Alphabet Announces Fourth Quarter and Fiscal Year 2023 Results
MOUNTAIN VIEW, Calif. – January 30, 2024 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced
financial results for the quarter and fiscal year ended December 31, 2023.
Sundar Pichai, CEO, said: “We are pleased with the ongoing strength in Search and the growing contribution from
YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the
Gemini era, the best is yet to come.”
Ruth Porat, President and Chief Investment Officer; CFO said: “We ended 2023 with very strong fourth quarter
financial results, with Q4 consolidated revenues of $86 billion, up 13% year over year. We remain committed to our
work to durably re-engineer our cost base as we invest to support our growth opportunities.”
Q4 2023 Financial Highlights
The following table summarizes our consolidated financial results for the quarters and years ended December 31,
2022 and 2023 (in millions, except for per share information and percentages).
Quarter Ended
December 31,
Year Ended
December 31,
2022 2023 2022 2023
(unaudited) (unaudited)
Revenues $ 76,048 $ 86,310 $ 282,836 $ 307,394
Change in revenues year over year 1 % 13 % 10 % 9 %
Change in constant currency revenues year over year
(1)
7 % 13 % 14 % 10 %
Operating income $ 18,160 $ 23,697 $ 74,842 $ 84,293
Operating margin 24 % 27 % 26 % 27 %
Other income (expense), net
$ (1,013) $ 715 $ (3,514) $ 1,424
Net income $ 13,624 $ 20,687 $ 59,972 $ 73,795
Diluted EPS $ 1.05 $ 1.64 $ 4.56 $ 5.80
(1)
Non-GAAP measure. See the table captioned “Reconciliation from GAAP revenues to non-GAAP constant currency
revenues and GAAP percentage change in revenues to non-GAAP percentage change in constant currency revenues” for
more details.
Q4 2023 Supplemental Information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC), and Number of Employees
Quarter Ended December 31,
2022 2023
Google Search & other $ 42,604 $ 48,020
YouTube ads 7,963 9,200
Google Network 8,475 8,297
Google advertising 59,042 65,517
Google subscriptions, platforms, and devices
(1)
8,796 10,794
Google Services total 67,838 76,311
Google Cloud 7,315 9,192
Other Bets 226 657
Hedging gains (losses) 669 150
Total revenues $ 76,048 $ 86,310
Total TAC $ 12,925 $ 13,986
Number of employees 190,234 182,502
(1)
Formerly “Google other.”
Segment Operating Results
Quarter Ended December 31,
2022 2023
Operating income (loss):
Google Services $ 20,222 $ 26,730
Google Cloud (186) 864
Other Bets (1,237) (863)
Alphabet-level activities
(1)
(639) (3,034)
Total income from operations $ 18,160 $ 23,697
(1)
Formerly “corporate costs, unallocated.” In addition to the costs included in Alphabet-level activities, hedging gains (losses)
related to revenue were $669 million and $150 million for the three months ended December 31, 2022 and 2023,
respectively. For the quarter ended December 31, 2023, Alphabet-level activities included charges related to the reduction
in force and our office space optimization efforts totaling $1.2 billion and $62 million in accelerated rent and accelerated
depreciation.
Additional Information Relating to the Quarter Ended December 31, 2023 (unaudited)
Reductions in Our Workforce and Office Space
In January 2023, we announced a reduction of our workforce, and as a result we recorded employee severance and
related charges of $2.1 billion for the twelve months ended December 31, 2023. In addition, we are taking actions
to optimize our global office space. As a result, exit charges recorded during the three and twelve months ended
December 31, 2023, were $1.2 billion and $1.8 billion, respectively. In addition to these exit charges, for the three
and twelve months ended December 31, 2023, we incurred $62 million and $269 million, respectively, in
accelerated rent and accelerated depreciation.
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Severance and office space exit charges are included within our consolidated statements of income as follows (in
millions):
Quarter Ended December 31, 2023 Year Ended December 31, 2023
Severance
and Related Office Space Total
Severance
and Related Office Space Total
Cost of revenues $ 2 $ 235 $ 237 $ 479 $ 481 $ 960
Research and development 1 602 603 848 870 1,718
Sales and marketing 3 198 201 497 257 754
General and administrative 1 161 162 264 237 501
Total charges $ 7 $ 1,196 $ 1,203 $ 2,088 $ 1,845 $ 3,933
For segment reporting, the substantial majority of these charges are included within Alphabet-level activities in our
segment results.
Change in Useful Lives of Our Server and Network Equipment
In January 2023, we completed an assessment of the useful lives of our servers and network equipment and
adjusted the estimated useful life of our servers from four years to six years and the estimated useful life of certain
network equipment from five years to six years. This change in accounting estimate was effective beginning in fiscal
year 2023, and the effect was a reduction in depreciation expense of $983 million and $3.9 billion and an increase
in net income of $765 million and $3.0 billion, or $0.06 and $0.24 per basic and $0.06 and $0.24 per diluted share
for the three and twelve months ended December 31, 2023, respectively.
Webcast and Conference Call Information
A live audio webcast of our fourth quarter 2023 earnings release call will be available on YouTube at https://
www.youtube.com/watch?v=b4alwdVvn4Q. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press
release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures,
is also available at http://abc.xyz/investor.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press
and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
We also share Google news and product updates on Google’s Keyword blog at https://www.blog.google/, which may
be of interest or material to our investors.
Forward-Looking Statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may
differ materially from the results predicted, and reported results should not be considered as an indication of future
performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted
include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for
the year ended December 31, 2022 and our most recent Quarterly Report on Form 10-Q for the quarter ended
September 30, 2023, which are on file with the SEC and are available on our investor relations website at http://
abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual
Report on Form 10-K for the year ended December 31, 2023, and may be set forth in other reports and filings we
make with the SEC. All information provided in this release and in the attachments is as of January 30, 2024. Undue
reliance should not be placed on the forward-looking statements in this press release, which are based on
information available to us on the date hereof. We undertake no duty to update this information unless required by
law.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP,
we use the following non-GAAP financial measures: free cash flow; constant currency revenues; and percentage
change in constant currency revenues. The presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in
accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to
evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful
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supplemental information regarding our performance and liquidity by excluding certain items that may not be
indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign
exchange rate movements and hedging activities, which are recognized at the consolidated level. We believe that
both management and investors benefit from referring to these non-GAAP financial measures in assessing our
performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures
also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons
to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both
because (1) they allow for greater transparency with respect to key metrics used by management in its financial and
operational decision-making and (2) they are used by our institutional investors and the analyst community to help
them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these
limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial
measures and evaluating these non-GAAP financial measures together with their relevant financial measures in
accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation from
GAAP net cash provided by operating activities to non-GAAP free cash flow” and “Reconciliation from GAAP
revenues to non-GAAP constant currency revenues and GAAP percentage change in revenues to non-GAAP
percentage change in constant currency revenues” included at the end of this release.
Contact
Investor relations Media
4
Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except par value per share amounts)
As of December 31,
2022 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 21,879 $ 24,048
Marketable securities
91,883 86,868
Total cash, cash equivalents, and marketable securities
113,762 110,916
Accounts receivable, net
40,258 47,964
Other current assets
10,775 12,650
Total current assets
164,795 171,530
Non-marketable securities
30,492 31,008
Deferred income taxes
5,261 12,169
Property and equipment, net
112,668 134,345
Operating lease assets
14,381 14,091
Goodwill
28,960 29,198
Other non-current assets
8,707 10,051
Total assets
$ 365,264 $ 402,392
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 5,128 $ 7,493
Accrued compensation and benefits
14,028 15,140
Accrued expenses and other current liabilities
37,866 46,168
Accrued revenue share
8,370 8,876
Deferred revenue
3,908 4,137
Total current liabilities
69,300 81,814
Long-term debt
14,701 13,253
Deferred revenue, non-current
599 911
Income taxes payable, non-current
9,258 8,474
Deferred income taxes
514 485
Operating lease liabilities
12,501 12,460
Other long-term liabilities
2,247 1,616
Total liabilities
109,120 119,013
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100 shares authorized; no shares
issued and outstanding
0 0
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par
value per share: 300,000 shares authorized (Class A 180,000, Class B 60,000,
Class C 60,000); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,460
(Class A 5,899, Class B 870, Class C 5,691) shares issued and outstanding
68,184 76,534
Accumulated other comprehensive income (loss)
(7,603) (4,402)
Retained earnings
195,563 211,247
Total stockholders’ equity
256,144 283,379
Total liabilities and stockholders’ equity
$ 365,264 $ 402,392
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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
Quarter Ended December 31, Year Ended December 31,
2022 2023 2022 2023
(unaudited) (unaudited)
Revenues $ 76,048 $ 86,310 $ 282,836 $ 307,394
Costs and expenses:
Cost of revenues 35,342 37,575 126,203 133,332
Research and development 10,267 12,113 39,500 45,427
Sales and marketing 7,183 7,719 26,567 27,917
General and administrative 5,096 5,206 15,724 16,425
Total costs and expenses 57,888 62,613 207,994 223,101
Income from operations 18,160 23,697 74,842 84,293
Other income (expense), net (1,013) 715 (3,514) 1,424
Income before income taxes 17,147 24,412 71,328 85,717
Provision for income taxes 3,523 3,725 11,356 11,922
Net income $ 13,624 $ 20,687 $ 59,972 $ 73,795
Basic earnings per share of Class A, Class B, and Class C
stock $ 1.06 $ 1.66 $ 4.59 $ 5.84
Diluted earnings per share of Class A, Class B, and Class
C stock $ 1.05 $ 1.64 $ 4.56 $ 5.80
Number of shares used in basic earnings per share
calculation 12,897 12,488 13,063 12,630
Number of shares used in diluted earnings per share
calculation 12,947 12,602 13,159 12,722
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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Quarter Ended December 31, Year Ended December 31,
2022 2023 2022 2023
(unaudited) (unaudited)
Operating activities
Net income $ 13,624 $ 20,687 $ 59,972 $ 73,795
Adjustments:
Depreciation of property and equipment 3,602 3,316 13,475 11,946
Stock-based compensation expense 5,100 5,659 19,362 22,460
Deferred income taxes (1,924) (1,670) (8,081) (7,763)
(Gain) loss on debt and equity securities, net 1,663 (471) 5,519 823
Other 1,260 1,665 3,483 4,330
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable, net (4,615) (6,518) (2,317) (7,833)
Income taxes, net 1,446 (9,869) 584 523
Other assets (778) 740 (5,046) (2,143)
Accounts payable (28) 427 707 664
Accrued expenses and other liabilities 3,424 4,317 3,915 3,937
Accrued revenue share 577 797 (445) 482
Deferred revenue 263 (165) 367 525
Net cash provided by operating activities 23,614 18,915 91,495 101,746
Investing activities
Purchases of property and equipment (7,595) (11,019) (31,485) (32,251)
Purchases of marketable securities (11,621) (28,436) (78,874) (77,858)
Maturities and sales of marketable securities 13,735 34,030 97,822 86,672
Purchases of non-marketable securities (903) (851) (2,531) (3,027)
Maturities and sales of non-marketable securities 19 204 150 947
Acquisitions, net of cash acquired, and purchases of
intangible assets (84) (29) (6,969) (495)
Other investing activities 222 (66) 1,589 (1,051)
Net cash used in investing activities (6,227) (6,167) (20,298) (27,063)
Financing activities
Net payments related to stock-based award activities (2,079) (2,680) (9,300) (9,837)
Repurchases of stock (15,407) (16,191) (59,296) (61,504)
Proceeds from issuance of debt, net of costs 8,550 1,492 52,872 10,790
Repayments of debt (8,718) (1,929) (54,068) (11,550)
Proceeds from sale of interest in consolidated entities,
net 25 0 35 8
Net cash used in financing activities (17,629) (19,308) (69,757) (72,093)
Effect of exchange rate changes on cash and cash
equivalents 137 (94) (506) (421)
Net increase (decrease) in cash and cash
equivalents (105) (6,654) 934 2,169
Cash and cash equivalents at beginning of period 21,984 30,702 20,945 21,879
Cash and cash equivalents at end of period $ 21,879 $ 24,048 $ 21,879 $ 24,048
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Segment Results
The following table presents our segment revenues and operating income (loss) (in millions; unaudited):
Quarter Ended December 31,
2022 2023
Revenues:
Google Services $ 67,838 $ 76,311
Google Cloud 7,315 9,192
Other Bets 226 657
Hedging gains (losses) 669 150
Total revenues $ 76,048 $ 86,310
Operating income (loss):
Google Services $ 20,222 $ 26,730
Google Cloud (186) 864
Other Bets (1,237) (863)
Alphabet-level activities (639) (3,034)
Total income from operations $ 18,160 $ 23,697
We report our segment results as Google Services, Google Cloud, and Other Bets:
• Google Services includes products and services such as ads, Android, Chrome, devices, Google Maps,
Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; fees
received for consumer subscription-based products such as YouTube TV, YouTube Music and Premium,
and NFL Sunday Ticket; the sale of apps and in-app purchases and devices.
• Google Cloud includes infrastructure and platform services, collaboration tools, and other services for
enterprise customers. Google Cloud generates revenues primarily from consumption-based fees and
subscriptions received for Google Cloud Platform services, Google Workspace communication and
collaboration tools, and other enterprise services.
• Other Bets is a combination of multiple operating segments that are not individually material. Revenues
from Other Bets are generated primarily from the sale of healthcare-related services and internet services.
Certain costs are not allocated to our segments because they represent Alphabet-level activities. These costs
primarily include AI-focused shared R&D activities, including development costs of our general AI models; corporate
initiatives such as our philanthropic activities; corporate shared costs such as certain finance, human resource, and
legal costs, including certain fines and settlements. Charges associated with reductions in our workforce and office
space during 2023 were not allocated to our segments. Additionally, hedging gains (losses) related to revenue are
not allocated to our segments.
Other Income (Expense), Net
The following table presents our other income (expense), net (in millions; unaudited):
Quarter Ended December 31,
2022 2023
Interest income $ 659 $ 1,110
Interest expense (90) (69)
Foreign currency exchange gain (loss), net (185) (449)
Gain (loss) on debt securities, net (176) (115)
Gain (loss) on equity securities, net
(1)
(1,487) 586
Performance fees 193 (45)
Income (loss) and impairment from equity method investments, net (31) (256)
Other 104 (47)
Other income (expense), net $ (1,013) $ 715
(1)
Includes all gains and losses, unrealized and realized, on equity securities. For Q4 2023, the net effect of the gain on equity
securities of $586 million and the $45 million of performance fees related to certain investments increased the provision for
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income tax, net income, and diluted EPS by $114 million, $427 million, and $0.03, respectively. Fluctuations in the value of
our investments may be affected by market dynamics and other factors and could significantly contribute to the volatility of
OI&E in future periods.
Reconciliation from GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow (in
millions; unaudited):
We provide non-GAAP free cash flow because it is a liquidity measure that provides useful information to
management and investors about the amount of cash generated by the business that can be used for strategic
opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet.
Quarter Ended
December 31, 2023
Net cash provided by operating activities $ 18,915
Less: purchases of property and equipment (11,019)
Free cash flow $ 7,896
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
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Reconciliation from GAAP Revenues to Non-GAAP Constant Currency Revenues and GAAP Percentage
Change in Revenues to Non-GAAP Percentage Change in Constant Currency Revenues (in millions, except
percentages; unaudited):
We provide non-GAAP constant currency revenues (“constant currency revenues”) and non-GAAP percentage change
in constant currency revenues (“percentage change in constant currency revenues”), because they facilitate the
comparison of current results to historic performance by excluding the effect of foreign exchange rate movements (“FX
Effect”) as well as hedging activities, which are recognized at the consolidated level, as they are not indicative of our
core operating results.
Non-GAAP constant currency revenues is defined as revenues excluding the effect of foreign exchange rate
movements and hedging activities and is calculated by translating current period revenues using prior period exchange
rates and excluding any hedging effect recognized in the current period. We calculate the percentage change in
constant currency revenues by comparing constant currency revenues to the prior year comparable period revenues,
excluding any hedging effect recognized in the prior period.
Revenues by Geography
Comparison from the Quarter Ended December 31, 2022 to the Quarter Ended December 31, 2023
Quarter Ended December 31, 2023
% Change from Prior Period
Quarter Ended December 31,
Less FX
Effect
Constant
Currency
Revenues
As
Reported
Less
Hedging
Effect
Less FX
Effect
Constant
Currency
Revenues2022 2023
United States
$ 36,982 $ 41,995 $ 0 $ 41,995 14 % 0 % 14 %
EMEA
21,762 25,010 1,105 23,905 15 % 5 % 10 %
APAC
11,979 13,979 (90) 14,069 17 % 0 % 17 %
Other Americas
4,656 5,176 (75) 5,251 11 % (2) % 13 %
Revenues, excluding hedging effect
75,379 86,160 940 85,220 14 % 1 % 13 %
Hedging gains (losses)
669 150
Total revenues
(1)
$ 76,048 $ 86,310 $ 85,220 13 % (1) % 1 % 13 %
(1)
Total constant currency revenues of $85.2 billion for the quarter ended December 31, 2023 increased $9.8 billion compared to $75.4 billion in
revenues, excluding hedging effect for the quarter ended December 31, 2022.
Comparison from the Quarter Ended September 30, 2023 to the Quarter Ended December 31, 2023
Quarter Ended December 31, 2023
% Change from Prior Period
Quarter Ended
Less FX
Effect
Constant
Currency
Revenues
As
Reported
Less
Hedging
Effect
Less FX
Effect
Constant
Currency
Revenues
September
30, 2023
December
31, 2023
United States
$ 36,354 $ 41,995 $ 0 $ 41,995 16 % 0 % 16 %
EMEA
22,661 25,010 (508) 25,518 10 % (3) % 13 %
APAC
13,126 13,979 (196) 14,175 6 % (2) % 8 %
Other Americas 4,553 5,176 (151) 5,327 14 % (3) % 17 %
Revenues, excluding hedging effect
76,694 86,160 (855) 87,015 12 % (1) % 13 %
Hedging gains (losses)
(1) 150
Total revenues
(1)
$ 76,693 $ 86,310 $ 87,015 13 % 1 % (1) % 13 %
(1)
Total constant currency revenues of $87.0 billion for the quarter ended December 31, 2023 increased $10.3 billion compared to $76.7 billion in
revenues, excluding hedging effect for the quarter ended September 30, 2023.
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Comparison from the Year Ended December 31, 2022 to the Year Ended December 31, 2023
Year Ended December 31, 2023
% Change from Prior Period
Year Ended December 31,
Less FX
Effect
Constant
Currency
Revenues
As
Reported
Less
Hedging
Effect
Less FX
Effect
Constant
Currency
Revenues2022 2023
United States
$ 134,814 $ 146,286 $ 0 $ 146,286 9 % 0 % 9 %
EMEA
82,062 91,038 460 90,578 11 % 1 % 10 %
APAC
47,024 51,514 (1,759) 53,273 10 % (3) % 13 %
Other Americas 16,976 18,320 (654) 18,974 8 % (4) % 12 %
Revenues, excluding hedging effect
280,876 307,158 (1,953) 309,111 9 % (1) % 10 %
Hedging gains (losses)
1,960 236
Total revenues
(1)
$ 282,836 $ 307,394 $ 309,111 9 % 0 % (1) % 10 %
(1)
Total constant currency revenues of $309.1 billion for the year ended December 31, 2023 increased $28.2 billion compared to $280.9 billion in
revenues, excluding hedging effect for the year ended December 31, 2022.
Total Revenues — Prior Year Comparative Periods
Comparison from the Quarter Ended December 31, 2021 to the Quarter Ended December 31, 2022
Quarter Ended December 31, 2022
Quarter Ended December
31,
% Change from Prior Period
Less FX
Effect
Constant
Currency
Revenues
As
Reported
Less
Hedging
Effect
Less FX
Effect
Constant
Currency
Revenues2021 2022
Revenues excluding hedging effect $ 75,122 $ 75,379 $ (4,733) $ 80,112 0 % (7) % 7 %
Hedging gains (losses) 203 669
Total revenues
$ 75,325 $ 76,048 $ 80,112 1 % 1 % (7) % 7 %
Comparison from the Year Ended December 31, 2021 to the Year Ended December 31, 2022
Year Ended December 31, 2022
% Change from Prior Period
Year Ended December 31,
Less FX
Effect
Constant
Currency
Revenues
As
Reported
Less
Hedging
Effect
Less FX
Effect
Constant
Currency
Revenues2021 2022
Revenues excluding hedging effect $ 257,488 $ 280,876 $ (13,324) $ 294,200 9 % (5) % 14 %
Hedging gains (losses) 149 1,960
Total revenues
$ 257,637 $ 282,836 $ 294,200 10 % 1 % (5) % 14 %
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