Leases

12 Months Ended

Dec. 31, 2019

Leases (Topic 842) and subsequently issued amendments require a lessee to recognize leases with a term greater than 12 months on the balance sheet. The Company adopted the standard using the modified retrospective approach with an effective date as of the beginning of the fiscal year, January 1, 2019. The comparative period presented is not adjusted and, therefore, those amounts are not presented below. 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.

The Company leases real estate property under operating leases. The Company is also a lessee and a sublessor from an accounting perspective in the car rental transactions involving Flexdrive. 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 Company does not separate lease and non-lease components of contracts for real estate property leases.

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, an amount equal to the lease payments in a similar economic environment. Lease payments may be fixed or variable, however, only fixed payments are included in the Company’s lease liability calculation. Variable lease payments are recognized primarily in operating expenses in the period in which the obligation for those payments are incurred.

Real Estate Operating Leases

The Company leases real estate property at approximately 90 locations with 87 commenced leases and three not yet commenced leases having an initial term of 12 months or longer as of December 31, 2019. These leases are classified as operating leases. As of December 31, 2019, the remaining lease terms vary from one month to ten years. For certain leases the Company has options to extend the lease term for periods varying from one to five years. These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options. For leases with an initial term of 12 months or longer, the Company has recorded a right-of-use asset and lease liability representing the fixed component of the lease payment.

Flexdrive Program

Under the Express Drive program, the Company connects drivers who need access to a car with third-party rental car companies. The Company facilitates the car rental transactions between car rental companies and drivers. During 2018 the Company expanded its Express Drive program with Flexdrive. Under the Company’s agreement with Flexdrive (the “head lease”), the Company is required to pay fleet operating costs over periods ranging from two to three years for vehicles that the Company has committed will remain in a dedicated fleet to be ready to be rented by drivers using the Lyft Platform. Fleet operating costs include monthly fixed payments and other vehicle operating costs. Such payments are required to be made regardless of whether the vehicles are rented by drivers using the Lyft Platform. Drivers who rent vehicles through the arrangement with Flexdrive are charged rental fees for which the Company collects such payments from the driver. The Company collects rental fees by deducting such amounts from the driver’s earnings on the Lyft Platform, or through charging the driver’s credit card.

The Company is a principal in the car rental transactions involving Flexdrive as the Company becomes a lessee for each vehicle prior to its rental by a driver and is committed to the payment of fixed monthly amounts and other fleet operating costs. The Company subleases the vehicles to drivers when they are rented by drivers and, as a result, the Company considers itself to be the accounting sublessor in its arrangements with drivers. Vehicle leases with Flexdrive are classified as operating leases and, accordingly, each sublease representing a car rental transaction with a driver is also an operating lease. The lease term in the car rental sublease is less than a month. Sublease income (revenue) and head lease expense for the Company’s transactions involving Flexdrive are recognized on a gross basis in the consolidated financial statements. The revenue recognized under the Flexdrive program was $111.3 million and $54.8 million for the years ended December 31, 2019 and 2018, respectively.

Lease Position as of December 31, 2019

The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheet (in thousands, except for remaining lease terms and percentages):


	December 31, 2019
Assets
Real Estate	$	316,499
Flexdrive Program	124,759
Total operating lease right-of-use assets	$	441,258
Liabilities
Current
Real Estate	$	40,729
Flexdrive Program	53,470
Total current operating lease liabilities	94,199
Noncurrent
Real Estate	312,323
Flexdrive Program	69,754
Total noncurrent operating lease liabilities	382,077
Total operating lease liabilities	$	476,276
Weighted-average remaining lease term (years)
Real Estate	6.8
Flexdrive Program	1.9
Weighted-average discount rate⁽¹⁾
Real Estate	6.6		%
Flexdrive Program	6.5		%

_______________

(1)Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

Lease Costs

The table below presents certain information related to the lease costs for operating leases for the year ended December 31, 2019 (in thousands):


	December 31, 2019
	Real Estate		Flexdrive Program		Total Operating Leases
Operating lease cost	$	61,277	$	54,142	$	115,419
Short-term lease cost	4,670		—		4,670
Variable lease cost⁽¹⁾	10,845		5,815		16,660
Total lease cost	$	76,792	$	59,957	$	136,749

_______________

(1)Consist primarily of common-area maintenance, taxes and utilities for real estate leases, and certain vehicle related charges under the Flexdrive program.

Cash paid for amounts included in the measurement of operating lease liabilities was $111.1 million for the year ended December 31, 2019 and is presented as cash flows from operating activities in the consolidated statement of cash flows.

Rent expense related to noncancelable real estate operating leases was $33.7 million and $22.8 million during the years ended December 31, 2018 and 2017, respectively. Sublease income was immaterial.

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities recorded on the consolidated balance sheet as of December 31, 2019 (in thousands):


	Real Estate		Flexdrive Program		Total Leases
2020	$	70,308	$	55,661	$	125,969
2021	76,681		49,968		126,649
2022	71,104		27,357		98,461
2023	55,147		743		55,890
2024	50,613		—		50,613
Thereafter	134,210		—		134,210
Total minimum lease payments	458,063		133,729		591,792
Less: amount of lease payments representing interest	(105,011)		(10,505)		(115,516)
Present value of future minimum lease payments	353,052		123,224		476,276
Less: current obligations under leases	(40,729)		(53,470)		(94,199)
Long-term lease obligations	$	312,323	$	69,754	$	382,077

As of December 31, 2019, the Company had an immaterial amount of real estate leases that had not yet commenced. These leases are expected to commence between February and June 2020 with lease terms of five to seven years.

Future lease payments receivable in car rental transactions under the Flexdrive Program are not material since the lease term is less than a month.

As of December 31, 2018, the future minimum lease payments required under noncancelable operating leases as defined under the previous accounting guidance of ASC Topic 840 were as follows (in thousands):


	Real Estate		Flexdrive Program		Total Operating Leases
2019	$	51,221	$	30,129	$	81,350
2020	53,380		34,597		87,977
2021	52,794		6,439		59,233
2022	48,813		—		48,813
2023 and Thereafter	133,670		—		133,670
Total minimum lease payments	$	339,878	$	71,165	$	411,043