Cumulative net gain(loss)$477$271$907$372(1)(1)(1)(1)16Table of ContentsAlphabet Inc.Equity Securities Accounted for Under the Equity MethodAs of December31,2022 and June30,2023 equity secu
113、rities accounted for under the equity method had acarrying value of approximately$1.5 billion for both periods.Our share of gains and losses,includingimpairments,are included as a component of other income(expense),net,in the Consolidated Statements ofIncome.SeeNote 6for further details on other inc
114、ome(expense),net.Derivative Financial InstrumentsWe use derivative instruments to manage risks relating to our ongoing business operations.The primaryrisk managed is foreign exchange risk.We use foreign currency contracts to reduce the risk that our cash flows,earnings,and investment in foreign subs
115、idiaries will be adversely affected by foreign currency exchange ratefluctuations.We also enter into derivative instruments to partially offset our exposure to other risks and enhanceinvestment returns.We recognize derivative instruments in the Consolidated Balance Sheets at fair value and classify
116、thederivatives primarily within Level 2 in the fair value hierarchy.We present our collar contracts(an option strategycomprised of a combination of purchased and written options)at net fair values and present all other derivativesat gross fair values.The accounting treatment for derivatives is based
117、 on the intended use and hedgedesignation.Cash Flow HedgesWe designate foreign currency forward and option contracts(including collars)as cash flow hedges tohedge certain forecasted revenue transactions denominated in currencies other than the U.S.dollar.Thesecontracts have maturities of 24 months o
118、r less.Cash flow hedge amounts included in the assessment of hedge effectiveness are deferred in AOCI andsubsequently reclassified to revenue when the hedged item is recognized in earnings.We exclude forward pointsand time value from our assessment of hedge effectiveness and amortize them on a strai
119、ght-line basis over thelife of the hedging instrument in revenues.The difference between fair value changes of the excluded componentand the amount amortized to revenues is recorded in AOCI.As of June30,2023 the net accumulated gain on our foreign currency cash flow hedges before tax effectwas$24 mi
120、llion,which is expected to be reclassified from AOCI into revenues within the next 12 months.Fair Value HedgesWe designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for ourmarketable securities denominated in currencies other than the U.S.dollar.Fair val
121、ue hedge amounts included inthe assessment of hedge effectiveness are recognized in other income(expense),net,along with the offsettinggains and losses of the related hedged items.We exclude forward points from the assessment of hedgeeffectiveness and recognize changes in the excluded component in o
122、ther income(expense),net.Net Investment HedgesWe designate foreign currency forward contracts as net investment hedges to hedge the foreign currencyrisks related to our investment in foreign subsidiaries.Net investment hedge amounts included in the assessmentof hedge effectiveness are recognized in
123、AOCI along with the foreign currency translation adjustment.Weexclude forward points from the assessment of hedge effectiveness and recognize changes in the excludedcomponent in other income(expense),net.Other DerivativesWe enter into foreign currency forward and option contracts that are not design
124、ated as hedging instrumentsto hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other thanthe functional currency of a subsidiary.Gains and losses on these derivatives that are not designated asaccounting hedges are primarily recorded in other income(
125、expense),net along with the foreign currency gainsand losses on monetary assets and liabilities.We also use derivatives not designated as hedging instruments to manage risks relating to interest rates,commodity prices,credit exposures,and to enhance investment returns.From time to time,we enter into
126、derivatives to hedge the market price risk on certain of our marketable equity securities.Gains and losses arisingfrom other derivatives are primarily reflected within the“other”component of other income(expense),net.SeeNote 6 for further details.17Table of ContentsAlphabet Inc.The gross notional am
127、ounts of outstanding derivative instruments were as follows(in millions):As of December 31,2022As of June 30,2023Derivatives designated as hedging instruments:Foreign exchange contractsCash flow hedges$15,972$15,823Fair value hedges$2,117$1,472Net investment hedges$8,751$9,371Derivatives not designa
128、ted as hedging instruments:Foreign exchange contracts$34,979$34,185Other contracts$7,932$9,133The fair values of outstanding derivative instruments were as follows(in millions):As of December 31,2022As of June 30,2023AssetsLiabilitiesAssetsLiabilitiesDerivatives designated as hedging instruments:For
129、eign exchange contracts$271$556$228$201Derivatives not designated as hedginginstruments:Foreign exchange contracts365207130136Other contracts40473967Total derivatives not designated as hedginginstruments405254169203Total$676$810$397$404Derivative assets are recorded as other current and non-current
130、assets in the Consolidated Balance Sheets.Derivative liabilities are recorded as accrued expenses and other liabilities,current and non-current in the ConsolidatedBalance Sheets.The gains(losses)on derivatives in cash flow hedging and net investment hedging relationships recognizedin other comprehen
131、sive income(OCI)are summarized below(in millions):Gains(Losses)Recognized in OCI on Derivatives Before TaxEffectThree Months EndedSix Months EndedJune 30,June 30,2022202320222023Derivatives in cash flow hedging relationship:Foreign exchange contractsAmount included in the assessment of effectiveness
132、$1,131$77$1,266$(61)Amount excluded from the assessment ofeffectiveness(39)80(54)127Derivatives in net investment hedging relationship:Foreign exchange contractsAmount included in the assessment of effectiveness509(59)658(274)Total$1,601$98$1,870$(208)(1)(2)(1)(2)(1)(2)18Table of ContentsAlphabet In
133、c.The table below presents the gains(losses)of our derivatives on the Consolidated Statements of Income:(in millions):Gains(Losses)Recognized in IncomeThree Months EndedJune 30,20222023RevenuesOther income(expense),netRevenuesOther income(expense),netTotal amounts in the Consolidated Statements ofIn
134、come$69,685$(439)$74,604$65Effect of cash flow hedges:Foreign exchange contractsAmount reclassified from AOCI to income$400$0$(2)$0Amount excluded from the assessment ofeffectiveness(amortized)(24)060Effect of fair value hedges:Foreign exchange contractsHedged items0(136)022Derivatives designated as
135、 hedging instruments01360(22)Amount excluded from the assessment ofeffectiveness0205Effect of net investment hedges:Foreign exchange contractsAmount excluded from the assessment ofeffectiveness028072Effect of non designated hedges:Foreign exchange contracts0(149)0124Other contracts0860(4)Total gains
136、(losses)$376$(33)$4$19719Table of ContentsAlphabet Inc.Gains(Losses)Recognized in IncomeSix Months EndedJune 30,20222023RevenuesOther income(expense),netRevenuesOther income(expense),netTotal amounts in the Consolidated Statements ofIncome$137,696$(1,599)$144,391$855Effect of cash flow hedges:Foreig
137、n exchange contractsAmount of gains(losses)reclassified from AOCI toincome$697$0$86$0Amount excluded from the assessment ofeffectiveness(amortized)(43)020Effect of fair value hedges:Foreign exchange contractsHedged items0(123)054Derivatives designated as hedging instruments01240(54)Amount excluded f
138、rom the assessment ofeffectiveness03010Effect of net investment hedges:Foreign exchange contractsAmount excluded from the assessment ofeffectiveness0400123Effect of non designated hedges:Foreign exchange contracts0(396)0154Other Contracts01240(1)Total gains(losses)$654$(228)$88$286Offsetting of Deri
139、vativesWe enter into master netting arrangements and collateral security arrangements to reduce credit risk.Cash collateral received related to derivative instruments under our collateral security arrangements areincluded in other current assets with a corresponding liability.Cash and non-cash colla
140、teral pledged related toderivative instruments under our collateral security arrangements are included in other current assets.The gross amounts of derivative instruments subject to master netting arrangements with variouscounterparties,and cash and non-cash collateral received and pledged under suc
141、h agreements were as follows(in millions):As of December 31,2022Gross Amounts Not Offset inthe Consolidated BalanceSheets,but Have Legal Rightsto OffsetGrossAmountsRecognizedGrossAmountsOffset in theConsolidatedBalanceSheetsNet AmountsPresented intheConsolidatedBalanceSheetsFinancialInstrumentsCash
142、andNon-CashCollateralReceived orPledgedNet AmountsDerivatives assets$760$(84)$676$(463)$(132)$81Derivatives liabilities$894$(84)$810$(463)$(28)$319(1)20Table of ContentsAlphabet Inc.As of June 30,2023Gross Amounts Not Offset inthe Consolidated BalanceSheets,but Have Legal Rightsto OffsetGrossAmounts
143、RecognizedGrossAmountsOffset in theConsolidatedBalance SheetsNet AmountsPresented intheConsolidatedBalance SheetsFinancialInstrumentsCash andNon-CashCollateralReceived orPledgedNet AmountsDerivatives assets$444$(47)$397$(138)$(226)$33Derivatives liabilities$451$(47)$404$(138)$(34)$232(1)The balances
144、 as of December31,2022 and June30,2023 were related to derivatives allowed to be net settled inaccordance with our master netting agreements.Note 4.Variable Interest Entities(VIE)Consolidated VIEsWe consolidate VIEs in which we hold a variable interest and are the primary beneficiary.The results ofo
145、perations and financial position of these VIEs are included in our consolidated financial statements.For certain consolidated VIEs,their assets are not available to us and their creditors do not have recourse tous.As of December31,2022 and June30,2023,assets that can only be used to settle obligatio
146、ns of these VIEswere$4.1 billion and$3.1 billion,respectively,and the liabilities for which creditors only have recourse to theVIEs were$2.6 billion for both periods.We may continue to fund ongoing operations of certain VIEs that areincluded within Other Bets.Total noncontrolling interests(NCI)in ou
147、r consolidated subsidiaries were$3.8 billion and$3.6 billion as ofDecember31,2022 and June30,2023,respectively,of which$1.1 billion is redeemable noncontrolling interest(RNCI)for both periods.NCI and RNCI are included within additional paid-in capital.Net loss attributable tononcontrolling interests
148、 was not material for any period presented and is included within the other component ofOI&E.See Note 6 for further details on OI&E.Unconsolidated VIEsWe have investments in VIEs in which we are not the primary beneficiary.These VIEs include privatecompanies that are primarily early stage companies
149、and certain renewable energy entities in which activitiesinvolve power generation using renewable sources.We have determined that the governance structures of these entities do not allow us to direct the activitiesthat would significantly affect their economic performance.Therefore,we are not the pr
150、imary beneficiary,and theresults of operations and financial position of these VIEs are not included in our consolidated financialstatements.We account for these investments as non-marketable equity securities or equity method investments.The maximum exposure of these unconsolidated VIEs is generall
151、y based on the current carrying value ofthe investments and any future funding commitments.We have determined that the single source of ourexposure to these VIEs is our capital investments in them.The carrying value and maximum exposure of theseunconsolidated VIEs were$2.7 billion and$2.8 billion,re
152、spectively,as of December31,2022 and$3.0 billion and$3.0 billion,respectively,as of June30,2023.Note 5.DebtShort-Term DebtWe have a debt financing program of up to$10.0 billionthrough the issuance of commercial paper.Netproceeds from this program are used for general corporate purposes.We had no com
153、mercial paper outstandingas of December31,2022 and June30,2023.Our short-term debt balance also includes the current portion of certain long-term debt.(1)21Table of ContentsAlphabet Inc.Long-Term DebtTotal outstanding debt is summarized below(in millions,except percentages):MaturityCoupon RateEffect
154、ive InterestRateAs ofDecember 31,2022As ofJune 30,2023Debt2014-2020 Notes issuances2024-20600.45%-3.38%0.57%-3.38%$13,000$13,000Future finance lease payments,net and other 2,1422,159Total debt15,14215,159Unamortized discount and debtissuance costs(143)(137)Less:Current portion of long-termnotes0(999
155、)Less:Current portion futurefinance lease payments,net andother current debt(298)(318)Total long-term debt$14,701$13,705Future finance lease payments are net of imputed interest.Total current portion of long-term debt is included within other accrued expenses and current liabilities.See Note 6 forfu
156、rther details.The notes in the table above are fixed-rate senior unsecured obligations and generally rank equally witheach other.We may redeem the notes at any time in whole or in part at specified redemption prices.The effectiveinterest rates are based on proceeds received with interest payable sem
157、i-annually.The total estimated fair value of the outstanding notes was approximately$9.9billion and$10.1billion as ofDecember31,2022 and June30,2023,respectively.The fair value was determined based on observable marketprices of identical instruments in less active markets and is categorized accordin
158、gly as Level 2 in the fair valuehierarchy.Credit FacilityAs of June30,2023,we had$10.0 billion of revolving credit facilities of which$4.0billion expires in April2024 and$6.0billion expires in April 2028.The interest rates for all credit facilities are determined based on aformula using certain mark
159、et rates,as well as our progress toward the achievement of certain sustainability goals.No amounts were outstanding under the credit facilities as of December31,2022 and June30,2023.Note 6.Supplemental Financial Statement InformationAccounts ReceivableThe allowance for credit losses on accounts rece
160、ivable was$754 million and$836 million as ofDecember31,2022 and June30,2023,respectively.Property and Equipment,NetProperty and equipment,net,consisted of the following(in millions):As ofDecember 31,2022As ofJune 30,2023Land and buildings$66,897$68,890Information technology assets66,26771,592Constru
161、ction in progress27,65732,019Leasehold improvements10,57511,286Furniture and fixtures314338Property and equipment,gross171,710184,125Less:accumulated depreciation(59,042)(62,917)Property and equipment,net$112,668$121,208(1)(2)(1)(2)(1)(2)22Table of ContentsAlphabet Inc.Accrued Expenses and Other Cur
162、rent LiabilitiesAccrued expenses and other current liabilities consisted of the following(in millions):As ofDecember 31,2022As ofJune 30,2023European Commission fines$9,106$9,446Income taxes payable,net1,63210,870Accrued customer liabilities3,6193,498Accrued purchases of property and equipment3,0193
163、,380Current operating lease liabilities2,4772,663Other accrued expenses and current liabilities18,01319,443Accrued expenses and other current liabilities$37,866$49,300While each EC decision is under appeal,the fines are included in accrued expenses and other current liabilities on ourConsolidated Ba
164、lance Sheets,as we provided bank guarantees(in lieu of a cash payment)for the fines.Amountsinclude the effects of foreign exchange and interest.See Note 9 for further details.Income taxes payable,net as of the quarter ended June 30,2023 includes balances related to the 2023 InternalRevenue Service(I
165、RS)payment deferral relief made available to taxpayers headquartered in designated counties inCalifornia.Accumulated Other Comprehensive Income(Loss)Components of AOCI,net of income tax,were as follows(in millions):ForeignCurrencyTranslationAdjustmentsUnrealizedGains(Losses)on Available-for-SaleInve
166、stmentsUnrealizedGains(Losses)on Cash FlowHedgesTotalBalance as of December 31,2021$(2,306)$236$447$(1,623)Other comprehensive income(loss)beforereclassifications(1,626)(3,404)1,083(3,947)Amounts excluded from the assessment of hedgeeffectiveness recorded in AOCI00(54)(54)Amounts reclassified from A
167、OCI0381(585)(204)Other comprehensive income(loss)(1,626)(3,023)444(4,205)Balance as of June 30,2022$(3,932)$(2,787)$891$(5,828)ForeignCurrencyTranslationAdjustmentsUnrealizedGains(Losses)on Available-for-SaleInvestmentsUnrealizedGains(Losses)on Cash FlowHedgesTotalBalance as of December 31,2022$(4,1
168、42)$(3,477)$16$(7,603)Other comprehensive income(loss)beforereclassifications831296(50)1,077Amounts excluded from the assessment of hedgeeffectiveness recorded in AOCI00127127Amounts reclassified from AOCI0490(82)408Other comprehensive income(loss)831786(5)1,612Balance as of June 30,2023$(3,311)$(2,
169、691)$11$(5,991)(1)(2)(1)(2)23Table of ContentsAlphabet Inc.The effects on net income of amounts reclassified from AOCI were as follows(in millions):Gains(Losses)Reclassified from AOCI to the ConsolidatedStatements of IncomeThree Months EndedSix Months EndedJune 30,June 30,AOCI ComponentsLocation2022
170、202320222023Unrealized gains(losses)on available-for-saleinvestmentsOther income(expense),net$(299)$(254)$(489)$(628)Benefit(provision)for income taxes6656108138Net of income tax(233)(198)(381)(490)Unrealized gains(losses)on cash flow hedgesForeignexchangecontractsRevenue400(2)69786Interest ratecont
171、ractsOther income(expense),net1133Benefit(provision)for income taxes(65)6(115)(7)Net of income tax336558582Total amount reclassified,net of income tax$103$(193)$204$(408)Other Income(Expense),NetComponents of OI&E were as follows(in millions):Three Months EndedSix Months EndedJune 30,June 30,2022202
172、320222023Interest income$486$892$900$1,689Interest expense(83)(43)(166)(123)Foreign currency exchange gain(loss),net(260)(268)(333)(478)Gain(loss)on debt securities,net(790)(304)(1,157)(597)Gain(loss)on equity securities,net(251)(205)(1,321)172Performance fees3185551123Income(loss)and impairment fro
173、m equity methodinvestments,net(118)(106)(207)(157)Other25994134226Other income(expense),net$(439)$65$(1,599)$855Interest expense is net of interest capitalized of$37 million and$47 million for the three months ended June 30,2022and 2023,respectively,and$71 million and$87 million for the six months e
174、nded June 30,2022 and 2023,respectively.(1)(1)24Table of ContentsAlphabet Inc.Note 7.Workforce Reduction and Other InitiativesWe have a company-wide effort underway to re-engineer our cost base.As part of this program,in January2023,we announced a reduction of our workforce.As a result,total employe
175、e severance and related chargesrecorded during the six months ended June 30,2023 were$2.0billion,of which$2.0billion and$1million wererecorded during the three months ended March 31,2023 and June 30,2023,respectively.In addition,we are taking actions to optimize our global office space.As a result,t
176、otal charges recordedduring the six months ended June 30,2023 were$633 million,of which$564 million and$69 million wererecorded during the three months ended March 31,2023 and June 30,2023,respectively.We may incuradditional charges in the future as we further evaluate our real estate needs.These se
177、verance and office space charges are included within our consolidated statements of income asfollows(in millions):Three Months Ended June 30,2023Six Months Ended June 30,2023Severanceand Related Office SpaceTotalSeveranceand Related Office SpaceTotalCost of revenues$(1)$20$19$460$240$700Research and
178、development(3),093Sales and marketing(1)232244458502General andadministrative63Total charges$1$69$70$1,995$633$2,628Severance includes amounts to be settled in cash,accounted for as one-time involuntary employee termination benefits,and stock based compensationFor segment repor
179、ting,the substantial majority of these charges are included within unallocated corporatecosts in our segment results.For the six months ended June 30,2023,changes in liabilities resulting from the severance charges andrelated accruals were as follows(in millions):Severance andRelatedBalance as of De
180、cember 31,2022$0Charges1,566Cash payments(1,423)Balance as of June 30,2023$143Excludes non-cash stock-based compensation of$429million.Included in Accrued compensation and benefits on the consolidated balance sheets.Note 8.Goodwill and Other Intangible AssetsGoodwillChanges in the carrying amount of
181、 goodwill for the six months ended June 30,2023 were as follows(inmillions):GoogleServicesGoogle CloudOther BetsTotalBalance as of December 31,2022$20,847$7,205$908$28,960Acquisitions24000240Foreign currency translation and other adjustments371(28)10Balance as of June 30,2023$21,124$7,206$880$29,210
182、(1)(1)(1)(1)(2)(1)(2)25Table of ContentsAlphabet Inc.Other Intangible AssetsInformation regarding intangible assets was as follows(in millions):As of December 31,2022As of June 30,2023GrossCarryingAmountAccumulatedAmortizationNetCarryingAmountGrossCarryingAmountAccumulatedAmortizationNetCarryingAmou
183、ntPatents and developedtechnology$1,164$354$810$1,181$420$761Customer relationships862235627884306578Trade names and other5275391Total definite-lived intangibleassets2,5537091,8442,6018711,730Indefinite-lived intangibleassets24002402360236Total intangible assets$2,793$709$2,084$2,837$871$
184、1,966Amortization expense relating to intangible assets was$201 million and$118 million for the three monthsended June 30,2022 and 2023,respectively,and$392 million and$244 million for the six months ended June30,2022 and 2023,respectively.Expected amortization expense of definite-lived intangible a
185、ssets held as of June 30,2023 was as follows(in millions):Remainder of 2023$2392024468202533820262612027176Thereafter248Total$1,730Note 9.Commitments and ContingenciesCommitmentsWe have content licensing agreements with future fixed or minimum guaranteed commitments of$11.5billion as of June30,2023,
186、of which the majority is paid over seven years ending in the first quarter of2030.IndemnificationsIn the normal course of business,including to facilitate transactions in our services and products andcorporate activities,we indemnify certain parties,including advertisers,Google Network partners,dist
187、ributionpartners,customers of Google Cloud offerings,lessors,and service providers with respect to certain matters.Wehave agreed to defend and/or hold certain parties harmless against losses arising from a breach ofrepresentations or covenants,or out of intellectual property infringement or other cl
188、aims made against certainparties.Several of these agreements limit the time within which an indemnification claim can be made and theamount of the claim.In addition,we have entered into indemnification agreements with our officers and directors,and our bylaws contain similar indemnification obligati
189、ons to our agents.It is not possible to make a reasonable estimate of the maximum potential amount under theseindemnification agreements due to the unique facts and circumstances involved in each particular agreement.Additionally,the payments we have made under such agreements have not had a materia
190、l adverse effect on ourresults of operations,cash flows,or financial position.However,to the extent that valid indemnification claimsarise in the future,future payments by us could be significant and could have a material adverse effect on ourresults of operations or cash flows in a particular perio
191、d.As of June30,2023,we did not have any material indemnification claims that were probable or reasonablypossible.26Table of ContentsAlphabet Inc.Legal MattersWe record a liability when we believe that it is probable that a loss has been incurred,and the amount canbe reasonably estimated.If we determ
192、ine that a loss is reasonably possible and the loss or range of loss can beestimated,we disclose the reasonably possible loss.We evaluate developments in our legal matters that couldaffect the amount of liability that has been previously accrued,and the matters and related reasonably possiblelosses
193、disclosed,and make adjustments as appropriate.Certain outstanding matters seek speculative,substantial or indeterminate monetary amounts,substantialchanges to our business practices and products,or structural remedies.Significant judgment is required todetermine both the likelihood of there being a
194、loss and the estimated amount of a loss related to such matters,and we may be unable to estimate the reasonably possible loss or range of losses.The outcomes of outstandinglegal matters are inherently unpredictable and subject to significant uncertainties,and could,either individually orin aggregate
195、,have a material adverse effect.We expense legal fees in the period in which they are incurred.Antitrust InvestigationsOn November 30,2010,the ECs Directorate General for Competition opened an investigation into variousantitrust-related complaints against us.On June 27,2017,the EC announced its deci
196、sion that certain actions taken by Google regarding its displayand ranking of shopping search results and ads infringed European competition law.The EC decision imposed a2.4 billion($2.7 billion as of June 27,2017)fine.On September 11,2017,we appealed the EC decision to theGeneral Court,and on Septe
197、mber 27,2017,we implemented product changes to bring shopping ads intocompliance with the ECs decision.We recognized a charge of$2.7 billion for the fine in the second quarter of2017.On November 10,2021,the General Court rejected our appeal,and we subsequently filed an appeal withthe European Court
198、of Justice on January 20,2022.On July 18,2018,the EC announced its decision that certain provisions in Googles Android-relateddistribution agreements infringed European competition law.The EC decision imposed a 4.3 billion($5.1 billionas of June 30,2018)fine and directed the termination of the condu
199、ct at issue.On October 9,2018,we appealedthe EC decision,and on October 29,2018,we implemented changes to certain of our Android distributionpractices.On September 14,2022,the General Court reduced the fine from 4.3 billion to 4.1 billion.Wesubsequently filed an appeal with the European Court of Jus
200、tice.In 2018,we recognized a charge of$5.1billionfor the fine,which we reduced by$217million in 2022.On March 20,2019,the EC announced its decision that certain contractual provisions in agreements thatGoogle had with AdSense for Search partners infringed European competition law.The EC decision imp
201、osed afine of 1.5 billion($1.7 billion as of March 20,2019)and directed actions related to AdSense for Search partnersagreements,which we implemented prior to the decision.On June 4,2019,we appealed the EC decision,whichremains pending.We recognized a charge of$1.7 billion for the fine in the first
202、quarter of 2019.From time to time we are subject to formal and informal inquiries and investigations on various competitionmatters by regulatory authorities in the U.S.,Europe,and other jurisdictions globally.For example:In August 2019,we began receiving civil investigative demands from the U.S.Depa
203、rtment of Justice(DOJ)requesting information and documents relating to our prior antitrust investigations and certainaspects of our business.The DOJ and a number of state Attorneys General filed a lawsuit in the U.S.District Court for the District of Columbia on October 20,2020 alleging that Google
204、violated U.S.antitrustlaws relating to Search and Search advertising,and a trial is scheduled for September 2023.Further,inJune 2022,the Australian Competition and Consumer Commission(ACCC)and the United KingdomsCompetition and Markets Authority(CMA)each opened an investigation into Search distribut
205、ionpractices.On December 16,2020,a number of state Attorneys General filed an antitrust complaint in the U.S.District Court for the Eastern District of Texas,alleging that Google violated U.S.antitrust laws as well asstate deceptive trade laws relating to its advertising technology.Additionally,on J
206、anuary 24,2023,theDOJ,along with a number of state Attorneys General,filed an antitrust complaint in the U.S.District Courtfor the Eastern District of Virginia alleging that Googles digital advertising technology products violateU.S.antitrust laws,and on April 17,2023,a number of additional state At
207、torneys General joined thecomplaint.The EC,the CMA,and the ACCC each opened a formal investigation into Googles advertisingtechnology business practices on June 22,2021,May 25,2022,and June 29,2022,respectively.OnJune 14,2023,27Table of ContentsAlphabet Inc.the EC issued a Statement of Objections(SO
208、)informing Google of its preliminary view that Googleviolated European antitrust laws relating to its advertising technology.We will respond to the SO byDecember 31,2023.On July 7,2021,a number of state Attorneys General filed an antitrust complaint in the U.S.District Courtfor the Northern District
209、 of California,alleging that Googles operation of Android and Google Playviolated U.S.antitrust laws and state antitrust and consumer protection laws.In May 2022,the EC andthe CMA each opened investigations into Google Plays business practices.Korean regulators areinvestigating Google Plays billing
210、practices,most recently opening a formal review in May 2022 ofGoogles compliance with the new app store billing regulations.We believe these complaints are without merit and will defend ourselves vigorously.We continue tocooperate with federal and state regulators in the U.S.,the EC,and other regula
211、tors around the world.Patent and Intellectual Property ClaimsWe have had patent,copyright,trade secret,and trademark infringement lawsuits filed against us claimingthat certain of our products,services,and technologies infringe others intellectual property rights.Adverse resultsin these lawsuits may
212、 include awards of substantial monetary damages,costly royalty or licensing agreements,ororders preventing us from offering certain features,functionalities,products,or services.As a result,we mayhave to change our business practices and develop non-infringing products or technologies,which could re
213、sult ina loss of revenues for us and otherwise harm our business.In addition,the U.S.International Trade Commission(ITC)has increasingly become an important forum to litigate intellectual property disputes because an ultimateloss in an ITC action can result in a prohibition on importing infringing p
214、roducts into the U.S.Because the U.S.isan important market,a prohibition on importation could have an adverse effect on us,including preventing usfrom importing many important products into the U.S.or necessitating workarounds that may limit certain featuresof our products.Furthermore,many of our ag
215、reements with our customers and partners require us to indemnify them againstcertain intellectual property infringement claims,which would increase our costs as a result of defending suchclaims,and may require that we pay significant damages if there were an adverse ruling in any such claims.Inaddit
216、ion,our customers and partners may discontinue the use of our products,services,and technologies,as aresult of injunctions or otherwise,which could result in loss of revenues and adversely affect our business.OtherWe are subject to claims,lawsuits,regulatory and government investigations,other proce
217、edings,andconsent orders involving competition,intellectual property,data privacy and security,tax and related compliance,labor and employment,commercial disputes,content generated by our users,goods and services offered byadvertisers or publishers using our platforms,personal injury,consumer protec
218、tion,and other matters.Forexample,we currently have a number of privacy investigations and lawsuits ongoing in multiple jurisdictions.Wealso periodically have data incidents that we report to relevant regulators as required by law.Such claims,lawsuits,regulatory and government investigations,other p
219、roceedings,and consent orders could result insubstantial fines and penalties,injunctive relief,ongoing monitoring and auditing obligations,changes to ourproducts and services,alterations to our business models and operations,and collateral related civil litigation orother adverse consequences,all of
220、 which could harm our business,reputation,financial condition,and operatingresults.We have ongoing legal matters relating to Russia.For example,civil judgments that include compoundingpenalties have been imposed upon us in connection with disputes regarding the termination of accounts,including thos
221、e of sanctioned parties.We do not believe these ongoing legal matters will have a material adverseeffect.Non-Income TaxesWe are under audit by various domestic and foreign tax authorities with regards to non-income tax matters.The subject matter of non-income tax audits primarily arises from dispute
222、s on the tax treatment and tax rateapplied to the sale of our products and services in these jurisdictions and the tax treatment of certain employeebenefits.We accrue non-income taxes that may result from examinations by,or any negotiated agreements with,these tax authorities when a loss is probable
223、 and reasonably estimable.If we determine that a loss is reasonablypossible and the loss or range of loss can be estimated,we disclose the reasonably possible loss.Due to theinherent complexity and uncertainty of these matters and judicial process in certain jurisdictions,the finaloutcome may be mat
224、erially different from our expectations.For information regarding income tax contingencies,see Note 13.28Table of ContentsAlphabet Inc.Note 10.Stockholders EquityShare RepurchasesIn the three and six months ended June 30,2023,we repurchased$15.1 billion and$30.2 billion,respectively,of Alphabets Cla
225、ss A and Class C shares.In April 2022,the Board of Directors of Alphabet authorized the company to repurchase up to$70.0billion ofits Class A and Class C shares.The repurchases from the April 2022 authorization were completed during thesecond quarter of 2023.In April 2023,the Board of Directors of A
226、lphabet authorized the company to repurchaseup to an additional$70.0billion of its Class A and Class C shares.As of June 30,2023,$68.1 billion remainsavailable for Class A and Class C share repurchases.The following table presents Class A and Class C shares repurchased and subsequently retired(in mi
227、llions):Three Months Ended June 30,2023Six Months Ended June 30,2023SharesAmountSharesAmountClass A share repurchases17$1,90837$3,919Class C share repurchases11413,20625126,319Total share repurchases131$15,114288$30,238Shares repurchased include unsettled repurchases as of June30,2023.Class A and Cl
228、ass C shares are repurchased in a manner deemed in the best interest of the company andits stockholders,taking into account the economic cost and prevailing market conditions,including the relativetrading prices and volumes of the Class A and Class C shares.Repurchases are executed from time to time
229、,subject to general business and market conditions and other investment opportunities,through open marketpurchases or privately negotiated transactions,including through Rule 10b5-1 plans.The repurchase programdoes not have an expiration date.Note 11.Net Income Per ShareThe following table sets fort
230、h the computation of basic and diluted net income per share of ClassA,Class B,and Class C stock(in millions,except per share amounts):Three Months Ended June 30,20222023Class AClass BClass CClass AClass BClass CBasic net income per share:NumeratorAllocation of undistributed earnings$7,329$1,081$7,59
231、2$8,600$1,275$8,493DenominatorNumber of shares used in per share computation6,0158876,2315,9318795,858Basic net income per share$1.22$1.22$1.22$1.45$1.45$1.45Diluted net income per share:NumeratorAllocation of undistributed earnings for basiccomputation$7,329$1,081$7,592$8,600$1,275$8,493Reallocatio
232、n of undistributed earnings as a result ofconversion of Class B to ClassA shares1,081001,27500Reallocation of undistributed earnings(68)(9)68(75)(10)75Allocation of undistributed earnings$8,342$1,072$7,660$9,800$1,265$8,568DenominatorNumber of shares used in basic computation6,0158876,2315,9318795,8
233、58Weighted-average effect of dilutive securitiesAdd:Conversion of Class B to ClassA sharesoutstanding8870087900Restricted stock units and other contingentlyissuable shares001060096Number of shares used in per share computation6,9028876,3376,8108795,954Diluted net income per share$1.21$1.21$1.21$1.44
234、$1.44$1.44(1)(1)29Table of ContentsAlphabet Inc.Six Months Ended June 30,20222023Class AClass BClass CClass AClass BClass CBasic net income per share:NumeratorAllocation of undistributed earnings$14,812$2,190$15,436$15,597$2,311$15,511DenominatorNumber of shares used in per share computation6,013889
235、6,2665,9398805,906Basic net income per share$2.46$2.46$2.46$2.63$2.63$2.63Diluted net income per share:NumeratorAllocation of undistributed earnings for basiccomputation$14,812$2,190$15,436$15,597$2,311$15,511Reallocation of undistributed earnings as a result ofconversion of Class B to ClassA shares
236、2,190002,31100Reallocation of undistributed earnings(162)(21)162(96)(12)96Allocation of undistributed earnings$16,840$2,169$15,598$17,812$2,299$15,607DenominatorNumber of shares used in basic computation6,0138896,2665,9398805,906Weighted-average effect of dilutive securitiesAdd:Conversion of Class B
237、 to ClassA sharesoutstanding8890088000Restricted stock units and other contingentlyissuable shares001270069Number of shares used in per share computation6,9028896,3936,8198805,975Diluted net income per share$2.44$2.44$2.44$2.61$2.61$2.61For the periods presented above,the net income per share amount
238、s are the same for Class A,Class B,andClass C stock because the holders of each class are entitled to equal per share dividends or distributions inliquidation in accordance with the Amended and Restated Certificate of Incorporation of Alphabet Inc.Note 12.Compensation PlansStock-Based CompensationFo
239、r the three months ended June 30,2022 and 2023,total stock-based compensation(SBC)expense was$4.9 billion and$5.4 billion,including amounts associated with awards we expect to settle in Alphabet stock of$4.6 billion and$5.6 billion,respectively.For the six months ended June 30,2022 and 2023,total SB
240、C expensewas$9.4 billion and$10.7 billion,including amounts associated with awards we expect to settle in Alphabet stockof$9.0 billion and$10.7 billion,respectively.During the six months ended June 30,2023,total SBC expense includes$429 million associated withworkforce reduction costs,of which$412mi
241、llion and$17million were recorded during the three months endedMarch 31,2023 and June 30,2023,respectively.See Note 7 for further information.Stock-Based Award ActivitiesThe following table summarizes the activities for unvested Alphabet restricted stock units(RSUs)for the sixmonths ended June 30,20
242、23(in millions,except per share amounts):UnvestedRestrictedStockUnitsNumber ofSharesWeighted-AverageGrant-DateFair ValueUnvested as of December 31,2022324$107.98Granted246$95.30Vested(109)$99.65Forfeited/canceled(19)$108.30Unvested as of June 30,2023442$102.9730Table of ContentsAlphabet Inc.As of Ju
243、ne30,2023,there was$43.6 billion of unrecognized compensation cost related to unvested RSUs.This amount is expected to be recognized over a weighted-average period of 2.8 years.Note 13.Income TaxesThe following table presents provision for income taxes(in millions,except for effective tax rate):Thre
244、e Months EndedSix Months EndedJune 30,June 30,2022202320222023Income before provision for income taxes$19,014$21,903$37,948$40,108Provision for income taxes$3,012$3,535$5,510$6,689Effective tax rate15.8%16.1%14.5%16.7%We are subject to income taxes in the U.S.and foreign jurisdictions.Significant ju
245、dgment is required inevaluating our uncertain tax positions and determining our provision for income taxes.The total amount of grossunrecognized tax benefits was$7.1 billion and$8.8 billion as of December 31,2022 and June 30,2023,respectively,of which$5.3 billion and$6.7 billion,if recognized,would
246、affect our effective tax rate,respectively.Note 14.Information about Segments and Geographic AreasWe report our segment results as Google Services,Google Cloud,and Other Bets:Google Services includes products and services such as ads,Android,Chrome,hardware,Google Maps,Google Play,Search,and YouTube
247、.Google Services generates revenues primarily from advertising;sales of apps and in-app purchases,and hardware;and fees received for subscription-based productssuch as YouTube Premium and YouTube TV.Google Cloud includes infrastructure and platform services,collaboration tools,and other services for
248、enterprise customers.Google Cloud generates revenues from fees received for Google Cloud Platformservices,Google Workspace communication and collaboration tools,and other enterprise services.Other Bets is a combination of multiple operating segments that are not individually material.Revenuesfrom Ot
249、her Bets are generated primarily from the sale of health technology and internet services.Revenues,certain costs,such as costs associated with content and traffic acquisition,certain engineeringactivities,and hardware,as well as certain operating expenses are directly attributable to our segments.Du
250、e tothe integrated nature of Alphabet,other costs and expenses,such as technical infrastructure and office facilities,are managed centrally at a consolidated level.These costs,including the associated depreciation andimpairment,are allocated to operating segments as a service cost generally based on
251、 usage,headcount,orrevenue.Reflecting DeepMinds increasing collaboration with Google Services,Google Cloud,and Other Bets,beginning in the first quarter of 2023 DeepMind is reported as part of Alphabets unallocated corporate costsinstead of within Other Bets.Additionally,beginning in the first quart
252、er of 2023,we updated and simplified ourcost allocation methodologies to provide our business leaders with increased transparency for decision-making.Prior periods have been recast to conform to the current presentation.As announced on April 20,2023,we brought together part of Google Research(the Br
253、ain team)andDeepMind to significantly accelerate our progress in artificial intelligence(AI).The group,called GoogleDeepMind,is reported within Alphabets unallocated corporate costs prospectively beginning in the secondquarter of 2023.Previously,the Brain team was included within Google Services.Cer
254、tain costs are not allocated to our segments because they represent Alphabet-level activities.Thesecosts primarily include AI-focused shared R&D activities;corporate initiatives such as our philanthropic activities;corporate shared costs such as certain finance,human resource,and legal costs,includi
255、ng certain fines andsettlements.Charges associated with reductions in our workforce and office space announced in January 2023are not allocated to our segments.Additionally,hedging gains(losses)related to revenue are not allocated to oursegments.Our operating segments are not evaluated using asset i
256、nformation.31Table of ContentsAlphabet Inc.The following table presents information about our segments(in millions):Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Revenues:Google Services$62,841$66,285$124,313$128,246Google Cloud6,2768,03112,09715,485Other Bets3Hedging
257、gains(losses)375365387Total revenues$69,685$74,604$137,696$144,391Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Operating income(loss):Google Services$21,621$23,454$43,594$45,191Google Cloud(590)395(1,296)586Other Bets(1,339)(813)(2,174)(2,038)Corporate costs,unallocated(239)(1,1
258、98)(577)(4,486)Total income from operations$19,453$21,838$39,547$39,253For revenues by geography,see Note 2.The following table presents long-lived assets by geographic area,which includes property and equipment,net and operating lease assets(in millions):As ofDecember 31,2022As ofJune 30,2023Long-l
259、ived assets:United States$93,565$99,714International33,48435,963Total long-lived assets$127,049$135,67732Table of ContentsAlphabet Inc.ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONSPlease read the following discussion and analysis of our financial conditio
260、n and results of operationstogether with Note About Forward-Looking Statements and our consolidated financial statements and relatednotes included under Item 1 of this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-Kfor the fiscal year ended December 31,2022,including Part I,I
261、tem 1A Risk Factors.Understanding Alphabets Financial ResultsAlphabet is a collection of businesses the largest of which is Google.We report Google in two segments,Google Services and Google Cloud;we also report all non-Google businesses collectively as Other Bets.Forfurther details on our segments,
262、see Note 14 of the Notes to Consolidated Financial Statements included in Item1 of this Quarterly Report on Form 10-Q.Revenues and Monetization MetricsWe generate revenues by delivering relevant,cost-effective online advertising;cloud-based solutions thatprovide enterprise customers of all sizes wit
263、h infrastructure and platform services as well as communication andcollaboration tools;sales of other products and services,such as apps and in-app purchases,and hardware;andfees received for subscription-based products.For details on how we recognize revenue,see Note 1 of the Notesto Consolidated F
264、inancial Statements included in Part II,Item 8 in our Annual Report on Form 10-K for the fiscalyear ended December31,2022.In addition to the long-term trends and their financial effect on our business noted in Trends in OurBusiness and Financial Effect in Part II,Item 7 of our Annual Report on Form
265、10-K for the fiscal year endedDecember 31,2022,fluctuations in our revenues have been and may continue to be affected by a combination offactors,including:changes in foreign currency exchange rates;changes in pricing,such as those resulting from changes in fee structures,discounts,and customerincent
266、ives;general economic conditions and various external dynamics,including geopolitical events,regulations,and other measures and their effect on advertiser,consumer,and enterprise spending;new product and service launches;andseasonality.Additionally,fluctuations in our revenues generated from adverti
267、sing(Google advertising),revenues fromother sources(Google other revenues),Google Cloud,and Other Bets revenues have been and may continueto be affected by other factors unique to each set of revenues,as described below.Google ServicesGoogle Services revenues consist of Google advertising as well as
268、 Google other revenues.Google AdvertisingGoogle advertising revenues are comprised of the following:Google Search&other,which includes revenues generated on Google search properties(includingrevenues from traffic generated by search distribution partners who use G as their defaultsearch in browsers,
269、toolbars,etc.),and other Google owned and operated properties like Gmail,GoogleMaps,and Google Play;YouTube ads,which includes revenues generated on YouTube properties;andGoogle Network,which includes revenues generated on Google Network properties participating inAdMob,AdSense,and Google Ad Manager
270、.We use certain metrics to track how well traffic across various properties is monetized as it relates to ouradvertising revenues:paid clicks and cost-per-click pertain to traffic on Google Search&other properties,whileimpressions and cost-per-impression pertain to traffic on our Google Network prop
271、erties.Paid clicks represent engagement by users and include clicks on advertisements by end-users on Googlesearch properties and other Google owned and operated properties including Gmail,Google Maps,and Google33Table of ContentsAlphabet Inc.Play.Cost-per-click is defined as click-driven revenues d
272、ivided by our total number of paid clicks and representsthe average amount we charge advertisers for each engagement by users.Impressions include impressions displayed to users on Google Network properties participating primarily inAdMob,AdSense,and Google Ad Manager.Cost-per-impression is defined a
273、s impression-based and click-basedrevenues divided by our total number of impressions,and represents the average amount we charge advertisersfor each impression displayed to users.As our business evolves,we periodically review,refine,and update our methodologies for monitoring,gathering,and counting
274、 the number of paid clicks and the number of impressions,and for identifying therevenues generated by the corresponding click and impression activity.Fluctuations in our advertising revenues,as well as the change in paid clicks and cost-per-click on GoogleSearch&other properties and the change in im
275、pressions and cost-per-impression on Google Network propertiesand the correlation between these items have been and may continue to be affected by additional factors,suchas:advertiser competition for keywords;changes in advertising quality,formats,delivery or policy;changes in device mix;seasonal fl
276、uctuations in internet usage,advertising expenditures,and underlying business trends,suchas traditional retail seasonality;andtraffic growth in emerging markets compared to more mature markets and across various verticals andchannels.Google OtherGoogle other revenues are comprised of the following:G
277、oogle Play,which includes sales of apps and in-app purchases;hardware,which includes sales of Fitbit wearable devices,Google Nest home products,and Pixeldevices;YouTube non-advertising,which includes subscription revenues from services such as YouTube Premiumand YouTube TV;andother products and serv
278、ices.Fluctuations in our Google other revenues have been and may continue to be affected by additional factors,such as changes in customer usage and demand,number of subscribers,and fluctuations in the timing of productlaunches.Google CloudGoogle Cloud revenues are comprised of the following:Google
279、Cloud Platform,which includes fees for infrastructure,platform,and other services;Google Workspace,which includes fees for cloud-based communication and collaboration tools forenterprises,such as Gmail,Docs,Drive,Calendar and Meet;andother enterprise services.Fluctuations in our Google Cloud revenue
280、s have been and may continue to be affected by additional factors,such as customer usage.Other BetsRevenues from Other Bets are generated primarily from the sale of health technology and internet services.Costs and ExpensesOur cost structure has two components:cost of revenues and operating expenses
281、.Our operating expensesinclude costs related to R&D,sales and marketing,and general and administrative functions.Certain of our costsand expenses,including those associated with the operation of our technical infrastructure as well ascomponents of our operating expenses,are generally less variable i
282、n nature and may not correlate to changes inrevenue.34Table of ContentsAlphabet Inc.Cost of RevenuesCost of revenues is comprised of TAC and other costs of revenues.TAC includes:Amounts paid to our distribution partners who make available our search access points andservices.Our distribution partner
283、s include browser providers,mobile carriers,original equipmentmanufacturers,and software developers.Amounts paid to Google Network partners primarily for ads displayed on their properties.Other cost of revenues includes:Content acquisition costs,which are payments to content providers from whom we l
284、icense videoand other content for distribution on YouTube and Google Play(we pay fees to these contentproviders based on revenues generated or a flat fee).Expenses associated with our data centers(including bandwidth,compensation expenses,depreciation,energy,and other equipment costs)as well as othe
285、r operations costs(such ascontent review as well as customer and product support costs).Inventory and other costs related to the hardware we sell.TAC as a percentage of revenues generated from ads placed on Google Network properties are significantlyhigher than TAC as a percentage of revenues genera
286、ted from ads placed on Google Search&other properties,because most of the advertiser revenues from ads served on Google Network properties are paid as TAC to ourGoogle Network partners.Operating ExpensesOperating expenses are generally incurred during our normal course of business,which we categoriz
287、e aseither R&D,sales and marketing,or general and administrative.The main components of our R&D expenses are:compensation expenses for engineering and technical employees responsible for R&D related to ourexisting and new products and services;depreciation;andthird-party services fees primarily rela
288、ting to consulting and outsourced services in support of ourengineering and product development efforts.The main components of our sales and marketing expenses are:compensation expenses for employees engaged in sales and marketing,sales support,and certaincustomer service functions;andspending relat
289、ing to our advertising and promotional activities in support of our products and services.The main components of our general and administrative expenses are:compensation expenses for employees in finance,human resources,information technology,legal,andother administrative support functions;expenses
290、relating to legal matters,including fines and settlements;andthird-party services fees,including audit,consulting,outside legal,and other outsourced administrativeservices.Other Income(Expense),NetOther income(expense),net primarily consists of interest income(expense),the effect of foreign currency
291、exchange gains(losses),net gains(losses)and impairment on our marketable and non-marketable securities,performance fees,and income(loss)and impairment from our equity method investments.For additional details,including how we account for our investments and factors that can drive fluctuations inthe
292、value of our investments,see Note 1 of the Notes to Consolidated Financial Statements included in Part II,Item 8 and Item 7A,“Quantitative and Qualitative Disclosures About Market Risk”in our Annual Report on Form10-K for35Table of ContentsAlphabet Inc.the fiscal year ended December31,2022 as well a
293、s Note 3 of the Notes to Consolidated Financial Statementsincluded in Item 1 of this Quarterly Report on Form 10-Q.Provision for Income TaxesProvision for income taxes represents the estimated amount of federal,state,and foreign income taxesincurred in the U.S.and the many jurisdictions in which we
294、operate.The provision includes the effect of reserveprovisions and changes to reserves that are considered appropriate as well as the related net interest andpenalties.For additional details,see Note 1 of the Notes to Consolidated Financial Statements included in Part II,Item8 in our Annual Report o
295、n Form 10-K for the fiscal year ended December31,2022 as well as Note 13 of theNotes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.Executive OverviewThe following table summarizes our consolidated financial results(in millions,except per share informat
296、ionand percentages):Three Months EndedJune 30,20222023$Change%ChangeConsolidated revenues$69,685$74,604$4,9197%Change in consolidated constant currencyrevenues9%Cost of revenues$30,104$31,916$1,8126%Operating expenses$20,128$20,850$7224%Operating income$19,453$21,838$2,38512%Operating margin28%29%1%
297、Other income(expense),net$(439)$65$504NMNet Income$16,002$18,368$2,36615%Diluted EPS$1.21$1.44$0.2319%NM=Not Meaningful See Use of Non-GAAP Constant Currency Measures below for details relating to our use of constant currencyinformation.Revenues were$74.6 billion,an increase of 7%year over year,prim
298、arily driven by an increase in GoogleServices revenues of$3.4 billion,or 5%,and an increase in Google Cloud revenues of$1.8 billion,or28%.Total constant currency revenues,which exclude the effect of hedging,increased 9%year over year.Cost of revenues was$31.9 billion,an increase of 6%year over year,
299、primarily driven by an increase incontent acquisition costs and hardware costs.An overall increase in data center and other operationscosts was partially offset by a reduction in depreciation expense due to the change in estimated usefullives of our servers and certain network equipment.Operating ex
300、penses were$20.9 billion,an increase of 4%year over year,primarily driven by an increasein compensation expenses largely due to headcount growth,partially offset by a reduction in valuation-based compensation liabilities related to certain Other Bets.Additionally,operating expenses benefitedfrom a r
301、eduction in depreciation expense due to the change in the estimated useful lives of our serversand certain network equipment.Other InformationIn January 2023,we announced a reduction of our workforce,and as a result we recorded employeeseverance and related charges of$2.0 billion for the six months
302、ended June 30,2023.In addition,we aretaking actions to optimize our global office space.As a result,total charges recorded during the sixmonths ended June 30,2023 were$633 million,of which$564 million and$69 million were recordedduring the three months ended March 31,2023 and June 30,2023,respective
303、ly.We may incur additionalcharges in(1)(1)36Table of ContentsAlphabet Inc.the future as we further evaluate our real estate needs.For additional information,see Note 7 of theNotes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.In January 2023,we complet
304、ed an assessment of the useful lives of our servers and network equipment,resulting in a change in the estimated useful life of our servers and certain network equipment to sixyears.The effect of this change was a reduction in depreciation expense of$966 million and$2.0 billionfor the three and six
305、months ended June 30,2023,respectively,recognized primarily in cost of revenuesand R&D expenses.For additional information,see Note 1 of the Notes to Consolidated FinancialStatements included in Item 1 of this Quarterly Report on Form 10-Q.Repurchases of Class A and Class C shares were$15.1 billion
306、for the three months ended June 30,2023.See Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this QuarterlyReport on Form 10-Q for additional information.Operating cash flow was$28.7 billion for the three months ended June 30,2023,and was affected by the2023 IRS paymen
307、t deferral relief made available to tax payers headquartered in designated counties inCalifornia.Capital expenditures,which primarily reflected investments in technical infrastructure,were$6.9 billionfor the three months ended June 30,2023.As of June30,2023,we had 181,798 employees.The substantial m
308、ajority of the employees affected bythe reduction of our workforce are no longer included in our headcount as of June 30,2023.We expectmost of the remaining employees affected will no longer be reflected in our headcount by the end of2023,subject to local law and consultation requirements.37Table of
309、 ContentsAlphabet Inc.Financial ResultsRevenuesThe following table presents revenues by type(in millions):Three Months EndedSix Months EndedJune 30,June 30,2022202320222023Google Search&other$40,689$42,628$80,307$82,987YouTube ads7,3407,66514,20914,358Google Network8,2597,85016,43315,346Google adver
310、tising56,28858,143110,949112,691Google other6,5538,14213,36415,555Google Services total62,84166,285124,313128,246Google Cloud6,2768,03112,09715,485Other Bets3Hedging gains(losses)375365387Total revenues$69,685$74,604$137,696$144,391Google ServicesGoogle advertising revenuesGoogle Search&o
311、therGoogle Search&other revenues increased$1.9 billion and$2.7 billion from the three and six months endedJune 30,2022 to the three and six months ended June 30,2023,respectively.The overall growth was driven byinterrelated factors including increases in search queries resulting from growth in user
312、adoption and usage onmobile devices;growth in advertiser spending;and improvements we have made in ad formats and delivery.Additionally,growth was adversely affected by changes in foreign currency exchange rates for the six monthsended June 30,2023 and,to a lesser extent,for the three months ended J
313、une 30,2023.YouTube adsYouTube ads revenues increased$325 million and$149 million from the three and six months ended June30,2022 to the three and six months ended June 30,2023,respectively.The growth was driven by our brandadvertising products followed by our direct response advertising products,bo
314、th of which benefited from increasedspending by our advertisers.Additionally,growth was adversely affected by changes in foreign currencyexchange rates for the six months ended June 30,2023 and,to a lesser extent,for the three months ended June30,2023.Google NetworkGoogle Network revenues decreased$
315、409 million and$1.1 billion from the three and six months endedJune 30,2022 to the three and six months ended June 30,2023,respectively,primarily driven by a decrease inGoogle Ad Manager and AdSense revenues.Additionally,Google Network revenues were adversely affected bychanges in foreign currency e
316、xchange rates for the six months ended June 30,2023 and,to a lesser extent,forthe three months ended June 30,2023.Monetization MetricsPaid clicks and cost-per-clickThe following table presents year-over-year changes in paid clicks and cost-per-click(expressed as apercentage):Three MonthsEnded June 3
317、0,Six MonthsEnded June 30,20232023Paid clicks change8%8%Cost-per-click change(3)%(5)%38Table of ContentsAlphabet Inc.Paid clicks increased from the three and six months ended June 30,2022 to the three and six months endedJune 30,2023 driven by a number of interrelated factors,including an increase i
318、n search queries resulting fromgrowth in user adoption and usage on mobile devices;growth in advertiser spending;and ongoing product andpolicy changes.Cost-per-click decreased from the three and six months ended June 30,2022 to the three and six monthsended June 30,2023 driven by a number of interre
319、lated factors including changes in device mix,geographic mix,advertiser spending,ongoing product and policy changes,and property mix.Additionally,cost-per-click wasadversely affected by changes in foreign currency exchange rates for the six months ended June 30,2023 and,to a lesser extent,for the th
320、ree months ended June 30,2023.Impressions and cost-per-impressionThe following table presents year-over-year changes in impressions and cost-per-impression(expressed asa percentage):Three MonthsEnded June 30,Six MonthsEnded June 30,20232023Impressions change0%(2)%Cost-per-impression change(5)%(5)%Im
321、pressions were relatively unchanged from the three months ended June 30,2022 to the three monthsended June 30,2023,as an increase in AdMob was largely offset by decreases in AdSense and Google AdManager.The decrease in cost-per-impression from the three months ended June 30,2022 to the three monthse
322、nded June 30,2023 was driven by a number of interrelated factors including ongoing product and policychanges,changes in device mix,geographic mix,product mix,and property mix,as well as the adverse effect ofchanges in foreign currency exchange rates.Impressions decreased from the six months ended Ju
323、ne 30,2022 to the six months ended June 30,2023driven by decreases in Google Ad Manager and AdSense,partially offset by an increase in AdMob.The decreasein cost-per-impression from the six months ended June 30,2022 to the six months ended June 30,2023 wasdriven by a number of interrelated factors in
324、cluding ongoing product and policy changes,changes in device mix,geographic mix,product mix,and property mix,as well as the adverse effect of changes in foreign currencyexchange rates.Google other revenuesGoogle other revenues increased$1.6 billion and$2.2 billion from the three and six months ended
325、 June 30,2022 to the three and six months ended June 30,2023 primarily driven by growth in YouTube non-advertising,largely due to an increase in paid subscribers,and growth in hardware,due to increased sales of Pixel devices,inlarge part due to product launch timing.Additionally,growth was adversely
326、 affected by changes in foreigncurrency exchange rates for the six months ended June 30,2023 and,to a lesser extent,for the three monthsended June 30,2023.Google CloudGoogle Cloud revenues increased$1.8 billion and$3.4 billion from the three and six months ended June30,2022 to the three and six mont
327、hs ended June 30,2023,respectively.Growth was primarily driven by GoogleCloud Platform followed by Google Workspace offerings.Google Clouds infrastructure and platform serviceswere the largest drivers of growth in Google Cloud Platform.39Table of ContentsAlphabet Inc.Revenues by GeographyThe followi
328、ng table presents revenues by geography as a percentage of revenues,determined based on theaddresses of our customers:Three Months EndedSix Months EndedJune 30,June 30,2022202320222023United States47%47%47%47%EMEA29%30%30%30%APAC17%17%17%17%Other Americas6%6%6%6%Hedging gains(losses)1%0%0%0%For furt
329、her details on revenues by geography,see Note 2 of the Notes to Consolidated Financial Statementsincluded in Item 1 of this Quarterly Report on Form 10-Q.Use of Non-GAAP Constant Currency InformationInternational revenues,which represent a significant portion of our revenues,are generally transacted
330、 inmultiple currencies andtherefore are affected by fluctuations in foreign currency exchange rates.The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons.We use non-GAAP constant currency revenues(constant currency revenues)and non
331、-GAAP percentage change in constant currency revenues(percentage change in constant currency revenues)for financial and operational decision-making and as a means to evaluate period-to-period comparisons.Webelieve the presentation of results on a constant currency basis in addition to GAAP results h
332、elps improve theability to understand our performance,because it excludes the effects of foreign currency volatility that are notindicative of our core operating results.Constant currency information compares results between periods as if exchange rates had remainedconstant period over period.We def
333、ine constant currency revenues as revenues excluding the effect of foreigncurrency exchange rate movements(FX Effect)as well as hedging activities,which are recognized at theconsolidated level.We use constant currency revenues to determine the constant currency revenue percentagechange on a year-on-year basis.Constant currency revenues are calculated by translating current periodrevenues using pri