Bulletin: Alphabet Inc. Sees Strong Revenue Growth, Higher Capital Spending, Lower Cash Flow; Ratings Unaffected

SAN FRANCISCO (S&P Global Ratings) April 25, 2018--S&P Global Ratings today said that Mountain View, Calif.-based global technology provider Alphabet Inc.' s lower free cash flow, due to capital expenditures that almost tripled year over year in the first quarter of 2018, does not affect our 'AA+' rating on the company. Free cash flow fell to $4.3 billion from $7.0 billion a year ago as capital spending surged to $7.3 billion from $2.5 billion, reflecting investments in facilities and computing capacity including technology upgrades, data center equipment, and undersea cables. Even controlling for the one-time $2.4 billion purchase of its Chelsea Market property in New York City, capital spending would have nearly doubled and cash flow would have fallen modestly.

...SAN FRANCISCO (S&P Global Ratings) April 25, 2018--S&P Global Ratings today said that Mountain View, Calif.-based global technology provider Alphabet Inc.' s lower free cash flow, due to capital expenditures that almost tripled year over year in the first quarter of 2018, does not affect our '##+' rating on the company. Free cash flow fell to $4.3 billion from $7.0 billion a year ago as capital spending surged to $7.3 billion from $2.5 billion, reflecting investments in facilities and computing capacity including technology upgrades, data center equipment, and undersea cables. Even controlling for the one-time $2.4 billion purchase of its Chelsea Market property in New York City, capital spending would have nearly doubled and cash flow would have fallen modestly. Nevertheless, revenue was up 26% year over year, driven by mobile search, programmatic ad buying, Google Cloud, hardware, and Google Play. Traffic acquisition cost (TAC) was 23.6% of total advertising revenue, up almost two percentage...

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