Lyft, Inc. 2021 Form 10-K Summary
Business context and reporting period
Lyft operates a multimodal transportation platform in the United States and Canada, primarily connecting rideshare drivers and riders. Additional offerings include vehicle rentals, bikes and scooters, driver vehicle services, business transportation, public-transit information, and autonomous-vehicle partnerships. The filing covers the fiscal year ended December 31, 2021, with comparisons primarily to fiscal 2020. The filing is an annual report rather than a quarterly filing, although fourth-quarter operating metrics are disclosed.
Business activity recovered from the COVID-19 demand shock, but active-rider levels remained below pre-pandemic levels and recovery continued to be affected by variants, altered commuting patterns, reduced travel, driver availability, and seasonality.
Financial and operating metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $3.208 billion | $2.365 billion | +36% |
| Cost of revenue | $1.650 billion | $1.448 billion | +14% |
| Total costs and expenses | $4.291 billion | $4.173 billion | +3% |
| Loss from operations | $(1.082) billion | $(1.808) billion | Improved by $726 million |
| Net loss | $(1.009) billion | $(1.753) billion | Improved by 42% |
| Net loss per share | $(3.02) | $(5.61) | Improved |
| Adjusted EBITDA | $92.9 million | $(755.2) million | Turned positive |
| Adjusted EBITDA margin | 2.9% | (31.9)% | Improved |
| Cash used in operating activities | $(101.7) million | $(1.379) billion | Improved |
GAAP net margin was approximately negative 31.5%, compared with negative 74.1% in 2020. Contribution was $1.882 billion and contribution margin was 58.6%, compared with $1.230 billion and 52.0% in 2020. Adjusted EBITDA is a non-GAAP measure and excludes, among other items, stock-based compensation, historical insurance-reserve changes, certain transaction costs, and restructuring charges.
| Liquidity and debt | December 31, 2021 |
|---|---|
| Cash and cash equivalents | $457.3 million |
| Short-term investments | $1.797 billion |
| Unrestricted cash, cash equivalents and short-term investments | Approximately $2.3 billion |
| Restricted cash, cash equivalents and investments | Approximately $1.1 billion |
| Total debt, including current maturities | $711.4 million |
| Insurance reserves | $1.069 billion |
Debt included $604.3 million of net carrying value for 1.50% convertible senior notes due 2025, a $75.7 million non-revolving loan, and a $31.4 million master vehicle loan. Contractual commitments included $317.8 million of operating lease commitments, $28.7 million of finance lease commitments, $711.5 million of long-term debt obligations, and $120.3 million of other noncancelable agreements.
Fourth-quarter 2021 active riders were 18.7 million, up 49.2% from the fourth quarter of 2020 and below the 22.9 million reported in the fourth quarter of 2019. Fourth-quarter revenue per active rider was $51.79, up 14.1% year over year and described as an all-time high.
Material changes versus the prior comparable period
- Revenue increased 36%, primarily from recovering rider demand, reopening economies, and higher active-rider volumes. Licensing and data-access revenue began in the second quarter of 2021.
- Driver incentives recorded as a reduction of revenue increased by $942.9 million year over year as demand outpaced driver supply during parts of the recovery.
- Cost of revenue increased 14%, driven principally by higher insurance costs, ride volume, payment processing fees, and bike and scooter costs. The year included $250.3 million of adverse changes to historical insurance reserves and $20.2 million of reinsurance transaction costs.
- Operations and support declined 11%; sales and marketing declined 1%; general and administrative expense declined 3%; and research and development expense was approximately flat.
- Stock-based compensation increased to $724.6 million from $565.8 million. Unrecognized stock-based compensation was $587.5 million at year-end, expected to be recognized over approximately 1.7 years.
- Lyft achieved its first annual positive Adjusted EBITDA, but remained substantially unprofitable on a GAAP basis and continued to generate negative operating cash flow.
- Operating cash burn improved materially from 2020. Investing cash flow was positive $267.0 million, principally reflecting purchases, maturities, and sales of marketable securities, while financing cash flow was negative $72.5 million.
- Shares outstanding increased, with Class A shares rising from 314.9 million to 336.3 million and Class B shares declining from 8.8 million to 8.6 million.
Guidance, outlook, commentary, risks and unusual items
Management stated that it expected continued demand recovery as immunity increased, communities reopened, and restrictions eased, but did not provide specific formal revenue or profit guidance in the filing. Management said it believed the approximately $2.3 billion of unrestricted liquidity was sufficient for working-capital and capital-expenditure needs for the next 12 months and beyond.
- COVID-19: The timing and pace of recovery remained uncertain. Variants, reduced commuting and travel, remote work, altered consumer behavior, and corporate cost cutting could continue to suppress demand.
- Driver supply and pricing: Limited driver availability led to higher prices and incentives. Maintaining driver supply may pressure revenue, margins, and customer experience.
- Insurance: Insurance reserves totaled $1.069 billion, and historical auto losses produced adverse reserve development. Actual claims may exceed estimates, and reserve estimation was identified as a critical audit matter.
- Driver classification: Lyft continues to treat drivers as independent contractors but faces numerous lawsuits, arbitrations, administrative audits, and regulatory actions. Proposition 22 remained in effect during appeal after a California trial court found it unenforceable. Adverse outcomes could increase costs, require operational changes, or suspend operations in affected jurisdictions.
- Woven Planet transaction: Lyft sold certain Level 5 autonomous-driving assets and entered data-access and commercial agreements. The transaction is expected to provide approximately $515 million in cash, including $165 million upfront and $350 million over five years, and generated a $119.3 million pretax gain in 2021.
- Legacy insurance reinsurance: Lyft ceded approximately $251.3 million of certain legacy insurance liabilities under a reinsurance arrangement with an aggregate limit of $434.5 million. The transaction generated approximately $20.4 million of expense and does not discharge Lyft's obligations to policyholders.
- Autonomous vehicles and EV transition: Lyft no longer develops its own autonomous-driving technology after the Level 5 divestiture and relies on partners. It also committed to 100% electric vehicles on the Lyft platform by the end of 2030, which may require significant capital and recurring operating costs.
- Other risks: The filing highlights intense competition, regulatory and privacy requirements, cybersecurity, reliance on AWS and payment processors, supply-chain constraints, litigation, macroeconomic conditions, interest rates, and the ability to achieve sustainable profitability.
Most important facts for investors to verify
- Whether revenue and active-rider growth continued after the December 2021 quarter as COVID-19 effects and travel patterns evolved.
- Whether positive Adjusted EBITDA translates into sustained GAAP profitability and positive operating cash flow after excluding stock compensation, reserve development, and unusual items.
- The adequacy of the $1.069 billion insurance-reserve balance and potential adverse development in historical claims.
- The financial and operating consequences of driver-classification litigation, Proposition 22 appeals, and other labor-related regulatory actions.
- The amount and timing of the $350 million of deferred Woven Planet consideration and the sustainability of related licensing revenue.
- The remaining cash requirements for debt maturities, lease commitments, AWS and other purchase commitments, insurance collateral, and the 2030 EV objective.
- The potential dilution and refinancing implications of the 2025 convertible notes and outstanding equity awards.
- The effects of the $724.6 million of 2021 stock-based compensation and the remaining $587.5 million unrecognized expense.