Alphabet Announces Second Quarter 2026 Results

Transcript

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   EX-99.1 2 googexhibit991q22026.htm EX-99.1

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   Alphabet Announces Second Quarter 2026 Results MOUNTAIN VIEW, Calif. – July 22, 2026 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended June 30, 2026. • Consolidated Alphabet revenues increased 24%, or 23% in constant currency, to $119.8 billion, reflecting strong performance across the business and our 12th consecutive quarter of double-digit revenue growth. • Google Services revenues increased 15% to $94.5 billion, led by 17% growth in Google Search & other, 15% in Google subscriptions, platforms, and devices, and 13% in YouTube ads. • Google Cloud saw a meaningful acceleration in growth as revenues increased 82% to $24.8 billion, led by an increase in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services. • Consolidated Alphabet operating income increased 30% and operating margin expanded by 2 percentage points to 34%. • Other income reflected a net gain of $98.0 billion, primarily the result of net unrealized gains on our equity securities. • Net income available to common stockholders increased 298% and EPS increased 294% to $9.11. Sundar Pichai, CEO of Googl…

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   We have exciting momentum across the board. Our popular AI features are driving Search query growth. Gemini models now process 22 billion API tokens per minute and the Gemini App has 950 million monthly active users. We are seeing strong demand for our security solutions, and our new Gemini 3.5 Flash Cyber delivers highly cost-efficient performance at the frontier. And month over month, people turn to YouTube for major world events, with over 1.7 billion unique viewers watching World Cup-related videos during the FIFA World Cup 2026 TM .

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   These outstanding results show that our differentiated, full stack approach to AI is delivering real, measurable value for consumers, customers, and our partners globally.” Q2 2026 Financial Highlights (unaudited) The following table summarizes our consolidated financial results for the quarters ended June 30, 2025 and 2026 (in millions, except for per share information and percentages). | | | | | | | | | | | | | | | | | Quarter Ended June 30, | | | | 2025 | | 2026 | | | | | | | | | | | Revenues | $ | 96,428 | | | $ | 119,796 | | | | | | Change in revenues year over year | 14 | % | | 24 | % | | | | | Change in constant currency revenues year over year (1) | 13 | % | | 23 | % | | | | | | | | | | | | | Operating income | $ | 31,271 | | | $ | 40,770 | | | | | | Operating margin | 32 | % | | 34 | % | | | | | | | | | | | | | Other income (expense), net | $ | 2,662 | | | $ | 97,983 | | | | | | | | | | | | | | Net income available to common stockholders | $ | 28,196 | | | $ | 112,107 | | | | | | Diluted net income per common share | $ | 2.31 | | | $ | 9.11 | | | | | |

5. #5for more details

   Reconciliation from GAAP Revenues to Non-GAAP Constant Currency Revenues and GAAP Percentage Change in Revenues to Non-GAAP Percentage Change in Constant Currency Revenues

6. #6qna

   Q2 2026 Supplemental Information (in millions, except for number of employees; unaudited) Revenues, Traffic Acquisition Costs (TAC), and Number of Employees | | | | | | | | | | | | | | | |

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   | Quarter Ended June 30, | | | | 2025 | | 2026 | | | | | Google Search & other | $ | 54,190 | | | $ | 63,271 | | | | | | YouTube ads | 9,796 | | | 11,055 | | | | | | Google Network | 7,354 | | | 7,303 | | | | | | Google advertising | 71,340 | | | 81,629 | | | | | | Google subscriptions, platforms, and devices | 11,203 | | | 12,911 | | | | | | Google Services total | 82,543 | | | 94,540 | | | | | | Google Cloud | 13,624 | | | 24,768 | | | | | | Other Bets | 373 | | | 382 | | | | | | Hedging gains (losses) | (112) | | | 106 | | | | | | Total revenues | $ | 96,428 | | | $ | 119,796 | | | | | | | | | | | | | | Total TAC | $ | 14,705 | | | $ | 16,179 | | | | | | | | | | | | | | Number of employees | 187,103 | | 198,933 | | | | |

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   Segment Operating Results | | | | | | | | | | | |

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   | Quarter Ended June 30, | | 2025 | | 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income (loss): | | | | Google Services | $ | 33,063 | | | $ | 39,544 | | Google Cloud | 2,826 | | | 8,814 | | Other Bets | (1,246) | | | (1,799) | | Alphabet-level activities (1) | (3,372) | | | (5,789) | | Total income from operations | $ | 31,271 | | | $ | 40,770 | |

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    (1) Alphabet-level activities primarily reflect expenses related to our shared AI research and development. Additional Information Relating to the Quarter Ended June 30, 2026 (unaudited) Equity Capital Raise In June 2026, we issued a combination of Class A stock and Class C stock and mandatory convertible preferred stock for aggregate net proceeds of $49.6 billion, to be used for general corporate purposes, including capital expenditures to scale AI infrastructure and global compute. Additionally, we entered into an equity distribution agreement with certain sales agents to sell up to $40.0 billion of our Class A stock and Class C stock from time to time through an At-the-Market Program (ATM Program). The proceeds of the ATM Program are primarily intended to be used to meet tax obligations associated with employee equity grants. As of June 30, 2026, we have not sold any shares under the ATM Program. Issuance of Senior Unsecured Notes In the second quarter of 2026, we issued senior unsecured notes for net proceeds of $20.3 billion, to be used for general corporate purposes.

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    Preferred and Common Dividend Programs In July 2026, the company's Board of Directors declared a quarterly cash dividend of $12.15 per share on each of our Series A and Series B mandatory convertible preferred stock (equivalent to approximately $0.60 per each of our Series A and Series B Depositary Shares) and a quarterly cash dividend of $0.22 per share on our Class A, Class B, and Class C stock. The mandatory convertible preferred stock dividend is payable on August 15, 2026 to stockholders of record for each of the company's Series A and Series B shares as of August 1, 2026, and the common stock dividend is payable on September 14, 2026 to stockholders of record for each of the company's Class A, Class B, and Class C shares as of September 7, 2026.

12. #12in our Annual Report

    Management’s Discussion and Analysis of Financial Condition and Results of Operations

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    Reconciliation from GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

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    Alphabet Inc. CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) | | | | | | | | | | | | | | | As of December 31, 2025 | | As of June 30, 2026 | | | | (unaudited) | Assets | | | | Current assets: | | | | Cash and cash equivalents | $ | 30,708 | | | $ | 55,911 | | Marketable securities | 96,135 | | | 186,563 | | Total cash, cash equivalents, and marketable securities | 126,843 | | | 242,474 | | Accounts receivable, net | 62,886 | | | 69,175 | | Inventory | 2,439 | | | 9,991 | | Other current assets | 13,870 | | | 21,884 | | Total current assets | 206,038 | | | 343,524 | | Non-marketable securities | 68,687 | | | 131,461 | | Deferred income taxes | 9,113 | | | 1,448 | | Property and equipment, net | 246,597 | | | 321,212 | | Operating lease assets | 15,221 | | | 17,694 | | Goodwill | 33,380 | | | 57,828 | | Intangible assets, net | 1,283 | | | 9,105 | | Other non-current assets | 14,962 | | | 39,711 | | Total assets | $ | 595,281 | | | $ | 921,983 | | Liabilities and Stockholders’ Equity | | | | Current liabilities: | | | | Accounts payable | $ | 12,200 | | | $ | 20,258 | | Accrued compensation and benefits | 17,546 | | | 15,086 | | Accru…

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    Alphabet Inc. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts, unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, | | Year To Date June 30, | | 2025 | | 2026 | | 2025 | | 2026 | | | | | | | Revenues | $ | 96,428 | | | $ | 119,796 | | | $ | 186,662 | | | $ | 229,692 | | Costs and expenses: | | | | | | | | Cost of revenues | 39,039 | | | 45,943 | | | 75,400 | | | 87,214 | | Research and development | 13,808 | | | 18,219 | | | 27,364 | | | 35,251 | | Sales and marketing | 7,101 | | | 8,403 | | | 13,273 | | | 16,009 | | General and administrative | 5,209 | | | 6,461 | | | 8,748 | | | 10,752 | | Total costs and expenses | 65,157 | | | 79,026 | | | 124,785 | | | 149,226 | | Income from operations | 31,271 | | | 40,770 | | | 61,877 | | | 80,466 | | Other income (expense), net | 2,662 | | | 97,983 | | | 13,845 | | | 135,699 | | Income before income taxes | 33,933 | | | 138,753 | | | 75,722 | | | 216,165 | | Provision for income taxes | 5,737 | | | 26,560 | | | 12,986 | | | 41,394 | | Net income | 28,196 | | | 112,193 | | | 62,736 | | | 174,771 | | Preferred stock dividends | 0 | | | 86 | | | 0 | | | 86 | | Net i…

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    Alphabet Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions, unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, | | Year To Date June 30, | | 2025 | | 2026 | | 2025 | | 2026 | | | | | | | Operating activities | | | | | | | | Net income | $ | 28,196 | | | $ | 112,193 | | | $ | 62,736 | | | $ | 174,771 | | Adjustments: | | | | | | | | Depreciation of property and equipment | 4,998 | | | 7,104 | | | 9,485 | | | 13,586 | | Stock-based compensation expense | 5,998 | | | 7,957 | | | 11,514 | | | 14,708 | | Deferred income taxes | (444) | | | 20,618 | | | (1,596) | | | 27,538 | | Loss (gain) on debt and equity securities, net | (1,451) | | | (98,999) | | | (11,411) | | | (135,803) | | Other | 560 | | | 1,896 | | | 1,041 | | | 3,161 | | Changes in assets and liabilities, net of effects of acquisitions: | | | | | | | | Accounts receivable, net | (2,839) | | | (6,541) | | | (1,201) | | | (6,904) | | Inventory | (198) | | | (6,696) | | | (628) | | | (7,739) | | Income taxes, net | (9,631) | | | 203 | | | (2,434) | | | 8,304 | | Other assets | (1,281) | | | (7,590) | | | (2,139) | | | (9,950) | | Accounts payable | 553 | | | 2,330 | | …

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    Segment Results The following table presents our segment revenues and operating income (loss) (in millions; unaudited): | | | | | | | | | | | | | Quarter Ended June 30, | | 2025 | | 2026 | | | | | Revenues: | | | | Google Services | $ | 82,543 | | | $ | 94,540 | | Google Cloud | 13,624 | | | 24,768 | | Other Bets | 373 | | | 382 | | Hedging gains (losses) | (112) | | | 106 | | Total revenues | $ | 96,428 | | | $ | 119,796 | | Operating income (loss): | | | | Google Services | $ | 33,063 | | | $ | 39,544 | | Google Cloud | 2,826 | | | 8,814 | | Other Bets | (1,246) | | | (1,799) | | Alphabet-level activities | (3,372) | | | (5,789) | | Total income from operations | $ | 31,271 | | | $ | 40,770 | |

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    We report our segment results as Google Services, Google Cloud, and Other Bets: • Google Services includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. Google Services generates revenues primarily from advertising; fees received for consumer subscription-based products such as YouTube TV, YouTube Music and Premium, and NFL Sunday Ticket, as well as Google One; the sale of apps and in-app purchases; and devices. • Google Cloud includes infrastructure and platform services, applications, and other products and services for enterprise customers. Google Cloud generates services revenues primarily from consumption-based fees and subscriptions received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services. Google Cloud generates product revenues primarily from the sale of TPU systems. • Other Bets is a combination of multiple operating segments that are not individually material. Revenues from Other Bets are generated primarily from the sale of autonomous transportation services and internet services. Certain costs are not allocated to our segments becau…

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    Other Income (Expense), Net The following table presents our other income (expense), net (in millions; unaudited): | | | | | | | | | | | | | Quarter Ended June 30, | | 2025 | | 2026 | Interest income | $ | 1,050 | | | $ | 1,430 | | Interest expense | (261) | | | (1,278) | | Foreign currency exchange gain (loss), net | (69) | | | (160) | | Gain (loss) on debt securities, net | 165 | | | (32) | | Gain (loss) on equity securities, net (1) | 1,286 | | | 99,031 | | Income (loss) and impairment from equity method investments, net | 419 | | | (35) | | Other | 72 | | | (973) | | Other income (expense), net | $ | 2,662 | | | $ | 97,983 | |

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    (1) Includes all gains and losses, unrealized and realized, on equity securities. For Q2 2026, the net effect of the gain on equity securities of $99.0 billion increased the provision for income tax, net income, and diluted net income per common share by $21.9 billion, $77.1 billion, and $6.26, respectively. Fluctuations in the value of our investments may be affected by market dynamics and other factors and could significantly contribute to the volatility of OI&E in future periods.

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    Reconciliation from GAAP Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow (in millions; unaudited) : We provide non-GAAP free cash flow for the current quarter and trailing twelve months (“TTM”) because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and acquisitions, and to strengthen our balance sheet. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended | | | TTM | | | Q3 2025 | | Q4 2025 | | Q1 2026 | | Q2 2026 | | | Q2 2026 | Net cash provided by operating activities | | $ | 48,414 | | | $ | 52,402 | | | $ | 45,790 | | | $ | 39,069 | | | | $ | 185,675 | | Less: purchases of property and equipment | | (23,953) | | | (27,851) | | | (35,674) | | | (44,924) | | | | (132,402) | | Free cash flow | | $ | 24,461 | | | $ | 24,551 | | | $ | 10,116 | | | $ | (5,855) | | | | $ | 53,273 | | Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures. TTM free cash flow: We define trailing twelve months…

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    constant currency revenues

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    Revenues by Geography Comparison from the Quarter Ended June 30, 2025 to the Quarter Ended June 30, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, 2026 | | | | | | | | | | % Change from Prior Period | | Quarter Ended June 30, | | Less FX Effect | | Constant Currency Revenues | | As Reported | | Less Hedging Effect | | Less FX Effect | | Constant Currency Revenues | | 2025 | | 2026 | | | | | | | United States | $ | 46,063 | | | $ | 60,846 | | | $ | 0 | | | $ | 60,846 | | | 32 | % | | | | 0 | % | | 32 | % | EMEA | 28,262 | | | 32,501 | | | 794 | | | 31,707 | | | 15 | % | | | | 3 | % | | 12 | % | APAC | 16,480 | | | 19,317 | | | (351) | | | 19,668 | | | 17 | % | | | | (2) | % | | 19 | % | Other Americas | 5,735 | | | 7,026 | | | 297 | | | 6,729 | | | 23 | % | | | | 6 | % | | 17 | % | Revenues, excluding hedging effect (1) | 96,540 | | | 119,690 | | | 740 | | | 118,950 | | | 24 | % | | | | 1 | % | | 23 | % | Hedging gains (losses) | (112) | | | 106 | | | | | | | | | | | | | | Total revenues | $ | 96,428 | | | $ | 119,796 | | | | | $ | 118,950 | | | 24 | % | | 0 | % | | 1 | % | | 23 | …

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    (1) Total constant currency revenues of $119.0 billion for the quarter ended June 30, 2026 increased $22.4 billion compared to $96.5 billion in revenues, excluding hedging effect, for the quarter ended June 30, 2025. Comparison from the Quarter Ended March 31, 2026 to the Quarter Ended June 30, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, 2026 | | | | | | | | | | % Change from Prior Period | | Quarter Ended | | Less FX Effect | | Constant Currency Revenues | | As Reported | | Less Hedging Effect | | Less FX Effect | | Constant Currency Revenues | | March 31, 2026 | | June 30, 2026 | | | | | | | United States | $ | 53,975 | | | $ | 60,846 | | | $ | 0 | | | $ | 60,846 | | | 13 | % | | | | 0 | % | | 13 | % | EMEA | 31,468 | | | 32,501 | | | (453) | | | 32,954 | | | 3 | % | | | | (2) | % | | 5 | % | APAC | 18,288 | | | 19,317 | | | (211) | | | 19,528 | | | 6 | % | | | | (1) | % | | 7 | % | Other Americas | 6,345 | | | 7,026 | | | 29 | | | 6,997 | | | 11 | % | | | | 1 | % | | 10 | % | Revenues, excluding hedging effect (1) | 110,076 | | | 119,690 | | | (635) | | | 120,325 | | | 9 | % | …

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    (1) Total constant currency revenues of $120.3 billion for the quarter ended June 30, 2026 increased $10.2 billion compared to $110.1 billion in revenues, excluding hedging effect, for the quarter e nded March 31, 2026.

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    Total Revenues — Prior Year Comparative Periods Comparison from the Quarter Ended June 30, 2024 to the Quarter Ended June 30, 2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter Ended June 30, 2025 | | Quarter Ended June 30, | | | | | | % Change from Prior Period | | | Less FX Effect | | Constant Currency Revenues | | As Reported | | Less Hedging Effect | | Less FX Effect | | Constant Currency Revenues | | 2024 | | 2025 | | | | | | | Revenues excluding hedging effect | $ | 84,640 | | | $ | 96,540 | | | $ | 543 | | | $ | 95,997 | | | 14 | % | | | | 1 | % | | 13 | % | Hedging gains (losses) | $ | 102 | | | $ | (112) | | | | | | | | | | | | | | Total revenues | $ | 84,742 | | | $ | 96,428 | | | | | $ | 95,997 | | | 14 | % | | 0 | % | | 1 | % | | 13 | % |