Executive Summary
Alphabet delivered a strong QQ2 2025 performance with revenue of USD 96.43 billion, up 13.8% year over year, underpinned by continued demand for Google Services and YouTube. The quarter produced a gross margin of 59.5% and an operating margin of 32.4%, supporting a net income of USD 28.20 billion and EPS of USD 2.33. Free cash flow reached USD 5.30 billion, with operating cash flow of USD 27.75 billion and capital expenditures of USD 22.45 billion, highlighting durable cash generation even as the company invests in AI, cloud and platform enhancements.
Strategic capital allocation remained constructive, as evidenced by USD 13.64 billion of share repurchases and a robust balance sheet featuring USD 21.04 billion in cash and USD 95.15 billion in total cash and short-term investments. Net debt stood at USD 20.63 billion, reflecting a conservative leverage profile (debt to capitalization ~10.3%). Alphabet’s earnings quality is solid, with net income margin near 29.2% and EBITDA margin around 40.6%, supported by strong operating leverage in Google Services. While near-term ad-market resilience remains a key driver, the company continues to invest for longer-term growth through Google Cloud and AI-enabled ads, aided by a favorable competitive position versus peers.
Overall investment thesis remains favorable: Alphabet combines a high-margin core advertising platform with a fast-growing cloud and AI initiative, ample liquidity, and disciplined capital deployment. The key question for investors is the sustainability of ad-growth amid macro uncertainty and the pace of cloud profitability as Google Cloud scales.
Key Performance Indicators
QoQ: -18.37% | YoY:19.38%
QoQ: -17.96% | YoY:21.99%
Key Insights
Revenue: USD 96.428B; YoY +13.79%; QoQ +6.86%
Gross Profit: USD 57.389B; YoY +16.56%; QoQ +6.53%
Operating Income: USD 31.271B; YoY +14.02%; QoQ +2.17%
Net Income: USD 28.196B; YoY +19.38%; QoQ -18.37%
EPS: USD 2.33; Diluted USD 2.31; YoY +21.99%; QoQ -17.96%
EBITDA: USD 39.192B; EBITDA Margin ~40.64%
Gross Margin: 59.5%; Operating Margin: 32.4%; Net Margin: 29.2%
Cash Flow: Operating cash flow USD 27.747B; Capex USD 22.446B; Free cash flow USD 5.301B
Balance Sheet: Cash and short-term investmen...
Financial Highlights
Revenue: USD 96.428B; YoY +13.79%; QoQ +6.86%
Gross Profit: USD 57.389B; YoY +16.56%; QoQ +6.53%
Operating Income: USD 31.271B; YoY +14.02%; QoQ +2.17%
Net Income: USD 28.196B; YoY +19.38%; QoQ -18.37%
EPS: USD 2.33; Diluted USD 2.31; YoY +21.99%; QoQ -17.96%
EBITDA: USD 39.192B; EBITDA Margin ~40.64%
Gross Margin: 59.5%; Operating Margin: 32.4%; Net Margin: 29.2%
Cash Flow: Operating cash flow USD 27.747B; Capex USD 22.446B; Free cash flow USD 5.301B
Balance Sheet: Cash and short-term investments USD 95.148B; Cash and cash equivalents USD 21.036B; Net debt USD 20.632B; Total assets USD 502.053B; Total stockholders’ equity USD 362.916B
Liquidity/Leverage: Current ratio 1.904, Debt-to-capitalization 0.103, Interest coverage 119.81x
Capital Allocation: Common stock repurchased USD 13.638B; dividends USD 2.543B; Net cash outflow from financing activities USD 5.832B
Valuation (spot metrics): P/E ~18.9x; P/S ~22.2x; P/OCF ~76.99x; EV/Revenue ~55.03x; Dividend yield ~0.12%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
96.43B |
13.79% |
6.86% |
| Gross Profit |
57.39B |
16.56% |
6.53% |
| Operating Income |
31.27B |
14.02% |
2.17% |
| Net Income |
28.20B |
19.38% |
-18.37% |
| EPS |
2.33 |
21.99% |
-17.96% |
Key Financial Ratios
operatingProfitMargin
32.4%
operatingCashFlowPerShare
$2.29
freeCashFlowPerShare
$0.44
dividendPayoutRatio
9.02%
Management Commentary
No earnings call transcript data provided for QQ2 2025. Consequently, quotes and management remarks are not included in this analysis. Key themes from the reporting period, however, center on sustaining profitability while investing in AI, Google Cloud, and platform enhancements, and maintaining a strong balance sheet to fund future growth.
No transcript quotes available.
— N/A
Forward Guidance
There was no formal forward-looking guidance published for QQ3 2025 in the provided data. Based on the quarter’s results and industry dynamics, management is likely to focus on: (1) expanding Google Services monetization and YouTube non-advertising revenue, (2) accelerating Google Cloud growth with an emphasis on enterprise adoption and AI-enabled offerings, (3) continued cost discipline and operating leverage to protect margins, and (4) disciplined capital allocation including buybacks and selective investments. Potential catalysts include AI-enabled ad products, enterprise cloud partnerships, and improvements in monetization of video and shopping on YouTube. Key risks to monitor include macro ad spend sensitivity, regulatory scrutiny across major markets, competitive pressure in cloud and AI, and currency movements for international revenue.