Alphabet(GOOGL) - 2025 Q1 - Quarterly Results

Executive Summary & Business Highlights Alphabet reported strong Q1 2025 results with double-digit revenue growth, increased profitability, and strategic AI advancements Q1 2025 Performance Overview Alphabet reported strong Q1 2025 with 12% revenue growth to $90.2 billion, 20% operating income, and 46% net income increase Q1 2025 Financial Highlights (Millions USD) | Metric | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------------- | | Revenues | 80,539 | 90,234 | 12% | | Revenues (Constant Currency) | - | - | 14% | | Operating Income | 25,472 | 30,606 | 20% | | Operating Margin | 32% | 34% | +2 ppts | | Net Income | 23,662 | 34,540 | 46% | | Diluted EPS | 1.89 | 2.81 | 49% | - Consolidated Alphabet revenues increased 12% (14% in constant currency) year-over-year to $90.2 billion, reflecting robust momentum across key segments[5] - Google Services revenues increased 10% to $77.3 billion, while Google Cloud revenues grew 28% to $12.3 billion, led by growth in Google Cloud Platform (GCP) across core products, AI Infrastructure, and Generative AI Solutions[5] - The company announced a 5% increase to the dividend, resulting in a quarterly cash dividend of $0.21[5][9] CEO Commentary & Strategic Focus CEO Sundar Pichai highlighted strong Q1 results, driven by Alphabet's full-stack AI approach, Gemini 2.5 rollout, and rapid Cloud growth - Strong Q1 results reflect healthy growth and momentum across the business, underpinned by Alphabet's unique full-stack approach to AI[2] - Rolled out Gemini 2.5, the most intelligent AI model, achieving breakthroughs in performance and serving as an extraordinary foundation for future innovation[2] - Search saw continued strong growth, boosted by engagement with features like AI Overviews, which now has 1.5 billion users per month[2] - Surpassed 270 million paid subscriptions, driven by YouTube and Google One, and Cloud grew rapidly with significant demand for its solutions[2] Consolidated Financial Statements Alphabet's Q1 2025 financial statements show significant revenue and profit growth, alongside changes in assets, liabilities, and cash flow activities Consolidated Statements of Income Alphabet's Q1 2025 income statement shows significant growth in revenues, operating income, and net income, with total costs increasing and other income rising Consolidated Statements of Income (Millions USD) | Metric | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :------------- | | Revenues | 80,539 | 90,234 | 12.0% | | Cost of revenues | 33,712 | 36,361 | 7.8% | | Research and development | 11,903 | 13,556 | 13.9% | | Sales and marketing | 6,426 | 6,172 | (3.9)% | | General and administrative | 3,026 | 3,539 | 17.0% | | Total costs and expenses | 55,067 | 59,628 | 8.3% | | Income from operations | 25,472 | 30,606 | 20.2% | | Other income (expense), net | 2,843 | 11,183 | 293.3% | | Income before income taxes | 28,315 | 41,789 | 47.6% | | Provision for income taxes | 4,653 | 7,249 | 55.8% | | Net income | 23,662 | 34,540 | 46.0% | | Diluted net income per share | 1.89 | 2.81 | 48.7% | Consolidated Balance Sheets As of March 31, 2025, Alphabet's total assets increased to $475.4 billion, driven by non-marketable securities and property, with liabilities and equity rising Consolidated Balance Sheets (Millions USD) | Metric | Dec 31, 2024 (Millions USD) | Mar 31, 2025 (Millions USD) | QoQ Change (%) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------- | | Total assets | 450,256 | 475,374 | 5.6% | | Total liabilities | 125,172 | 130,107 | 3.9% | | Total stockholders' equity | 325,084 | 345,267 | 6.2% | | Cash and cash equivalents | 23,466 | 23,264 | (0.9)% | | Non-marketable securities | 37,982 | 51,029 | 34.3% | | Property and equipment, net | 171,036 | 185,062 | 8.2% | Consolidated Statements of Cash Flows In Q1 2025, net cash from operations increased to $36.2 billion, with investing activities using $16.2 billion and financing activities using $20.2 billion Consolidated Statements of Cash Flows (Millions USD) | Cash Flow Activity | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (%) | | :------------------------------------ | :--------------------- | :--------------------- | :------------- | | Net cash provided by operating activities | 28,848 | 36,150 | 25.3% | | Net cash used in investing activities | (8,564) | (16,194) | 89.1% | | Net cash used in financing activities | (19,714) | (20,201) | 2.5% | | Net increase (decrease) in cash and cash equivalents | 445 | (202) | (145.4)% | | Cash and cash equivalents at end of period | 24,493 | 23,264 | (5.1)% | - Purchases of property and equipment increased from $12.0 billion in Q1 2024 to $17.2 billion in Q1 2025[28] - Stock repurchases amounted to $15.1 billion in Q1 2025, and dividend payments totaled $2.4 billion[28] Segment Performance Analysis Alphabet's Q1 2025 segment analysis reveals strong growth in Google Services and Cloud, while Other Bets experienced a decline Segment Revenues and Operating Income Google Services revenues grew 10% with 17% operating income increase, Google Cloud revenues rose 28% with operating income more than doubling, and Other Bets declined Segment Revenues and Operating Income (Millions USD) | Segment | Q1 2024 Revenues (Millions USD) | Q1 2025 Revenues (Millions USD) | YoY Revenue Change (%) | Q1 2024 Operating Income (Millions USD) | Q1 2025 Operating Income (Millions USD) | YoY Operating Income Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Google Services | 70,398 | 77,264 | 9.7% | 27,897 | 32,682 | 17.2% | | Google Cloud | 9,574 | 12,260 | 28.0% | 900 | 2,177 | 141.9% | | Other Bets | 495 | 450 | (9.1)% | (1,020) | (1,226) | (20.2)% | | Hedging gains (losses) | 72 | 260 | 261.1% | - | - | - | | Alphabet-level activities | - | - | - | (2,305) | (3,027) | (31.3)% | - Google Search & other revenues increased from $46.2 billion in Q1 2024 to $50.7 billion in Q1 2025, and YouTube ads revenues increased from $8.1 billion to $8.9 billion[6] - Google Cloud's growth was led by Google Cloud Platform (GCP) across core GCP products, AI Infrastructure, and Generative AI Solutions[5] Segment Descriptions and Unallocated Costs The report defines Google Services, Google Cloud, and Other Bets segments, clarifying that certain AI-focused R&D, corporate initiatives, and employee severance costs are unallocated - Google Services includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube, generating revenues primarily from advertising, consumer subscription-based products, app sales, and devices[31] - Google Cloud includes infrastructure and platform services, applications, and other services for enterprise customers, generating revenues primarily from consumption-based fees and subscriptions for Google Cloud Platform services, Google Workspace, and other enterprise services[31] - Other Bets is a combination of multiple operating segments not individually material, with revenues generated primarily from the sale of healthcare-related services and internet services[31] - Alphabet-level activities include unallocated costs such as certain AI-focused shared R&D (including general AI models), corporate initiatives, corporate shared costs (finance, HR, legal), and charges related to employee severance and office space reductions[7][30] Capital Allocation & Other Financial Details Alphabet's capital allocation strategy includes dividend payments, significant stock repurchases, and details on other income components Dividend Program Alphabet paid $2.4 billion in Q1 2025 dividends and declared a 5% increase to $0.21 per share, payable June 16, 2025 - Dividend payments to stockholders of Class A, Class B, and Class C shares totaled $2.4 billion for the three months ended March 31, 2025[8] - Alphabet's Board of Directors declared a quarterly cash dividend of $0.21, representing a 5% increase from the previous $0.20, payable on June 16, 2025, to stockholders of record as of June 9, 2025[9] Stock Repurchases Alphabet's Board authorized an additional $70.0 billion for opportunistic repurchases of Class A and Class C shares - On April 23, 2025, Alphabet's Board of Directors authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares[10] Net Gain on Equity Securities Q1 2025 other income (expense), net, included an $8.0 billion unrealized gain on non-marketable equity securities from a private company investment - Other income (expense), net, of $11.2 billion for Q1 2025 included an $8.0 billion unrealized gain on non-marketable equity securities related to an investment in a private company[11] Other Income (Expense), Net Breakdown The increase in Other income (expense), net, to $11.2 billion in Q1 2025 was primarily driven by a substantial gain on equity securities Other Income (Expense), Net Breakdown (Millions USD) | Component | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (%) | | :-------------------------------------- | :--------------------- | :--------------------- | :------------- | | Interest income | 1,061 | 1,001 | (5.7)% | | Interest expense | (94) | (34) | (63.8)% | | Foreign currency exchange gain (loss), net | (238) | (106) | (55.5)% | | Gain (loss) on debt securities, net | (462) | 202 | 143.7% | | Gain (loss) on equity securities, net | 2,243 | 9,758 | 335.0% | | Performance fees | 104 | (40) | (138.5)% | | Other income (expense), net | 2,843 | 11,183 | 293.3% | - The net effect of the $9.8 billion gain on equity securities and $40 million performance fees increased the provision for income tax by $2.0 billion, net income by $7.7 billion, and diluted net income per share by $0.62[32] Supplemental Operational Data Overview of key operational metrics including total revenues, traffic acquisition costs, and employee count for Q1 2025 Supplemental Operational Data (Millions USD) | Metric | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------------- | | Total revenues | 80,539 | 90,234 | 12.0% | | Total TAC | 12,946 | 13,748 | 6.2% | | Number of employees | 180,895 | 185,719 | 2.7% | Non-GAAP Measures & Geographic Performance This section details Alphabet's use of non-GAAP financial measures and provides a breakdown of revenues by geographic region About Non-GAAP Financial Measures Alphabet uses non-GAAP measures like free cash flow and constant currency revenues to provide insights into core business operating results and facilitate period-to-period comparisons - Non-GAAP financial measures (free cash flow, constant currency revenues) are used for financial and operational decision-making and to evaluate period-to-period comparisons[17] - These measures provide meaningful supplemental information by excluding items that may not be indicative of recurring core business operating results, such as foreign exchange rate movements and hedging activities[17] - Limitations related to the use of non-GAAP financial measures are compensated by providing specific information regarding the GAAP amounts excluded and evaluating these measures together with their relevant GAAP financial measures[18] Free Cash Flow Reconciliation Free cash flow for Q1 2025 was $18.95 billion, calculated as net cash from operations less capital expenditures, with TTM free cash flow at $74.88 billion Free Cash Flow Reconciliation (Millions USD) | Metric | Q1 2025 (Millions USD) | TTM Q1 2025 (Millions USD) | | :------------------------------------ | :--------------------- | :------------------------- | | Net cash provided by operating activities | 36,150 | 132,601 | | Less: purchases of property and equipment | (17,197) | (57,720) | | Free cash flow | 18,953 | 74,881 | - Free cash flow is defined as net cash provided by operating activities less capital expenditures, providing useful information about cash generated for strategic opportunities and balance sheet strengthening[33][34] Constant Currency Revenues Reconciliation Q1 2025 total revenues were $90.2 billion, or $91.6 billion in constant currency, representing a 14% YoY increase and a 6% QoQ decrease Constant Currency Revenues Reconciliation (YoY, Millions USD) | Metric | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (As Reported) | YoY Change (Constant Currency) | | :------------------------------------ | :--------------------- | :--------------------- | :----------------------- | :----------------------------- | | Total revenues | 80,539 | 90,234 | 12% | 14% | Constant Currency Revenues Reconciliation (QoQ, Millions USD) | Metric | Q4 2024 (Millions USD) | Q1 2025 (Millions USD) | QoQ Change (As Reported) | QoQ Change (Constant Currency) | | :------------------------------------ | :--------------------- | :--------------------- | :----------------------- | :----------------------------- | | Total revenues | 96,469 | 90,234 | (6)% | (6)% | - Non-GAAP constant currency revenues facilitate the comparison of current results to historic performance by excluding the effect of foreign exchange rate movements and hedging activities, as they are not indicative of core operating results[37][38] Revenues by Geography All geographic regions showed YoY revenue growth in Q1 2025, with Other Americas leading at 23% constant currency growth, while all regions declined QoQ Revenues by Geography (Millions USD) | Region | Q1 2024 (Millions USD) | Q1 2025 (Millions USD) | YoY Change (As Reported) | YoY Change (Constant Currency) | QoQ Change (As Reported) | QoQ Change (Constant Currency) | | :---------------- | :--------------------- | :--------------------- | :----------------------- | :----------------------------- | :----------------------- | :----------------------------- | | United States | 38,737 | 43,964 | 13% | 13% | (7)% | (7)% | | EMEA | 23,788 | 25,923 | 9% | 12% | (8)% | (6)% | | APAC | 13,289 | 14,854 | 12% | 15% | (2)% | 0% | | Other Americas | 4,653 | 5,233 | 12% | 23% | (9)% | (6)% | Corporate Information This section provides details on accessing earnings information, forward-looking statement disclaimers, and company contact information Webcast and Conference Call Information Information on accessing the Q1 2025 earnings webcast and investor materials is provided, including the investor relations website and social media channels - A live audio webcast of the first quarter 2025 earnings release call is available on YouTube[12] - Announcements regarding financial performance, including SEC filings, investor events, press and earnings releases, and blogs, are available on the investor relations website (http://abc.xyz/investor)[13](index=13&type=chunk) - Google news and product updates are shared on Google's Keyword blog and News From Google page on X, with executive officers also using social media channels to communicate company updates[14] Forward-Looking Statements This press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially; investors should refer to SEC filings for detailed risk factors - This press release may contain forward-looking statements that involve risks and uncertainties, and actual results may differ materially from the results predicted[15] - Potential risks and uncertainties are included under the captions 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in the Annual Report on Form 10-K and Quarterly Report on Form 10-Q[15] Contact Information Contact details for investor relations and media inquiries are provided - Investor relations can be contacted at investor-relations@abc.xyz[20] - Media inquiries can be directed to press@abc.xyz[20]