FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

FINANCIAL ASSETS AND LIABILITIES MEASURED AND RECORDED AT FAIR VALUE ON A RECURRING BASIS

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:

	September 30, 2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents(1)
Commercial paper	$	70	$	—	$	70
Short-term investments(2):
U.S. government and agency securities	333		—		333
Foreign government and agency securities	24		—		24
Corporate debt securities	1,194		—		1,194
Mortgage-backed and asset-backed securities	771		—		771
Commercial paper	2,038		—		2,038
Total short-term investments	4,360		—		4,360
Funds receivable and customer accounts(3):
U.S. government and agency securities	6,382		—		6,382
Foreign government and agency securities	398		—		398
Corporate debt securities	530		—		530
Mortgage-backed and asset-backed securities	3,399		—		3,399
Municipal securities	647		—		647
Commercial paper	3,469		—		3,469
Total funds receivable and customer accounts	14,825		—		14,825
Derivatives(4)	214		—		214
Crypto asset safeguarding asset(4)	2,167		—		2,167
Long-term investments(2),(5):
U.S. government and agency securities	235		—		235
Foreign government and agency securities	184		—		184
Corporate debt securities	1,568		—		1,568
Mortgage-backed and asset-backed securities	673		—		673
Marketable equity securities	17		17		—
Total long-term investments	2,677		17		2,660
Total financial assets	$	24,313	$	17	$	24,296
Liabilities:
Derivatives(4)	$	161	$	—	$	161
Crypto asset safeguarding liability(4)	2,167		—		2,167
Total financial liabilities	$	2,328	$	—	$	2,328

(1) Excludes cash of $7.2 billion not measured and recorded at fair value.

(2) Excludes restricted cash of $1 million and time deposits of $201 million not measured and recorded at fair value.

(3) Excludes cash, time deposits, and funds receivable of $24.4 billion underlying funds receivable and customer accounts not measured and recorded at fair value.

(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other long-term liabilities,” respectively, on our condensed consolidated balance sheets. Crypto safeguarding asset and associated liability are recorded within “prepaid expenses and other current assets” and “accrued expenses and other current liabilities,” respectively, on our condensed consolidated balance sheets.

(5) Excludes non-marketable equity securities of $1.7 billion measured using the Measurement Alternative or equity method accounting.

	December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In millions)
Assets:
Cash and cash equivalents(1)
U.S. government and agency securities	$	428	$	—	$	428
Commercial paper	349		—		349
Money market fund	160		160		—
Total cash and cash equivalents	937		160		777
Short-term investments(2):
U.S. government and agency securities	623		—		623
Foreign government and agency securities	347		—		347
Corporate debt securities	1,482		—		1,482
Asset-backed securities	718		—		718
Commercial paper	1,678		—		1,678
Total short-term investments	4,848		—		4,848
Funds receivable and customer accounts(3):
U.S. government and agency securities	8,478		—		8,478
Foreign government and agency securities	1,118		—		1,118
Corporate debt securities	1,601		—		1,601
Asset-backed securities	1,423		—		1,423
Municipal securities	638		—		638
Commercial paper	2,849		—		2,849
Total funds receivable and customer accounts	16,107		—		16,107
Derivatives(4)	141		—		141
Crypto asset safeguarding asset(4)	1,241		—		1,241
Long-term investments(2), (5):
U.S. government and agency securities	180		—		180
Foreign government and agency securities	32		—		32
Corporate debt securities	418		—		418
Asset-backed securities	761		—		761
Marketable equity securities	24		24		—
Total long-term investments	1,415		24		1,391
Total financial assets	$	24,689	$	184	$	24,505
Liabilities:
Derivatives(4)	$	131	$	—	$	131
Crypto asset safeguarding liability(4)	1,241		—		1,241
Total financial liabilities	$	1,372	$	—	$	1,372

(1) Excludes cash of $8.1 billion not measured and recorded at fair value.

(2) Excludes restricted cash of $3 million and time deposits of $173 million not measured and recorded at fair value.

(3) Excludes cash, time deposits, and funds receivable of $22.8 billion underlying funds receivable and customer accounts not measured and recorded at fair value.

(4) Derivative assets and liabilities are included within “prepaid expenses and other current assets” and “other assets” and “accrued expenses and other current liabilities” and “other long-term liabilities,” respectively, on our condensed consolidated balance sheets. Crypto safeguarding asset and associated liability are recorded within “prepaid expenses and other current assets” and “accrued expenses and other current liabilities,” respectively, on our condensed consolidated balance sheets.

(5) Excludes non-marketable equity securities of $1.8 billion measured using the Measurement Alternative or equity method accounting.

Our financial assets classified within Level 1 are valued using quoted prices for identical assets in active markets. There are no active markets for our crypto asset safeguarding liability or the corresponding safeguarding asset. Accordingly, we have valued the asset and liability using quoted prices on the active exchange that we have identified as the principal market for the underlying crypto assets (Level 2). All other financial assets and liabilities are valued using quoted prices for identical instruments in less active markets, readily available pricing sources for comparable instruments, or models using market observable inputs (Level 2).

A majority of our derivative instruments are valued using pricing models that take into account the contract terms as well as multiple observable inputs where applicable, such as currency rates, interest rate yield curves, option volatility, and equity prices (Level 2).

As of September 30, 2024 and December 31, 2023, we did not have any assets or liabilities requiring measurement at fair value on a recurring basis with significant unobservable inputs that would require a high level of judgment to determine fair value (Level 3).

We elect to account for available-for-sale debt securities denominated in currencies other than the functional currency of our subsidiaries under the fair value option. Election of the fair value option allows us to recognize any gains and losses from fair value changes on such investments in other income (expense), net on the condensed consolidated statements of income (loss) to significantly reduce the accounting asymmetry that would otherwise arise when recognizing the corresponding foreign exchange gains and losses relating to customer liabilities. The following table summarizes the estimated fair value and amortized cost of our available-for-sale debt securities under the fair value option as of September 30, 2024 and December 31, 2023:

	September 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In millions)				(In millions)
Funds receivable and customer accounts	$	478	$	474	$	625	$	618

The following table summarizes the gains (losses) from fair value changes recognized in other income (expense), net related to the available-for-sale debt securities under the fair value option for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(In millions)
Funds receivable and customer accounts	$	23	$	(5)	$	8	$	6

ASSETS MEASURED AND RECORDED AT FAIR VALUE ON A NON-RECURRING BASIS

The following tables summarize our assets held as of September 30, 2024 and December 31, 2023 for which a non-recurring fair value measurement was recorded during the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively:

	September 30, 2024		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(In millions)
Loans and interest receivable, held for sale	$	471	$	471	$	—
Non-marketable equity securities measured using the Measurement Alternative(1)	473		94		379
Total	$	944	$	565	$	379

(1) Excludes non-marketable equity securities of $1.0 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the nine months ended September 30, 2024.

	December 31, 2023		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
	(In millions)
Loans and interest receivable, held for sale(1)	$	563	$	—	$	563
Non-marketable equity investments measured using the Measurement Alternative(2)	440		131		309
Other assets(3)	112		112		—
Total	$	1,115	$	243	$	872

(1) As of December 31, 2023, loans and interest receivable, held for sale were valued using a price-based model. The price was the significant unobservable input and was determined based upon certain loan and risk classifications of the portfolio. Low, high and weighted average prices were all $0.99, measured in relation to $1.00 par.

(2) Excludes non-marketable equity securities of $1.2 billion accounted for under the Measurement Alternative for which no observable price changes occurred during the year ended December 31, 2023.

(3) Consists of ROU lease assets recorded at fair value pursuant to impairment charges that occurred during the year ended December 31, 2023.

Beginning with the first quarter of 2024, we measure loans and interest receivable, held for sale using observable inputs, such as the most recent executed prices for comparable loans sold to the global investment firm. Accordingly, loans and interest receivable, held for sale are classified within Level 2 in the fair value hierarchy. Refer to “Note 11—Loans and interest receivable” for additional information on loans and interest receivable, held for sale.

We measure the non-marketable equity securities accounted for under the Measurement Alternative at cost minus impairment, if any, adjusted for observable price changes in orderly transactions for an identical or similar investment in the same issuer. Non-marketable equity securities that have been remeasured during the period based on observable price changes are classified within Level 2 in the fair value hierarchy because we estimate the fair value based on valuation methods which only include significant inputs that are observable, such as the observable transaction price at the transaction date. The fair value of non-marketable equity securities are classified within Level 3 when we estimate fair value using significant unobservable inputs such as when we remeasure due to impairment and use discount rates, forecasted cash flows, and market data of comparable companies, among others.

We evaluate ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of an ROU asset may not be recoverable. Impairment losses on ROU lease assets related to office operating leases are calculated using estimated rental income per square foot derived from observable market data, and the impaired asset is classified within Level 2 in the fair value hierarchy.

FINANCIAL ASSETS AND LIABILITIES NOT MEASURED AND RECORDED AT FAIR VALUE

Our financial instruments, including cash, restricted cash, time deposits, reverse repurchase agreements, loans and interest receivable, net, certain customer accounts, and long-term debt related to borrowings on our credit facilities, are carried at amortized cost, which approximates their fair value. Our notes receivable had a carrying value of approximately $521 million and fair value of approximately $506 million as of September 30, 2024. Our notes receivable had a carrying value of approximately $513 million and fair value of approximately $474 million as of December 31, 2023. Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $11.8 billion and fair value of approximately $10.2 billion as of September 30, 2024. Our term debt (including current portion) in the form of fixed rate notes had a carrying value of approximately $10.6 billion and fair value of approximately $10.0 billion as of December 31, 2023. If these financial instruments were measured at fair value in the financial statements, cash would be classified as Level 1; restricted cash, time deposits, reverse repurchase agreements, certain customer accounts, and term debt (including current portion) would be classified as Level 2; and the remaining financial instruments would be classified as Level 3 in the fair value hierarchy.