FAQs and General Information

A glossary of terms you can find on Alphabet financial statements.

Segments and Allocations

Google Services Segment

• Includes products and services such as ads, Android, Chrome, hardware (including Fitbit, Nest), Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; sales of apps and in-app purchases, and hardware; and fees received for subscription-based products such as YouTube Premium and YouTube TV.

Google Cloud Segment

• Google Cloud includes Google’s infrastructure and platform services, collaboration tools, and other services for enterprise customers.
• Google Cloud generates revenues primarily from fees received for Google Cloud Platform (“GCP”) services, Google Workspace (formerly known as G Suite) communication and collaboration tools, and other enterprise services.

Other Bets Segment

• Other Bets is a combination of multiple operating segments that are not individually material.
• Includes businesses such as Access/Fiber, Calico, CapitalG, GV, Verily, Waymo and X, among others.
• Revenues from the Other Bets are generated primarily through the sale of health technology through Verily and internet services through Access/Fiber.

Unallocated

• Unallocated corporate costs primarily include AI-focused shared R&D activities, primarily Google DeepMind; corporate initiatives such as our philanthropic activities; and corporate shared costs such as finance, certain human resource costs, and legal, including certain fines and settlements. Unallocated corporate costs also include charges associated with reductions in our workforce and office space. Additionally, hedging gains (losses) related to revenue are included in unallocated corporate costs.

Revenues

Google Services Revenues

• Advertising revenues : Google Search & Other
  
  • Google search properties (including revenues from traffic generated by search distribution partners who use Google.com as their default search in browsers, toolbars, etc.).
  • Revenues generated from advertising on other Google owned and operated properties like Gmail, Google Maps, and Google Play.
• Advertising revenues: YouTube Ads
  
  • YouTube properties.
  • YouTube Ads revenues are primarily recognized on a gross basis. Content acquisition costs (“CAC”) for YouTube, which are payments to content providers from whom we license video and other content for distribution, are recognized in Other Cost of Revenues.
• Advertising revenues: Google Network
  
  • Google Network properties participating in AdMob, AdSense, and Google Ad Manager.
• Google Other revenues
  
  • Google Play, which include sales of apps and in-app purchases (which we recognize on a net basis) and digital content. Sales of certain digital content are recorded on a gross basis.
  • Hardware, which includes sales of Fitbit wearable devices, Google Nest home products, and Pixel devices.
  • YouTube non-advertising, which includes subscription revenues from services such as YouTube Premium, YouTube TV and NFL Sunday Ticket.
  • Other products and services.

Revenue Backlog

• We have performance obligations associated with commitments in customer contracts, primarily related to Google Cloud, for future services that have not yet been recognized as revenues (“revenue backlog”). This includes related deferred revenue currently recorded and amounts that will be invoiced in future periods, and excludes contracts with an original expected term of one year or less and cancellable contracts.

Expenses

Traffic Acquisition Costs (TAC)

• Amounts paid to our distribution partners who make available our search access points and services. Distribution partners include browser providers, mobile carriers, original equipment manufacturers, and software developers.
• Amounts paid to Google Network partners primarily for ads displayed on their properties.

Other Cost of Revenues

• Content acquisition costs, which are payments to content providers from whom we license video and other content for distribution on YouTube advertising and subscription services and Google Play (we pay fees to these content providers based on revenues generated or a flat fee). Content acquisition costs also include licensing costs for news from our Google News Showcase product.
• Expenses associated with our data centers (including bandwidth, compensation expenses (including stock-based compensation), depreciation, energy, and other equipment costs) as well as other operations costs (such as content review and customer and product support costs).
• Inventory and other costs related to the hardware we sell.

Workforce Reduction and Real Estate Optimization

• In January 2023, we announced a reduction of our workforce.
• The majority of the future compensation and severance expense were accrued in Q1 for the affected employees and reflected in severance and related charges.
• We are also taking actions to optimize our global office space, which have resulted in additional charges within our consolidated statements of income.
• The substantial majority of these charges are recognized within unallocated corporate costs in our segment results.
• Please refer to our consolidated financial statements as filed with the SEC for further details on the timing, classification and amount of charges associated with reductions in our workforce.

Balance Sheet (Assets and Liabilities)

Capital Expenditures (“CapEx”)

• Our capital investments in property and equipment consist primarily of the following major categories:
  
  • Technical infrastructure, which consists of our investments in servers and network equipment for computing, storage and networking requirements for ongoing business activities, including AI, (collectively referred to as our information technology assets) and data center land and building construction; and
  • Office facilities, which consists of acquisitions, ground up development projects and related building improvements. (also referred to as “fit-outs”).

Useful Lives of Property and Equipment

• Following summarizes useful lives for property and equipment as of January 1, 2023:
  
  • Buildings depreciated over periods of seven to 25 years.
  • Server equipment depreciated generally over six years.
  • Network equipment depreciated generally over six years.
  • Leasehold improvements depreciated over the shorter of the remaining lease term or the estimated useful lives of the assets.
• In January 2023, we completed an assessment of the useful lives of our servers and network equipment, resulting in a change in the estimated useful life of our servers and certain network equipment to six years.

Cash Flows

Net Payments Related to Stock-based Award Activities

• The “Net payments related to stock-based award activities” line in the statement of cash flows primarily reflects employee tax withholding payments related to stock-based compensation.

YouTube

YouTube Music and Premium and YouTube TV Subscribers

• YouTube Music and Premium subscribers includes those in trial and all registered members in our family plan. Family plan memberships include one subscriber and up to an additional 5 family members. It does not include YouTube TV subscribers.
• YouTube TV subscribers include trialers. Subscribers exclude additional household members. It does not include YouTube Music and Premium subscribers.

NFL Sunday Ticket

• We account for NFL Sunday Ticket in a manner generally consistent with other subscription offerings:
  
  • Annual subscription fees are recognized as revenue when content is delivered to our customers, which occurs over the course of the NFL regular season.
  • Similarly, content acquisition costs will be recorded in our income statement over the course of the NFL regular season.

Investments

How Do You Measure the Change in Valuation of a Private Equity Investment (Non-marketable Equity Security)?

• Under the measurement alternative of US GAAP, we may increase the valuation of a private equity investment when an observable market transaction occurs.

  • For illustrative purposes, if Company A in our portfolio raises capital through the sale of securities at a valuation that is 20% higher than its previous financing round, we may increase the valuation of the holding by 20%.

• We may decrease the valuation of a private equity investment when an observable market transaction occurs. In addition, we also decrease the valuation of a private investment when we determine an impairment exists (the fair value is below the carrying value of the investment).

  • For illustrative purposes, if Company B in our portfolio raises capital through the sale of securities at a valuation that is 20% lower than its previous financing round, we may decrease the valuation of the holding by 20%.

Where Does a Change in Valuation of a Private equity Investment Appear (Non-marketable Equity Security)?

• Gains and losses, including impairments, in private equity investments are reflected in the OI&E line in the income statement.

Foreign Exchange

• Foreign Exchange Rates: We translate the financial statements of our international subsidiaries to U.S. dollars using month-end exchange rates for assets and liabilities, and average rates for the annual period derived from month-end exchange rates for revenues, costs, and expenses. An illustrative example:

• Hedging Framework: Principal currencies hedged included the Australian dollar, British pound, Canadian dollar, Euro, and Japanese yen.

Note: All information is as of July 25, 2023, and we undertake no duty to update this information unless required by law.

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