Q3 2019 GOOG 8-K
Alphabet Announces Third Quarter 2019 Results
MOUNTAIN VIEW, Calif. ? October 28, 2019 ? Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2019.
"I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud," said Sundar Pichai, Chief Executive Officer of Google. "We're focused on providing the most helpful services to our users and partners, and we see many opportunities ahead."
"Our businesses delivered another quarter of strong performance, with revenues of $40.5 billion, up 20% versus the third quarter of 2018 and up 22% on a constant currency basis," said Ruth Porat, Chief Financial Officer of Alphabet and Google. "We continue to invest thoughtfully in talent and infrastructure to support our growth, particularly in newer areas like Cloud and machine learning."
Q3 2019 financial highlights
The following table summarizes our consolidated financial results for the quarters ended September 30, 2018 and 2019 (in millions, except for per share information, percentages, and number of employees; unaudited):
Revenues Increase in revenues year over year Increase in constant currency revenues year over year
Three Months Ended September 30, 2018
$33,740
21%
22%
Three Months Ended September 30, 2019
$40,499
20%
22%
Operating income(1) Operating margin(1)
$8,625 26%
$9,177 23%
Other income (expense), net(1)
$1,458
($549)
Net income Diluted EPS Diluted shares (in thousands)
$9,192 $13.06 703,859
$7,068 $10.12 698,199
Effective tax rate Number of employees
9% 94,372
18% 114,096
(1)
Q3 2018 results have been recast to reflect the reclassification of performance fees from general and administrative
expenses to other income (expense), net (OI&E) to conform to the current period presentation.
Q3 2019 supplemental information (in millions, except for percentages; unaudited)
Segment revenues and operating results
Google properties revenues Google Network Members' properties revenues Google advertising revenues Google other revenues Google segment revenues Other Bets revenues
Three Months Ended September 30, 2018
$24,054 4,900
28,954 4,640
$33,594 $146
Three Months Ended September 30, 2019
$28,647 5,269
33,916 6,428
$40,344 $155
Google operating income Other Bets operating loss
$9,490 ($727)
$10,865 ($941)
Traffic acquisition costs (TAC) to Google Network Members and distribution partners
TAC to Google Network Members
TAC to Google Network Members as % of Google Network Members' properties revenues
TAC to distribution partners
TAC to distribution partners as % of Google properties revenues
Total TAC Total TAC as % of Google advertising revenues
Three Months Ended September 30, 2018
$3,427
Three Months Ended September 30, 2019
$3,634
70% $3,155
69% $3,856
13% $6,582
23%
13% $7,490
22%
Monetization metrics information
Paid clicks on Google properties Cost-per-click on Google properties
Change from Q3 2018 Change from Q2 2019
to Q3 2019 (YoY)
to Q3 2019 (QoQ)
18 %
1%
(2)%
3%
Impressions on Google Network Members' properties
12 %
0%
Cost-per-impression on Google Network Members' properties
(3)%
0%
Webcast and conference call information
A live audio webcast of our third quarter 2019 earnings release call will be available at . The call begins today at 2:00 PM (PT) / 5:00 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available on that site.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website ().
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, 2018, as amended, and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 which are on file with the SEC and are available on our investor relations website at investor and on the SEC website at . Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019. All information provided in this release and in the attachments is as of October 28, 2019. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: free cash flow; constant currency revenues; and constant currency revenue growth. 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
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measures in assessing our performance and when planning, forecasting, and analyzing future periods. These nonGAAP 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.xyz press@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)
Assets Current assets:
Cash and cash equivalents Marketable securities Total cash, cash equivalents, and marketable securities Accounts receivable, net of allowance of $729 and $643 Income taxes receivable, net Inventory Other current assets
Total current assets Non-marketable investments Deferred income taxes Property and equipment, net Operating lease assets Intangible assets, net Goodwill Other non-current assets
Total assets Liabilities and Stockholders' Equity Current liabilities:
Accounts payable Accrued compensation and benefits Accrued expenses and other current liabilities Accrued revenue share Deferred revenue Income taxes payable, net
Total current liabilities Long-term debt Deferred revenue, non-current Income taxes payable, non-current Deferred income taxes Operating lease liabilities Other long-term liabilities
Total liabilities 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); 695,556 (Class A 299,242, Class B 46,636, Class C 349,678) and 690,906 (Class A 299,624, Class B 46,508, Class C 344,774) shares issued and outstanding Accumulated other comprehensive loss Retained earnings
Total stockholders' equity Total liabilities and stockholders' equity
December 31, 2018
September 30, 2019
(unaudited)
$
16,701 $
16,032
92,439
105,145
109,140
121,177
20,838
20,889
355
192
1,107
1,401
4,236
4,699
135,676
148,358
13,859
12,488
737
564
59,719
69,252
0
10,341
2,220
1,747
17,888
18,069
2,693
2,225
$
232,792 $
263,044
$
4,378 $
4,142
6,839
7,399
16,958
21,038
4,592
4,835
1,784
1,679
69
131
34,620
39,224
4,012
4,082
396
364
11,327
11,355
1,264
1,747
0
9,666
3,545
1,637
55,164
68,075
0
0
45,049
49,040
(2,306)
(1,196)
134,885
147,125
177,628
194,969
$
232,792 $
263,044
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Alphabet Inc. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts; unaudited)
Revenues Costs and expenses:
Cost of revenues Research and development Sales and marketing General and administrative European Commission fines Total costs and expenses Income from operations Other income (expense), net Income before income taxes Provision for income taxes Net income
Three Months Ended
September 30,
2018
2019
$ 33,740 $ 40,499 $
Nine Months Ended
September 30,
2018
2019
97,543 $ 115,782
14,281
17,568
41,631
50,876
5,232
6,554
15,385
18,796
3,849
4,609
11,233
12,726
1,753
2,591
4,920
6,722
0
0
5,071
1,697
25,115
31,322
78,240
90,817
8,625
9,177
19,303
24,965
1,458
(549)
5,538
3,956
10,083
8,628
24,841
28,921
891
1,560
3,053
5,249
$
9,192 $
7,068 $ 21,788 $ 23,672
Basic earnings per share of Class A and B common stock and
Class C capital stock
$
Diluted earnings per share of Class A and B common stock and
Class C capital stock
$
13.21 $ 13.06 $
10.20 $ 10.12 $
31.34 $ 30.95 $
34.12 33.83
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