Investments

9 Months Ended

Oct. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Debt Securities

As of October 31, 2021, debt securities consisted of the following (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	$	1,246,777	$	54	$	(294)	$	1,246,537
U.S. agency obligations	232,209		2		(383)		231,828
Corporate bonds	426,074		35		(444)		425,665
Commercial paper	934,715		—		—		934,715
Total debt securities	$	2,839,775	$	91	$	(1,121)	$	2,838,745
Included in Cash and cash equivalents	$	715,486	$	1	$	(2)	$	715,485
Included in Marketable securities	$	2,124,289	$	90	$	(1,119)	$	2,123,260

As of January 31, 2021, debt securities consisted of the following (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Fair Value
U.S. treasury securities	$	1,054,146	$	205	$	(10)	$	1,054,341
U.S. agency obligations	504,298		196		(49)		504,445
Corporate bonds	346,563		1,253		(14)		347,802
Commercial paper	664,262		—		—		664,262
Total debt securities	$	2,569,269	$	1,654	$	(73)	$	2,570,850
Included in Cash and cash equivalents	$	440,678	$	—	$	—	$	440,678
Included in Marketable securities	$	2,128,591	$	1,654	$	(73)	$	2,130,172

We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. We consider all debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classify these securities as current assets on the condensed consolidated balance sheets. Debt securities included in Marketable securities on the condensed consolidated balance sheets consist of securities with original maturities at the time of purchase greater than three months, and the remainder of the securities is included in Cash and cash equivalents.

The unrealized losses associated with our debt securities were immaterial as of October 31, 2021, and January 31, 2021, and we did not recognize any credit losses related to our debt securities during the three and nine months ended October 31, 2021, or 2020.

We did not have any sales of debt securities during the three months ended October 31, 2021, or 2020. We sold $10 million and $5 million of debt securities during the nine months ended October 31, 2021, and 2020, respectively. The realized gains and losses from the sales were immaterial.

Equity Investments

Equity investments consisted of the following (in thousands):


	Condensed Consolidated Balance Sheets Location	October 31, 2021		January 31, 2021
Money market funds	Cash and cash equivalents	$	280,481	$	659,964
Equity investments accounted for under the equity method	Other assets	—		48,222
Non-marketable equity investments measured using the measurement alternative	Other assets	169,929		73,142
Marketable equity investments	Marketable securities	134,462		21,300
Total equity investments		$	584,872	$	802,628

Total realized and unrealized gains and losses associated with our equity investments consisted of the following (in thousands):


	Three Months Ended October 31,				Nine Months Ended October 31,
	2021		2020		2021		2020
Net realized gains (losses) recognized on equity investments sold (1)	$	11,759	$	—	$	4,236	$	1,591
Net unrealized gains (losses) recognized on equity investments held as of the end of the period	13,448		3,830		121,167		1,643
Total net gains (losses) recognized in Other income (expense), net	$	25,207	$	3,830	$	125,403	$	3,234

(1)Reflects the difference between the sale proceeds and the carrying value of the equity investments at the beginning of the period.

Equity Investments Accounted for Under the Equity Method

We determine at the inception of each arrangement whether an investment or other interest is considered a variable interest entity (“VIE”). Investments in VIEs for which we are not the primary beneficiary or do not own a controlling interest but can exercise significant influence over the investee are accounted for under the equity method of accounting. During fiscal 2021, we made an equity investment of $50 million in a limited partnership, which represented an ownership interest of approximately 6%. We determined that the limited partnership was a VIE because the at-risk equity holders, as a group, lacked the characteristics of a controlling financial interest. We did not have majority voting rights nor the power to direct the activities of this entity, and therefore, we were not the primary beneficiary. The investment was accounted for under the equity method of accounting as it was considered to be more than minor and we had the ability to exercise significant influence over the entity. Under the equity method, our share of earnings and losses of the investee was not material and there was no impairment loss recorded for the periods presented.

In June 2021, the limited partnership was liquidated and shares of common stock in a corporation were distributed to the partners. Immediately thereafter, the corporation completed its initial public offering (“IPO”). We no longer exercise significant influence over the entity and therefore we accounted for our interest in the common stock received as a marketable equity investment measured at fair value. Concurrent with the IPO, we sold a portion of our investment for proceeds of $5 million, resulting in a realized gain of $3 million. Our remaining investment, which had a carrying value of $134 million as of October 31, 2021, is subject to a lock-up agreement which restricts our ability to sell the securities until December 2021 at the earliest. We recorded an unrealized loss of $7 million and an unrealized gain of $91 million related to this investment for the three and nine months ended October 31, 2021, respectively.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which we do not own a controlling interest or exercise significant influence. The carrying values for our non-marketable equity investments are summarized below (in thousands):


	October 31, 2021		January 31, 2021
Total initial cost	$	130,131	$	65,377
Cumulative net unrealized gains (losses)	39,798		7,765
Carrying value	$	169,929	$	73,142

We recorded upward adjustments to the carrying value of non-marketable equity investments of $20 million and no material impairment losses for the three months ended October 31, 2021. In addition, as discussed in Note 7, Business Combinations, we recognized a $12 million non-cash gain related to our acquisition of Zimit. No material adjustments or impairment losses were recorded for the three months ended October 31, 2020. We recorded upward adjustments of $34 million and impairment losses of $2 million for the nine months ended October 31, 2021. We recorded no material adjustments and $3 million of impairment losses for the nine months ended October 31, 2020.

Marketable Equity Investments

We hold marketable equity investments with readily determinable fair values over which we do not own a controlling interest or exercise significant influence. The carrying values for our marketable equity investments are summarized below (in thousands):


	October 31, 2021		January 31, 2021
Total initial cost	$	47,513	$	5,000
Cumulative net unrealized gains (losses)	86,949		16,300
Carrying value (1)	$	134,462	$	21,300

(1)As of October 31, 2021, investments with a carrying value of $134 million are subject to a lock-up agreement through December 2021.

There were no sales of marketable equity investments during the three months ended October 31, 2021. During the nine months ended October 31, 2021, we sold marketable equity investments for proceeds of $17 million which had an initial cost of $7 million. This includes the $5 million sale of the investment previously accounted for under the equity method described above. There were no sales of marketable equity investments during the comparative prior year periods.