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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________
FORM 10-Q
_________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                
Commission File Number: 001-38846
_________________________________________________________________
Lyft, Inc.
(Exact name of registrant as specified in its charter)
_________________________________________________________________
Delaware20-8809830
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
185 Berry Street, Suite 5000
San Francisco, California 94107
(Address of registrant’s principal executive offices, including zip code)
(844) 250-2773
(Registrant’s telephone number, including area code)
_________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value of $0.00001 per shareLYFTNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  
As of May 9, 2022, the number of shares of the registrant’s Class A common stock outstanding was 339,379,514 and the number of shares of the registrant’s Class B common stock outstanding was 8,602,629.

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NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include statements about:
our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, capital expenditures, our ability to determine insurance, legal and other reserves and our ability to achieve and maintain future profitability;
the sufficiency of our cash, cash equivalents and short-term investments to meet our liquidity needs;
the impact of the COVID-19 pandemic and related responses of businesses and governments to the pandemic on our operations and personnel, on commercial activity and demand across our platform, on our business and results of operations, and on our ability to forecast our financial and operating results;
the demand for our platform or for Transportation-as-a-Service networks in general;
our ability to attract and retain drivers and riders;
our ability to develop new offerings and bring them to market in a timely manner and make enhancements to our platform;
our ability to compete with existing and new competitors in existing and new markets and offerings;
our expectations regarding outstanding and potential litigation, including with respect to the classification of drivers on our platform;
our expectations regarding the effects of existing and developing laws and regulations, including with respect to the classification of drivers on our platform, taxation, privacy and data protection;
our ability to manage and insure risks associated with our Transportation-as-a-Service network, including auto-related and operations-related risks, and our expectations regarding estimated insurance reserves;
our expectations regarding new and evolving markets and our efforts to address these markets, including Lyft Autonomous, bikes and scooters, Lyft Auto Care, Driver Centers and Lyft Mobile Services, Flexdrive, Express Drive, and Lyft Rentals;
our ability to develop and protect our brand;
our ability to maintain the security and availability of our platform;
our expectations and management of future growth and business operations;
our expectations regarding macroeconomic events;
our expectations concerning relationships with third-parties;
our ability to maintain, protect and enhance our intellectual property;
our ability to service our existing debt;
our ability to successfully acquire and integrate companies and assets;
our ability to identify, attract, motivate and retain qualified personnel, especially in light of hyper-competitive compensation environment
the restatement of our financial statements in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021 and the impact of such restatement on our future financial statements and other financial measures; and
the material weakness we identified in our internal control over financial reporting, our efforts to remediate such material weakness and the timing of remediation.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
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You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Lyft, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share data)
(unaudited)
March 31, 2022December 31, 2021
Assets
Current assets
Cash and cash equivalents$214,868 $457,325 
Short-term investments2,021,663 1,796,533 
Prepaid expenses and other current assets699,019 522,212 
Total current assets2,935,550 2,776,070 
Restricted cash and cash equivalents67,152 73,205 
Restricted investments880,908 1,044,855 
Other investments70,203 80,411 
Property and equipment, net313,731 298,195 
Operating lease right-of-use assets213,111 223,412 
Intangible assets, net48,418 50,765 
Goodwill180,475 180,516 
Other assets58,916 46,455 
Total assets$4,768,464 $4,773,884 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$95,573 $129,542 
Insurance reserves1,065,881 1,068,628 
Accrued and other current liabilities1,364,019 1,264,426 
Operating lease liabilities — current51,710 53,765 
Total current liabilities2,577,183 2,516,361 
Operating lease liabilities200,018 210,232 
Long-term debt, net of current portion787,404 655,173 
Other liabilities45,871 50,905 
Total liabilities3,610,476 3,432,671 
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.00001 par value; 1,000,000,000 shares authorized as of March 31, 2022 and December 31, 2021; no shares issued and outstanding as of March 31, 2022 and December 31, 2021
  
Common stock, $0.00001 par value; 18,000,000,000 Class A shares authorized as of March 31, 2022 and December 31, 2021; 339,958,214 and 336,335,594 Class A shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively; 100,000,000 Class B shares authorized as of March 31, 2022 and December 31, 2021; 8,602,629 Class B shares issued and outstanding, as of March 31, 2022 and December 31, 2021
3 3 
Additional paid-in capital9,721,213 9,706,293 
Accumulated other comprehensive income (loss)(10,212)(2,511)
Accumulated deficit(8,553,016)(8,362,572)
Total stockholders’ equity1,157,988 1,341,213 
Total liabilities and stockholders’ equity$4,768,464 $4,773,884 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except for per share data)
(unaudited)
Three Months Ended March 31,
20222021
Revenue$875,575 $608,960 
Costs and expenses
Cost of revenue440,294 412,039 
Operations and support98,600 88,931 
Research and development192,754 238,218 
Sales and marketing126,329 78,620 
General and administrative216,941 207,594 
Total costs and expenses1,074,918 1,025,402 
Loss from operations(199,343)(416,442)
Interest expense(4,549)(12,568)
Other income, net9,763 3,605 
Loss before income taxes(194,129)(425,405)
Provision for income taxes2,803 1,934 
Net loss$(196,932)$(427,339)
Net loss per share, basic and diluted$(0.57)$(1.31)
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted346,558 326,165 
Stock-based compensation included in costs and expenses:
Cost of revenue$9,922 $8,450 
Operations and support5,590 4,888 
Research and development80,765 95,590 
Sales and marketing10,572 7,963 
General and administrative46,894 47,338 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Net loss$(196,932)$(427,339)
Other comprehensive (loss) income
Foreign currency translation adjustment737 427 
Unrealized gain (loss) on marketable securities, net of taxes(8,438)(209)
Other comprehensive (loss) income(7,701)218 
Comprehensive loss$(204,633)$(427,121)

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
(unaudited)
Three Months Ended March 31, 2021
Class A and Class B
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
SharesAmount
Balances as of December 31, 2020323,737 $3 $8,977,061 $(7,300,428)$(473)$1,676,163 
Issuance of common stock upon exercise of stock options488 — 3,244 — — 3,244 
Issuance of common stock upon settlement of restricted stock units5,218 — — — — — 
Shares withheld related to net share settlement(130)— (7,653)— — (7,653)
Stock-based compensation— — 164,229 — — 164,229 
Other comprehensive income— — — — 218 218 
Net loss— — — (427,339)— (427,339)
Balances as of March 31, 2021329,313 $3 $9,136,881 $(7,727,767)$(255)$1,408,862 

Three Months Ended March 31, 2022
Class A and Class B
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
SharesAmount
Balances as of December 31, 2021344,938 $3 $9,706,293 $(8,362,572)$(2,511)$1,341,213 
Adjustments related to the adoption of ASU 2020-06— — (139,958)6,488 — (133,470)
Issuance of common stock upon exercise of stock options65 — 90 — — 90 
Issuance of common stock upon settlement of restricted stock units3,602 — — — — — 
Shares withheld related to net share settlement(44)— (1,807)— — (1,807)
Stock-based compensation— — 156,595 — — 156,595 
Other comprehensive loss— — — — (7,701)(7,701)
Net loss— — — (196,932)— (196,932)
Balances as of March 31, 2022348,561 $3 $9,721,213 $(8,553,016)$(10,212)$1,157,988 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities
Net loss$(196,932)$(427,339)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization31,788 34,449 
Stock-based compensation153,743 164,229 
Amortization of premium on marketable securities1,063 1,542 
Accretion of discount on marketable securities(1,238)(361)
Amortization of debt discount and issuance costs653 8,471 
(Gain) loss on sale and disposal of assets, net(13,723)289 
Other1,835 2,881 
Changes in operating assets and liabilities, net effects of acquisition
Prepaid expenses and other assets(187,884)242 
Operating lease right-of-use assets13,497 14,966 
Accounts payable(33,932)(11,123)
Insurance reserves(2,748)71,352 
Accrued and other liabilities96,242 71,391 
Lease liabilities(14,707)(10,453)
Net cash used in operating activities(152,343)(79,464)
Cash flows from investing activities
Purchases of marketable securities(661,728)(981,743)
Purchases of term deposits (75,000)
Proceeds from sales of marketable securities202,246 17,099 
Proceeds from maturities of marketable securities224,865 1,169,796 
Proceeds from maturities of term deposits175,000 36,000 
Purchases of property and equipment and scooter fleet(30,310)(10,685)
Cash paid for acquisitions, net of cash acquired 3 
Sales of property and equipment15,685 5,653 
Net cash provided by (used in) investing activities(74,242)161,123 
Cash flows from financing activities
Repayment of loans(12,266)(9,984)
Proceeds from exercise of stock options and other common stock issuances90 3,244 
Taxes paid related to net share settlement of equity awards(1,807)(7,652)
Principal payments on finance lease obligations (8,031)(9,894)
Net cash used in financing activities(22,014)(24,286)
Effect of foreign exchange on cash, cash equivalents and restricted cash and cash equivalents89 34 
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents(248,510)57,407 
Cash, cash equivalents and restricted cash and cash equivalents
Beginning of period531,193 438,485 
End of period$282,683 $495,892 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Reconciliation of cash, cash equivalents and restricted cash and cash equivalents to the consolidated balance sheets
Cash and cash equivalents$214,868 $312,230 
Restricted cash and cash equivalents67,152 183,556 
Restricted cash, included in prepaid expenses and other current assets663 106 
Total cash, cash equivalents and restricted cash and cash equivalents$282,683 $495,892 
Non-cash investing and financing activities
Purchases of property and equipment, and scooter fleet not yet settled$29,477 $26,616 
Right-of-use assets acquired under finance leases4,002 1,824 
Right-of-use assets acquired under operating leases1,426 3,177 
Remeasurement of finance and operating lease right of use assets for lease modification1,217 (3,582)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Lyft, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
1.    Description of Business and Basis of Presentation
Organization and Description of Business
Lyft, Inc. (the “Company” or “Lyft”) is incorporated in Delaware with its headquarters in San Francisco, California. The Company operates multimodal transportation networks in the United States and Canada that offer access to a variety of transportation options through the Company’s platform and mobile-based applications. This network enables multiple modes of transportation including the facilitation of peer-to-peer ridesharing by connecting drivers who have a vehicle with riders who need a ride. The Lyft Platform provides a marketplace where drivers can be matched with riders via the Lyft App where the Company operates as a transportation network company (“TNC”).
Transportation options through the Company’s platform and mobile-based applications are substantially comprised of its ridesharing marketplace that connects drivers and riders in cities across the United States and in select cities in Canada, Lyft’s network of bikes and scooters (“Light Vehicles"), the Express Drive program, where drivers can enter into short-term rental agreements with Flexdrive or a third party for vehicles that may be used to provide ridesharing services on the Lyft Platform, and Lyft Rentals, a consumer offering for users who want to rent a car for a fixed period of time for personal use, and Lyft Driver Centers and Lyft Auto Care, where drivers and riders can request auto maintenance and collision repair services offered through the Lyft Platform in certain markets.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the U.S. Securities and Exchange Commission (“SEC”) rules and regulations for interim reporting and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
The Company uses the U.S. dollar predominantly as the functional currency of its foreign subsidiaries. For foreign subsidiaries where the U.S. dollar is the functional currency, gains and losses from remeasurement of foreign currency balances into U.S. dollars are included on the condensed consolidated statements of operations. For the foreign subsidiary where the local currency is the functional currency, translation adjustments of foreign currency financial statements into U.S. dollars are recorded to a separate component of accumulated other comprehensive loss.
The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss, stockholders’ equity, and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period.
2.    Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on various factors and information which may include, but are not limited to, history and prior experience, expected future results, new related events and economic conditions, which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.
Significant items subject to estimates and assumptions include those related to losses resulting from insurance claims, fair value of financial instruments, goodwill and identifiable intangible assets, leases, indirect tax obligations, legal contingencies, valuation allowance for deferred income taxes, and the valuation of stock-based compensation.
Beginning in the middle of March 2020, the outbreak of the coronavirus (“COVID-19”) in the United States, Canada, and globally has impacted the Company’s business. The Company continues to be impacted by COVID-19, but the long-term
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impact 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. The Company has adopted a number of measures in response to the COVID-19 pandemic. The Company cannot be certain that these actions will mitigate the negative effects of the pandemic on Lyft's business. As of the date of issuance of the financial statements, the Company is not aware of any material event or circumstance that would require it to update its estimates, judgments or revise the carrying value of the Company's assets or liabilities, including the recording of any credit losses. These estimates may change, as new events occur and additional information is obtained, and could lead to impairment of long lived assets or goodwill, or credit losses associated with investments or other assets, and the impact of such changes on estimates will be recognized on the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company's financial statements.
Revenue Recognition
The Company generates its revenue from its multimodal transportation networks that offer access to a variety of transportation options through the Lyft Platform and mobile-based applications. Substantially all of the Company’s revenue is generated from its ridesharing marketplace that connects drivers and riders and is recognized in accordance with Accounting Standards Codification Topic 606 (“ASC 606”). In addition, the Company generates revenue in accordance with ASC 606 from licensing and data access, primarily with third-party autonomous vehicle companies. The Company also generates rental revenue from Flexdrive, its network of Light Vehicles and Lyft Rentals, which is recognized in accordance with Accounting Standards Codification Topic 842 (“ASC 842”).
The table below presents the Company's revenues as included on the condensed consolidated statements of operations (in thousands):
Three Months Ended March 31,
20222021
Revenue from contracts with customers (ASC 606)$818,099 $568,790 
Rental revenue (ASC 842)57,476 40,170 
Total revenue$875,575 $608,960 
Revenue from Contracts with Customers (ASC 606)
The Company recognizes revenue for its rideshare marketplace in accordance with ASC 606. The Company generates revenue from service fees and commissions (collectively, “fees”) paid by drivers for use of the Lyft Platform and related activities to connect drivers with riders to facilitate and successfully complete rides via the Lyft App where the Company operates as a TNC. The Company recognizes revenue upon completion of each ride. Drivers enter into terms of service (“ToS”) with the Company in order to use the Lyft Driver App. Under the ToS, drivers agree that the Company retains the applicable fee as consideration for their use of the Lyft Platform and related activities from the fare and related charges it collects from riders on behalf of drivers. The Company is acting as an agent in facilitating the ability of a driver to provide a transportation service to a rider. The Company reports revenue on a net basis, reflecting the fee owed to the Company from a driver as revenue, and not the gross amount collected from the rider.
As the Company’s customary business practice, a contract exists between the driver and the Company when the driver’s ability to cancel the ride lapses, which typically is upon pickup of the rider. The Company’s single performance obligation in the transaction is to connect drivers with riders to facilitate the completion of a successful transportation service for riders. The Company recognizes revenue upon completion of a ride as its performance obligation is satisfied upon the completion of the ride. The Company collects the fare and related charges from riders on behalf of drivers using the rider’s pre-authorized credit card or other payment mechanism and retains its fees before making the remaining disbursement to drivers; thus the driver’s ability and intent to pay is not subject to significant judgment.
The Company recognizes revenue from subscription fees paid to access transportation options through the Lyft Platform and mobile-based applications over the applicable subscription period in accordance with ASC 606. The Company also recognizes revenue from auto maintenance and collision repair services in accordance with ASC 606.
The Company generates revenue from licensing and data access agreements. The Company is primarily responsible for fulfilling its promise to provide rideshare data and access to Flexdrive vehicles and bears the fulfillment risk, and the responsibility of providing the data, over the license period. The Company is acting as a principal in delivering the data and access licenses and presents revenue on a gross basis. Consideration allocated to each performance obligation, the data delivery and vehicle access, is determined by assigning the relative fair value to each of the performance obligations. Revenue is
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recorded upon delivery of the rideshare data and ratably over the quarter for access to fleet vehicles as the Company’s respective performance obligation is satisfied upon the delivery of each.
Rental Revenue (ASC 842)
The Company generates rental revenues primarily from Flexdrive, its network of Light Vehicles, and Lyft Rentals. Rental revenues are recognized for rental and rental related activities where an identified asset is transferred to the customer and the customer has the ability to control that asset in accordance with ASC 842.
The Company operates a fleet of rental vehicles through Flexdrive comprised of both owned vehicles and vehicles leased from third-party leasing companies. The Company either leases or subleases vehicles to drivers and Lyft Rentals renters, and as a result, the Company considers itself to be the accounting lessor or sublessor, as applicable, in these arrangements in accordance with ASC 842. Fleet operating costs include monthly fixed lease payments and other vehicle operating or ownership costs, as applicable. For vehicles that are subleased, sublease income and head lease expense for these transactions are recognized on a gross basis on the condensed consolidated financial statements. Drivers who rent vehicles are charged rental fees, which the Company collects from the driver by deducting such amounts from the driver’s earnings on the Lyft Platform.
Due to the short-term nature of the Flexdrive, Lyft Rentals, and Light Vehicle transactions, the Company classifies these rentals as operating leases. Revenue generated from single-use ride fees paid by Light Vehicle riders is 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.
Enterprise and Trade Receivables
The Company collects any fees owed for completed transactions on the Lyft Platform primarily from the rider’s authorized payment method. Uncollected fees are included in prepaid expenses and other current assets on the condensed consolidated balance sheets and represent receivables from (i) participants in the Company’s enterprise programs (“Enterprise Users”), where the transactions have been completed and the amounts owed from the Enterprise Users have either been invoiced or are unbilled as of the reporting date; and (ii) riders where the authorized payment method is a credit card but the fare amounts have not yet settled with third-party payment processors. Under the ToS, drivers agree that the Company retains the applicable fee as consideration for their use of the Lyft Platform and related activities from the fare and related charges it collects from riders on behalf of drivers. Accordingly, the Company has no trade receivables from drivers. The portion of the fare receivable to be remitted to drivers is included in accrued and other current liabilities on the condensed consolidated balance sheets.
The Company records an allowance for credit losses for fees owed for completed transactions that may never settle or be collected. As a result of the adoption of Accounting Standards Update No. 2016-13 “Financial Instruments—Credit Losses" (“ASC 326”), the Company’s measurement of the allowance for credit losses has been augmented to reflect the change from the incurred loss model to the expected credit loss model. The allowance for credit losses reflects the Company’s current estimate of expected credit losses inherent in the enterprise and trade receivables balance. In determining the expected credit losses, the Company considers its historical loss experience, the aging of its receivable balance, current economic and business conditions, and anticipated future economic events that may impact collectability. The Company reviews its allowance for credit losses periodically and as needed, and amounts are written off when determined to be uncollectible.
The Company’s receivable balance, which consists primarily of amounts due from Enterprise Users, was $187.0 million and $196.2 million as of March 31, 2022 and December 31, 2021, respectively. The Company's allowance for credit losses was $9.2 million and $9.3 million as of March 31, 2022 and December 31, 2021, respectively. The change in the allowance for credit losses for the three months ended March 31, 2022 were immaterial.
Incentive Programs
The Company offers incentives to attract drivers, riders, Light Vehicle riders and Lyft Rentals renters to use the Lyft Platform. Drivers generally receive cash incentives while riders, Light Vehicle riders and Lyft Rentals renters generally receive free or discounted rides under such incentive programs. Incentives provided to drivers, Light Vehicle riders and Lyft Rental renters, the customers of the Company, are accounted for as a reduction of the transaction price. As the riders are not the Company’s customers, incentives provided to riders are generally recognized as sales and marketing expense except for certain pricing programs described below.
Driver Incentives
The Company offers various incentive programs to drivers, including minimum guaranteed payments, volume-based discounts and performance-based bonus payments. These driver incentives are similar to retrospective volume-based rebates and represent variable consideration that is typically settled within a week. The Company reduces the transaction price by the estimated amount of the incentives expected to be paid upon completion of the performance criteria by applying the most likely outcome method. Therefore, such driver incentives are recorded as a reduction to revenue. Driver incentives are recorded as a
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reduction to revenue if the Company does not receive a distinct good or service in exchange for the payment or cannot reasonably estimate the fair value of the good or service received. Driver incentives for referring new drivers or riders are accounted for as sales and marketing expense. The amount recorded as an expense is the lesser of the amount of the payment or the established fair value of the benefit received. The fair value of the benefit is established using amounts paid to third parties for similar services.
Rideshare Rider Incentives
The Company has several rideshare rider incentive programs, which are offered to encourage rider activity on the Lyft Platform. Generally, the rider incentive programs are as follows:
(i)Market-wide marketing promotions. Market-wide promotions reduce the fare charged by drivers to riders for all or substantially all rides in a specific market. This type of incentive effectively reduces the overall pricing of the service provided by drivers for that specific market and the gross fare charged by the driver to the rider, and thereby results in a lower fee earned by the Company. Accordingly, the Company records this type of incentive as a reduction to revenue at the date it records the corresponding revenue transaction.
(ii)Targeted marketing promotions. Targeted marketing promotions are used to promote the use of the Lyft Platform to a targeted group of riders. An example is a promotion where the Company offers a number of discounted rides (capped at a given number of rides) which are valid only during a limited period of time to a targeted group of riders. The Company believes that the incentives that provide consideration to riders to be applied to a limited number of rides are similar to marketing coupons. These incentives differ from the market-wide marketing promotions because they do not reduce the overall pricing of the service provided by drivers for a specific market. During the promotion period, riders not utilizing an incentive would be charged the full fare. These incentives represent marketing costs. When a rider redeems the incentive, the Company recognizes revenue equal to the transaction price and the cost of the incentive is recorded as sales and marketing expense.
(iii)Rider referral programs. Under the rider referral program, the referring rider (the referrer) earns referral coupons when a new rider (the referee) completes their first ride on the Lyft Platform. The Company records the incentive as a liability at the time the incentive is earned by the referrer with the corresponding charge recorded to sales and marketing expense. Referral coupons typically expire within one year. The Company estimates breakage using its historical experience. As of March 31, 2022 and December 31, 2021, the rider referral coupon liability was not material.
Light Vehicle Rider and Lyft Rentals Renter Incentives
Incentives offered to Light Vehicle riders and Lyft Rentals renters were not material for the three months ended March 31, 2022 and 2021.
For the three months ended March 31, 2022 and 2021, in relation to the driver, rider, Light Vehicle riders, and Lyft Rentals renters incentive programs, the Company recorded $349.9 million and $196.2 million as a reduction to revenue and $24.9 million and $13.1 million as sales and marketing expense, respectively.
Investments
Debt Securities
The Company’s accounting for its investments in debt securities is based on the legal form of the security, the Company’s intended holding period for the security, and the nature of the transaction. Investments in debt securities include commercial paper, certificates of deposit, corporate bonds and U.S. government securities. Investments in debt securities are classified as available-for-sale and are recorded at fair value.
The Company considers an available-for-sale debt security to be impaired if the fair value of the investment is less than its amortized cost basis. The entire difference between the amortized cost basis and the fair value of the Company’s available-for-sale debt securities is recognized on the condensed consolidated statements of operations as an impairment if, (i) the fair value of the security is below its amortized cost and (ii) the Company intends to sell or is more likely than not required to sell the security before recovery of its amortized cost basis. If neither criterion is met, the Company evaluates whether the decline in fair value is due to credit losses or other factors. In making this assessment, the Company considers the extent to which the security’s fair value is less than amortized cost, changes to the rating of the security by third-party rating agencies, and adverse conditions specific to the security, among other factors. If the Company's assessment indicates that a credit loss exists, the credit loss is measured based on the Company's best estimate of the cash flows expected to be collected. When developing its estimate of cash flows expected to be collected, the Company considers all available information relevant to the collectability of the security, including past events, current conditions, and reasonable and supportable forecasts.
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Credit loss impairments are recognized through an allowance for credit losses adjustment to the amortized cost basis of the debt securities on the balance sheet with an offsetting credit loss expense on the condensed consolidated statements of operations. Impairments related to factors other than credit losses are recognized as an adjustment to the amortized cost basis of the security and an offsetting amount in accumulated other comprehensive income (loss), net of tax. As of March 31, 2022, the Company had not recorded any credit impairments. The Company determines realized gains or losses on the sale of debt securities on a specific identification method.
The Company's investments in debt securities include:
(i)Cash and cash equivalents. Cash equivalents include certificates of deposits, commercial paper and corporate bonds that have an original maturity of 90 days or less and are readily convertible to known amounts of cash.
(ii)Short-term investments. Short-term investments are comprised of commercial paper, certificates of deposit, and corporate bonds, which mature in twelve months or less. As a result, the Company classifies these investments as current assets in the accompanying condensed consolidated balance sheets.
(iii)Restricted investments. Restricted investments are comprised of debt security investments in commercial paper, certificates of deposit, corporate bonds and U.S. government securities which are held in trust accounts at third-party financial institutions pursuant to certain contracts with insurance providers.
Non-marketable Equity Securities
The Company has elected to measure its investments in non-marketable equity securities at cost, with remeasurements to fair value only upon the occurrence of observable transactions for identical or similar investments of the same issuer or impairment. The Company qualitatively assesses whether indicators of impairment exist. Factors considered in this assessment include the investees’ financial and liquidity position, access to capital resources, exposure to industries and markets impacted by COVID-19, and the time since the last adjustment to fair value, among others. If an impairment exists, the Company estimates the fair value of the investment by using the best information available, which may include cash flow projections or other available market data, and recognizes a loss for the amount by which the carrying value exceeds the fair value of the investment on the condensed consolidated statements of operations.
Insurance Reserves
The Company utilizes 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 or more frequently as determined by management, an independent third-party actuary will evaluate the liabilities for appropriateness with claims reserve valuations.
Insurance claims may take years to completely settle, and the Company has limited historical loss experience. Because of the limited operational history, the Company makes certain assumptions based on currently available information and industry statistics, with the loss development factors as one of the most significant assumptions, and utilizes 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 the Company believes 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 on the consolidated balance sheets. The Company continues to review its insurance estimates in a regular, ongoing process as historical loss experience develops, additional claims are reported and settled, and the legal, regulatory and economic environment evolves.
On April 22, 2021, PVIC entered into a Reinsurance Agreement with DARAG, under which DARAG reinsured a legacy portfolio of auto insurance policies, based on reserves in place as of March 31, 2021, for $183.2 million of coverage above the liabilities recorded as of that date (the “Reinsurance Transaction”). Under the terms of the Reinsurance Agreement, PVIC ceded to DARAG approximately $251.3 million of certain legacy insurance liabilities for policies underwritten during the period of October 1, 2018 to October 1, 2020, with an aggregate limit of $434.5 million, for a premium of $271.5 million. Losses ceded under the Reinsurance Agreement that exceed $271.5 million, but are below the aggregate limit of $434.5 million, result in the recognition of a deferred gain liability. The deferred gain liability is amortized and recognized as a benefit to the
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statement of operations over the estimated remaining settlement period of the ceded reserves. The settlement period of the ceded reserves is based on the life-to-date cumulative losses collected and likely extends over periods longer than a quarter. The amount of the deferral that is amortized is recalculated each period based on loss payments and updated estimates of the portfolio’s total losses. When the amount and timing of the reinsurance recoveries are uncertain, the recovery method should be used to calculate the amount of amortization in period. The deferral of gains has a negative impact in the current period to cost of revenue as the losses on direct liabilities are not offset by gains from excess benefits under the Reinsurance Agreement. The amortization of these deferred gains provides a benefit to cost of revenue in current and future periods equal to the excess benefits received. Deferred gain liabilities for the Reinsurance Transaction are included in accruals and other current liabilities on the consolidated balance sheets.
Leases
The Company adopted ASC 842 using the modified retrospective approach with an effective date as of the beginning of the fiscal year, January 1, 2019. The Company elected the package of transition provisions available for expired or existing contracts, which allowed the Company to carryforward the historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. In accordance with ASC 842, the Company determines if an arrangement is or contains a lease at contract inception by assessing whether the arrangement contains an identified asset and whether the lessee has the right to control such asset. The Company determines the classification and measurement of its leases upon lease commencement. The Company enters into certain agreements as a lessor and either leases or subleases the underlying asset in the agreement to customers. The Company also enters into certain agreements as a lessee. If any of the following criteria are met, the Company classifies the lease as a financing lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor):
The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;
The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;
The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
Leases that do not meet any of the above criteria are accounted for as operating leases.
Lessor
The Company's lease arrangements include vehicle rentals to drivers or renters under the Flexdrive and Lyft Rentals programs and Light Vehicle rentals to single-use riders. Due to the short-term nature of these arrangements, the Company classifies these leases as operating leases. The Company does not separate lease and non-lease components, such as insurance or roadside assistance provided to the lessee, in its lessor lease arrangements. Lease payments are primarily fixed and are recognized as revenue in the period over which the lease arrangement occurs. Taxes or other fees assessed by governmental authorities that are both imposed on and concurrent with each lease revenue-producing transaction and collected by the Company from the lessee are excluded from the consideration in its lease arrangements. The Company mitigates residual value risk of its leased assets by performing regular maintenance and repairs, as necessary, and through periodic reviews of asset depreciation rates based on the Company's ongoing assessment of present and estimated future market conditions.
Lessee
The Company's leases include real estate property to support its operations and Flexdrive vehicles that may be used by drivers to provide ridesharing services on the Lyft Platform or renters for personal reasons through Lyft Rentals. For leases with a term greater than 12 months, the Company records the related right-of-use asset and lease liability at the present value of lease payments over the term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company does not separate lease and non-lease components of contracts for real estate property leases, but has elected to do so for vehicle leases when non-lease components exist in these arrangements. For certain leases, the Company also applies a portfolio approach to account for right-of-use assets and lease liabilities that are similar in nature and have nearly identical contract provisions.
The Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The Company determines its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.
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Lease payments may be fixed or variable; however, only fixed payments are included in the Company’s lease liability calculation. Operating leases are included in operating lease right-of-use assets, operating lease liabilities — current and operating lease liabilities on the condensed consolidated balance sheets. Lease costs for the Company's operating leases are recognized on a straight-line basis primarily within operating expenses over the lease term. Finance leases are included in property and equipment, net, accrued and other current liabilities, and other liabilities on the condensed consolidated balance sheets. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term in cost of revenue on the condensed consolidated statements of operations. The interest component of finance leases is included in cost of revenue on the condensed consolidated statements of operations and recognized using the effective interest method over the lease term. Variable lease payments are recognized primarily in operating expenses in the period in which the obligation for those payments are incurred.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features. This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations. This new standard is effective for the Company for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this standard effective January 1, 2022, using the modified retrospective method. In the condensed consolidated balance sheets, the adoption of this new guidance resulted in:
an increase of $133.5 million to the total carrying value of the convertible senior notes to reflect the full principal amount of the convertible notes outstanding net of issuance costs,
a reduction of $140.0 million (net of tax) to additional paid-in capital to remove the equity component separately recorded for the conversion features associated with the convertible notes, and
a cumulative-effect adjustment of $6.5 million (net of tax) to the beginning balance of accumulated deficit as of January 1, 2022.
Recent Accounting Pronouncements Not Yet Adopted
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires companies to apply the definition of a performance obligation under ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination. This will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. This new standard will be effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within that fiscal year, with early adoption permitted. The Company is currently assessing the impact of adopting this standard on the condensed consolidated financial statements. 
3.    Divestitures
Transaction with Woven Planet Holdings, Inc. (“Woven Planet”)
On July 13, 2021, the Company completed a multi-element transaction with Woven Planet, a subsidiary of Toyota Motor Corporation, for the divestiture of certain assets related to the Company’s self-driving vehicle division, Level 5, as well as commercial agreements for the utilization of Lyft rideshare and fleet data to accelerate the safety and commercialization of the automated-driving vehicles that Woven Planet is developing. The Company 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 the Company’s operations and financial results, and therefore, does not qualify for reporting as a discontinued operation. As the transaction included multiple elements, the Company had to estimate how much of the arrangement consideration was attributable to the divestiture of certain assets related to the Level 5 division and how much was attributable to the commercial agreements for the utilization of Lyft rideshare and fleet data. The Company recognized a $119.3 million pre-tax gain for the divestiture of certain assets related to the Level 5 division, which was based on the relative fair value of the Level 5 division, valued under the replacement cost method, and the
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estimated standalone selling price of the rideshare and fleet data, valued using an adjusted market approach. The significant assumptions related to the obsolescence curve used to estimate the fair value of the Level 5 division assets and the estimated miles to recreate the data produced from the rideshare license used to determine the stand alone selling price of the rideshare data. The gain was included in other income, net on the condensed consolidated statement of operations for the quarter ended September 30, 2021. The commercial agreements for the utilization of Lyft rideshare and fleet data by Woven Planet is accounted for under ASC 606 and the Company recorded a deferred revenue liability of $42.5 million related to the performance obligations under these commercial agreements as part of the transaction at closing. The Company also derecognized $3.4 million in assets held for sale.
4.    Supplemental Financial Statement Information
Cash Equivalents and Short-Term Investments
The following tables summarize the cost or amortized cost, gross unrealized gain, gross unrealized loss and fair value of the Company’s cash equivalents and short-term investments as of the dates indicated (in thousands):
March 31, 2022
Cost or
Amortized
Cost
UnrealizedEstimated
Fair Value
GainsLosses
Unrestricted Balances(1)
Money market funds$10,824 $ $ $10,824 
Money market deposit accounts115,099   115,099 
Term deposits210,000   210,000 
Certificates of deposit481,555 13 (1,440)480,128 
Commercial paper1,198,296 3 (3,970)1,194,329 
Corporate bonds165,693  (611)165,082 
U.S. government securities3,098  (3)3,095 
Total unrestricted cash equivalents and short-term investments2,184,565 16 (6,024)2,178,557 
Restricted Balances(2)
Money market funds11,868   11,868 
Term deposits5,046   5,046 
Certificates of deposit281,852 3 (775)281,080 
Commercial paper486,896  (1,854)485,042 
Corporate bonds65,900  (158)65,742 
U.S. government securities46,300  (202)46,098 
Total restricted cash equivalents and investments897,862 3 (2,989)894,876 
Total unrestricted and restricted cash equivalents and investments$3,082,427 $19 $(9,013)$3,073,433 
_______________
(1)Excludes $48.1 million of cash and $9.8 million of marketable equity securities, which are included within the $2.2 billion of cash and cash equivalents and short-term investments on the condensed consolidated balance sheets.
(2)Excludes $53.2 million of restricted cash, which is included within the $948.1 million of restricted cash and cash equivalents and restricted short-term investments on the condensed consolidated balance sheets.
.
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December 31, 2021
Cost or
Amortized
Cost
UnrealizedEstimated
Fair Value
GainsLosses
Unrestricted Balances(1)
Money market funds$22,250 $ $ $22,250 
Money market deposit accounts330,252   330,252 
Term deposits385,000   385,000 
Certificates of deposit505,562 25 (149)505,438 
Commercial paper806,446 132 (190)806,388 
Corporate bonds99,779 4 (78)99,705 
Total unrestricted cash equivalents and short-term investments2,149,289 161 (417)2,149,033 
Restricted Balances(2)
Money market funds20,161   20,161 
Term deposits5,046   5,046 
Certificates of deposit421,243 35 (134)421,144 
Commercial paper523,616 43 (169)523,490 
Corporate bonds63,506  (48)63,458 
U.S. government securities31,745  (28)31,717 
Total restricted cash equivalents and investments1,065,317 78 (379)1,065,016 
Total unrestricted and restricted cash equivalents and investments$3,214,606 $239 $(796)$3,214,049 
_______________
(1)Excludes $104.8 million of cash, which is included within the $2.3 billion of cash and cash equivalents and short-term investments on the condensed consolidated balance sheets.
(2)Excludes $53.7 million of restricted cash, which is included within the $1.1 billion of restricted cash and cash equivalents and restricted short-term investments on the condensed consolidated balance sheets.
The Company’s short-term investments consist of available-for-sale debt securities and term deposits. The term deposits are at cost, which approximates fair value.
The weighted-average remaining maturity of the Company’s investment portfolio was less than one year as of the periods presented. No individual security incurred continuous unrealized losses for greater than 12 months.
The Company purchases investment grade marketable debt securities which are rated by nationally recognized statistical credit rating organizations in accordance with its investment policy. This policy is designed to minimize the Company's exposure to credit losses. As of March 31, 2022, the credit-quality of the Company’s marketable available-for-sale debt securities had remained stable. The unrealized losses recognized on marketable available-for-sale debt securities as of March 31, 2022 was primarily related to the continued market volatility associated with market expectations of an aggressive pace of interest rate increases by the Federal Reserve. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments and it is not expected that the investments would be settled at a price less than their amortized cost basis. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. The Company is not aware of any specific event or circumstance that would require the Company to change its assessment of credit losses for any marketable available-for-sale debt security as of March 31, 2022. These estimates may change, as new events occur and additional information is obtained, and will be recognized on the condensed consolidated financial statements as soon as they become known. No credit losses were recognized as of March 31, 2022 for the Company’s marketable and non-marketable debt securities.
The following table summarizes the Company’s available-for-sale debt securities in an unrealized loss position for which no allowance for credit losses was recorded, aggregated by major security type (in thousands):
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March 31, 2022
Estimated Fair ValueUnrealized Losses
Certificates of deposit$703,093 $(2,215)
Corporate bonds 230,825 (769)
Commercial paper1,617,500 (5,824)
U.S. government securities49,192 (205)
Total available-for-sale debt securities in an unrealized loss position $2,600,610 $(9,013)
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following as of the dates indicated (in thousands):
March 31, 2022December 31, 2021
Legal accruals$368,640 $349,518 
Insurance-related accruals345,740 336,340 
Ride-related accruals198,807 196,716 
Deferred gain related to the Reinsurance Transaction (1)
108,053 52,785 
Long-term debt, current55,921 56,264 
Insurance claims payable and related fees27,985 33,696 
Other258,873 239,107 
Accrued and other current liabilities$1,364,019 $1,264,426 
_______________
(1)Refer to Note 2 “ Summary of Significant Accounting Policies” above and the rest of this Note 4 “Supplemental Financial Information - Insurance Reserves” below for more information on this deferred gain.
Insurance Reserves
The following table provides a rollforward of the insurance reserve for the periods presented (in thousands):
Three Months Ended March 31,
20222021
Balance at beginning of period$1,068,628 $987,064 
Reinsurance recoverable at beginning of period(245,179) 
Additions related to:
Reserves for current period55,110 64,468 
Change in estimates for prior periods 128,045 
Losses paid(102,830)(121,161)
Transfer of certain legacy auto insurance liabilities  
Net balance at the end of the period775,729 1,058,416 
Add: Reinsurance recoverable at the end of the period290,152  
Balance at end of period$1,065,881 $1,058,416 
Reinsurance of Certain Legacy Auto Liability Insurance
On April 22, 2021, the Company’s wholly-owned subsidiary, Pacific Valley Insurance Company, Inc. (“PVIC”), entered into a Quota Share Reinsurance Agreement (the “Reinsurance Agreement”) with DARAG Bermuda LTD (“DARAG”), under which DARAG reinsured a legacy portfolio of auto insurance policies, based on reserves in place as of March 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 to DARAG approximately $251.3 million of certain legacy insurance liabilities for policies underwritten during the period of October 1, 2018 to October 1, 2020, with an aggregate limit of $434.5 million, for a premium of $271.5 million (“the Reinsurance Transaction”). The Reinsurance Agreement is on a funds withheld basis, meaning that funds are withheld by PVIC from the insurance premium owed to DARAG in order to pay future reinsurance claims on DARAG’s behalf. Upon consummation of the Reinsurance Transaction, a reinsurance recoverable of $251.3 million was established, and since a contractual right of offset exists, the reinsurance recoverable has been netted against the funds withheld liability balance of
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$271.5 million for a $20.2 million net funds withheld liability balance included in accrued and other current liabilities on the condensed consolidated balance sheet. In addition to the initial funds withheld balance of $271.5 million, additional coverage of certain legacy insurance liabilities is collateralized by a trust account established by DARAG for the benefit of PVIC, which was $75.0 million upon consummation. As of March 31, 2022, the balance of the net funds withheld liability is zero. At the inception of the Reinsurance Agreement, a loss of approximately $20.4 million for the total cost of the Reinsurance Transaction was recognized on the condensed consolidated statement of operations for the year ended December 31, 2021, with $20.2 million in cost of revenue and $0.2 million in general and administrative expenses.
The Reinsurance Transaction does not discharge PVIC of its obligations to the policyholder. Management evaluated reinsurance counterparty credit risk and does not consider it to be material since the premium of $271.5 million was retained by PVIC on a funds withheld basis on behalf of the reinsurer.
As of March 31, 2022, the Company has $108.1 million of deferred gains related to losses ceded under the Reinsurance Agreement which are included within accrued and other current liabilities on the consolidated balance sheets. The reinsurance recoverable receivable from DARAG, net of the funds withheld liability, is included in prepaid expenses and other current assets on the consolidated balance sheets.
Other Income (Expense), Net
The following table sets forth the primary components of other income (expense), net as reported on the condensed consolidated statements of operations (in thousands):
Three Months Ended March 31,
20222021
Interest income$2,654 $2,879 
Gain (loss) on sale of securities, net1 701 
Foreign currency exchange gains (losses), net77 (588)
Sublease income3,714  
Other, net3,317 613 
Other income (expense), net$9,763 $3,605 
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5.    Fair Value Measurements
Financial Instruments Measured at Fair Value on a Recurring Basis
The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis as of the dates indicated by level within the fair value hierarchy (in thousands):
March 31, 2022
Level 1Level 2Level 3Total
Unrestricted Balances(1)
Money market funds$10,824 $ $ $10,824 
Certificates of deposit 480,128  480,128 
Commercial paper 1,194,329  1,194,329 
Corporate bonds 165,082  165,082 
U.S. government securities 3,095  3,095 
Marketable equity securities9,830   9,830 
Total unrestricted cash equivalents and short-term investments20,654 1,842,634  1,863,288 
Restricted Balances(2)
Money market funds11,868   11,868 
Certificates of deposit 281,080  281,080 
Commercial paper 485,042  485,042 
Corporate bonds 65,742  65,742 
U.S. government securities 46,098  46,098 
Total restricted cash equivalents and investments11,868 877,962  889,830 
Total unrestricted and restricted cash equivalents and investments$32,522 $2,720,596 $ $2,753,118 
_______________
(1)$48.1 million of cash, $115.1 million of money market deposit accounts and $210.0 million of term deposits are not subject to recurring fair value measurement and therefore excluded from this table. However, these balances are included within the $2.2 billion of cash and cash equivalents and short-term investments on the condensed consolidated balance sheets.
(2)$53.2 million of restricted cash and $5.0 million of a restricted term deposit are not subject to recurring fair value measurement and therefore excluded from this table. However, these balances are included within the $948.1 million of restricted cash and cash equivalents and restricted short-term investments on the condensed consolidated balance sheets.
December 31, 2021
Level 1Level 2Level 3Total
Unrestricted Balances(1)
Money market funds$22,250 $ $ $22,250 
Certificates of deposit$ $505,438 $ $505,438 
Commercial paper 806,388  806,388 
Corporate bonds 99,705  99,705 
Total unrestricted cash equivalents and short-term investments22,250 1,411,531  1,433,781 
Restricted Balances(2)
Money market funds20,161   20,161 
Certificates of deposit