Alphabet Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Alphabet Inc. CONSOLIDATED BALANCE SHEETS (in millions, except par value per share amounts) As of December 31, 2025 As of March 31, 2026 (unaudited) Assets Current assets: Cash and cash equivalents $ 30,708 $ 38,063 Marketable securities 96,135 88,777 Total cash, cash equivalents, and marketable securities 126,843 126,840 Accounts receivable, net 62,886 62,999 Other current assets 16,309 23,914 Total current assets 206,038 213,753 Non-marketable securities 68,687 106,946 Deferred income taxes 9,113 1,995 Property and equipment, net 246,597 281,020 Operating lease assets 15,221 15,509 Goodwill 33,380 57,774 Intangible assets, net 1,283 9,444 Other non-current assets 14,962 17,478 Total assets $ 595,281 $ 703,919 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,200 $ 16,852 Accrued compensation and benefits 17,546 13,947 Accrued expenses and other current liabilities 55,557 63,019 Accrued revenue share 10,864 10,208 Deferred revenue 6,578 7,162 Total current liabilities 102,745 111,188 Long-term debt 46,547 77,501 Income taxes payable, non-current 9,531 12,457 Operating lease liabilities 12,744 12,983 Other long-term liabilities 8,449 11,044 Total liabilities 180,016 225,173 Commitments and Contingencies (Note 10) Stockholders’ equity: Preferred stock, $ 0.001 par value per share, 100 shares authorized; no shares issued and outstanding 0 0 Class A, Class B, and Class C stock and additional paid-in capital, $ 0.001 par value per share: 300,000 shares authorized (Class A 180,000 , Class B 60,000 , Class C 60,000 ); 12,088 (Class A 5,822 , Class B 837 , Class C 5,429 ) and 12,116 (Class A 5,824 , Class B 836 , Class C 5,456 ) shares issued and outstanding 93,126 96,902 Accumulated other comprehensive income (loss) ( 1,916 ) ( 2,180 ) Retained earnings 324,055 384,024 Total stockholders’ equity 415,265 478,746 Total liabilities and stockholders’ equity $ 595,281 $ 703,919 See accompanying notes. 4 Table of Contents Alphabet Inc. Alphabet Inc. CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts; unaudited) Three Months Ended March 31, 2025 2026 Revenues $ 90,234 $ 109,896 Costs and expenses: Cost of revenues 36,361 41,271 Research and development 13,556 17,032 Sales and marketing 6,172 7,606 General and administrative 3,539 4,291 Total costs and expenses 59,628 70,200 Income from operations 30,606 39,696 Other income (expense), net 11,183 37,716 Income before income taxes 41,789 77,412 Provision for income taxes 7,249 14,834 Net income $ 34,540 $ 62,578 Basic net income per share (Note 12) $ 2.84 $ 5.17 Diluted net income per share (Note 12) $ 2.81 $ 5.11 See accompanying notes. 5 Table of Contents Alphabet Inc. Alphabet Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions; unaudited) Three Months Ended March 31, 2025 2026 Net income $ 34,540 $ 62,578 Other comprehensive income (loss): Change in foreign currency translation adjustment, net of income tax benefit (expense) of $ 45 and $( 54 ) 663 ( 326 ) Available-for-sale investments: Change in net unrealized gains (losses) 645 ( 356 ) Less: reclassification adjustment for net (gains) losses included in net income ( 84 ) ( 19 ) Net change, net of income tax benefit (expense) of $( 159 ) and $ 106 561 ( 375 ) Cash flow hedges: Change in net unrealized gains (losses) ( 313 ) 279 Less: reclassification adjustment for net (gains) losses included in net income ( 197 ) 158 Net change, net of income tax benefit (expense) of $ 131 and $( 117 ) ( 510 ) 437 Other comprehensive income (loss) 714 ( 264 ) Comprehensive income $ 35,254 $ 62,314 See accompanying notes. 6 Table of Contents Alphabet Inc. Alphabet Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions; unaudited) Three Months Ended March 31, 2025 Class A, Class B, Class C Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of December 31, 2024 12,211 $ 84,800 $ ( 4,800 ) $ 245,084 $ 325,084 Stock issued 27 0 0 0 0 Stock-based compensation 0 5,553 0 0 5,553 Tax withholding related to vesting of restricted stock units, and other 0 ( 3,240 ) 0 0 ( 3,240 ) Repurchases of stock ( 83 ) ( 815 ) 0 ( 14,486 ) ( 15,301 ) Dividends and dividend equivalents declared ($ 0.20 per share) 0 27 0 ( 2,510 ) ( 2,483 ) Sale of interest in consolidated entities 0 400 0 0 400 Net income 0 0 0 34,540 34,540 Other comprehensive income (loss) 0 0 714 0 714 Balance as of March 31, 2025 12,155 $ 86,725 $ ( 4,086 ) $ 262,628 $ 345,267 Three Months Ended March 31, 2026 Class A, Class B, Class C Stock and Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders’ Equity Shares Amount Balance as of December 31, 2025 12,088 $ 93,126 $ ( 1,916 ) $ 324,055 $ 415,265 Stock issued 28 0 0 0 0 Stock-based compensation 0 6,793 0 0 6,793 Tax withholding related to vesting of restricted stock units, and other 0 ( 6,267 ) 0 0 ( 6,267 ) Dividends and dividend equivalents declared ($ 0.21 per share) 0 50 0 ( 2,609 ) ( 2,559 ) Sale of interest in consolidated entities 0 3,200 0 0 3,200 Net income 0 0 0 62,578 62,578 Other comprehensive income (loss) 0 0 ( 264 ) 0 ( 264 ) Balance as of March 31, 2026 12,116 $ 96,902 $ ( 2,180 ) $ 384,024 $ 478,746 See accompanying notes. 7 Table of Contents Alphabet Inc. Alphabet Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended March 31, 2025 2026 Operating activities Net income $ 34,540 $ 62,578 Adjustments: Depreciation of property and equipment 4,487 6,482 Stock-based compensation expense 5,516 6,751 Deferred income taxes ( 1,152 ) 6,920 Loss (gain) on debt and equity securities, net ( 9,960 ) ( 36,804 ) Other 481 1,265 Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable, net 1,638 ( 363 ) Income taxes, net 7,197 8,101 Other assets ( 1,288 ) ( 3,403 ) Accounts payable ( 880 ) ( 240 ) Accrued expenses and other liabilities ( 4,929 ) ( 6,002 ) Deferred revenue 500 505 Net cash provided by operating activities 36,150 45,790 Investing activities Purchases of property and equipment ( 17,197 ) ( 35,674 ) Purchases of marketable securities ( 18,453 ) ( 31,041 ) Maturities and sales of marketable securities 20,345 38,001 Purchases of non-marketable securities ( 958 ) ( 906 ) Maturities and sales of non-marketable securities 259 848 Acquisitions, net of cash acquired, and purchases of intangible assets ( 340 ) ( 33,621 ) Other investing activities 150 ( 996 ) Net cash used in investing activities ( 16,194 ) ( 63,389 ) Financing activities Net payments related to stock-based award activities ( 3,110 ) ( 5,483 ) Repurchases of stock ( 15,068 ) 0 Dividend payments ( 2,434 ) ( 2,542 ) Proceeds from issuance of debt, net of costs 4,532 31,379 Repayments of debt ( 4,521 ) ( 1,477 ) Proceeds from sale of interest in consolidated entities, net 400 3,200 Net cash provided by (used in) financing activities ( 20,201 ) 25,077 Effect of exchange rate changes on cash and cash equivalents 43 ( 123 ) Net increase (decrease) in cash and cash equivalents ( 202 ) 7,355 Cash and cash equivalents at beginning of period 23,466 30,708 Cash and cash equivalents at end of period $ 23,264 $ 38,063 Supplemental disclosures of non-cash investing activities: Property and equipment included in accrued liabilities and accounts payable $ 11,388 $ 24,131 See accompanying notes. 8 Table of Contents Alphabet Inc. Alphabet Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Summary of Significant Accounting Policies Nature of Operations Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we implemented a holding company reorganization, and as a result, Alphabet Inc. ("Alphabet") became the successor issuer to Google. We generate revenues by delivering relevant, cost-effective online advertising; cloud-based solutions that provide enterprise customers of all sizes with infrastructure, platform services, and applications; and sales of other products and services, such as fees received for subscription-based products, apps and in-app purchases, and devices. Basis of Consolidation The consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. Intercompany balances and transactions have been eliminated. Unaudited Interim Financial Information These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and in our opinion, include all adjustments of a normal recurring nature necessary for fair financial statement presentation. Interim results are not necessarily indicative of the results to be expected for the full year ending December 31, 2026. We have made estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. These consolidated financial statements and other information presented in this Form 10-Q should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC. There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2025, except for as described below. Use of Estimates Preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates due to uncertainties. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses; contingent liabilities; fair values of financial instruments, intangible assets and goodwill; income taxes; inventory; and useful lives of intangible assets and property and equipment, among others. We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, and the results of which form the basis for making judgments about the carrying values of assets and liabilities. Acquired Intangible Assets Intangible assets with definite lives are amortized over their estimated useful lives on a straight-line basis generally over periods ranging from one to 10 years, and are subsequently removed from the presentation of gross intangible assets and accumulated amortization once they are fully amortized. Assets Held for Sale We consider assets to be held for sale in the period when all of the criteria for a qualifying plan of sale are met. Upon designation as held for sale, we record the assets at the lower of their carrying value or their estimated fair value, reduced for the cost to sell the assets, and cease depreciation. Long-lived assets classified as held for sale are measured at fair value on a nonrecurring basis. 9 Table of Contents Alphabet Inc. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 "Income Statement: Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)" to improve the disclosures about an entity’s expenses. Upon adoption, we will be required to disclose in the notes to the financial statements a disaggregation of certain expense categories included within the relevant expense captions on the consolidated statements of income. The standard is effective for our 2027 annual period, and our interim periods beginning in 2028, with early adoption permitted. The standard can be applied either prospectively or retrospectively. We are currently assessing adoption timing, the method of adoption, and the effect that the updated standard will have on our financial statement disclosures. In September 2025, the FASB issued ASU 2025-06 "Intangibles: Goodwill and Other‒Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" to modernize the accounting for software costs under Subtopic 350-40, Intangibles‒Goodwill and Other‒Internal-Use Software (referred to as “internal-use software”). Upon adoption, we will be required to account for internal-use software under the updated capitalization criteria. The standard is effective for our interim and annual 2028 periods, with early adoption permitted. The standard can be applied either prospectively, retrospectively, or under a modified transition approach. We are currently assessing adoption timing, the method of adoption, and the effect that the updated standard will have on our consolidated financial statements. Prior Period Reclassifications Certain amounts in prior periods have been reclassified to conform with current period presentation. Note 2. Revenues Disaggregated Revenues The following table presents revenues disaggregated by type (in millions): Three Months Ended March 31, 2025 2026 Google Search & other $ 50,702 $ 60,399 YouTube ads 8,927 9,883 Google Network 7,256 6,971 Google advertising 66,885 77,253 Google subscriptions, platforms, and devices 10,379 12,384 Google Services total 77,264 89,637 Google Cloud 12,260 20,028 Other Bets 450 411 Hedging gains (losses) 260 ( 180 ) Total revenues $ 90,234 $ 109,896 The following table presents revenues disaggregated by geography, based on the addresses of our customers (in millions): Three Months Ended March 31, 2025 2026 United States $ 43,964 49 % $ 53,975 49 % EMEA (1) 25,923 29 31,468 28 APAC (1) 14,854 16 18,288 17 Other Americas (1) 5,233 6 6,345 6 Hedging gains (losses) 260 0 ( 180 ) 0 Total revenues $ 90,234 100 % $ 109,896 100 % (1) Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America ("Other Americas"). 10 Table of Contents Alphabet Inc. Revenue Backlog As of March 31, 2026, we had $ 467.6 billion of remaining performance obligations (“revenue backlog”), of which $ 462.3 billion related to Google Cloud. Revenue backlog represents commitments in customer contracts that have not yet been recognized as revenue. We expect to recognize just over 50 % of the revenue backlog as revenues over the next 24 months with the remainder to be recognized thereafter. The estimated revenue backlog and timing of revenue recognition for these commitments is largely driv en by contract duration, our ability to deliver in accordance with relevant contract terms, and when our customers utilize services. Revenue backlog includes related deferred revenue currently recorded as well as amounts that will be invoiced in future periods and excludes cancellable contracts and payments we make to our customers not expected to be in exchange for distinct goods and services. In the first quarter of 2026, we elected to change our reporting of revenue backlog to now also include contracts with an original expected term of one year or less. As of March 31, 2026, the portion of our revenue backlog related to contracts with an original expected term of one year or less was approximately $ 7.3 billion . Deferred Revenues We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenues primarily relate to Google Cloud and Google s ubscriptions, platforms, and devices. Total deferred revenue as of December 31, 2025 was $ 8.6 billion, of which $ 3.5 billion was recognized as revenues for the three months ended March 31, 2026. Total deferred revenue as of March 31, 2026 was $ 9.8 billion. Note 3. Financial Instruments Fair Value Measurements Investments Measured at Fair Value on a Recurring Basis Cash equivalents and marketable equity securities are measured at fair value and classified within Level 1 and Level 2 in the fair value hierarchy, because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets. Debt securities are measured at fair value and classified within Level 2 in the fair value hierarchy, because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value. The following tables summarize our cash, cash equivalents, and marketable securities measured at fair value on a recurring basis (in millions): 11 Table of Contents Alphabet Inc. As of December 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Total Cash $ 15,305 Cash equivalents: Money market funds $ 11,349 $ 0 $ 11,349 Time deposits 0 3,353 3,353 Government bonds 0 602 602 Corporate debt securities 0 99 99 Total cash and cash equivalents 11,349 4,054 30,708 Marketable securities: Marketable equity securities 4,402 1,911 6,313 Time deposits 0 0 0 Government bonds 0 50,549 50,549 Corporate debt securities 0 21,565 21,565 Mortgage-backed and asset-backed securities 0 17,708 17,708 Total marketable securities 4,402 91,733 96,135 Total $ 15,751 $ 95,787 $ 126,843 As of March 31, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Total Cash $ 15,408 Cash equivalents: Money market funds $ 16,686 $ 0 $ 16,686 Time deposits 0 2,966 2,966 Government bonds 0 2,946 2,946 Corporate debt securities 0 57 57 Total cash and cash equivalents 16,686 5,969 38,063 Marketable securities: Marketable equity securities 5,541 503 6,044 Time deposits 0 0 0 Government bonds 0 43,204 43,204 Corporate debt securities 0 21,763 21,763 Mortgage-backed and asset-backed securities 0 17,766 17,766 Total marketable securities 5,541 83,236 88,777 Total $ 22,227 $ 89,205 $ 126,840 12 Table of Contents Alphabet Inc. Investments Measured at Fair Value on a Nonrecurring Basis Non-marketable equity securities accounted for under the measurement alternative are investments in privately held companies without readily determinable market values. The carrying value of these non-marketable equity securities is adjusted upward or downward to fair value upon observable transactions for identical or similar investments of the same issuer or impairment. Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy, and remeasurements due to impairment are classified within Level 3. Our valuation methods include option pricing models, market comparable approach, and common stock equivalent method, which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, expected time to exit, risk free rate, and the rights, and obligations of the securities we hold. These inputs vary significantly based on investment type. As of March 31, 2026, the carrying value of our non-marketable equity securities accounted for under the measurement alternative was $ 101.3 billion, of which $ 73.6 billion was remeasured at fair value during the three months ended March 31, 2026 and was primarily classified within Level 2 o f the fair value hierarchy at the time of measurement. Debt and Equity Securities Debt Securities The following table summarizes the estimated fair value of investments in available-for-sale marketable debt securities by effective contractual maturity dates (in millions): As of March 31, 2026 Due in 1 year or less $ 14,323 Due in 1 year through 5 years 42,670 Due in 5 years through 10 years 12,471 Due after 10 years 13,269 Total $ 82,733 The following tables present fair values and gross unrealized gains and losses recorded to accumulated other comprehensive income (AOCI), less any expected credit losses, aggregated by investment category (in millions): As of December 31, 2025 Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Time deposits $ 3,353 $ 0 $ 0 $ 3,353 Government bonds 49,087 443 ( 26 ) 49,504 Corporate debt securities 18,346 242 ( 32 ) 18,556 Mortgage-backed and asset-backed securities 14,337 174 ( 128 ) 14,383 Total investments with fair value change reflected in other comprehensive income $ 85,123 $ 859 $ ( 186 ) $ 85,796 As of March 31, 2026 Adjusted Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Time deposits $ 2,966 $ 0 $ 0 $ 2,966 Government bonds 44,465 272 ( 101 ) 44,636 Corporate debt securities 18,737 124 ( 63 ) 18,798 Mortgage-backed and asset-backed securities 14,627 109 ( 160 ) 14,576 Total investments with fair value change reflected in other comprehensive income $ 80,795 $ 505 $ ( 324 ) $ 80,976 13 Table of Contents Alphabet Inc. The following tables present fair values and gross unrealized losses recorded to AOCI, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions): As of December 31, 2025 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Government bonds $ 4,230 $ ( 9 ) $ 1,174 $ ( 17 ) $ 5,404 $ ( 26 ) Corporate debt securities 915 0 2,429 ( 24 ) 3,344 ( 24 ) Mortgage-backed and asset-backed securities 1,377 ( 4 ) 3,035 ( 124 ) 4,412 ( 128 ) Total $ 6,522 $ ( 13 ) $ 6,638 $ ( 165 ) $ 13,160 $ ( 178 ) As of March 31, 2026 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss Government bonds $ 14,349 $ ( 85 ) $ 890 $ ( 16 ) $ 15,239 $ ( 101 ) Corporate debt securities 5,506 ( 17 ) 1,826 ( 19 ) 7,332 ( 36 ) Mortgage-backed and asset-backed securities 5,228 ( 40 ) 1,972 ( 120 ) 7,200 ( 160 ) Total $ 25,083 $ ( 142 ) $ 4,688 $ ( 155 ) $ 29,771 $ ( 297 ) We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. For certain marketable debt securities, we have elected the fair value option for which changes in fair value are recorded in other income (expense), net (OI&E). The fair value option was elected for these securities to align with the unrealized gains and losses from related derivative contracts. The following table summarizes gains and losses for debt securities, reflected as a component of OI&E (in millions): Three Months Ended March 31, 2025 2026 Unrealized gain (loss) on fair value option debt securities $ 97 $ ( 142 ) Gross realized gain on debt securities 266 83 Gross realized loss on debt securities ( 175 ) ( 33 ) (Increase) decrease in allowance for credit losses 14 ( 19 ) Total gain (loss) on debt securities recognized in other income (expense), net $ 202 $ ( 111 ) Non-Marketable Securities Our non-marketable securities primarily consist of non-marketable equity securities accounted for under the measurement alternative. The carrying value is measured at the total initial cost plus the cumulative net upward and downward adjustments (including impairments). We account for non-marketable equity securities through which we exercise significant influence, but do not have control over the investee under the equity method. Certain of our non-marketable securities include our investments in variable interest entities (VIEs) where we are not the primary beneficiary. See Note 5 for further details on VIEs. Realized net gain (loss) on equity securities sold during the period reflects the difference between the sale proceeds and the carrying value of the equity securities at the beginning of the period or the purchase date, if later. All gains and losses, including impairments, are included as components of OI&E. 14 Table of Contents Alphabet Inc. The carrying values for non-marketable securities are summarized below (in millions): As of December 31, 2025 As of March 31, 2026 Non-marketable securities: Total initial cost of non-marketable equity securities accounted for under the measurement alternative $ 28,429 $ 29,489 Cumulative upward adjustments 44,485 80,792 Cumulative downward adjustments (including impairments) ( 8,820 ) ( 8,935 ) Carrying value of non-marketable equity securities accounted for under the measurement alternative 64,094 101,346 Equity method investments and other 4,593 5,600 Total non-marketable securities $ 68,687 $ 106,946 Gains and Losses on Equity Securities Gains and losses (including impairments), net, for equity securities included in OI&E are summarized below (in millions): Three Months Ended March 31, 2025 2026 Gross unrealized gain on non-marketable equity securities accounted for under the measurement alternative $ 9,715 $ 36,660 Gross unrealized loss (including impairments) on non-marketable equity securities accounted for under the measurement alternative ( 399 ) ( 346 ) Unrealized net gain (loss) on non-marketable equity securities accounted for under the measurement alternative 9,316 36,314 Unrealized net gain (loss) on marketable and other equity securities 227 105 Realized net gain (loss) on marketable and non-marketable equity securities sold during the period 215 496 Total gain (loss) on equity securities in other income (expense), net (1) $ 9,758 $ 36,915 (1) Excludes income (loss) and impairment from equity method investments. Refer to Note 7 for further details. Cumulative net gains (losses), calculated as the difference between the sales price and purchase price, represent the total net gains (losses) recognized after the initial purchase date. This represents the total economic impact of the investment, regardless of when the gains or losses were previously recognized. Cumulative net gains on equity securities sold were $ 161 million and $ 502 million during the three months ended March 31, 2025 and 2026, respectively. Derivative Financial Instruments We utilize derivative instruments to manage risks relating to our ongoing business operations, including foreign currencies, interest rates, commodity prices, credit risk, and market prices of certain marketable equity securities. These derivatives are primarily classified within Level 2 of the fair value hierarchy. We also enter into derivatives as a result of agreements with certain third parties to backstop certain payment obligations related to data centers, which we account for as credit derivatives. Additionally, a certain strategic investment includes forward funding commitments that are accounted for as equity derivatives, as they include rights to participate in future capital funding, the exercise of which is contingent upon the achievement of specified operational and financial milestones. These credit and equity derivatives are classified within Level 3 of the fair value hierarchy. Our valuation methods include probability-weighted expected return models, which may include a combination of observable and unobservable inputs, including counterparty risk, credit default rates, risk-free rate, and our contractual rights and obligations under the agreements. We recognize derivative instruments in the Consolidated Balance Sheets at fair value. We present our foreign currency collars (an option strategy comprised of a combination of purchased and written options) at net fair values and present all other derivatives at gross fair values. The accounting treatment for derivatives is based on the intended use and hedge designation. 15 Cash Flow Hedges We designate foreign currency forwards and options (including collars) as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the US dollar. These contracts have maturitie s of 24 months or less. Cash flow hedge amounts included in the assessment of hedge effectiveness are deferred in AOCI and reclassified to revenue when the hedged item is recognized in earnings. Hedge components excluded from our assessment of hedge effectiveness are amortized on a straight-line basis over the life of the hedging instrument in revenues. The difference between fair value changes of the excluded component and the amount amortized to revenues is recorded in AOCI. As of March 31, 2026, the net accumulated gain on our foreign currency cash flow hedges b efore tax effect wa s $ 415 million , which is expected to be reclassified from AOCI into revenues within the next 12 mo nths. Additionally, we may designate interest rate derivatives as cash flow hedges to manage our exposure to certain interest rate risks. Changes in the fair value of these derivatives are deferred in AOCI and reclassified to OI&E when the hedged item is recognized in earnings. Net Investment Hedges We designate foreign currency forwards, options (including collars), cross-currency swaps, and foreign currency-denominated debt as net investment hedges to hedge the foreign currency risks related to our investments in foreign subsidiaries. Net investment hedge amounts included in the assessment of hedge effectiveness are recognized in AOCI. Changes in the fair value of hedge components of forward and option contracts that are excluded from the assessment of hedge effectiveness are recognized in OI&E. Hedge components of cross-currency swaps that are excluded from the assessment of hedge effectiveness are amortized over the life of the hedging instrument and recognized in OI&E. The difference between fair value changes of the excluded component and the amount amortized to OI&E is recorded in AOCI. Foreign currency-denominated debt designated as net investment hedges had a carrying value of $ 15.4 billion and $ 19.6 billion as of December 31, 2025 and March 31, 2026, respectively. Derivatives Not Designated as Hedging Instruments We primarily enter into derivatives not designated as hedging instruments to manage risks related to our ongoing business operations. The primary risk managed is foreign exchange risk related to the remeasurement of monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains and losses on these foreign exchange derivatives are recorded within the "foreign currency exchange gain (loss), net" component of OI&E. We also enter into derivatives to manage other risks, including interest rates, commodity prices, credit risk, and market prices of certain marketable equity securities, the gains and losses from which are recorded within the "other" component of OI&E. We have entered into agreements with certain third parties to backstop certain payment obligations relating to data centers, which we account for as credit derivatives. The notional amounts for these credit derivatives represent the maximum potential exposure regarding future payments in the event of specified default scenarios by underlying parties. These agreements carry remaining terms of up to 15 years and the total potential exposure reduces over time as the underlying parties fulfill their payment obligations. Upon a default under these backstops, we retain the right to assume the underlying leases for internal use or to sublease to third parties. Under specific conditions or following a predetermined period, we may elect to extinguish the backstop obligation by making a termination payment. If we elect such payment, our obligations may be partially offset by equity or cash receipts from counterparties. These potential inflows are not reflected in the notional amounts for credit derivatives. The notional amounts for equity derivatives represent an agreement for future capital funding in the form of notes receivable or equity to be funded in multiple tranches contingent upon the achievement of specified operational and financial milestones through 2030. The fair value of these equity derivatives was not material as of March 31, 2026 . Gains and losses arising from these credit and equity derivatives are recorded within the “other” component of OI&E. See Note 7 for further details. 16 The gross notional amounts of outstanding derivative instruments were as follows (in millions): As of December 31, 2025 As of March 31, 2026 Derivatives designated as hedging instruments: Foreign exchange derivatives Cash flow hedges $ 23,852 $ 23,448 Net investment hedges $ 14,203 $ 14,020 Derivatives not designated as hedging instruments: Foreign exchange derivatives $ 56,085 $ 51,976 Equity derivatives $ 0 $ 30,000 Credit derivatives $ 16,940 $ 28,436 Other derivatives $ 15,900 $ 15,862 In April, 2026, we entered into additional agreements with certain third parties to backstop certain obligations relating to third-party data centers that we expect to be accounted for as credit derivatives with notional amounts totaling approximately $ 15.3 billion. See Note 5 for further details on variable interest entity considerations relating to our equity and credit derivatives. The fair values of outstanding derivative instruments were as follows (in millions): As of December 31, 2025 As of March 31, 2026 Assets (1) Liabilities (2) Assets (1) Liabilities (2) Derivatives designated as hedging instruments: Foreign exchange derivatives $ 316 $ 197 $ 991 $ 39 Derivatives not designated as hedging instruments: Foreign exchange derivatives 92 15 244 472 Credit derivatives 0 69 0 339 Other derivatives 324 98 375 40 Total derivatives not designated as hedging instruments 416 182 619 851 Total $ 732 $ 379 $ 1,610 $ 890 (1) Derivative assets are recorded as other current and non-current assets. (2) Derivative liabilities are recorded as accrued expenses and other liabilities, current and non-current. The gains (losses) on derivatives and non-derivative financial instruments in cash flow hedging and net investment hedging relationships recognized in other comprehensiv e income are summarized below (in millions): Three Months Ended March 31, 2025 2026 Cash flow hedging relationship: Foreign exchange and other derivatives Amount included in the assessment of effectiveness $ ( 339 ) $ 259 Amount excluded from the assessment of effectiveness ( 61 ) 83 Net investment hedging relationship: Amount included in the assessment of effectiveness Foreign exchange derivatives ( 206 ) 320 Foreign currency-denominated debt 0 440 Amounts excluded from the assessment of effectiveness Foreign exchange derivatives 0 1 Total $ ( 606 ) $ 1,103 17 The table below presents the gains (losses) of derivatives included in the Consolidated Statements of Income: (in millions): Three Months Ended March 31, 2025 2026 Revenues Other income (expense), net Revenues Other income (expense), net Total amounts included in the Consolidated Statements of Income $ 90,234 $ 11,183 $ 109,896 $ 37,716 Effect of cash flow hedges: Foreign exchange derivatives Amount included in the assessment of effectiveness $ 242 $ 0 $ ( 211 ) $ 0 Amount excluded from the assessment of effectiveness 18 0 31 0 Effect of fair value hedges: Foreign exchange derivatives Hedged items 0 ( 9 ) 0 0 Amount included in the assessment of effectiveness 0 9 0 0 Amount excluded from the assessment of effectiveness 0 1 0 0 Effect of net investment hedges: Foreign exchange derivatives Amount excluded from the assessment of effectiveness 0 31 0 62 Effect of non-designated hedges: Foreign exchange derivatives 0 65 0 ( 179 ) Credit derivatives 0 0 0 ( 148 ) Other derivatives 0 ( 71 ) 0 14 Total gains (losses) $ 260 $ 26 $ ( 180 ) $ ( 251 ) Offsetting of Derivatives We enter into master netting arrangements and collateral security arrangements to reduce credit risk. Cash collateral received related to derivative instruments under our collateral security arrangements are included in other current assets with a corresponding liability . Cash and non-cash collateral pledged related to derivative instruments under our collateral security arrangements are primarily included in other current assets. The gross amounts of derivative instruments subject to master netting arrangements with various counterparties, and cash and non-cash collateral received and pledged under such agreements were as follows (in millions): As of December 31, 2025 Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Financial Instruments (1) Cash and Non-Cash Collateral Received or Pledged Net Amounts Derivatives assets $ 842 $ ( 110 ) $ 732 $ ( 140 ) $ ( 231 ) $ 361 Derivatives liabilities $ 489 $ ( 110 ) $ 379 $ ( 140 ) $ ( 15 ) $ 224 18 As of March 31, 2026 Gross Amounts Not Offset in the Consolidated Balance Sheets, but Have Legal Rights to Offset Gross Amounts Recognized Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Financial Instruments (1) Cash and Non-Cash Collateral Received or Pledged Net Amounts Derivatives assets (1) $ 1,725 $ ( 115 ) $ 1,610 $ ( 470 ) $ ( 696 ) $ 444 Derivatives liabilities $ 1,005 $ ( 115 ) $ 890 $ ( 470 ) $ ( 18 ) $ 402 (1) The balances as of December 31, 2025 and March 31, 2026 were related to derivatives allowed to be net settled in accordance with our master netting agreements. Note 4. Leases We have entered into operating and finance lease agreements primarily for data centers, land, and offices throughout the world with varying lease terms. Components of lease costs were as follows (in millions): Three Months Ended March 31, 2025 2026 Operating lease cost $ 790 $ 892 Finance lease cost: Amortization of lease assets 96 226 Interest on lease liabilities 15 17 Finance lease cost 111 243 Variable lease cost 360 403 Total lease cost $ 1,261 $ 1,538 Supplemental information related to leases was as follows (in millions): As of December 31, 2025 As of March 31, 2026 Weighted-average remaining lease term: Operating leases 7.6 years 7.8 years Finance leases 8.3 years 9.0 years Weighted-average discount rate: Operating leases 3.6 % 3.7 % Finance leases 3.1 % 3.0 % 19 As of December 31, 2025 As of March 31, 2026 Operating leases: Operating lease assets $ 15,221 $ 15,509 Accrued expenses and other liabilities $ 3,209 $ 3,178 Operating lease liabilities 12,744 12,983 Total operating lease liabilities $ 15,954 $ 16,161 Finance leases: Property and equipment, at cost $ 6,822 $ 7,036 Accumulated depreciation ( 2,025 ) ( 2,203 ) Property and equipment, net $ 4,797 $ 4,833 Accrued expenses and other liabilities $ 441 $ 177 Other long-term liabilities 2,059 2,037 Total finance lease liabilities $ 2,500 $ 2,214 Three Months Ended March 31, 2025 2026 Cash payments for lease liabilities: Operating cash flows used for operating leases $ 878 $ 918 Operating cash flows used for finance leases $ 15 $ 17 Financing cash flows used for finance leases (1) $ 192 $ 522 Assets obtained in exchange for lease liabilities: Operating leases $ 697 $ 1,075 Finance leases $ 523 $ 211 (1) Additionally, in the three month period ended March 31, 2026, we made $ 634 million of lease prepayments for leases not yet commenced, which are expected to be accounted for as finance leases. Future lease payments as of March 31, 2026 were as follows (in millions): Operating Leases Finance Leases Remainder of 2026 $ 2,485 $ 144 2027 3,229 349 2028 2,643 339 2029 2,186 319 2030 1,797 247 Thereafter 6,467 1,237 Total undiscounted lease payments 18,807 2,635 Less: imputed interest ( 2,646 ) ( 421 ) Total lease liability balance $ 16,161 $ 2,214 As of March 31, 2026, we have entered into leases primarily related to data centers that have not yet commenced with future lease payments of $ 75.6 billion that are not yet recorded. These leases will commence between 2026 and 2031 with non-cancelable lease terms primarily between one and 25 years. 20 Note 5. Variable Interest Entities Consolidated VIEs We consolidate VIEs in which we hold a variable interest and are the primary beneficiary. The results of operations and financial position of these VIEs are included in our consolidated financial statements. Unconsolidated VIEs We hold various forms of interests in VIEs, including certain of our investments in private companies and renewable energy entities, certain leases and credit backstops with data center entities, and certain backstops with energy infrastructure entities. Because we have determined that we do not direct the activities that most significantly impact the economic performance of these entities, we are not the primary beneficiary. Therefore, these VIEs are not consolidated within our financial statements. Our investments in private companies and renewable energy VIEs are primarily accounted for as non-marketable securities under the measurement alternative or the equity method. The carrying value of these investments are included within non-marketable securities on our Consolidated Balance Sheets. See Note 3 for further details on investments. The maximum exposure to these VIEs is generally limited to the current carrying value plus future funding commitments. As of December 31, 2025 and March 31, 2026, future funding commitments were $ 1.1 billion and $ 40.7 billion, respectively. As of March 31, 2026, this amount includes commitments for a future private investment consisting of a $ 10.0 billion capital commitment and $ 30.0 billion of future capital funding contingent upon the achievement of specified operational and financial milestones through 2030, which is accounted for as an equity derivative. See Note 3 for further details on derivatives. Leases with data center leasing VIEs are accounted for as finance leases and are included within total lease obligations disclosed in Note 4. The maximum exposure arising from leases with VIEs is limited to the net carrying value of commenced finance lease assets, plus the undiscounted future obligations for leases that have not yet commenced. See Note 4 for further details on leases. Credit backstops we have provided to data center VIEs are accounted for as credit derivatives . The maximum exposure arising from credit backstops with VIEs is limited to the financial risk over the remaining period of the arrangements, as reflected by the credit derivative notional value. See Note 3 for further details on credit derivatives. Backstop agreements we have provided to certain energy infrastructure VIEs are accounted for as financial guarantees. The maximum exposure to these VIEs is limited to the potential amount of future payments under these arrangements. See Note 10 for further details on financial guarantees. Note 6. Debt Short-Term Debt We have a commercial paper program of up to $ 25.0 billion, which is used for general corporate purposes. We had no commercial paper outstanding as of December 31, 2025 and March 31, 2026 . Our short-term debt balance also includes the current portion of certain long-term debt. Long-Term Debt During the first quarter of 2026, we issued fixed-rate senior unsecured notes consisting of: $ 20.0 billion US dollar-denominated notes with a weighted-average coupon rate of 4.80 % and a weighted-average maturity of 15 years; £ 5.5 billion Sterling-denominated notes with a weighted-average coupon rate of 5.31 % and a weighted-average maturity of 31 years; and CHF 3.1 billion Swiss Franc-denominated notes with a weighted-average coupon rate of 1.06 % and a weighted-average maturity of 10 years. 21 Total outstanding long-term debt is summarized below (in millions, except percentages): Maturity Coupon Rate Effective Interest Rate As of December 31, 2025 As of March 31, 2026 Debt 2016 US dollar notes 2026 2.00 % 2.23 % $ 2,000 $ 2,000 2020 US dollar notes 2027 - 2060 0.80 % - 2.25 % 0.93 % - 2.33 % 9,000 9,000 2025 US dollar notes (1) 2028 - 2075 3.88 % - 5.70 % 4.00 % - 5.79 % 22,500 22,500 2025 Euro notes (2) 2028 - 2064 2.38 % - 4.38 % 2.57 % - 4.51 % 15,585 15,265 2026 US dollar notes 2029 - 2066 3.70 % - 5.75 % 3.93 % - 5.84 % 0 20,000 2026 Sterling notes (2) 2029 - 2126 4.13 % - 6.13 % 4.23 % - 6.19 % 0 7,310 2026 Swiss franc notes (2) 2029 - 2051 0.43 % - 1.87 % 0.52 % - 1.90 % 0 3,833 Other long-term debt 0 397 Total face value of long-term debt 49,085 80,305 Unamortized discount and debt issuance costs (2) ( 542 ) ( 806 ) Less: current portion of long-term notes (3) ( 1,996 ) ( 1,998 ) Total long-term debt $ 46,547 $ 77,501 (1) Includes $ 500 million of floating-rate notes due in 2028. Interest is calculated using the compounded Secured Overnight Financing Rate (SOFR) plus 0.52 %, reset quarterly. (2) Principal, unamortized discount, and debt issuance costs for the foreign currency-denominated notes include the effect of foreign exchange rates. (3) Total current portion of long-term debt is included within accrued expenses and other current liabilities. See Note 7 for further details. The notes in the table above are senior unsecured obligations and rank equally with each other. We may redeem the fixed-rate notes at any time in whole or in part at specified redemption prices. The floating-rate notes are not redeemable prior to maturity. Interest is payable quarterly for the floating-rate notes, semi-annually for the US dollar-denominated fixed-rate notes, and annually for the euro-, sterling-, and Swiss franc-denominated fixed-rate notes. The effective interest rates are based on proceeds received and contractual interest payments. The total estimated fair value of the outstanding notes was approximately $ 45.6 billion and $ 75.3 billion as of December 31, 2025 and March 31, 2026, respectively. The fair value was determined based on observable market prices of identical instruments in less active markets and is categorized accordingly as Level 2 in the fair value hierarchy. Credit Facility As of March 31, 2026, we had $ 11.7 billion of credit facilities expiring at various dates through April 2030, of which $ 1.2 billion was outstanding. The outstanding debt under the credit facilities bears an interest rate of SOFR plus 1.5 % to 2.25 % that is paid quarterly. Note 7. Supplemental Financial Statement Information Accounts Receivable The allowance for credit losses on accounts receivable was $ 924 million an d $ 962 million as of December 31, 2025 and March 31, 2026, respectively. 22 Property and Equipment, Net Property and equipment, net, co nsisted of the following (in millions): As of December 31, 2025 As of March 31, 2026 Technical infrastructure (1) $ 203,679 $ 217,886 Office space 48,348 48,772 Corporate and other assets 14,463 5,945 Property and equipment, in service 266,490 272,603 Less: accumulated depreciation ( 98,485 ) ( 100,180 ) Add: assets not yet in service 78,592 108,597 Property and equipment, net $ 246,597 $ 281,020 (1) As of December 31, 2025 and March 31, 2026, approximately 60 % of technical infrastructure assets were comprised of servers and network equipment. The remaining balance was comprised of data center land and buildings and related assets. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in millions): As of December 31, 2025 As of March 31, 2026 Accrued fines and settlements (1) $ 15,594 $ 15,551 Accrued purchases of property and equipment 8,877 12,873 Accrued customer liabilities 5,029 4,965 Payables to brokers for unsettled investment trades 950 631 Income taxes payable, net 523 3,905 Other accrued expenses and current liabilities 24,584 25,094 Accrued expenses and other current liabilities $ 55,557 $ 63,019 (1) See Legal Matters in Note 10 for further details. Noncontrolling Interests Total noncontrolling interests (NCI) in our consolidated subsidiaries were $ 3.4 billion and $ 7.2 billion as of December 31, 2025 and March 31, 2026, respectively, of which $ 841 million and $ 1.8 billion were redeemable noncontrolling interests (RNCI) as of December 31, 2025 and March 31, 2026, respectively. NCI and RNCI are included within additional paid-in capital. Net loss attributable to noncontrolling interests was not material for any period presented and is included within the "other" component of OI&E. Accumulated Other Comprehensive Income (Loss) Components of AOCI, net of income tax, were as follows (in millions): Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Available-for-Sale Investments Unrealized Gains (Losses) on Cash Flow Hedges Total Balance as of December 31, 2024 $ ( 5,080 ) $ ( 299 ) $ 579 $ ( 4,800 ) Other comprehensive income (loss) before reclassifications 663 645 ( 252 ) 1,056 Amounts excluded from the assessment of hedge effectiveness recorded in AOCI 0 0 ( 61 ) ( 61 ) Amounts reclassified from AOCI 0 ( 84 ) ( 197 ) ( 281 ) Other comprehensive income (loss) 663 561 ( 510 ) 714 Balance as of March 31, 2025 $ ( 4,417 ) $ 262 $ 69 $ ( 4,086 ) 23 Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Available-for-Sale Investments Unrealized Gains (Losses) on Cash Flow Hedges Total Balance as of December 31, 2025 $ ( 2,558 ) $ 678 $ ( 36 ) $ ( 1,916 ) Other comprehensive income (loss) before reclassifications ( 338 ) ( 356 ) 196 ( 498 ) Amounts excluded from the assessment of hedge effectiveness recorded in AOCI 12 0 83 95 Amounts reclassified from AOCI 0 ( 19 ) 158 139 Other comprehensive income (loss) ( 326 ) ( 375 ) 437 ( 264 ) Balance as of March 31, 2026 $ ( 2,884 ) $ 303 $ 401 $ ( 2,180 ) The effects on net income of amounts reclassified from AOCI were as follows (in millions): Three Months Ended March 31, AOCI Components Location 2025 2026 Unrealized gains (losses) on available-for-sale investments Other income (expense), net $ 104 $ 24 Benefit (provision) for income taxes ( 20 ) ( 5 ) Net of income tax 84 19 Unrealized gains (losses) on cash flow hedges Foreign exchange derivatives Revenue 242 ( 211 ) Interest rate derivatives Other income (expense), net 0 1 Benefit (provision) for income taxes ( 45 ) 52 Net of income tax 197 ( 158 ) Total amount reclassified, net of income tax $ 281 $ ( 139 ) Other Income (Expense), Net Components of OI&E were as follows (in millions): Three Months Ended March 31, 2025 2026 Interest income $ 1,001 $ 1,381 Interest expense (1) ( 34 ) ( 533 ) Foreign currency exchange gain (loss), net ( 106 ) 146 Gain (loss) on debt securities, net 202 ( 111 ) Gain (loss) on equity securities, net 9,758 36,915 Income (loss) and impairment from equity method investments, net ( 22 ) 60 Other 384 ( 142 ) Other income (expense), net $ 11,183 $ 37,716 (1) Interest expense is net of interest capitalized of $ 79 million and $ 265 million for the three months ended March 31, 2025 and 2026, respectively. Note 8. Acquisitions and Divestitures Wiz Acquisition 24 On March 11, 2026, we completed our acquisition of Wiz for $ 29.5 billion, after purchase price adjustments and excluding post combination compensation arrangements. This acquisition represents an investment by Google Cloud to accelerate our capabilities in multicloud and artificial intelligence (AI)-driven security. Following the close of the acquisition, the financial results are included in our consolidated financial statements within the Google Cloud segment. The preliminary purchase price was allocated as follows (in millions): Intangible assets $ 8,300 Goodwill (1) 22,689 Net liabilities assumed (2) ( 1,522 ) Total purchase price $ 29,467 (1) Goodwill has been recorded in the Google Cloud segment and primarily attributable to synergies expected to arise after the acquisition. G oodwill is not deductible for tax purposes. (2) Includes $ 660 million of acquired cash. Intangible assets acquired as of the acquisition date were as follows: Amount (in millions) Weighted-Average Useful Life (in years) Patents and developed technology $ 3,600 7 Customer relationships 4,500 10 Trade names and other 200 7 Total intangible assets $ 8,300 Intersect Acquisition On March 10, 2026, we completed our acquisition of Intersect, a developer of renewable energy, for $ 5.9 billion, after purchase price adjustments. This acquisition enables acceleration of data center capacity and energy development. Intersect is a VIE and we have determined we are the primary beneficiary. Following the close of the acquisition, the financial results are included in our consolidated financial statements and are allocated to our segments. The preliminary purchase price was allocated as follows (in millions): Goodwill (1) $ 2,170 Property and equipment 5,111 Debt ( 1,214 ) Net liabilities assumed (2) ( 205 ) Total purchase price $ 5,862 (1) Goodwill has been allocated to Google Services and Google Cloud segments and primarily attributable to synergies expected to arise after the acquisition. G oodwill is not deductible for tax purposes. `(2) Includes $ 410 million of acquired cash. Pending Divestiture In March 2026, we entered into a definitive agreement to contribute our ownership interest in GFiber, a wholly owned subsidiary, into a newly formed entity. Upon closing, we expect to receive $ 1.5 billion in cash, a $ 2.0 billion note receivable, and a 49.99 % equity interest. The remaining interest is expected to be accounted for as an unconsolidated VIE under the equity method of accounting, as we will no longer be the primary beneficiary. The transaction is expected to close in late 2026. As of March 31, 2026, GFiber met the criteria for held for sale classification. No impairment loss was recognized upon classification as held for sale and we ceased depreciation of the related long-lived assets. Held for sale assets primarily consist of property and equipment of $ 6.8 billion, which is included in other current assets in our Consolidated Balance Sheet as of March 31, 2026. The operating results of GFiber remain included within the Other Bets segment through the close of the transaction. Note 9. Goodwill and Intangible Assets Goodwill 25 Changes in the carrying amount of goodwill for the three months ended March 31, 2026 were as follows (in millions): Google Services Google Cloud Other Bets Total Balance as of December 31, 2025 $ 24,870 $ 7,660 $ 850 $ 33,380 Additions 1,143 23,841 0 24,984 Foreign currency translation and other adjustments ( 28 ) ( 3 ) ( 559 ) ( 590 ) Balance as of March 31, 2026 $ 25,985 $ 31,498 $ 291 $ 57,774 Intangible Assets Information regarding intangible assets was as follows (in millions): As of December 31, 2025 As of March 31, 2026 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Value Patents and developed technology $ 1,332 $ ( 754 ) $ 578 $ 4,821 $ ( 735 ) $ 4,086 Customer relationships 582 ( 318 ) 264 5,090 ( 355 ) 4,735 Trade names and other 553 ( 307 ) 246 715 ( 287 ) 428 Total definite-lived intangible assets 2,467 ( 1,379 ) 1,088 10,626 ( 1,377 ) 9,249 Indefinite-lived intangible assets 195 0 195 195 0 195 Total intangible assets $ 2,662 $ ( 1,379 ) $ 1,283 $ 10,821 $ ( 1,377 ) $ 9,444 Amortization expense relating to intangible assets was $ 122 million and $ 178 million for the three months ended March 31, 2025 and 2026, respectively. Expected amortization expense of definite-lived intangible assets held as of March 31, 2026 was as follows (in millions): Remainder of 2026 $ 1,080 2027 1,310 2028 1,146 2029 1,098 2030 1,061 Thereafter 3,554 Total definite-lived intangible assets $ 9,249 Note 10. Commitments and Contingencies Commitments We have contractual obligations from contracts with remaining terms greater than one year primarily consisting of certain long-term supply agreements to secure future production capacity for technical infrastructure and inventory components. In addition, we have commitments for certain energy service agreements to secure energy for data center usage, and certain content licensing agreements. As of March 31, 2026, expected future fixed or minimum guaranteed commitments under these agreements were $ 232.7 billion. We expect contractual commitments under the long-term supply agreements and content licenses to generally be paid through 2030. The energy service agreements include terms ranging from two to 20 years, with payments through 2047, and generally include take-or-pay provisions for minimum quantities of energy supply and substantive termination fees. Financial Guarantees 26 We provide financial guarantees to certain counterparties, primarily in the form of backstop agreements with varying terms through August 2026. These backstop agreements support counterparty procurement of long-lead time equipment for our future power purchase and energy agreements. As of March 31, 2026, our maximum potential amount of future payments under these guarantees was $ 9.0 billion, upon which we may receive certain assets. The fair value of these obligations was not material. Indemnifications In the normal course of business, including to facilitate transactions in our services and products and corporate activities, we indemnify certain parties, including advertisers, Google Network partners, distribution partners, customers of Google Cloud offerings, lessors, and service providers with respect to certain matters. We have agreed to defend and/or indemnify certain parties against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors, and our bylaws contain similar indemnification obligations to our agents. It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows, or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of March 31, 2026, we did not have any material indemnification claims that were probable or reasonably possible. Legal Matters We record a liability when we believe that it is probable that a loss has been incurred, and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Certain outstanding matters seek speculative, substantial, or indeterminate monetary amounts, substantial changes to our business practices and products, or structural remedies. Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of a loss related to such matters, and we may be unable to estimate the reasonably possible loss or range of losses. The outcomes of outstanding legal matters are inherently unpredictable and subject to significant uncertainties, and could, either individually or in aggregate, have a material adverse effect. We expense legal fees in the period in which they are incurred. Antitrust Matters We are subject to formal and informal inquiries and investigations as well as litigation on various competition matters by regulatory authorities and private parties in the US, Europe, and other jurisdictions globally, including the following: • Android: In July 2018, the European Commission (EC) announced its decision that certain provisions in Google's Android-related distribution agreements infringed European antitrust laws, imposed a € 4.3 billion fine, and directed the termination of the conduct at issue. We appealed the EC decision and implemented changes to certain of our Android distribution practices. In September 2022, the General Court affirmed the EC decision but reduced the fine from € 4.3 billion to € 4.1 billion. We subsequently appealed the General Court's affirmation of the EC decision with the European Court of Justice, which remains pending. In 2018, we recognized a charge of $ 5.1 billion for the fine, which we reduced by $ 217 million in 2022. • AdSense for Search: In March 2019, the EC announced its decision that certain provisions in Google's agreements with AdSense for Search partners infringed European antitrust laws, imposed a € 1.5 billion fine, and directed actions related to AdSense for Search partners' agreements, which we implemented prior to the decision. In 2019, we recognized a charge of $ 1.7 billion for the fine and appealed the EC decision. In September 2024, the General Court overturned the EC decision and annulled the € 1.5 billion fine. The EC has appealed the General Court's decision with the European Court of Justice, which remains pending. 27 • Search: In October 2020, the US Department of Justice (DOJ) and a number of state Attorneys General filed a lawsuit in the US District Court for the District of Columbia concerning Google's Search and Search advertising practices and its compliance with US antitrust laws. In August 2024, the US District Court for the District of Columbia ruled against Google. A final judgment was entered in December 2025, which, among other things, imposes restrictions on how Google distributes its services and requires Google to share certain search data with and offer syndication services to certain competitors. In January 2026, we appealed the final judgment and moved to pause implementation of certain remedies. In February 2026, the DOJ and state Attorneys General also appealed. • Advertising Technology: In December 2020, a number of state Attorneys General filed a lawsuit in the US District Court for the Eastern District of Texas concerning Google's advertising technology and its compliance with US antitrust laws and state deceptive trade laws. In January 2023, the DOJ, along with a number of state Attorneys General, filed a lawsuit in the US District Court for the Eastern District of Virginia concerning Google's advertising technology and its compliance with US antitrust laws, and a number of additional state Attorneys General subsequently joined the lawsuit. In April 2025, the US District Court for the Eastern District of Virginia issued a mixed decision in the DOJ case against Google, ruling that neither Google's advertiser tools nor the DoubleClick and AdMeld acquisitions were anticompetitive, but that Google's publisher tools unfairly excluded rivals. A separate proceeding to determine remedies, the range of which vary widely, took place in September 2025, with the parties presenting differing remedy proposals. The DOJ's remedy proposal includes structural remedies that could have a material adverse effect on our business. Closing arguments were held in November 2025, and we are awaiting a final judgment. After that judgment, we plan to appeal the adverse portion of the April 2025 decision and potentially aspects of the remedies decision. A trial in the state Attorneys General case in the Eastern District of Texas will take place after a decision on remedies is issued in the DOJ case. Given the nature of these matters, we cannot estimate a possible loss. Further, in September 2025, the EC announced its decision that Google had infringed European competition laws through "self-preferencing" practices on the buy-side and the sell-side relating to Google's advertising technology business. The EC decision imposed a € 3.0 billion fine and directed Google to cease and desist the alleged "self-preferencing" practices. We appealed the ruling in November 2025, which remains pending. We recognized a charge of $ 3.5 billion in the third quarter of 2025, and we placed bank guarantees in the fourth quarter of 2025 in lieu of cash payment. In September 2024, the United Kingdom (UK) also issued a Statement of Objections concerning Google's advertising technology and its compliance with UK antitrust laws, to which we responded. • Google Play: In July 2021, a number of state Attorneys General filed a lawsuit in the US District Court for the Northern District of California concerning Google's operation of Android and Google Play and its compliance with US antitrust laws and state antitrust and consumer protection laws. In September 2023, we reached a settlement in principle with 50 state Attorneys General and three territories and recognized a charge. The court preliminarily approved the settlement in November 2025, and final approval remains pending before the court. In May 2024, we funded the settlement amount to an escrow agent. In December 2023, a California jury delivered a verdict against Google in Epic Games v. Google related to Google Play's business. Epic did not seek monetary damages. The presiding judge issued a remedies decision in October 2024, ordering a variety of alterations to our business models and operations and contractual agreements for Android and Google Play. We appealed the judgment, including the jury verdict and aspects of the remedies ordered. In July 2025, the Court of Appeals denied our appeal, and we subsequently petitioned the US Supreme Court for review. While that appeal was pending, we implemented the effective ordered remedies in October 2025. In March 2026, we reached a settlement with Epic to seek modification of the remedies, implement certain changes regarding the operation of Google Play, and resolve certain other lawsuits Epic has filed regarding Google Play's business. Following the settlement, we withdrew our petition to the US Supreme Court in March 2026, and Epic and Google filed a joint motion to modify the injunction in April 2026, which is currently pending before the court. • European Digital Markets Act: In March 2024, the EC opened two investigations regarding Google's compliance with certain provisions of the European Union's (EU) Digital Markets Act relating to Google Play and Search. In March 2025, the EC issued preliminary findings of non-compliance in both investigations, to which we responded. Given the nature of this matter, we cannot reasonably estimate a probable loss. In addition to these antitrust proceedings, private individual and collective actions that overlap with claims pursued by regulatory authorities are pending in the US and in several other jurisdictions, including across Europe. Given the nature of these matters, we cannot estimate a possible loss. 28 We believe we have strong arguments against these open claims and will defend ourselves vigorously. We continue to cooperate with federal and state regulators in the US, the EC, and other regulators around the world. Privacy Matters We are subject to a number of privacy-related laws and regulations, and we currently are party to a number of privacy investigations and lawsuits ongoing in multiple jurisdictions. For example, there are ongoing investigations and litigation in the US and the EU, including those relating to our collection and use of location information, the choices we offer users, and advertising practices, which could result in significant fines, judgments, and product changes. Patent and Intellectual Property Claims We have had patent, copyright, trade secret, and trademark infringement lawsuits filed against us claiming that certain of our products, services, and technologies infringe others' intellectual property rights. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, functionalities, products, or services. As a result, we may have to change our business practices and develop non-infringing products or technologies, which could result in a loss of revenues for us and otherwise harm our business. In addition, the US International Trade Commission (ITC) has increasingly become an important forum to litigate intellectual property disputes because an ultimate loss in an ITC action can result in a prohibition on importing infringing products into the US. Because the US is an important market, a prohibition on importation could have an adverse effect on us, including preventing us from importing many important products into the US or necessitating workarounds that may limit certain features of our products. Further, our customers and partners may discontinue the use of our products, services, and technologies, as a result of injunctions or otherwise, which could result in loss of revenues and adversely affect our business. Other We are subject to claims, lawsuits, regulatory and government inquiries and investigations, other proceedings, and consent orders involving competition, intellectual property, data privacy and security, tax and related compliance, labor and employment, commercial disputes, content generated by our users, goods and services offered by advertisers or publishers using our platforms, design of our products and services, personal injury and other tort and nuisance theories, consumer protection, including how we moderate content on our platforms, AI, and other matters. For example, we periodically have data incidents that we report to relevant regulators as required by law. Such claims, consent orders, lawsuits, regulatory and government investigations, and other proceedings could result in substantial fines and penalties, injunctive relief, ongoing monitoring and auditing obligations, changes to our products and services, alterations to our business models and operations, and collateral related civil litigation or other adverse consequences, all of which could harm our business, reputation, financial condition, and operating results. We have ongoing legal matters relating to Russia. For example, some matters concern civil judgments that include compounding penalties imposed upon us in connection with disputes regarding the termination of accounts, including those of sanctioned parties. We do not expect these ongoing legal matters will have a material adverse effect. Non-Income Taxes We are under audit by various domestic and foreign tax authorities with regards to non-income tax matters. The subject matter of non-income tax audits primarily arises from disputes on the tax treatment and tax rate applied to the sale of our products and services in these jurisdictions and the tax treatment of certain employee benefits. We accrue non-income taxes that may result from examinations by, or any negotiated agreements with, these tax authorities when a loss is probable and reasonably estimable. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. Due to the inherent complexity and uncertainty of these matters and judicial process in certain jurisdictions, the final outcome may be materially different from our expectations. See Note 14 for further details regarding income tax contingencies. Note 11. Stockholders' Equity Share Repurchases In the three months ended March 31, 2026, there were no repurchases of the company's Class A or Class C shares. 29 In April 2025, the company's Board of Directors authorized a $ 70.0 billion share repurchase program for its Class A and Class C shares. As of March 31, 2026, $ 69.5 billion remained available for Class A and Class C share repurchases. Repurchases may 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. The repurchase programs do not have an expiration date. Dividends In the three months ended March 31, 2026, total cash dividends were $ 1.2 billion for Class A, $ 176 million for Class B, and $ 1.1 billion for Class C shares, respectively. In April 2026, the company's Board of Directors declared a quarterly cash dividend of $ 0.22 per share, representing a 5 % increase from the previous quarterly dividend of $ 0.21 per share. The dividend is payable on June 15, 2026 to stockholders of record for each of the company's Class A, Class B, and Class C shares as of June 8, 2026. The company has declared a quarterly cash dividend in the current quarter, and intends to pay quarterly cash dividends in the future, subject to review and approval by the company’s Board of Directors in its sole discretion. Note 12. Net Income Per Share The following table sets forth the computation of basic and diluted net income per share of Class A, Class B, and Class C stock (in millions, except per share amounts): 30 Three Months Ended March 31, 2025 2026 Class A Class B Class C Consolidated Class A Class B Class C Consolidated Basic net income per share: Numerator Allocation of distributed earnings (cash dividends paid) $ 1,167 $ 171 $ 1,096 $ 2,434 $ 1,223 $ 175 $ 1,144 $ 2,542 Allocation of undistributed earnings 15,367 2,264 14,475 32,106 28,889 4,153 26,994 60,036 Net income $ 16,534 $ 2,435 $ 15,571 $ 34,540 $ 30,112 $ 4,328 $ 28,138 $ 62,578 Denominator Number of shares used in per share computation 5,831 859 5,493 12,183 5,822 837 5,440 12,099 Basic net income per share $ 2.84 $ 2.83 $ 2.83 $ 2.84 $ 5.17 $ 5.17 $ 5.17 $ 5.17 Diluted net income per share: Numerator Allocation of total earnings for basic computation $ 16,534 $ 2,435 $ 15,571 $ 34,540 $ 30,112 $ 4,328 $ 28,138 $ 62,578 Reallocation of total earnings as a result of conversion of Class B to Class A shares 2,435 0 0 _ (1) 4,328 0 0 _ (1) Reallocation of undistributed earnings ( 156 ) ( 20 ) 156 _ (1) ( 375 ) ( 47 ) 375 _ (1) Net income $ 18,813 $ 2,415 $ 15,727 $ 34,540 $ 34,065 $ 4,281 $ 28,513 62,578 Denominator Number of shares used in basic computation 5,831 859 5,493 12,183 5,822 837 5,440 12,099 Weighted-average effect of dilutive securities Add: Conversion of Class B to Class A shares outstanding 859 0 0 _ (1) 837 0 0 _ (1) Restricted stock units and other contingently issuable shares 0 0 108 108 0 0 139 139 Number of shares used in per share computation 6,690 859 5,601 12,291 6,659 837 5,579 12,238 Diluted net income per share $ 2.81 $ 2.81 $ 2.81 $ 2.81 $ 5.12 $ 5.11 $ 5.11 $ 5.11 (1) Not applicable for consolidated net income per share. For the periods presented above, the holders of each class are entitled to equal per share dividends or distributions in liquidation in accordance with the Amended and Restated Certificate of Incorporation of Alphabet Inc. Holders of Alphabet unvested stock units are awarded dividend equivalents, which are subject to the same vesting conditions as the underlying award, and settled in Class C shares. Immaterial differences in net income per share across our Class A, Class B, and Class C shares may arise due to the allocation of distributed earnings, which is based on the holders as of the record date, compared with the allocation of undistributed earnings and number of shares, which is based on the weighted average shares outstanding over the periods. 31 Note 13. Compensation Plans Stock-Based Compensation For the three months ended March 31, 2025 and 2026, total stock-based compensation (SBC) expense was $ 5.5 billion an d $ 7.2 billion, incl uding amounts associated with awards we expect to settle in Alphabet stock of $ 5.3 billion an d $ 6.5 billion, res pectively. Stock-Based Award Activities The following table summarizes the activities for unvested Alphabet restricted stock units (RSUs), which include dividend equivalents awarded to holders of unvested stock, for the three months ended March 31, 2026 (in millions, except per share amounts): Number of Shares Weighted- Average Grant-Date Fair Value Unvested as of December 31, 2025 282 $ 159.75 Granted 90 $ 305.14 Vested ( 44 ) $ 155.46 Forfeited/canceled ( 7 ) $ 167.42 Unvested as of March 31, 2026 321 $ 200.89 As of March 31, 2026, there wa s $ 62.6 billion of u nrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of 2.9 y ears. Note 14. Income Taxes The following table presents provision for income taxes (in millions, except for effective tax rate): Three Months Ended March 31, 2025 2026 Income before provision for income taxes $ 41,789 $ 77,412 Provision for income taxes $ 7,249 $ 14,834 Effective tax rate 17.3 % 19.2 % We are subject to income taxes in the US and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and det ermining our provision for income taxes. The total amount of gross unrecognized tax benefits was $ 11.5 billion an d $ 13.4 billion, of which $ 9.7 billion and $ 11.6 billion, if recognized, would affect our effective tax rate, as of December 31, 2025 and March 31, 2026, respectively. Note 15. Information about Segments and Geographic Areas 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 services for enterprise customers. Google Cloud generates revenues primarily from consumption-based fees and subscriptions received for Google Cloud Platform services, Google Workspace communication and collaboration tools, and other enterprise services. • 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. Revenues, certain costs, such as costs associated with content and traffic acquisition, certain engineering activities, and devices, as well as certain operating expenses are directly attributable to our segments. Due to the integrated nature of Alphabet, other costs and expenses, such as technical infrastructure and office facilities, are 32 managed centrally at a consolidated level. These costs, including the associated depreciation, are allocated to operating segments as a service cost generally based on usage, headcount, or revenue. Certain costs are not allocated to our segments because they represent Alphabet-level activities. These costs primarily include: • certain AI-focused shared research and development activities, including employee compensation expenses and technical infrastructure usage costs associated with the development of our general AI models; • corporate initiatives such as our philanthropic activities; and • corporate shared costs such as certain finance, human resource, and legal costs, including certain fines and settlements. Charges associated with employee severance and office space reductions are also not allocated to our segments. Additionally, hedging gains (losses) related to revenue are not allocated to our segments. Our Chief Operating Decision Maker (CODM) is our Chief Executive Officer, Sundar Pichai. Our CODM uses segment operating income (loss) to allocate resources to our segments in our annual planning process and to assess the performance of our segments, primarily by monitoring actual results versus the annual plan. Our operating segments are not evaluated using asset information. The following table presents revenue, profitability, and expense information about our segments (in millions): Three Months Ended March 31, 2025 2026 Revenues: Google Services $ 77,264 $ 89,637 Google Cloud 12,260 20,028 Other Bets 450 411 Hedging gains (losses) 260 ( 180 ) Total revenues $ 90,234 $ 109,896 Operating income (loss): Google Services $ 32,682 $ 40,589 Google Cloud 2,177 6,598 Other Bets ( 1,226 ) ( 2,100 ) Alphabet-level activities ( 3,027 ) ( 5,391 ) Total income from operations $ 30,606 $ 39,696 Supplemental information about segment expenses: Google Services: Employee compensation expenses $ 11,337 $ 12,206 Other costs and expenses 33,245 36,842 Total Google Services costs and expenses $ 44,582 $ 49,048 Google Cloud: Employee compensation expenses $ 5,412 $ 6,443 Other costs and expenses 4,671 6,987 Total Google Cloud costs and expenses $ 10,083 $ 13,430 Google Services and Google Cloud employee compensation expenses include the costs associated with direct and allocated employees. Google Services and Google Cloud other costs and expenses primarily include direct costs, such as advertising and promotional activities, legal and other matters, and third-party services fees as well as allocated costs, such as technical infrastructure and office facilities usage costs. Additionally, Google Services other costs and expenses include content acquisition costs, traffic acquisition costs (TAC), and device costs. See Note 2 for further details relating to revenues by geography. 33 The following table presents long-lived assets by geographic area, which includes property and equipment, net and operating lease assets (in millions): As of December 31, 2025 As of March 31, 2026 Long-lived assets: United States $ 195,337 $ 227,266 International 66,481 69,263 Total long-lived assets $ 261,818 $ 296,529 34