WeWork loses $ 2.1 billion, a quarter of its members as lockdowns bite – fr

WeWork loses $ 2.1 billion, a quarter of its members as lockdowns bite – fr

WeWork’s losses nearly quadrupled to $ 2.1 billion in the first quarter of this year, with the coworking company hemorrhaging more than a quarter of its members and spending hundreds of millions of dollars to restructure its portfolio. immovable.

Documents viewed by the Financial Times showed that lockdowns and remote working in the pandemic caused WeWork’s losses to increase dramatically from the $ 556 million net loss incurred in the first three months of 2020, which was slightly impacted by the coronavirus pandemic.

A settlement with ousted co-founder Adam Neumann also represented around $ 500 million in loss, a person close to the company said.

WeWork’s quarterly revenue fell nearly 50% year-over-year from $ 1.1 billion to $ 598 million and the company lost around 200,000 customers, according to documents viewed by the FT. The number of WeWork “members” increased from 693,000 in March 2020 to 490,000 a year later.

Restructuring and other related costs fell from $ 56 million in the first quarter of 2020 to $ 494 million in the first quarter of 2021, as WeWork pulled out of unprofitable sites.

The results underscore the scale of the challenge for WeWork, which told potential investors in March that annual revenues would rise rapidly from $ 3.2 billion last year to $ 7 billion by 2024. It predicts a second attempted public offering later this year.

The company has grown aggressively in anticipation of an initial public offering slated for 2019, taking on leases in prime office buildings in major cities around the world such as London and New York. Driven by billions of dollars in investment from SoftBank, its largest funder, the company’s valuation peaked at $ 47 billion in 2019.

But the valuation fell as investors took a close look at the company’s heavy spending and constant losses, as well as the eccentric culture instilled by Neumann. Eventually, the planned IPO was withdrawn and Neumann ceded his role as managing director.

The person close to the company added that WeWork has access to $ 2.2 billion in cash and, excluding one-time losses, “is on track operationally and financially.”

WeWork declined to comment.

Under the leadership of Sandeep Mathrani, who took over as CEO in February last year, WeWork is cutting costs. Selling, general and administrative expenses almost halved to $ 274 million between the first quarter of 2020 and the first quarter of 2021. Costs associated with opening new offices and operating existing offices have increased. dropped from about $ 160 million to $ 852 million over the same period.

With new management promising a more sober approach, WeWork is once again trying to go public through a merger with BowX Acquisition, a special-purpose acquisition company created by Vivek Ranadivé, founder of California-based software group Tibco, for a valuation. of $ 9 billion. .

The deal will inject $ 1.3 billion in cash into WeWork, $ 800 million from institutional investors such as Starwood Capital, Fidelity and BlackRock and $ 483 million in BowX cash raised during its IPO.

Additional reporting by Andrew Edgecliffe-Johnson


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