FAIR VALUE MEASUREMENTS
Cash and cash equivalents include cash in banks, highly liquid investments, and term deposits with maturities of three months or less recorded in “Cash and cash equivalents” on the Consolidated Balance Sheets. Short-term investments are available-for-sale debt securities and term deposits with maturities over three months recorded in “Short-term investments” on the Consolidated Balance Sheets. As the Company views these securities as available to support current operations, highly liquid securities with maturities beyond 12 months are classified as current assets. The Company’s available-for-sale debt securities are measured at fair value with unrealized gains and losses recorded in “Other comprehensive income (loss)” in the Consolidated Statements of Comprehensive Loss and reclassified to net loss upon maturity or sale of the security. Term deposits are recorded at cost, which approximates fair value due to their short time to maturity. Interest receivable on cash equivalents and short-term investments is recorded in “Other current assets” on the Consolidated Balance Sheets and was not material of December 31, 2024 and 2025.
A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. These two types of inputs create the following fair value hierarchy:
•Level 1 – Quoted prices for identical instruments in active markets
•Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable
•Level 3 – Instruments with model-derived valuations whose significant inputs are unobservable
The following table presents the fair value of the Company’s cash and cash equivalents and short-term investments and their corresponding level within the fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2024 | | December 31, 2025 |
| Level | | Amount
(in millions) | | Level | | Amount
(in millions) |
| Cash and cash equivalents: | | | | | | | |
| Cash | | | $ | 1,157 | | | | | $ | 1,370 | |
| Commercial paper | 2 | | 184 | | | 2 | | 42 | |
| Money market funds | 1 | | 3,868 | | | 1 | | 2,142 | |
| Term deposits | 2 | | — | | | 2 | | 25 | |
| United States Treasury securities | 1 | | 60 | | | 1 | | — | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Other items1 | 2 | | 25 | | | 2 | | — | |
| Total cash and cash equivalents | | | $ | 5,294 | | | | | $ | 3,579 | |
| | | | | | | |
| Short-term investments: | | | | | | | |
| Certificates of deposit | 2 | | $ | 141 | | | 2 | | $ | 223 | |
| Commercial paper | 2 | | 378 | | | 2 | | 437 | |
| Corporate bonds | 2 | | 374 | | | 2 | | 464 | |
| Term deposits | 2 | | 475 | | | 2 | | 600 | |
| United States Treasury securities | 1 | | 993 | | | 1 | | 735 | |
| | | | | | | |
| | | | | | | |
Other items2 | 2 | | 45 | | | 2 | | 44 | |
Total short-term investments3 | | | $ | 2,406 | | | | | $ | 2,503 | |
| | | | | | | |
| Total cash and cash equivalents and short-term investments | | | $ | 7,700 | | | | | $ | 6,082 | |
| | | | | | | |
1 Includes certificates of deposit, corporate bonds, and Yankee bonds. |
2 Includes Yankee bonds and agency discount notes. |
3 As of December 31, 2024 and 2025, $289 million and $257 million is due between 12 and 24 months, respectively. |
As of December 31, 2024 and 2025, the fair value of cash equivalents and short-term investments approximated their cost. Fair value measurements classified within Level 2 of the fair value hierarchy are determined using observable inputs other than quoted prices for identical assets in active markets.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.