FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2024

The Company measures its cash equivalents, customer funds, short-term and long-term marketable debt securities, marketable equity investments, and bitcoin investment at fair value. The Company classifies these investments within Level 1 or Level 2 of the fair value hierarchy because the Company values these investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. The Company measures its safeguarding obligation liability related to bitcoin held for other parties at the fair value of the bitcoin that the Company holds for other parties and classifies the liability within Level 2 because the Company uses observable market prices of the underlying bitcoin as an input for the valuation. The Company also classifies its safeguarding asset related to bitcoin held for other parties within Level 2, unless the asset's carrying amount is adjusted to reflect any actual or potential safeguarding loss events, in which case it would be classified within Level 3. The Company was not aware of any actual or possible safeguarding loss events as of March 31, 2024 or December 31, 2023.

The Company’s assets and liabilities that are measured at fair value on a recurring basis were classified as follows (in thousands):


	March 31, 2024						December 31, 2023
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash equivalents:
Money market funds	$	1,403,811	$	—	$	—	$	960,705	$	—	$	—
U.S. government securities	44,577		—		—		29,788		—		—



Commercial paper	—		1,875		—		—		4,993		—
Corporate bonds	—		555		—		—		699		—



Restricted cash:
Money market funds	292,184		—		—		291,374		—		—
Customer funds:
Money market funds	4,645		—		—		4,042		—		—
Reverse repurchase agreement	932,384		—		—		1,028,754		—		—
Short-term debt securities:
U.S. government securities	370,063		—		—		539,998		—		—
Corporate bonds	—		134,532		—		—		215,227		—
U.S. agency securities	—		57,722		—		—		67,515		—
Certificates of deposit	—		500		—		—		3,856		—
Commercial paper	—		724		—		—		15,159		—
Municipal securities	—		9,253		—		—		9,165		—
Foreign government securities	—		596		—		—		981		—
Long-term debt securities:
U.S. government securities	89,146		—		—		153,387		—		—
Corporate bonds	—		96,384		—		—		95,328		—

Municipal securities	—		2,392		—		—		2,412		—

Other:
Investment in marketable equity securities	1,610		—		—		8,267		—		—
Bitcoin investment (i)	573,302		—		—		339,898		—		—
Safeguarding asset related to bitcoin held for other parties	—		1,681,111		—		—		1,038,585		—
Safeguarding obligation liability related to bitcoin held for other parties	—		(1,681,111)		—		—		(1,038,585)		—
Total assets (liabilities) measured at fair value	$	3,711,722	$	304,533	$	—	$	3,356,213	$	415,335	$	—

(i) The Company holds an immaterial amount of bitcoin for operating purposes and, given the bitcoin is held for a relatively short period of time, typically being purchased and sold within a day, the fair value approximates carrying value. Refer to Note 11, Bitcoin for more details.

The carrying amounts of certain financial instruments, including settlements receivable, consumer receivables, loans held for investment, accounts payable, customers payable, accrued expenses, and settlements payable, approximate their fair values due to their short-term nature. The carrying amounts of the Company's warehouse funding facilities approximate their fair values.

The Company estimates the fair value of its convertible and senior notes based on their last actively traded prices (Level 1) or market observable inputs (Level 2). The estimated fair value and carrying value of the convertible and senior notes were as follows (in thousands):


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value (Level 2)		Carrying Value		Fair Value (Level 2)
2031 Senior Notes	$	989,915	$	862,038	$	989,567	$	879,913
2026 Senior Notes	993,905		935,652		993,208		938,105
2027 Convertible Notes	570,197		477,540		569,865		468,475
2026 Convertible Notes	571,439		510,998		571,014		501,910
2025 Convertible Notes	997,197		1,020,472		996,437		979,776
Total	$	4,122,653	$	3,806,700	$	4,120,091	$	3,768,179

The estimated fair value and carrying value of loans held for sale and loans held for investment were as follows (in thousands):


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value (Level 3)		Carrying Value		Fair Value (Level 3)
Loans held for sale	$	892,068	$	889,427	$	775,424	$	783,464
Loans held for investment	246,355		256,285		247,631		258,684
Total	$	1,138,423	$	1,145,712	$	1,023,055	$	1,042,148

If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the three months ended March 31, 2024 and March 31, 2023, the Company did not have any transfers in or out of Level 1, Level 2, or Level 3 assets or liabilities.

- 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.

+ References + Details