Alphabet (GOOGL) Q4 2025 Earnings Call — February 4, 2026

Date: February 4, 2026 | Source: Alphabet Investor Relations (abc.xyz) Q4 2025 Earnings Call transcript PDF + CNBC

Participants:Sundar Pichai (CEO), Philipp Schindler (SVP/CBO), Anat Ashkenazi (SVP/CFO), Jim Friedland (Head of IR).

---

Jim Friedland, Head of IR: Welcome, everyone, and thank you for standing by for the Alphabet Fourth Quarter 2025 Earnings Conference Call. With us today are Sundar Pichai, Philipp Schindler and Anat Ashkenazi. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release.

Sundar Pichai, CEO: Thanks, Jim. Hi, everyone, and thanks for joining us. It was a tremendous quarter for Alphabet. The launch of Gemini 3 was a major milestone and we have great momentum. Alphabet annual revenues exceeded $400 billion for the first time. This quarter, Search continued to accelerate with revenues growing 17%. YouTube's annual revenues surpassed $60 billion across Ads and Subscriptions.

Cloud significantly accelerated with revenues growing 48%, now on an annual run rate of over $70 billion. Backlog grew by 55% quarter-over-quarter to $240 billion, representing a wide breadth of customers, driven by demand for AI products.

We have over 325 million paid subscriptions across consumer services, with strong adoption for Google One and YouTube Premium. We have sold more than 8 million paid seats of Gemini Enterprise, which we launched just four months ago. And our Gemini App now has over 750 million monthly active users.

Overall, we're seeing our AI investments and infrastructure drive revenue and growth across the board. To meet customer demand and capitalize on the growing opportunities ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 billion to $185 billion.

Our unrivaled infrastructure serves as the bedrock of our AI stack. We have the industry's widest variety of compute options, including GPUs from our partner NVIDIA and our own TPUs. In December, we announced our intent to acquire Intersect, which provides data center and energy infrastructure solutions. As we scale, we're getting dramatically more efficient. We lowered Gemini serving unit costs by 78% over 2025.

Gemini 3 Pro drives the state of the art in reasoning and multimodal understanding. Since launch, Gemini 3 Pro has consistently processed 3x as many daily tokens on average as 2.5 Pro. Our first-party models now process over 10 billion tokens per minute via direct API use by our customers, up from 7 billion last quarter.

In Search, we've integrated Gemini 3 directly into AI Mode, upgraded AI Overviews to Gemini 3, and shipped over 250 product launches within AI Mode and AI Overviews last quarter. Queries in AI Mode are 3x longer than traditional searches, and nearly one in six AI Mode queries are now non-text.

In Google Cloud, we're winning more new customers faster — double the new customer velocity compared to Q1. The number of deals in 2025 over $1 billion surpassed the previous three years combined. Existing customers are outpacing their initial commitments by over 30%. In Q4, revenue from products built on our generative AI models grew nearly 400% year-over-year. More than 120,000 enterprises use Gemini.

I'm pleased that we are collaborating with Apple as their preferred Cloud provider and to develop the next generation of Apple Foundation Models, based on Gemini technology.

On YouTube, we continue to be the number one streamer in the U.S. for nearly three years. Waymo raised its largest investment round to date; in December we surpassed 20 million fully autonomous trips and are providing more than 400,000 rides every week. Waymo's sixth market, Miami, launched two weeks ago.

In closing, 2025 was a fantastic year for the company. We're really well positioned going into 2026.

Philipp Schindler, SVP and CBO: Google Services revenues were $96 billion for the quarter, up 14% year-on-year, primarily driven by accelerated growth in Search. The 17% increase in Search and Other was led by broad strength across all major verticals, with Retail particularly strong. YouTube's 9% growth in advertising revenues was driven by direct response. Network advertising revenues were down 2% year-on-year.

Search and Other revenues delivered over $63 billion for the quarter. Gemini uniquely positions us to bring the transformational benefits of AI to Ads in three critical areas: ads quality, advertiser tools and new AI user experiences. In Q4 alone, advertisers used Gemini to create nearly 70 million creative assets via text customization in AI Max and PMax.

We have significantly increased our focus on AI Mode and are in the early stages of experimenting with AI Mode monetization, like testing ads below the AI response. We announced Direct Offers, a new Google Ads pilot, which will allow advertisers to show exclusive offers for shoppers who are ready to buy, directly in AI Mode.

Anat Ashkenazi, SVP and CFO: 2025 was a strong year of innovation and execution for Alphabet. For the full-year 2025, consolidated revenues were $403 billion, up 15%. In Q4, consolidated revenues reached $113.8 billion, up 18%, or 17% in constant currency, driven by acceleration in Search and Cloud revenues.

We reported a $2.1 billion stock-based compensation charge due to an increase in Waymo's valuation related to the investment round announced on Monday; the vast majority was reflected in R&D.

Operating income increased 16% to $35.9 billion, and operating margin was 31.6%. Other income and expenses was $3.2 billion, primarily due to unrealized gains in our non-marketable equity securities portfolio. Net income increased 30% to $34.5 billion, and earnings per share increased 31% to $2.82.

We generated record operating cash flow of $52.4 billion in Q4 and $164.7 billion for the full year. This translated into $24.6 billion of free cash flow in Q4 and $73.3 billion for the full year. We ended the quarter with $126.8 billion in cash and marketable securities.

Google Services revenues increased 14% to $95.5 billion. Google Search and Other advertising revenues increased 17% to $63.1 billion. YouTube advertising revenues increased 9% to $11.4 billion. Network advertising revenues of $7.8 billion were down 2%. Subscriptions, Platforms and Devices revenues increased 17% to $13.6 billion.

The Google Cloud segment delivered outstanding results. Cloud revenue accelerated meaningfully and was up 48% to $17.7 billion. Cloud operating income was $5.3 billion, more than doubling year-over-year, and operating margin increased from 17.5% to 30.1%. Google Cloud's backlog increased 55% sequentially and more than doubled year-over-year, reaching $240 billion.

In Other Bets, revenues were $370 million, and operating loss was $3.6 billion, reflecting the $2.1 billion Waymo charge. Alphabet funded a significant portion of the $16 billion investment round that Waymo announced.

CapEx was $27.9 billion for Q4 and $91.4 billion for the full year. In Q4, we returned capital through $5.5 billion of share repurchase and $2.5 billion of dividend payments.

For the full year 2026, we expect CapEx in the range of $175 billion to $185 billion, with investments ramping over the course of the year. We would expect to see an FX tailwind toward consolidated revenues in Q1.

Questions & Answers

Brian Nowak (Morgan Stanley): On agentic, where did you make the most progress on new types of agentic commerce products in 2025, and where are you most optimistic for 2026? And second, on YouTube, walk us through the long-term vision for how Genie and content-creation tools could be integrated into YouTube.

Sundar Pichai: Great. Thanks, Brian. On agentic commerce, we're building the Universal Commerce Protocol alongside many retail industry leaders, and we announced direct offers and new checkout experiences. On Genie, we announced Project Genie which lets users create and explore interactive worlds generated in real-time using Genie 3, and I'm blown away by the velocity there.

Doug Anmuth (JPMorgan): On Search, direct response was good and Retail came in relatively strong. Can you comment on the search advertising strength and the broader monetization across AI Mode?

Philipp Schindler: Nearly every major vertical actually accelerated in Q4, so we're very pleased. AI Overviews and AI Mode continue to drive greater Search usage and growth in overall queries, including commercial queries. AI Max is already used by hundreds of thousands of advertisers and continues to unlock billions of net new queries. We're very pleased with what we're seeing.

Justin Post (Bank of America): Just wanted to follow up on the Gemini App. Are you seeing any cannibalization of Search? And second, on monetization, where are you on that?

Sundar Pichai: Right now, overall, we are giving people choice. People are using Search, experiencing AI Overviews and AI Mode, and the Gemini App. The combination creates an expansionary moment, and we haven't seen any evidence of cannibalization.

Philipp Schindler: As with all of our products, we focus first and foremost on creating a great user experience. Today, the Gemini App is focused on the free tier and subscriptions. Ads have always been part of scaling products to reach billions of people, and at the right moment, we'll share any plans. We're not rushing anything here.