10-QPeriod: Q3 FY2015

Alphabet Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 29, 2015For Securities:GOOGLGOOGGOOGMGOOGN

Summary

Alphabet Inc. (formerly Google Inc.) reported strong financial performance for the third quarter ended September 30, 2015. Total revenues reached $18.7 billion, a 13% year-over-year increase (21% in constant currency), demonstrating robust top-line growth. Net income was $4.0 billion, translating to a diluted EPS of $5.73 for Class A and B common stock and Class C capital stock. The company's balance sheet remains strong, with $72.8 billion in cash, cash equivalents, and marketable securities, indicating significant financial flexibility for future investments, strategic initiatives, and potential capital returns. The company also highlighted an increase in operating expenses, particularly in Research and Development (R&D) and Sales and Marketing, reflecting continued investment in innovation and growth strategies. Notably, headcount also increased to nearly 60,000 employees. The report also provides insight into the significant operational restructuring with the creation of Alphabet Inc., which became effective shortly after the quarter's end, positioning the company for a more focused approach to its diverse businesses.

Financial Highlights

45 data points
Beta

Revenue

$18.68B

62.3% Gross Margin

Net Income

$3.98B

21.3% Net Margin

Total Assets

$144.28B

Cash & Equivalents

$18.07B

Free Cash Flow

$3.76B

Financial Statements
Beta
Revenue$18.68B
Cost of Revenue$7.04B
Gross Profit$11.64B
R&D Expenses$3.23B
Operating Expenses$13.97B
Operating Income$4.71B
Interest Expense$26.00M
Net Income$3.98B

Key Highlights

  • 1Revenue growth of 13% year-over-year to $18.7 billion, with constant currency growth of 21%.
  • 2Net income of $4.0 billion, resulting in diluted EPS of $5.73.
  • 3Strong liquidity position with $72.8 billion in cash, cash equivalents, and marketable securities.
  • 4Increased investment in Research and Development (R&D) with expenses rising to $3.23 billion for the quarter.
  • 5Operating expenses increased, driven by growth in R&D and Sales & Marketing headcount and investments.
  • 6The company announced a significant corporate restructuring, forming Alphabet Inc. as a new holding company.
  • 7Headcount grew to 59,976 employees as of September 30, 2015.

Frequently Asked Questions

Alphabet (formerly Google) reported revenues of $18.7 billion for the third quarter ended September 30, 2015. This represents a 13% increase compared to the same period in the prior year, or 21% growth when measured in constant currency.

Net income for the third quarter of 2015 was $4.0 billion. Diluted earnings per share (EPS) for Class A and B common stock, and Class C capital stock, was $5.73.

Alphabet maintained a very strong liquidity position, with $72.8 billion in cash, cash equivalents, and marketable securities as of September 30, 2015. The company believes its current sources of funding are sufficient to meet its anticipated cash requirements for at least the next 12 months.

Operating expenses increased due to higher costs in Research and Development (R&D), driven by headcount growth and increased facilities and labor costs, as well as higher Sales and Marketing expenses. These reflect the company's continued investment in innovation and expanding its product and service offerings.

The most significant change announced was the formation of Alphabet Inc. as a new public holding company. This reorganization, which became effective shortly after the quarter's close, restructures the company's diverse businesses under the Alphabet umbrella, aiming for greater operational focus and transparency.