goog-20240630

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 June 30, 2024


☐			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)

________________________________________________________________________________________


Delaware			61-1767919
(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 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)

________________________________________________________________________________________

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 July 16, 2024, there were 5,859 million shares of Alphabet’s Class A stock outstanding, 866 million shares of Alphabet's Class B stock outstanding, and 5,585 million shares of Alphabet's Class C stock outstanding.


Table of Contents			Alphabet Inc.

Alphabet Inc.

Form 10-Q

For the Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS


		Page No.
Note About Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements	5
	Consolidated Balance Sheets - December 31, 2023 and June 30, 2024	5
	Consolidated Statements of Income - Three and Six Months Ended June 30, 2023 and 2024	6
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2023 and 2024	7
	Consolidated Statements of Stockholders' Equity - Three and Six Months Ended June 30, 2023 and 2024	8
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2023 and 2024	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	47
Item 4	Controls and Procedures	47

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	49
Item 1A	Risk Factors	49
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 5	Other Information	50
Item 6	Exhibits	51
Signatures		52


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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 beyond advertising 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 paid clicks and cost-per-click as well as 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;

•our expectation that our capital expenditures will increase, including the expected increase in our technical infrastructure investment to support the growth of our business and our long-term initiatives, in particular in support of artificial intelligence (AI) products and services;

•our plans to continue to invest in new businesses, products, services and technologies, and systems, 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;

•our expectation that our effective tax rate and cash tax payments could increase in future years;

•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;

•our expectation that we will continue to face heightened regulatory scrutiny, and changes in regulatory conditions, laws, and public policies, which could affect our business practices and financial results;


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•the expected timing, amount, and effect of Alphabet Inc.'s share repurchases and dividends;

•our long-term sustainability and diversity goals;

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, 2023, as updated in our subsequent Quarterly Reports on Form 10-Q, including in this Quarterly Report on Form 10-Q. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "predicts," "projects," "will be," "will continue," "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" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated in our subsequent Quarterly Reports on Form 10-Q, including in this Quarterly Report on Form 10-Q; 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, 2023; 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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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, 2023		As of June 30, 2024
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	24,048	$	27,225
Marketable securities	86,868		73,500
Total cash, cash equivalents, and marketable securities	110,916		100,725
Accounts receivable, net	47,964		47,087
Other current assets	12,650		14,183
Total current assets	171,530		161,995
Non-marketable securities	31,008		34,172
Deferred income taxes	12,169		14,958
Property and equipment, net	134,345		151,155
Operating lease assets	14,091		13,606
Goodwill	29,198		29,185
Other non-current assets	10,051		9,699
Total assets	$	402,392	$	414,770
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,493	$	6,092

Accrued compensation and benefits	15,140		11,373
Accrued expenses and other current liabilities	46,168		47,298
Accrued revenue share	8,876		8,899
Deferred revenue	4,137		4,251
Total current liabilities	81,814		77,913
Long-term debt	13,253		13,238
Deferred revenue, non-current	911		985
Income taxes payable, non-current	8,474		7,703
Deferred income taxes	485		717
Operating lease liabilities	12,460		11,708
Other long-term liabilities	1,616		1,753
Total liabilities	119,013		114,017
Commitments and Contingencies (Note 8)
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); 12,460 (Class A 5,899, Class B 870, Class C 5,691) and 12,322 (Class A 5,860, Class B 866, Class C 5,596) shares issued and outstanding	76,534		79,732
Accumulated other comprehensive income (loss)	(4,402)		(5,012)
Retained earnings	211,247		226,033
Total stockholders’ equity	283,379		300,753
Total liabilities and stockholders’ equity	$	402,392	$	414,770

See accompanying notes.


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Alphabet Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts; unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Revenues	$	74,604	$	84,742	$	144,391	$	165,281
Costs and expenses:
Cost of revenues	31,916		35,507		62,528		69,219
Research and development	10,588		11,860		22,056		23,763
Sales and marketing	6,781		6,792		13,314		13,218
General and administrative	3,481		3,158		7,240		6,184
Total costs and expenses	52,766		57,317		105,138		112,384
Income from operations	21,838		27,425		39,253		52,897
Other income (expense), net	65		126		855		2,969
Income before income taxes	21,903		27,551		40,108		55,866
Provision for income taxes	3,535		3,932		6,689		8,585
Net income	$	18,368	$	23,619	$	33,419	$	47,281




Basic net income per share (Note 10)	$	1.45	$	1.91	$	2.63	$	3.82









Diluted net income per share (Note 10)	$	1.44	$	1.89	$	2.61	$	3.78

See accompanying notes.


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Alphabet Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions; unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Net income	$	18,368	$	23,619	$	33,419	$	47,281
Other comprehensive income (loss):
Change in foreign currency translation adjustment, net of income tax benefit (expense) of $13, $(26), $60 and $(44)	235		(447)		831		(950)
Available-for-sale investments:
Change in net unrealized gains (losses)	(570)		(93)		296		(453)
Less: reclassification adjustment for net (gains) losses included in net income	198		230		490		541
Net change, net of income tax benefit (expense) of $106, $(40), $(224) and $(26)	(372)		137		786		88
Cash flow hedges:
Change in net unrealized gains (losses)	151		232		77		418
Less: reclassification adjustment for net (gains) losses included in net income	(5)		(95)		(82)		(166)
Net change, net of income tax benefit (expense) of $(11), $(27), $19 and $(50)	146		137		(5)		252
Other comprehensive income (loss)	9		(173)		1,612		(610)
Comprehensive income	$	18,377	$	23,446	$	35,031	$	46,671

See accompanying notes.


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Alphabet Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions; unaudited)


	Three Months Ended June 30, 2023
	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, 2023	12,722	$	70,269	$	(6,000)	$	196,625	$	260,894
Stock issued	38	0		0		0		0
Stock-based compensation expense	0	5,815		0		0		5,815
Tax withholding related to vesting of restricted stock units and other	0	(2,831)		0		0		(2,831)
Repurchases of stock	(131)	(1,005)		0		(14,109)		(15,114)
Net income	0	0		0		18,368		18,368
Other comprehensive income (loss)	0	0		9		0		9
Balance as of June 30, 2023	12,629	$	72,248	$	(5,991)	$	200,884	$	267,141


	Six Months Ended June 30, 2023
	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, 2022	12,849	$	68,184	$	(7,603)	$	195,563	$	256,144
Stock issued	68	0		0		0		0
Stock-based compensation expense	0	11,128		0		0		11,128
Tax withholding related to vesting of restricted stock units and other	0	(4,924)		0		0		(4,924)
Repurchases of stock	(288)	(2,140)		0		(28,098)		(30,238)
Net income	0	0		0		33,419		33,419
Other comprehensive income (loss)	0	0		1,612		0		1,612
Balance as of June 30, 2023	12,629	$	72,248	$	(5,991)	$	200,884	$	267,141


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	Three Months Ended June 30, 2024
	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, 2024	12,381	$	77,913	$	(4,839)	$	219,770	$	292,844
Stock issued	33	0		0		0		0
Stock-based compensation expense	0	5,908		0		0		5,908
Tax withholding related to vesting of restricted stock units and other	0	(3,304)		0		0		(3,304)
Repurchases of stock	(92)	(789)		0		(14,809)		(15,598)
Dividends and dividend equivalents declared ($0.20 per share)	0	4		0		(2,547)		(2,543)
Net income	0	0		0		23,619		23,619
Other comprehensive income (loss)	0	0		(173)		0		(173)
Balance as of June 30, 2024	12,322	$	79,732	$	(5,012)	$	226,033	$	300,753


	Six Months Ended June 30, 2024
	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, 2023	12,460	$	76,534	$	(4,402)	$	211,247	$	283,379
Stock issued	65	0		0		0		0
Stock-based compensation expense	0	11,201		0		0		11,201
Tax withholding related to vesting of restricted stock units and other	0	(6,300)		0		0		(6,300)
Repurchases of stock	(203)	(1,707)		0		(29,948)		(31,655)
Dividends and dividend equivalents declared ($0.20 per share)	0	4		0		(2,547)		(2,543)
Net income	0	0		0		47,281		47,281
Other comprehensive income (loss)	0	0		(610)		0		(610)
Balance as of June 30, 2024	12,322	$	79,732	$	(5,012)	$	226,033	$	300,753

See accompanying notes.


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Alphabet Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)


	Six Months Ended
	June 30,
	2023		2024
Operating activities
Net income	$	33,419	$	47,281
Adjustments:
Depreciation of property and equipment	5,459		7,121
Stock-based compensation expense	11,058		11,129
Deferred income taxes	(4,269)		(2,738)
Loss (gain) on debt and equity securities, net	425		(757)
Other	1,774		1,185
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net	1,506		110
Income taxes, net	8,520		(889)
Other assets	(1,259)		(1,532)
Accounts payable	14		(563)
Accrued expenses and other liabilities	(4,037)		(5,176)
Accrued revenue share	(418)		97
Deferred revenue	(17)		220
Net cash provided by operating activities	52,175		55,488
Investing activities
Purchases of property and equipment	(13,177)		(25,198)
Purchases of marketable securities	(35,589)		(43,011)
Maturities and sales of marketable securities	37,049		58,577
Purchases of non-marketable securities	(1,513)		(2,199)
Maturities and sales of non-marketable securities	181		605


Acquisitions, net of cash acquired, and purchases of intangible assets	(340)		(87)
Other investing activities	(357)		(32)

Net cash used in investing activities	(13,746)		(11,345)
Financing activities
Net payments related to stock-based award activities	(4,725)		(6,138)

Repurchases of stock	(29,526)		(31,380)
Dividend payments	0		(2,466)
Proceeds from issuance of debt, net of costs	8,050		4,875
Repayments of debt	(8,207)		(5,502)
Proceeds from sale of interest in consolidated entities, net	5		8
Net cash used in financing activities	(34,403)		(40,603)
Effect of exchange rate changes on cash and cash equivalents	24		(363)
Net increase (decrease) in cash and cash equivalents	4,050		3,177
Cash and cash equivalents at beginning of period	21,879		24,048
Cash and cash equivalents at end of period	$	25,929	$	27,225

See accompanying notes.


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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 fees received for subscription-based products, apps and in-app purchases, and devices.

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, 2024. 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, 2023 filed with the SEC.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes. Upon adoption we will be required to disclose standardized categories in the rate reconciliation in both percentage and dollar amounts. ASU 2023-09 will also require income taxes paid to be disaggregated by jurisdiction, among other disclosure requirements. We will adopt ASU 2023-09 for our annual periods beginning January 1, 2025.

Prior Period Reclassifications

Certain amounts in prior periods have been reclassified to conform with current period presentation.


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Note 2. Revenues

Disaggregated Revenues

The following table presents revenues disaggregated by type (in millions):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Google Search & other	$	42,628	$	48,509	$	82,987	$	94,665
YouTube ads	7,665		8,663		14,358		16,753
Google Network	7,850		7,444		15,346		14,857
Google advertising	58,143		64,616		112,691		126,275
Google subscriptions, platforms, and devices	8,142		9,312		15,555		18,051
Google Services total	66,285		73,928		128,246		144,326
Google Cloud	8,031		10,347		15,485		19,921
Other Bets	285		365		573		860
Hedging gains (losses)	3		102		87		174
Total revenues	$	74,604	$	84,742	$	144,391	$	165,281

The following table presents revenues disaggregated by geography, based on the addresses of our customers (in millions):


	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2023				2024				2023				2024
United States	$	35,073	47	%	$	41,196	49	%	$	67,937	47	%	$	79,933	48	%
EMEA(1)	22,289		30		24,683		29		43,367		30		48,471		29
APAC(1)	12,728		17		13,823		16		24,409		17		27,112		17
Other Americas(1)	4,511		6		4,938		6		8,591		6		9,591		6
Hedging gains (losses)	3		0		102		0		87		0		174		0
Total revenues	$	74,604	100	%	$	84,742	100	%	$	144,391	100	%	$	165,281	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 June 30, 2024, we had $78.8 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 estimated revenue backlog 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. 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 subscriptions, platforms, and devices. Total deferred revenue as of December 31, 2023 was $5.0 billion, of which $2.9 billion was recognized as revenues during the six months ended June 30, 2024.

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


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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 OI&E. 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, 2023
	Fair Value Hierarchy	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Fair value changes recorded in other comprehensive income
Time deposits	Level 2	$	2,628	$	0	$	0	$	2,628	$	2,628	$	0
Government bonds	Level 2	38,106		233		(679)		37,660		1,993		35,667
Corporate debt securities	Level 2	22,457		112		(637)		21,932		0		21,932
Mortgage-backed and asset-backed securities	Level 2	17,243		88		(634)		16,697		0		16,697
Total investments with fair value change reflected in other comprehensive income(1)		$	80,434	$	433	$	(1,950)	$	78,917	$	4,621	$	74,296
Fair value adjustments recorded in net income
Money market funds	Level 1							$	6,480	$	6,480	$	0
Current marketable equity securities(2)	Level 1							4,282		0		4,282
Mutual funds	Level 2							311		0		311
Government bonds	Level 2							1,952		347		1,605
Corporate debt securities	Level 2							3,782		91		3,691
Mortgage-backed and asset-backed securities	Level 2							2,683		0		2,683
Total investments with fair value change recorded in net income								$	19,490	$	6,918	$	12,572
Cash								0		12,509		0
Total		$	80,434	$	433	$	(1,950)	$	98,407	$	24,048	$	86,868

(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 $1.4 billion as of December 31, 2023 is included within other non-current assets.


Table of Contents			Alphabet Inc.


		As of June 30, 2024
	Fair Value Hierarchy	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities
Fair value changes recorded in other comprehensive income
Time deposits	Level 2	$	2,784	$	0	$	0	$	2,784	$	2,784	$	0
Government bonds	Level 2	33,002		60		(447)		32,615		5,268		27,347
Corporate debt securities	Level 2	18,856		40		(437)		18,459		0		18,459
Mortgage-backed and asset-backed securities	Level 2	14,806		30		(578)		14,258		0		14,258
Total investments with fair value change reflected in other comprehensive income(1)		$	69,448	$	130	$	(1,462)	$	68,116	$	8,052	$	60,064
Fair value adjustments recorded in net income
Money market funds	Level 1							$	7,061	$	7,061	$	0
Current marketable equity securities(2)	Level 1							4,683		0		4,683
Mutual funds	Level 2							276		0		276
Government bonds	Level 2							2,162		152		2,010
Corporate debt securities	Level 2							3,694		89		3,605
Mortgage-backed and asset-backed securities	Level 2							2,862		0		2,862
Total investments with fair value change recorded in net income								$	20,738	$	7,302	$	13,436
Cash								0		11,871		0
Total		$	69,448	$	130	$	(1,462)	$	88,854	$	27,225	$	73,500

(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 $276 million as of June 30, 2024 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. Non-marketable equity securities that have been remeasured due to impairment are classified within Level 3. Our valuation methods include option pricing models, market comparable approach, and common stock equivalent method, which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, expected time to exit, risk free rate, and the rights, and obligations of the securities we hold. These inputs significantly vary based on investment type.

As of June 30, 2024, the carrying value of our non-marketable equity securities was $31.6 billion, of which $2.2 billion were remeasured at fair value during the three months ended June 30, 2024 and classified within Level 2 and Level 3 of the fair value hierarchy at the time of measurement.


Table of Contents			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 June 30, 2024
Due in 1 year or less	$	7,234
Due in 1 year through 5 years	36,666
Due in 5 years through 10 years	11,977
Due after 10 years	12,664
Total	$	68,541

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, 2023
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	1,456	$	(22)	$	13,897	$	(657)	$	15,353	$	(679)
Corporate debt securities	827		(5)		15,367		(592)		16,194		(597)
Mortgage-backed and asset-backed securities	2,945		(26)		7,916		(608)		10,861		(634)
Total	$	5,228	$	(53)	$	37,180	$	(1,857)	$	42,408	$	(1,910)


	As of June 30, 2024
	Less than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Government bonds	$	13,602	$	(99)	$	6,385	$	(348)	$	19,987	$	(447)
Corporate debt securities	3,456		(8)		10,636		(394)		14,092		(402)
Mortgage-backed and asset-backed securities	4,534		(43)		6,887		(535)		11,421		(578)
Total	$	21,592	$	(150)	$	23,908	$	(1,277)	$	45,500	$	(1,427)

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 Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Unrealized gain (loss) on fair value option debt securities	$	(24)	$	(23)	$	121	$	(69)
Gross realized gain on debt securities	28		161		85		229
Gross realized loss on debt securities	(303)		(455)		(795)		(935)
(Increase) decrease in allowance for credit losses	(5)		7		(8)		3
Total gain (loss) on debt securities recognized in other income (expense), net	$	(304)	$	(310)	$	(597)	$	(772)


Table of Contents			Alphabet Inc.

Equity Investments

The carrying value of equity securities is measured as the total initial cost plus the cumulative net gain (loss). 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, 2023						As of June 30, 2024
	Marketable Equity Securities		Non-Marketable Equity Securities		Total		Marketable Equity Securities		Non-Marketable Equity Securities		Total
Total initial cost	$	5,418	$	17,616	$	23,034	$	5,107	$	19,219	$	24,326
Cumulative net gain (loss)(1)	555		11,150		11,705		128		12,370		12,498
Carrying value	$	5,973	$	28,766	$	34,739	$	5,235	$	31,589	$	36,824

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $18.1 billion gains and $6.9 billion losses (including impairments) as of December 31, 2023 and $20.6 billion gains and $8.2 billion losses (including impairments) as of June 30, 2024.

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 Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Realized net gain (loss) on equity securities sold during the period	$	87	$	64	$	292	$	184
Unrealized net gain (loss) on marketable equity securities	397		(350)		349		(214)
Unrealized net gain (loss) on non-marketable equity securities(1)	(689)		(428)		(469)		1,559
Total gain (loss) on equity securities in other income (expense), net	$	(205)	$	(714)	$	172	$	1,529

(1)Unrealized gain (loss) on non-marketable equity securities accounted for under the measurement alternative is comprised of $75 million and $319 million of upward adjustments and $789 million and $745 million of downward adjustments (including impairments) for the three months ended June 30, 2023 and 2024, respectively, and $989 million and $3.1 billion of upward adjustments and $1.5 billion and $1.6 billion of downward adjustments (including impairments) for the six months ended June 30, 2023 and 2024, 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 Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Total sale price	$	427	$	583	$	739	$	1,673
Total initial cost	156		303		367		964
Cumulative net gains (losses)	$	271	$	280	$	372	$	709


Table of Contents			Alphabet Inc.

Equity Securities Accounted for Under the Equity Method

As of December 31, 2023 and June 30, 2024, equity securities accounted for under the equity method had a carrying value of approximately $1.7 billion and $2.1 billion, respectively. 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 United States (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 June 30, 2024, the net accumulated gain on our foreign currency cash flow hedges before tax effect was $300 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, and 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.

The gross notional amounts of outstanding derivative instruments were as follows (in millions):


	As of December 31, 2023		As of June 30, 2024
Derivatives designated as hedging instruments:
Foreign exchange contracts
Cash flow hedges	$	18,039	$	18,803
Fair value hedges	$	2,065	$	1,649
Net investment hedges	$	9,472	$	9,355
Derivatives not designated as hedging instruments:
Foreign exchange contracts	$	39,722	$	42,006
Other contracts	$	10,818	$	11,542

The fair values of outstanding derivative instruments were as follows (in millions):


	As of December 31, 2023				As of June 30, 2024
	Assets(1)		Liabilities(2)		Assets(1)		Liabilities(2)
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	205	$	242	$	365	$	22

Derivatives not designated as hedging instruments:
Foreign exchange contracts	134		156		26		171
Other contracts	114		47		172		26
Total derivatives not designated as hedging instruments	248		203		198		197
Total	$	453	$	445	$	563	$	219

(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):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2024		2023		2024
Derivatives in cash flow hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	$	77	$	277	$	(61)	$	432
Amount excluded from the assessment of effectiveness	80		(7)		127		51

Derivatives in net investment hedging relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness	(59)		120		(274)		202
Total	$	98	$	390	$	(208)	$	685

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 June 30,
	2023				2024
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts in the Consolidated Statements of Income	$	74,604	$	65	$	84,742	$	126

Effect of cash flow hedges:
Foreign exchange contracts
Amount reclassified from AOCI to income	$	(2)	$	0	$	106	$	0
Amount excluded from the assessment of effectiveness (amortized)	6		0		(4)		0
Effect of fair value hedges:
Foreign exchange contracts
Hedged items	0		22		0		(9)
Derivatives designated as hedging instruments	0		(22)		0		9
Amount excluded from the assessment of effectiveness	0		5		0		3
Effect of net investment hedges:
Foreign exchange contracts
Amount excluded from the assessment of effectiveness	0		72		0		31
Effect of non designated hedges:
Foreign exchange contracts	0		124		0		(22)
Other contracts	0		(4)		0		26
Total gains (losses)	$	4	$	197	$	102	$	38


	Gains (Losses) Recognized in Income
	Six Months Ended June 30,
	2023				2024
	Revenues		Other income (expense), net		Revenues		Other income (expense), net
Total amounts in the Consolidated Statements of Income	$	144,391	$	855	$	165,281	$	2,969

Effect of cash flow hedges:
Foreign exchange contracts
Amount of gains (losses) reclassified from AOCI to income	$