Form 8-K Alphabet Inc. For: Jan 31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________
FORM 8-K
_____________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 31, 2018
____________________________________________________________
ALPHABET INC.
(Exact name of registrant as specified in its charter)
_______________________________________________________________
Delaware | 001-37580 | 61-1767919 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1600 Amphitheatre Parkway
Mountain View, CA 94043
(Address of principal executive offices, including zip code)
(650) 253-0000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
______________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On February 1, 2018, Alphabet Inc. (“Alphabet”) is issuing a press release and holding a conference call regarding its financial results for the quarter and fiscal year ended December 31, 2017. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Alphabet is making reference to non-GAAP financial information in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On January 31, 2018, the Board of Directors (the “Board”) of Alphabet appointed John L. Hennessy to serve as Chair of Alphabet’s Board. Mr. Hennessy has served as a member of the Board since April 2004 and Lead Independent Director since April 2007.
Also on January 31, 2018, Shirley M. Tilghman announced her retirement from the Board, effective February 15, 2018. Ms. Tilghman has served as a member of the Board since October 2005.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. | Description |
99.1 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ALPHABET INC. | |
Date: February 1, 2018 | /s/ RUTH PORAT |
Ruth Porat Senior Vice President and Chief Financial Officer | |
Exhibit 99.1
Alphabet Announces Fourth Quarter and Fiscal Year 2017 Results
MOUNTAIN VIEW, Calif. – February 1, 2018 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter and fiscal year ended December 31, 2017.
"Our business is driving great growth, with 2017 revenues of $110.9 billion, up 23% year on year, and fourth quarter revenues of $32.3 billion, up 24% year on year. Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses," said Ruth Porat, CFO of Alphabet.
Q4 2017 financial highlights
In order to facilitate comparison of current quarter performance to prior periods, this summary table highlights the impact of the U.S. Tax Cuts and Jobs Act (Tax Act):
Q4 2017 summary results reflecting the impact of the Tax Act | |||||||
Including (GAAP) . | Excluding | ||||||
Revenues | $32,323 | $32,323 | |||||
Operating income | $7,664 | $7,664 | |||||
Provision for income taxes | $11,038 | $1,181 | |||||
Net (loss) income | ($3,020 | ) | $6,837 | ||||
Effective tax rate | 138 | % | 15 | % | |||
Diluted EPS | ($4.35 | ) | $9.70 | ||||
The following summarizes our consolidated financial results for the quarters ended December 31, 2016 and 2017 (in millions, except for per share information, effective tax rate, and number of employees; unaudited), reported on a GAAP basis including the impact of the Tax Act (except for constant currency revenues information):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
Revenues | $26,064 | $32,323 | |||||
Increase in revenues year over year | 22 | % | 24 | % | |||
Increase in constant currency revenues year over year | 24 | % | 24 | % | |||
Operating income | $6,639 | $7,664 | |||||
Operating margin | 25 | % | 24 | % | |||
Net income (loss) | $5,333 | ($3,020 | ) | ||||
Diluted EPS | $7.56 | ($4.35 | ) | ||||
Diluted shares (in thousands) | 700,221 | 694,604 | |||||
Effective tax rate | 22 | % | 138 | % | |||
Number of employees | 72,053 | 80,110 | |||||
Q4 2017 supplemental information
Segment revenues and operating results (in millions; unaudited):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
Google properties revenues | $17,968 | $22,237 | |||||
Google Network Members' properties revenues | 4,431 | 4,990 | |||||
Google advertising revenues | 22,399 | 27,227 | |||||
Google other revenues | 3,403 | 4,687 | |||||
Google segment revenues | $25,802 | $31,914 | |||||
Other Bets revenues | $262 | $409 | |||||
Google operating income | $7,883 | $8,763 | |||||
Other Bets operating loss | ($1,088 | ) | ($916 | ) | |||
Traffic acquisition costs (TAC) to Google Network Members and distribution partners (in millions; unaudited):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
TAC to Google Network Members | $3,082 | $3,674 | |||||
TAC to Google Network Members as % of Google Network Members' properties revenues | 70 | % | 74 | % | |||
TAC to distribution partners | $1,766 | $2,776 | |||||
TAC to distribution partners as % of Google properties revenues | 10 | % | 12 | % | |||
Total TAC | $4,848 | $6,450 | |||||
Total TAC as % of Google advertising revenues | 22 | % | 24 | % | |||
Paid clicks and cost-per-click information (unaudited):
Change from Q4 2016 to Q4 2017 (YoY) | Change from Q3 2017 to Q4 2017 (QoQ) | ||||
Aggregate paid clicks | 43 | % | 18 | % | |
Paid clicks on Google properties | 48 | % | 19 | % | |
Paid clicks on Google Network Members' properties | 13 | % | 9 | % | |
Aggregate cost-per-click | (14 | )% | (6 | )% | |
Cost-per-click on Google properties | (16 | )% | (7 | )% | |
Cost-per-click on Google Network Members' properties | (4 | )% | 1 | % | |
Impact of the Tax Act
The Tax Act was enacted on December 22, 2017 and resulted in additional tax expense of $9.9 billion in the fourth quarter of 2017 primarily due to the one-time transition tax on accumulated foreign subsidiary earnings and deferred tax impacts.
Other announcements
On January 31, 2018, the Board of Directors (Board) of Alphabet authorized the company to repurchase up to an additional $8,589,869,056 of its Class C capital stock. The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
On January 31, 2018, the Board appointed John L. Hennessy to serve as Chair of Alphabet’s Board. Mr. Hennessy has served as a member of the Board since April 2004 and Lead Independent Director since April 2007.
Webcast and conference call information
A live audio webcast of our fourth quarter 2017 earnings release call will be available at http://abc.xyz/investor. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, is also available on that site.
We also provide announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs, on our investor relations website (http://abc.xyz/investor).
Forward-looking statements
This press release may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2016 and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, which are on file with the SEC and are available on our investor relations website at http://abc.xyz/investor and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2017. All information provided in this release and in the attachments is as of February 1, 2018. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. We undertake no duty to update this information unless required by law.
About non-GAAP financial measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: operating income, excluding the impact of the Q2 2017 European Commission fine (EC fine); provision for income taxes, excluding the impact of the Tax Act; net income, excluding the impact of the Tax Act; effective tax rate, excluding the impact of the Tax Act; diluted earnings per share, excluding the impact of the Tax Act; free cash flow; constant currency revenues; and constant currency revenue growth. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as our revenues excluding the impact of foreign exchange rate movements and hedging activities or our financial performance excluding one-time charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
There are a number of limitations related to the use of non-GAAP financial measures, such as the components of the expenses that we exclude in our calculation of non-GAAP financial measures may differ from our peer companies. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.
For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures,” "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP revenues to non-GAAP constant currency revenues" included at the end of this release.
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Investor relations Media
Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts which are reflected in thousands and par value per share amounts)
December 31, 2016 | December 31, 2017 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 12,918 | $ | 10,715 | |||
Marketable securities | 73,415 | 91,156 | |||||
Total cash, cash equivalents, and marketable securities | 86,333 | 101,871 | |||||
Accounts receivable, net of allowance of $467 and $674 | 14,137 | 18,336 | |||||
Income taxes receivable, net | 95 | 369 | |||||
Inventory | 268 | 749 | |||||
Other current assets | 4,575 | 2,983 | |||||
Total current assets | 105,408 | 124,308 | |||||
Non-marketable investments | 5,878 | 7,813 | |||||
Deferred income taxes | 383 | 680 | |||||
Property and equipment, net | 34,234 | 42,383 | |||||
Intangible assets, net | 3,307 | 2,692 | |||||
Goodwill | 16,468 | 16,747 | |||||
Other non-current assets | 1,819 | 2,672 | |||||
Total assets | $ | 167,497 | $ | 197,295 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,041 | $ | 3,137 | |||
Accrued compensation and benefits | 3,976 | 4,581 | |||||
Accrued expenses and other current liabilities | 6,144 | 10,177 | |||||
Accrued revenue share | 2,942 | 3,975 | |||||
Deferred revenue | 1,099 | 1,432 | |||||
Income taxes payable, net | 554 | 881 | |||||
Total current liabilities | 16,756 | 24,183 | |||||
Long-term debt | 3,935 | 3,969 | |||||
Deferred revenue, non-current | 202 | 340 | |||||
Income taxes payable, non-current | 4,677 | 12,812 | |||||
Deferred income taxes | 226 | 430 | |||||
Other long-term liabilities | 2,665 | 3,059 | |||||
Total liabilities | 28,461 | 44,793 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding | 0 | 0 | |||||
Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 691,293 (Class A 296,992, Class B 47,437, Class C 346,864) and 694,783 (Class A 298,470, Class B 46,972, Class C 349,341) shares issued and outstanding | 36,307 | 40,247 | |||||
Accumulated other comprehensive loss | (2,402 | ) | (992 | ) | |||
Retained earnings | 105,131 | 113,247 | |||||
Total stockholders’ equity | 139,036 | 152,502 | |||||
Total liabilities and stockholders’ equity | $ | 167,497 | $ | 197,295 | |||
Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenues | $ | 26,064 | $ | 32,323 | $ | 90,272 | $ | 110,855 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenues | 10,661 | 14,267 | 35,138 | 45,583 | |||||||||||
Research and development | 3,622 | 4,306 | 13,948 | 16,625 | |||||||||||
Sales and marketing | 3,118 | 4,310 | 10,485 | 12,893 | |||||||||||
General and administrative | 2,024 | 1,776 | 6,985 | 6,872 | |||||||||||
European Commission fine | 0 | 0 | 0 | 2,736 | |||||||||||
Total costs and expenses | 19,425 | 24,659 | 66,556 | 84,709 | |||||||||||
Income from operations | 6,639 | 7,664 | 23,716 | 26,146 | |||||||||||
Other income (expense), net | 218 | 354 | 434 | 1,047 | |||||||||||
Income before income taxes | 6,857 | 8,018 | 24,150 | 27,193 | |||||||||||
Provision for income taxes | 1,524 | 11,038 | 4,672 | 14,531 | |||||||||||
Net income (loss) | $ | 5,333 | $ | (3,020 | ) | $ | 19,478 | $ | 12,662 | ||||||
Basic earnings per share of Class A and B common stock and Class C capital stock | $ | 7.73 | $ | (4.35 | ) | $ | 28.32 | $ | 18.27 | ||||||
Diluted earnings per share of Class A and B common stock and Class C capital stock | $ | 7.56 | $ | (4.35 | ) | $ | 27.85 | $ | 18.00 | ||||||
Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended | Twelve Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2017 | 2016 | 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Operating activities | |||||||||||||||
Net income (loss) | $ | 5,333 | $ | (3,020 | ) | $ | 19,478 | $ | 12,662 | ||||||
Adjustments: | |||||||||||||||
Depreciation and impairment of property and equipment | 1,464 | 1,831 | 5,267 | 6,103 | |||||||||||
Amortization and impairment of intangible assets | 223 | 195 | 877 | 812 | |||||||||||
Stock-based compensation expense | 1,846 | 1,847 | 6,703 | 7,679 | |||||||||||
Deferred income taxes | (157 | ) | 16 | (38 | ) | 258 | |||||||||
Loss on marketable and non-marketable investments, net | 71 | 34 | 275 | 194 | |||||||||||
Other | 57 | 38 | 174 | 137 | |||||||||||
Changes in assets and liabilities, net of effects of acquisitions: | |||||||||||||||
Accounts receivable | (2,279 | ) | (3,049 | ) | (2,578 | ) | (3,768 | ) | |||||||
Income taxes, net | 972 | 9,076 | 3,125 | 8,211 | |||||||||||
Other assets | 198 | (78 | ) | 312 | (2,164 | ) | |||||||||
Accounts payable | (128 | ) | 673 | 110 | 731 | ||||||||||
Accrued expenses and other liabilities | 1,177 | 1,770 | 1,515 | 4,891 | |||||||||||
Accrued revenue share | 455 | 773 | 593 | 955 | |||||||||||
Deferred revenue | 181 | 162 | 223 | 390 | |||||||||||
Net cash provided by operating activities | 9,413 | 10,268 | 36,036 | 37,091 | |||||||||||
Investing activities | |||||||||||||||
Purchases of property and equipment | (3,078 | ) | (4,307 | ) | (10,212 | ) | (13,184 | ) | |||||||
Proceeds from disposals of property and equipment | 14 | 18 | 240 | 99 | |||||||||||
Purchases of marketable securities | (13,550 | ) | (13,486 | ) | (84,509 | ) | (92,195 | ) | |||||||
Maturities and sales of marketable securities | 12,516 | 11,371 | 66,895 | 73,959 | |||||||||||
Purchases of non-marketable investments | (247 | ) | (874 | ) | (1,109 | ) | (1,745 | ) | |||||||
Maturities and sales of non-marketable investments | 305 | 318 | 494 | 533 | |||||||||||
Cash collateral related to securities lending | 0 | 0 | (2,428 | ) | 0 | ||||||||||
Investments in reverse repurchase agreements | 0 | 0 | 450 | 0 | |||||||||||
Acquisitions, net of cash acquired, and purchases of intangible assets | (662 | ) | (14 | ) | (986 | ) | (287 | ) | |||||||
Proceeds from collection of notes receivable | 0 | 0 | 0 | 1,419 | |||||||||||
Net cash used in investing activities | (4,702 | ) | (6,974 | ) | (31,165 | ) | (31,401 | ) | |||||||
Financing activities | |||||||||||||||
Net payments related to stock-based award activities | (879 | ) | (1,055 | ) | (3,304 | ) | (4,166 | ) | |||||||
Repurchases of capital stock | 0 | (2,101 | ) | (3,693 | ) | (4,846 | ) | ||||||||
Proceeds from issuance of debt, net of costs | 0 | 1,593 | 8,729 | 4,291 | |||||||||||
Repayments of debt | (13 | ) | (1,615 | ) | (10,064 | ) | (4,377 | ) | |||||||
Proceeds from sale of subsidiary shares | 0 | 0 | 0 | 800 | |||||||||||
Net cash used in financing activities | (892 | ) | (3,178 | ) | (8,332 | ) | (8,298 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (307 | ) | 18 | (170 | ) | 405 | |||||||||
Net increase (decrease) in cash and cash equivalents | 3,512 | 134 | (3,631 | ) | (2,203 | ) | |||||||||
Cash and cash equivalents at beginning of period | 9,406 | 10,581 | 16,549 | 12,918 | |||||||||||
Cash and cash equivalents at end of period | $ | 12,918 | $ | 10,715 | $ | 12,918 | $ | 10,715 | |||||||
Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures
The following table presents non-GAAP financial measures, excluding the impact of the Tax Act (in millions, except share amounts which are reflected in thousands and per share amounts, unaudited):
Three Months Ended December 31, 2017 | |||
Provision for income taxes (GAAP) | $ | 11,038 | |
Exclude impact of the Tax Act | (9,857 | ) | |
Provision for income taxes, excluding the impact of the Tax Act (Non-GAAP) | $ | 1,181 | |
Effective tax rate (GAAP) | 138 | % | |
Effective tax rate, excluding the impact of the Tax Act (Non-GAAP) | 15 | % | |
Net loss (GAAP) | $ | (3,020 | ) |
Exclude impact of the Tax Act | 9,857 | ||
Net income, excluding the impact of the Tax Act (Non-GAAP) | $ | 6,837 | |
Diluted earnings per share (GAAP) | $ | (4.35 | ) |
Diluted earnings per share, excluding the impact of the Tax Act (Non-GAAP) | $ | 9.70 | |
Shares used in GAAP diluted per share calculation (in thousands) | 694,604 | ||
Shares used in non-GAAP diluted per share calculation (in thousands) | 705,079 | ||
The following table presents non-GAAP financial measures, excluding the impact of the EC fine (in millions, unaudited):
Twelve Months Ended December 31, 2017 | |||
Operating income (GAAP) | $ | 26,146 | |
Exclude impact of the EC fine | 2,736 | ||
Operating income, excluding the impact of the EC fine (Non-GAAP) | $ | 28,882 | |
Non-GAAP financial measures: Effective tax rate, excluding the impact of the Tax Act, is calculated by using provision for income taxes, excluding the impact of the Tax Act, divided by income before income taxes. Diluted earnings per share, excluding the impact of the Tax Act, is calculated by using net income, excluding the impact of the Tax Act, divided by total weighted average outstanding shares, on a fully-diluted basis for non-GAAP net income.
Reconciliation from net cash provided by operating activities to free cash flow (in millions, unaudited):
We provide free cash flow 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.
Three Months Ended December 31, 2017 | |||
Net cash provided by operating activities | $ | 10,268 | |
Less: purchases of property and equipment | (4,307 | ) | |
Free cash flow | $ | 5,961 | |
Free cash flow: We define free cash flow as net cash provided by operating activities less capital expenditures.
Reconciliation from GAAP revenues to non-GAAP constant currency revenues (in millions, unaudited):
We provide non-GAAP constant currency revenues and growth because they facilitate the comparison of current results to historic performance by excluding the impact of foreign exchange rate movements and hedging activities, which are not indicative of our core operating results.
Three Months Ended December 31, 2017 | Three Months Ended December 31, 2017 | ||||||
YoY (using Q4'16's FX rates) | QoQ (using Q3'17's FX rates) | ||||||
EMEA revenues (GAAP) | $ | 10,313 | $ | 10,313 | |||
Exclude foreign exchange impact on Q4'17 revenues using Q4'16 rates | (562 | ) | N/A | ||||
Exclude foreign exchange impact on Q4'17 revenues using Q3'17 rates | N/A | (38 | ) | ||||
Exclude hedging impact recognized in Q4'17 | 175 | 175 | |||||
EMEA constant currency revenues (non-GAAP) | $ | 9,926 | $ | 10,450 | |||
Prior period EMEA revenues, excluding hedging impact (non-GAAP) | $ | 8,111 | $ | 9,258 | |||
EMEA revenue growth (GAAP) | 24 | % | 13 | % | |||
EMEA constant currency revenue growth (non-GAAP) | 22 | % | 13 | % | |||
APAC revenues (GAAP) | $ | 4,687 | $ | 4,687 | |||
Exclude foreign exchange impact on Q4'17 revenues using Q4'16 rates | 59 | N/A | |||||
Exclude foreign exchange impact on Q4'17 revenues using Q3'17 rates | N/A | 41 | |||||
Exclude hedging impact recognized in Q4'17 | 9 | 9 | |||||
APAC constant currency revenues (non-GAAP) | $ | 4,755 | $ | 4,737 | |||
Prior period APAC revenues, excluding hedging impact (non-GAAP) | $ | 3,608 | $ | 4,217 | |||
APAC revenue growth (GAAP) | 30 | % | 12 | % | |||
APAC constant currency revenue growth (non-GAAP) | 32 | % | 12 | % | |||
Other Americas revenues (GAAP) | $ | 1,895 | $ | 1,895 | |||
Exclude foreign exchange impact on Q4'17 revenues using Q4'16 rates | (37 | ) | N/A | ||||
Exclude foreign exchange impact on Q4'17 revenues using Q3'17 rates | N/A | 12 | |||||
Exclude hedging impact recognized in Q4'17 | 14 | 14 | |||||
Other Americas constant currency revenues (non-GAAP) | $ | 1,872 | $ | 1,921 | |||
Prior period Other Americas revenues, excluding hedging impact (non-GAAP) | $ | 1,442 | $ | 1,558 | |||
Other Americas revenue growth (GAAP) | 31 | % | 23 | % | |||
Other Americas constant currency revenue growth (non-GAAP) | 30 | % | 23 | % | |||
United States revenues (GAAP) | $ | 15,428 | $ | 15,428 | |||
United States revenue growth (GAAP) | 21 | % | 19 | % | |||
Revenues (GAAP) | $ | 32,323 | $ | 32,323 | |||
Constant currency revenues (non-GAAP) | $ | 31,981 | $ | 32,536 | |||
Prior period revenues, excluding hedging impact (non-GAAP) | $ | 25,877 | $ | 27,963 | |||
Revenue growth (GAAP) | 24 | % | 16 | % | |||
Constant currency revenue growth (non-GAAP) | 24 | % | 16 | % | |||
Non-GAAP constant currency revenues and growth: We define non-GAAP constant currency revenues as total revenues excluding the impact of foreign exchange rate movements and hedging activities, and we use it to determine the constant currency revenue growth on year-on-year and quarter-on-quarter bases. Non-GAAP constant currency revenues are calculated by translating current quarter revenues using prior period exchange rates and excluding any hedging impact recognized in the current quarter. Constant currency revenue growth (expressed as a percentage) is calculated by determining the increase in current quarter non-GAAP constant currency revenues over prior period revenues, excluding any hedging impact recognized in the prior period.
Other income (expense), net
The following table presents our other income (expense), net (in millions, unaudited):
Three Months Ended | |||||||
December 31, | |||||||
2016 | 2017 | ||||||
Interest income | $ | 325 | $ | 400 | |||
Interest expense | (33 | ) | (36 | ) | |||
Foreign currency exchange losses, net | (38 | ) | (20 | ) | |||
Gain (loss) on marketable securities, net | (84 | ) | 1 | ||||
Gain (loss) on non-marketable investments, net | 13 | (35 | ) | ||||
Other | 35 | 44 | |||||
Other income (expense), net | $ | 218 | $ | 354 | |||
Segment results
The following table presents our revenues, operating income (loss), stock-based compensation, capital expenditures, and depreciation, amortization, and impairment by segment (in millions, unaudited):
Three Months Ended | |||||||
December 31, | |||||||
2016 | 2017 | ||||||
Revenues: | |||||||
Google | $ | 25,802 | $ | 31,914 | |||
Other Bets | 262 | 409 | |||||
Total revenues | $ | 26,064 | $ | 32,323 | |||
Operating income (loss): | |||||||
Google | $ | 7,883 | $ | 8,763 | |||
Other Bets | (1,088 | ) | (916 | ) | |||
Reconciling items(1) | (156 | ) | (183 | ) | |||
Total income from operations | $ | 6,639 | $ | 7,664 | |||
Stock-based compensation(2): | |||||||
Google | $ | 1,653 | $ | 1,676 | |||
Other Bets | 161 | 138 | |||||
Reconciling items(1) | 32 | 33 | |||||
Total stock-based compensation | $ | 1,846 | $ | 1,847 | |||
Capital expenditures: | |||||||
Google | $ | 2,888 | $ | 3,805 | |||
Other Bets | 504 | 109 | |||||
Reconciling items(3) | (314 | ) | 393 | ||||
Total capital expenditures | $ | 3,078 | $ | 4,307 | |||
Depreciation, amortization, and impairment: | |||||||
Google | $ | 1,586 | $ | 1,914 | |||
Other Bets | 101 | 112 | |||||
Total depreciation, amortization, and impairment | $ | 1,687 | $ | 2,026 | |||
(1) | Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments. |
(2) | For purposes of segment reporting, SBC represents awards that we expect to settle in Alphabet stock. |
(3) | Reconciling items are related to timing differences of payments, as segment capital expenditures are on accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flows are on cash basis, and other miscellaneous differences. |