LYFT, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled "Selected Consolidated Financial and Other Data" and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses fiscal years 2021 and 2020 and year-to-year comparisons between 2021 and 2020. Discussions of fiscal year 2019 and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 . This 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 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.
Financial Results for the Year Ended
•Total revenue was
•Total costs and expenses were$4.3 billion , including stock-based compensation expense of$724.6 million and insurance costs related to changes to insurance reserves attributable to historical periods of$250.3 million .
•Loss from operations was
•Other income was
•Net loss was
•Adjusted EBITDA was
•Cash used in operating activities was
•Unrestricted cash and cash equivalents and short-term investments totaled
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 social distancing measures in many regions ofthe United States andCanada , and many enterprises have instituted and maintained work from home programs and limited the number of employees on site. Beginning in the middle ofMarch 2020 , the pandemic and these related responses 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 levels continue to be affected by the impact of variants and changes in case counts. 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. 56 -------------------------------------------------------------------------------- We have strengthened our business over the last year and we are confident in our ability to continue to navigate this challenging period. In 2021, we saw continued recovery as vaccines were more widely distributed and more communities fully reopened, which resulted in revenue increasing 36% in 2021 compared to the prior year, and the number of Active Riders increasing 49.2% in the fourth quarter of 2021 compared to the fourth quarter of 2020. Net loss decreased$743.5 million , or 42%, from$1.8 billion in 2020 to$1.0 billion in 2021, which included a benefit from a pre-tax gain of$119.3 million from the transaction with Woven Planet. Adjusted EBITDA in 2021 was$92.9 million , marking our first annual Adjusted EBITDA profitability. We remain focused on our long-term growth opportunities. With$2.3 billion in unrestricted cash and cash equivalents and short-term investments as ofDecember 31, 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, see the section titled "Risk Factors" in Item 1A of Part I. Recent Developments
Transaction with
OnJuly 13, 2021 , we completed a multi-element 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 rideshare 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 consolidated statement of operations for the quarter endedSeptember 30, 2021 . Refer to Note 4 "Divestitures" to the consolidated financial statements for information regarding the divestiture of certain assets related to our self-driving vehicles division, Level 5.
Reinsurance of
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 Transaction"). 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 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.
Active Riders and Revenue per Active Rider
The COVID-19 pandemic caused a significant decrease in Active Riders and in revenue per Active Rider beginningMarch 2020 . Though we experienced a recovery in revenue per Active Rider and the number of Active Riders in 2021, the number of Active Rider levels have not reached levels we experienced prior to the onset of the pandemic inMarch 2020 . The number of Active Riders is a key indicator of the scale of our community and awareness of our brand. Revenue per Active Rider represents our ability to drive usage and monetization of our platform. Active Riders 2021 2020 2019 2020 to 2021 % Change 2019 to 2020 % Change (in
thousands, except for dollar amounts and percentages)
Three Months Ended
13,494 21,211 20,503 (36.4)% 3.5%
Three Months Ended June 30 17,142 8,688 21,807 97.3% (60.2)%
Three Months Ended September 30 18,942 12,513 22,314 51.4% (43.9)%
Three Months Ended December 31 18,728 12,552 22,905 49.2% (45.2)%
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Revenue per Active Rider
2021 2020 2019 2020 to 2021 % Change 2019 to 2020 % Change
Three Months Ended March 31 $45.13 $45.06 $37.86 0.2% 19.0%
Three Months Ended June 30 $44.63 $39.06 $39.77 14.3% (1.8)%
Three Months Ended September 30 $45.63 $39.94 $42.82 14.2% (6.7)%
Three Months Ended December 31 $51.79 $45.40 $44.40 14.1% 2.3%
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.
With the exception of the three months ended March 31, 2021 as compared to the
three months ended March 31, 2020 , Active Riders in each of the three month
periods ended June 30 , September 30 , and December 31, 2021 increased compared to
the same period in 2020 as vaccines were more widely distributed and more
communities fully reopened. Active Riders in the three months periods ended June
30 , September 30 , and December 31, 2020 represented significantly lower Active
Rider counts since shelter-in-place orders and other travel restrictions were
first implemented across North America in response to the COVID-19 pandemic in
March 2020 . The slight decrease in the number of Active Riders in the three
months ended December 31, 2021 as compared to the three months ended September
30, 2021 was due primarily to the increasing COVID-19 case counts from COVID-19
variants and their impact on demand as well as the seasonality we typically
experience in the winter months.
Revenue per Active Rider increased in each of the three months periods ended
March 31 , June 30 , September 30 , and December 31, 2021 as compared to the same
periods in 2020, primarily reflecting 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 high in the three months ended December 31, 2021 ,
increasing compared to the three months ended September 30, 2021 . This was
driven by an increase in ride frequency as well as a shift toward higher revenue
rides such as airport rides, reflecting the increased travel experienced in the
fourth quarter in 2021 nationwide. Revenue per Active Rider also benefited from
revenues from licensing and data access agreements, beginning in the second
quarter of 2021.
Critical Accounting Policies and Estimates
Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of 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. We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For further information, see Note 2 of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition
Revenues from Contracts with Customers (ASC 606)
We generate substantially all our revenue from our ridesharing marketplace that
connects drivers and riders. We recognize revenue from fees paid by drivers for
use of our Lyft Platform offerings in accordance with ASC 606 as described in
Note 2 of the notes to our consolidated financial statements. Drivers enter into
terms of service ("ToS") with us in order to use our Lyft Driver App.
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We provide a service to drivers to complete a successful transportation service
for riders. This service includes on-demand lead generation that assists drivers
to find, receive and fulfill on-demand requests from riders seeking
transportation services and related collection activities using our Lyft
Platform. As a result, our single performance obligation in the transaction is
to connect drivers with riders to facilitate the completion of a successful
transportation service for riders.
We evaluate the presentation of revenue on a gross versus net basis based on
whether we act as a principal by controlling the transportation service provided
to the rider or whether we act as an agent by arranging for third parties to
provide the service to the rider. We facilitate the provision of a
transportation service by a driver to a rider (the driver's customer) in order
for the driver to fulfill their contractual promise to the rider. The driver
fulfills their promise to provide a transportation service to their customer
through use of the Lyft Platform. While we facilitate setting the price for
transportation services, the drivers and riders have the discretion in accepting
the transaction price through the platform. We do not control the transportation
services being provided to the rider nor do we have inventory risk related to
the transportation services. As a result, we act as an agent in facilitating the
ability for a driver to provide a transportation service to a rider.
We report revenue on a net basis, reflecting the service fees and commissions
owed to us from the drivers as revenue, and not the gross amount collected from
the rider. We made this determination of not being primarily responsible for the
services since we do not promise the transportation services, do not contract
with drivers to provide transportation services on our behalf, do not control
whether the driver accepts or declines the transportation request via the Lyft
Platform, and do not control the provision of transportation services by drivers
to riders at any point in time either before, during, or after, the trip.
We consider the ToS and our customary business practices in identifying the
contracts under ASC 606. As our customary business practice, a contract exists
between the driver and us when the driver's ability to cancel the trip lapses,
which typically is upon pickup of the rider. We collect the fare and related
charges from riders on behalf of drivers using the rider's pre-authorized credit
card or other payment mechanism and retain any fees owed to us before making the
remaining disbursement to drivers; thus the driver's ability and intent to pay
is not subject to significant judgment.
We earn service fees and commissions from the drivers either as the difference
between an amount paid by a rider based on an upfront quoted fare and the amount
earned by a driver based on actual time and distance for the trip or as a fixed
percentage of the fare charged to the rider. In an upfront quoted fare
arrangement, as we do not control the driver's actions at any point in the
transaction to limit the time and distance for the trip, we take on risks
related to the driver's actions which may not be fully mitigated. We earn a
variable amount from the drivers and may record a loss from a transaction, which
is recorded as a reduction to revenue, in instances where an up-front quoted
fare offered to a rider is less than the amount we are committed to pay the
driver.
We recognize revenue upon completion of a ride as the single performance obligation is satisfied and we have the right to receive payment for the services rendered upon the completion of the ride.
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. In some cases, we also earn Concierge platform fees from organizations that use our Concierge offering, which is a product that allows organizations to request rides for their customers and employees through our ridesharing marketplace. Concierge platform fees are earned as a fixed dollar amount per ride or a percentage of the ride price depending on the contract and such Concierge platform fee revenue is recognized on a gross basis.
We recognize revenue from subscription fees paid by users to access transportation options through the Lyft Platform and mobile-based applications over the applicable subscription period.
We generate revenue from licensing and data access agreements. We are primarily
responsible for fulfilling our promise to provide rideshare data and access to
Flexdrive vehicles and bear the fulfillment risk, and the responsibility of
providing the data, over the license period. We act as a principal in delivering
the data and access licenses and present revenue on a gross basis. Consideration
allocated to each performance obligation, the data delivery and vehicle access,
are determined by assigning the relative fair value to each of the performance
obligations. Revenue is recorded upon delivery of the rideshare data and ratably
over the quarter for access to fleet vehicles as our respective performance
obligation is satisfied upon the delivery of each. Refer to Note 4
"Divestitures" to the consolidated financial statements for information
regarding the divestiture of certain assets related to our self-driving vehicles
division, Level 5.
Rental Revenue (ASC 842)
We generate rental revenues primarily from Flexdrive, our network of Light
Vehicles, and Lyft Rentals. Under the Flexdrive and Lyft Rentals programs, we
operate a fleet of rental vehicles comprised of both vehicles owned by us and
vehicles leased from third-party leasing companies. We either lease or sublease
vehicles to drivers and Lyft Rentals renters, as a result, we are considered the
accounting lessor or sublessor, as applicable, in these arrangements in
accordance with ASC 842. For vehicles that are subleased, sublease income and
head lease expense for these transactions are recognized on a gross basis on the
consolidated financial statements. Drivers who rent vehicles are charged rental
fees, which we collect from the driver by deducting such amounts from the
driver's earnings on the Lyft Platform.
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Revenue generated from single-use ride fees paid by Light Vehicles riders are
recognized upon completion of each related ride. Revenue generated from
Flexdrive and Lyft Rentals is recognized evenly over the rental period, which is
typically seven days or less. Due to the short-term nature of the Flexdrive,
Lyft Rentals, and Light Vehicle transactions, we classify these rentals as
operating leases.
Insurance Reserves
We utilize both a wholly-owned captive insurance subsidiary and third-party insurance, which may include deductibles and self-insured retentions, to insure or reinsure costs including auto liability, uninsured and underinsured motorist, auto physical damage, first party injury coverages including personal injury protection under state law and general business liabilities up to certain limits. The recorded liabilities reflect the estimated cost for claims incurred but not paid and claims that have been incurred but not yet reported and any estimable administrative run-out expenses related to the processing of these outstanding claim payments. Liabilities are determined on a quarterly basis by internal actuaries through an analysis of historical trends, changes in claims experience including consideration of new information and application of loss development factors among other inputs and assumptions. On an annual basis, an independent third-party actuary will evaluate the liabilities for appropriateness with claims reserve valuations. Insurance claims may take years to completely settle, and we have limited historical loss experience. Because of the limited operational history, we make certain assumptions based on currently available information and industry statistics, with the loss development factors as one of the most significant assumptions, and utilize actuarial models and techniques to estimate the reserves. A number of factors can affect the actual cost of a claim, including the length of time the claim remains open, economic and healthcare cost trends and the results of related litigation. Furthermore, claims may emerge in future years for events that occurred in a prior year at a rate that differs from previous actuarial projections. The impact of these factors on ultimate costs for insurance is difficult to estimate and could be material. However, while we believe that the insurance reserve amount is adequate, the ultimate liability may be in excess of, or less than, the amount provided. As a result, the net amounts that will ultimately be paid to settle the liability and when amounts will be paid may significantly vary from the estimated amounts provided for in the consolidated balance sheets. We continue to review our insurance reserve estimates in a regular, ongoing process as historical experience develops, additional claims are reported as settled, and the legal, regulatory and economic environment evolves.
Stock-Based Compensation
We incur stock-based compensation expense primarily from RSUs, performance based
stock units ("PSUs"), stock options and stock purchase rights granted under our
Employee Stock Purchase Plan ("ESPP").
We estimate the fair value of stock options granted to employees, directors and
consultants and ESPP purchase rights using the Black-Scholes option-pricing
model. The fair value of stock options that are expected to vest is recognized
as compensation expense on a straight-line basis over the requisite service
period. We recognize compensation expense related to the ESPP purchase rights on
a straight-line basis over the offering period, which is typically 12 months.
The fair value of RSUs and PSUs are estimated based on the fair market value of
our common stock on the date of grant, which subsequent to our IPO is determined
based on the closing price of our Class A common stock as reported on the date
of grant. Prior to our IPO, we granted RSUs which vest upon the satisfaction of
both a service condition and a performance condition.
Compensation expense for RSUs with service and performance conditions is
amortized on a graded basis over the requisite service period as long as the
performance condition in the form of a specified liquidity event is probable to
occur. The liquidity event condition was satisfied upon the effectiveness of our
IPO Registration Statement on March 28, 2019 . On that date we recorded a
cumulative stock-based compensation expense of $857.2 million using the
accelerated attribution method for the RSUs for which the service condition was
satisfied as of March 28, 2019 . The remaining unrecognized stock-based
compensation expense related to these RSUs is recorded over their remaining
requisite service periods. The compensation expense for RSUs granted after March
28, 2019 , which vest upon satisfaction of a service-based condition only, is
recognized on a straight-line basis over the requisite service period. As of
December 31, 2021 , the total unrecognized compensation cost related to RSUs was
$587.5 million , which we expect to recognize over the remaining weighted-average
period of approximately 1.7 years.
Business Combinations
We account for our business combinations using the acquisition method of
accounting, which requires, among other things, allocation of the fair value of
purchase consideration to the tangible and intangible assets acquired and
liabilities assumed at their estimated fair values on the acquisition date. The
excess of the fair value of purchase consideration over the values of these
identifiable assets and liabilities is recorded as goodwill. When determining
the fair value of assets acquired and liabilities assumed, we make significant
estimates and assumptions, especially with respect to intangible assets. Our
estimates of fair value are based upon assumptions believed to be reasonable,
but which are inherently uncertain and unpredictable and, as a result, actual
results may differ from estimates. During the measurement period, not to exceed
one year from the date of acquisition, we may record adjustments to the assets
acquired and liabilities assumed, with a corresponding offset to goodwill if new
information is obtained related to facts and
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circumstances that existed as of the acquisition date. After the measurement
period, any subsequent adjustments are reflected on the consolidated statements
of operations. Acquisition costs, such as legal and consulting fees, are
expensed as incurred.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisition of entities accounted for using the purchase method of accounting are estimated by us based on the fair value of assets received. Intangible assets are amortized on a straight-line basis over the estimated useful lives which range from two to twelve years.Goodwill is not subject to amortization, but is tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of the goodwill may not be recoverable. As part of the annual goodwill impairment test, we first perform a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of its qualitative assessment, it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amounts, the quantitative impairment test will be required. There was no impairment of goodwill recorded for the years endedDecember 31, 2021 , 2020 and 2019.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K 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 in future periods.
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
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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.
On July 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 our
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The following table summarizes our historical consolidated statements of
operations data:
Year Ended December 31,
2021 2020 2019
(in thousands)
Revenue $ 3,208,323 $ 2,364,681 $ 3,615,960
Costs and expenses
Cost of revenue 1,649,532 1,447,516 2,176,469
Operations and support 402,233 453,963 636,116
Research and development 911,946 909,126 1,505,640
Sales and marketing 411,406 416,331 814,122
General and administrative 915,638 946,127 1,186,093
Total costs and expenses 4,290,755 4,173,063 6,318,440
Loss from operations (1,082,432) (1,808,382) (2,702,480)
Interest expense (51,635) (32,678) -
Other income, net 135,933 43,669 102,595
Loss before income taxes (998,134) (1,797,391) (2,599,885)
Provision for (benefit from) income taxes 11,225 (44,534) 2,356
Net loss $ (1,009,359) $ (1,752,857) $ (2,602,241) The following table sets forth the components of our consolidated statements of operations data as a percentage of revenue:
Year Ended December 31,
2021 2020 2019
Revenue 100.0 % 100.0 % 100.0 %
Costs and expenses
Cost of revenue 51.4 61.2 60.2
Operations and support 12.5 19.2 17.6
Research and development 28.4 38.4 41.6
Sales and marketing 12.8 17.6 22.5
General and administrative 28.5 40.0 32.8
Total costs and expenses 133.7 176.5 174.7
Loss from operations (33.7) (76.5) (74.7)
Interest expense (1.6) (1.4) -
Other income, net 4.2 1.8 2.8
Loss before income taxes (31.1) (76.0) (71.9)
Provision for (benefit from) income taxes 0.3 (1.9) 0.1
Net loss (31.5) % (74.1) % (72.0) %
Comparison of Years Ended
Revenue
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Revenue $ 3,208,323 $ 2,364,681 $ 3,615,960 36 % (35) %
Revenue increased $843.6 million , or 36%, in 2021 as compared to the prior year,
driven primarily by the significant increase in the number of Active Riders in
2021 as compared to the prior year, as vaccines became more widely distributed
and more communities reopened. Revenue in 2021 also benefited from revenues from
licensing and data access agreements, beginning in the
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second quarter of 2021. These increases were offset by investments in driver
supply by increasing driver incentives recorded as a reduction to revenue by
$942.9 million in 2021 as compared to the prior year as rider demand outpaced
driver supply during certain periods of the pandemic recovery in 2021. Revenue
in 2020 was also higher in the first quarter of 2020 prior to the implementation
of shelter-in-place orders and other travel restrictions across North America
beginning March 2020 .
We expect to see continued recovery in demand for our platform and the resulting
positive impacts on revenue as there are more widespread immunity levels, more
communities reopen and other restrictive travel and social distancing measures
in response to COVID-19 are eased. However, we cannot predict the impact of
COVID variants and the longer term impact of the pandemic on consumer behavior.
Cost of Revenue
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Cost of revenue $ 1,649,532 $ 1,447,516 $ 2,176,469 14 % (33) %
Cost of revenue increased $202.0 million , or 14%, in 2021 as compared to the
prior year. The increase was due primarily to an increase of $160.6 million in
insurance costs driven by increased rider demand. Insurance costs were also
impacted by (i) an increase of $46.2 million attributable to changes in
estimates to the liabilities for insurance required by regulatory agencies, (ii)
a $20.2 million increase in transaction costs related to the reinsurance of
certain legacy auto insurance liabilities in the second quarter of 2021, and
(iii) 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 $48.4 million in transaction fees and
$14.9 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 $31.4 million decrease in costs
related to Flexdrive and a $13.4 million decrease in web-hosting fees to support
our platform.
Operations and Support
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Operations and support $ 402,233 $ 453,963 $ 636,116 (11) % (29) %
Operations and support expenses decreased $51.7 million , or 11%, in 2021 as
compared to the prior year. The decrease was primarily due to a reduction of
$18.3 million in driver onboarding costs and rider and driver support costs and
a reduction of $14.7 million in personnel-related costs. There was also a
$13.1 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
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Research and development $ 911,946 $ 909,126 $ 1,505,640 - % (40) %
Research and development expenses increased $2.8 million in 2021. The slight
increase was due to a $51.6 million increase in stock-based compensation and 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
costs which did not recur in 2021. These increases were offset by a
$37.5 million decrease in personnel-related costs and a $4.6 million decrease in
autonomous vehicle research costs which were
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impacted by our transaction with Woven Planet in the third quarter of 2021.
There were also decreases of
Sales and Marketing
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Sales and marketing $ 411,406 $ 416,331 $ 814,122 (1) % (49) %
Sales and marketing expenses decreased $4.9 million , or 1%, in 2021 as compared
to the prior year. The decrease was primarily due to a $70.3 million decrease
related to incentive programs driven by a reduction in rider incentives, a
$11.0 million decrease in brand and other marketing, $7.1 million in rider
reward payments related to our marketing partnerships and a $6.6 million
decrease in personnel-related cost. These decreases were partially offset by a
$78.3 million increase in costs associated with driver and rider programs and a
$14.9 million increase in stock-based compensation.
General and Administrative
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
General and administrative $ 915,638 $ 946,127 $ 1,186,093 (3) % (20) %
General and administrative expenses decreased $30.5 million , or 3%, in 2021 as
compared to the prior year. The decrease was due to a $28.7 million decrease in
consultant and advisory costs, a $17.7 million decrease in bad debt expense, a
$12.8 million decrease in claims administration costs and a $8.7 million
decrease in depreciation and amortization. There was also an $18.9 million
decrease 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 remote work option for many employees beginning in the
middle of March 2020 . These decreases were partially offset by a $32.2 million
increase in stock-based compensation, a $28.1 million increase in an accrual for
self-retained general business liabilities and a $16.5 million increase in
certain loss contingencies including legal accruals and settlements. We also
continued to our contributions toward policy, which saw an increase of
$2.3 million in 2021 as compared to the prior year.
Interest Expense
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Interest expense $ (51,635) $ (32,678) $ - 58 % - %
Interest expense increased $19.0 million , or 58%, in 2021 as compared to the
prior year. Interest expense was higher in 2021 due to a full period of expense
related to the issuance of our 2025 Notes in May 2020 and the vehicle-related
debt assumed from the acquisition of Flexdrive in February 2020 .
Other Income (Expense), Net
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in thousands, except for percentages)
Other income, net $ 135,933 $ 43,669 $ 102,595 211 % (57) %
Other income, net increased $92.3 million , or 211%, in 2021 as compared to the
prior year. The increase was primarily due to a pre-tax gain of $119.3 million
as a result of the transaction with Woven Planet. This was offset by a decrease
of $34.6 million in interest income driven by a decline in interest rates and
the yield on debt securities and a decrease in our cash equivalents and
short-term investments balance.
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Non-GAAP Financial Measures
Year Ended December 31, 2020 to 2021 % 2019 to 2020 %
2021 2020 2019 Change Change
(in millions, except for percentages)
Contribution (1) $ 1,881.6 $ 1,229.5 $ 1,812.5 53.0 % (32.2) %
Contribution Margin 58.6 % 52.0 % 50.1 %
Adjusted EBITDA (1) $ 92.9 $ (755.2) $ (678.9) 112.3 % (11.2) %
Adjusted EBITDA Margin 2.9 % (31.9) % (18.8) %
_______________
(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 changes to the 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. 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 6 "Supplemental Financial Statement Information" to the 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. 66 -------------------------------------------------------------------------------- Losses ceded under the Reinsurance Agreement that exceed the combined funds withheld liability balance and collateralized amount established byDARAG for the benefit of PVIC, which was$346.5 million at the execution of the Reinsurance Agreement, but are below the aggregate limit of$434.5 million may result in the recognition of a deferred gain liability. When the amount and timing of the reinsurance recoveries are uncertain, the recovery method should be used. The deferred gain liability would be amortized and recognized as a benefit to the statement of operations over the estimated remaining 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 amortization recognized in the same period to 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 related 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 ofDecember 31, 2021 , there have been no such net amounts related to claims ceded under the Reinsurance Agreement which have impacted our 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;
•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.
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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 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".
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--------------------------------------------------------------------------------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 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):
Year Ended December 31,
2021 2020 2019
(in millions)
Revenue $ 3,208.3 $ 2,364.7 $ 3,616.0
Less: cost of revenue (1,649.5) (1,447.5) (2,176.5)
Adjusted to exclude the following (as related to cost of
revenue):
Amortization of intangible assets 11.0 12.0 19.5
Stock-based compensation 39.5 28.7 81.4
Payroll tax expense related to stock-based compensation 1.8 1.5 1.8
Changes to the liabilities for insurance required by regulatory agencies attributable to historical periods(1) 250.3
204.1 270.3
Transaction costs related to certain legacy auto insurance
liabilities(2)(3) 20.2 62.5 -
Restructuring charges(4) - 3.5 -
Contribution $ 1,881.6 $ 1,229.5 $ 1,812.5 _______________
(1)$250.3 million of insurance expense recorded during the year endedDecember 31, 2021 reflects changes to reserves estimates of claims from the third quarter of 2021 and earlier periods.$204.1 million of insurance expense recorded during the year endedDecember 31, 2020 reflects changes to reserves estimates of claims from the third quarter of 2020 and earlier periods.$270.3 million of insurance expense recorded during the year endedDecember 31, 2019 reflects changes to reserves estimates of claims from the third quarter of 2019 and earlier periods. (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 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 year endedDecember 31, 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 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 year ended 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$0.1 million are included on their respective line items. 69 -------------------------------------------------------------------------------- The following table provides a reconciliation of net loss to Adjusted EBITDA (in millions): Year Ended December 31, 2021 2020 2019 (in millions) Net loss$ (1,009.4) $ (1,752.9) $ (2,602.2) Adjusted to exclude the following: Interest expense(1) 52.8 34.3 - Other income, net(2) (135.9) (43.7) (102.6) Provision for (benefit from) income taxes 11.2 (44.5) 2.3 Depreciation and amortization 139.3 157.4 108.3 Stock-based compensation 724.6 565.8 1,599.3
Payroll tax expense related to stock-based compensation 31.5
23.7 44.7
Changes to the liabilities for insurance required by regulatory agencies attributable to historical periods(3) 250.3
204.1 270.3
Sublease income(4) 6.6 - -
Costs related to acquisitions and divestitures(5) 1.5 0.4 1.0
Transaction costs related to certain legacy auto
insurance liabilities(6)(7) 20.4 64.7 -
Restructuring charges(8) - 35.5 -
Adjusted EBITDA $ 92.9 $ (755.2) $ (678.9) _______________
(1)Includes interest expense for Flexdrive vehicles and the 2025 Notes.$1.1 million and$1.6 million related to the interest component of vehicle related finance leases in the year endedDecember 31, 2021 and 2020. Refer to Note 8 "Leases" to the 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 consolidated statement of operations in periods prior to the second quarter of 2020. (3)$250.3 million of insurance expense recorded during the year endedDecember 31, 2021 reflects changes to reserves estimates of claims from the third quarter of 2021 and earlier periods.$204.1 million of insurance expense recorded during the year endedDecember 31, 2020 reflects changes to reserves estimates of claims from the third quarter of 2020 and earlier periods.$270.3 million of insurance expense recorded during the year endedDecember 31, 2019 reflects changes to reserves estimates of claims from the third quarter of 2019 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 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 onJuly 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 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 year endedDecember 31, 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 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 year endedDecember 31, 2021 . (8)Included in restructuring charges is$32.9 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$50.0 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. 70 --------------------------------------------------------------------------------
Cash Flows
The following table summarizes our cash flows for the periods indicated (in
thousands):
Year Ended December 31,
2021 2020
(in thousands)
Net cash used in operating activities $ (101,721) $ (1,378,899)
Net cash provided by (used in) investing activities 267,012 740,427
Net cash provided by (used in) financing activities (72,470) 512,566
Effect of foreign exchange on cash, cash equivalents and restricted cash and cash equivalents
(113) (74)
Net change in cash, cash equivalents and restricted cash and cash
equivalents $ 92,708 $ (125,980)
Operating Activities
Cash used in operating activities was $101.7 million for the year ended
December 31, 2021 . This consisted primarily of a net loss of $1.0 billion 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 $724.6 million and
depreciation and amortization expense of $139.3 million .
Cash used in operating activities was $1.4 billion for the year ended
December 31, 2020 . This consisted primarily of a net loss of $1.8 billion and a
decrease in the insurance reserve of $391.4 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 $565.8
million and depreciation and amortization expense of $157.4 million .
Investing Activities
Cash provided by investing activities was
Cash provided by investing activities was
Financing Activities
Cash used in financing activities was
Cash provided by financing activities was
Liquidity and Capital Resources
As ofDecember 31, 2021 , our principal sources of liquidity were cash and cash equivalents of approximately$457.3 million and short-term investments of approximately$1.8 billion , exclusive of restricted cash, cash equivalents and investments of$1.1 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 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 ofDecember 31, 2021 and 2020 were$1.0 billion and$1.1 billion , respectively.
We continue to actively monitor the impact of the COVID-19 pandemic. Beginning
in
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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 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 $2.3 billion
in unrestricted cash and cash equivalents and short-term investments as of
December 31, 2021 , we believe we have sufficient liquidity to meet our working
capital and capital expenditures needs for the next 12 months and beyond.
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. For example, we intend to significantly invest
further into EVs in order to achieve compliance with the California Clean Miles
Standard and Incentive Program which sets the target that 90% of rideshare miles
in California must be in EVs by the end of 2030. Our investment also allows us
to make steps toward our commitment to reach 100% EVs on the Lyft Platform by
the end of 2030. 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.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations and commitments as of
Payments Due by Period(1)
12 months or
Total less Thereafter
Operating lease commitments $ 317.8 $ 67.6 $ 250.2
Financing lease commitments 28.7 14.0 14.7
Long-term debt, including current maturities 711.5 56.3 655.2
Other noncancelable agreements 120.3 46.8 73.5
_______________
(1)The table excludes insurance reserves due to uncertainties in the timing of settlement of these reserves.
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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