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INVESTMENTS AND FAIR VALUE MEASUREMENT

9 Months Ended

Sep. 30, 2023

NOTE 8: INVESTMENTS AND FAIR VALUE MEASUREMENT

Investments

Available-for-sale

At December 31, 2022, our available-for-sale investments, which are included in other current assets on the audited consolidated balance sheets, was $10 million with no significant unrealized gains or losses. These investments had a stated contractual maturity or redemption date within one year. As of September 30, 2023, we had no available-for-sale investments. Refer to Fair Value of Financial Instruments below for further details.

Held-to-maturity

We had no held-to-maturity investments as of December 31, 2022. The following table summarizes our held-to-maturity investments as of September 30, 2023:


	September 30, 2023
(in millions)	Amortized Cost		Allowance for Credit Losses		Unrealized Gains		Unrealized Losses		Fair Value
Debt securities:
Corporate debt securities	$	225	$	—	$	—	$	(2)	$	223
U.S. Treasury securities	149		—		—		—		149
U.S. government agency securities	49		—		—		—		49
Certificates of deposit	48		—		—		—		48
Commercial paper	19		—		—		—		19
Total held-to-maturity investments	$	490	$	—	$	—	$	(2)	$	488

There were no sales of held-to-maturity investments during the three and nine months ended September 30, 2023.

The table below presents the amortized cost and fair value of held-to-maturity investments by contractual maturity; the maximum maturity is two years:


	September 30, 2023
(in millions)	Within 1 Year		1 to 2 Years		Total
Amortized cost
Debt securities:
Corporate debt securities	$	125	$	100	$	225
U.S. Treasury securities	131		18		149
U.S. government agency securities	49		—		49
Certificates of deposit	48		—		48
Commercial paper	19		—		19
Total held-to-maturity investments	$	372	$	118	$	490
Fair value
Debt securities:
Corporate debt securities	$	124	$	99	$	223
U.S. Treasury securities	132		17		149
U.S. government agency securities	49		—		49
Certificates of deposit	48		—		48
Commercial paper	19		—		19
Total held-to-maturity investments	$	372	$	116	$	488

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis were presented on our unaudited condensed consolidated balance sheets as follows:


	December 31, 2022
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	735	$	—	$	—	$	735


Other current assets:
Available-for-sale investments:

Commercial paper	—		5		—		5
Government bonds	3		—		—		3
Corporate bonds	—		2		—		2
Equity securities - securities owned	8		—		—		8
Asset related to user cryptocurrencies safeguarding obligation	—		8,431		—		8,431
User-held fractional shares	997		—		—		997
Total financial assets	$	1,743	$	8,438	$	—	$	10,181

Liabilities


User cryptocurrencies safeguarding obligation	$	—	$	8,431	$	—	$	8,431
Fractional shares repurchase obligations	997		—		—		997
Total financial liabilities	$	997	$	8,431	$	—	$	9,428


	September 30, 2023
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	254	$	—	$	—	$	254




Other current assets:
Stablecoin	10		—		—		10
Equity securities - securities owned	8		—		—		8
Other non-current assets:
Money market funds - escrow account	2		—		—		2






Asset related to user cryptocurrencies safeguarding obligation	—		10,183		—		10,183
User-held fractional shares	1,396		—		—		1,396
Total financial assets	$	1,670	$	10,183	$	—	$	11,853

Liabilities


User cryptocurrencies safeguarding obligation	$	—	$	10,183	$	—	$	10,183
Fractional shares repurchase obligations	1,396		—		—		1,396
Total financial liabilities	$	1,396	$	10,183	$	—	$	11,579

The fair value for certain financial instruments that are not required to be measured or reported at fair value was presented on our unaudited condensed consolidated balance sheets as follows:


	September 30, 2023
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Held-to-maturity investments:
Corporate debt securities	$	—	$	223	$	—	$	223
U.S. Treasury securities	149		—		—		149
U.S. government agency securities	—		49		—		49
Certificates of deposit	—		48		—		48
Commercial paper	—		19		—		19
Total held-to-maturity investments	$	149	$	339	$	—	$	488

The fair values used for held-to-maturity investments are obtained from an independent pricing service and represent fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatility, relevant yield curves, credit spreads and prices from market makers and live trading systems. Management reviews the valuation methodology and quality controls utilized by the pricing services in management's overall assessment of the reasonableness of the fair values provided.

During the nine months ended September 30, 2023, we did not have any transfers in or out of Level 3 assets or liabilities.

Safeguarded user cryptocurrencies

Safeguarded user cryptocurrencies were as follows:


	December 31,		September 30,
(in millions)	2022		2023
Bitcoin (BTC)	$	2,327	$	3,858
Ethereum (ETH)	2,341		2,870
Dogecoin (DOGE)	2,802		2,405
Other	961		1,050
Total user cryptocurrencies safeguarding obligation and corresponding asset	$	8,431	$	10,183

The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of December 31, 2022 and September 30, 2023.

- 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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