Alphabet Inc.

07/24/2025 | Press release | Distributed by Public on 07/24/2025 04:01

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Please read the following discussion and analysis of our financial condition and results of operations together with "Note About Forward-Looking Statements" and our consolidated financial statements and related notes included under Item 1 of this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, including Part I, Item 1A "Risk Factors."
Understanding Alphabet's Financial Results
Alphabet is a collection of businesses - the largest of which is Google. We report Google in two segments, Google Services and Google Cloud; we also report all non-Google businesses collectively as Other Bets. For further details on our segments, see Note 15 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Revenues and Monetization Metrics
We generate revenues by delivering relevant, cost-effective online advertising; cloud-based solutions that provide enterprise customers of all sizes with infrastructure, platform services, and applications; sales of other products and services, such as fees received for subscription-based products, apps and in-app purchases, and devices. For additional information on how we recognize revenue, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
In addition to the long-term trends and their financial effect on our business discussed in "Trends in Our Business and Financial Effect" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, fluctuations in our revenues have been and may continue to be affected by a combination of factors, including:
•changes in foreign currency exchange rates;
•changes in pricing, such as those resulting from changes in fee structures, discounts, and customer incentives;
•general economic conditions and various external dynamics, including geopolitical events, regulations, and other measures and their effect on advertiser, consumer, and enterprise spending;
•new product, service, and market launches; and
•seasonality.
Additionally, fluctuations in our revenues generated from advertising ("Google advertising"), other sources ("Google subscriptions, platforms, and devices"), Google Cloud, and Other Bets have been, and may continue to be, affected by other factors unique to each set of revenues, as described below.
Google Services
Google Services revenues consist of Google advertising as well as Google subscriptions, platforms, and devices revenues.
Google Advertising
Google advertising revenues are comprised of the following:
•Google Search & other, which includes revenues generated on Google search properties (including revenues from traffic generated by search distribution partners who use Google.com as their default search in browsers, toolbars, etc.), and other Google owned and operated properties like Gmail, Google Maps, and Google Play;
•YouTube ads, which includes revenues generated on YouTube properties; and
•Google Network, which includes revenues generated on Google Network properties participating in AdMob, AdSense, and Google Ad Manager.
We use certain metrics to track how well traffic across various properties is monetized as it relates to our advertising revenues: paid clicks and cost-per-click pertain to traffic on Google Search & other properties, while impressions and cost-per-impression pertain to traffic on our Google Network properties.
Paid clicks represent engagement by users and include clicks on advertisements by end-users on Google search properties and other Google owned and operated properties including Gmail, Google Maps, and Google Play. Cost-per-click is defined as click-driven revenues divided by our total number of paid clicks and represents the average amount we charge advertisers for each engagement by users.
Impressions include impressions displayed to users on Google Network properties participating primarily in AdMob, AdSense, and Google Ad Manager. Cost-per-impression is defined as impression-based and click-based revenues divided by our total number of impressions, and represents the average amount we charge advertisers for each impression displayed to users.
As our business evolves, we periodically review, refine, and update our methodologies for monitoring, gathering, and counting the number of paid clicks and the number of impressions, and for identifying the revenues generated by the corresponding click and impression activity.
Fluctuations in our advertising revenues, as well as the change in paid clicks and cost-per-click on Google Search & other properties and the change in impressions and cost-per-impression on Google Network properties and the correlation between these items have been, and may continue to be, affected by factors in addition to the general factors described above, such as:
•advertiser competition for keywords;
•changes in advertising quality, formats, delivery, or policy;
•changes in device mix;
•seasonal fluctuations in internet usage, advertising expenditures, and underlying business trends, such as traditional retail seasonality; and
•traffic growth in emerging markets compared to more mature markets and across various verticals and channels.
Google subscriptions, platforms, and devices
Google subscriptions, platforms, and devices revenues are comprised of the following:
•consumer subscriptions, which primarily include revenues from YouTube services, such as YouTube TV, YouTube Music and Premium, and NFL Sunday Ticket, as well as Google One;
•platforms, which primarily include revenues from Google Play sales of apps and in-app purchases;
•devices, which primarily include sales of the Pixel family of devices; and
•other products and services.
Fluctuations in our Google subscriptions, platforms, and devices revenues have been, and may continue to be, affected by factors in addition to the general factors described above, such as changes in customer usage and demand, number of subscribers, and the timing of product launches.
Google Cloud
Google Cloud revenues are comprised of the following:
•Google Cloud Platform, which generates consumption-based fees and subscriptions for infrastructure, platform, and other services. These services provide access to solutions such as AI offerings including our AI infrastructure, Vertex AI platform, and Gemini for Google Cloud: cybersecurity; and data and analytics;
•Google Workspace, which includes subscriptions for cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet, with integrated features like Gemini for Google Workspace; and
•other enterprise services.
Fluctuations in our Google Cloud revenues have been, and may continue to be, affected by factors in addition to the general factors described above, such as changes in customer usage and demand.
Other Bets
Revenues from Other Bets are generated primarily from the sale of autonomous transportation services, healthcare-related services, and internet services.
Costs and Expenses
Our cost structure has two components: cost of revenues and operating expenses. Our operating expenses include costs related to R&D, sales and marketing, and general and administrative functions. Certain of our costs and expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to changes in revenue. Additionally, fluctuations in employee compensation expenses may not directly correlate with changes in headcount due to factors such as annual SBC awards that generally vest over four years.
Cost of Revenues
Cost of revenues is comprised of TAC and other costs of revenues.
•TAC includes:
◦amounts paid to our distribution partners who make available our search access points and services. Our distribution partners include browser providers, mobile carriers, original equipment manufacturers, and software developers; and
◦amounts paid to Google Network partners primarily for ads displayed on their properties.
•Other cost of revenues primarily includes:
◦content acquisition costs, which are payments to content providers from whom we license video and other content for distribution, primarily related to YouTube (we pay fees to these content providers based on revenues generated, subscriber counts, or a flat fee);
◦depreciation expense related to our technical infrastructure;
◦employee compensation expenses related to our technical infrastructure and other operations such as content review and customer and product support;
◦inventory and other costs related to the devices we sell; and
◦other technical infrastructure operations costs, including network capacity, energy, and equipment costs.
TAC as a percentage of revenues generated from ads placed on Google Network properties are significantly higher than TAC as a percentage of revenues generated from ads placed on Google Search & other properties, because most of the advertiser revenues from ads served on Google Network properties are paid as TAC to our Google Network partners.
Operating Expenses
Operating expenses are generally incurred during our normal course of business, which we categorize as either R&D, sales and marketing, or general and administrative.
The main components of our R&D expenses are:
•depreciation;
•employee compensation expenses for engineering and technical employees responsible for R&D related to our existing and new products and services; and
•third-party services fees primarily relating to consulting and outsourced services in support of our engineering and product development efforts.
The main components of our sales and marketing expenses are:
•employee compensation expenses for employees engaged in sales and marketing, sales support, and certain customer service functions; and
•spend relating to our advertising and promotional activities in support of our products and services.
The main components of our general and administrative expenses are:
•employee compensation expenses for employees in finance, human resources, information technology, legal, and other administrative support functions;
•expenses relating to legal and other matters, including certain fines and settlements; and
•third-party services fees, including audit, consulting, outside legal, and other outsourced administrative services.
Other Income (Expense), Net
OI&E, net primarily consists of interest income (expense), the effect of foreign currency exchange gains (losses), net gains (losses) and impairment on our marketable and non-marketable securities, performance fees, and income (loss) and impairment from our equity method investments.
For additional information, including how we account for our investments and factors that can drive fluctuations in the value of our investments, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 and Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as well as Note 3 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Provision for Income Taxes
Provision for income taxes represents the estimated amount of federal, state, and foreign income taxes incurred in the U.S. and the many jurisdictions in which we operate. The provision includes the effect of reserve provisions and changes to reserves that are considered appropriate as well as the related net interest and penalties.
For additional information, see Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as well as Note 14 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Executive Overview
The following table summarizes consolidated financial results (in millions, except per share information and percentages):
Three Months Ended
June 30,
2024 2025 $ Change % Change
Consolidated revenues $ 84,742 $ 96,428 $ 11,686 14 %
Change in consolidated constant currency revenues(1)
13 %
Cost of revenues $ 35,507 $ 39,039 $ 3,532 10 %
Operating expenses $ 21,810 $ 26,118 $ 4,308 20 %
Operating income $ 27,425 $ 31,271 $ 3,846 14 %
Operating margin 32 % 32 % 0 %
Other income (expense), net $ 126 $ 2,662 $ 2,536 2,013 %
Net income
$ 23,619 $ 28,196 $ 4,577 19 %
Diluted EPS (2)
$ 1.89 $ 2.31 $ 0.42 22 %
(1)See "Use of Non-GAAP Constant Currency Information" below for details relating to our use of constant currency information.
(2) For additional information on the calculation of diluted EPS, see Note 12 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Revenues were $96.4 billion, an increase of 14% year over year, primarily driven by an increase in Google Services revenues of $8.6 billion, or 12%, and an increase in Google Cloud revenues of $3.3 billion, or 32%.
•Total constant currency revenues, which exclude the effect of hedging,increased 13% year over year.
•Costof revenues was $39.0 billion, an increase of 10% year over year, primarily driven by increases in TAC, content acquisition costs, and depreciation expense.
•Operating expenses were $26.1 billion, an increase of 20% year over year, primarily driven by increases in expenses related to legal and other matters, employee compensation expenses, and depreciation expense.
Other Information:
•General and administrative expenses of $5.2 billion for the three months ended June 30, 2025 included a $1.4 billioncharge in our Google Services segment related to a settlement in principle of certain legal matters.
•In May 2025, Alphabet issued fixed-rate senior unsecured notes for net proceeds of $12.5 billion to be used for general corporate purposes. For additional information, see Note 6 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Repurchases of Class A and Class C shares were $2.5 billion and $10.7 billion, respectively, totaling $13.3 billion for the three months ended June 30, 2025. For additional information, see Note 11 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
•Operating cash flow was $27.7 billion for the three months ended June 30, 2025.
•Capital expenditures, which primarily reflected investments in technical infrastructure, were $22.4 billion for the three months ended June 30, 2025.
•As of June 30, 2025, we had 187,103 employees.
We are monitoring ongoing developments surrounding international trade and the macroeconomic environment. As a result of volatility in international trade and financial markets, we may experience direct and indirect effects on our business, operations, and financial results. Our past results may not be indicative of our future performance, and our financial results may differ materially from historical trends.
On July 4, 2025 the OBBBA was signed into law. We are assessing the legislation and its effects on our business, operations, and financial results, including the potential effects on our effective tax rate.
Financial Results
Revenues
The following table presents revenues by type (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Google Search & other $ 48,509 $ 54,190 $ 94,665 $ 104,892
YouTube ads 8,663 9,796 16,753 18,723
Google Network 7,444 7,354 14,857 14,610
Google advertising 64,616 71,340 126,275 138,225
Google subscriptions, platforms, and devices
9,312 11,203 18,051 21,582
Google Services total 73,928 82,543 144,326 159,807
Google Cloud 10,347 13,624 19,921 25,884
Other Bets 365 373 860 823
Hedging gains (losses) 102 (112) 174 148
Total revenues $ 84,742 $ 96,428 $ 165,281 $ 186,662
Google Services
Google advertising revenues
Google Search & other
Google Search & other revenues increased $5.7 billion and $10.2 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025. The overall growth was driven by interrelated factors including increases in search queries resulting from growth in user adoption and usage on mobile devices; growth in advertiser spending; and improvements we have made in ad formats and delivery.
YouTube ads
YouTube ads revenues increased $1.1 billion and $2.0 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025. The growth was driven by our direct response advertising products followed by our brand advertising products, both of which benefited from increased spending by our advertisers.
Google Network
Google Network revenues decreased $90 million from the three months ended June 30, 2024 to the three months ended June 30, 2025, primarily due to a decrease in AdSense and Google Ad Manager revenues, partially offset by an increase in AdMob revenues.
Google Network revenues decreased $247 million from the six months ended June 30, 2024 to the six months ended June 30, 2025, primarily due to a decrease in Google Ad Manager revenues and the unfavorable effect of foreign currency exchange rates. These decreases were partially offset by an increase in AdSense revenues.
Monetization Metrics
The following table presents changes in monetization metrics for Google Search & other revenues (paid clicks and cost-per-click) and Google Network revenues (impressions and cost-per-impression), expressed as a percentage, from three and six months ended June 30, 2024 to three and six months ended June 30, 2025:
Three Months Ended Six Months Ended
June 30, 2025 June 30, 2025
Google Search & other
Paid clicks change 4 % 3 %
Cost-per-click change 8 % 8 %
Google Network
Impressions change (6) % (5) %
Cost-per-impression change 6 % 5 %
Changes in paid clicks and impressions are driven by a number of interrelated factors, including changes in advertiser spending; ongoing product and policy changes; and, as it relates to paid clicks, fluctuations in search queries resulting from changes in user adoption and usage, primarily on mobile devices.
Changes in cost-per-click and cost-per-impression are driven by a number of interrelated factors including changes in device mix, geographic mix, advertiser spending, ongoing product and policy changes, product mix, property mix, and changes in foreign currency exchange rates.
Google subscriptions, platforms, and devices
Google subscriptions, platforms, and devices revenuesincreased $1.9 billion and $3.5 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025. The growth was primarily driven by an increase in subscription revenues. This increase was primarily due to the contribution from growth in paid subscriptions across both YouTube services and Google One.
Google Cloud
Google Cloud revenues increased $3.3 billion and $6.0 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025 primarily driven by growth in Google Cloud Platform largely from infrastructure services.
Revenues by Geography
The following table presents revenues by geography as a percentage of revenues, determined based on the addresses of our customers:
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
United States 49 % 48 % 48 % 48 %
EMEA 29 % 29 % 29 % 29 %
APAC 16 % 17 % 17 % 17 %
Other Americas 6 % 6 % 6 % 6 %
Hedging gains (losses) 0 % 0 % 0 % 0 %
For additional information, see Note 2 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Use of Non-GAAP Constant Currency Information
International revenues, which represent a significant portion of our revenues, are generally transacted in multiple currencies and therefore are affected by fluctuations in foreign currency exchange rates.
The effect of currency exchange rates on our business is an important factor in understanding period-to-period comparisons. We use non-GAAP constant currency revenues ("constant currency revenues") and non-GAAP percentage change in constant currency revenues ("percentage change in constant currency revenues") for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe the presentation of results on a constant currency basis in addition to GAAP results helps improve the ability to understand our performance, because it excludes the effects of foreign currency volatility that are not indicative of our core operating results.
Constant currency information compares results between periods as if exchange rates had remained constant period over period. We define constant currency revenues as revenues excluding the effect of foreign currency exchange rate movements ("FX Effect") as well as hedging activities, which are recognized at the consolidated level. We use constant currency revenues to determine the constant currency revenue percentage change on a year-on-year basis. Constant currency revenues are calculated by translating current period revenues using prior year comparable period exchange rates, as well as excluding any hedging effects realized in the current period.
Constant currency revenue percentage change is calculated by determining the change in current period revenues over prior year comparable period revenues where current period foreign currency revenues are translated using prior year comparable period exchange rates and hedging effects are excluded from revenues of both periods.
These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP.
The following table presents the foreign currency exchange effect on international revenues and total revenues (in millions, except percentages):
Three Months Ended June 30, 2025
% Change from Prior Period
Three Months Ended June 30, Less FX Effect Constant Currency Revenues As Reported Less Hedging Effect Less FX Effect Constant Currency Revenues
2024 2025
United States $ 41,196 $ 46,063 $ 0 $ 46,063 12 % 0 % 12 %
EMEA 24,683 28,262 780 27,482 14 % 3 % 11 %
APAC 13,823 16,480 115 16,365 19 % 1 % 18 %
Other Americas 4,938 5,735 (352) 6,087 16 % (7) % 23 %
Revenues, excluding hedging effect
84,640 96,540 543 95,997 14 % 1 % 13 %
Hedging gains (losses) 102 (112)
Total revenues(1)
$ 84,742 $ 96,428 $ 95,997 14 % 0 % 1 % 13 %
(1)Total constant currency revenues of $96.0 billion for the three months ended June 30, 2025 increased $11.4 billion compared to $84.6 billion in revenues, excluding hedging effect, for the three months ended June 30, 2024.
EMEA revenue growth was favorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar weakening relative to the euro and British pound.
APAC revenue growth was favorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar weakening relative to the Japanese yen, partially offset by the U.S. dollar strengthening relative to the South Korean won and Australian dollar.
Other Americas revenue growth was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Brazilian real and Mexican peso.
Six Months Ended June 30, 2025
% Change from Prior Period
Six months ended
June 30, 		Less FX Effect Constant Currency Revenues As Reported Less Hedging Effect Less FX Effect Constant Currency Revenues
2024 2025
United States $ 79,933 $ 90,027 $ 0 $ 90,027 13 % 0 % 13 %
EMEA 48,471 54,185 56 54,129 12 % 0 % 12 %
APAC 27,112 31,334 (266) 31,600 16 % (1) % 17 %
Other Americas 9,591 10,968 (852) 11,820 14 % (9) % 23 %
Revenues, excluding hedging effect
165,107 186,514 (1,062) 187,576 13 % (1) % 14 %
Hedging gains (losses) 174 148
Total revenues(1)
$ 165,281 $ 186,662 $ 187,576 13 % 0 % (1) % 14 %
(1)Total constant currency revenues of $187.6 billion for the six months ended June 30, 2025 increased $22.5 billion compared to $165.1 billionin revenues, excluding hedging effect, for the six months ended June 30, 2024.
EMEA revenue growth was not materially affected by changes in foreign currency exchange rates, as the effect of the U.S. dollar weakening relative to the British pound was largely offset by the U.S. dollar strengthening relative to the Turkish lira.
APAC revenue growth was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Australian dollar, South Korean won, and Indian rupee.
Other Americas revenue growth was unfavorably affected by changes in foreign currency exchange rates, primarily due to the U.S. dollar strengthening relative to the Brazilian real and Mexican peso.
Costs and Expenses
Cost of Revenues
The following table presents cost of revenues, including TAC (in millions, except percentages):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
TAC $ 13,387 $ 14,705 $ 26,333 $ 28,453
Other cost of revenues 22,120 24,334 42,886 46,947
Total cost of revenues $ 35,507 $ 39,039 $ 69,219 $ 75,400
Total cost of revenues as a percentage of revenues 42 % 41 % 42 % 40 %
Cost of revenues increased $3.5 billion from the three months ended June 30, 2024 to the three months ended June 30, 2025 due to an increase in other cost of revenues and TAC of $2.2 billion and $1.3 billion, respectively. Cost of revenues increased $6.2 billion from the six months ended June 30, 2024 to the six months ended June 30, 2025 due to an increase in other cost of revenues and TAC of $4.1 billion and $2.1 billion, respectively.
The increase in TAC from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025 was largely due to an increase in TAC paid to distribution partners, primarily driven by growth in revenues subject to TAC. The TAC rate decreased from 20.7% to 20.6% from the three months ended June 30, 2024 to the three months ended June 30, 2025 and decreased from 20.9% to 20.6% from the six months ended June 30, 2024 to the six months ended June 30, 2025, primarily due to a revenue mix shift from Google Network properties to Google Search & other properties partially offset by an increase in the Google Search & other TAC rate. The TAC rate on Google Search & other revenues increased from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025 primarily due to increases related to mobile searches. The TAC rate on Google Network revenues was substantially consistent from the three months ended June 30, 2024 to the three months ended June 30, 2025 and decreased from the six months ended June 30, 2024 to the six months ended June 30, 2025 due to a combination of factors, none of which were individually significant.
The increase in other cost of revenues from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025 was primarily due to increases in content acquisition costs, largely for YouTube, depreciation expense, and certain app and platform distribution costs.
Research and Development
The following table presents R&D expenses (in millions, except percentages):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Research and development expenses $ 11,860 $ 13,808 $ 23,763 $ 27,364
Research and development expenses as a percentage of revenues 14 % 14 % 14 % 15 %
R&D expenses increased $1.9 billion and $3.6 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025, primarily driven by increases in employee compensation expenses of $851 million and $1.5 billion as well as depreciation expense of $575 million and $1.1 billion, respectively.
Sales and Marketing
The following table presents sales and marketing expenses (in millions, except percentages):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Sales and marketing expenses $ 6,792 $ 7,101 $ 13,218 $ 13,273
Sales and marketing expenses as a percentage of revenues 8 % 7 % 8 % 7 %
Sales and marketing expenses increased $309 million from the three months ended June 30, 2024 to the three months ended June 30, 2025, primarily driven by an increase in advertising and promotional activities of $305 million.
Sales and marketing expenses increased $55 million from the six months ended June 30, 2024 to the six months ended June 30, 2025, primarily driven by an increase in advertising and promotional activities of $361 million, partially offset by a decrease in employee compensation expenses of $314 million.
General and Administrative
The following table presents general and administrative expenses (in millions, except percentages):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
General and administrative expenses $ 3,158 $ 5,209 $ 6,184 $ 8,748
General and administrative expenses as a percentage of revenues 4 % 5 % 4 % 5 %
General and administrative expenses increased $2.1 billion and $2.6 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025, primarily driven by an increase in expenses related to legal and other matters of $2.3 billion and $2.6 billion, respectively, largely due to a settlement in principle of certain legal matters.
Segment Profitability
We report our segment results as Google Services, Google Cloud, and Other Bets. Additionally, certain costs are not allocated to our segments because they represent Alphabet-level activities. For further details on our segments, Note 15 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
The following table presents segment operating income (loss) (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Operating income (loss):
Google Services $ 29,674 $ 33,063 $ 57,571 $ 65,745
Google Cloud 1,172 2,826 2,072 5,003
Other Bets (1,134) (1,246) (2,154) (2,472)
Alphabet-level activities(1)
(2,287) (3,372) (4,592) (6,399)
Total income from operations $ 27,425 $ 31,271 $ 52,897 $ 61,877
(1)In addition tothe costs included in Alphabet-level activities, hedging gains (losses) related to revenue were $102 million and $(112) million for the three months ended June 30, 2024 and 2025, respectively, and $174 million and $148 million for the six months ended June 30, 2024 and 2025, respectively. Alphabet-level activities include charges related to employee severance and office space charges.
Google Services
Google Services operating income increased $3.4 billion from the three months ended June 30, 2024 to the three months ended June 30, 2025. The increase in operating income was primarily driven by an increase in revenues, partially offset by increases in expenses related to legal and other matters, TAC, and content acquisition costs.
Google Services operating income increased $8.2 billion from the six months ended June 30, 2024 to the six months ended June 30, 2025. The increase in operating income was primarily driven by an increase in revenues, partially offset by increases in TAC and content acquisition costs.
Google Cloud
Google Cloud operating income increased $1.7 billion and $2.9 billion from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025, respectively. The increase in operating income was primarily driven by an increase in revenues, partially offset by increases in usage costs for technical infrastructure and employee compensation expenses.
Other Bets
Other Bets operating loss increased $112 million and $318 million from the three and six months ended June 30, 2024 to the three and six months ended June 30, 2025, respectively. The increase in operating loss was due to a combination of factors, none of which were individually significant.
Other Income (Expense), Net
The following table presents OI&E (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Interest income $ 1,090 $ 1,050 $ 2,151 $ 2,051
Interest expense (67) (261) (161) (295)
Foreign currency exchange gain (loss), net (173) (69) (411) (175)
Gain (loss) on debt securities, net (310) 165 (772) 367
Gain (loss) on equity securities, net (714) 1,286 1,529 11,044
Performance fees 128 (83) 232 (123)
Income (loss) and impairment from equity method investments, net 32 419 6 397
Other 140 155 395 579
Other income (expense), net $ 126 $ 2,662 $ 2,969 $ 13,845
OI&E, net increased $2.5 billion from the three months ended June 30, 2024 to the three months ended June 30, 2025 primarily due to an increase in net gains on equity and debt securities. The increase was primarily due to an increase in net unrealized gains on equity securities resulting from market-driven changes and fair value adjustments related to observable transactions, and increased net gains on debt securities due to lower market interest rates.
OI&E, net increased $10.9 billion from the six months ended June 30, 2024 to the six months ended June 30, 2025. The increase was primarily due to an increase in net unrealized gains on equity securities resulting from fair value adjustments related to observable transactions and market-driven changes.
For additional information, see Note 3 and Note 7 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Provision for Income Taxes
The following table presents provision for income taxes (in millions, except effective tax rate):
Three Months Ended Six Months Ended
June 30, June 30,
2024 2025 2024 2025
Income before provision for income taxes $ 27,551 $ 33,933 $ 55,866 $ 75,722
Provision for income taxes $ 3,932 $ 5,737 $ 8,585 $ 12,986
Effective tax rate 14.3 % 16.9 % 15.4 % 17.1 %
The effective tax rate increased from the three months ended June 30, 2024 to the three months ended June 30, 2025. This increase was primarily due to a decrease in SBC-related tax benefits, and a non-deductible legal settlement in the U.S., partially offset by changes in prior period tax positions.
The effective tax rate increased from the six months ended June 30, 2024 to the six months ended June 30, 2025. This increase was primarily due to a decrease in SBC-related tax benefits, lower effective tax rate impacts in the U.S. federal Foreign Derived Intangible Income tax deduction, and a non-deductible legal settlement in the U.S., partially offset by changes in prior period tax positions.
On July 4, 2025, the OBBBA was signed into law. This legislation includes changes to U.S. federal tax law, which may be subject to further clarification and the issuance of interpretive guidance. We are assessing the legislation and its effect on our consolidated financial statements, which we expect to begin reflecting in the three month period ended September 30, 2025.
The Organization for Economic Cooperation and Development is coordinating negotiations among more than 140 countries with the goal of achieving consensus around substantial changes to international tax policies,
including the implementation of a minimum global effective tax rate of 15%. Some countries have already implemented the legislation effective January 1, 2024, and we expect others to follow, however this did not have a material effect on our income tax provision for the period ending June 30, 2025.
Financial Condition
Cash, Cash Equivalents, and Marketable Securities
As of June 30, 2025, we had $95.1 billion in cash, cash equivalents, and short-term marketable securities. Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities, and marketable equity securities.
Sources, Uses of Cash and Related Trends
Our principal sources of liquidity are cash, cash equivalents, and marketable securities, as well as the cash flow that we generate from operations. The primary use of capital continues to be to invest for the long-term growth of the business. We regularly evaluate our cash and capital structure, including the size, pace, and form of capital return to stockholders.
The following table presents cash flows (in millions):
Six Months Ended
June 30,
2024 2025
Net cash provided by operating activities $ 55,488 $ 63,897
Net cash used in investing activities $ (11,345) $ (40,738)
Net cash used in financing activities $ (40,603) $ (26,033)
Cash Provided by Operating Activities
Our largest source of cash provided by operations are advertising revenues generated by Google Search & other properties, Google Network properties, and YouTube properties. In Google Services, we also generate cash through consumer subscriptions, the sale of apps and in-app purchases, and devices. In Google Cloud, we generate cash through consumption-based fees and subscriptions for infrastructure, platform, applications, and other cloud services.
Our primary uses of cash from operating activities include payments to distribution and Google Network partners, to employees for compensation, and to content providers. Other uses of cash from operating activities include payments to suppliers for devices, to tax authorities for income taxes, and other general corporate expenditures.
Net cash provided by operating activities increasedfrom the six months ended June 30, 2024 to the six months ended June 30, 2025 due to an increase in cash received from customers, partially offset by an increase in cash payments for cost of revenues and operating expenses and an increase in income tax payments.
Cash Used in Investing Activities
Cash provided by investing activities consists primarily of maturities and sales of investments in marketable and non-marketable securities. Cash used in investing activities consists primarily of purchases of marketable and non-marketable securities, purchases of property and equipment, and payments for acquisitions.
Net cash used in investing activities increasedfrom the six months ended June 30, 2024 to the six months ended June 30, 2025 primarily due to a decrease in maturities and sales of marketable securities and an increase in purchases of property and equipment primarily driven by investments in technical infrastructure.
Cash Used in Financing Activities
Cash provided by financing activities consists primarily of proceeds from issuance of debt and proceeds from the sale of interests in consolidated entities. Cash used in financing activities consists primarily of repurchases of stock, net payments related to stock-based award activities, payment of dividends, and repayments of debt.
Net cash used in financing activities decreased from the six months ended June 30, 2024 to the six months ended June 30, 2025due to an increase in proceeds from issuance of debt, net of repayments.
Liquidity and Material Cash Requirements
We expect existing cash, cash equivalents, short-term marketable securities, and cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months, and thereafter for the foreseeable future.
Capital Expenditures and Leases
We make investments in land, buildings, and servers and network equipment through purchases of property and equipment and lease arrangements to provide capacity for the growth of our services and products.
Capital Expenditures
Our capital investments in property and equipment consist primarily of the following major categories:
•technical infrastructure, which consists of our investments in servers and network equipment for computing, storage, and networking requirements for ongoing business activities, including AI, and data center land and building construction; and
•office facilities, ground-up development projects, and building improvements (also referred to as "fit-outs").
Assets not yet in service are those that are not ready for our intended use, including assets in the process of construction or assembly, and consists primarily of technical infrastructure. The time frame from date of purchase to placement in service of these assets may extend from months to years. For example, our data center construction projects are generally multi-year projects with multiple phases, where we acquire land and buildings, construct buildings, and secure and install servers and network equipment.
During the six months ended June 30, 2024 and 2025, we spent $25.2 billion and $39.6 billion on capital expenditures, respectively. We expect to increase, relative to 2024, our investment in our technical infrastructure, including servers, network equipment, and data centers, to support the growth of our business and our long-term initiatives, in particular in support of AI products and services. Depreciation of our property and equipment commences when such assets are ready for our intended use. For the six months ended June 30, 2024 and 2025, depreciation on property and equipment was $7.1 billion and $9.5 billion, respectively.
Leases
As of June 30, 2025, the amount of total future lease payments under operating and finance leases was $17.4 billion and $2.6 billion, respectively.
As of June 30, 2025, we have entered into leases primarily related to data centers that have not yet commenced with future lease payments of $23.9 billion. These leases will commence between 2025 and 2031 with non-cancelable lease terms between one and 25 years.
For additional information on leases, see Note 4 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Financing
We have a short-term debt financing program of up to $25.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. As of June 30, 2025, we had $3.0 billion of short-term commercial paper outstanding.
In May 2025, we issued $5.0 billion of U.S. dollar-denominated fixed-rate senior unsecured notes in four tranches: $750 million of 4.00% notes due 2030, $1.25 billion of 4.50% notes due 2035, $1.5 billion of 5.25% notes due 2055, and $1.5 billion of 5.30% notes due 2065. Additionally in May 2025, we issued €6.75 billion of euro-denominated fixed-rate senior unsecured notes in five tranches: €1.5 billion of 2.50% notes due 2029, €1.5 billion of 3.00% notes due 2033, €1.25 billion of 3.38% notes due 2037, €1.25 billion of 3.88% notes due 2045, and €1.25 billion of 4.00% notes due 2054. The net proceeds from all notes issued in May 2025 are used for general corporate purposes.
As of June 30, 2025, we had senior unsecured notes outstanding with a total carrying value of $24.6 billion.
As of June 30, 2025, we had $10.0 billionof revolving credit facilities, $4.0 billion expiring in April 2026 and $6.0 billionexpiring in April 2030. The interest rates for all credit facilities are determined based on a formula using certain market rates.No amounts have been borrowed under the credit facilities.
For additional information, see Note 6 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
We primarily utilize contract manufacturers for the assembly of our servers used in our technical infrastructure and devices we sell. We have agreements where we may purchase components directly from suppliers and then supply these components to contract manufacturers for use in the assembly of the servers and devices. Certain of these arrangements result in a portion of the cash received from and paid to the contract manufacturers to be presented as financing activities in the Consolidated Statements of Cash Flows included in Item 1 of this Quarterly Report on Form 10-Q.
Share Repurchase Program
During the three and six months ended June 30, 2025, we repurchased and subsequently retired 81 million and 164 million shares for $13.3 billion and $28.6 billion, respectively.
In April 2024, the Board of Directors of Alphabet authorized the company to repurchase up to $70.0 billion of its Class A and Class C shares. In April 2025, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $70.0 billion of Class A and Class C shares. As of June 30, 2025, $86.3 billionremained available for Class A and Class C share repurchases.
The following table presents Class A and Class C shares repurchased and subsequently retired (in millions):
Three Months Ended Six Months Ended
June 30, 2025 June 30, 2025
Shares Amount Shares Amount
Class A share repurchases 16 $ 2,537 31 $ 5,303
Class C share repurchases 65 10,726 133 23,261
Total share repurchases(1)
81 $ 13,263 164 $ 28,564
(1)Shares repurchased include unsettled repurchases.
For additional information, see Note 11 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Dividend Program
In the three and six months ended June 30, 2025, total cash dividends were $1.2 billion and $2.4 billion for Class A, $178 million and $350 million for Class B, and $1.1 billion and $2.2 billion for Class C shares, respectively.
In April 2025, the Board of Directors of Alphabet increased the quarterly cash dividend by 5% to $0.21 per share of outstanding Class A, Class B, and Class C shares.
The company intends to pay quarterly cash dividends in the future, subject to review and approval by the company's Board of Directors in its sole discretion.
European Commission Fines
In 2018 and 2019, the EC announced decisions that certain actions taken by Google infringed European competition law and imposed fines of €4.3 billion ($5.1 billion as of June 30, 2018) and €1.5 billion ($1.7 billion as of March 20, 2019), respectively.
In September 2022, the General Court affirmed the EC decision but reduced the 2018 fine from €4.3 billionto €4.1 billion. We subsequently appealed the General Court's affirmation of the EC decision with the European Court of Justice, which remains pending.
In September 2024, the EU's General Court overturned the 2019 decision and annulled the €1.5 billionfine. The EC has appealed the General Court's decision to the European Court of Justice.
We included the outstanding EC fines, including any under appeal, in accrued expenses and other current liabilities on our Consolidated Balance Sheets. For additional information, see Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Taxes
As of June 30, 2025, we had long-term income taxes payable of $10.0 billion primarily related to uncertain tax positions.
Purchase Commitments and Other Contractual Obligations
As of June 30, 2025, we had material purchase commitments and other contractual obligations of $72.5 billion, of which $51.0 billion was short-term. These amounts primarily consist of purchase orders for certain technical infrastructure as well as the non-cancelable portion or the minimum cancellation fee in certain agreements relatedto commitments to purchase licenses, including content licenses, inventory, and network capacity. For those agreements with variable terms, we do not estimate the non-cancelable obligation beyond any minimum quantities and/or pricing as of June 30, 2025. In certain instances, the amount of our contractual obligations may change based on the expected timing of order fulfillment from our suppliers. For more information related to our content licenses, see Note 10 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
In addition, we regularly enter into multi-year, non-cancellable agreements to purchase renewable energy and energy attributes, such as renewable energy certificates. These agreements do not include a minimum dollar commitment. The amounts to be paid under these agreements are based on the actual volumes to be generated and are not readily determinable.
We may experience increases in the costs associated with our purchase commitments and other contractual obligations as a result of ongoing developments surrounding international trade. For details on risks related to our manufacturing and supply chain and other risks, refer to Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ending December 31, 2024.
Pending Acquisition
In March 2025, we entered into a definitive agreement to acquire Wiz, a leading cloud security platform, for $32.0 billion, subject to closing adjustments, in an all-cash transaction. The acquisition of Wiz is expected to close in 2026, subject to customary closing conditions, including the receipt of regulatory approvals. For additional information, see Note 8 of the Notes to Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
See Part II, Item 7, "Critical Accounting Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Available Information
Our website is located at www.abc.xyz, and our investor relations website is located at www.abc.xyz/investor. Access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our Proxy Statements, and any amendments to these reports, is available on our investor relations website, free of charge, after we file or furnish them with the SEC and they are available on the SEC's website at www.sec.gov.
We webcast via our investor relations YouTube channel and website our earnings calls and certain events we participate in or host with members of the investment community. Our investor relations website also provides notifications of news or announcements regarding our financial performance and other items that may be material or of interest to our investors, including SEC filings, investor events, press and earnings releases, and blogs. We also share Google news and product updates on Google's Keyword blog at https://www.blog.google/ and News From Google page on X at x.com/NewsFromGoogle, and our executive officers may also use certain social media channels, such as X and LinkedIn, to communicate information about earnings results and company updates, which may be of interest or material to our investors. Further, corporate governance information, including our certificate of incorporation, bylaws, governance guidelines, board committee charters, and code of conduct, is also available on our investor relations website under the heading "Governance." The information contained on, or that may be accessed through our websites or our executive officers' social media channels, is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
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