Funds Receivable and Customer Accounts and Investments

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Funds Receivable and Customer Accounts and Investments

Funds Receivable and Customer Accounts and Investments

The following table summarizes the assets underlying our funds receivable and customer accounts, short-term investments, and long-term investments as of March 31, 2020 and December 31, 2019:

	March 31, 2020		December 31, 2019
	(In millions)
Funds receivable and customer accounts:
Cash and cash equivalents	$	8,871	$	8,387
Time deposits	552		514
Available-for-sale debt securities	9,614		10,190
Funds receivable	3,780		3,436
Total funds receivable and customer accounts	$	22,817	$	22,527
Short-term investments:
Time deposits	$	204	$	614
Available-for-sale debt securities	2,060		2,734
Restricted cash	68		64
Total short-term investments	$	2,332	$	3,412
Long-term investments:
Available-for-sale debt securities	$	661	$	1,025
Restricted cash	6		—
Strategic investments	1,699		1,838
Total long-term investments	$	2,366	$	2,863

As of March 31, 2020 and December 31, 2019, the estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments was as follows:

	March 31, 2020
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In millions)
Funds receivable and customer accounts:
U.S. government and agency securities	$	4,793	$	28	$	—		$	4,821
Foreign government and agency securities	1,757		4		(1		)	1,760
Corporate debt securities	1,754		—		(4		)	1,750
Short-term investments:
U.S. government and agency securities	50		—		—			50
Foreign government and agency securities	258		—		—			258
Corporate debt securities	1,390		2		(5		)	1,387
Long-term investments:
U.S. government and agency securities	100		—		—			100
Foreign government and agency securities	125		1		—			126
Corporate debt securities	443		—		(8		)	435
Total available-for-sale debt securities(1)	$	10,670	$	35	$	(18	)	$	10,687

⁽¹⁾ Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.”

	December 31, 2019
	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Funds receivable and customer accounts:
U.S. government and agency securities	$	4,996	$	—	$	—	$	4,996
Foreign government and agency securities	1,392		—		—		1,392
Corporate debt securities	2,112		—		—		2,112
Short-term investments:
Foreign government and agency securities	533		—		—		533
Corporate debt securities	1,955		—		—		1,955
Long-term investments:
U.S. government and agency securities	140		—		—		140
Foreign government and agency securities	207		—		—		207
Corporate debt securities	676		2		—		678
Total available-for-sale debt securities(1)	$	12,011	$	2	$	—	$	12,013

⁽¹⁾ Excludes foreign currency denominated available-for-sale debt securities accounted for under the fair value option. Refer to “Note 9—Fair Value Measurement of Assets and Liabilities.”

As of March 31, 2020 and December 31, 2019, the gross unrealized losses and estimated fair value of our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments for which an allowance for credit losses has not been deemed necessary in the current period, aggregated by length of time those individual securities have been in a continuous loss position, was as follows:

	March 31, 2020(1)
	Less than 12 months					12 months or longer				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Funds receivable and customer accounts:
U.S. government and agency securities	$	500	$	—		$	—	$	—	$	500	$	—
Foreign government and agency securities	422		(1		)	—		—		422		(1		)
Corporate debt securities	769		(4		)	—		—		769		(4		)
Short-term investments:
Foreign government and agency securities	55		—			—		—		55		—
Corporate debt securities	759		(5		)	—		—		759		(5		)
Long-term investments:
Corporate debt securities	297		(8		)	3		—		300		(8		)
Total available-for-sale debt securities	$	2,802	$	(18	)	$	3	$	—	$	2,805	$	(18	)

⁽¹⁾ “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.

	December 31, 2019(1)
	Less than 12 months				12 months or longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In millions)
Funds receivable and customer accounts:
U.S. government and agency securities	$	2,452	$	—	$	—	$	—	$	2,452	$	—
Foreign government and agency securities	563		—		30		—		593		—
Corporate debt securities	825		—		—		—		825		—
Short-term investments:
Foreign government and agency securities	115		—		—		—		115		—
Corporate debt securities	424		—		—		—		424		—
Long-term investments:
U.S. government and agency securities	100		—		—		—		100		—
Foreign government and agency securities	75		—		—		—		75		—
Corporate debt securities	27		—		44		—		71		—
Total available-for-sale debt securities	$	4,581	$	—	$	74	$	—	$	4,655	$	—

⁽¹⁾ “—” Denotes gross unrealized loss or fair value of less than $1 million in a given position.

Unrealized losses have not been recognized into income as we neither intend to sell nor anticipate that it is more likely than not that we will be required to sell the securities before recovery. The decline in fair value is due primarily to changes in market conditions, rather than credit losses. We will continue to monitor the performance of the investment portfolio and assess whether impairment due to expected credit losses has occurred. Amounts reclassified to earnings from unrealized gains and losses were not material for the three months ended March 31, 2020 and 2019.

Our available-for-sale debt securities included within funds receivable and customer accounts, short-term investments, and long-term investments classified by date of contractual maturity were as follows:

	March 31, 2020
	Amortized Cost		Fair Value
	(In millions)
One year or less	$	9,407	$	9,429
After one year through five years	1,260		1,255
After five years through ten years	3		3
Total	$	10,670	$	10,687

Strategic Investments

Our strategic investments include marketable equity securities, which are publicly traded, and non-marketable equity securities, which are investments in privately held companies. Our marketable equity securities have readily determinable fair values and are recorded as long-term investments on our condensed consolidated balance sheets at fair value with changes in fair value recorded in other income (expense), net on our condensed consolidated statements of income. Marketable equity securities totaled $1.2 billion and $1.3 billion as of March 31, 2020 and December 31, 2019, respectively.

Our non-marketable equity securities are recorded in long-term investments on our condensed consolidated balance sheets. As of March 31, 2020 and December 31, 2019, we had non-marketable equity securities of $28 million and $27 million, respectively, where we have the ability to exercise significant influence, but not control, over the investee and account for these equity securities using the equity method of accounting. The remaining non-marketable equity securities do not have a readily determinable fair value and we measure these equity investments at cost minus impairment, if any, and adjust for changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer (the “Measurement Alternative”). All gains and losses on these investments, realized and unrealized, and our share of earnings or losses from investments accounted for using the equity method are recognized in other income (expense), net on our condensed consolidated statements of income. The carrying value of our non-marketable equity securities totaled $548 million and $524 million as of March 31, 2020 and December 31, 2019, respectively.

Measurement Alternative Adjustments

The adjustments to the carrying value of our non-marketable equity securities accounted for under the Measurement Alternative in the three months ended March 31, 2020 and 2019 were as follows:

	Three Months Ended March 31,
	2020			2019
	(In millions)
Carrying amount, beginning of period	$	497		$	293
Adjustments related to non-marketable equity securities:
Net (sales) additions(1)	(9		)	19
Gross unrealized gains	45			57
Gross unrealized losses and impairments	(13		)	—
Carrying amount, end of period	$	520		$	369

⁽¹⁾ Net (sales) additions includes additions from purchases and reductions due to sales of securities and reclassifications when Measurement Alternative no longer applies.

Cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative held at March 31, 2020 were approximately $257 million and $18 million, respectively. Cumulative gross unrealized gains and cumulative gross unrealized losses and impairment related to non-marketable equity securities accounted for under the Measurement Alternative held at December 31, 2019 were approximately $230 million and $5 million, respectively.

Gains (losses) on marketable and non-marketable equity securities, excluding those accounted for using the equity method

Net unrealized losses recognized in the three months ended March 31, 2020 related to marketable and non-marketable equity securities (excluding those accounted for using the equity method) held at March 31, 2020 were approximately $132 million. Net unrealized gains recognized in the three months ended March 31, 2019 related to marketable and non-marketable equity securities (excluding those accounted for using the equity method) held at March 31, 2019 was approximately $180 million.