Financial Instruments

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2018 and September 30, 2019, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S. and foreign government and agency securities, and other investment grade securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of cash, cash equivalents, restricted cash, or marketable securities categorized as Level 3 assets as of December 31, 2018 and September 30, 2019.

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):



	December 31, 2018			September 30, 2019
	Total Estimated Fair Value			Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Total Estimated Fair Value
Cash	$	10,406		$	8,900	$	—	$	—		$	8,900
Level 1 securities:
Money market funds	12,515			9,869		—		—			9,869
Equity securities (1)	170										225
Level 2 securities:
Foreign government and agency securities	815			4,170		—		—			4,170
U.S. government and agency securities	11,667			6,875		13		(4		)	6,884
Corporate debt securities	4,990			11,132		37		(1		)	11,168
Asset-backed securities	892			2,180		8		(1		)	2,187
Other fixed income securities	188			293		2		—			295
Equity securities (1)	33										5
	$	41,676		$	43,419	$	60	$	(6	)	$	43,703
Less: Restricted cash, cash equivalents, and marketable securities (2)	(426		)								(302		)
Total cash, cash equivalents, and marketable securities	$	41,250									$	43,401

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(1)	The related unrealized gain (loss) recorded in “Other income (expense), net” was $(55) million in Q3 2019 and $27 million for the nine months ended September 30, 2019.

(2)

We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of September 30, 2019 (in millions):



	Amortized Cost		Estimated Fair Value
Due within one year	$	24,194	$	24,202
Due after one year through five years	9,104		9,146
Due after five years through ten years	309		310
Due after ten years	912		915
Total	$	34,519	$	34,573

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.

Equity Warrants and Non-Marketable Equity Securities

We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2018 and September 30, 2019, these warrants had a fair value of $440 million and $526 million, and are recorded within “Other assets” on our consolidated balance sheets. The related gain (loss) recorded in “Other income (expense), net” was $(62) million and $(151) million in Q3 2018 and Q3 2019, and $25 million and $(79) million for the nine months ended September 30, 2018 and 2019. These assets are primarily classified as Level 2 assets.

As of December 31, 2018 and September 30, 2019, equity securities not accounted for under the equity-method and without readily determinable fair values, had a carrying value of $282 million and $894 million, and are recorded within “Other assets” on our consolidated balance sheets.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):



	December 31, 2018		September 30, 2019
Cash and cash equivalents	$	31,750	$	23,255
Restricted cash included in accounts receivable, net and other	418		257
Restricted cash included in other assets	5		42
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	32,173	$	23,554