Exhibit 99.1
Alphabet Announces Third Quarter 2020 Results
MOUNTAIN VIEW, Calif. – October 29, 2020 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2020.
“We had a strong quarter, consistent with the broader online environment,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google. “It’s also a testament to the deep investments we’ve made in AI and other technologies, to deliver services that people turn to for help, in moments big and small.”
“Total revenues of $46.2 billion in the third quarter reflect broad based growth led by an increase in advertiser spend in Search and YouTube as well as continued strength in Google Cloud and Play,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “We remain focused on making the right investments to support long term sustainable value.”
Q3 2020 financial highlights
The following table summarizes our consolidated financial results for the quarters ended September 30, 2019 and 2020 (in millions, except for per share information and percentages; unaudited).
Quarter Ended September 30,
20192020
Revenues$40,499 $46,173 
Increase in revenues year over year20 %14 %
Increase in constant currency revenues year over year(1)
22 %15 %
Operating income$9,177 $11,213 
Operating margin23 %24 %
Other income (expense), net
($549)$2,146 
Net income$7,068 $11,247 
Diluted EPS$10.12 $16.40 
(1)    Non-GAAP measure. See the table captioned “Reconciliation from GAAP revenues to non-GAAP constant currency revenues” for more details.



Q3 2020 supplemental information (in millions, except for number of employees; unaudited)
Revenues, Traffic Acquisition Costs (TAC) and number of employees
The following table summarizes our revenues, total TAC and number of employees.
Quarter Ended September 30,
20192020
Google Search & other$24,741 $26,338 
YouTube ads(1)
3,804 5,037 
Google properties28,545 31,375 
Google Network Members' properties5,251 5,720 
Google advertising33,796 37,095 
Google Cloud2,379 3,444 
Google other(1)
4,050 5,478 
Google revenues40,225 46,017 
Other Bets revenues155 178 
Hedging gains (losses)119 (22)
Total revenues$40,499 $46,173 
Total TAC$7,490 $8,166 
Number of employees114,096 132,121 
(1)     YouTube non-advertising revenues are included in Google other revenues.
Segment operating results
Quarter Ended September 30,
20192020
Google operating income$10,746 $12,589 
Other Bets operating loss($941)($1,103)
Webcast and conference call information
A live audio webcast of our third quarter 2020 earnings release call will be available on YouTube at https://youtu.be/_EFJ_2QuRk4. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available at http://abc.xyz/investor.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
We also share Google news and product updates on Google’s Keyword blog at https://www.blog.google/, which may be of interest or material to our investors.
Forward-looking statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019, and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 which are on file with the SEC and are available on our investor relations website at http://abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. All information provided in this release and in the attachments is as of October 29, 2020. Undue reliance should not be placed on the forward-looking statements in
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this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: free cash flow; constant currency revenues; and percentage change in constant currency revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the effect of foreign exchange rate movements and hedging activities. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation from net cash provided by operating activities to free cash flow” and “Reconciliation from GAAP revenues to non-GAAP constant currency revenues” included at the end of this release.
Contact
Investor relations
Media
investor-relations@abc.xyzpress@abc.xyz

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Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts which are reflected in thousands and par value per share amounts)
As of December 31,As of
September 30,
20192020
(unaudited)
Assets
Current assets:
Cash and cash equivalents$18,498 $20,129 
Marketable securities101,177 112,467 
Total cash, cash equivalents, and marketable securities119,675 132,596 
Accounts receivable, net25,326 24,925 
Income taxes receivable, net2,166 588 
Inventory999 835 
Other current assets4,412 5,425 
Total current assets152,578 164,369 
Non-marketable investments13,078 14,656 
Deferred income taxes721 972 
Property and equipment, net73,646 81,636 
Operating lease assets10,941 11,946 
Intangible assets, net1,979 1,520 
Goodwill20,624 20,870 
Other non-current assets2,342 3,274 
Total assets$275,909 $299,243 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5,561 $4,391 
Accrued compensation and benefits8,495 8,747 
Accrued expenses and other current liabilities23,067 25,631 
Accrued revenue share5,916 6,030 
Deferred revenue1,908 2,302 
Income taxes payable, net274 1,099 
Total current liabilities45,221 48,200 
Long-term debt4,554 13,902 
Deferred revenue, non-current358 454 
Income taxes payable, non-current9,885 8,616 
Deferred income taxes1,701 1,973 
Operating lease liabilities10,214 10,984 
Other long-term liabilities2,534 2,194 
Total liabilities74,467 86,323 
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding
Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 688,335 (Class A 299,828, Class B 46,441, Class C 342,066) and 677,724 (Class A 300,641, Class B 45,915, Class C 331,168) shares issued and outstanding
50,552 57,307 
Accumulated other comprehensive income (loss)(1,232)46 
Retained earnings152,122 155,567 
Total stockholders’ equity201,442 212,920 
Total liabilities and stockholders’ equity$275,909 $299,243 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except share amounts which are reflected in thousands and per share amounts; unaudited)
Quarter Ended September 30,Year to Date September 30,
2019202020192020
Revenues$40,499 $46,173 $115,782 $125,629 
Costs and expenses:
Cost of revenues17,568 21,117 50,876 58,652 
Research and development6,554 6,856 18,796 20,551 
Sales and marketing4,609 4,231 12,726 12,632 
General and administrative2,591 2,756 6,722 8,221 
European Commission fines1,697 
Total costs and expenses31,322 34,960 90,817 100,056 
Income from operations9,177 11,213 24,965 25,573 
Other income (expense), net(549)2,146 3,956 3,820 
Income before income taxes 8,628 13,359 28,921 29,393 
Provision for income taxes1,560 2,112 5,249 4,351 
Net income$7,068 $11,247 $23,672 $25,042 
Basic earnings per share of Class A and B common stock and Class C capital stock$10.20 $16.55 $34.12 $36.69 
Diluted earnings per share of Class A and B common stock and Class C capital stock$10.12 $16.40 $33.83 $36.38 
Number of shares used in basic earnings per share calculation692,741 679,449 693,860 682,561 
Number of shares used in diluted earnings per share calculation698,199 685,851 699,677 688,381 

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Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions; unaudited)
Quarter Ended September 30,Year to Date September 30,
2019202020192020
Operating activities
Net income$7,068 $11,247 $23,672 $25,042 
Adjustments:
Depreciation and impairment of property and equipment2,732 3,289 7,774 9,366 
Amortization and impairment of intangible assets188 189 594 606 
Stock-based compensation expense2,624 3,195 8,149 9,768 
Deferred income taxes(239)136 381 (280)
(Gain) loss on debt and equity securities, net1,479 (2,015)(2,399)(3,055)
Other(71)206 (119)875 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable(1)(3,601)25 (1,079)
Income taxes, net185 (69)210 469 
Other assets(611)(233)(787)(592)
Accounts payable57 420 (386)(269)
Accrued expenses and other liabilities1,853 2,990 2,927 891 
Accrued revenue share261 969 201 277 
Deferred revenue(59)280 (149)428 
Net cash provided by operating activities15,466 17,003 40,093 42,447 
Investing activities
Purchases of property and equipment(6,732)(5,406)(17,496)(16,802)
Purchases of marketable securities(36,244)(40,821)(80,968)(104,932)
Maturities and sales of marketable securities34,091 31,877 74,783 97,751 
Purchases of non-marketable investments(404)(553)(1,499)(1,864)
Maturities and sales of non-marketable investments91 125 297 598 
Acquisitions, net of cash acquired, and purchases of intangible assets(126)(13)(373)(368)
Other investing activities379 (406)468 125 
Net cash used in investing activities(8,945)(15,197)(24,788)(25,492)
Financing activities
Net payments related to stock-based award activities(1,131)(1,357)(3,566)(4,073)
Repurchases of capital stock(5,696)(7,897)(12,298)(23,245)
Proceeds from issuance of debt, net of costs9,863 317 11,761 
Repayments of debt(145)(61)(538)(2,043)
Proceeds from sale of interest in consolidated entities, net18 (2)202 2,462 
Net cash provided by (used in) financing activities(6,954)546 (15,883)(15,138)
Effect of exchange rate changes on cash and cash equivalents(122)35 (91)(186)
Net increase (decrease) in cash and cash equivalents(555)2,387 (669)1,631 
Cash and cash equivalents at beginning of period16,587 17,742 16,701 18,498 
Cash and cash equivalents at end of period$16,032 $20,129 $16,032 $20,129 

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Reconciliation from net cash provided by operating activities to free cash flow (in millions; unaudited):
We provide free cash flow because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet.
Quarter Ended
September 30, 2020
Net cash provided by operating activities$17,003 
Less: purchases of property and equipment(5,406)
Free cash flow$11,597 
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
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Reconciliation from GAAP revenues to non-GAAP constant currency revenues (in millions, except percentages; unaudited):
We provide non-GAAP constant currency revenues and the non-GAAP percentage change in constant currency revenues because they facilitate the comparison of current results to historic performance by excluding the effect of foreign exchange rate movements and hedging activities, which are not indicative of our core operating results.
Quarter Ended September 30, 2020
YoY
(using Q3'19's FX rates)
QoQ
(using Q2'20's FX rates)
EMEA revenues (GAAP)$13,924 $13,924 
Exclude foreign exchange effect on Q3'20 revenues using Q3'19 rates(250)N/A
Exclude foreign exchange effect on Q3'20 revenues using Q2'20 ratesN/A(605)
EMEA constant currency revenues (non-GAAP)$13,674 $13,319 
Prior period EMEA revenues (GAAP)$12,565 $11,363 
EMEA revenue percentage change (GAAP)11 %23 %
EMEA constant currency revenue percentage change (non-GAAP)%17 %
APAC revenues (GAAP)$8,458 $8,458 
Exclude foreign exchange effect on Q3'20 revenues using Q3'19 ratesN/A
Exclude foreign exchange effect on Q3'20 revenues using Q2'20 ratesN/A(180)
APAC constant currency revenues (non-GAAP)$8,459 $8,278 
Prior period APAC revenues (GAAP)$6,814 $6,945 
APAC revenue percentage change (GAAP)24 %22 %
APAC constant currency revenue percentage change (non-GAAP)24 %19 %
Other Americas revenues (GAAP)$2,371 $2,371 
Exclude foreign exchange effect on Q3'20 revenues using Q3'19 rates304 N/A
Exclude foreign exchange effect on Q3'20 revenues using Q2'20 ratesN/A(35)
Other Americas constant currency revenues (non-GAAP)$2,675 $2,336 
Prior period Other Americas revenues (GAAP)$2,290 $1,839 
Other Americas revenue percentage change (GAAP)%29 %
Other Americas constant currency revenue percentage change (non-GAAP)17 %27 %
United States revenues (GAAP)$21,442 $21,442 
United States revenue percentage change (GAAP)15 %19 %
Hedging gains (losses)$(22)$(22)
Revenues (GAAP)$46,173 $46,173 
Constant currency revenues (non-GAAP)$46,250 $45,375 
Prior period revenues, excluding hedging effect (non-GAAP)(1)
$40,380 $38,146 
Revenue percentage change (GAAP)14 %21 %
Constant currency revenue percentage change (non-GAAP)15 %19 %
(1)    Total revenues and hedging gains (losses) for the quarter ended September 30, 2019 were $40,499 million and $119 million, respectively. Total revenues and hedging gains (losses) for the quarter ended June 30, 2020 were $38,297 million and $151 million, respectively.
Non-GAAP constant currency revenues and percentage change: We define non-GAAP constant currency revenues as total revenues excluding the effect of foreign exchange rate movements and hedging activities, and we use it to determine the constant currency revenue percentage change on year-on-year and quarter-on-quarter basis. Non-GAAP constant currency revenues are calculated by translating current quarter revenues using prior period exchange rates and excluding any hedging effect recognized in the current quarter. Constant currency revenue percentage change is calculated by determining the increase in current quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging effect recognized in the prior period.
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Other income (expense), net
The following table presents our other income (expense), net (in millions; unaudited):
 Quarter Ended
September 30,
20192020
Interest income$631 $460 
Interest expense(23)(48)
Foreign currency exchange gain (loss), net41 (84)
Gain (loss) on debt securities, net49 116 
Gain (loss) on equity securities, net(1)(2)
(1,528)1,899 
Performance fees227 (135)
Income (loss) and impairment from equity method investments, net(14)26 
Other68 (88)
Other income (expense), net$(549)$2,146 
(1)Includes unrealized losses on equity investments that we hold. Fluctuations in the value of our investments could significantly contribute to the volatility of OI&E in future periods.
(2)All gains and losses, unrealized and realized, on equity security investments are recognized in OI&E. For Q3 2020, the net effect of the gain on equity securities of $1,899 million and the performance fees of $135 million increased the provision for income tax, net income, and diluted EPS by $370 million, $1,394 million, and $2.03, respectively.
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Segment results
The following table presents our revenues, operating income (loss), stock-based compensation (SBC), capital expenditures, and depreciation, amortization, and impairment by segment (in millions; unaudited):
 Quarter Ended
September 30,
20192020
Revenues:
Google(1)
$40,225 $46,017 
Other Bets155 178 
Hedging gains (losses)(1)
119 (22)
Total revenues$40,499 $46,173 
Operating income (loss):
Google(1)
$10,746 $12,589 
Other Bets(941)(1,103)
Reconciling items(1)(2)
(628)(273)
Total income from operations$9,177 $11,213 
Stock-based compensation(3):
Google$2,470 $2,921 
Other Bets117 130 
Reconciling items(4)
34 66 
Total stock-based compensation$2,621 $3,117 
Capital expenditures:
Google$7,228 $5,465 
Other Bets71 120 
Reconciling items(5)
(567)(179)
Total capital expenditures$6,732 $5,406 
Depreciation, amortization, and impairment:
Google$2,837 $3,383 
Other Bets83 95 
Total depreciation, amortization, and impairment$2,920 $3,478 
(1)Hedging gains (losses), which were previously included in Google revenues, are presented separately.
(2)Reconciling items are generally comprised of corporate administrative costs, hedging gains (losses) and other miscellaneous items that are not allocated to individual segments. Reconciling items for the quarter ended September 30, 2019 include a $554 million charge from a legal settlement.
(3)For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock.
(4)Reconciling items are primarily related to corporate administrative and other costs that are not allocated to individual segments.
(5)Reconciling items are related to timing differences of payments, as segment capital expenditures are on an accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flows are on a cash basis, and other miscellaneous differences.
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