LYFT, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our 2020 Annual Report on Form 10-K. As discussed in the section titled "Note About Forward-Looking Statements," the following discussion contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled "Risk Factors" and other parts of this Quarterly Report on Form 10-Q and in our 2020 Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our fiscal year endsDecember 31 . Our Business Our mission is to improve people's lives with the world's best transportation.Lyft started a movement to revolutionize transportation. In 2012, we launched our peer-to-peer marketplace for on-demand ridesharing and have continued to pioneer innovations aligned with our mission. Today,Lyft is one of the largest multimodal transportation networks inthe United States andCanada . We continue to be laser-focused on revolutionizing transportation. We have established a scaled network of users brought together by our robust technology platform (the "Lyft Platform") that powers rides and connections every day. We leverage our technology platform, the scale and density of our user network and insights from the significant number of rides we have facilitated to continuously develop new offerings. We've also taken steps to ensure our network is well positioned to benefit from technological innovation in mobility. Today, our offerings include an expanded set of transportation modes in select cities, such as access to a network of shared bikes and scooters for shorter rides and first-mile and last-mile legs of multimodal trips, information about nearby public transit routes, and Lyft Rentals, an offering for users who want to rent a car for a fixed period of time for personal use. We believe our transportation network offers a viable alternative to personal car ownership and use. We generate substantially all of our revenue from our ridesharing marketplace that connects drivers and riders. We collect service fees and commissions from drivers for their use of our ridesharing marketplace. As drivers accept more rider leads and complete more rides, we earn more revenue. We also generate revenue from riders renting Light Vehicles, drivers renting vehicles throughExpress Drive , Lyft Rentals renters, Lyft Driver Center and Lyft Auto Care users, and by making our ridesharing marketplace available to organizations through our Lyft Business offerings, such as ourConcierge and Corporate Business Travel programs. In the second quarter of 2021, we began generating revenues from licensing and data access agreements, primarily with third-party autonomous vehicle companies. We have made focused and substantial investments in support of our mission. For example, to continually launch new innovations on our platform, we have invested heavily in research and development and have completed multiple strategic acquisitions. We have also invested in sales and marketing to grow our community, cultivate a differentiated brand that resonates with drivers and riders and promote further brand awareness. Together, these investments have enabled us to create a powerful multimodal platform and scaled user network that has resulted in the rapid growth of our business. Notwithstanding the impact of COVID-19, we will continue to invest in the future, both organically and through acquisitions of complementary businesses. We also continue to invest in the expansion of our network of shared bikes and scooters and Lyft Autonomous, which focuses on the deployment and scaling of third-party self-driving technology on theLyft network. Our strategy is to always be at the forefront of transportation innovation, and we believe that through these investments, we will continue to be well positioned as a leader in Transportation-as-a-Service. Even as we invest in the business, we also remain focused on finding ways to operate more efficiently. Our values, brand and focus on customer experience are key differentiators for our business. We continue to believe that users are increasingly choosing services, including a transportation network, based on brand affinity and value alignment. As we progress through the COVID-19 recovery, we remain confident the demand for our offerings will continue to grow as more and more people discover and rely on the convenience, experience and affordability of usingLyft . Impact of COVID-19 to our Business The ongoing COVID-19 pandemic continues to impact communities inthe United States ,Canada and globally. Since the pandemic began inMarch 2020 , governments and private businesses - at the recommendation of public health officials - have enacted precautions to mitigate the spread of the virus, including travel restrictions and extensive social distancing measures in many regions ofthe United States andCanada , and many enterprises instituted work from home programs and limited the number of employees on site. Beginning in the middle ofMarch 2020 , the pandemic and these related responses 36 -------------------------------------------------------------------------------- Table of Contents caused decreased demand for our platform leading to decreased revenues as well as decreased earning opportunities for drivers on our platform. Our business continues to be impacted by the COVID-19 pandemic. Although we have seen some signs of demand improving as COVID-19 case counts trended down, particularly compared to the demand levels at the start of the pandemic, demand remains below the levels prior to the pandemic. The exact timing and pace of the recovery remain uncertain. The extent to which our operations will continue to be impacted by the pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning COVID-19 variants and the severity of the pandemic and actions by government authorities and private businesses to contain the pandemic or recover from its impact, among other things. For example, an increase in cases due to variants of the virus has caused many businesses to delay employees returning to the office. Even as travel restrictions and shelter-in-place orders are modified or lifted, we anticipate that continued social distancing, altered consumer behavior, reduced travel and commuting, and expected corporate cost cutting will be significant challenges for us. The strength and duration of these challenges cannot be presently estimated. In response to the COVID-19 pandemic, we have adopted multiple measures, including, but not limited, to establishing new health and safety requirements for ridesharing and updating workplace policies. We also made adjustments to our expenses and cash flow to correlate with declines in revenues including headcount reductions in 2020. We have strengthened our business over the last year and we are confident in our ability to continue to navigate this challenging period. In the third quarter of 2021, we saw continued recovery as vaccines were more widely distributed and more communities fully reopened, which resulted in revenue increasing 73% in the third quarter of 2021 compared to the third quarter of 2020, and the number of Active Riders increasing 51% in the third quarter of 2021 compared to the third quarter of 2020. Net loss decreased$388.0 million , or 84%, from$459.5 million in the third quarter of 2020 to$71.5 million in the third quarter of 2021, which included a benefit from a pre-tax gain of$119.3 million from the the transaction with Woven Planet. Adjusted EBITDA in the third quarter of 2021 was$67.3 million , marking a second consecutive quarterly Adjusted EBITDA profitability. We remain focused on our long-term growth opportunities. With$2.4 billion in unrestricted cash and cash equivalents and short-term investments as ofSeptember 30, 2021 , we believe we have sufficient liquidity to continue business operations and to take action we determine to be in the best interests of our employees, stockholders, stakeholders and of drivers and riders on the Lyft Platform. For more information on risks associated with the COVID-19 pandemic and our litigation matters, see the section titled "Risk Factors" in Item 1A of Part II. Recent Developments Transaction withWoven Planet Holdings, Inc. ("Woven Planet") OnJuly 13, 2021 , we completed a transaction with Woven Planet, a subsidiary of Toyota Motor Corporation, for the divestiture of certain assets related to our self-driving vehicle division, Level 5, as well as commercial agreements for the utilization ofLyft system and fleet data to accelerate the safety and commercialization of the automated-driving vehicles that Woven Planet is developing. We will receive, in total, approximately$515 million in cash in connection with this transaction, with$165 million paid upfront and$350 million to be paid over a five-year period. The divestiture did not represent a strategic shift with a major effect on our operations and financial results, and therefore does not qualify for reporting as a discontinued operation. We recognized a pre-tax gain of$119.3 million as a result of our transaction with Woven Planet, which was included in other income, net on the condensed consolidated statement of operations for the quarter endedSeptember 30, 2021 . Refer to Note 4 "Divestitures" to the condensed consolidated financial statements for information regarding the divestiture of certain assets related to our self-driving vehicles division, Level 5, Reinsurance ofCertain Legacy Auto Liability Insurance OnApril 22, 2021 , our wholly-owned subsidiary,Pacific Valley Insurance Company, Inc. ("PVIC"), entered into a Quota Share Reinsurance Agreement (the "Reinsurance Agreement") withDARAG Bermuda LTD ("DARAG"), under whichDARAG reinsured a legacy portfolio of auto insurance policies, based on reserves in place as ofMarch 31, 2021 , for$183.2 million of coverage above the liabilities recorded as of that date. Under the terms of the Reinsurance Agreement, PVIC ceded toDARAG approximately$251.3 million of certain legacy insurance liabilities for policies underwritten during the period ofOctober 1, 2018 toOctober 1, 2020 , with an aggregate limit of$434.5 million , for a premium of$271.5 million . The Reinsurance Agreement arrangement does not discharge PVIC of its obligations to the policyholder. A loss of approximately$20.4 million for the net cost of the Reinsurance Transaction was recognized on the condensed consolidated statement of operations for the nine months endedSeptember 30, 2021 , with$20.2 million in cost of revenue and$0.2 million in general and administrative expenses. 37 -------------------------------------------------------------------------------- Table of Contents Financial Results for the Three Months EndedSeptember 30, 2021 •Total revenue was$864.4 million , an increase of 73% year-over-year. •Total costs and expenses were$1.0 billion , including stock-based compensation expense of$198.4 million . •Loss from operations was$176.9 million . •Other income was$125.0 million , including a pre-tax gain of$119.3 million as a result of the transaction with Woven Planet. •Net loss was$71.5 million , a decrease of 84% year-over-year. •Adjusted EBITDA was$67.3 million , marking the Company's second consecutive quarterly Adjusted EBITDA profit. •Cash provided by operating activities was$41.5 million . •Unrestricted cash and cash equivalents and short-term investments totaled$2.4 billion as ofSeptember 30, 2021 . Active Riders and Revenue per Active Rider Active Riders Revenue per Active Rider 2021 2020 Growth Rate 2021 2020 Growth Rate (in
thousands, except for dollar amounts and percentages)
Three Months Ended
21,211 (36.4)% $45.13 $45.06 0.2%
Three Months Ended June 30 17,142 8,688 97.3%$44.63 $39.06 14.3% Three Months Ended September 30 18,942 12,513 51.4%$45.63 $39.94 14.2% Three Months Ended December 31 12,552$45.40 We define Active Riders as all riders who take at least one ride during a quarter where the Lyft Platform processes the transaction. An Active Rider is identified by a unique phone number. If a rider has two mobile phone numbers or changed their phone number and such rider took rides using both phone numbers during the quarter, that person would count as two Active Riders. If a rider has a personal and business profile tied to the same mobile phone number, that person would be considered a single Active Rider. If a ride has been requested by an organization using our Concierge offering for the benefit of a rider, we exclude this rider in the calculation of Active Riders unless the ride is accessible in the Lyft App. Revenue per Active Rider is calculated by dividing revenue for a period by Active Riders for the same period. Beginning in the fourth quarter of 2020, some riders were able to access their Concierge rides in the Lyft App if they already had a Lyft account. Accordingly,Lyft updated the definition of Active Riders to include Concierge riders if the rider's phone number matches that of a verified Lyft account, allowing the rider to access their ride in the Lyft App. This update resulted in a 0.01% increase, or an additional 927 Active Riders in the fourth quarter of 2020. Prior to the fourth quarter of 2020, all Concierge riders were excluded from the calculation of Active Riders as Concierge rides could not be matched with verified rider accounts. The increase in the number of Active Riders in the three months endedSeptember 30, 2021 as compared to the three months endedSeptember 30, 2020 and three months endedJune 30, 2021 was due primarily to an increase in new rider activations as a result of the easing of travel restrictions and social distancing measures in certain regions. However, local recovery trends continue to vary significantly and these restrictions continue to have an ongoing impact on people's mobility and we expect seasonality in the winter months may impact the number of Active Riders. The increase in Revenue per Active Rider in the three months endedSeptember 30, 2021 as compared to the three months endedSeptember 30, 2020 primarily reflects the improvement in demand on our platform compared to earlier periods during the COVID-19 pandemic, which had materially limited people's mobility and severely reduced Active Riders. Revenue per Active Rider reached an all-time record high in the three months endedSeptember 30, 2021 , increasing slightly compared to the three months endedJune 30, 2021 . We saw improvements in Active Riders, consisting of both returning riders as well as new riders, each month in the third quarter as vaccines were more widely distributed and more communities fully reopened. Additions to our Active Rider base at the end of any quarter are generally dilutive to Revenue per Active Rider for the quarter as there is less time to generate revenue. Revenue per Active Rider also benefited from revenues from licensing and data access agreements, beginning in the second quarter of 2021. 38 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Policies and Estimates Our condensed consolidated financial statements and the related notes thereto are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K, except as described below. Recent Accounting Pronouncements See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently issued accounting pronouncements not yet adopted as of the date of this report. Components of Results of Operations As noted above, we expect to see decreased levels of demand for our platform, decreased numbers of new rider activations, and negative impacts on revenue for so long as responsive measures to COVID-19 remain in place when compared to levels prior to the onset of the COVID-19 pandemic inMarch 2020 . We have adopted multiple measures in response to the COVID-19 pandemic. We cannot be certain that these actions will mitigate some or all of the negative effects of the pandemic on our business. In light of the evolving and unpredictable effects of COVID-19, we are not currently in a position to forecast the expected impact of COVID-19 on our financial and operating results for the remainder of 2021. Revenue Recognition Revenue consists of revenue recognized from fees paid by drivers for use of our Lyft Platform offerings, Concierge platform fees from organizations that use our Concierge offering, subscription fees paid by riders to access transportation options through the Lyft Platform, revenue from our vehicle service centers and revenue from licensing and data access agreements. Revenue derived from these offerings are recognized in accordance with ASC 606 as described in the Critical Accounting Policies and Estimates above and in Note 2 of the notes to our consolidated financial statements. Revenue also consists of rental revenues recognized through leases or subleases primarily from Flexdrive, Lyft Rentals, and our network of Light Vehicles, which includes revenue generated from single-use ride fees paid by riders of Light Vehicles. Revenue derived from these offerings are recognized in accordance with ASC 842 as described in the Critical Accounting Policies and Estimates above and in Note 2 of the notes to our consolidated financial statements. We offer various incentive programs to drivers that are recorded as reduction to revenue if we do not receive a distinct good or service in consideration or if we cannot reasonably estimate the fair value of goods or services received. Cost of Revenue Cost of revenue consists of costs directly related to revenue generating transactions through our multimodal platform which primarily includes insurance costs, payment processing charges, and other costs. Insurance costs consist of insurance generally required under TNC and city regulations for ridesharing and bike and scooter rentals and also includes occupational hazard insurance for drivers inCalifornia . Payment processing charges include merchant fees, chargebacks and failed charges. Other costs included in cost of revenue are hosting and platform-related technology costs, vehicle lease expenses, personnel-related compensation costs, depreciation, amortization of technology-related intangible assets, asset write-off charges, and remarketing gains and losses related to the sale of vehicles. Operations and Support Operations and support expenses primarily consist of personnel-related compensation costs of local operations teams and teams who provide phone, email and chat support to users, bike and scooter fleet operations support costs, driver background checks and onboarding costs, fees paid to third-parties providing operations support, facility costs and certain car rental fleet support costs. Bike and scooter fleet operations support costs include general repairs and maintenance, and other customer support activities related to repositioning bikes and scooters for rider convenience, cleaning and safety checks. Research and Development Research and development expenses primarily consist of personnel-related compensation costs and facilities costs. Such expenses include costs related to autonomous vehicle technology initiatives. Research and development costs are expensed as incurred. 39 -------------------------------------------------------------------------------- Table of Contents OnJuly 13, 2021 , we completed a transaction with Woven Planet, a subsidiary of Toyota Motor Corporation, for the divestiture of certain assets related to our self-driving vehicle division, Level 5, and as a result, certain costs related to our prior initiative to develop self-driving systems were eliminated beginning in the third quarter of 2021. Sales and Marketing Sales and marketing expenses primarily consist of rider incentives, personnel-related compensation costs, driver incentives for referring new drivers or riders, advertising expenses, rider refunds and marketing partnerships with third parties. Sales and marketing costs are expensed as incurred. General and Administrative General and administrative expenses primarily consist of personnel-related compensation costs, professional services fees, certain insurance costs that are generally not required under TNC regulations, certain loss contingency expenses including legal accruals and settlements, insurance claims administrative fees, policy spend, depreciation, facility costs and other corporate costs. General and administrative expenses are expensed as incurred. Interest Expense Interest expense consists primarily of interest incurred on our 2025 Notes, as well as the related amortization of deferred debt issuance costs and debt discount. Interest expense also includes interest incurred on our Non-Revolving Loan and our Master Vehicle Loan. Other Income (Expense), Net Other income (expense), net consists primarily of a pre-tax gain as a result of the transaction with Woven Planet, interest earned on our cash and cash equivalents, sublease income and restricted and unrestricted short-term investments. Provision for Income Taxes Our provision for income taxes consists primarily of income taxes in foreign jurisdictions andU.S. state income taxes. As we expand the scale of our international business activities, any changes in theU.S. and foreign taxation of such activities may increase our overall provision for income taxes in the future. We have a valuation allowance for ourU.S. deferred tax assets, including federal and state net operating loss carryforwards, or NOLs. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income inthe United States . Results of Operations The following table summarizes our historical condensed consolidated statements of operations data: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (in thousands) Revenue$ 864,405 $ 499,744 $ 2,238,390 $ 1,794,801 Costs and expenses Cost of revenue 364,032 261,614 1,122,961 1,055,388 Operations and support 109,679 123,136 292,375 355,528 Research and development 226,693 232,106 716,950 693,946 Sales and marketing 108,955 78,548 287,502 326,807 General and administrative 231,907 257,693 652,023 718,087 Total costs and expenses 1,041,266 953,097 3,071,811 3,149,756 Loss from operations (176,861) (453,353) (833,421) (1,354,955) Interest expense (13,093) (12,529) (38,510) (20,573) Other income, net 125,042 7,474 130,388 38,766 Loss before income taxes (64,912) (458,408) (741,543) (1,336,762) Provision for (benefit from) income taxes 6,627 1,109 9,253 (42,060) Net loss$ (71,539) $ (459,517) $ (750,796) $ (1,294,702) 40
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Table of Contents The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenue 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses
Cost of revenue 42.1 52.3 50.2 58.8
Operations and support 12.7 24.6 13.1 19.8
Research and development 26.2 46.4 32.0 38.7
Sales and marketing 12.6 15.7 12.8 18.2
General and administrative 26.8 51.6 29.1 40.0
Total costs and expenses 120.5 190.7 137.2 175.5
Loss from operations (20.5) (90.7) (37.2) (75.5)
Interest expense (1.5) (2.5) (1.7) (1.1)
Other income, net 14.5 1.5 5.8 2.2
Loss before income taxes (7.5) (91.7) (33.1) (74.5)
Provision for (benefit from) income taxes 0.8 0.2 0.4 (2.3)
Net loss (8.3) % (92.0) % (33.5) % (72.1) %
Comparison of the three and nine months ended September 30, 2021 to the three
and nine months ended September 30, 2020
Revenue
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
Revenue $ 864,405 $ 499,744 73 % $ 2,238,390 $ 1,794,801 25 %
Revenue increased $364.7 million , or 73%, in the three months ended
September 30, 2021 , as compared to the three months ended September 30, 2020 ,
driven primarily by the improvement in demand on our platform as pandemic
conditions improved compared to earlier stages of the COVID-19 pandemic which
had materially limited people's mobility and severely reduced Active Riders. The
number of Active Riders in the third quarter of 2021 increased 51.4%
year-over-year as compared to the third quarter of 2020. Revenue per Active
Rider increased 14.2% in the three months ended September 30, 2021 , as compared
to the three months ended September 30, 2020 . The increase in Revenue per Active
Rider was primarily due to increased demand as vaccines were more widely
distributed and more communities fully reopened, as well as elevated pricing as
rider demand outpaced driver supply. Revenue per Active Rider also benefited
from revenues from licensing and data access agreements, beginning in the second
quarter of 2021. We continued our investment in driver supply by increasing
driver incentives recorded as a reduction to revenue in light of the increased
rider demand as recovery from the pandemic continued.
Revenue increased $443.6 million , or 25%, in the nine months ended September 30,
2021 as compared to the nine months ended September 30, 2020 , driven primarily
by the significant increase in the number of Active Riders in the second and
third quarters of 2021 as compared to the same periods in 2020, as vaccines
became more widely distributed and more communities fully reopened. This was
offset by higher revenue from the first quarter of 2020 which was prior to the
implementation of shelter-in-place orders and other travel restrictions across
North America beginning in March 2020 . We invested in driver supply by
increasing driver incentives recorded as a reduction to revenue in light of the
increased rider demand as recovery from the pandemic continued.
We expect to see continued recovery in demand for our platform and the resulting
positive impacts on revenue as vaccines are more widely distributed, more
communities fully reopen and other restrictive travel and social distancing
measures in response to COVID-19 continue to be eased. However, we cannot
predict the impact of COVID variants and the longer term impact of the pandemic
on consumer behavior.
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Cost of Revenue
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
Cost of revenue $ 364,032 $ 261,614 39 % $ 1,122,961 $ 1,055,388 6 %
Cost of revenue increased $102.4 million , or 39%, in the three months ended
September 30, 2021 as compared to the three months ended September 30, 2020 . The
increase was due primarily to a $59.5 million increase in insurance costs, a
$27.0 million increase in transaction fees, and a $15.1 million increase in
bikes and scooter related costs driven by the increased ride volume as a result
of increased demand as recovery from the pandemic continued.
Cost of revenue increased $67.6 million , or 6%, in the nine months ended
September 30, 2021 as compared to the nine months ended September 30, 2020 . The
increase was due primarily to a $76.5 million increase in insurance costs driven
by an increase of $66.8 million in changes to the liabilities for insurance
required by regulatory agencies attributable to historical periods and a
$20.2 million increase in transaction costs related to the reinsurance of
certain legacy auto insurance liabilities in the second quarter of 2021 offset
by a $62.5 million decrease in transaction costs related to the transfer of
certain legacy auto insurance liabilities from the first quarter of 2020. In
addition, there was an increase of $24.4 million in transaction fees and
$9.8 million in bikes and scooter related costs driven by the increased ride
volume as a result of increased demand as recovery from the pandemic continued.
These increases were partially offset by a $37.5 million decrease in costs
related to Flexdrive and a $16.3 million decrease in web-hosting fees to support
our platform.
Operations and Support
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
Operations and support $ 109,679 $ 123,136 (11) % 292,375 $ 355,528 (18) %
Operations and support expenses decreased $13.5 million , or 11%, in the three
months ended September 30, 2021 as compared to the three months ended
September 30, 2020 . The decrease was primarily due to a $6.7 million decrease in
bikes and scooter related costs and a $2.8 million decrease in costs related to
Flexdrive.
Operations and support expenses decreased $63.2 million , or 18%, in the nine
months ended September 30, 2021 as compared to the nine months ended
September 30, 2020 . The decrease was primarily due to a reduction of
$19.8 million in driver onboarding costs and rider and driver support costs and
a reduction of $15.9 million decrease in personnel-related costs. There was also
an $11.3 million decrease in costs related to Flexdrive and a $6.5 million net
decrease related to costs from the restructuring event in the second quarter of
2020, consisting of severance and benefits costs, lease termination costs and a
stock-based compensation benefit which did not recur in 2021.
Research and Development
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
Research and development $ 226,693 $ 232,106 (2) % 716,950 $ 693,946 3 %
Research and development expenses decreased $5.4 million , or 2%, in the three
months ended September 30, 2021 as compared to the three months ended
September 30, 2020 . The decrease was primarily due to a $9.3 million in
personnel-related costs, which was partially driven by the transaction with
Woven Planet completed on July 13, 2021 . There were also decreases of
$5.4 million in consulting and advisory costs and a $3.8 million in web hosting
fees. These decreases were offset by a $15.3 million increase in stock-based
compensation primarily driven by awards related to the retention of Level 5
employees prior to completion of the transaction with Woven Planet in the third
quarter of 2021.
Research and development expenses increased $23.0 million , or 3%, in the nine
months ended September 30, 2021 as compared to the nine months ended
September 30, 2020 . The increase was due to a $43.9 million increase in
stock-based compensation, which was partially driven by awards related to the
retention of Level 5 employees prior to completion of the transaction with Woven
Planet in the third quarter of 2021. There was also an increase due to a
$25.4 million benefit from the restructuring event in the second quarter of 2020
consisting of a stock-based compensation benefit and severance and benefits
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costs. These increases were offset by a $23.8 million decrease in
personnel-related costs as a result of reduced headcount and a $14.1 million
decrease in consulting and advisory costs.
Sales and Marketing
Three Months Ended September
30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
Sales and marketing $ 108,955 $ 78,548 39 % $ 287,502 $ 326,807 (12) %
Sales and marketing expenses increased $30.4 million , or 39%, in the three
months ended September 30, 2021 as compared to the three months ended
September 30, 2020 . The increase was primarily in response to the increased ride
volume and demand as a result of continued pandemic recovery in the third
quarter of 2021 compared to the third quarter of 2020, which led to an increase
of $26.5 million in costs associated with driver and rider programs and an
increase of $5.8 million in costs related to incentive programs.
Sales and marketing expenses decreased $39.3 million , or 12%, in the nine months
ended September 30, 2021 as compared to the nine months ended September 30,
2020 . The decrease was primarily due to a $74.8 million decrease related to
incentive programs driven primarily by a reduction in rider incentives. The
decrease was partially offset by a $46.2 million increase in costs associated
with driver and rider programs.
General and Administrative
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
(in thousands, except for percentages)
General and administrative $ 231,907 $ 257,693 (10) % $ 652,023 $ 718,087 (9) %
General and administrative expenses decreased$25.8 million , or 10%, in the three months endedSeptember 30, 2021 as compared to the three months endedSeptember 30, 2020 . The decrease was due primarily to a$14.6 million net decrease in policy spend, a$12.7 million decrease in consultant and advisory costs, and a$10.3 million decrease in certain loss contingencies including legal accruals and settlements. These decreases were partially offset by an increase of$13.1 million in an accrual for self-retained general business liabilities and an increase of$10.0 million in stock-based compensation expense, which was partially driven by awards related to the retention of Level 5 employees prior to completion of the transaction with Woven Planet in the third quarter of 2021. General and administrative expenses decreased$66.1 million , or 9%, in the nine months endedSeptember 30, 2021 as compared to the nine months endedSeptember 30, 2020 . The overall decrease was due to a$35.6 million decrease in consultant and advisory costs, a$20.0 million decrease in bad debt expense and a$14.6 million net decrease in policy spend. There was also a reduction of$17.7 million in office-related costs, personnel-related costs, and other employee-related expenses primarily as a result of the restructuring events in 2020 and our temporary work from home option for many employees beginning in the middle ofMarch 2020 . In addition, there were reductions of$8.7 million in claims administration costs and$5.9 million in depreciation and amortization. These decreases were partially offset by a$19.7 million increase in stock-based compensation, a$17.1 million increase in an accrual for self-retained general business liabilities and a$15.6 million increase in certain loss contingencies including legal accruals and settlements. Interest Expense Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change (in thousands, except for percentages) Interest expense$ (13,093) $ (12,529) 5 %$ (38,510) $ (20,573) 87 % Interest expense increased$0.6 million , or 5%, and$17.9 million , or 87% in the three and nine months endedSeptember 30, 2021 as compared to the three and nine months endedSeptember 30, 2020 , respectively. Interest expense was higher in the nine months endedSeptember 30, 2021 due to a full period of expense related to the issuance of our 2025 Notes inMay 2020 and the vehicle-related debt assumed from the acquisition of Flexdrive inFebruary 2020 . 43 -------------------------------------------------------------------------------- Table of Contents Other Income (Expense), Net Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change (in thousands, except for percentages) Other income, net$ 125,042 $ 7,474 1,573 %$ 130,388 $ 38,766 236 % Other income (expense), net increased$117.6 million , or 1,573%, and$91.6 million , or 236% in the three and nine months endedSeptember 30, 2021 as compared to the three and nine months endedSeptember 30, 2020 , respectively. The increase was primarily due to a pre-tax gain of$119.3 million as a result of the transaction with Woven Planet. 44 -------------------------------------------------------------------------------- Table of Contents Non-GAAP Financial Measures Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 % Change 2021 2020 % Change (in millions, except for percentages) Contribution(1)$ 513.6 $ 248.8 106.4 %$ 1,302.7 $ 913.5 42.6 % Contribution Margin(1) 59.4 % 49.8 % 58.2 % 50.9 % Adjusted EBITDA(1) $ 67.3$ (239.7) 128.1 %$ 18.2 $ (605.2) 103.0 % Adjusted EBITDA Margin(1) 7.8 % (48.0) % 0.8 % (33.7) % _______________ (1)Contribution, Contribution Margin, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures and metrics. For more information regarding our use of these measures and a reconciliation of these measures to the most comparable GAAP measures, see "Reconciliation of Non-GAAP Financial Measures." Contribution and Contribution Margin Contribution and Contribution Margin are measures used by our management to understand and evaluate our operating performance and trends. We believe Contribution and Contribution Margin are key measures of our ability to achieve profitability and increase it over time. Contribution Margin has generally increased over the periods presented as revenue has increased at a faster rate than the costs included in the calculation of Contribution. We define Contribution as revenue less cost of revenue, adjusted to exclude the following items from cost of revenue: •amortization of intangible assets; •stock-based compensation expense; •payroll tax expense related to stock-based compensation; •changes to the liabilities for insurance required by regulatory agencies attributable to historical periods; •transaction costs related to certain legacy auto insurance liabilities, if any; and •restructuring charges, if any. For more information about cost of revenue, see the section titled "-Components of Results of Operations-Cost of Revenue." Contribution Margin is calculated by dividing Contribution for a period by revenue for the same period. We record changes to historical liabilities for insurance required by regulatory agencies for financial reporting purposes in the quarter of positive or adverse development even though such development may be related to claims that occurred in prior periods. For example, if in the first quarter of a given year, the cost of claims grew by$1 million for claims related to the prior fiscal year or earlier, the expense would be recorded for GAAP purposes within the first quarter instead of in the results of the prior period. We believe these prior period changes to insurance liabilities do not illustrate the current period performance of our ongoing operations since these prior period changes relate to claims that could potentially date back years. We have limited ability to influence the ultimate development of historical claims. Accordingly, including the prior period changes would not illustrate the performance of our ongoing operations or how the business is run or managed by us. For consistency, we do not adjust the calculation of Contribution for any prior period based on any positive or adverse development that occurs subsequent to the quarter end. Annual Contribution is calculated by adding Contribution of the last four quarters. We believe the adjustment to exclude the changes to historical liabilities for insurance required by regulatory agencies from Contribution and Adjusted EBITDA is useful to investors by enabling them to better assess our operating performance in the context of current period results. 45 -------------------------------------------------------------------------------- Table of Contents During the second quarter of 2021, we entered into a Quota Share Reinsurance Agreement for the reinsurance of legacy auto insurance liabilities betweenOctober 1, 2018 toOctober 1, 2020 , based on the reserves in place as ofMarch 31, 2021 . During the first quarter of 2020, we entered into a Novation Agreement for the transfer of certain legacy auto insurance liabilities betweenOctober 1, 2015 andSeptember 30, 2018 . Refer to Note 5 "Supplemental Financial Statement Information" to the condensed consolidated financial statements for information regarding these transactions. We believe the costs associated with these transactions related to certain legacy auto insurance liabilities do not illustrate the current period performance of our ongoing operations despite this transaction occurring in the current period because the impacted insurance liabilities relate to claims that date back years. We believe the adjustment to exclude these costs associated with transactions related to legacy insurance liabilities from Contribution and Adjusted EBITDA is useful to investors by enabling them to better assess our operating performance in the context of current period results and provide for better comparability with our historically disclosed Contribution and Adjusted EBITDA amounts. Losses ceded under the Reinsurance Agreement that exceed$346.5 million but are below the aggregate limit of$434.5 million may result in the recognition of a deferred gain liability. The deferred gain liability would be amortized and recognized as a benefit to the statement of operations over the settlement period of the ceded reserves. The settlement period of the ceded reserves will be based on the life-to-date cumulative losses collected and will likely extend over periods longer than a quarter. The amount of the deferral will be recalculated each period based on loss payments and updated estimates. Consequently, cumulative adverse development for claims ceded under the Reinsurance Agreement in subsequent periods may result in significant losses to the statement of operations unless the deferred gain recognized in the same period does not offset said losses. We believe that the net amount recognized on the statement of operations associated with claims ceded under the Reinsurance Agreement, including any adverse development and any benefit recognized for the related deferred gains, should be excluded to show the ultimate economic benefit of the Reinsurance Agreement. This adjustment will help investors understand the economic benefit of our Reinsurance Agreement on future trends in our operations, as they improve over the settlement period of any deferred gains. Additionally, net amounts recognized for claims ceded under the Reinsurance Agreement would represent changes to historical liabilities for insurance required by regulatory agencies. As stated above, we believe prior period changes to insurance liabilities do not illustrate the current period performance of our ongoing operations or how the business is managed. This is because we have limited ability to influence the ultimate development of these historical claims, which can potentially date back years. Therefore, in the event that the net amount of any adverse developments and any benefits from deferred gains related to claims ceded under the Reinsurance Agreement is recognized on the statement of operations in a subsequent period, those amounts will be excluded from the calculation of Contribution and Adjusted EBITDA through the exclusion of changes to liabilities for insurance required by regulatory agencies attributable to historical periods. As ofSeptember 30, 2021 , there have been no such net amounts related to claims ceded under the Reinsurance Agreement which have impacted our condensed consolidated statement of operations. We had restructuring efforts in the second and fourth quarters of 2020 to reduce operating expenses and adjust cash flows in light of the ongoing economic challenges resulting from the COVID-19 pandemic and its impact on our business. We believe the costs associated with the restructuring do not reflect current period performance of our ongoing operations. We believe the adjustment to exclude the costs related to restructuring from Contribution and Adjusted EBITDA is useful to investors by enabling them to better assess our operating performance in the context of current period results and provide for better comparability with our historically disclosed Contribution and Adjusted EBITDA amounts. For more information regarding the limitations of Contribution and Contribution Margin and a reconciliation of revenue to Contribution, see the section titled "-Reconciliation of Non-GAAP Financial Measures." Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA Margin are key performance measures that our management uses to assess our operating performance and the operating leverage in our business. Because Adjusted EBITDA and Adjusted EBITDA Margin facilitate internal comparisons of our historical operating performance on a more consistent basis, we use these measures for business planning purposes. We expect Adjusted EBITDA and Adjusted EBITDA Margin will increase over the long term as we continue to scale our business and achieve greater efficiencies in our operating expenses. We calculate Adjusted EBITDA as net loss, adjusted for: •interest expense; •other income (expense), net; •provision for (benefit from) income taxes; •depreciation and amortization; •stock-based compensation expense; •payroll tax expense related to stock-based compensation; 46 -------------------------------------------------------------------------------- Table of Contents •changes to the liabilities for insurance required by regulatory agencies attributable to historical periods; •sublease income; •costs related to acquisitions and divestitures, if any; •transaction costs related to certain legacy auto insurance liability, if any; and •restructuring charges, if any. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period. During the third quarter of 2021, we entered into subleases for certain offices as part of the transaction with Woven Planet. Sublease income is included within other income on our condensed consolidated statement of operations, while the related lease expense is included within our operating expenses and loss from operations. Sublease income was immaterial prior to the third quarter of 2021. We believe the adjustment to include sublease income to Adjusted EBITDA is useful to investors by enabling them to better assess our operating performance, including the benefits of recent transactions, by presenting sublease income as a contra-expense to the related lease charges within our operating expenses. For more information regarding the limitations of Adjusted EBITDA and Adjusted EBITDA Margin and a reconciliation of net loss to Adjusted EBITDA, see the section titled "-Reconciliation of Non-GAAP Financial Measures." Reconciliation of Non-GAAP Financial Measures We use Contribution, Contribution Margin, Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Furthermore, these measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations that are necessary to run our business. Thus, our Contribution, Contribution Margin, Adjusted EBITDA and Adjusted EBITDA Margin should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP. We compensate for these limitations by providing a reconciliation of Contribution and Adjusted EBITDA to the related GAAP financial measures, revenue and net loss, respectively. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Contribution, Contribution Margin, Adjusted EBITDA and Adjusted EBITDA Margin in conjunction with their respective related GAAP financial measures. The following table provides a reconciliation of revenue to Contribution (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ 864.4 $ 499.7$ 2,238.4 $ 1,794.8 Less cost of revenue (364.0) (261.6) (1,123.0) (1,055.4) Adjusted to exclude the following (as related to cost of revenue): Amortization of intangible assets 2.8 2.8 8.7 9.3 Stock-based compensation expense 10.2 7.0 28.8 21.2 Payroll tax expense related to stock-based compensation 0.2 0.2 1.6 1.2 Changes to the liabilities for insurance required by regulatory agencies attributable to historical periods(1) - 0.7 128.0 76.4 Transaction costs related to certain legacy auto insurance liabilities(2)(3) - - 20.2 62.5 Restructuring charges(4) - - - 3.5 Contribution $ 513.6 $ 248.8$ 1,302.7 $ 913.5 _______________ (1)$128.0 million of insurance expense recorded during the nine months endedSeptember 30, 2021 reflects changes to reserves estimates of claims from 2020 and earlier periods.$0.7 million and$76.4 million of insurance expense recorded during the three and nine months endedSeptember 30, 2020 reflects changes to reserves estimates of claims from the second quarter of 2020 and earlier periods. 47 -------------------------------------------------------------------------------- Table of Contents (2)In the second quarter of 2021, we entered into a Reinsurance Agreement under which a third party reinsured certain legacy auto insurance liabilities. The total impact of the transaction to reinsure certain legacy auto insurance liabilities on our condensed consolidated statement of operations was$20.4 million , with$20.2 million in cost of revenue and$0.2 million in general and administrative expense in the nine months endedSeptember 30, 2021 . (3)In the first quarter of 2020, we transferred certain legacy auto insurance liabilities. The total impact of the transfer of certain legacy auto insurance liabilities on our condensed consolidated statement of operations was$64.7 million , with$62.5 million in cost of revenue and$2.2 million in general and administrative expense in the nine months endedSeptember 30, 2020 . (4)Included in restructuring charges is$2.0 million of severance and other employee costs and$1.5 million of other restructuring charges. Restructuring-related charges for the stock-based compensation benefit of$4.2 million and payroll taxes related to stock-based compensation of$0.1 million are included on their respective line items. The following table provides a reconciliation of net loss to Adjusted EBITDA (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net loss$ (71.5) $
(459.5)
13.4 13.1 39.3 21.8
Other income, net(2) (125.0) (7.5) (130.4) (38.8)
Provision for (benefit from) income taxes 6.6 1.1 9.3 (42.1)
Depreciation and amortization 37.0 41.7 106.1 121.7
Stock-based compensation expense 198.4 166.7 563.7 432.5
Payroll tax expense related to stock-based
compensation 4.9 4.0 28.2 18.9
Changes to the liabilities for insurance required
by regulatory agencies attributable to historical
periods(3) - 0.7 128.0 76.4
Sublease income(4) 2.9 - 2.9 -
Costs related to acquisitions and divestitures(5) 0.6 - 1.5 0.4
Transaction costs related to certain legacy auto
insurance liabilities(6)(7) - - 20.4 64.7
Restructuring charges(8) - - - 34.0
Adjusted EBITDA $ 67.3 $ (239.7) $ 18.2 $ (605.2)
_______________
(1)Includes interest expense for Flexdrive vehicles and the 2025 Notes. $0.3
million and $0.9 million related to the interest component of vehicle-related
finance leases in the three and nine months ended September 30, 2021 ,
respectively. $0.6 million and $1.1 million was related to the interest
component of vehicle-related finance leases in the three and nine months ended
September 30, 2020 , respectively. Refer to Note 7 "Leases" to the condensed
consolidated financial statements for information regarding the interest
component of vehicle-related finance leases.
(2)Includes a $119.3 million pre-tax gain from the transaction with Woven Planet
in the third quarter of 2021 and interest income which was reported as a
separate line item on the condensed consolidated statement of operations in
periods prior to the second quarter of 2020.
(3)$128.0 million of insurance expense recorded during the nine months ended
September 30, 2021 reflects changes to reserves estimates of claims from 2020
and earlier periods. $0.7 million and $76.4 million of insurance expense
recorded during the three and nine months ended September 30, 2020 reflects
changes to reserves estimates of claims from the second quarter of 2020 and
earlier periods.
(4)Includes sublease income from subleases entered into as part of the
transaction with Woven Planet in the third quarter of 2021. Sublease income
prior to the third quarter of 2021 was immaterial. Refer to Note 4
"Divestitures" to the condensed consolidated financial statements for
information regarding our transaction with Woven Planet for the divestiture of
certain assets related to our self-driving vehicles division, Level 5,
(5)Includes third-party costs incurred related to our transaction with Woven
Planet which closed on July 13, 2021 .
(6)In the second quarter of 2021, we entered into a Reinsurance Agreement under
which a third party reinsured certain legacy auto insurance liabilities. The
total impact of the transaction to reinsure certain legacy auto insurance
liabilities on our condensed consolidated statement of operations was $20.4
million , with $20.2 million in cost of revenue and $0.2 million in general and
administrative expense in the nine months ended September 30, 2021 .
(7)In the first quarter of 2020, we transferred certain legacy auto insurance
liabilities. The total impact of the transfer of certain legacy auto insurance
liabilities on our condensed consolidated statement of operations was
$64.7 million , with $62.5 million in cost of revenue and $2.2 million in general
and administrative expense in the nine months ended September 30, 2020 .
(8)Included in restructuring charges is $31.4 million of severance and other
employee costs and $2.6 million related to lease termination and other
restructuring costs. Restructuring-related charges for the stock-based
compensation benefit of $49.8 million , payroll taxes related to stock-based
compensation of $0.7 million and accelerated depreciation of $0.5 million are
included on their respective line items.
Liquidity and Capital Resources
As of September 30, 2021 , our principal sources of liquidity were cash and cash
equivalents of approximately $728.4 million and short-term investments of
approximately $1.7 billion , exclusive of restricted cash, cash equivalents and
investments of $1.0 billion . Cash and cash equivalents consisted of
institutional money market funds, certificates of deposits, commercial paper and
corporate bonds that have an original maturity of less than three months and are
readily convertible into known
48
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Table of Contents
amounts of cash. Also included in cash and cash equivalents are certain money
market deposit accounts and cash in transit from payment processors for credit
and debit card transactions. Short-term investments consisted of commercial
paper, certificates of deposit, corporate bonds and term deposits, which mature
in 12 months or less. Restricted cash, cash equivalents and investments
consisted primarily of amounts held in separate trust accounts and restricted
bank accounts as collateral for insurance purposes and amounts pledged to secure
certain letters of credit.
We collect the fare and related charges from riders on behalf of drivers at the
time the ride is delivered using the rider's authorized payment method, and we
retain any fees owed to us before making the remaining disbursement to drivers.
Accordingly, we maintain no accounts receivable from drivers. Our contracts with
insurance providers require reinsurance premiums to be deposited into trust
accounts with a third-party financial institution from which the insurance
providers are reimbursed for claims payments. Our restricted reinsurance trust
investments as of September 30, 2021 and December 31, 2020 were $898.4 million
and $1.1 billion , respectively.
We continue to actively monitor the impact of the COVID-19 pandemic. Beginning
in March 2020 , the pandemic and responses thereto contributed to a severe
decrease in the number of rides on our platform and revenue which had a
significant effect on our cash flows from operations. While conditions have
improved, these impacts are ongoing. The extent to which our operations,
financial results and financial condition will be impacted in the next few
quarters by the pandemic will depend largely on future developments, which are
highly uncertain and cannot be accurately predicted, including the duration of
the pandemic, new information about additional variants, the availability and
efficacy of vaccine distributions, additional or renewed actions by government
authorities and private businesses to contain the pandemic or respond to its
impact and altered consumer behavior, among other things. We have adopted
several measures in response to the COVID-19 pandemic including, but not limited
to, establishing new health and safety requirements for ridesharing, and
updating workplace policies. We also made adjustments to our expenses and cash
flow to correlate with declines in revenues including the transaction with Woven
Planet completed on July 13, 2021 and headcount reductions in 2020. Refer to
Note 4 "Divestitures" to the condensed consolidated financial statements for
information regarding the divestiture of certain assets related to our
self-driving vehicles division, Level 5.
We cannot be certain that our actions will mitigate some or all of the
continuing negative effects of the pandemic on our business. With $2.4 billion
in unrestricted cash and cash equivalents and short-term investments as of
September 30, 2021 , we believe we have sufficient liquidity to meet our working
capital and capital expenditures needs for at least the next 12 months.
Our future capital requirements will depend on many factors, including, but not
limited to our growth, our ability to maintain profitability on an Adjusted
EBITDA basis, our ability to attract and retain drivers and riders on our
platform, the continuing market acceptance of our offerings, the timing and
extent of spending to support our efforts to develop our platform, actual
insurance payments for which we have made reserves, measures we take in response
to the COVID-19 pandemic, our ability to maintain demand for and confidence in
the safety of our platform during and following the COVID-19 pandemic, and the
expansion of sales and marketing activities. As noted above, we expect to see
continued suppression of demand for our platform and the resultant negative
impacts on revenue for so long as the travel restrictions and other social
distancing measures in response to COVID-19 remain in place. Further, we may in
the future enter into arrangements to acquire or invest in businesses, products,
services and technologies. From time to time, we may seek additional equity or
debt financing to fund capital expenditures, strategic initiatives or
investments and our ongoing operations, or to refinance our existing or future
indebtedness. In the event that we decide, or are required, to seek additional
financing from outside sources, we may not be able to raise it on terms
acceptable to us or at all. If we are unable to raise additional capital when
desired, our business, financial condition and results of operations could be
adversely affected.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in
thousands):
Nine Months Ended September 30,
2021 2020
Net cash used in operating activities $ (75,502) $ (1,114,286)
Net cash provided by investing activities 572,732 555,008
Net cash provided by (used in) financing activities (63,138) 536,021
Effect of foreign exchange on cash, cash equivalents and restricted cash and cash equivalents
(141) (286)
Net change in cash, cash equivalents and restricted cash and cash
equivalents $ 433,951 $ (23,543)
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Table of Contents Operating Activities Cash used in operating activities was$75.5 million for the nine months endedSeptember 30, 2021 . This consisted primarily of a net loss of$750.8 million and a$119.3 million pre-tax gain from the transaction with Woven Planet. This was offset by non-cash stock-based compensation expense of$563.7 million and depreciation and amortization expense of$106.1 million . Cash used in operating activities was$1.1 billion for the nine months endedSeptember 30, 2020 . This consisted primarily of a net loss of$1.3 billion and a decrease in the insurance reserve of$455.8 million primarily related to the transfer of certain legacy auto insurance liabilities in the first quarter of 2020. This was offset by non-cash stock-based compensation expense of$432.5 million . Investing Activities Cash provided by investing activities was$572.7 million for the nine months endedSeptember 30, 2021 , which primarily consisted of proceeds from sales and maturities of marketable securities of$2.8 billion , maturities of term deposits of$607.5 million and proceeds of$122.7 million from the transaction with Woven Planet. This was partially offset by purchases of marketable securities of$2.5 billion and term deposits of$441.5 million . Cash provided by investing activities was$555.0 million for the nine months endedSeptember 30, 2020 , which primarily consisted of proceeds from sales and maturities of marketable securities of$4.5 billion , partially offset by purchases of marketable securities of$3.4 billion and term deposits of$718.8 million . Financing Activities Cash used in financing activities was$63.1 million for the nine months endedSeptember 30, 2021 , which primarily consisted of our repayment of loans of$34.0 million , principal payments of finance lease obligations of$28.7 million and taxes paid related to net share settlement of equity awards of$21.9 million . This was partially offset by proceeds from the exercise of stock options and other common stock issuances of$21.4 million . Cash provided by financing activities was$536.0 million for the nine months endedSeptember 30, 2020 , which primarily consisted of proceeds from issuance of our 2025 Notes of$734.1 million offset by the purchase of the Capped Calls for$132.7 million . Contractual Obligations and Commitments As ofSeptember 30, 2021 , there have been no material changes from the contractual obligations and commitments previously disclosed in our Annual Report on Form 10-K. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
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