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Looking at Alphabet’s Balance Sheet



Alphabet’s cash flow

Google parent Alphabet (GOOG) ended with cash and cash equivalents of $12.7 billion at the end of March 2018, higher than its $10.7 billion at the end of December 2017. In 1Q18, operating cash flow was $11.6 billion, with free cash flow of $4.3 billion. The company repaid a debt of $3.3 billion in the first quarter.

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Alphabet’s capital expenditure

Alphabet spent ~$7.3 billion on capital spending in the first quarter of 2018, reported on April 23. Analysts expected just $3.5 billion in capital expenditures for all of Alphabet’s divisions.

In 2017, key cloud players Amazon (AMZN), Microsoft (MSFT), and Alphabet collectively spent “$41.6 billion in capital expenditures and capital lease deals,” as reported by the Wall Street Journal. The capital spending by these three players represented a 33.0% YoY (year-over-year) increase and focused on data center construction and network expansion.

Google’s capital spending

Alphabet’s Google division spent $7.7 billion on capital expenditure, which was triple the capital spending of $2.4 billion in 1Q17 and more than double the expenditure of $3.8 billion in 4Q17. Google’s spending on data centers, content acquisition for YouTube and hardware-related costs, and other facilities led to the spike in capital expenditure in 1Q18. Google’s $2.4 billion acquisition of New York’s Chelsea Market last month also added to the capital spending.

CFO Ruth Porat remarked on the earnings call, “We favor owning rather than leasing real estate when we see good opportunities.” Porat also stated that the growth in capital expenditure demonstrates the company’s “commitment to growth.”


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