Supplemental Financial Statement Information

9 Months Ended

Sep. 30, 2022

Additional Financial Information Disclosure [Abstract]

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):


	September 30, 2022
	Cost or Amortized Cost		Unrealized				Estimated Fair Value
			Gains		Losses
Unrestricted Balances(1)
Money market funds	$	1,885	$	—	$	—	$	1,885
Money market deposit accounts	51,318		—		—		51,318
Term deposits	15,000		—		—		15,000
Certificates of deposit	430,038		122		(801)		429,359
Commercial paper	1,085,841		62		(2,631)		1,083,272
Corporate bonds	85,821		—		(675)		85,146
U.S. government securities	39,750		—		(34)		39,716
Total unrestricted cash equivalents and short-term investments	1,709,653		184		(4,141)		1,705,696
Restricted Balances(2)
Money market funds	91,231		—		—		91,231
Term deposits	5,046		—		—		5,046
Certificates of deposit	269,915		52		(680)		269,287
Commercial paper	660,339		44		(1,190)		659,193
Corporate bonds	29,158		—		(151)		29,007
U.S. government securities	63,622		—		(282)		63,340
Total restricted cash equivalents and investments	1,119,311		96		(2,303)		1,117,104
Total unrestricted and restricted cash equivalents and investments	$	2,828,964	$	280	$	(6,444)	$	2,822,800

_______________

(1)Excludes $72.8 million of cash and $4.9 million of marketable equity securities, which are included within the $1.8 billion of cash and cash equivalents and short-term investments on the condensed consolidated balance sheets.

(2)Excludes $56.1 million of restricted cash, which is included within the $1.2 billion of restricted cash and cash equivalents and restricted short-term investments on the condensed consolidated balance sheets.


	December 31, 2021
	Cost or Amortized Cost		Unrealized				Estimated Fair Value
			Gains		Losses
Unrestricted Balances(1)
Money market funds	$	22,250	$	—	$	—	$	22,250
Money market deposit accounts	330,252		—		—		330,252
Term deposits	385,000		—		—		385,000
Certificates of deposit	505,562		25		(149)		505,438
Commercial paper	806,446		132		(190)		806,388
Corporate bonds	99,779		4		(78)		99,705
Total unrestricted cash equivalents and short-term investments	2,149,289		161		(417)		2,149,033
Restricted Balances(2)
Money market funds	20,161		—		—		20,161
Term deposits	5,046		—		—		5,046
Certificates of deposit	421,243		35		(134)		421,144
Commercial paper	523,616		43		(169)		523,490
Corporate bonds	63,506		—		(48)		63,458
U.S. government securities	31,745		—		(28)		31,717
Total restricted cash equivalents and investments	1,065,317		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 September 30, 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 September 30, 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 quarterly assessment of credit losses for any marketable available-for-sale debt security as of September 30, 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 September 30, 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):


	September 30, 2022
	Estimated Fair Value		Unrealized Losses
Certificates of deposit	$	463,826	$	(1,481)
Corporate bonds	114,153		(826)
Commercial paper	1,523,046		(3,821)
U.S. government securities	103,055		(316)
Total available-for-sale debt securities in an unrealized loss position	$	2,204,080	$	(6,444)

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following as of the dates indicated (in thousands):


	September 30, 2022		December 31, 2021
Legal accruals	$	389,540	$	349,518
Insurance-related accruals	384,729		336,340
Ride-related accruals	208,477		196,716
Long-term debt, current	38,233		56,264
Insurance claims payable and related fees	36,695		33,696
Deferred gain related to the Reinsurance Transaction (1)	2,357		52,785
Other	322,575		239,107
Accrued and other current liabilities	$	1,382,606	$	1,264,426

_______________

(1)Refer to Note 2 “Summary of Significant Accounting Policies” above and the rest of this Note 5 “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):


	Nine Months Ended September 30,
	2022		2021
Balance at beginning of period	$	1,068,628	$	987,064
Reinsurance recoverable at beginning of period	(245,179)		(251,328)
Additions related to:
Reserves for current period	210,905		227,478
Change in estimates for prior periods	368,280		128,045
Losses paid	(388,344)		(329,805)
Adjustments related to Commutation Transaction(1)	247,438		—
Transfer of certain legacy auto insurance liabilities	—		—
Net balance at the end of the period	1,261,728		761,454
Add: Reinsurance recoverable at the end of the period	4,000		249,699
Balance at end of period	$	1,265,728	$	1,011,153

_______________

(1)In the second quarter of 2022, the Company completed the Commutation Transaction, which effectively commuted and settled the previous Reinsurance Agreement. See below for more details of the "Commutation of the Reinsurance Agreement".

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 was 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 was netted against the funds withheld liability balance of $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 was collateralized by a trust account established by DARAG for the benefit of PVIC, which was $75.0 million upon consummation. 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.

Commutation of the Reinsurance Agreement

On June 21, 2022, PVIC and DARAG entered into a Commutation Agreement, which effectively commuted and settled the previous Reinsurance Agreement. Under the terms of the Commutation Agreement, DARAG released $89.3 million of assets held in trust to PVIC and the remaining balance of the funds withheld liability of $90.3 million from the Reinsurance Transaction for a total consideration of $178.6 million.

In addition, the Commutation Agreement caused a DARAG affiliate, DNA Insurance Company (“DNA”), to simultaneously enter into an Adverse Development Cover Reinsurance Agreement (“ADC”) with PVIC (the Commutation Agreement and the ADC will collectively be referred to as the “Commutation Transaction”). Under the terms of the ADC, DNA agreed to reinsure up to $20 million of the legacy insurance liabilities contemplated in the Reinsurance Agreement for a premium of $1.0 million, which will be retained by PVIC on a funds withheld basis. DNA also has the option to commute this agreement for $5.0 million prior to November 1, 2023, which may be offset by any premiums retained as funds withheld.

As a result of the Commutation Transaction, the Company noted the following impacts on its financial statements:

•The Company recognized a $36.8 million gain in cost of revenue in the three months ended June 30, 2022, including amortization of a portion of the previously recognized deferred gain.

•The Company reduced its reinsurance recoverable by $247.4 million. As of September 30, 2022, the balance of reinsurance recoverables was $4.0 million, reflecting the ultimate amount it anticipates receiving from DNA as a result of this transaction. The reinsurance recoverable from DNA, net of the funds withheld liability, is included in prepaid expenses and other current assets on the condensed consolidated balance sheets.

•The Company reduced the funds withheld liability balance by $90.3 million. As of September 30, 2022, the balance of the funds withheld liability was $1.0 million, reflecting the premium retained by PVIC for the Adverse Development Cover.

•The Company amortized deferred gains related to losses ceded under the Reinsurance Agreement by $105.7 million. As of September 30, 2022, the Company had $2.4 million of deferred gains related to losses ceded under the Reinsurance Agreement remaining following the Commutation Transaction, which are included within accrued and other current liabilities on the condensed consolidated balance sheets.

Other Income (Expense), Net

The following table sets forth the primary components of other income, net as reported on the condensed consolidated statements of operations (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Interest income	$	12,945	$	1,923	$	20,321	$	7,008
Gain (loss) on sale of securities, net	(28)		(17)		(61)		685
Foreign currency exchange gains (losses), net	(7,121)		736		(6,436)		1,212
Sublease income	2,555		2,947		10,099		2,947
Gain from transaction with Woven Planet	—		119,284		—		119,284
Impairment charges(1)	(135,714)		—		(135,714)		—
Other, net	1,208		169		(3,648)		(748)
Other income (expense), net	$	(126,155)	$	125,042	$	(115,439)	$	130,388