10-QPeriod: Q3 FY2025

Alphabet Inc. Quarterly Report for Q3 Ended Sep 30, 2025

Filed October 30, 2025For Securities:GOOGLGOOGGOOGMGOOGN

Summary

Alphabet Inc. reported strong financial results for the third quarter of 2025, with total revenues reaching $102.3 billion, a 16% increase year-over-year. This growth was primarily fueled by a 14% rise in Google Services revenues and a significant 34% surge in Google Cloud revenues. Despite a 28% increase in operating expenses, largely due to legal settlements and increased compensation, Alphabet demonstrated robust profitability with net income growing by 33% to $34.9 billion, and diluted EPS increasing to $2.87. The company continues to invest heavily in technical infrastructure and R&D, with capital expenditures increasing by approximately 66% year-over-year, reflecting a strategic focus on AI. Alphabet also remains committed to returning capital to shareholders, repurchasing $11.6 billion of its stock and increasing its quarterly dividend. The company's strong cash flow from operations provides ample liquidity to fund its growth initiatives and ongoing legal obligations.

Financial Highlights

51 data points
Beta

Revenue

$102.35B

59.6% Gross Margin

Net Income

$34.98B

34.2% Net Margin

EPS (Diluted)

$2.87

Total Assets

$536.47B

Cash & Equivalents

$23.09B

Free Cash Flow

$24.46B

Financial Statements
Beta
Revenue$102.35B
Cost of Revenue$41.37B
Gross Profit$60.98B
R&D Expenses$15.15B
Operating Expenses$71.12B
Operating Income$31.23B
Net Income$34.98B
EPS (Basic)$2.89
EPS (Diluted)$2.87
Shares Outstanding (Basic)12.09B
Shares Outstanding (Diluted)12.20B

Key Highlights

  • 1Total revenues grew 16% year-over-year to $102.3 billion, exceeding analyst expectations.
  • 2Google Services revenue increased by 14%, driven by Search & other and YouTube ads.
  • 3Google Cloud revenue saw substantial growth of 34%, indicating strong enterprise adoption.
  • 4Net income rose 33% to $34.9 billion, with diluted EPS reaching $2.87.
  • 5Operating expenses increased by 28%, largely impacted by a $3.5 billion EU competition fine and increased employee compensation.
  • 6Capital expenditures significantly increased by 66% year-over-year, primarily for technical infrastructure and AI investments.
  • 7Share repurchases totaled $11.6 billion for the quarter, with $74.8 billion remaining under the authorized program.

Frequently Asked Questions

Alphabet's revenue growth was primarily driven by strong performance in its two core segments: Google Services, which saw a 14% increase, and Google Cloud, which experienced a substantial 34% surge. This growth was fueled by increased advertiser spending on search and YouTube, alongside escalating demand for Google Cloud's infrastructure and platform services.

The European Commission's decision imposing a €3.0 billion (approximately $3.5 billion) fine for competition law infringements in its advertising technology business significantly impacted Alphabet's financial results for the third quarter of 2025. This fine was accrued in general and administrative expenses, contributing to a 28% increase in operating expenses and a higher effective tax rate for the period.

Alphabet continues to prioritize long-term growth through significant investments in technical infrastructure, particularly in support of AI initiatives, as evidenced by a 66% year-over-year increase in capital expenditures. The company is also actively returning capital to shareholders through substantial share repurchases, totaling $11.6 billion in the quarter, and has increased its quarterly dividend.

Google Cloud demonstrated robust growth of 34% in Q3 2025, indicating strong momentum. This growth is primarily attributed to the increasing adoption of Google Cloud Platform's infrastructure services. The company's forward-looking revenue backlog, largely from Google Cloud, stands at $157.7 billion, with over 55% expected to be recognized within the next 24 months, suggesting continued strong performance for the segment.