10-QPeriod: Q2 FY2016

Alphabet Inc. Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 4, 2016For Securities:GOOGLGOOGGOOGMGOOGN

Summary

Alphabet Inc. reported strong financial results for the second quarter of 2016, showcasing robust revenue growth driven primarily by its Google segment. Total revenues reached $21.5 billion, a 21% increase year-over-year, with the Google segment contributing $21.3 billion. The company demonstrated solid operational performance, with income from operations growing to $6.0 billion. The effective tax rate was maintained at 20%, leading to a net income of $4.9 billion, or $7.00 per diluted share for Class A and B stock and Class C capital stock. Alphabet also highlighted significant operational activities, including a substantial increase in headcount to 66,575 and capital expenditures of $2.1 billion. The company maintained a strong liquidity position with $78.5 billion in cash, cash equivalents, and marketable securities as of June 30, 2016. The 'Other Bets' segment continued to show growth, though it remains a smaller contributor to overall revenue, indicating ongoing investment in future growth areas.

Financial Highlights

48 data points
Beta

Revenue

$21.50B

62.2% Gross Margin

Net Income

$4.88B

22.7% Net Margin

EPS (Diluted)

$0.35

Total Assets

$154.29B

Cash & Equivalents

$13.63B

Free Cash Flow

$6.98B

Financial Statements
Beta
Revenue$21.50B
Cost of Revenue$8.13B
Gross Profit$13.37B
R&D Expenses$3.36B
Operating Expenses$15.53B
Operating Income$5.97B
Interest Expense$32.00M
Net Income$4.88B
EPS (Basic)$0.36
EPS (Diluted)$0.35

Key Highlights

  • 1Revenue increased by 21% year-over-year to $21.5 billion for the second quarter of 2016.
  • 2Google segment revenue grew 21% year-over-year to $21.3 billion, representing the vast majority of total revenue.
  • 3Income from operations increased to $6.0 billion, reflecting efficient operational management.
  • 4Net income stood at $4.9 billion, translating to $7.00 in diluted earnings per share.
  • 5Cash, cash equivalents, and marketable securities remained strong at $78.5 billion as of June 30, 2016.
  • 6Headcount grew to 66,575 as of June 30, 2016, indicating expansion and investment in talent.
  • 7Other Bets segment revenues showed significant growth, increasing to $185 million for the quarter, though still a small portion of total revenue.

Frequently Asked Questions

Alphabet reported a strong 21% year-over-year increase in consolidated revenues for the second quarter of 2016, reaching $21.5 billion. The Google segment, which is the primary driver, also saw a 21% increase, contributing $21.3 billion of that total.

The company maintained healthy profitability with an income from operations of $6.0 billion, a 27.8% margin on revenue for the quarter. The effective tax rate was 20%, contributing to a net income of $4.9 billion. Operating expenses, excluding cost of revenues, were $7.4 billion.

Alphabet maintained a very strong financial position, with $78.5 billion in cash, cash equivalents, and marketable securities as of June 30, 2016. The company generated $9.1 billion in operating cash flow during the first six months of 2016, indicating robust cash generation capabilities.

While the core Google segment drives current revenue and profit, Alphabet continues to invest in its 'Other Bets.' Revenues from Other Bets grew significantly year-over-year, reaching $185 million for the quarter, indicating progress in these ventures, even though they represent a small portion of total revenue. The company also increased its headcount to 66,575, suggesting continued investment in talent and operations across its various businesses.