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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For 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 Parkway
Mountain View, CA 94043
(Address of principal executive offices, including zip code)
(650) 253-0000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par valueGOOGLNasdaq 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 Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒  Accelerated filer☐
Non-accelerated filer ☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒
As of October 17, 2023, there were 5,918 million shares of Alphabet’s Class A stock outstanding, 873 million shares of Alphabet's Class B stock outstanding, and 5,725 million shares of Alphabet's Class C stock outstanding.

Alphabet Inc.
Alphabet Inc.
Form 10-Q
For the Quarterly Period Ended September 30, 2023
TABLE OF CONTENTS
  Page No.
Item 1
Consolidated Balance Sheets - December 31, 2022 and September 30, 2023
Consolidated Statements of Income - Three and Nine Months Ended September 30, 2022 and 2023
Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2022 and 2023
Consolidated Statements of Stockholders' Equity - Three and Nine Months Ended September 30, 2022 and 2023
Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2022 and 2023
Item 2
Item 3
Item 4
Item 1
Item 1A
Item 2
Item 5
Item 6

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Alphabet Inc.
Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities 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 our success and trends in our business;
•fluctuations in our revenues and margins and various factors contributing to such fluctuations;
•our expectation that the continuing shift from an offline to online world will continue to benefit our business;
•our expectation that the portion of our revenues that we derive from non-advertising revenues will continue to increase and may affect our margins;
•our expectation that our traffic acquisition costs (TAC) and the associated TAC rate will fluctuate, which could 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 clicks and cost-per-click and the change in impressions 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 for monitoring, gathering, and counting the number of paid clicks and impressions;
•our expectation that our results will be affected by our performance in international markets as users in developing economies increasingly come online;
•our expectation that our foreign exchange risk management program will not fully offset our net exposure to fluctuations in foreign currency exchange rates;
•the expected variability of gains and losses related to hedging activities under our foreign exchange risk management program;
•the amount and timing of revenue recognition from customer contracts with commitments for performance obligations, including our estimate of the remaining amount of commitments and when we expect 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, land and buildings for data centers, and infrastructure, as well as to continue to invest in acquisitions and strategic 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 and marketing expenses, and general and administrative expenses may increase in amount and/or may increase 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 largely driven by market dynamics;
•fluctuations in our effective tax rate;
•seasonal fluctuations in internet usage and advertiser expenditures, underlying business trends such as traditional retail seasonality, which are likely to cause fluctuations in our quarterly results;
•the sufficiency of our sources of funding;
•our potential exposure in connection with new and pending investigations, proceedings, and other contingencies, including the possibility that certain legal proceedings to which we are a party could harm our business, financial condition, and operating results;
3
Alphabet Inc.
•our expectation that we will continue to face heightened regulatory scrutiny, and the sufficiency and timing of our proposed remedies in response to decisions from the European Commission (EC) and other regulators and governmental entities;
•the expected timing, amount, and effect of Alphabet Inc.'s share repurchases;
•our long-term sustainability and diversity goals;
•the unpredictability of the ongoing broader economic effects resulting from the war in Ukraine on our future financial results;
•the expected financial effect of our announced workforce reduction and office space optimization;
•our expectation that the change in estimated useful lives of servers and certain network equipment will have a favorable effect on our 2023 operating results;
as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "may," "could," "will likely result," and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, the risks discussed in Part I, Item 1A, "Risk Factors" and the trends discussed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, "Alphabet," "the company," "we," "us," "our," and similar terms include Alphabet Inc. and its subsidiaries, unless the context indicates otherwise.
"Alphabet," "Google," and other trademarks of ours appearing in this report are our property. We do not intend our use or display of other companies' trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

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Alphabet Inc.
PART I.    FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value per share amounts)
As of
December 31, 2022		As of
September 30, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents$21,879 $30,702 
Marketable securities91,883 89,233 
Total cash, cash equivalents, and marketable securities113,762 119,935 
Accounts receivable, net40,258 41,020 
Inventory2,670 2,957 
Other current assets8,105 12,398 
Total current assets164,795 176,310 
Non-marketable securities30,492 30,907 
Deferred income taxes5,261 10,983 
Property and equipment, net112,668 125,705 
Operating lease assets14,381 14,199 
Intangible assets, net2,084 1,833 
Goodwill28,960 29,146 
Other non-current assets6,623 7,628 
Total assets$365,264 $396,711 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,128 $5,803 
Accrued compensation and benefits14,028 12,562 
Accrued expenses and other current liabilities37,866 55,602 
Accrued revenue share8,370 8,025 
Deferred revenue3,908 4,303 
Total current liabilities69,300 86,295 
Long-term debt14,701 13,781 
Deferred revenue, non-current599 884 
Income taxes payable, non-current9,258 8,038 
Deferred income taxes514 528 
Operating lease liabilities12,501 12,550 
Other long-term liabilities2,247 1,433 
Total liabilities109,120 123,509 
Commitments and 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); 12,849 (Class A 5,964, Class B 883, Class C 6,002) and 12,541 (Class A 5,922, Class B 874, Class C 5,745) shares issued and outstanding
68,184 74,591 
Accumulated other comprehensive income (loss)(7,603)(7,036)
Retained earnings195,563 205,647 
Total stockholders’ equity256,144 273,202 
Total liabilities and stockholders’ equity$365,264 $396,711 
See accompanying notes.
5
Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
2022202320222023
Revenues$69,092 $76,693 $206,788 $221,084 
Costs and expenses:
Cost of revenues31,158 33,229 90,861 95,757 
Research and development10,273 11,258 29,233 33,314 
Sales and marketing6,929 6,884 19,384 20,198 
General and administrative3,597 3,979 10,628 11,219 
Total costs and expenses51,957 55,350 150,106 160,488 
Income from operations17,135 21,343 56,682 60,596 
Other income (expense), net(902)(146)(2,501)709 
Income before income taxes16,233 21,197 54,181 61,305 
Provision for income taxes2,323 1,508 7,833 8,197 
Net income$13,910 $19,689 $46,348 $53,108 
Basic net income per share of Class A, Class B, and Class C stock$1.07 $1.56 $3.53 $4.19 
Diluted net income per share of Class A, Class B, and Class C stock$1.06 $1.55 $3.50 $4.16 
See accompanying notes.
6
Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
Three Months EndedNine Months Ended
 September 30,September 30,
 2022202320222023
Net income$13,910 $19,689 $46,348 $53,108 
Other comprehensive income (loss):
Change in foreign currency translation adjustment(2,175)(1,169)(3,801)(338)
Available-for-sale investments:
Change in net unrealized gains (losses)(1,800)(678)(5,204)(382)
Less: reclassification adjustment for net (gains) losses included in net income362 255 743 745 
Net change, net of income tax benefit (expense) of $409, $120, $1,269 and $(104)
(1,438)(423)(4,461)363 
Cash flow hedges:
Change in net unrealized gains (losses)1,136 550 2,165 627 
Less: reclassification adjustment for net (gains) losses included in net income(547)(3)(1,132)(85)
Net change, net of income tax benefit (expense) of $(159), $(134), $(228) and $(115)
589 547 1,033 542 
Other comprehensive income (loss)(3,024)(1,045)(7,229)567 
Comprehensive income$10,886 $18,644 $39,119 $53,675 
See accompanying notes.
7
Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions; unaudited)
 Three Months Ended September 30, 2022
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)		Retained
Earnings		Total
Stockholders’
Equity
 SharesAmount
Balance as of June 30, 202213,078 $64,402 $(5,828)$196,845 $255,419 
Stock issued31 0 0 0 0 
Stock-based compensation expense0 5,018 0 0 5,018 
Tax withholding related to vesting of restricted stock units and other0 (2,315)0 0 (2,315)
Repurchases of stock(138)(857)0 (14,535)(15,392)
Sale of interest in consolidated entities0 10 0 0 10 
Net income0 0 0 13,910 13,910 
Other comprehensive income (loss)0 0 (3,024)0 (3,024)
Balance as of September 30, 202212,971 $66,258 $(8,852)$196,220 $253,626 


 Nine Months Ended September 30, 2022
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)		Retained
Earnings		Total
Stockholders’
Equity
 SharesAmount
Balance as of December 31, 202113,242 $61,774 $(1,623)$191,484 $251,635 
Stock issued98 8 0 0 8 
Stock-based compensation expense0 14,388 0 0 14,388 
Tax withholding related to vesting of restricted stock units and other0 (7,644)0 (1)(7,645)
Repurchases of stock(369)(2,278)0 (41,611)(43,889)
Sale of interest in consolidated entities0 10 0 0 10 
Net income0 0 0 46,348 46,348 
Other comprehensive income (loss)0 0 (7,229)0 (7,229)
Balance as of September 30, 202212,971 $66,258 $(8,852)$196,220 $253,626 









8
Alphabet Inc.
 Three Months Ended September 30, 2023
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)		Retained
Earnings		Total
Stockholders’
Equity
 SharesAmount
Balance as of June 30, 202312,629 $72,248 $(5,991)$200,884 $267,141 
Stock issued34 0 0 0 0 
Stock-based compensation expense0 5,777 0 0 5,777 
Tax withholding related to vesting of restricted stock units and other0 (2,442)0 0 (2,442)
Repurchases of stock(122)(992)0 (14,926)(15,918)
Net income0 0 0 19,689 19,689 
Other comprehensive income (loss)0 0 (1,045)0 (1,045)
Balance as of September 30, 202312,541 $74,591 $(7,036)$205,647 $273,202 


 Nine Months Ended September 30, 2023
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)		Retained
Earnings		Total
Stockholders’
Equity
 SharesAmount
Balance as of December 31, 202212,849 $68,184 $(7,603)$195,563 $256,144 
Stock issued102 0 0 0 0 
Stock-based compensation expense0 16,905 0 0 16,905 
Tax withholding related to vesting of restricted stock units and other0 (7,366)0 0 (7,366)
Repurchases of stock(410)(3,132)0 (43,024)(46,156)
Net income0 0 0 53,108 53,108 
Other comprehensive income (loss)0 0 567 0 567 
Balance as of September 30, 202312,541 $74,591 $(7,036)$205,647 $273,202 
See accompanying notes.



9
Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Nine Months Ended
September 30,
20222023
Operating activities
Net income$46,348 $53,108 
Adjustments:
Depreciation and impairment of property and equipment11,222 10,010 
Amortization and impairment of intangible assets505 373 
Stock-based compensation expense14,262 16,801 
Deferred income taxes(6,157)(6,093)
Loss (gain) on debt and equity securities, net3,856 1,294 
Other369 912 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net2,298 (1,315)
Income taxes, net(862)10,392 
Other assets(4,268)(2,883)
Accounts payable735 237 
Accrued expenses and other liabilities491 (380)
Accrued revenue share(1,022)(315)
Deferred revenue104 690 
Net cash provided by operating activities67,881 82,831 
Investing activities
Purchases of property and equipment(23,890)(21,232)
Purchases of marketable securities(67,253)(49,422)
Maturities and sales of marketable securities84,087 52,642 
Purchases of non-marketable securities(1,628)(2,176)
Maturities and sales of non-marketable securities131 743 
Acquisitions, net of cash acquired, and purchases of intangible assets(6,885)(466)
Other investing activities1,367 (985)
Net cash used in investing activities(14,071)(20,896)
Financing activities
Net payments related to stock-based award activities(7,221)(7,157)
Repurchases of stock(43,889)(45,313)
Proceeds from issuance of debt, net of costs44,322 9,298 
Repayments of debt(45,350)(9,621)
Proceeds from sale of interest in consolidated entities, net10 8 
Net cash used in financing activities(52,128)(52,785)
Effect of exchange rate changes on cash and cash equivalents(643)(327)
Net increase in cash and cash equivalents1,039 8,823 
Cash and cash equivalents at beginning of period20,945 21,879 
Cash and cash equivalents at end of period$21,984 $30,702 
See accompanying notes.
10
Alphabet Inc.
Alphabet Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Nature of Operations
Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we 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 that provide enterprise customers with infrastructure and platform services as well as communication and collaboration tools; sales of other products and services, such as apps and in-app purchases, and hardware; and fees received for subscription-based products.
Basis of Consolidation
The consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. Intercompany balances and transactions have been eliminated.
Unaudited Interim Financial Information
These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and in our opinion, include all adjustments of a normal recurring nature necessary for fair financial statement presentation. Interim results are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. We have made estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.
These consolidated financial statements and other information presented in this Form 10-Q should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC.
Change in Accounting Estimate
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. Based on the carrying value of servers and certain network equipment as of December 31, 2022, and those placed in service during the nine months ended September 30, 2023, the effect of this change in estimate was a reduction in depreciation expense of $977 million and $2.9 billion and an increase in net income of $761 million and $2.3 billion, or $0.06 and $0.18 per basic and $0.06 and $0.18 per diluted share, for the three and nine months ended September 30, 2023, respectively.
Prior Period Reclassifications
Certain amounts in prior periods have been reclassified to conform with current period presentation.
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Alphabet Inc.
Note 2. Revenues
Disaggregated Revenues
The following table presents revenues disaggregated by type (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202320222023
Google Search & other$39,539 $44,026 $119,846 $127,013 
YouTube ads7,071 7,952 21,280 22,310 
Google Network7,872 7,669 24,305 23,015 
Google advertising54,482 59,647 165,431 172,338 
Google other6,895 8,339 20,259 23,894 
Google Services total61,377 67,986 185,690 196,232 
Google Cloud6,868 8,411 18,965 23,896 
Other Bets209 297 842 870 
Hedging gains (losses)638 (1)1,291 86 
Total revenues$69,092 $76,693 $206,788 $221,084 
The following table presents revenues disaggregated by geography, based on the addresses of our customers (in millions):
 Three Months EndedNine Months Ended
September 30,September 30,
 2022202320222023
United States$33,372 48 %$36,354 47 %$97,832 47 %$104,291 47 %
EMEA(1)
19,450 28 22,661 30 60,300 29 66,028 30 
APAC(1)
11,494 17 13,126 17 35,045 17 37,535 17 
Other Americas(1)
4,138 6 4,553 6 12,320 6 13,144 6 
Hedging gains (losses)638 1 (1)0 1,291 1 86 0 
Total revenues$69,092 100 %$76,693 100 %$206,788 100 %$221,084 100 %
(1)    Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America ("Other Americas").
Revenue Backlog
As of September 30, 2023, we had $64.9 billion of remaining performance obligations (“revenue backlog”), primarily related to Google Cloud. Our revenue backlog represents commitments in customer contracts for future services that have not yet been recognized as revenue. The amount and timing of revenue recognition for these commitments is largely driven by our ability to deliver in accordance with relevant contract terms and when our customers utilize services, which could affect our estimate of revenue backlog and when we expect to recognize such as revenue. We expect to recognize approximately half of the revenue backlog as revenues over the next 24 months with the remaining to be recognized thereafter. Revenue backlog includes related deferred revenue currently recorded as well as amounts that will be invoiced in future periods, and excludes contracts with an original expected term of one year or less and cancellable contracts.
Deferred Revenues
We record deferred revenues when cash payments are received or due in advance of our performance, including 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 $2.3 billion was recognized as revenues during the nine months ended September 30, 2023.



12
Alphabet Inc.
Note 3. Financial Instruments
Fair Value Measurements
Investments Measured at Fair Value on a Recurring Basis
Cash, cash equivalents, and marketable equity securities are measured at fair value and classified within Level 1 and Level 2 in the fair value hierarchy, because we use quoted prices for identical assets in active markets 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, because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. For certain marketable debt securities, we have elected the fair value option for which changes in fair value are recorded in other income (expense), net. The fair value option was elected for these securities to align with the unrealized gains and losses from related derivative contracts.
The following tables summarize our cash, cash equivalents, and marketable securities measured at fair value on a recurring basis (in millions):
As of December 31, 2022
Fair Value HierarchyAdjusted CostGross Unrealized GainsGross Unrealized LossesFair ValueCash and Cash EquivalentsMarketable Securities
Fair value changes recorded in other comprehensive income
Time depositsLevel 2$5,297 $0 $0 $5,297 $5,293 $4 
Government bondsLevel 241,03664 (2,045)39,055 283 38,772 
Corporate debt securitiesLevel 228,5788 (1,569)27,017 1 27,016 
Mortgage-backed and asset-backed securitiesLevel 216,1765 (1,242)14,939 0 14,939 
Total investments with fair value change reflected in other comprehensive income(1)
$91,087 $77 $(4,856)$86,308 $5,577 $80,731 
Fair value adjustments recorded in net income
Money market fundsLevel 1$7,234 $7,234 $0 
Current marketable equity securities(2)
Level 14,013 0 4,013 
Mutual fundsLevel 2339 0 339 
Government bondsLevel 21,877 440 1,437 
Corporate debt securitiesLevel 23,744 65 3,679 
Mortgage-backed and asset-backed securitiesLevel 21,686 2 1,684 
Total investments with fair value change recorded in net income$18,893 $7,741 $11,152 
Cash0 8,561 0 
Total$91,087 $77 $(4,856)$105,201 $21,879 $91,883 
(1)Represents gross unrealized gains and losses for debt securities recorded to accumulated other comprehensive income (AOCI).
(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $803 million as of December 31, 2022 is included within other non-current assets.
13
Alphabet Inc.

As of September 30, 2023
Fair Value HierarchyAdjusted CostGross Unrealized GainsGross Unrealized LossesFair ValueCash and Cash EquivalentsMarketable Securities
Fair value changes recorded in other comprehensive income
Time depositsLevel 2$2,987 $0 $0 $2,987 $2,987 $0 
Government bondsLevel 250,369 2 (1,916)48,455 8,505 39,950 
Corporate debt securitiesLevel 222,746 2 (1,081)21,667 0 21,667 
Mortgage-backed and asset-backed securitiesLevel 217,652 1 (1,333)16,320 0 16,320 
Total investments with fair value change reflected in other comprehensive income(1)
$93,754 $5 $(4,330)$89,429 $11,492 $77,937 
Fair value adjustments recorded in net income
Money market fundsLevel 1$9,268 $9,268 $0 
Current marketable equity securities(2)
Level 13,706 0 3,706 
Mutual fundsLevel 23090 309
Government bondsLevel 22,141555 1,586
Corporate debt securitiesLevel 23,48393 3,390
Mortgage-backed and asset-backed securitiesLevel 22,3050 2,305
Total investments with fair value change recorded in net income$21,212 $9,916 $11,296 
Cash0 9,294 0 
Total$93,754 $5 $(4,330)$110,641 $30,702 $89,233 
(1)Represents gross unrealized gains and losses for debt securities recorded to AOCI.
(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $958 million as of September 30, 2023 is included within other non-current assets
Investments Measured at Fair Value on a Nonrecurring Basis
Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value upon 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 are classified within Level 2 or Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.
As of September 30, 2023, the carrying value of our non-marketable equity securities was $28.8 billion, of which $10.4 billion were remeasured at fair value during the three months ended September 30, 2023 and primarily classified as Level 2.
14
Alphabet Inc.
Debt Securities
The following table summarizes the estimated fair value of investments in available-for-sale marketable debt securities by effective contractual maturity dates (in millions):
As of
September 30, 2023
Due in 1 year or less$13,958 
Due in 1 year through 5 years42,554 
Due in 5 years through 10 years15,114 
Due after 10 years13,592 
Total$85,218 
The following tables present fair values and gross unrealized losses recorded to AOCI, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):
 As of December 31, 2022
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized
Loss		Fair ValueUnrealized
Loss		Fair ValueUnrealized
Loss
Government 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-backed securities7,725 (585)6,964 (657)14,689 (1,242)
Total$39,992 $(2,029)$35,527 $(2,750)$75,519 $(4,779)
 As of September 30, 2023
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized
Loss		Fair ValueUnrealized
Loss		Fair ValueUnrealized
Loss
Government bonds$15,506 $(463)$19,121 $(1,453)$34,627 $(1,916)
Corporate debt securities4,163 (60)17,162 (935)21,325 (995)
Mortgage-backed and asset-backed securities6,888 (239)9,212 (1,094)16,100 (1,333)
Total$26,557 $(762)$45,495 $(3,482)$72,052 $(4,244)
We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. The following table summarizes gains and losses for debt securities, reflected as a component of OI&E (in millions):    
Three Months EndedNine Months Ended
September 30,September 30,
 2022202320222023
Unrealized gain (loss) on fair value option debt securities$(177)$(86)$(746)$35 
Gross realized gain on debt securities14 8 83 93 
Gross realized loss on debt securities(551)(402)(1,190)(1,197)
(Increase) decrease in allowance for credit losses(17)(23)(35)(31)
Total gain (loss) on debt securities recognized in other income (expense), net$(731)$(503)$(1,888)$(1,100)

15
Alphabet Inc.
Equity Investments
The carrying value of equity securities is measured as the total initial cost plus the cumulative net gain (loss). Our share of gains and losses, including impairments, are included as a component of OI&E in the Consolidated Statements of Income. See Note 6 for further details on OI&E.
The carrying values for marketable and non-marketable equity securities are summarized below (in millions):
As of December 31, 2022As of September 30, 2023
Marketable Equity SecuritiesNon-Marketable Equity SecuritiesTotalMarketable Equity SecuritiesNon-Marketable Equity SecuritiesTotal
Total initial cost$5,764 $16,157 $21,921 $5,331 $17,504 $22,835 
Cumulative net gain (loss)(1)
(608)12,372 11,764 (358)11,317 10,959 
Carrying value$5,156 $28,529 $33,685 $4,973 $28,821 $33,794 
(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $16.8 billion gains and $4.5 billion losses (including impairments) as of December 31, 2022 and $18.0 billion gains and $6.7 billion losses (including impairments) as of September 30, 2023.
Gains and Losses on Marketable and Non-marketable Equity Securities
Gains and losses (including impairments), net, for marketable and non-marketable equity securities included in OI&E are summarized below (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202320222023
Realized net gain (loss) on equity securities sold during the period$(73)$42 $(355)$348 
Unrealized net gain (loss) on marketable equity securities(86)(224)(2,494)136 
Unrealized net gain (loss) on non-marketable equity securities(1)
(488)(184)881 (678)
Total gain (loss) on equity securities in other income (expense), net$(647)$(366)$(1,968)$(194)
(1)Unrealized gain (loss) on non-marketable equity securities accounted for under the measurement alternative is comprised of $219 million and $599 million of upward adjustments and $707 million and $783 million of downward adjustments (including impairments) for three months ended September 30, 2022 and 2023, respectively, and $3.2 billion and $1.6 billion of upward adjustments and $2.4 billion and $2.3 billion of downward adjustments (including impairments) for the nine months ended September 30, 2022 and 2023, respectively.
In the table above, realized net gain (loss) on equity securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the purchase date, if later.
Cumulative net gains (losses) on equity securities sold during the period, which is summarized in the following table (in millions), represents the total net gains (losses) recognized after the initial purchase date of the equity security sold during the period. While these net gains (losses) may have been reflected in periods prior to the period of sale, we believe they are important supplemental information as they reflect the economic net gains (losses) on the securities sold during the period. Cumulative net gains (losses) are calculated as the difference between the sale price and the initial purchase price for the equity security sold during the period.
Equity Securities Sold
Three Months EndedNine Months Ended
September 30,September 30,
 2022202320222023
Total sale price$296 $736 $1,631 $1,475 
Total initial cost310 549 738 916 
Cumulative net gain (loss)$(14)$187 $893 $559 
16
Alphabet Inc.
Equity Securities Accounted for Under the Equity Method
As of December 31, 2022 and September 30, 2023, equity securities accounted for under the equity method had a carrying value of approximately $1.5 billion for both periods. Our share of gains and losses, including impairments, are included as a component of OI&E, in the Consolidated Statements of Income. See Note 6 for further details on OI&E.
Derivative Financial Instruments
We use derivative instruments to manage risks relating to our ongoing business operations. The primary risk managed is foreign exchange risk. We use foreign currency contracts to reduce the risk that our cash flows, earnings, and investment in foreign subsidiaries will be adversely affected by foreign currency exchange rate fluctuations. We also enter into derivative instruments to partially offset our exposure to other risks and enhance investment returns.
We recognize derivative instruments in the Consolidated Balance Sheets at fair value and classify the derivatives primarily within Level 2 in the fair value hierarchy. We present our collar contracts (an option strategy comprised of a combination of purchased and written options) at net fair values and present all other derivatives at gross fair values. The accounting treatment for derivatives is based on the intended use and hedge designation.
Cash Flow Hedges
We designate foreign currency forward and option contracts (including collars) as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar. These contracts have maturities of 24 months or less.
Cash flow hedge amounts included in the assessment of hedge effectiveness are deferred in AOCI and subsequently reclassified to revenue when the hedged item is recognized in earnings. We exclude forward points and time value from our assessment of hedge effectiveness and amortize them on a straight-line basis over the life of the hedging instrument in revenues. The difference between fair value changes of the excluded component and the amount amortized to revenues is recorded in AOCI.
As of September 30, 2023, the net accumulated gain on our foreign currency cash flow hedges before tax effect was $691 million, which is expected to be reclassified from AOCI into revenues within the next 12 months.
Fair Value Hedges
We designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for our marketable securities denominated in currencies other than the U.S. dollar. Fair value hedge amounts included in the assessment of hedge effectiveness are recognized in OI&E, along with the offsetting gains and losses of the related hedged items. We exclude forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in OI&E.
Net Investment Hedges
We designate foreign currency forward contracts as net investment hedges to hedge the foreign currency risks related to our investment in foreign subsidiaries. Net investment hedge amounts included in the assessment of hedge effectiveness are recognized in AOCI along with the foreign currency translation adjustment. We exclude forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in OI&E.
Other Derivatives
We enter into foreign currency forward and option contracts that are not designated as hedging instruments to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains and losses on these derivatives that are not designated as accounting hedges are primarily recorded in OI&E along with the foreign currency gains and 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 derivatives to hedge the market price risk on certain of our marketable equity securities. Gains and losses arising from other derivatives are primarily reflected within the “other” component of OI&E. See Note 6 for further details.
17
Alphabet Inc.
The gross notional amounts of outstanding derivative instruments were as follows (in millions):
As of December 31, 2022As of September 30, 2023
Derivatives designated as hedging instruments:
Foreign exchange contracts
Cash flow hedges $15,972 $17,225 
Fair value hedges$2,117 $1,384 
Net investment hedges$8,751 $9,547 
Derivatives not designated as hedging instruments:
Foreign exchange contracts$34,979 $36,585 
Other contracts$7,932 $11,572 
The fair values of outstanding derivative instruments were as follows (in millions):
 As of December 31, 2022As of September 30, 2023
  
Assets(1)
Liabilities(2)
Assets(1)
Liabilities(2)
Derivatives designated as hedging instruments:
Foreign exchange contracts$271 $556 $1,102 $14 
Derivatives not designated as hedging instruments:
Foreign exchange contracts365207123496
Other contracts404714985
Total derivatives not designated as hedging instruments405 254 272 581 
Total$676 $810 $1,374 $595 
(1)    Derivative assets are recorded as other current and non-current assets in the Consolidated Balance Sheets.
(2)    Derivative liabilities are recorded as accrued expenses and other liabilities, current and non-current in the Consolidated Balance Sheets.
The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income (OCI) are summarized below (in millions):
 Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
Three Months EndedNine Months Ended
 September 30,September 30,
2022202320222023
Derivatives in cash flow hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness$1,486 $652 $2,752 $591 
Amount excluded from the assessment of effectiveness(77)16 (131)143 
Derivatives in net investment hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness760 336 1,418 62 
Total$2,169 $1,004 $4,039 $796 
18
Alphabet Inc.
 The table below presents the gains (losses) of our derivatives on the Consolidated Statements of Income: (in millions):
 Gains (Losses) Recognized in Income
Three Months Ended
 September 30,
20222023
RevenuesOther income (expense), netRevenuesOther income (expense), net
Total amounts in the Consolidated Statements of Income$69,092 $(902)$76,693 $(146)
Effect of cash flow hedges:
Foreign exchange contracts
Amount reclassified from AOCI to income$658 $0 $(15)$0 
Amount excluded from the assessment of effectiveness (amortized)(20)0 14 0 
Effect of fair value hedges:
Foreign exchange contracts
Hedged items0