source: https://abc.xyz/assets/investor/static/pdf/20220202_alphabet_10K.

pdf
source: https://abc.xyz/assets/9a/bd/838c917c4b4ab21f94e84c3c2c65/goog-10-k-q4-2022.pdf
Note: Tables and figures are converted to images for demonstration purposes.

Revenues by Geography

The following table presents revenues by geography as a percentage of

The following table presents the foreign exchange effect on international

EMEA revenue growth from 2020 to 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 growth from 2020 to 2021 was favorably affected by foreign
currency exchange rates, primarily due to the U.S. dollar weakening relative to
the Australian dollar, partially offset by the U.S. dollar strengthening relative to
the Japanese yen.

Other Americas growth change from 2020 to 2021 was favorably affected by
changes in foreign currency exchange rates, primarily due to the U.S. dollar
weakening relative to the Canadian dollar, partially offset by the U.S. dollar
strengthening relative to the Argentine peso and the Brazilian real.

Costs and Expenses

Cost of Revenues

The following tables present cost of revenues, including TAC (in millions, except
percentages):

Cost of revenues increased $26.2 billion from 2020 to 2021. The increase was
due to an increase in other cost of revenues and TAC of $13.4 billion and $12.8
billion, respectively.

The increase in TAC from 2020 to 2021 was due to an increase in TAC paid to
distribution partners and to Google Network partners, primarily driven by growth
in revenues subject to TAC. The TAC rate decreased from 22.3% to 21.8% from
2020 to 2021 primarily due to a revenue mix shift from Google Network
properties to Google Search & other properties.

The TAC rate on Google Search & other properties revenues and the TAC rate
on Google Network revenues were both substantially consistent from 2020 to
2021. The increase in other cost of revenues from 2020 to 2021 was driven by
increases in content acquisition costs primarily for YouTube, data center and
other operations costs, and hardware costs. The increase in data center and
Table of Contents Alphabet Inc. 36 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.

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 restricted stock units and other
contingently issuable shares. The dilutive effect of outstanding restricted stock
units 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.

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.

In the years ended December 31, 2019, 2020 and 2021, 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.

The following tables set forth the computation of basic and diluted net income per
share of Class A, Class B, and Class C stock (in millions, except share amounts
which are reflected in thousands and per share amounts):
Stock-Based Award Activities

The weighted-average grant-date fair value of RSUs granted during the years
ended December 31, 2019 and 2020 was $1,092.36 and $1,407.97, respectively.
Total fair value of RSUs, as of their respective vesting dates, during the years
ended December 31, 2019, 2020, and 2021 were $15.2 billion, $17.8 billion, and
$28.8 billion, respectively. As of December 31, 2021, there was $25.8 billion of
unrecognized compensation cost related to unvested employee RSUs. This
amount is expected to be recognized over a weighted-average period of 2.5
years. 401(k) Plans We have two 401(k) Savings Plans that qualify as deferred
salary arrangements under Section 401(k) of the Internal Revenue Code. Under
these 401(k) Plans, matching contributions are based upon the amount of the
employees’ contributions subject to certain limitations. We recognized expense of
approximately $724 million, $855 million, and $916 million for the years ended
December 31, 2019, 2020, and 2021, respectively. Note 14. Income Taxes
Income from continuing operations before income taxes consisted of the
following (in millions):

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, 2021, our federal, state, and foreign net operating loss
carryforwards for income tax purposes were approximately $5.6 billion, $4.6
billion, and $1.7 billion respectively. If not utilized, the federal net operating loss
carryforwards will begin to expire in 2023, foreign net operating loss
carryforwards will begin to expire in 2025 and the state net operating loss
carryforwards will begin to expire in 2028. It is more likely than not that certain
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. As of December 31, 2021, our California R&D carryforwards for
income tax purposes were approximately $5.0 billion that can be carried over
indefinitely. We believe the state tax credit is not likely to be realized. As of
December 31, 2021, our investment tax credit carryforwards for state income tax
purposes were approximately $700 million and will begin to expire in 2025. We
use the flow-through method of accounting for investment tax credits. We believe
this tax credit is not likely to be realized. As of December 31, 2021, we
maintained a valuation allowance with respect to California deferred tax assets,
certain federal net operating losses, certain state tax credits, net deferred tax
assets relating to certain Other Bets, and certain foreign net operating losses that
we believe are not likely to be realized.