10-QPeriod: Q1 FY2017

Alphabet Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 2, 2017For Securities:GOOGLGOOGGOOGMGOOGN

Summary

Alphabet Inc. reported strong financial performance for the first quarter of 2017, with total revenues reaching $24.75 billion, a 22% increase year-over-year. This growth was primarily driven by the Google segment, which saw a 22% increase in revenues to $24.5 billion, fueled by continued strength in advertising across Google properties and growing contributions from Google Cloud and hardware. Net income for the quarter was $5.43 billion, translating to a diluted earnings per share of $7.73, up significantly from $4.21 billion or $6.02 per share in the prior year's comparable period. The company maintained a healthy operating income of $6.57 billion. Alphabet also demonstrated robust operational cash flow of $9.55 billion, while capital expenditures remained manageable at $2.51 billion, indicating strong financial health and operational efficiency. The company ended the quarter with a substantial cash and marketable securities balance of $92.44 billion.

Financial Highlights

48 data points
Beta

Revenue

$24.75B

60.4% Gross Margin

Net Income

$5.43B

21.9% Net Margin

EPS (Diluted)

$0.39

Total Assets

$172.76B

Cash & Equivalents

$18.13B

Free Cash Flow

$7.04B

Financial Statements
Beta
Revenue$24.75B
Cost of Revenue$9.79B
Gross Profit$14.96B
R&D Expenses$3.94B
Operating Expenses$18.18B
Operating Income$6.57B
Interest Expense$25.00M
Net Income$5.43B
EPS (Basic)$0.39
EPS (Diluted)$0.39

Key Highlights

  • 1Total revenues grew 22% year-over-year to $24.75 billion.
  • 2Google segment revenues increased 22% year-over-year to $24.51 billion, driven by strong advertising performance and growth in Google other revenues.
  • 3Net income rose to $5.43 billion from $4.21 billion in the prior year's quarter.
  • 4Diluted earnings per share increased to $7.73 from $6.02 year-over-year.
  • 5Operating income grew to $6.57 billion from $5.34 billion in the prior year's quarter.
  • 6Cash and cash equivalents and marketable securities totaled $92.44 billion as of March 31, 2017.
  • 7Operating cash flow was $9.55 billion for the quarter.

Frequently Asked Questions

The primary driver of Alphabet's revenue growth in Q1 2017 was the continued strong performance of its Google segment, particularly in advertising revenues from Google properties (like Search and YouTube) and Google Network Members' properties. Google other revenues, including Google Play, hardware, and Google Cloud offerings, also contributed significantly to the growth.

Alphabet's profitability saw a significant improvement. Net income increased by approximately 29% to $5.43 billion for the three months ended March 31, 2017, compared to $4.21 billion in the same period of 2016. Diluted earnings per share also increased to $7.73 from $6.02 year-over-year.

Alphabet maintained a very strong liquidity position, with $92.44 billion in cash, cash equivalents, and marketable securities as of March 31, 2017. The company generated $9.55 billion in operating cash flow during the quarter. During the quarter, $1.2 billion was used for share repurchases, and capital expenditures were $2.51 billion, primarily for property and equipment.

The 'Other Bets' segment, comprising various non-reportable businesses, generated $244 million in revenue for the quarter, a 48% increase year-over-year. However, this segment continued to operate at a loss, with an operating loss of $855 million for the quarter, indicating ongoing investment in these ventures.