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Exhibit
Exhibit 99.1

Alphabet Announces First Quarter 2017 Results
MOUNTAIN VIEW, Calif. – April 27, 2017 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2017.
"Our excellent results represent a terrific start to 2017, with revenues up 22% versus the first quarter of 2016 and 24% on a constant currency basis. We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet," said Ruth Porat, CFO of Alphabet.
Q1 2017 financial highlights
The following summarizes our consolidated financial results for the quarters ended March 31, 2016 and 2017 (in millions, except for per share information, effective tax rate, and headcount; unaudited):
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2017
Revenues

$20,257

 

$24,750

Increase in revenues year over year
17
%
 
22
%
Increase in constant currency revenues year over year
23
%
 
24
%
 
 
 
 
Operating income

$5,342

 

$6,568

Operating margin
26
%
 
27
%
 
 
 
 
Net income

$4,207

 

$5,426

Diluted EPS

$6.02

 

$7.73

Diluted shares (in thousands)
699,311

 
702,036

 
 
 
 
Effective tax rate (ETR)
18
%
 
20
%
Headcount
64,115

 
73,992

Q1 2017 supplemental information
Segment revenues and operating results (in millions; unaudited):
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2017
Google properties revenues

$14,328

 

$17,403

Google Network Members' properties revenues
3,692

 
4,008
Google advertising revenues
18,020

 
21,411
Google other revenues
2,072

 
3,095
Google segment revenues

$20,092

 

$24,506

Other Bets revenues

$165

 

$244

 
 
 
 
Google operating income

$6,245

 

$7,598

Other Bets operating loss

($774
)
 

($855
)



Traffic acquisition costs (TAC) to Google Network Members and distribution partners (in millions; unaudited):
 
Three Months Ended March 31, 2016
 
Three Months Ended March 31, 2017
TAC to Google Network Members

$2,571

 

$2,824

TAC to Google Network Members as % of Google Network Members' properties revenues
70
%
 
70
%
TAC to distribution partners

$1,217

 

$1,805

TAC to distribution partners as % of Google properties revenues
8
%
 
10
%
Total TAC

$3,788

 

$4,629

Total TAC as % of Google advertising revenues
21
%
 
22
%
Paid clicks and cost-per-click information (unaudited):
 
Change from Q1 2016 to Q1 2017 (YoY)
 
Change from Q4 2016 to Q1 2017 (QoQ)
Aggregate paid clicks
44
 %
 
2
 %
Paid clicks on Google properties
53
 %
 
1
 %
Paid clicks on Google Network Members' properties
10
 %
 
6
 %
 
 
 
 
Aggregate cost-per-click
(19
)%
 
(4
)%
Cost-per-click on Google properties
(21
)%
 
(3
)%
Cost-per-click on Google Network Members' properties
(17
)%
 
(9
)%
In the first quarter of 2017, we refined our methodology for paid clicks and cost-per-click to include additional categories of TrueView engagement ads and exclude non-engagement based trial ad formats. This change resulted in a modest increase in paid clicks and a modest decrease in cost-per-click. For comparison purposes, we have included updated data for historical periods. Please see the table captioned “Monetization metrics” included at the end of this release.
Webcast and conference call information
A live audio webcast of our first quarter 2017 earnings release call will be available at http://abc.xyz/investor. 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 on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://abc.xyz/investor).
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, 2016, which is on file with the SEC and is 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 March 31, 2017.  All information provided in this release and in the attachments is as of April 27, 2017, and 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, non-GAAP constant currency revenues, and non-GAAP 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. Our management believes 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 impact for foreign currency fluctuations. 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.
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
investor-relations@abc.xyz
Media
press@abc.xyz



Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts which are reflected in thousands and par value per share amounts)
 
December 31, 2016
 
March 31, 2017
 
 
 
(unaudited)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
12,918

 
$
18,132

Marketable securities
73,415

 
74,307

Total cash, cash equivalents, and marketable securities
86,333

 
92,439

Accounts receivable, net of allowance of $467 and $489
14,137

 
12,913

Income taxes receivable, net
95

 
56

Inventory
268

 
280

Prepaid revenue share, expenses and other assets
4,575

 
3,106

Total current assets
105,408

 
108,794

Prepaid revenue share, expenses and other assets, non-current
1,819

 
1,846

Non-marketable investments
5,878

 
6,131

Deferred income taxes
383

 
365

Property and equipment, net
34,234

 
35,936

Intangible assets, net
3,307

 
3,137

Goodwill
16,468

 
16,547

Total assets
$
167,497

 
$
172,756

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
2,041

 
$
2,306

Accrued compensation and benefits
3,976

 
2,673

Accrued expenses and other current liabilities
6,144

 
5,438

Accrued revenue share
2,942

 
2,888

Deferred revenue
1,099

 
1,148

Income taxes payable, net
554

 
803

Total current liabilities
16,756

 
15,256

Long-term debt
3,935

 
3,937

Deferred revenue, non-current
202

 
323

Income taxes payable, non-current
4,677

 
4,924

Deferred income taxes
226

 
604

Other long-term liabilities
2,665

 
2,763

Total liabilities
28,461

 
27,807

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding
0

 
0

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); 691,293 (Class A 296,992, Class B 47,437, Class C 346,864) and 692,108 (Class A 297,600, Class B 47,164, Class C 347,344) shares issued and outstanding
36,307

 
37,698

Accumulated other comprehensive loss
(2,402
)
 
(2,169
)
Retained earnings
105,131

 
109,420

Total stockholders’ equity
139,036

 
144,949

Total liabilities and stockholders’ equity
$
167,497

 
$
172,756





Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts; unaudited)
 
Three Months Ended
 
March 31,
 
2016
 
2017
Revenues
$
20,257

 
$
24,750

Costs and expenses:
 
 
 
Cost of revenues
7,648

 
9,795

Research and development
3,367

 
3,942

Sales and marketing
2,387

 
2,644

General and administrative
1,513

 
1,801

Total costs and expenses
14,915

 
18,182

Income from operations
5,342

 
6,568

Other income (expense), net
(213
)
 
251

Income before income taxes
5,129

 
6,819

Provision for income taxes
922

 
1,393

Net income
$
4,207

 
$
5,426

 
 
 
 
Basic net income per share of Class A and B common stock and Class C capital stock
$
6.12

 
$
7.85

Diluted net income per share of Class A and B common stock and Class C capital stock
$
6.02

 
$
7.73





Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions; unaudited)
 
Three Months Ended
 
March 31,
 
2016
 
2017
Operating activities
 
 
 
Net income
$
4,207

 
$
5,426

Adjustments:
 
 
 
Depreciation and impairment of property and equipment
1,155

 
1,287

Amortization and impairment of intangible assets
216

 
216

Stock-based compensation expense
1,494

 
2,009

Deferred income taxes
414

 
613

Loss on marketable and non-marketable investments, net
280

 
68

Other
64

 
8

Changes in assets and liabilities, net of effects of acquisitions:
 
 
 
Accounts receivable
818

 
1,267

Income taxes, net
271

 
510

Prepaid revenue share, expenses and other assets
185

 
(128
)
Accounts payable
(269
)
 
103

Accrued expenses and other liabilities
(1,064
)
 
(1,868
)
Accrued revenue share
(131
)
 
(74
)
Deferred revenue
18

 
111

Net cash provided by operating activities
7,658

 
9,548

Investing activities
 
 
 
Purchases of property and equipment
(2,444
)
 
(2,508
)
Proceeds from disposals of property and equipment
16

 
41

Purchases of marketable securities
(20,748
)
 
(20,119
)
Maturities and sales of marketable securities
17,443

 
19,362

Purchases of non-marketable investments
(363
)
 
(354
)
Maturities and sales of non-marketable investments
42

 
78

Cash collateral related to securities lending
(257
)
 
0

Investments in reverse repurchase agreements
100

 
0

Acquisitions, net of cash acquired, and purchases of intangible assets
(34
)
 
(101
)
Proceeds from collection of notes receivable
0

 
750

Net cash used in investing activities
(6,245
)
 
(2,851
)
Financing activities
 
 
 
Net payments related to stock-based award activities
(807
)
 
(1,009
)
Repurchases of capital stock
(2,098
)
 
(1,127
)
Proceeds from issuance of debt, net of costs
3,956

 
0

Repayments of debt
(3,962
)
 
(18
)
Proceeds from sale of subsidiary shares
0

 
480

Net cash used in financing activities
(2,911
)
 
(1,674
)
Effect of exchange rate changes on cash and cash equivalents
60

 
191

Net increase (decrease) in cash and cash equivalents
(1,438
)
 
5,214

Cash and cash equivalents at beginning of period
16,549

 
12,918

Cash and cash equivalents at end of period
$
15,111

 
$
18,132





Reconciliation from net cash provided by operating activities to free cash flow (in millions, unaudited):
We continue to 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.
 
Three Months Ended March 31, 2017
Net cash provided by operating activities
$
9,548

Less: purchases of property and equipment
(2,508
)
Free cash flow
$
7,040

Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures. There is a limitation to using free cash flow to evaluate Alphabet rather than the GAAP measure of net cash provided by operating activities because free cash flow adjusts for the cash used for capital expenditures during the period and as such, it does not represent the total increase or decrease in the cash balance from operations for the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Alphabet has computed free cash flow using the same consistent method from quarter to quarter and year to year.




Reconciliation from GAAP revenues to non-GAAP constant currency revenues (in millions, unaudited):
We continue to provide non-GAAP constant currency revenues and growth because they facilitate the comparison of current results to historic performance by excluding the effects of foreign currency movements, which are not indicative of our core operating results.
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2017
 
YoY
(using Q1'16 FX rates)
 
QoQ
(using Q4'16's FX rates)
EMEA revenues (GAAP)(1)
$
8,091

 
$
8,091

Exclude foreign exchange impact on Q1'17 revenues using Q1'16 rates
444

 
N/A

Exclude foreign exchange impact on Q1'17 revenues using Q4'16 rates
N/A

 
177

Exclude hedging impact recognized in Q1'17
(158
)
 
(158
)
EMEA constant currency revenues (non-GAAP)(1)
$
8,377

 
$
8,110

Prior period EMEA revenues, excluding hedging impact (non-GAAP)
$
7,011

 
$
8,111

EMEA revenue growth (GAAP)
13
%
 
(2
)%
EMEA constant currency revenue growth (non-GAAP)
19
%
 
0
 %
 
 
 
 
APAC revenues (GAAP)
$
3,619

 
$
3,619

Exclude foreign exchange impact on Q1'17 revenues using Q1'16 rates
(63
)
 
N/A

Exclude foreign exchange impact on Q1'17 revenues using Q4'16 rates
N/A

 
138

Exclude hedging impact recognized in Q1'17
(59
)
 
(59
)
APAC constant currency revenues (non-GAAP)
$
3,497

 
$
3,698

Prior period APAC revenues, excluding hedging impact (non-GAAP)
$
2,772

 
$
3,608

APAC revenue growth (GAAP)
29
%
 
0
 %
APAC constant currency revenue growth (non-GAAP)
26
%
 
2
 %
 
 
 
 
Other Americas revenues (GAAP)
$
1,271

 
$
1,271

Exclude foreign exchange impact on Q1'17 revenues using Q1'16 rates
(77
)
 
N/A

Exclude foreign exchange impact on Q1'17 revenues using Q4'16 rates
N/A

 
(9
)
Exclude hedging impact recognized in Q1'17
0

 
0

Other Americas constant currency revenues (non-GAAP)
$
1,194

 
$
1,262

Prior period Other Americas revenues, excluding hedging impact (non-GAAP)
$
924

 
$
1,442

Other Americas revenue growth (GAAP)
34
%
 
(12
)%
Other Americas constant currency revenue growth (non-GAAP)
29
%
 
(12
)%
 
 
 
 
United States revenues (GAAP)
$
11,769

 
$
11,769

United States revenue growth
25
%
 
(7
)%
 
 
 
 
Revenues (GAAP)
$
24,750

 
$
24,750

Constant currency revenues (non-GAAP)
$
24,837

 
$
24,839

Prior period revenues, excluding hedging impact (non-GAAP)
$
20,088

 
$
25,877

Revenue growth (GAAP)
22
%
 
(5
)%
Constant currency revenue growth (non-GAAP)
24
%
 
(4
)%
(1) 
On a year-over-year basis, United Kingdom (UK) constant currency revenues were $2,186 million, calculated as GAAP revenues of $2,025 million less negative foreign exchange impact of $252 million and hedging gain of $91 million. On a quarter-over-quarter basis, UK constant currency revenues were $1,948 million, calculated as GAAP revenues of $2,025 million less negative foreign exchange impact of $14 million and hedging gain of $91 million. UK constant currency growth was 16% on a year-over-year basis and 1% on a quarter-over-quarter basis.
Non-GAAP constant currency revenues and growth: We define non-GAAP constant currency revenues as total revenues excluding the impact of foreign exchange rate movements and hedging activities, and we use it to determine the constant currency revenue growth on year-on-year and quarter-on-quarter bases. Non-GAAP constant currency revenues are calculated by translating current quarter revenues using prior period exchange rates and excluding any hedging impact recognized in the current quarter. Constant currency revenue growth (expressed as a percentage) is calculated by determining the increase in current quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging impact recognized in the prior period.




Other income (expense), net
The following table presents our other income (expense), net, (in millions, unaudited):
 
Three Months Ended
 
March 31,
 
2016
 
2017
Interest income
$
270

 
$
312

Interest expense
(30
)
 
(25
)
Foreign currency exchange losses, net
(186
)
 
(2
)
Loss on marketable securities, net
(167
)
 
(22
)
Loss on non-marketable investments, net
(113
)
 
(46
)
Other
13

 
34

Other income (expense), net
$
(213
)
 
$
251





Segment results
The following table presents our revenues, operating income (loss), stock-based compensation, capital expenditures, and depreciation, amortization, and impairment by segment (in millions, unaudited):
 
Three Months Ended
 
March 31,
 
2016
 
2017
Revenues:
 
 
 
Google
$
20,092

 
$
24,506

Other Bets
165

 
244

Total revenues
$
20,257

 
$
24,750

 
 
 
 
Operating income (loss):
 
 
 
Google
$
6,245

 
$
7,598

Other Bets
(774
)
 
(855
)
Reconciling items(1)
(129
)
 
(175
)
Total income from operations
$
5,342

 
$
6,568

 
 
 
 
Stock-based compensation(2):
 
 
 
Google
$
1,323

 
$
1,854

Other Bets
138

 
114

Reconciling items(1)
33

 
41

Total stock-based compensation
$
1,494

 
$
2,009

 
 
 
 
Capital expenditures:
 
 
 
Google
$
2,039

 
$
2,406

Other Bets
277

 
170

Reconciling items(3)
128

 
(68
)
Total capital expenditures
$
2,444

 
$
2,508

 
 
 
 
Depreciation, amortization, and impairment:
 
 
 
Google
$
1,317

 
$
1,396

Other Bets
54

 
107

Total depreciation, amortization, and impairment
$
1,371

 
$
1,503

(1) 
Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments.
(2) 
For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock.
(3) 
Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flows are on cash basis and other miscellaneous differences.




Revenues by geography
The following table presents our revenues by geography, based on the billing addresses of our customers (in millions, unaudited):
 
Three Months Ended
 
 
 
Mar 31, 2016
 
Jun 30, 2016
 
Sep 30, 2016
 
Dec 31, 2016
 
Mar 31, 2017
United States
$
9,381

 
$
10,035

 
$
10,649

 
$
12,716

 
$
11,769

EMEA
7,130

 
7,485

 
7,392

 
8,297

 
8,091

APAC
2,799

 
2,904

 
3,248

 
3,608

 
3,619

Other Americas
947

 
1,076

 
1,162

 
1,443

 
1,271

Total revenues
$
20,257

 
$
21,500

 
$
22,451

 
$
26,064

 
$
24,750

 
 
 
 
 
 
 
 
 
 
Supplemental information:
 
 
 
 
 
 
 
 
 
United Kingdom (included in EMEA)
$
1,921

 
$
1,914

 
$
1,890

 
$
2,062

 
$
2,025






Monetization metrics
The following table presents our revised paid clicks and cost-per-click information based on the refined methodology (unaudited):
 
Three Months Ended
 
Mar 31, 2016
 
Jun 30, 2016
 
Sep 30, 2016
 
Dec 31, 2016
Year-over-year change
 
 
 
 
 
 
 
Aggregate paid clicks
29
 %
 
28
 %
 
32
 %
 
39
 %
Paid clicks on Google properties
38
 %
 
36
 %
 
41
 %
 
47
 %
Paid clicks on Google Network Members' properties
2
 %
 
0
 %
 
1
 %
 
7
 %
 
 
 
 
 
 
 
 
Aggregate cost-per-click
(8
)%
 
(6
)%
 
(10
)%
 
(17
)%
Cost-per-click on Google properties
(11
)%
 
(8
)%
 
(12
)%
 
(18
)%
Cost-per-click on Google Network Members' properties
(8
)%
 
(8
)%
 
(14
)%
 
(19
)%
 
 
 
 
 
 
 
 
Quarter-over-quarter change
 
 
 
 
 
 
 
Aggregate paid clicks
(2
)%
 
7
 %
 
9
 %
 
22
 %
Paid clicks on Google properties
(3
)%
 
9
 %
 
11
 %
 
25
 %
Paid clicks on Google Network Members' properties
4
 %
 
(3
)%
 
1
 %
 
6
 %
 
 
 
 
 
 
 
 
Aggregate cost-per-click
(1
)%
 
(1
)%
 
(5
)%
 
(10
)%
Cost-per-click on Google properties
1
 %
 
(2
)%
 
(6
)%
 
(12
)%
Cost-per-click on Google Network Members' properties
(12
)%
 
(2
)%
 
(6
)%
 
0
 %


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