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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 001-37580
________________________________________________________________________________________
Alphabet Inc.
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________
Delaware61-1767919
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
1600 Amphitheatre Parkway
Mountain View, CA 94043
(Address of principal executive offices, including zip code)
(650) 253-0000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par valueGOOGLNasdaq Stock Market LLC
(Nasdaq Global Select Market)
Class C Capital Stock, $0.001 par valueGOOGNasdaq Stock Market LLC
(Nasdaq Global Select Market)
________________________________________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No
As of April 19, 2022, there were 300,763,622 shares of Alphabet’s Class A stock outstanding, 44,359,838 shares of Alphabet's Class B stock outstanding, and 313,376,417 shares of Alphabet's Class C stock outstanding.


Alphabet Inc.
Alphabet Inc.
Form 10-Q
For the Quarterly Period Ended March 31, 2022
TABLE OF CONTENTS
  Page No.
Item 1
Consolidated Balance Sheets - December 31, 2021 and March 31, 2022
Consolidated Statements of Income - Three Months Ended March 31, 2021 and 2022
Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2021 and 2022
Consolidated Statements of Stockholders' Equity - Three Months Ended March 31, 2021 and 2022
Consolidated Statements of Cash Flows - Three Months Ended March 31, 2021 and 2022
Item 2
Item 3
Item 4
Item 1
Item 1A
Item 2
Item 6

2

Alphabet Inc.
Note About Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, among other things, statements regarding:
the ongoing effect of the novel coronavirus pandemic ("COVID-19"), including its macroeconomic effects on our business, operations, and financial results;
the growth of our business and revenues and our expectations about the factors that influence our success and trends in our business;
fluctuations in our revenue growth rate and operating margin and various factors contributing to such fluctuations;
our expectation that the continuing shift from an offline to online world will continue to benefit our business;
our expectation that the portion of our revenues that we derive from non-advertising revenues will continue to increase and may affect our margins;
our expectation that our traffic acquisition costs (TAC) and the associated TAC rate will fluctuate, which could affect our overall margins;
our expectation that our monetization trends will fluctuate, which could affect our revenues and margins;
fluctuations in our revenue growth, as well as the change in paid clicks and cost-per-click and the change in impressions and cost-per-impression, and various factors contributing to such fluctuations;
our expectation that we will continue to periodically review, refine, and update our methodologies for monitoring, gathering, and counting the number of paid clicks and impressions;
our expectation that our results will be affected by our performance in international markets as users in developing economies increasingly come online;
our expectation that our foreign exchange risk management program will not fully offset our net exposure to fluctuations in foreign currency exchange rates;
the expected variability of gains and losses related to hedging activities under our foreign exchange risk management program;
the amount and timing of revenue recognition from customer contracts with commitments for performance obligations, including our estimate of the remaining amount of commitments and when we expect to recognize revenue;
fluctuations in our capital expenditures;
our plans to continue to invest in new businesses, products, services and technologies, systems, land and buildings for data centers and offices, and infrastructure, as well as to continue to invest in acquisitions and strategic investments;
our pace of hiring and our plans to provide competitive compensation programs;
our expectation that our cost of revenues, research and development (R&D) expenses, sales and marketing expenses, and general and administrative expenses may increase in amount and/or may increase as a percentage of revenues and may be affected by a number of factors;
estimates of our future compensation expenses;
our expectation that our other income (expense), net (OI&E), will fluctuate in the future, as it is largely driven by market dynamics;
fluctuations in our effective tax rate;
seasonal fluctuations in internet usage and advertiser expenditures, underlying business trends such as traditional retail seasonality, which are likely to cause fluctuations in our quarterly results;
the sufficiency of our sources of funding;
our potential exposure in connection with new and pending investigations, proceedings, and other contingencies;
3

Alphabet Inc.
the sufficiency and timing of our proposed remedies in response to decisions from the European Commission (EC) and other regulators and governmental entities;
our expectations regarding the timing, design, and ongoing phased implementation of our new global enterprise resource planning (ERP) system;
the expected timing, amount, and effect of Alphabet Inc.'s share repurchases;
our long-term sustainability and diversity goals;
the unpredictability of the ongoing broader economic effects resulting from the war in Ukraine on our future financial results;
as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections: Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "will be," "will continue," "may," "could," "will likely result," and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
As used herein, "Alphabet," "the company," "we," "us," "our," and similar terms include Alphabet Inc. and its subsidiaries, unless the context indicates otherwise.
"Alphabet," "Google," and other trademarks of ours appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies' trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

4

Alphabet Inc.
PART I.    FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
Alphabet Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts which are reflected in thousands, and par value per share amounts)
As of
December 31, 2021
As of
March 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents$20,945 $20,886 
Marketable securities118,704 113,084 
Total cash, cash equivalents, and marketable securities139,649 133,970 
Accounts receivable, net39,304 34,703 
Income taxes receivable, net966 919 
Inventory1,170 1,369 
Other current assets7,054 6,892 
Total current assets188,143 177,853 
Non-marketable securities29,549 30,544 
Deferred income taxes1,284 1,388 
Property and equipment, net97,599 104,218 
Operating lease assets12,959 12,992 
Intangible assets, net1,417 1,313 
Goodwill22,956 23,010 
Other non-current assets5,361 5,778 
Total assets$359,268 $357,096 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$6,037 $3,436 
Accrued compensation and benefits13,889 9,803 
Accrued expenses and other current liabilities31,236 33,051 
Accrued revenue share8,996 8,116 
Deferred revenue3,288 3,198 
Income taxes payable, net808 4,344 
Total current liabilities64,254 61,948 
Long-term debt14,817 14,791 
Deferred revenue, non-current535 499 
Income taxes payable, non-current9,176 9,406 
Deferred income taxes5,257 2,843 
Operating lease liabilities11,389 11,363 
Other long-term liabilities2,205 2,242 
Total liabilities107,633 103,092 
Contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding
0 0 
Class A, Class B, and Class C stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 662,121 (Class A 300,737, Class B 44,665, Class C 316,719) and 658,763 (Class A 300,763, Class B 44,404, Class C 313,596) shares issued and outstanding
61,774 62,832 
Accumulated other comprehensive income (loss)(1,623)(4,049)
Retained earnings191,484 195,221 
Total stockholders’ equity251,635 254,004 
Total liabilities and stockholders’ equity$359,268 $357,096 
See accompanying notes.
5

Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
Three Months Ended
March 31,
20212022
Revenues$55,314 $68,011 
Costs and expenses:
Cost of revenues24,103 29,599 
Research and development7,485 9,119 
Sales and marketing4,516 5,825 
General and administrative2,773 3,374 
Total costs and expenses38,877 47,917 
Income from operations16,437 20,094 
Other income (expense), net4,846 (1,160)
Income before income taxes21,283 18,934 
Provision for income taxes3,353 2,498 
Net income$17,930 $16,436 
Basic net income per share of Class A, Class B, and Class C stock$26.63 $24.90 
Diluted net income per share of Class A, Class B, and Class C stock$26.29 $24.62 
See accompanying notes.
6

Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions; unaudited)
Three Months Ended
 March 31,
 20212022
Net income$17,930 $16,436 
Other comprehensive loss:
Change in foreign currency translation adjustment(423)39 
Available-for-sale investments:
Change in net unrealized gains (losses)(488)(2,478)
Less: reclassification adjustment for net (gains) losses included in net income11 148 
Net change, net of income tax benefit (expense) of $135 and $633
(477)(2,330)
Cash flow hedges:
Change in net unrealized gains (losses)179 114 
Less: reclassification adjustment for net (gains) losses included in net income85 (249)
Net change, net of income tax benefit (expense) of $(50) and $44
264 (135)
Other comprehensive loss(636)(2,426)
Comprehensive income$17,294 $14,010 
See accompanying notes.
7

Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except share amounts which are reflected in thousands; unaudited)

 Three Months Ended March 31, 2021
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Stockholders’
Equity
 Shares    Amount    
Balance as of December 31, 2020675,222 $58,510 $633 $163,401 $222,544 
Stock issued1,569 6 6 
Stock-based compensation expense3,788 3,788 
Tax withholding related to vesting of restricted stock units and other(2,234)(2,234)
Repurchases of stock(5,697)(644)(10,751)(11,395)
Sale of interest in consolidated entities10 10 
Net income17,930 17,930 
Other comprehensive income (loss)(636)(636)
Balance as of March 31, 2021671,094 $59,436 $(3)$170,580 $230,013 

 Three Months Ended March 31, 2022
 Class A, Class B, Class C Stock and Additional Paid-In CapitalAccumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Stockholders’
Equity
 Shares    Amount    
Balance as of December 31, 2021662,121 $61,774 $(1,623)$191,484 $251,635 
Stock issued1,555 7 7 
Stock-based compensation expense4,547 4,547 
Tax withholding related to vesting of restricted stock units and other(2,895)(2,895)
Repurchases of stock(4,913)(601)(12,699)(13,300)
Net income16,436 16,436 
Other comprehensive income (loss)(2,426)(2,426)
Balance as of March 31, 2022658,763 $62,832 $(4,049)$195,221 $254,004 
See accompanying notes.



8

Alphabet Inc.
Alphabet Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
Three Months Ended
March 31,
20212022
Operating activities
Net income$17,930 $16,436 
Adjustments:
Depreciation and impairment of property and equipment2,525 3,591 
Amortization and impairment of intangible assets228 191 
Stock-based compensation expense3,745 4,504 
Deferred income taxes1,100 (2,090)
(Gain) loss on debt and equity securities, net(4,751)1,437 
Other(255)140 
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable2,794 4,364 
Income taxes, net785 3,820 
Other assets7 (776)
Accounts payable(982)(2,373)
Accrued expenses and other liabilities(3,530)(3,216)
Accrued revenue share(444)(828)
Deferred revenue137 (94)
Net cash provided by operating activities19,289 25,106 
Investing activities
Purchases of property and equipment(5,942)(9,786)
Purchases of marketable securities(36,426)(28,462)
Maturities and sales of marketable securities39,248 29,779 
Purchases of non-marketable securities(646)(776)
Maturities and sales of non-marketable securities19 12 
Acquisitions, net of cash acquired, and purchases of intangible assets(1,666)(173)
Other investing activities30 355 
Net cash used in investing activities(5,383)(9,051)
Financing activities
Net payments related to stock-based award activities(2,184)(2,916)
Repurchases of stock(11,395)(13,300)
Proceeds from issuance of debt, net of costs900 16,422 
Repayments of debt(937)(16,420)
Proceeds from sale of interest in consolidated entities, net10 0 
Net cash used in financing activities(13,606)(16,214)
Effect of exchange rate changes on cash and cash equivalents(143)100 
Net increase (decrease) in cash and cash equivalents157 (59)
Cash and cash equivalents at beginning of period26,465 20,945 
Cash and cash equivalents at end of period$26,622 $20,886 
See accompanying notes.
9

Alphabet Inc.
Alphabet Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Nature of Operations
Google was incorporated in California in September 1998 and re-incorporated in the State of Delaware in August 2003. In 2015, we implemented a holding company reorganization, and as a result, Alphabet Inc. ("Alphabet") became the successor issuer to Google.
We generate revenues by delivering relevant, cost-effective online advertising; cloud-based solutions that provide customers with infrastructure and platform services and collaboration tools; sales of other products and services, such as apps and in-app purchases, digital content products, and hardware; and fees received for subscription-based products such as YouTube Premium and YouTube TV.
Basis of Consolidation
The consolidated financial statements of Alphabet include the accounts of Alphabet and entities consolidated under the variable interest and voting models. All intercompany balances and transactions have been eliminated.
Unaudited Interim Financial Information
These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP), and in our opinion, include all adjustments of a normal recurring nature necessary for fair financial statement presentation. Interim results are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. We have made estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates.
These consolidated financial statements and other information presented in this Form 10-Q should be read in conjunction with the consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC.
Note 2. Revenues
Revenue Recognition
The following table presents revenues disaggregated by type (in millions).
Three Months Ended
March 31,
20212022
Google Search & other$31,879 $39,618 
YouTube ads6,005 6,869 
Google Network6,800 8,174 
Google advertising44,684 54,661 
Google other6,494 6,811 
Google Services total51,178 61,472 
Google Cloud4,047 5,821 
Other Bets198 440 
Hedging gains (losses)(109)278 
Total revenues$55,314 $68,011 
10

Alphabet Inc.
The following table presents revenues disaggregated by geography, based on the addresses of our customers (in millions):
 Three Months Ended
March 31,
 20212022
United States$25,032 45 %$31,733 47 %
EMEA(1)
17,031 31 20,317 30 
APAC(1)
10,455 19 11,841 17 
Other Americas(1)
2,905 5 3,842 6 
Hedging gains (losses)(109)278 
Total revenues$55,314 100 %$68,011 100 %
(1)    Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific (APAC); and Canada and Latin America ("Other Americas").
Revenue Backlog and Deferred Revenues
As of March 31, 2022, we had $50.5 billion of remaining performance obligations (“revenue backlog”), primarily related to Google Cloud, and expect to recognize approximately half of this amount as revenues over the next 24 months with the remaining to be recognized thereafter. Our revenue backlog represents commitments in customer contracts for future services that have not yet been recognized as revenues. The amount and timing of revenue recognition for these commitments is largely driven by when our customers utilize services and our ability to deliver in accordance with relevant contract terms, which could affect our estimate of revenue backlog and when we expect to recognize such as revenues. Revenue backlog includes related deferred revenue currently recorded as well as amounts that will be invoiced in future periods and excludes contracts with an original expected term of one year or less and cancellable contracts.
We record deferred revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. Deferred revenues primarily relate to Google Cloud and Google other. Total deferred revenue as of December 31, 2021 was $3.8 billion, of which $1.4 billion was recognized as revenues during the three months ended March 31, 2022.
Note 3. Financial Instruments
Debt Securities
We classify our marketable debt securities, which are accounted for as available-for-sale, within Level 2 in the fair value hierarchy because we use quoted market prices to the extent available or alternative pricing sources and models utilizing market observable inputs to determine fair value.
For certain marketable debt securities, we have elected the fair value option for which changes in fair value are recorded in other income (expense), net. The fair value option was elected for these securities to align with the unrealized gains and losses from related derivative contracts. Unrealized net losses related to debt securities still held where we have elected the fair value option were $35 million and $236 million as of December 31, 2021 and March 31, 2022, respectively. As of December 31, 2021 and March 31, 2022, the fair value of these debt securities was $4.7 billion and $5.6 billion, respectively.
The following tables summarize debt securities, for which we did not elect the fair value option, by significant investment categories (in millions):
 As of December 31, 2021
 Adjusted
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Cash and Cash
Equivalents
Marketable
Securities
Level 2:
Time deposits(1)
$5,133 $0 $0 $5,133 $5,133 $0 
Government bonds53,288 258 (238)53,308 5 53,303 
Corporate debt securities35,605 194 (223)35,576 12 35,564 
Mortgage-backed and asset-backed securities18,829 96 (112)18,813 0 18,813 
Total$112,855 $548 $(573)$112,830 $5,150 $107,680 
11

Alphabet Inc.
 As of March 31, 2022
 Adjusted
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Cash and Cash
Equivalents
Marketable
Securities
Level 2:
Time deposits(1)
$4,690 $0 $0 $4,690 $4,690 $0 
Government bonds50,485 58 (1,365)49,178 0 49,178 
Corporate debt securities36,621 30 (1,043)35,608 10 35,598 
Mortgage-backed and asset-backed securities18,852 6 (594)18,264 0 18,264 
Total$110,648 $94 $(3,002)$107,740 $4,700 $103,040 
(1)The majority of our time deposits are domestic deposits.
We determine realized gains or losses on the sale or extinguishment of debt securities on a specific identification method. We recognized gross realized gains of $135 million and $40 million for the three months ended March 31, 2021 and 2022, respectively. We recognized gross realized losses of $136 million and $271 million for the three months ended March 31, 2021 and 2022, respectively. We reflect these gains and losses as a component of other income (expense), net.
The following table summarizes the estimated fair value of investments in marketable debt securities by stated contractual maturity dates (in millions):
As of
March 31, 2022
Due in 1 year or less$15,516 
Due in 1 year through 5 years75,938 
Due in 5 years through 10 years4,755 
Due after 10 years12,245 
Total$108,454 
The following tables present fair values and gross unrealized losses recorded to AOCI, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in millions):
 As of December 31, 2021
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Government bonds$32,843 $(236)$71 $(2)$32,914 $(238)
Corporate debt securities22,737 (152)303 (5)23,040 (157)
Mortgage-backed and asset-backed securities11,502 (106)248 (6)11,750 (112)
Total$67,082 $(494)$622 $(13)$67,704 $(507)
 As of March 31, 2022
 Less than 12 Months12 Months or GreaterTotal
 Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Fair ValueUnrealized
Loss
Government bonds$37,948 $(1,203)$3,909 $(162)$41,857 $(1,365)
Corporate debt securities27,403 (879)2,572 (164)29,975 (1,043)
Mortgage-backed and asset-backed securities15,415 (532)1,101 (62)16,516 (594)
Total$80,766 $(2,614)$7,582 $(388)$88,348 $(3,002)
During the three months ended March 31, 2021 and 2022, we did not recognize significant credit losses and the ending allowance balances for credit losses were immaterial as of December 31, 2021 and March 31, 2022. See Note 6 for further details on other income (expense), net.
12

Alphabet Inc.
Equity Investments
The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities, as well as our equity securities accounted for under the equity method.
Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.
Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.
Gains and losses on marketable and non-marketable equity securities
Gains and losses reflected in other income (expense), net, for marketable and non-marketable equity securities are summarized below (in millions):
Three Months Ended
March 31,
20212022
Net gain (loss) on equity securities sold during the period$201 $(74)
Net unrealized gain (loss) on equity securities held as of the end of the period4,636 (996)
Total gain (loss) recognized in other income (expense), net$4,837 $(1,070)
In the table above, 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. While these net gains 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 on the securities sold during the period. Cumulative net gains 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
Three Months Ended
March 31,
 20212022
Total sale price$725 $364 
Total initial cost357 260 
Cumulative net gains$368 $104 
13

Alphabet Inc.
Carrying value of marketable and non-marketable equity securities
The carrying value is measured as the total initial cost plus the cumulative net gain (loss). The carrying values for marketable and non-marketable equity securities are summarized below (in millions):
As of December 31, 2021
Marketable SecuritiesNon-Marketable SecuritiesTotal
Total initial cost$4,211 $15,135 $19,346 
Cumulative net gain (loss)(1)
3,587 12,436 16,023 
Carrying value(2)
$7,798 $27,571 $35,369 
(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $14.1 billion gains and $1.7 billion losses (including impairment).
(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $1.4 billion is included within other non-current assets.
As of March 31, 2022
Marketable SecuritiesNon-Marketable SecuritiesTotal
Total initial cost$4,549 $15,770 $20,319 
Cumulative net gain (loss)(1)
1,586 12,882 14,468 
Carrying value(2)
$6,135 $28,652 $34,787 
(1)Non-marketable equity securities cumulative net gain (loss) is comprised of $14.9 billion gains and $2.1 billion losses (including impairment).
(2)The long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $1.5 billion is included within other non-current assets.
Marketable equity securities
The following table summarizes marketable equity securities measured at fair value by significant investment categories (in millions):
 As of December 31, 2021As of March 31, 2022
 Cash and Cash EquivalentsMarketable
Securities
Cash and Cash EquivalentsMarketable
Securities
Level 1:
Money market funds$7,499 $$7,820 $
Marketable equity securities(1)(2)
7,447 5,877 
7,499 7,447 7,820 5,877 
Level 2:
Mutual funds351 258 
Total$7,499 $7,798 $7,820 $6,135 
(1)The balance as of December 31, 2021 includes investments that were reclassified from non-marketable equity securities following the commencement of public market trading of the issuers or acquisition by public entities (certain investments are subject to short-term lock-up restrictions).
(2)As of December 31, 2021 and March 31, 2022 the long-term portion of marketable equity securities (subject to long-term lock-up restrictions) of $1.4 billion and $1.5 billion, respectively, is included within other non-current assets.
14

Alphabet Inc.
Non-marketable equity securities
The following is a summary of unrealized gains and losses recorded in other income (expense), net, which are included as adjustments to the carrying value of non-marketable equity securities held as of the end of the period (in millions):
Three Months Ended
March 31,
20212022
Unrealized gains on non-marketable equity securities$4,678 $838 
Unrealized losses on non-marketable equity securities (including impairment)(2)(378)
Total unrealized gain (loss) recognized on non-marketable equity securities$4,676 $460 
During the three months ended March 31, 2022, included in the $28.7 billion of non-marketable equity securities held as of the end of the period, $3.1 billion were measured at fair value resulting in a net unrealized gain of $0.5 billion.
Equity securities accounted for under the Equity Method
As of December 31, 2021 and March 31, 2022, equity securities accounted for under the equity method had a carrying value of approximately $1.5 billion and $1.4 billion, respectively. Our share of gains and losses, including impairments, are included as a component of other income (expense), net, in the Consolidated Statements of Income. See Note 6 for further details on other income (expense), net.
Derivative Financial Instruments
We enter into derivative instruments to manage risks relating to our ongoing business operations. The primary risk managed with derivative instruments 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.
We recognize derivative instruments as either assets or liabilities 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 where both the purchased and written options are with the same counterparty. For other derivative contracts, we present at gross fair values. We primarily record changes in the fair value in the Consolidated Statements of Income as either other income (expense), net, or revenues, or in the Consolidated Balance Sheets in AOCI, as discussed below.
We enter into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. Further, we enter into collateral security arrangements that provide for collateral to be received or pledged when the net fair value of certain financial instruments fluctuates from contractually established thresholds. 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.
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.
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 the change in forward points and time value from our assessment of hedge effectiveness. The initial value of the excluded component is amortized on a straight-line basis over the life of the hedging instrument and recognized in revenues. The difference between fair value changes of the excluded component and the amount amortized to revenues is recorded in AOCI. If the hedged transactions become probable of not occurring, the corresponding amounts in AOCI are reclassified to other income (expense), net in the period of de-designation.
As of March 31, 2022, the net accumulated gain on our foreign currency cash flow hedges before tax effect was $356 million, which is expected to be reclassified from AOCI into earnings within the next 12 months.
15

Alphabet Inc.
Fair Value Hedges
We designate foreign currency forward contracts as fair value hedges to hedge foreign currency risks for our investments denominated in currencies other than the U.S. dollar. Fair value hedge amounts included in the assessment of hedge effectiveness are recognized in other income (expense), net, along with the offsetting gains and losses of the related hedged items. We exclude changes in forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in other income (expense), net.
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 changes in forward points from the assessment of hedge effectiveness and recognize changes in the excluded component in other income (expense), net.
Other Derivatives
Other derivatives not designated as hedging instruments consist primarily of foreign currency forward contracts that we use 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 contracts, as well as the related costs, are recognized in other income (expense), net, along with the foreign currency gains and losses on monetary assets and liabilities.
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. Additionally, from time to time, we enter into derivatives to hedge the market price risk on certain of our marketable equity securities. Gains (losses) arising from these derivatives are reflected within the "other" component of other income (expense), net and the offsetting recognized gains (losses) on the marketable equity securities are reflected within the gain (loss) on equity securities, net component of other income (expense), net. See Note 6 for further details on other income (expense), net.
The gross notional amounts of outstanding derivative instruments were as follows (in millions):
As of December 31, 2021As of March 31, 2022
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts
    Cash flow hedges $16,362 $17,817 
    Fair value hedges$2,556 $2,438 
    Net investment hedges$10,159 $9,933 
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts$41,031 $42,338 
Other contracts$4,275 $6,052 
16

Alphabet Inc.
The fair values of outstanding derivative instruments were as follows (in millions):
  As of December 31, 2021
  
Balance Sheet LocationFair Value of
Derivatives
Designated as
Hedging Instruments
Fair Value of
Derivatives Not
Designated as
Hedging Instruments
Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contractsOther current and non-current assets$867 $42 $909 
Other contractsOther current and non-current assets0 52 52 
Total$867 $94 $961 
Derivative Liabilities:
Level 2:
Foreign exchange contractsAccrued expenses and other liabilities, current and non-current$8 $452 $460 
Other contractsAccrued expenses and other liabilities, current and non-current0 121 121 
Total $8 $573 $581 
  As of March 31, 2022
  
Balance Sheet LocationFair Value of
Derivatives
Designated as
Hedging Instruments
Fair Value of
Derivatives Not
Designated as
Hedging Instruments
Total Fair Value
Derivative Assets:
Level 2:
Foreign exchange contractsOther current and non-current assets$705 $26 $731 
Other contractsOther current and non-current assets0 76 76 
Total$705 $102 $807 
Derivative Liabilities:
Level 2:
Foreign exchange contractsAccrued expenses and other liabilities, current and non-current$163 $404 $567 
Other contractsAccrued expenses and other liabilities, current and non-current0 76 76 
Total $163 $480 $643 
17

Alphabet Inc.
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):
 Gains (Losses) Recognized in OCI on Derivatives Before Tax Effect
Three Months Ended
 March 31,
20212022
Derivatives in Cash Flow Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness$162 $135 
Amount excluded from the assessment of effectiveness49 (15)
Derivatives in Net Investment Hedging Relationship:
Foreign exchange contracts
Amount included in the assessment of effectiveness378 149 
Total$