Alphabet Inc.GOOGL

Alphabet Inc. Leases Disclosure

10-KFiled Feb 5, 20262 min read
Leases
We have entered into operating and finance lease agreements primarily for data centers, land, and offices throughout the world with varying lease terms.
Components of lease costs were as follows (in millions):
Year Ended December 31,
202320242025
Operating lease cost$3,362 $3,304 $3,345 
Finance lease cost:
Amortization of lease assets469 413 553 
Interest on lease liabilities35 31 65 
Finance lease cost504 444 618 
Variable lease cost1,182 1,425 1,739 
Total lease cost$5,048 $5,173 $5,702 
Supplemental information related to leases was as follows (in millions):
December 31,
20242025
Weighted-average remaining lease term:
Operating leases7.8 years7.6 years
Finance leases10.4 years8.3 years
Weighted-average discount rate:
Operating leases3.4 %3.6 %
Finance leases2.8 %3.1 %
December 31,
20242025
Operating leases:
Operating lease assets$13,588 $15,221 
Accrued expenses and other liabilities$2,887 $3,209 
Operating lease liabilities11,691 12,744 
Total operating lease liabilities$14,578 $15,954 
Finance leases:
Property and equipment, at cost$4,622 $6,822 
Accumulated depreciation(2,037)(2,025)
Property and equipment, net$2,585 $4,797 
Accrued expenses and other liabilities$235 $441 
Other long-term liabilities1,442 2,059 
Total finance lease liabilities$1,677 $2,500 

Year Ended December 31,
202320242025
Cash payments for lease liabilities:
Operating cash flows used for operating leases
$3,173 $3,425 $3,370 
Operating cash flows used for finance leases
$35 $31 $65 
Financing cash flows used for finance leases(1)
$705 $405 $1,988 
Assets obtained in exchange for lease liabilities:
Operating leases$2,877 $2,510 $4,070 
Finance leases$564 $313 $1,606 
(1)Financing cash flows used for financing leases are included within financing activities as repayments of debt. The year ended December 31, 2025 includes $1.1 billion of prepayments for finance leases not yet commenced.
Future lease payments as of December 31, 2025 were as follows (in millions):
Operating LeasesFinance
Leases
2026$3,275 $491 
20273,082 345 
20282,510 335 
20292,061 314 
20301,669 241 
Thereafter5,654 1,143 
Total undiscounted lease payments
18,251 2,869 
Less: imputed interest
(2,297)(369)
Total lease liability balance$15,954 $2,500 
As of December 31, 2025, we have entered into leases primarily related to data centers that have not yet commenced with short-term and long-term future lease payments of $5.8 billion and $52.7 billion, respectively, that are not yet recorded. These leases will commence between 2026 and 2031 with non-cancelable lease terms primarily between one and 25 years.
In January 2026, we executed a power purchase agreement which we expect to be accounted for as a lease resulting in future payments depending on certain agreement terms of $9.9 billion between 2027 and 2047. If certain contractual conditions for the project are not met, we would instead make a one-time payment of approximately $3.5 billion and assume ownership of the power generating assets.

Historical Timeline

Fiscal YearFiled
2025Feb 5, 2026Showing above
2024Feb 5, 2025
2023Jan 31, 2024
2022Feb 3, 2023
2021Feb 2, 2022
2020Feb 3, 2021
2019Feb 4, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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