Fair Value Measurement

9 Months Ended

Oct. 31, 2021

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.

Level 3. Significant unobservable inputs which are supported by little or no market activity.

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The following table presents information about the Company’s assets and liabilities that were measured at fair value as of October 31, 2021 and indicates the fair value hierarchy of the valuation (in millions):


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of October 31, 2021
Cash equivalents (1):
Time deposits	$	0	$	1,025	$	0	$	1,025
Money market mutual funds	849		0		0		849
Cash equivalent securities	0		205		0		205
Marketable securities:
Corporate notes and obligations	0		2,871		0		2,871
U.S. treasury securities	0		211		0		211
Mortgage-backed obligations	0		257		0		257
Asset-backed securities	0		930		0		930
Municipal securities	0		139		0		139

Commercial paper	0		40		0		40

Covered bonds	0		179		0		179
Other	0		11		0		11
Strategic investments:
Publicly held equity securities	603		0		0		603


Total assets	$	1,452	$	5,868	$	0	$	7,320

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $2.7 billion of cash, as of October 31, 2021.

The following table presents information about the Company’s assets and liabilities that were measured at fair value as of January 31, 2021 and indicates the fair value hierarchy of the valuation (in millions):


Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of January 31, 2021
Cash equivalents (1):
Time deposits	$	0	$	1,143	$	0	$	1,143
Money market mutual funds	377		0		0		377
Cash equivalent securities	0		1,910		0		1,910
Marketable securities:
Corporate notes and obligations	0		3,341		0		3,341
U.S. treasury securities	0		206		0		206
Mortgage-backed obligations	0		387		0		387
Asset-backed securities	0		1,101		0		1,101
Municipal securities	0		244		0		244


Covered bonds	0		328		0		328
Other	0		164		0		164
Strategic investments:
Publicly held equity securities	2,068		0		0		2,068


Total assets	$	2,445	$	8,824	$	0	$	11,269

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $2.8 billion of cash, as of January 31, 2021.

Strategic Investments Measured and Recorded at Fair Value on a Non-Recurring Basis

The Company's privately held debt and equity securities and equity method investments are recorded at fair value on a non-recurring basis. The estimation of fair value for these investments requires the use of significant unobservable inputs, and as a result, the Company deems these assets as Level 3 within the fair value measurement framework. For investments without a readily determinable fair value, the Company applies valuation methods based on information available, including the market approach and option pricing models (“OPM”). Observable transactions, such as the issuance of new equity by an investee, are indicators of investee enterprise value and are used to estimate the fair value of the Company’s investments. An OPM may be utilized to allocate value to the various classes of securities of the investee, including classes owned by the Company. Such information available to the Company from investee companies is supplemented with estimates such as volatility, expected time to liquidity and the rights and obligations of the securities the Company holds. The Company's privately held debt and equity securities and other investments amounted to $3.4 billion and $1.8 billion as of October 31, 2021 and January 31, 2021, respectively.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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