Alphabet Inc 10-Q for FY2022 Q2

Alphabet Inc. (GOOGL)

10-Q 2022-07-27 For: 2022-06-30

Added on April 10, 2026

About this 10-Q

Alphabet Inc filed this 10-Q on July 27, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $69.69B; up 12.6% from $61.88B a year earlier
Net income: $16B; down 13.6% from net income of $18.53B a year earlier
Diluted EPS: $1.21; down 11.0% from $1.36 a year earlier

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Delaware			61-1767919
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	GOOGL	Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)
Class C Capital Stock, $0.001 par value	GOOG	Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)


		Page No.
Note About Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	5
	Consolidated Balance Sheets - December 31, 2021 and June 30, 2022	5
	Consolidated Statements of Income - Three and Six Months Ended June 30, 2021 and 2022	6
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2021 and 2022	7
	Consolidated Statements of Stockholders' Equity - Three and Six Months Ended June 30, 2021 and 2022	8
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2021 and 2022	10
	Notes to Consolidated Financial Statements	11
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4	Controls and Procedures	46

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	47
Item 1A	Risk Factors	47
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	47


Item 6	Exhibits	48
Signatures		49


	As of December 31, 2021		As of June 30, 2022
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,945	$	17,936
Marketable securities	118,704		107,061
Total cash, cash equivalents, and marketable securities	139,649		124,997
Accounts receivable, net	39,304		35,707
Income taxes receivable, net	966		1,366
Inventory	1,170		1,980
Other current assets	7,054		8,321
Total current assets	188,143		172,371
Non-marketable securities	29,549		30,665
Deferred income taxes	1,284		1,490
Property and equipment, net	97,599		106,223
Operating lease assets	12,959		13,398
Intangible assets, net	1,417		1,377
Goodwill	22,956		23,949
Other non-current assets	5,361		5,712
Total assets	$	359,268	$	355,185
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,037	$	4,409

Accrued compensation and benefits	13,889		10,852
Accrued expenses and other current liabilities	31,236		32,976
Accrued revenue share	8,996		7,889
Deferred revenue	3,288		3,272
Income taxes payable, net	808		1,956
Total current liabilities	64,254		61,354
Long-term debt	14,817		14,734
Deferred revenue, non-current	535		472
Income taxes payable, non-current	9,176		8,163
Deferred income taxes	5,257		924
Operating lease liabilities	11,389		11,697
Other long-term liabilities	2,205		2,422
Total liabilities	107,633		99,766
Contingencies (Note 9)
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); 13,242 (Class A 6,015, Class B 893, Class C 6,334) and 13,078 (Class A 6,002, Class B 885, Class C 6,191) shares issued and outstanding	61,774		64,402
Accumulated other comprehensive income (loss)	(1,623)		(5,828)
Retained earnings	191,484		196,845
Total stockholders’ equity	251,635		255,419
Total liabilities and stockholders’ equity	$	359,268	$	355,185


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2022		2021		2022
Revenues	$	61,880	$	69,685	$	117,194	$	137,696
Costs and expenses:
Cost of revenues	26,227		30,104		50,330		59,703
Research and development	7,675		9,841		15,160		18,960
Sales and marketing	5,276		6,630		9,792		12,455
General and administrative	3,341		3,657		6,114		7,031
Total costs and expenses	42,519		50,232		81,396		98,149
Income from operations	19,361		19,453		35,798		39,547
Other income (expense), net	2,624		(439)		7,470		(1,599)
Income before income taxes	21,985		19,014		43,268		37,948
Provision for income taxes	3,460		3,012		6,813		5,510
Net income	$	18,525	$	16,002	$	36,455	$	32,438




Basic net income per share of Class A, Class B, and Class C stock	$	1.38	$	1.22	$	2.72	$	2.46









Diluted net income per share of Class A, Class B, and Class C stock	$	1.36	$	1.21	$	2.68	$	2.44


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended June 30, 2021
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of March 31, 2021	13,422	$	59,436	$	(3)	$	170,580	$	230,013
Stock issued	39	1		0		0		1
Stock-based compensation expense	0	3,844		0		0		3,844
Tax withholding related to vesting of restricted stock units and other	0	(2,515)		0		0		(2,515)
Repurchases of stock	(108)	(630)		0		(12,166)		(12,796)
Sale of interest in consolidated entities	0	300		0		0		300
Net income	0	0		0		18,525		18,525
Other comprehensive income (loss)	0	0		193		0		193
Balance as of June 30, 2021	13,353	$	60,436	$	190	$	176,939	$	237,565


	Six Months Ended June 30, 2021
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2020	13,504	$	58,510	$	633	$	163,401	$	222,544
Stock issued	70	7		0		0		7
Stock-based compensation expense	0	7,632		0		0		7,632
Tax withholding related to vesting of restricted stock units and other	0	(4,749)		0		0		(4,749)
Repurchases of stock	(221)	(1,274)		0		(22,917)		(24,191)
Sale of interest in consolidated entities	0	310		0		0		310
Net income	0	0		0		36,455		36,455
Other comprehensive income (loss)	0	0		(443)		0		(443)
Balance as of June 30, 2021	13,353	$	60,436	$	190	$	176,939	$	237,565


	Three Months Ended June 30, 2022
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of March 31, 2022	13,175	$	62,832	$	(4,049)	$	195,221	$	254,004
Stock issued	36	1		0		0		1
Stock-based compensation expense	0	4,823		0		0		4,823
Tax withholding related to vesting of restricted stock units and other	0	(2,434)		0		(1)		(2,435)
Repurchases of stock	(133)	(820)		0		(14,377)		(15,197)
Net income	0	0		0		16,002		16,002
Other comprehensive income (loss)	0	0		(1,779)		0		(1,779)
Balance as of June 30, 2022	13,078	$	64,402	$	(5,828)	$	196,845	$	255,419


	Six Months Ended June 30, 2022
	Class A, Class B, Class C Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2021	13,242	$	61,774	$	(1,623)	$	191,484	$	251,635
Stock issued	67	8		0		0		8
Stock-based compensation expense	0	9,370		0		0		9,370
Tax withholding related to vesting of restricted stock units and other	0	(5,329)		0		(1)		(5,330)
Repurchases of stock	(231)	(1,421)		0		(27,076)		(28,497)
Net income	0	0		0		32,438		32,438
Other comprehensive income (loss)	0	0		(4,205)		0		(4,205)
Balance as of June 30, 2022	13,078	$	64,402	$	(5,828)	$	196,845	$	255,419


	As of December 31, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	5,133	$	0	$	0	$	5,133	$	5,133	$	0
Government bonds	53,288		258		(238)		53,308		5		53,303
Corporate debt securities	35,605		194		(223)		35,576		12		35,564
Mortgage-backed and asset-backed securities	18,829		96		(112)		18,813		0		18,813
Total	$	112,855	$	548	$	(573)	$	112,830	$	5,150	$	107,680


	As of June 30, 2022
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Level 2:
Time deposits(1)	$	4,054	$	0	$	0	$	4,054	$	4,054	$	0
Government bonds	46,782		36		(1,575)		45,243		45		45,198
Corporate debt securities	35,486		6		(1,449)		34,043		0		34,043
Mortgage-backed and asset-backed securities	18,426		1		(903)		17,524		0		17,524
Total	$	104,748	$	43	$	(3,927)	$	100,864	$	4,099	$	96,765


	As of June 30, 2022
Due in 1 year or less	$	12,374
Due in 1 year through 5 years	73,397
Due in 5 years through 10 years	4,795
Due after 10 years	12,210
Total	$	102,776


	As of December 31, 2021
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	32,843	$	(236)	$	71	$	(2)	$	32,914	$	(238)
Corporate debt securities	22,737		(152)		303		(5)		23,040		(157)
Mortgage-backed and asset-backed securities	11,502		(106)		248		(6)		11,750		(112)
Total	$	67,082	$	(494)	$	622	$	(13)	$	67,704	$	(507)


Table of Contents			Alphabet Inc.


Table of Contents			Alphabet Inc.


Table of Contents			Alphabet Inc.


Table of Contents			Alphabet Inc.


	Equity Securities Sold
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2022		2021		2022
Total sale price	$	2,629	$	645	$	3,353	$	1,335
Total initial cost	409		168		766		428
Cumulative net gains(1)	$	2,220	$	477	$	2,587	$	907


	As of December 31, 2021		As of June 30, 2022
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
Cash flow hedges	$	16,362	$	17,871
Fair value hedges	$	2,556	$	2,151
Net investment hedges	$	10,159	$	9,801
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	$	41,031	$	42,270
Other contracts	$	4,275	$	7,347


		As of December 31, 2021
	Balance Sheet Location	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contracts	Other current and non-current assets	$	867	$	42	$	909
Other contracts	Other current and non-current assets	0		52		52
Total		$	867	$	94	$	961
Derivative Liabilities:
Level 2:
Foreign exchange contracts	Accrued expenses and other liabilities, current and non-current	$	8	$	452	$	460
Other contracts	Accrued expenses and other liabilities, current and non-current	0		121		121
Total		$	8	$	573	$	581


	Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2022		2021		2022
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	(60)	$	1,131	$	102	$	1,266
Amount excluded from the assessment of effectiveness	(4)		(39)		45		(54)

Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	(179)		509		199		658
Total	$	(243)	$	1,601	$	346	$	1,870


	Gains (Losses) Recognized in Income
	Three Months Ended
	June 30,
	2021				2022
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded	$	61,880	$	2,624	$	69,685	$	(439)

Gains (Losses) on Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$	(3)	$	0	$	400	$	0
Amount excluded from the assessment of effectiveness recognized in earnings based on an amortization approach	(4)		0		(24)		0
Gains (Losses) on Derivatives in Fair Value Hedging Relationship:
Foreign exchange contracts
Hedged items	0		28		0		(136)
Derivatives designated as hedging instruments	0		(28)		0		136
Amount excluded from the assessment of effectiveness	0		2		0		2
Gains (Losses) on Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		21		0		28
Gains (Losses) on Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	0		(64)		0		(149)
Other Contracts	0		(142)		0		86
Total gains (losses)	$	(7)	$	(183)	$	376	$	(33)


	As of December 31, 2021
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
Derivatives	$	999	$	(38)	$	961	$	(434)	(1)	$	(394)	$	(12)	$	121

	As of June 30, 2022
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Non-Cash Collateral Received		Net Assets Exposed
Derivatives	$	1,773	$	(76)	$	1,697	$	(736)	(1)	$	(880)	$	(18)	$	63


	As of December 31, 2021
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
Derivatives	$	619	$	(38)	$	581	$	(434)	(2)	$	(4)	$	(110)	$	33

	As of June 30, 2022
							Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Non-Cash Collateral Pledged		Net Liabilities
Derivatives	$	917	$	(76)	$	841	$	(736)	(2)	$	(13)	$	(1)	$	91


	Maturity	Coupon Rate	Effective Interest Rate	As of December 31, 2021		As of June 30, 2022
Debt
2014-2020 Notes Issuances	2024 - 2060	0.45% - 3.38%	0.57% - 3.38%	$	13,000	$	13,000
Future finance lease payments, net and other (1)				2,086		1,966
Total debt				15,086		14,966
Unamortized discount and debt issuance costs				(156)		(150)
Less: Current portion future finance lease payments, net and other current debt(1)(2)				(113)		(82)
Total long-term debt				$	14,817	$	14,734


	As of December 31, 2021		As of June 30, 2022
Land and buildings	$	58,881	$	65,015
Information technology assets	55,606		59,643
Construction in progress	23,172		25,341
Leasehold improvements	9,146		9,992
Furniture and fixtures	208		267
Property and equipment, gross	147,013		160,258
Less: accumulated depreciation	(49,414)		(54,035)
Property and equipment, net	$	97,599	$	106,223


	As of December 31, 2021		As of June 30, 2022
European Commission fines(1)	$	9,799	$	9,191
Accrued customer liabilities	3,505		2,948
Accrued purchases of property and equipment	2,415		2,797
Current operating lease liabilities	2,189		2,297
Other accrued expenses and current liabilities	13,328		15,743
Accrued expenses and other current liabilities	$	31,236	$	32,976


	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Investments		Unrealized Gains (Losses) on Cash Flow Hedges		Total
Balance as of December 31, 2020	$	(864)	$	1,612	$	(115)	$	633
Other comprehensive income (loss) before reclassifications	(57)		(540)		92		(505)
Amounts excluded from the assessment of hedge effectiveness recorded in AOCI	0		0		45		45
Amounts reclassified from AOCI	0		(64)		81		17
Other comprehensive income (loss)	(57)		(604)		218		(443)
Balance as of June 30, 2021	$	(921)	$	1,008	$	103	$	190


		Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income
		Three Months Ended				Six Months Ended
		June 30,				June 30,
AOCI Components	Location	2021		2022		2021		2022
Unrealized gains (losses) on available-for-sale investments
	Other income (expense), net	$	96	$	(299)	$	82	$	(489)
	Benefit (provision) for income taxes	(21)		66		(18)		108
	Net of income tax	75		(233)		64		(381)
Unrealized gains (losses) on cash flow hedges
Foreign exchange contracts	Revenue	(3)		400		(108)		697
Interest rate contracts	Other income (expense), net	2		1		3		3
	Benefit (provision) for income taxes	5		(65)		24		(115)
	Net of income tax	4		336		(81)		585
Total amount reclassified, net of income tax		$	79	$	103	$	(17)	$	204


	Google Services		Google Cloud		Other Bets		Total
Balance as of December 31, 2021	$	19,826	$	2,337	$	793	$	22,956
Acquisitions	896		103		113		1,112
Foreign currency translation and other adjustments	(104)		(12)		(3)		(119)
Balance as of June 30, 2022	$	20,618	$	2,428	$	903	$	23,949


	As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Patents and developed technology	$	4,786	$	4,112	$	674
Customer relationships	506		140		366
Trade names and other	534		295		239
Total definite-lived intangible assets	5,826		4,547		1,279
Indefinite-lived intangible assets	138		—		138
Total intangible assets	$	5,964	$	4,547	$	1,417


Remainder of 2022	$	193
2023	294
2024	275
2025	145
2026	99
Thereafter	133
Total	$	1,139


	Three Months Ended June 30,
	2021						2022
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	8,321	$	1,265	$	8,939	$	7,329	$	1,081	$	7,592

Denominator
Number of shares used in per share computation	6,009		914		6,456		6,015		887		6,231



Basic net income per share	$	1.38	$	1.38	$	1.38	$	1.22	$	1.22	$	1.22
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	8,321	$	1,265	$	8,939	$	7,329	$	1,081	$	7,592


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	1,265		0		0		1,081		0		0
Reallocation of undistributed earnings	(149)		(19)		149		(68)		(9)		68
Allocation of undistributed earnings	$	9,437	$	1,246	$	9,088	$	8,342	$	1,072	$	7,660




Denominator
Number of shares used in basic computation	6,009		914		6,456		6,015		887		6,231
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding	914		0		0		887		0		0

Restricted stock units and other contingently issuable shares	0		0		213		0		0		106
Number of shares used in per share computation	6,923		914		6,669		6,902		887		6,337



Diluted net income per share	$	1.36	$	1.36	$	1.36	$	1.21	$	1.21	$	1.21


	Six Months Ended June 30,
	2021						2022
	Class A		Class B		Class C		Class A		Class B		Class C
Basic net income per share:
Numerator
Allocation of undistributed earnings	$	16,330	$	2,485	$	17,640	$	14,812	$	2,190	$	15,436

Denominator
Number of shares used in per share computation	6,012		915		6,495		6,013		889		6,266



Basic net income per share	$	2.72	$	2.72	$	2.72	$	2.46	$	2.46	$	2.46
Diluted net income per share:
Numerator

Allocation of undistributed earnings for basic computation	$	16,330	$	2,485	$	17,640	$	14,812	$	2,190	$	15,436


Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	2,485		0		0		2,190		0		0
Reallocation of undistributed earnings	(269)		(36)		269		(162)		(21)		162
Allocation of undistributed earnings	$	18,546	$	2,449	$	17,909	$	16,840	$	2,169	$	15,598




Denominator
Number of shares used in basic computation	6,012		915		6,495		6,013		889		6,266
Weighted-average effect of dilutive securities
Add:
Conversion of Class B to Class A shares outstanding	915		0		0		889		0		0

Restricted stock units and other contingently issuable shares	0		0		195		0		0		127
Number of shares used in per share computation	6,927		915		6,690		6,902		889		6,393



Diluted net income per share	$	2.68	$	2.68	$	2.68	$	2.44	$	2.44	$	2.44


	Unvested Restricted Stock Units
	Number of Shares	Weighted- Average Grant-Date Fair Value
Unvested as of December 31, 2021	338	$	81.31
Granted	163	$	135.49
Vested	(103)	$	85.45
Forfeited/canceled	(19)	$	94.47
Unvested as of June 30, 2022	379	$	102.80


	As of December 31, 2021		As of June 30, 2022
Long-lived assets:
United States	$	80,207	$	88,044
International	30,351		31,577
Total long-lived assets	$	110,558	$	119,621


Period	Total Number of Class A Shares Purchased (in thousands) (1)	Total Number of Class C Shares Purchased (in thousands) (1)	Average Price Paid per Class A Share (2)		Average Price Paid per Class C Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Programs (in thousands) (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)
April 1 - 30	2,125	11,469	$	124.95	$	126.62	13,594	$	72,353
May 1 - 31	7,712	54,160	$	113.20	$	113.01	61,872	$	65,360
June 1 - 30	6,470	50,882	$	111.33	$	113.31	57,352	$	58,874
Total	16,307	116,511					132,818