GOOGL Equity Investments

(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $16.8 billion gains and $4.5 billion losses (including impairments) as of December 31, 2022 and $18.1 billion gains and $6.9 billion losses (including impairments) as of December 31, 2023.


GOOGL Gains and Losses on Marketable and Non-marketable Equity Securities

Gains and losses (including impairments), net, for marketable and non-marketable equity securities included in OI&E are summarized below (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Realized net gain (loss) on equity securities sold during the period##$##1,196##$##(442)##$##690 Unrealized net gain (loss) on marketable equity securities####1,335####(3,242)####790 Unrealized net gain (loss) on non-marketable equity securities(1)####9,849####229####(1,088) Total gain (loss) on equity securities in other income (expense), net##$##12,380##$##(3,455)##$##392


(1)Unrealized gain (loss) on non-marketable equity securities accounted for under the measurement alternative is comprised of $10.0 billion, $3.3 billion, and $1.8 billion of upward adjustments as of December 31, 2021, 2022, and 2023, respectively, and $122 million, $3.0 billion, and $2.9 billion of downward adjustments (including impairments) as of December 31, 2021, 2022, and 2023, respectively.


In the table above, 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.


Cumulative net gains (losses) on equity securities sold during the period, which is summarized in the following table (in millions), represents the total net gains (losses) recognized after the initial purchase date of the equity security sold during the period. While these net gains (losses) may have been reflected in periods prior to the period of sale, we believe they are important supplemental information as they reflect the economic net gains (losses) on the securities sold during the period. Cumulative net gains (losses) are calculated as the difference between the sale price and the initial purchase price for the equity security sold during the period. ######Equity Securities Sold During the Year Ended December 31,#### ####2022######2023 Total sale price##$##1,784####$##1,981 Total initial cost####937######1,512 Cumulative net gains (losses)##$##847####$##469


GOOGL Equity Securities Accounted for Under the Equity Method

As of December 31, 2022 and 2023, equity securities accounted for under the equity method had a carrying value of approximately $1.5 billion and $1.7 billion, respectively. Our share of gains and losses, including impairments, are included as a component of OI&E, in the Consolidated Statements of Income. See Note 7 for further details on OI&E.


Alphabet Inc.


GOOGL Derivative Financial Instruments

We use derivative instruments to manage risks relating to our ongoing business operations. The primary risk managed is foreign exchange risk. We use foreign currency contracts to reduce the risk that our cash flows, earnings, and investment in foreign subsidiaries will be adversely affected by foreign currency exchange rate fluctuations. We also enter into derivative instruments to partially offset our exposure to other risks and enhance investment returns.


GOOGL Derivative Financial Instruments

We recognize derivative instruments in the Consolidated Balance Sheets at fair value and classify the derivatives primarily within Level 2 in the fair value hierarchy. We present our collar contracts (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.


GOOGL Cash Flow Hedges

We designate foreign currency forward and option contracts (including collars) as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar. These contracts have maturities of 24 months or less.


GOOGL Cash Flow Hedges

Cash flow hedge amounts included in the assessment of hedge effectiveness are deferred in AOCI and subsequently reclassified to revenue when the hedged item is recognized in earnings. We exclude forward points and time value from our assessment of hedge effectiveness and amortize them 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.


GOOGL Cash Flow Hedges

As of December 31, 2023, the net accumulated gain on our foreign currency cash flow hedges before tax effect was $47 million, which is expected to be reclassified from AOCI into revenues within the next 12 months.


GOOGL Fair Value Hedges

We designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for our marketable securities denominated in currencies other than the U.S. dollar. Fair value hedge amounts included in the assessment of hedge effectiveness are recognized in OI&E, along with the offsetting gains and losses of the related hedged items. We exclude forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in OI&E.


GOOGL Net Investment Hedges

We designate foreign currency forward contracts as net investment hedges to hedge the foreign currency risks related to our investment in foreign subsidiaries. Net investment hedge amounts included in the assessment of hedge effectiveness are recognized in AOCI along with the foreign currency translation adjustment. We exclude forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in OI&E.


GOOGL Other Derivatives

We enter into foreign currency forward and option contracts that are not designated as hedging instruments to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the functional currency of a subsidiary. Gains and losses on these derivatives that are not designated as accounting hedges are primarily recorded in OI&E along with the foreign currency gains and losses on monetary assets and liabilities.


GOOGL Other Derivatives

We also use derivatives not designated as hedging instruments to manage risks relating to interest rates, commodity prices, credit exposures, and to enhance investment returns. From time to time, we enter into derivatives to hedge the market price risk on certain of our marketable equity securities. Gains and losses arising from other derivatives are primarily reflected within the “other” component of OI&E. See Note 7 for further details.


GOOGL Other Derivatives


GOOGL Other Derivatives

Alphabet Inc.


GOOGL Other Derivatives

The gross notional amounts of outstanding derivative instruments were as follows (in millions): ######As of December 31,#### ####2022######2023 ##Derivatives designated as hedging instruments:######## Foreign exchange contracts########## Cash flow hedges##$##15,972####$##18,039 Fair value hedges##$##2,117####$##2,065 Net investment hedges##$##8,751####$##9,472 ##Derivatives not designated as hedging instruments:######## Foreign exchange contracts##$##34,979####$##39,722 Other contracts##$##7,932####$##10,818


GOOGL Other Derivatives

The fair values of outstanding derivative instruments were as follows (in millions): ######As of December 31, 2022##########As of December 31, 2023#### ####Assets(1)######Liabilities(2)####Assets(1)######Liabilities(2) Derivatives designated as hedging instruments:#################### Foreign exchange contracts##$##271####$##556##$##205####$##242 Derivatives not designated as hedging instruments:#################### Foreign exchange contracts####365######207####134######156 Other contracts####40######47####114######47 Total derivatives not designated as hedging instruments####405######254####248######203 Total##$##676####$##810##$##453####$##445


GOOGL Other Derivatives

(1) Derivative assets are recorded as other current and non-current assets in the Consolidated Balance Sheets.


GOOGL Other Derivatives

(2) Derivative liabilities are recorded as accrued expenses and other liabilities, current and non-current in the Consolidated Balance Sheets.


GOOGL Other Derivatives

The gains (losses) on derivatives in cash flow hedging and net investment hedging relationships recognized in other comprehensive income (OCI) are summarized below (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Derivatives in cash flow hedging relationship:############ Foreign exchange contracts############ Amount included in the assessment of effectiveness##$##806##$##1,699##$##90 Amount excluded from the assessment of effectiveness####48####(188)####84 Derivatives in net investment hedging relationship:############ Foreign exchange contracts############ Amount included in the assessment of effectiveness####754####608####(287) Total##$##1,608##$##2,119##$##(113)


GOOGL Other Derivatives

The table below presents the gains (losses) of our derivatives on the Consolidated Statements of Income: (in millions): ################Year Ended December 31,############## ######2021##########2022##########2023#### ####Revenues######Other income (expense), net####Revenues######Other income (expense), net####Revenues######Other income (expense), net Total amounts in the Consolidated Statements of Income##$##257,637####$##12,020##$##282,836####$##(3,514)##$##307,394####$##1,424 Effect of cash flow hedges:############################## Foreign exchange contracts############################## Amount reclassified from AOCI to income##$##165####$##0##$##2,046####$##0##$##213####$##0 Amount excluded from the assessment of effectiveness (amortized)####(16)######0####(85)######0####24######0 Effect of fair value hedges:############################## Foreign exchange contracts############################## Hedged items####0######(95)####0######(162)####0######59 Derivatives designated as hedging instruments####0######95####0######163####0######(59) Amount excluded from the assessment of effectiveness####0######8####0######16####0######15 Effect of net investment hedges:############################## Foreign exchange contracts############################## Amount excluded from the assessment of effectiveness####0######82####0######171####0######187 Effect of non designated hedges:############################## Foreign exchange contracts####0######(860)####0######(395)####0######7 Other contracts####0######101####0######144####0######53 Total gains (losses)##$##149####$##(669)##$##1,961####$##(63)##$##237####$##262


GOOGL 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 included in other current assets.


GOOGL Offsetting of Derivatives


GOOGL Offsetting of Derivatives

Alphabet Inc.


GOOGL Offsetting of Derivatives

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, 2022############## ####################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##$##760##$##(84)##$##676####$##(463)####$##(132)##$##81 Derivatives liabilities##$##894##$##(84)##$##810####$##(463)####$##(28)##$##319 ##############As of December 31, 2023############## ####################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##$##535##$##(82)##$##453####$##(213)####$##(75)##$##165 Derivatives liabilities##$##527##$##(82)##$##445####$##(213)####$##(16)##$##216


GOOGL Offsetting of Derivatives

(1) The balances as of December 31, 2022 and 2023 were related to derivatives allowed to be net settled in accordance with our master netting agreements.


GOOGL Note 4. Leases

We have entered into operating lease agreements primarily for data centers, land, and offices throughout the world with lease periods expiring between 2024 and 2063.


GOOGL Note 4. Leases

Components of operating lease expense were as follows (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Operating lease cost##$##2,699##$##2,900##$##3,362 Variable lease cost####726####838####1,182 Total operating lease cost##$##3,425##$##3,738##$##4,544


GOOGL Note 4. Leases

Supplemental information related to operating leases was as follows (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Cash payments for operating leases##$##2,489##$##2,722##$##3,173 New operating lease assets obtained in exchange for operating lease liabilities##$##2,951##$##4,383##$##2,877


GOOGL Note 4. Leases


GOOGL Note 4. Leases

Alphabet Inc.


GOOGL Note 4. Leases

As of December 31, 2023, our operating leases had a weighted average remaining lease term of 8.1 years and a weighted average discount rate of 3.1%. Future lease payments under operating leases as of December 31, 2023 were as follows (in millions): 2024##$##3,179 2025####2,929 2026####2,450 2027####1,951 2028####1,488 Thereafter####5,685 Total future lease payments####17,682 Less imputed interest####(2,431) Total lease liability balance##$##15,251


GOOGL Note 4. Leases

As of December 31, 2023, we have entered into leases that have not yet commenced with short-term and long-term future lease payments of $657 million and $3.3 billion that are not yet recorded on our Consolidated Balance Sheets. These leases will commence between 2024 and 2026 with non-cancelable lease terms between one and 25 years.


GOOGL Consolidated Variable Interest Entities

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.


For certain consolidated VIEs, their assets are not available to us and their creditors do not have recourse to us. As of December 31, 2022 and 2023, assets that can only be used to settle obligations of these VIEs were $4.1 billion and $4.9 billion, respectively, and the liabilities for which creditors only have recourse to the VIEs were $2.6 billion and $2.5 billion, respectively. We may continue to fund ongoing operations of certain VIEs that are included within Other Bets.


Total noncontrolling interests (NCI) in our consolidated subsidiaries were $3.8 billion and $3.4 billion as of December 31, 2022 and 2023, respectively, of which $1.1 billion is redeemable noncontrolling interest (RNCI) for both periods. 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. See Note 7 for further details on OI&E.


GOOGL Unconsolidated Variable Interest Entities

We have investments in VIEs in which we are not the primary beneficiary. These VIEs include private companies that are primarily early stage companies and certain renewable energy entities in which activities involve power generation using renewable sources.


We have determined that the governance structures of these entities do not allow us to direct the activities that would significantly affect their economic performance. Therefore, we are not the primary beneficiary, and the results of operations and financial position of these VIEs are not included in our consolidated financial statements. We account for these investments primarily as non-marketable equity securities or equity method investments.


The maximum exposure of these unconsolidated VIEs is generally based on the current carrying value of the investments and any future funding commitments. The maximum exposure and carrying value of these unconsolidated VIEs were $2.8 billion and $2.7 billion, respectively, as of December 31, 2022 and $5.7 billion and $4.0 billion, respectively, as of December 31, 2023. The difference between the maximum exposure and the carrying value relates primarily to future funding commitments.


GOOGL Short-Term Debt

We have a debt financing program of up to $10.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. We had no commercial paper outstanding as of December 31, 2022 and 2023.


GOOGL Short-Term Debt

Our short-term debt balance also includes the current portion of certain long-term debt.


GOOGL Short-Term Debt


GOOGL Short-Term Debt

Alphabet Inc.


GOOGL Long-Term Debt

Total outstanding debt is summarized below (in millions, except percentages): ######Effective Interest Rate######As of December 31,#### ##Maturity##Coupon Rate######2022######2023 Debt################ 2014-2020 Notes issuances##2024 - 2060##0.45% - 3.38%##0.57% - 3.38%##$##13,000####$##13,000 Future finance lease payments, net and other (1)##########2,142######1,746 Total debt##########15,142######14,746 Unamortized discount and debt issuance costs##########(143)######(130) Less: Current portion of long-term notes(2)##########0######(1,000) Less: Current portion of future finance lease payments, net and other current debt(1)(2)##########(298)######(363) Total long-term debt########$##14,701####$##13,253


GOOGL Long-Term Debt

(1)Future finance lease payments are net of imputed interest.


GOOGL Long-Term Debt

(2)Total current portion of long-term debt is included within other accrued expenses and current liabilities. See Note 7 for further details.


GOOGL Long-Term Debt

The notes in the table above are fixed-rate senior unsecured obligations and generally rank equally with each other. We may redeem the notes at any time in whole or in part at specified redemption prices. The effective interest rates are based on proceeds received with interest payable semi-annually.


GOOGL Long-Term Debt

The total estimated fair value of the outstanding notes was approximately $9.9 billion and $10.3 billion as of December 31, 2022 and December 31, 2023, 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.


GOOGL Long-Term Debt

As of December 31, 2023, the aggregate future principal payments for long-term debt, including finance lease liabilities, for each of the next five years and thereafter were as follows (in millions): 2024##$##1,299 2025####1,163 2026####2,165 2027####1,143 2028####132 Thereafter####8,960 Total##$##14,862


GOOGL Credit Facility

As of December 31, 2023, we had $10.0 billion of revolving credit facilities, of which $4.0 billion expires in April 2024 and $6.0 billion expires in April 2028. The interest rates for all credit facilities are determined based on a formula using certain market rates, as well as our progress toward the achievement of certain sustainability goals. No amounts were outstanding under the credit facilities as of December 31, 2022 and 2023.


GOOGL Accounts Receivable

The allowance for credit losses on accounts receivable was $754 million and $771 million as of December 31, 2022 and 2023, respectively.


GOOGL Accounts Receivable


GOOGL Accounts Receivable

Alphabet Inc.


GOOGL Property and Equipment, Net

Property and equipment, net, consisted of the following (in millions): ######As of December 31,#### ####2022######2023 Land and buildings##$##66,897####$##74,083 Information technology assets####66,267######80,594 Construction in progress####27,657######35,229 Leasehold improvements####10,575######11,425 Furniture and fixtures####314######472 Property and equipment, gross####171,710######201,803 Less: accumulated depreciation####(59,042)######(67,458) Property and equipment, net##$##112,668####$##134,345


GOOGL Property and Equipment, Net

Our technical infrastructure is comprised of information technology assets, including servers and networking equipment, and data center land and buildings.


GOOGL Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in millions): ######As of December 31,#### ####2022######2023 European Commission fines(1)##$##9,106####$##9,525 Accrued purchases of property and equipment####3,019######4,679 Accrued customer liabilities####3,619######4,140 Current operating lease liabilities####2,477######2,791 Income taxes payable, net####1,632######2,748 Other accrued expenses and current liabilities####18,013######22,285 Accrued expenses and other current liabilities##$##37,866####$##46,168


(1) While each EC decision is under appeal, the fines are included in accrued expenses and other current liabilities on our Consolidated Balance Sheets, as we provided bank guarantees (in lieu of a cash payment) for the fines. Amounts include the effects of foreign exchange and interest. See Note 10 for further details.


Alphabet Inc.


GOOGL 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, 2020##$##(864)##$##1,612##$##(115)##$##633 Other comprehensive income (loss) before reclassifications####(1,442)####(1,312)####668####(2,086) Amounts excluded from the assessment of hedge effectiveness recorded in AOCI####0####0####48####48 Amounts reclassified from AOCI####0####(64)####(154)####(218) Other comprehensive income (loss)####(1,442)####(1,376)####562####(2,256) Balance as of December 31, 2021####(2,306)####236####447####(1,623) Other comprehensive income (loss) before reclassifications####(1,836)####(4,720)####1,463####(5,093) Amounts excluded from the assessment of hedge effectiveness recorded in AOCI####0####0####(188)####(188) Amounts reclassified from AOCI####0####1,007####(1,706)####(699) Other comprehensive income (loss)####(1,836)####(3,713)####(431)####(5,980) Balance as of December 31, 2022####(4,142)####(3,477)####16####(7,603) Other comprehensive income (loss) before reclassifications####735####1,344####84####2,163 Amounts excluded from the assessment of hedge effectiveness recorded in AOCI####0####0####84####84 Amounts reclassified from AOCI####0####1,168####(214)####954 Other comprehensive income (loss)####735####2,512####(46)####3,201 Balance as of December 31, 2023##$##(3,407)##$##(965)##$##(30)##$##(4,402)


The effects on net income of amounts reclassified from AOCI were as follows (in millions): ############Gains (Losses) Reclassified from AOCI to the Consolidated Statements of Income#### ############Year Ended December 31,#### AOCI Components####Location####2021####2022####2023 ##Unrealized gains (losses) on available-for-sale investments############## ####Other income (expense), net##$##82##$##(1,291)##$##(1,497) ####Benefit (provision) for income taxes####(18)####284####329 ####Net of income tax####64####(1,007)####(1,168) ##Unrealized gains (losses) on cash flow hedges############## Foreign exchange contracts####Revenue####165####2,046####213 Interest rate contracts####Other income (expense), net####6####6####6 ####Benefit (provision) for income taxes####(17)####(346)####(5) ####Net of income tax####154####1,706####214 ##Total amount reclassified, net of income tax####$##218##$##699##$##(954)


GOOGL Other Income (Expense), Net

Components of OI&E were as follows (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Interest income##$##1,499##$##2,174##$##3,865 Interest expense(1)####(346)####(357)####(308) Foreign currency exchange gain (loss), net####(240)####(654)####(1,238) Gain (loss) on debt securities, net####(110)####(2,064)####(1,215) Gain (loss) on equity securities, net####12,380####(3,455)####392 Performance fees####(1,908)####798####257 Income (loss) and impairment from equity method investments, net####334####(337)####(628) Other####411####381####299 Other income (expense), net##$##12,020##$##(3,514)##$##1,424


GOOGL Other Income (Expense), Net

(1) Interest expense is net of interest capitalized of $163 million, $128 million, and $181 million for the years ended December 31, 2021, 2022, and 2023, respectively.


GOOGL Note 8. Workforce Reduction and Other Initiatives

We have a company-wide effort underway to re-engineer our cost base. As part of this program, in January 2023, we announced a reduction of our workforce. As a result, total employee severance and related charges recorded during the year ended December 31, 2023 were $2.1 billion. Substantially all of the employees affected were no longer included in our headcount as of December 31, 2023.


In addition, we are taking actions to optimize our global office space. As a result, exit charges recorded during the year ended December 31, 2023, were $1.8 billion as reflected in the table below. In addition to these exit charges, for the year ended December 31, 2023, we incurred $269 million in accelerated rent and accelerated depreciation, which are not included in the table below.


Severance and office space exit charges are included within our consolidated statements of income as follows (in millions): ########Year Ended December 31, 2023#### ####Severance and Related (1)####Office Space####Total Cost of revenues##$##479##$##481##$##960 Research and development####848####870####1,718 Sales and marketing####497####257####754 General and administrative####264####237####501 Total charges##$##2,088##$##1,845##$##3,933


(1)Severance includes amounts to be settled in cash, accounted for as one-time involuntary employee termination benefits, and SBC.


For segment reporting, the substantial majority of these charges are included within Alphabet-level activities in our segment results.


For the year ended December 31, 2023, changes in liabilities resulting from the severance charges and related accruals were as follows (in millions): ####Severance and Related Balance as of December 31, 2022##$##0 Charges(1)####1,656 Cash payments####(1,579) Balance as of December 31, 2023(2)##$##77


(1)Excludes non-cash SBC of $432 million.


(2)Included in accrued compensation and benefits on the Consolidated Balance Sheets.


GOOGL Note 9. Goodwill

Changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2023 were as follows (in millions): ####Google Services####Google Cloud####Other Bets####Total Balance as of December 31, 2021##$##19,826##$##2,337##$##793##$##22,956 Acquisitions####1,176####4,876####119####6,171 Foreign currency translation and other adjustments####(155)####(8)####(4)####(167) Balance as of December 31, 2022####20,847####7,205####908####28,960 Acquisitions####240####3####0####243 Foreign currency translation and other adjustments####31####(9)####(27)####(5) Balance as of December 31, 2023##$##21,118##$##7,199##$##881##$##29,198


GOOGL Commitments

We have content licensing agreements with future fixed or minimum guaranteed commitments of $10.6 billion as of December 31, 2023, of which the majority is paid over seven years ending in the first quarter of 2030.


GOOGL 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 hold certain parties harmless 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.


GOOGL Indemnifications

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.


GOOGL Indemnifications

As of December 31, 2023, we did not have any material indemnification claims that were probable or reasonably possible.


GOOGL 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.


GOOGL Legal Matters

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.


GOOGL Legal Matters

We expense legal fees in the period in which they are incurred.


GOOGL Legal Matters


GOOGL Legal Matters

Alphabet Inc.


GOOGL Antitrust Investigations

On November 30, 2010, the EC's Directorate General for Competition opened an investigation into various antitrust-related complaints against us.


GOOGL Antitrust Investigations

On June 27, 2017, the EC announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law. The EC decision imposed a €2.4 billion ($2.7 billion as of June 27, 2017) fine. On September 11, 2017, we appealed the EC decision to the General Court, and on September 27, 2017, we implemented product changes to bring shopping ads into compliance with the EC's decision. We recognized a charge of $2.7 billion for the fine in the second quarter of 2017. On November 10, 2021, the General Court rejected our appeal, and we subsequently filed an appeal with the European Court of Justice on January 20, 2022.


GOOGL Antitrust Investigations

On July 18, 2018, the EC announced its decision that certain provisions in Google’s Android-related distribution agreements infringed European competition law. The EC decision imposed a €4.3 billion ($5.1 billion as of June 30, 2018) fine and directed the termination of the conduct at issue. On October 9, 2018, we appealed the EC decision, and on October 29, 2018, we implemented changes to certain of our Android distribution practices. On September 14, 2022, the General Court reduced the fine from €4.3 billion to €4.1 billion. We subsequently filed an appeal with the European Court of Justice. In 2018, we recognized a charge of $5.1 billion for the fine, which we reduced by $217 million in 2022.


GOOGL Antitrust Investigations

On March 20, 2019, the EC announced its decision that certain contractual provisions in agreements that Google had with AdSense for Search partners infringed European competition law. The EC decision imposed a fine of €1.5 billion ($1.7 billion as of March 20, 2019) and directed actions related to AdSense for Search partners' agreements, which we implemented prior to the decision. On June 4, 2019, we appealed the EC decision. We recognized a charge of $1.7 billion for the fine in the first quarter of 2019.


GOOGL Antitrust Investigations

From time to time we are subject to formal and informal inquiries and investigations on various competition matters by regulatory authorities in the U.S., Europe, and other jurisdictions globally. Examples, for which given their nature we cannot estimate a possible loss, include: •In August 2019, we began receiving civil investigative demands from the U.S. Department of Justice (DOJ) requesting information and documents relating to our prior antitrust investigations and certain aspects of our business. The DOJ and a number of state Attorneys General filed a lawsuit in the U.S. District Court for the District of Columbia on October 20, 2020 alleging that Google violated U.S. antitrust laws relating to Search and Search advertising. The trial ended on November 16, 2023, and we expect a decision in 2024. Further, in June 2022, the Australian Competition and Consumer Commission (ACCC) and the United Kingdom's Competition and Markets Authority (CMA) each opened an investigation into Search distribution practices. •On December 16, 2020, a number of state Attorneys General filed an antitrust complaint in the U.S. District Court for the Eastern District of Texas, alleging that Google violated U.S. antitrust laws as well as state deceptive trade laws relating to its advertising technology, and a trial is scheduled for March 2025. Additionally, on January 24, 2023, the DOJ, along with a number of state Attorneys General, filed an antitrust complaint in the U.S. District Court for the Eastern District of Virginia alleging that Google’s digital advertising technology products violate U.S. antitrust laws, and on April 17, 2023, a number of additional state Attorneys General joined the complaint. The EC, the CMA, and the ACCC each opened a formal investigation into Google's advertising technology business practices on June 22, 2021, May 25, 2022, and June 29, 2022, respectively. On June 14, 2023, the EC issued a Statement of Objections (SO) informing Google of its preliminary view that Google violated European antitrust laws relating to its advertising technology. We responded to the SO on December 1, 2023. •On July 7, 2021, a number of state Attorneys General filed an antitrust complaint in the U.S. District Court for the Northern District of California, alleging that Google’s operation of Android and Google Play violated U.S. 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. The U.S. District Court subsequently vacated the trial date with the states, and any final approval of the settlement is expected to occur in 2024. In May 2022, the EC and the CMA each opened investigations into Google Play’s business practices. Korean regulators are investigating Google Play's billing practices, including a formal review in May 2022 of Google's compliance with the new app store billing regulations.


GOOGL Antitrust Investigations

We believe we have strong arguments against these claims and will defend ourselves vigorously. We continue to cooperate with federal and state regulators in the U.S., the EC, and other regulators around the world.


GOOGL Antitrust Investigations


GOOGL Antitrust Investigations

Alphabet Inc.


GOOGL 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 U.S. and the EU, including those relating to our collection and use of location information and advertising practices, which could result in significant fines, judgments, and product changes.


GOOGL 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 U.S. 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 U.S. Because the U.S. 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 U.S. or necessitating workarounds that may limit certain features of our products.


Furthermore, many of our agreements with our customers and partners require us to indemnify them against certain intellectual property infringement claims, which would increase our costs as a result of defending such claims, and may require that we pay significant damages if there were an adverse ruling in any such claims. In addition, 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.


GOOGL Other

We are subject to claims, lawsuits, regulatory and government investigations, other proceedings, and consent orders involving competition, intellectual property, data 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, personal injury, consumer protection, and other matters. For example, in December 2023, a California jury delivered a verdict in Epic Games v. Google finding that Google violated antitrust laws related to Google Play's business. The presiding judge will determine remedies in 2024, and the range of potential remedies vary widely. We plan to appeal. We also periodically have data incidents that we report to relevant regulators as required by law.


GOOGL Other

These 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.


GOOGL Other

We have ongoing legal matters relating to Russia. For example, civil judgments that include compounding penalties have been imposed upon us in connection with disputes regarding the termination of accounts, including those of sanctioned parties. We do not believe these ongoing legal matters will have a material adverse effect.


GOOGL 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.


GOOGL Non-Income Taxes

See, Note 14 for information regarding income tax contingencies.


GOOGL Non-Income Taxes


GOOGL Non-Income Taxes

Alphabet Inc.


GOOGL Note 11. Stockholders' Equity

Class A and Class B Common Stock and Class C Capital Stock


GOOGL Note 11. Stockholders' Equity

Our Board of Directors has authorized three classes of stock, Class A and Class B common stock, and Class C capital stock. The rights of the holders of each class of our common and capital stock are identical, except with respect to voting. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share. Class C capital stock has no voting rights, except as required by applicable law. Shares of Class B common stock may be converted at any time at the option of the stockholder and automatically convert upon sale or transfer to Class A common stock.


GOOGL Share Repurchases

In the years ended December 31, 2021, 2022, and 2023, we repurchased $50.3 billion, $59.3 billion, and $62.2 billion, respectively, of Alphabet's Class A and Class C shares.


GOOGL Share Repurchases

In April 2023, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares. As of December 31, 2023, $36.3 billion remains available for Class A and Class C share repurchases.


GOOGL Share Repurchases

The following table presents Class A and Class C shares repurchased and subsequently retired (in millions): ####Year Ended December 31, 2022########Year Ended December 31, 2023#### ##Shares######Amount##Shares######Amount Class A share repurchases##61####$##6,719##78####$##9,316 Class C share repurchases##469######52,577##450######52,868 Total share repurchases(1)##530####$##59,296##528####$##62,184


GOOGL Share Repurchases

(1) Shares repurchased include unsettled repurchases as of December 31, 2023.


GOOGL Share Repurchases

Class A and Class C shares are repurchased in a manner deemed in the best interest of the company and its stockholders, taking into account the economic cost and prevailing market conditions, including the relative trading prices and volumes of the Class A and Class C shares. Repurchases are 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 program does not have an expiration date.


GOOGL Note 12. Net Income Per Share

We compute net income per share of Class A, Class B, and Class C stock using the two-class method. Basic net income per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of RSUs and other contingently issuable shares. The dilutive effect of outstanding RSUs and other contingently issuable shares is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A stock assumes the conversion of Class B stock, while the diluted net income per share of Class B stock does not assume the conversion of those shares.


GOOGL Note 12. Net Income Per Share

The rights, including the liquidation and dividend rights, of the holders of our Class A, Class B, and Class C stock are identical, except with respect to voting. Furthermore, there are a number of safeguards built into our certificate of incorporation, as well as Delaware law, which preclude our Board of Directors from declaring or paying unequal per share dividends on our Class A, Class B, and Class C stock. Specifically, Delaware law provides that amendments to our certificate of incorporation which would have the effect of adversely altering the rights, powers, or preferences of a given class of stock must be approved by the class of stock adversely affected by the proposed amendment. In addition, our certificate of incorporation provides that before any such amendment may be put to a stockholder vote, it must be approved by the unanimous consent of our Board of Directors. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A, Class B, and Class C stock as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.


GOOGL Note 12. Net Income Per Share

In the years ended December 31, 2021, 2022, and 2023, the net income per share amounts are the same for Class A, Class B, and Class C stock because 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.


GOOGL Note 12. Net Income Per Share


GOOGL Note 12. Net Income Per Share

Alphabet Inc.


GOOGL 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): ########Year Ended December 31,#### ########2021#### ####Class A####Class B####Class C Basic net income per share:############ Numerator############ Allocation of undistributed earnings##$##34,200##$##5,174##$##36,659 Denominator############ Number of shares used in per share computation####6,006####909####6,438 Basic net income per share##$##5.69##$##5.69##$##5.69 Diluted net income per share:############ Numerator############ Allocation of undistributed earnings for basic computation##$##34,200##$##5,174##$##36,659 Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares####5,174####0####0 Reallocation of undistributed earnings####(581)####(77)####581 Allocation of undistributed earnings##$##38,793##$##5,097##$##37,240 Denominator############ Number of shares used in basic computation####6,006####909####6,438 Weighted-average effect of dilutive securities############ Add:############ Conversion of Class B to Class A shares outstanding####909####0####0 Restricted stock units and other contingently issuable shares####0####0####200 Number of shares used in per share computation####6,915####909####6,638 Diluted net income per share##$##5.61##$##5.61##$##5.61 ########Year Ended December 31,#### ########2022#### ####Class A####Class B####Class C Basic net income per share:############ Numerator############ Allocation of undistributed earnings##$##27,518##$##4,072##$##28,382 Denominator############ Number of shares used in per share computation####5,994####887####6,182 Basic net income per share##$##4.59##$##4.59##$##4.59 Diluted net income per share:############ Numerator############ Allocation of undistributed earnings for basic computation##$##27,518##$##4,072##$##28,382 Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares####4,072####0####0 Reallocation of undistributed earnings####(230)####(30)####230 Allocation of undistributed earnings##$##31,360##$##4,042##$##28,612 Denominator############ Number of shares used in basic computation####5,994####887####6,182 Weighted-average effect of dilutive securities############ Add:############ Conversion of Class B to Class A shares outstanding####887####0####0 Restricted stock units and other contingently issuable shares####0####0####96 Number of shares used in per share computation####6,881####887####6,278 Diluted net income per share##$##4.56##$##4.56##$##4.56


GOOGL Note 12. Net Income Per Share

Alphabet Inc. ########Year Ended December 31,#### ########2023#### ####Class A####Class B####Class C Basic net income per share:############ Numerator############ Allocation of undistributed earnings##$##34,601##$##5,124##$##34,070 Denominator############ Number of shares used in per share computation####5,922####877####5,831 Basic net income per share##$##5.84##$##5.84##$##5.84 Diluted net income per share:############ Numerator############ Allocation of undistributed earnings for basic computation##$##34,601##$##5,124##$##34,070 Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares####5,124####0####0 Reallocation of undistributed earnings####(287)####(37)####287 Allocation of undistributed earnings##$##39,438##$##5,087##$##34,357 Denominator############ Number of shares used in basic computation####5,922####877####5,831 Weighted-average effect of dilutive securities############ Add:############ Conversion of Class B to Class A shares outstanding####877####0####0 Restricted stock units and other contingently issuable shares####0####0####92 Number of shares used in per share computation####6,799####877####5,923 Diluted net income per share##$##5.80##$##5.80##$##5.80


GOOGL Stock Plans

Our stock plans include the Alphabet Amended and Restated 2021 Stock Plan ("Alphabet 2021 Stock Plan") and Other Bets stock-based plans. Under our stock plans, RSUs and other types of awards may be granted. Under the Alphabet 2021 Stock Plan, an RSU award is an agreement to issue shares of our Class C stock at the time the award vests. RSUs generally vest over four years contingent upon employment on the vesting date.


GOOGL Stock Plans

As of December 31, 2023, there were 723 million shares of Class C stock reserved for future issuance under the Alphabet 2021 Stock Plan.


GOOGL Stock-Based Compensation

For the years ended December 31, 2021, 2022, and 2023, total SBC expense was $15.7 billion, $19.5 billion, and $22.1 billion, including amounts associated with awards we expect to settle in Alphabet stock of $15.0 billion, $18.8 billion, and $21.7 billion, respectively.


GOOGL Stock-Based Compensation

During the year ended December 31, 2023, total SBC expense includes $432 million associated with workforce reduction costs. See Note 8 for further details.


GOOGL Stock-Based Compensation

For the years ended December 31, 2021, 2022, and 2023, we recognized tax benefits on total SBC expense, which are reflected in the provision for income taxes in the Consolidated Statements of Income, of $3.1 billion, $3.9 billion, and $4.5 billion, respectively.


GOOGL Stock-Based Compensation

For the years ended December 31, 2021, 2022, and 2023, tax benefit realized related to awards vested or exercised during the period was $5.9 billion, $4.7 billion, and $5.6 billion, respectively. These amounts do not include the indirect effects of stock-based awards, which primarily relate to the R&D tax credit.


GOOGL Stock-Based Award Activities


GOOGL Stock-Based Award Activities

Alphabet Inc.


GOOGL Stock-Based Award Activities

The following table summarizes the activities for unvested Alphabet RSUs for the year ended December 31, 2023 (in millions, except per share amounts): ####Unvested Restricted Stock Units#### ##Number of Shares######Weighted- Average Grant-Date Fair Value Unvested as of December 31, 2022##324####$##107.98 Granted##263####$##97.59 Vested##(217)####$##100.36 Forfeited/canceled##(32)####$##106.56 Unvested as of December 31, 2023##338####$##104.93


GOOGL Stock-Based Award Activities

The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2021 and 2022 was $97.46 and $127.22, respectively. Total fair value of RSUs, as of their respective vesting dates, during the years ended December 31, 2021, 2022, and 2023, were $28.8 billion, $23.9 billion, and $26.6 billion, respectively.


GOOGL Stock-Based Award Activities

As of December 31, 2023, there was $33.5 billion of unrecognized compensation cost related to unvested RSUs. This amount is expected to be recognized over a weighted-average period of 2.5 years.


GOOGL Note 14. Income Taxes

Income from continuing operations before income taxes consisted of the following (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Domestic operations##$##77,016##$##61,307##$##73,600 Foreign operations####13,718####10,021####12,117 Total##$##90,734##$##71,328##$##85,717


GOOGL Note 14. Income Taxes

Provision for income taxes consisted of the following (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Current:############ Federal and state##$##10,126##$##17,120##$##17,125 Foreign####2,692####2,434####2,526 Total####12,818####19,554####19,651 Deferred:############ Federal and state####2,018####(8,052)####(7,482) Foreign####(135)####(146)####(247) Total####1,883####(8,198)####(7,729) Provision for income taxes##$##14,701##$##11,356##$##11,922


GOOGL Note 14. Income Taxes


GOOGL Note 14. Income Taxes

Alphabet Inc.


GOOGL Note 14. Income Taxes

The reconciliation of federal statutory income tax rate to our effective income tax rate was as follows: ######Year Ended December 31,###### ##2021####2022####2023## U.S. federal statutory tax rate##21.0##%##21.0##%##21.0##% Foreign income taxed at different rates##0.2####3.0####0.3## Foreign-derived intangible income deduction##(2.5)####(5.4)####(4.6)## Stock-based compensation expense##(2.5)####(1.2)####(0.8)## Federal research credit##(1.6)####(2.2)####(1.8)## Deferred tax asset valuation allowance##0.6####0.9####0.6## State and local income taxes##1.0####0.8####1.0## Effect of tax law change##0.0####0.0####(1.4)## Other##0.0####(1.0)####(0.4)## Effective tax rate##16.2##%##15.9##%##13.9##%


GOOGL Note 14. Income Taxes

In 2022, there was an increase in the U.S. Foreign Derived Intangible Income tax deduction from the effects of capitalization and amortization of R&D expenses starting in 2022 as required by the 2017 Tax Cuts and Jobs Act.


GOOGL Note 14. Income Taxes

In 2023, the IRS issued a rule change allowing taxpayers to temporarily apply the regulations in effect prior to 2022 related to U.S. federal foreign tax credits as well as a separate rule change with interim guidance on the capitalization and amortization of R&D expenses. A cumulative one-time adjustment applicable to the prior period for these tax rule changes was recorded in 2023.


GOOGL Deferred Income Taxes

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows (in millions): ######As of December 31,#### ####2022######2023 Deferred tax assets:########## Accrued employee benefits##$##955####$##1,855 Accruals and reserves not currently deductible####1,956######2,481 Tax credits####6,002######6,609 Net operating losses####2,557######2,965 Operating leases####2,711######3,526 Capitalized research and development(1)####10,381######17,757 Other####2,289######1,951 Total deferred tax assets####26,851######37,144 Valuation allowance####(9,553)######(10,999) Total deferred tax assets net of valuation allowance####17,298######26,145 Deferred tax liabilities:########## Property and equipment, net####(6,607)######(8,189) Net investment gains####(2,361)######(2,405) Operating leases####(2,491)######(2,965) Other####(1,092)######(902) Total deferred tax liabilities####(12,551)######(14,461) Net deferred tax assets (liabilities)##$##4,747####$##11,684


GOOGL Deferred Income Taxes

(1)As required by the 2017 Tax Cuts and Jobs Act, effective January 1, 2022, our research and development expenditures were capitalized and amortized which resulted in substantially higher cash taxes starting in 2022 with an equal amount of deferred tax benefit.


GOOGL Deferred Income Taxes

As of December 31, 2023, our federal, state, and foreign net operating loss carryforwards for income tax purposes were approximately $7.1 billion, $18.6 billion, and $1.8 billion respectively. If not utilized, the federal net


GOOGL Deferred Income Taxes


GOOGL Deferred Income Taxes

Alphabet Inc.


GOOGL Deferred Income Taxes

operating loss carryforwards will begin to expire in 2024, foreign net operating loss carryforwards will begin to expire in 2025 and the state net operating loss carryforwards will begin to expire in 2029. It is more likely than not that the majority of the net operating loss carryforwards will not be realized; therefore, we have recorded a valuation allowance against them. The net operating loss carryforwards are subject to various annual limitations under the tax laws of the different jurisdictions.


GOOGL Deferred Income Taxes

As of December 31, 2023, our Federal and California research and development credit carryforwards for income tax purposes were approximately $600 million and $6.3 billion, respectively. If not utilized, the Federal R&D credit will begin to expire in 2037 and the California R&D credit can be carried over indefinitely. We believe the majority of the federal tax credit and state tax credit is not likely to be realized.


GOOGL Deferred Income Taxes

As of December 31, 2023, our investment tax credit carryforwards for state income tax purposes were approximately $1.0 billion and will begin to expire in 2029. We use the flow-through method of accounting for investment tax credits. We believe this tax credit is not likely to be realized.


GOOGL Deferred Income Taxes

As of December 31, 2023, we maintained a valuation allowance with respect to California deferred tax assets, certain federal net operating losses, certain state net operating losses and tax credits, net deferred tax assets relating to Other Bet companies, and certain foreign net operating losses that we believe are not likely to be realized. We continue to reassess the remaining valuation allowance quarterly, and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly.


GOOGL Uncertain Tax Positions

The following table summarizes the activity related to our gross unrecognized tax benefits (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Beginning gross unrecognized tax benefits##$##3,837##$##5,158##$##7,055 Increases related to prior year tax positions####529####253####740 Decreases related to prior year tax positions####(263)####(437)####(682) Decreases related to settlement with tax authorities####(329)####(140)####(21) Increases related to current year tax positions####1,384####2,221####2,346 Ending gross unrecognized tax benefits##$##5,158##$##7,055##$##9,438


GOOGL Uncertain Tax Positions

We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. The total amount of gross unrecognized tax benefits was $5.2 billion, $7.1 billion, and $9.4 billion as of December 31, 2021, 2022, and 2023, respectively, of which $3.7 billion, $5.3 billion, and $7.4 billion, if recognized, would affect our effective tax rate, respectively.


GOOGL Uncertain Tax Positions

As of December 31, 2022 and 2023, we accrued $346 million and $622 million in interest and penalties in provision for income taxes, respectively.


GOOGL Uncertain Tax Positions

We file income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. Our two major tax jurisdictions are the U.S. federal and Ireland. We are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. The IRS is currently examining our 2016 through 2021 tax returns. We have also received tax assessments in multiple foreign jurisdictions asserting transfer pricing adjustments or permanent establishment. We continue to defend such claims as presented.


GOOGL Uncertain Tax Positions

The tax years 2016 through 2022 remain subject to examination by the appropriate governmental agencies for Irish tax purposes. There are other ongoing audits in various other jurisdictions that are not material to our financial statements.


GOOGL Uncertain Tax Positions

We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. We continue to monitor the progress of ongoing discussions with tax authorities and the effect, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions.


GOOGL Uncertain Tax Positions

We believe that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner not consistent with management's expectations, we could be required to adjust our provision for income taxes in the period such resolutions occur. Although the timing of resolution, settlement, and closure of audits is not certain, it is reasonably possible that our unrecognized tax benefits from certain U.S. federal, state, and non U.S. tax positions could decrease by approximately $700 million in the next 12 months. Positions that may be resolved include various U.S. and non-U.S. matters.


GOOGL Uncertain Tax Positions


GOOGL Uncertain Tax Positions

Alphabet Inc.


GOOGL 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; the sale of apps and in-app purchases and devices. •Google Cloud includes infrastructure and platform services, collaboration tools, 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 healthcare-related 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 managed centrally at a consolidated level. These costs, including the associated depreciation and impairment, are allocated to operating segments as a service cost generally based on usage, headcount, or revenue.


Reflecting DeepMind's increasing collaboration with Google Services, Google Cloud, and Other Bets, beginning in the first quarter of 2023 DeepMind is reported as part of Alphabet-level activities instead of within Other Bets. Additionally, beginning in the first quarter of 2023, we updated and simplified our cost allocation methodologies to provide our business leaders with increased transparency for decision-making. Prior periods have been recast to conform to the current presentation.


As announced on April 20, 2023, we brought together part of Google Research (the Brain team) and DeepMind to significantly accelerate our progress in artificial intelligence (AI). The group, called Google DeepMind, is reported within Alphabet-level activities prospectively beginning in the second quarter of 2023. Previously, the Brain team was included within Google Services.


Certain costs are not allocated to our segments because they represent Alphabet-level activities. These costs primarily include AI-focused shared R&D activities, including development costs of our general AI models; corporate initiatives such as our philanthropic activities; corporate shared costs such as certain finance, human resource, and legal costs, including certain fines and settlements. Charges associated with reductions in our workforce and office space during 2023 were not allocated to our segments. Additionally, hedging gains (losses) related to revenue are not allocated to our segments.


Our operating segments are not evaluated using asset information.


The following table presents information about our segments (in millions): ########Year Ended December 31,#### ####2021####2022####2023 Revenues:############ Google Services##$##237,529##$##253,528##$##272,543 Google Cloud####19,206####26,280####33,088 Other Bets####753####1,068####1,527 Hedging gains (losses)####149####1,960####236 Total revenues##$##257,637##$##282,836##$##307,394 Operating income (loss):############ Google Services##$##88,132##$##82,699##$##95,858 Google Cloud####(2,282)####(1,922)####1,716 Other Bets####(4,051)####(4,636)####(4,095) Alphabet-level activities####(3,085)####(1,299)####(9,186) Total income from operations##$##78,714##$##74,842##$##84,293


See Note 2 for information relating to revenues by geography.


Alphabet Inc.


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,#### ####2022######2023 Long-lived assets:########## United States##$##93,565####$##110,053 International####33,484######38,383 Total long-lived assets##$##127,049####$##148,436


GOOGL IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


GOOGL Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K.


Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.


GOOGL Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


GOOGL Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2023. Management reviewed the results of its assessment with our Audit and Compliance Committee. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K.


GOOGL Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.


GOOGL 10b5-1 Trading Plans

During the fiscal quarter ended December 31, 2023, the following Section 16 officer and directors adopted, modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act): •John Hennessy, Chair of the Board of Directors, through the John L. Hennessy & Andrea J. Hennessy Revocable Trust, adopted a new trading plan on November 1, 2023 (with the first trade under the new plan scheduled for February 12, 2024). The trading plan will be effective until March 12, 2025 to sell 6,664 shares of Class C Capital Stock and 11,336 shares of Class A Common Stock. •Ann Mather, former member of the Board of Directors, terminated her trading plan on October 30, 2023, effective with her resignation from the Board of Directors. The trading plan previously permitted the sale of 12,580 shares of Class C Capital Stock and would have been effective until June 2, 2024. •Ruth M. Porat, President and Chief Investment Officer; Chief Financial Officer, adopted a new trading plan on November 30, 2023 (with the first trade under the new plan scheduled for March 8, 2024). The trading plan will be effective until March 8, 2025 to sell all of the (net) shares of up to 82,900 (gross) Class C Capital Stock issued upon the vesting of her Alphabet 2021 Performance Stock Units, as adjusted based on performance (net shares are net of tax withholding).


GOOGL 10b5-1 Trading Plans

There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the fiscal quarter ended December 31, 2023 by our directors and Section 16 officers. Each of the Rule 10b5-1 trading arrangements are in accordance with our Policy Against Insider Trading and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly in Section 16 filings with the SEC in accordance with applicable securities laws, rules and regulations.


GOOGL Required Disclosure Pursuant to Section 13(r) of the Exchange Act

As previously disclosed, Google LLC, a subsidiary of Alphabet, filed notifications with the Russian Federal Security Service pursuant to Russian encryption control requirements, which must be complied with prior to the import of covered items. The information provided pursuant to Section 13(r) of the Exchange Act in Part II, Item 5 of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 is incorporated herein by reference.


GOOGL DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.


GOOGL EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item will be included under the caption “Directors, Executive Officers, and Corporate Governance” in our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 (2024 Proxy Statement) and is incorporated herein by reference. The information required by this item regarding delinquent filers pursuant to Item 405 of Regulation S-K will be included under the caption “Delinquent Section 16(a) Reports” in the 2024 Proxy Statement and is incorporated herein by reference.


GOOGL COMPENSATION

The information required by this item will be included under the captions “Director Compensation,” “Executive Compensation” and “Directors, Executive Officers, and Corporate Governance—Corporate Governance and Board Matters—Compensation Committee Interlocks and Insider Participation” in the 2024 Proxy Statement and is incorporated herein by reference, except as to information disclosed therein pursuant to Item 402(v) of Regulation S-K relating to pay versus performance.


GOOGL COMPENSATION

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


GOOGL COMPENSATION

The information required by this item will be included under the captions “Common Stock Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the 2024 Proxy Statement and is incorporated herein by reference.


GOOGL RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be included under the captions “Certain Relationships and Related Transactions” and “Directors, Executive Officers, and Corporate Governance—Corporate Governance and Board Matters—Director Independence” in the 2024 Proxy Statement and is incorporated herein by reference.


GOOGL ACCOUNTANT FEES AND SERVICES

The information required by this item will be included under the caption “Independent Registered Public Accounting Firm” in the 2024 Proxy Statement and is incorporated herein by reference.


GOOGL ACCOUNTANT FEES AND SERVICES


GOOGL ACCOUNTANT FEES AND SERVICES

Alphabet Inc.


GOOGL FINANCIAL STATEMENT SCHEDULES

We have filed the following documents as part of this Annual Report on Form 10-K: 1. Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm##48 Financial Statements:## Consolidated Balance Sheets##51 Consolidated Statements of Income##52 Consolidated Statements of Comprehensive Income##53 Consolidated Statements of Stockholders’ Equity##54 Consolidated Statements of Cash Flows##55


GOOGL Schedule II: Valuation and Qualifying Accounts

The table below details the activity of the allowance for credit losses and sales credits for the years ended December 31, 2021, 2022, and 2023 (in millions): ####Balance at Beginning of Year####Additions####Usage####Balance at End of Year Year ended December 31, 2021##$##1,344##$##2,092##$##(2,047)##$##1,389 Year ended December 31, 2022##$##1,389##$##2,125##$##(2,301)##$##1,213 Year ended December 31, 2023##$##1,213##$##3,115##$##(2,737)##$##1,591


GOOGL Note: Additions to the allowance for credit losses are charged to expense. Additions to the allowance for sales credits are charged against revenues.

All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included.


GOOGL 3. Exhibits

Exhibit Number##Description####Incorporated by reference herein## ####Form####Date 2.01##Agreement and Plan of Merger, dated October 2, 2015, by and among Google Inc., the Registrant and Maple Technologies Inc.##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 3.01##Amended and Restated Certificate of Incorporation of the Registrant##Current Report on Form 8-K (File No. 001-37580)####June 3, 2022 3.02##Amended and Restated Bylaws of the Registrant, dated October 19, 2022##Current Report on Form 8-K (File No. 001-37580)####October 25, 2022 4.01##Specimen Class A Common Stock certificate##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.02##Specimen Class C Capital Stock certificate##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.03##Alphabet Inc. Deferred Compensation Plan##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.04##Transfer Restriction Agreement, dated October 2, 2015, between the Registrant and Larry Page and certain of his affiliates##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.05##Transfer Restriction Agreement, dated October 2, 2015, between the Registrant and Sergey Brin and certain of his affiliates##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.06##Joinder Agreement, dated December 31, 2021, among the Registrant, Sergey Brin and certain of his affiliates##Annual Report on Form 10-K (File No. 001-37580)####February 2, 2022


GOOGL 3. Exhibits


GOOGL 3. Exhibits

Alphabet Inc. Exhibit Number######Description####Incorporated by reference herein## ########Form####Date 4.07######Transfer Restriction Agreement, dated October 2, 2015, between the Registrant and Eric E. Schmidt and certain of its affiliates##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.08######Class C Undertaking, dated October 2, 2015, executed by the Registrant##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 4.09######Indenture, dated February 12, 2016, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as Trustee##Registration Statement on Form S-3 (File No. 333-209510)####February 12, 2016 4.10######Registrant Registration Rights Agreement dated December 14, 2015##Registration Statement on Form S-3 (File No. 333-209518)####February 12, 2016 4.11######First Supplemental Indenture, dated April 27, 2016, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee##Current Report on Form 8-K (File No. 001-37580)####April 27, 2016 4.12######Form of the Registrant’s 3.375% Notes due 2024 (included in Exhibit 4.11)###### 4.13######Form of the Registrant’s 1.998% Note due 2026##Current Report on Form 8-K (File No. 001-37580)####August 9, 2016 4.14######Form of Global Note representing the Registrant’s 0.450% notes due 2025##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.15######Form of Global Note representing the Registrant’s 0.800% notes due 2027##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.16######Form of Global Note representing the Registrant’s 1.100% notes due 2030##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.17######Form of Global Note representing the Registrant’s 1.900% notes due 2040##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.18######Form of Global Note representing the Registrant’s 2.050% notes due 2050##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.19######Form of Global Note representing the Registrant’s 2.250% notes due 2060##Current Report on Form 8-K (File No. 001-37580)####August 5, 2020 4.20######Description of Registrant’s Securities##Annual Report on Form 10-K (File No. 001-37580)####February 3, 2023 10.01##u####Form of Indemnification Agreement entered into between the Registrant, its affiliates and its directors and officers##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 10.02##u##*##Form of Offer Letter for Directors###### 10.03##u####Offer Letter, dated March 20, 2015, between Ruth Porat and Google Inc., as assumed by the Registrant on October 2, 2015##Current Report on Form 8-K (File No. 001-36380)####March 26, 2015 10.04##u####Compensation Plan Agreement, dated October 2, 2015, between Google Inc. and the Registrant##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 10.05##u####Director Arrangements Agreement, dated October 2, 2015, between Google Inc. and the Registrant##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 10.06##u####Alphabet Inc. Deferred Compensation Plan##Current Report on Form 8-K (File No. 001-37580)####October 2, 2015 10.07##u####Alphabet Inc. Amended and Restated 2012 Stock Plan##Current Report on Form 8-K (File No. 001-37580)####June 5, 2020 10.07.1##u####Alphabet Inc. Amended and Restated 2012 Stock Plan - Form of Alphabet Restricted Stock Unit Agreement##Annual Report on Form 10-K (File No. 001-37580)####February 4, 2020 10.07.2##u####Alphabet Inc. 2012 Stock Plan - Form of Alphabet Restricted Stock Unit Agreement##Quarterly Report on Form 10-Q (File No. 001-37580)####November 3, 2016


GOOGL 3. Exhibits

Alphabet Inc. Exhibit Number####Description####Incorporated by reference herein## ######Form####Date 10.08##u##Alphabet Inc. Amended and Restated 2021 Stock Plan##Current Report on Form 8-K (file No. 001-37580)####June 3, 2022 10.08.1##u##Alphabet Inc. Amended and Restated 2021 Stock Plan - Form of Alphabet Restricted Stock Unit Agreement##Quarterly Report on Form 10-Q (file No. 001-37580)####July 28, 2021 10.08.2##u##Alphabet Inc. Amended and Restated 2021 Stock Plan - Form of Alphabet Restricted Stock Unit Agreement##Quarterly Report on Form 10-Q (File No. 001-37580)####July 26, 2023 10.08.3##u##Alphabet Inc. Amended and Restated 2021 Stock Plan - Form of Alphabet 2022 CEO Performance Stock Unit Agreement##Annual Report on Form 10-K (File No. 001-37580)####February 3, 2023 10.08.4##u##Alphabet Inc. Amended and Restated 2021 Stock Plan - Form of Alphabet 2022 Non-CEO Performance Stock Unit Agreement##Annual Report on Form 10-K (File No. 001-37580)####February 4, 2020 10.08.5##u##Alphabet Inc. Amended and Restated 2021 Stock Plan - Form of Alphabet 2023 Non-CEO Performance Stock Unit Agreement##Quarterly Report on Form 10-Q (File No. 001-37580)####July 26, 2023 10.09##u##Alphabet Inc. Company Bonus Plan, as amended##Annual Report on Form 10-K (File No. 001-37350)####February 2, 2023 21.01##*##Subsidiaries of the Registrant###### 23.01##*##Consent of Independent Registered Public Accounting Firm###### 24.01##*##Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)###### 31.01##*##Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002###### 31.02##*##Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002###### 32.01##‡##Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002###### 97.01##*##Clawback Policy###### 101.INS##*##Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document###### 101.SCH##*##Inline XBRL Taxonomy Extension Schema Document###### 101.CAL##*##Inline XBRL Taxonomy Extension Calculation Linkbase Document###### 101.DEF##*##Inline XBRL Taxonomy Extension Definition Linkbase Document###### 101.LAB##*##Inline XBRL Taxonomy Extension Label Linkbase Document######


GOOGL 3. Exhibits

Alphabet Inc. Exhibit Number####Description####Incorporated by reference herein## ######Form####Date 101.PRE##*##Inline XBRL Taxonomy Extension Presentation Linkbase Document###### 104####Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)######


GOOGL 3. Exhibits

_________________u Indicates management compensatory plan, contract, or arrangement.


GOOGL 3. Exhibits

* Filed herewith.


GOOGL 3. Exhibits

‡ Furnished herewith.


GOOGL 10-K SUMMARY

None.


GOOGL 10-K SUMMARY


GOOGL 10-K SUMMARY

Alphabet Inc.


GOOGL SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.


GOOGL Date: January 30, 2024

##ALPHABET INC.## By:####/S/ SUNDAR PICHAI ####Sundar Pichai ####Chief Executive Officer (Principal Executive Officer of the Registrant)


GOOGL POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sundar Pichai and Ruth M. Porat, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.


GOOGL POWER OF ATTORNEY

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


GOOGL POWER OF ATTORNEY


GOOGL POWER OF ATTORNEY

Alphabet Inc. Signature##Title##Date /S/ SUNDAR PICHAI##Chief Executive Officer and Director (Principal Executive Officer)##January 30, 2024 Sundar Pichai#### /S/ RUTH M. PORAT##President and Chief Investment Officer; Chief Financial Officer (Principal Financial Officer)##January 30, 2024 Ruth M. Porat#### /S/ AMIE THUENER O'TOOLE##Vice President, Corporate Controller and Principal Accounting Officer##January 30, 2024 Amie Thuener O'Toole#### /S/ FRANCES H. ARNOLD##Director##January 30, 2024 Frances H. Arnold#### /S/ SERGEY BRIN##Co-Founder and Director##January 30, 2024 Sergey Brin#### /S/ R. MARTIN CHAVEZ##Director##January 30, 2024 R. Martin Chávez#### /S/ L. JOHN DOERR##Director##January 30, 2024 L. John Doerr#### /S/ ROGER W. FERGUSON JR.##Director##January 30, 2024 Roger W. Ferguson Jr.#### /S/ JOHN L. HENNESSY##Director, Chair##January 30, 2024 John L. Hennessy#### /S/ LARRY PAGE##Co-Founder and Director##January 30, 2024 Larry Page#### /S/ K. RAM SHRIRAM##Director##January 30, 2024 K. Ram Shriram#### /S/ ROBIN L. WASHINGTON##Director##January 30, 2024 Robin L. Washington####


HD INTRODUCTION

The Home Depot, Inc. is the world’s largest home improvement retailer based on net sales for fiscal 2023. We offer our customers a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products. We also provide a number of services, including home improvement installation services and tool and equipment rental. As of the end of fiscal 2023, we operated 2,335 stores located throughout the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico. The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. We also maintain a network of distribution and fulfillment centers, as well as a number of e-commerce websites in the U.S., Canada and Mexico. When we refer to “The Home Depot,” the “Company,” “we,” “us” or “our” in this report, we are referring to The Home Depot, Inc. and its consolidated subsidiaries.


HD INTRODUCTION

The Home Depot, Inc. is a Delaware corporation that was incorporated in 1978. Our Store Support Center (corporate headquarters) is located at 2455 Paces Ferry Road, Atlanta, Georgia 30339. Our telephone number at that address is (770) 433-8211.


HD OUR STRATEGY

The retail landscape has changed rapidly over the past several years, with a complex macroeconomic environment and customer expectations continually evolving. In fiscal 2023, we experienced a year of moderation after the unprecedented growth of the prior three years, as we navigated the continued shift in consumer consumption trends away from goods and towards services and the impact of a rising interest rate environment. Our ability to operate successfully and meet the needs of our customers in an efficient and cost-effective way was due in significant part to our investments over the past several years aimed at creating an interconnected, frictionless shopping experience that enables our customers to seamlessly blend the digital and physical worlds. Going forward, we will continue to leverage the momentum of these investments and invest in our business in support of the following goals: •We intend to provide the best customer experience in home improvement and develop differentiated capabilities for our customers; •We intend to extend our position as the low-cost provider in home improvement; and •We intend to be the most efficient investor of capital in home improvement.


HD OUR STRATEGY

We believe that these goals will help us grow faster than the market and deliver value to our shareholders. We are steadfast in this commitment, while also recognizing that exercising corporate responsibility and being informed by the needs of our other stakeholders, including our customers, associates, supplier partners, and communities, creates value for all stakeholders, including our shareholders.


HD DELIVER SHAREHOLDER VALUE

We deliver on our objective to create shareholder value through our disciplined approach to capital allocation. Our capital allocation principles are as follows: •First, we intend to reinvest in our business to drive growth faster than the market. •Second, after meeting the needs of the business, we look to pay a quarterly dividend. •Third, after reinvesting in our business and paying our dividend, we intend to return excess cash to our shareholders through share repurchases.


HD DELIVER SHAREHOLDER VALUE

In fiscal 2023, we invested $3.2 billion in capital expenditures to support our business, advance our goals, and continue to build an interconnected customer experience. We also focused on driving productivity throughout the business by lowering our product and transportation costs and initiating a plan to reduce our fixed cost structure by approximately $500 million, which we expect will be realized in fiscal 2024. The combination of reinvesting in the business to drive higher sales and supporting productivity to lower costs allows us to improve our customer experience, increase our competitiveness in the market, and deliver shareholder value.


HD Table of Contents

In fiscal 2023, we returned over $16 billion to shareholders in the form of cash dividends and share repurchases. Our capital allocation is discussed further in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


HD OUR CUSTOMERS

We serve two primary customer groups — consumers (including both DIY and DIFM customers) and professional customers — and have developed varying approaches to meet their diverse needs: DIY Customers


HD OUR CUSTOMERS

These customers are typically homeowners who purchase products and complete their own projects and installations. Our associates assist these customers both in our stores and through online resources and other media designed to provide product and project knowledge. We also offer a variety of clinics and workshops both to share this knowledge and to build an emotional connection with our DIY customers. As the preferences and behaviors of our DIY customers are changing, we are investing in capabilities to better serve the needs of those customers.


HD Professional Customers (or “Pros”)

These customers are primarily professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, building service contractors and specialty tradespeople, such as electricians, plumbers and painters. These customers build, renovate, remodel, repair, and maintain residential properties, multifamily properties, hospitality properties, and commercial facilities, including education, healthcare, government, institutional, and office buildings.


HD Professional Customers (or “Pros”)

We have a number of initiatives designed to drive growth with Pros, including those working on both simple and complex projects. We remain focused on providing a customized online experience, a dedicated sales force, a broad assortment of Pro-focused products and brands, an extensive delivery network, our Pro Xtra loyalty program, and enhanced credit offerings. Building on our historical strength as a destination for urgent purchase needs, we are investing in differentiated capabilities that will help us better serve our Pros’ complex purchase needs, including expanded supply chain capabilities, additional trade credit offerings, more showroom space, and an enhanced order management system.


HD Professional Customers (or “Pros”)

We serve the MRO marketplace through our subsidiary HD Supply, a leading national distributor and provider of MRO products and related value-added services to multifamily, hospitality, healthcare, and government housing facilities, among others. Our MRO operations use a distribution center-based model that sells products primarily through a professional sales force and through e-commerce platforms and print catalogs.


HD Professional Customers (or “Pros”)

In October 2023, we announced changes to our leadership structure, aligning our outside sales and service business with our global store organization to better serve our Pros by leveraging our full ecosystem and newest capabilities. We recognize the great value our Pros provide to their clients, and we strive to make their jobs easier and help them grow their businesses, from expanded capabilities to improve their business and customer experience to the Path to Pro network we are building for Pros to connect with jobseekers to help address the skilled labor shortage. We believe that investments aimed at deepening our relationships with our Pros are yielding increased engagement and will continue to translate into incremental sales to these customers.


HD DIFM Customers

Intersecting our DIY customers and our Pros are our DIFM customers. These customers are typically homeowners who use Pros to complete their project or installation. Currently, we offer installation services in a variety of categories, such as flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. DIFM customers can purchase these services in our stores, online, or in their homes through in-home consultations. In addition to serving our DIFM customer needs, we believe our focus on the Pros who perform services for these customers helps us drive higher product sales.


HD OUR PRODUCTS AND SERVICES

A typical The Home Depot store stocks approximately 30,000 to 40,000 items during the year, including both national brand name and proprietary products. Our online product offerings complement our stores by serving as an extended aisle, and we offer a significantly broader product assortment through our websites and mobile applications, including homedepot.com, our primary website; homedepot.ca and homedepot.com.mx, our websites in Canada and Mexico, respectively; hdsupply.com, our website for our MRO products and related services; our websites for custom window coverings including blinds.com, justblinds.com and americanblinds.com; and thecompanystore.com, our website featuring textiles and décor products.


HD Table of Contents

We believe our merchandising organization is a key competitive advantage, delivering product innovation, assortment and value, which reinforces our position as the product authority in home improvement. In fiscal 2023, we continued to invest in merchandising resets in our stores to refine assortments, optimize space productivity, introduce innovative new products to our customers, and improve visual merchandising to drive a better shopping experience. At the same time, we remain focused on offering everyday values in our stores and online. To help our merchandising organization keep pace with changing customer expectations and increasing desire for innovation, localization, and personalization, we are continuing to invest in tools to better leverage our data and drive a deeper level of collaboration with our supplier partners. As a result, we have continued to focus on enhanced merchandising information technology tools to help us: (1) build an interconnected shopping experience that is tailored to our customers’ shopping intent and location; (2) provide the best value in the market; and (3) optimize our product assortments. Our merchandising team leverages technology and works closely with our inventory and supply chain teams, as well as our supplier partners, to manage our assortments, drive innovation, manage the cost environment, and adjust inventory levels to respond to fluctuations in demand.


HD Table of Contents

To complement our merchandising efforts, we offer a number of services for our customers, including installation services for our DIY and DIFM customers, as noted above. We also provide tool and equipment rentals at locations across the U.S. and Canada, providing value and convenience for both Pros and consumers. To improve the customer experience and continue to grow this differentiated service offering, we are continuing to invest in more locations (including continuing to pilot rental locations in Mexico), more tools, and better technology.