ALPHABET INC. Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q. The Impact of COVID-19 on our Results and Operations We began to observe the impact of COVID-19 on our financial results inMarch 2020 when, despite an increase in users' search activity, our advertising revenues declined compared to the prior year due to a shift of user search activity to less commercial topics and reduced spending by our advertisers. For the quarter endedJune 30, 2020 , our advertising revenues declined due to the continued impacts of COVID-19 and the related reductions in global economic activity. During the course of the quarter endedJune 30, 2020 , we observed a gradual return in user search activity to more commercial topics, followed by increased spending by our advertisers that continued throughout the second half of 2020. Additionally, over the course of 2020, we experienced variability in our margins as many of our expenses are less variable in nature and/or may not correlate to changes in revenues. Market volatility contributed to fluctuations in the valuation of our equity investments. Further, our assessment of the credit deterioration of our customers due to changes in the macroeconomic environment during the period was reflected in our allowance for credit losses for accounts receivable. During the first quarter of 2021, we continued to benefit from elevated consumer activity online and broad-based increases in advertiser spending. We remain focused on innovating and investing in the services we offer to consumers and businesses to support our long-term growth. For example, we continue to invest in our technical infrastructure and data centers. Additionally, certain expenses continued to be lower due to the ongoing pandemic, such as advertising and promotional, and travel and entertainment. These factors, combined with the adverse impact of COVID-19 on the first quarter of 2020, positively affected year-on-year growth trends in our financial results. Further, year-on-year trends benefited from a reduction in depreciation expense due to the change in the estimated useful life of our servers and certain network equipment beginning in the first quarter of 2021; we expect the effect of this change in estimate to decline through the remainder of the year (for further details see Note 1 of the Notes to Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q). The COVID-19 pandemic continues to evolve, be unpredictable and affect our business and financial results. Our past results may not be indicative of our future performance, and historical trends in our financial results may differ materially. See Part II Item 7, "Impact of COVID-19" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 for more information. Executive Overview The following table summarizes our consolidated financial results (in millions, except for per share information and percentages). Three Months Ended March 31, 2020 2021 Revenues$41,159 $55,314 Increase in revenues year over year 13 % 34 % Increase in constant currency revenues year over year 15 % 32 % Operating income$ 7,977 $ 16,437 Operating margin 19 % 30 % Other income (expense), net$ (220) $ 4,846 Net Income$ 6,836 $ 17,930 Diluted EPS$ 9.87 $ 26.29 •Total revenues were$55.3 billion , an increase of 34% year over year, primarily driven by an increase in$13.0 billion or 34% and an increase in
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revenues of$1.3 billion or 46%. The adverse effect of COVID-19 on prior period revenues positively affected our revenue growth. Revenues fromthe United States , EMEA, APAC, and Other Americas were$25.0 billion ,$17.0 billion ,$10.5 billion , and$2.9 billion , respectively. •Total cost of revenues was$24.1 billion , an increase of 27% year over year. TAC was$9.7 billion , an increase of 30% year over year, primarily driven by an increase in revenues subject to TAC. Other cost of revenues were$14.4 billion , an increase of 25% year over year. •Operating expenses (excluding cost of revenues) were$14.8 billion , an increase of 4% year over year primarily driven by headcount growth and partially offset by a decline in our allowance for credit losses for accounts receivable. Other information: •Operating cash flow was$19.3 billion . •Capital expenditures, which primarily included investments in technical infrastructure, were$5.9 billion . •Number of employees was 139,995 as ofMarch 31, 2021 . The majority of new hires during the quarter were engineers and product managers. Our Segments Beginning in the fourth quarter of 2020, we report our segment results as
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Table of Contents Alphabet Inc.
Financial Results
Revenues
The following table presents our revenues by type (in millions).
Three Months Ended
March 31,
2020 2021
Google Search & other $ 24,502 $ 31,879
YouTube ads 4,038 6,005
Google Network 5,223 6,800
Google advertising 33,763 44,684
Google other 4,435 6,494
Google Services total 38,198 51,178
Google Cloud 2,777 4,047
Other Bets 135 198
Hedging gains (losses) 49 (109)
Total revenues $ 41,159 $ 55,314
Google Services
Google advertising revenues
Our advertising revenue growth, as well as the change in paid clicks and
cost-per-click on Google Search & other properties and the change in impressions
and cost-per-impression on Google Network partners' properties ("Google Network
properties") and the correlation between these items, have been affected and may
continue to be affected by various factors, including:
•advertiser competition for keywords;
•changes in advertising quality, formats, delivery or policy;
•changes in device mix;
•changes in foreign currency exchange rates;
•fees advertisers are willing to pay based on how they manage their advertising
costs;
•general economic conditions including the impact of COVID-19;
•seasonality; and
•traffic growth in emerging markets compared to more mature markets and across
various advertising verticals and channels.
Our advertising revenue growth rate has been affected over time as a result of a
number of factors, including challenges in maintaining our growth rate as
revenues increase to higher levels; changes in our product mix; changes in
advertising quality or formats and delivery; the evolution of the online
advertising market; increasing competition; our investments in new business
strategies; query growth rates; and shifts in the geographic mix of our
revenues. We also expect that our revenue growth rate will continue to be
affected by evolving user preferences, the acceptance by users of our products
and services as they are delivered on diverse devices and modalities, our
ability to create a seamless experience for both users and advertisers, and
movements in foreign currency exchange rates.
Google advertising revenues consist primarily of the following:
•Google Search & other consists of revenues generated on Google search
properties (including revenues from traffic generated by search distribution
partners who use Google.com as their default search in browsers, toolbars, etc.)
and other Google owned and operated properties like Gmail, Google Maps, and
Google Play;
•YouTube ads consists of revenues generated on YouTube properties; and
•Google Network consists of revenues generated on Google Network properties
participating in AdMob, AdSense, and Google Ad Manager.
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Google Search & other Google Search & other revenues increased$7,377 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The overall growth was primarily driven by interrelated factors including increases in search queries resulting from growth in user adoption and usage, primarily on mobile devices, growth in advertiser spending, and improvements we have made in ad formats and delivery. The adverse effect of COVID-19 on prior period revenues also contributed to the year-over-year increase. YouTube ads YouTube ads revenues increased$1,967 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . Growth was primarily driven by our direct response products followed by our brand advertising products, both of which benefited from improvements to ad formats and delivery and increased advertiser spending. The adverse effect of COVID-19 on prior period revenues also contributed to the year-over-year increase.$1,577 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The growth was primarily driven by strength in AdMob andMarch 31, 2021 Paid clicks change 25 % Cost-per-click change 3 % Paid clicks increased from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 primarily driven by interrelated factors, including an increase in search queries resulting from growth in user adoption and usage, primarily on mobile devices; continued growth in advertiser activity; improvements we have made in ad formats and delivery; and the adverse effect of COVID-19 on the prior period. Growth was also driven by an increase in clicks relating to ads onU.S. dollar compared to certain foreign currencies. 32
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Impressions and cost-per-impression
The following table presents changes in our impressions and cost-per-impression
(expressed as a percentage):
Three Months Ended March 31,
2021
Impressions change 7 %
Cost-per-impression change 19 %
Impressions increased from the three months ended March 31, 2020 to the three
months ended March 31, 2021 primarily driven by growth in Google Ad Manager and
AdMob. The increase in cost-per-impression was primarily driven by the adverse
effect of COVID-19 on the prior period, as well as the effect of a combination
of factors including ongoing product and policy changes and improvements we have
made in ad formats and delivery, changes in device mix, geographic mix, product
mix, property mix, and fluctuations of the U.S. dollar compared to certain
foreign currencies.
Google other revenues
Google other revenues consist primarily of revenues from:
•Google Play, which includes revenues from sales of apps and in-app purchases
(which we recognize net of payout to developers) and digital content sold in the
Google Play store;
•Devices and Services which includes hardware, such as Fitbit wearable devices,
Google Nest home products, Pixelbooks, Pixel phones and other devices;
•YouTube non-advertising, including YouTube Premium and YouTube TV subscriptions
and other services; and
•other products and services.
Google other revenues increased $2,059 million from the three months ended March
31, 2020 to the three months ended March 31, 2021 . The growth was primarily
driven by Google Play and YouTube non-advertising. Growth for Google Play was
primarily driven by sales of apps and in-app purchases, which benefited from
elevated user engagement partially due to the impact of COVID-19. Growth for
YouTube non-advertising was primarily driven by an increase in paid subscribers.
In addition, for the three months ended March 31, 2021 Google other revenues
include Fitbit revenues as the acquisition closed in January 2021 .
Over time, our growth rate for Google other revenues may be affected by the
seasonality associated with new product and service launches as well as market
dynamics.
Google Cloud
Our Google Cloud revenues increased $1,270 million from the three months ended
March 31, 2020 to the three months ended March 31, 2021 . The growth was
primarily driven by GCP followed by Google Workspace offerings. Google Cloud's
infrastructure and platform products were the largest drivers of growth in GCP.
Over time, our growth rate for Google Cloud revenues may be affected by customer
usage, market dynamics, as well as new product and service launches.
Revenues by Geography
The following table presents our revenues by geography as a percentage of
revenues, determined based on the addresses of our customers:
Three Months Ended
March 31,
2020 2021
United States 46 % 45 %
EMEA 31 % 31 %
APAC 18 % 19 %
Other Americas 5 % 5 %
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For further details on revenues by geography, see Note 2 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Use of Constant Currency Revenues and Constant Currency Revenue Percentage Change The effect of currency exchange rates on our business is an important factor in understanding period to period comparisons. Our international revenues are favorably affected as theU.S. dollar weakens relative to other foreign currencies, and unfavorably affected as theU.S. dollar strengthens relative to other foreign currencies. Our revenues are also favorably affected by net hedging gains and unfavorably affected by net hedging losses. We use non-GAAP constant currency revenues and non-GAAP percentage change in constant currency revenues for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe the presentation of results on a constant currency basis in addition to GAAP results helps improve the ability to understand our performance because they exclude the effects of foreign currency volatility that are not indicative of our core operating results. Constant currency information compares results between periods as if exchange rates had remained constant period over period. We define constant currency revenues as total revenues excluding the effect of foreign exchange rate movements and hedging activities, and use it to determine the constant currency revenue percentage change on a year-on-year basis. Constant currency revenues are calculated by translating current period revenues using prior period exchange rates, as well as excluding any hedging effects realized in the current period. Constant currency revenue percentage change is calculated by determining the change in period revenues over prior period revenues where current period foreign currency revenues are translated using prior period exchange rates and hedging effects are excluded from revenues of both periods. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP. 34
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The following table presents the foreign exchange effect on our international revenues and total revenues (in millions, except percentages):
Three Months Ended
March 31,
2020 2021
EMEA revenues $ 12,845
235 (929)
EMEA constant currency revenues $ 13,080 $ 16,102
Prior period EMEA revenues $ 11,668 $ 12,845
EMEA revenue percentage change 10 % 33 %
EMEA constant currency revenue percentage change 12 % 25 %
APAC revenues $ 7,238
61 (363)
APAC constant currency revenues $ 7,299 $ 10,092
Prior period APAC revenues $ 6,096 $ 7,238
APAC revenue percentage change 19 % 44 %
APAC constant currency revenue percentage change 20 % 39 %
Other Americas revenues $ 2,157
96 191
Other Americas constant currency revenues $ 2,253 $ 3,096
Prior period Other Americas revenues $ 1,906 $ 2,157
Other Americas revenue percentage change 13 % 35 %
Other Americas constant currency revenue percentage change 18 % 44 %
United States revenues $ 18,870 $ 25,032
United States revenue percentage change 14 % 33 %
Hedging gains (losses) $ 49 $ (109)
Total revenues $ 41,159 $ 55,314
Total constant currency revenues $ 41,502 $ 54,322
Prior period revenues, excluding hedging effect(1) $ 36,202 $ 41,110
Total revenue percentage change 13 % 34 %
Total constant currency revenue percentage change 15 % 32 %
(1) Total revenues and hedging gains (losses) were $36,339 million and $137
million for the three months ended March 31, 2019 , respectively.
EMEA revenue percentage change from the three months ended March 31, 2020 to the
three months ended March 31, 2021 was favorably affected by foreign currency
exchange rates, primarily due to the U.S. dollar weakening relative to the Euro
and British pound.
APAC revenue percentage change from the three months ended March 31, 2020 to the
three months ended March 31, 2021 was favorably affected by foreign currency
exchange rates, primarily due to the U.S. dollar weakening relative to the
Japanese yen and Australian dollar.
Other Americas revenue percentage change from the three months ended March 31,
2020 to the three months ended March 31, 2021 was unfavorably affected by
changes in foreign currency exchange rates, primarily due to the U.S. dollar
strengthening relative to the Brazilian real.
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Costs and Operating Expenses Cost of Revenues Cost of revenues includes TAC which are paid to our distribution partners, who make available our search access points and services, and amounts paid to$ 7,452 $ 9,712 Other cost of revenues 11,530 14,391 Total cost of revenues$ 18,982 $ 24,103
Total cost of revenues as a percentage of revenues 46.1 %
43.6 %
Cost of revenues increased$5,121 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The increase was due to increases in other cost of revenues and TAC of$2,861 million and$2,260 million , respectively. The increase in other cost of revenues from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 was primarily due to increases in content acquisition costs primarily for YouTube as well as data center and other operations costs. The increase in data center and other operations costs was partially offset by a reduction in depreciation expense due to the change in the estimated useful life of our servers and certain network equipment beginning in the first quarter of 2021. The increase in TAC from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 was due to increases in TAC paid to distribution partners and toMarch 31, 2020 to the three months endedMarch 31, 2021 due to a combination of factors none of which were individually significant. The TAC rate onMarch 31, 2020 to the three months endedMarch 31, 2021 . Over time, cost of revenues as a percentage of total revenues may be affected by a number of factors, including the following: •The amount of TAC paid to distribution partners, which is affected by changes in device mix, geographic mix, partner mix, partner agreement terms such as revenue share arrangements, and the percentage of queries channeled through paid access points; •The amount of TAC paid to
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•Costs associated with our data centers and other operations to support ads,$ 6,820
R&D expenses consist primarily of: •Compensation expenses (including SBC) for engineering and technical employees responsible for R&D of our existing and new products and services; •Depreciation; •Equipment-related expenses; and •Professional services fees primarily related to consulting and outsourcing services. R&D expenses increased$665 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The increase was primarily due to an increase in compensation expenses of$861 million , largely resulting from a 10% increase in headcount. This increase was partially offset by a reduction in depreciation expense of$161 million including the effect of our change in the estimated useful life of our servers and certain network equipment. Over time, R&D expenses as a percentage of revenues may fluctuate due to certain expenses that are generally less variable in nature and may not correlate to the changes in revenues. In addition, R&D expenses may be affected by a number of factors including continued investment in ads, Android, Chrome, Google Cloud, Google Play, hardware, machine learning, Other Bets, Search and YouTube. Sales and Marketing The following table presents our sales and marketing expenses (in millions, except percentages): Three Months Ended March 31, 2020 2021 Sales and marketing expenses$ 4,500 $ 4,516 Sales and marketing expenses as a percentage of revenues 10.9 % 8.2 % Sales and marketing expenses consist primarily of: •Advertising and promotional expenditures related to our products and services; and •Compensation expenses (including SBC) for employees engaged in sales and marketing, sales support, and certain customer service functions. Sales and marketing expenses increased$16 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The increase was primarily due to an increase in compensation expenses of$368 million , largely resulting from an 8% increase in headcount. This increase was largely offset by decreases in advertising and promotional as well as travel and entertainment expenses totaling$268 million , primarily as a result of COVID-19. Over time, sales and marketing expenses as a percentage of revenues may fluctuate due to certain expenses that are generally less variable in nature and may not correlate to the changes in revenues. In addition, sales and marketing expenses may be affected by a number of factors including the seasonality associated with new product and service launches and strategic decisions regarding the timing and extent of our spending. 37
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General and Administrative The following table presents our general and administrative expenses (in millions, except percentages):
Three Months Ended
March 31,
2020 2021
General and administrative expenses $ 2,880 $ 2,773
General and administrative expenses as a percentage of revenues 7.0 % 5.0 %
General and administrative expenses consist primarily of:
•Compensation expenses (including SBC) for employees in our finance, human
resources, information technology, and legal organizations;
•Depreciation;
•Equipment-related expenses;
•Legal-related expenses; and
•Professional services fees primarily related to audit, information technology
consulting, outside legal, and outsourcing services.
General and administrative expenses decreased $107 million from the three months
ended March 31, 2020 to the three months ended March 31, 2021 . The decrease was
primarily driven by a $493 million decline in allowance for credit losses for
accounts receivable, as the prior year period reflected a higher allowance
related to the economic impact of COVID-19. The decrease was partially offset by
$236 million in charges relating to certain legal matters.
Over time, general and administrative expenses as a percentage of revenues may
fluctuate due to certain expenses that are generally less variable in nature and
may not correlate to the changes in revenues, the effect of discrete items such
as legal settlements, or allowances for credit losses for accounts receivable.
Segment Profitability
The following table presents our segment operating income (loss) (in millions).
For comparative purposes, amounts in prior periods have been recast.
Three Months Ended
March 31,
2020 2021
Operating income (loss):
Google Services $ 11,548 $ 19,546
Google Cloud (1,730) (974)
Other Bets (1,121) (1,145)
Corporate costs, unallocated (720) (990)
Total income from operations $ 7,977 $ 16,437
Google Services
Google services operating income increased $7,998 million from the three months
ended March 31, 2020 to the three months ended March 31, 2021 . The increase was
due to growth in revenues partially offset by increases in TAC, content
acquisition costs and compensation expenses. The increase in expenses was
partially offset by a reduction in costs driven by the change in the estimated
useful life of our servers and certain network equipment. The adverse effect of
COVID-19 on prior period results also positively affected the year-over-year
increase in operating income.
Google Cloud
Google Cloud operating loss decreased $756 million from the three months ended
March 31, 2020 to the three months ended March 31, 2021 . The decrease in
operating loss was primarily driven by growth in revenues, partially offset by
an increase in expenses, primarily driven by compensation expenses. The increase
in expenses was partially offset by a reduction in costs driven by the change in
the estimated useful life of our servers and certain network equipment.
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Other Bets Other Bets operating loss increased$24 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The increase in operating loss was due to a combination of factors none of which were individually significant. Other Income (Expense), Net The following table presents other income (expense), net (in millions): Three Months Ended March 31, 2020 2021 Other income (expense), net$ (220) $ 4,846 Other income (expense), net, increased$5,066 million from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The change was primarily driven by an increase in unrealized gains recognized for certain of our non-marketable equity securities of$5,624 million during the three months endedMarch 31, 2021 , partially offset by an increase in accrued performance fees of$671 million . Over time, other income (expense), net, may be affected by market dynamics and other factors. Equity values generally change daily for marketable equity securities and upon the occurrence of observable price changes or upon impairment of non-marketable equity securities. In addition, volatility in the global economic climate and financial markets could result in a significant change in the value of our investments. Fluctuations in the value of these investments has, and we expect will continue to, contribute to volatility of OI&E in future periods. For additional information about our investments, see Note 3 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Provision for Income Taxes The following table presents our provision for income taxes (in millions, except for effective tax rate): Three Months Ended March 31, 2020 2021 Provision for income taxes$ 921 $ 3,353 Effective tax rate 11.9 % 15.8 % Our provision for income taxes and our effective tax rate increased from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 . The increase in the provision for income taxes and our effective tax rate is primarily due to an increase in pre-tax earnings, including in countries that have higher statutory rates, partially offset by an increase in theU.S. federal Foreign-Derived Intangible Income tax deduction benefit and stock-based compensation related tax benefit. We expect our future effective tax rate to be affected by changes in pre-tax earnings, including the effect of countries with different statutory rates. Additionally, our future effective tax rate may be affected by changes in the valuation of our deferred tax assets or liabilities, or changes in tax laws, regulations, as well as certain discrete items. Financial Condition Cash, Cash Equivalents, andMarketable Securities As ofMarch 31, 2021 , we had$135.1 billion in cash, cash equivalents, and short-term marketable securities. Cash equivalents and marketable securities are comprised of time deposits, money market funds, highly liquid government bonds, corporate debt securities, mortgage-backed and asset-backed securities and marketable equity securities. Sources, Uses of Cash and Related Trends Our principal sources of liquidity are our cash, cash equivalents, and marketable securities, as well as the cash flow that we generate from our operations. The primary use of capital continues to be to invest for the long term growth of the business. We regularly evaluate our cash and capital structure, including the size, pace and form of capital return to stockholders. 39
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The following table presents our cash flows (in millions):
Three Months Ended
March 31,
2020 2021
Net cash provided by operating activities
Cash Provided by Operating Activities Our largest source of cash provided by our operations are advertising revenues generated by Google Search & other properties,March 31, 2020 to the three months endedMarch 31, 2021 primarily due to the net effect of increases in cash received from revenues and cash paid for cost of revenues and operating expenses, and changes in operating assets and liabilities. Cash Used in Investing Activities Cash provided by investing activities consists primarily of maturities and sales of our investments in marketable and non-marketable securities. Cash used in investing activities consists primarily of purchases of marketable and non-marketable securities, purchases of property and equipment, and payments for acquisitions. Net cash used in investing activities increased from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 primarily due to a net decrease in maturities and sales of securities and increase in payments for acquisitions. Cash Used in Financing Activities Cash provided by financing activities consists primarily of proceeds from issuance of debt and proceeds from the sale of interest in consolidated entities. Cash used in financing activities consists primarily of repurchases of capital stock, net payments related to stock-based award activities, and repayments of debt. Net cash used in financing activities increased from the three months endedMarch 31, 2020 to the three months endedMarch 31, 2021 primarily due to increases in cash payments for repurchases of capital stock and net payments related to stock-based award activities, and a decrease in proceeds from the sale of interest in consolidated entities. Liquidity and Material Cash Requirements We expect existing cash, cash equivalents, short-term marketable securities, cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future. As ofMarch 31, 2021 , we had long-term taxes payable of$6.5 billion related to a one-time transition tax payable incurred as a result of theU.S. Tax Cuts and Jobs Act ("Tax Act"). As permitted by the Tax Act, we will pay the transition tax in annual interest-free installments through 2025. In 2017, 2018 and 2019, the EC announced decisions that certain actions taken by$2.7 billion as ofJune 27, 2017 ), €4.3 billion ($5.1 billion as ofJune 30, 2018 ), and €1.5 billion ($1.7 billion as ofMarch 20, 2019 ), respectively. While each EC decision is under appeal, we included the fines 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. We have a short-term debt financing program of up to$5.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. As ofMarch 31, 2021 , we had no commercial paper outstanding. As ofMarch 31, 2021 , we had$4 billion of revolving credit facilities with no amounts outstanding. InApril 2021 , we terminated the existing revolving credit facilities, which were scheduled to expire inJuly 2023 , and entered into two new revolving credit facilities in the amounts of$4.0 billion and$6.0 billion , which 40
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will expire inApril 2022 andApril 2026 , respectively. The interest rates for the new 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 have been borrowed under the new credit facilities. As ofMarch 31, 2021 , we have senior unsecured notes outstanding due from 2021 through 2060 with a total carrying value of$13.8 billion . Refer to Note 5 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the notes. In accordance with the authorizations of the Board of Directors of Alphabet, during the three months endedMarch 31, 2021 we repurchased and subsequently retired 5.7 million shares of Alphabet Class C capital stock for an aggregate amount of$11.4 billion . As ofMarch 31, 2021 ,$6.3 billion remains authorized and available for repurchase. InApril 2021 , the Board of Directors of Alphabet authorized the company to repurchase up to an additional$50.0 billion of its Class C capital stock. The repurchases are being 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. Refer to Note 10 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Capital Expenditures and Leases We make investments in land and buildings for data centers and offices and information technology assets through purchases of property and equipment and lease arrangements to provide capacity for the growth of our services and products. During the three months endedMarch 31, 2020 and 2021, we spent$6.0 billion and$5.9 billion on capital expenditures and recognized total operating lease assets of$770 million and$769 million , respectively. As ofMarch 31, 2021 , the amount of total future lease payments under operating leases, which had a weighted average remaining lease term of 9 years, was$15.6 billion . As ofMarch 31, 2021 , we have entered into leases that have not yet commenced with future lease payments of$8.0 billion , excluding purchase options, that are not yet recorded on our Consolidated Balance Sheets. These leases will commence between 2021 and 2026 with non-cancelable lease terms of 1 to 25 years. For the three months endedMarch 31, 2020 and 2021, our depreciation and impairment expenses on property and equipment were$2.9 billion and$2.5 billion , respectively. The change in estimated useful life of our servers and certain network equipment was effective beginning in fiscal year 2021. The effect of this change in accounting estimate was a reduction in depreciation expense of$835 million for the three months endedMarch 31, 2021 . For the three months endedMarch 31, 2020 and 2021, our operating lease expenses (including variable lease costs), were$663 million and$794 million , respectively. Finance leases were not material for the three months endedMarch 31, 2020 and 2021. Critical Accounting Policies and Estimates See Part II, Item 7, "Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Available Information Our website is located at www.abc.xyz, and our investor relations website is located at www.abc.xyz/investor. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our Proxy Statements, and any amendments to these reports, are available through our investor relations website, free of charge, after we file them with theSEC . We also provide a link to the section of theSEC's website at www.sec.gov that has all of the reports that we file or furnish with theSEC . We webcast via our investor relations website our earnings calls and certain events we participate in or host with members of the investment community. Our investor relations website also provides notifications of news or announcements regarding our financial performance and other items of interest to our investors, includingSEC filings, investor events, press and earnings releases, and blogs. We also share Google news and product updates on Google's Keyword blog at https://www.blog.google/, which may be of interest or material to our investors. Further, corporate governance information, including our certificate of incorporation, bylaws, governance guidelines, board committee charters, and code of conduct, is also available on our investor relations website under the heading "Other." The content of our websites are not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with theSEC , and any references to our websites are intended to be inactive textual references only. 41
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