EARNINGS REVIEW
Alphabet, 2025 Q4 Earnings Results
Historical quarterly report · Results and outlook reflect information available at the time of that release. Actual results from later quarters have not been incorporated into the outlook.
Google Cloud growth accelerated to 48% and cloud operating income expanded. The sharp increase in the 2026 investment plan and Waymo compensation expense should also be considered.
Assessment · Cloud growth and conversion into earnings clearly improved. The next step is to assess whether substantial capital expenditure is recovered in cash without damaging profitability. Advertising and cloud growth should be evaluated alongside the pace of investment.
Key management and company statements
Earnings release · Excerpt from the original“We’re seeing our AI investments and infrastructure drive revenue and growth across the board.”Meaning · AI investment and infrastructure are driving revenue and growth across the business.
Context · This is management’s interpretation of growth, not a statement that quantitatively establishes a return on investment.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · revenue 96.469 → 113.828 B$ (+18.0% · +17.359 B$), operating income 30.972 → 35.934 B$ (+16.0% · +4.962 B$).
Quarter over quarter · revenue 102.346 → 113.828 B$ (+11.2% · +11.482 B$), operating income 31.228 → 35.934 B$ (+15.1% · +4.706 B$), operating margin 30.5% → 31.6% (+1.1%p).
Search revenue increased 17% and Cloud 48%. YouTube advertising growth of 9% was lower than growth in the other major businesses.
02 Earnings sustainability · From operating income to net income
Operating income includes approximately 2.100 B$ of Waymo employee compensation expense. The company explained that it recognized this expense in the fourth quarter of 2025 based on the estimated equity value at the time of the February 2026 funding round.
Cloud operating income rose from 2.093 → 5.313 B$, an increase of 3.220 B$. Separating consolidated earnings from Other Bets costs makes cloud profitability improvement clearer.
- Operating income
- 35.934 B$
- Net non-operating income
- 3.183 B$
- Income tax expense
- −4.662 B$
- Consolidated net income
- 34.455 B$
Net income of 34.455 B$ in the existing quarterly dataset is on a consolidated basis.
03 Cash flow quality · Net income → OCF → FCF
The fourth quarter is calculated by subtracting the 9-month cumulative cash flow figures from the full year. Revenue uses the quarterly earnings release figure of 113.828 B$. Quarterly revenue has not been changed to eliminate the 0.001 B$ presentation difference from a figure back-calculated from the annual total.
- Consolidated net income
- 34.455 B$
- Total net adjustments for noncash items, working capital and other items¹
- 17.947 B$
- Operating cash flow
- 52.402 B$
- Cash CapEx
- −27.851 B$
- FCF
- 24.551 B$
¹ Total net adjustments calculated as OCF−net income. This is not a single disclosed line item; it combines noncash items, working capital, classification differences and other adjustments.
FCF versus previous quarter · 24.461 → 24.551 B$, 0.090 B$ improvement.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2025-09-30
Cash and current investments 98.496 / Debt 26.602 B$
Current-quarter net cash · 2025-12-31
Cash and current investments 126.843 / Debt 48.543 B$
Net debt improved by 6.406 B$ from the previous quarter. The carrying amount of current debt is 1.996 B$. It may differ from the principal maturity schedule.
The November 2025 issuance of senior unsecured notes raised net proceeds of 24.800 B$. The entire increase in cash should not be interpreted as the result of operating activities.
Common definition · Cash and current investments = cash equivalents + current investments and deposits. Debt = carrying amount of interest-bearing borrowings (current + noncurrent), excluding separately reported lease liabilities. This differs from total liabilities of 180.016 B$. Restricted cash, noncurrent securities and noncurrent deposits are excluded from cash and current investments.
05 Investment, capital allocation and cash returns
The 2026 CapEx plan is 175.000~185.000 B$. This was the outlook at the time of the release; spending and depreciation may occur with a time lag.
This quarter, cash CapEx/revenue is 24.5% and FCF/revenue is 21.6%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
RPO / Backlog
QoQ 157.700 → 242.800 B$ (+54.0% · +85.100 B$).
YoY 93.200 → 242.800 B$ (+160.5% · +149.600 B$).
Alphabet revenue backlog, mainly Google Cloud and distinct from the explicitly stated Cloud amount. Inclusion of contracts with terms of 1 year or less from 2026 creates a break in the time series · Contract balances are not equivalent to confirmed next-quarter revenue or cash inflows. RPO scope differs across companies.
RPO disclosure ↗Quarterly results · CY-aligned presentation
Amounts in B$. Based on the CY-aligned year of this report, the table shows all 4 quarters of the preceding year and the current year to date. Each fiscal quarter is assigned to the CY quarter with the greatest overlap in actual reporting dates, alongside its original FY/CY quarter and start/end dates. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2024 · 4 quarters | 2025 · 4 quarters | Change this quarter | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2024 total4-quarter totalBalances are period-end | 1Q2024 Q124-01-01 ~24-03-31 | 2Q2024 Q224-04-01 ~24-06-30 | 3Q2024 Q324-07-01 ~24-09-30 | 4Q2024 Q424-10-01 ~24-12-31 | 2025 total4-quarter totalBalances are period-end | 1Q2025 Q125-01-01 ~25-03-31 | 2Q2025 Q225-04-01 ~25-06-30 | 3Q2025 Q325-07-01 ~25-09-30 | 4Q2025 Q425-10-01 ~25-12-31 | QoQvs 2025 Q3 | YoYvs 2024 Q4 |
| Revenue | 350.018 | 80.539 | 84.742 | 88.268 | 96.469 | 402.836 | 90.234 | 96.428 | 102.346 | 113.828 | +11.2%+11.482 B$ | +18.0%+17.359 B$ |
| Operating income | 112.390 | 25.472 | 27.425 | 28.521 | 30.972 | 129.039 | 30.606 | 31.271 | 31.228 | 35.934 | +15.1%+4.706 B$ | +16.0%+4.962 B$ |
| Operating margin | 32.1% | 31.6% | 32.4% | 32.3% | 32.1% | 32.0% | 33.9% | 32.4% | 30.5% | 31.6% | +1.1%p | −0.5%p |
| FCF | 72.764 | 16.836 | 13.454 | 17.637 | 24.837 | 73.266 | 18.953 | 5.301 | 24.461 | 24.551 | +0.090 B$ | −0.286 B$ |
| Operating cash flow | 125.299 | 28.848 | 26.640 | 30.698 | 39.113 | 164.713 | 36.150 | 27.747 | 48.414 | 52.402 | +8.2%+3.988 B$ | +34.0%+13.289 B$ |
| Cash CapEx | 52.535 | 12.012 | 13.186 | 13.061 | 14.276 | 91.447 | 17.197 | 22.446 | 23.953 | 27.851 | +16.3%+3.898 B$ | +95.1%+13.575 B$ |
| Net cash | 81.475 | — | — | — | 81.475 | 78.300 | 80.942 | 67.541 | 71.894 | 78.300 | +6.406 B$ | −3.175 B$ |
| Cash and current investments | 95.657 | 108.090 | 100.725 | 93.230 | 95.657 | 126.843 | 95.328 | 95.148 | 98.496 | 126.843 | +28.8%+28.347 B$ | +32.6%+31.186 B$ |
| Debt | 14.182 | — | — | — | 14.182 | 48.543 | 14.386 | 27.607 | 26.602 | 48.543 | +82.5%+21.941 B$ | +242.3%+34.361 B$ |
Indented rows are components or reference items for the parent metric. Net cash = cash and current investments − debt. Depending on the company definition, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals appear before each year’s quarters. Revenue, earnings and cash flow are sums of quarterly figures; margin is total operating income ÷ total revenue; net cash, cash and debt are balances at the end of the last quarter. Do not treat totals covering different lengths of time as directly comparable annual figures.
Net cash = cash and current investments − debt. A negative figure indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly figures have not been adjusted to force reconciliation with disclosed annual totals.
Comparison bases, calculation methods and quarterly sources
Calculation and presentation · Amounts in B$. Figures disclosed in millions of US dollars are divided by 1,000 without altering the source values. Where only cumulative cash flows are available, the previous cumulative period within the same fiscal year is deducted. YoY, QoQ and margins are calculated using amounts before display rounding. Earnings changes from negative or 0 bases are expressed as profit/loss transitions and absolute amounts.
Opinions and outlook · Management quotations include original excerpts and their translations. Quotations not identified as earnings-call transcripts come from earnings releases. Interpretations and implications are the author’s judgments. No numerical probability of achieving a target is assigned without quantitative verification.