WeWork reported its first quarterly results as a public company on Monday, revealing that its co-working business is still racking up big losses and hemorrhaging cash.
But WeWork pointed to an uptick in customer leasing activity in the quarter as evidence that it is positioned to do well in office-space markets that have been upended by the pandemic.
WeWork, which became public through a merger last month with a special purpose acquisition company, or SPAC, reported a net loss of $802 million in the third quarter, an improvement on the loss of $941 million in the same period a year ago. WeWork’s revenue, however, declined to $661 million in the latest third quarter, from $811 million in the year-earlier period. The company reduced its loss by cutting its expenses significantly.
WeWork leases huge amounts of office space and then charges its customers — large companies, small businesses and individuals — to use it. Customers might prefer being in a WeWork space because the lease agreements are shorter than for traditional office space, allowing for more flexibility. But the drawback for WeWork is that its customers can move out on short notice.
WeWork was on the brink of bankruptcy in 2019 after it decided to call off an initial public offering, but the company was bailed out by SoftBank, the Japanese conglomerate that is now its largest shareholder. In the debacle, Adam Neumann, a co-founder, stepped down as chief executive and left the company, but remains a shareholder. Mr. Neumann spoke about his role in the imbroglio last week.
WeWork’s operations consumed $1.5 billion of cash in the first nine months of this year, but it appears to be slowing the cash drain. In the third quarter of this year, its operations used $380 million of cash, less than the $618 million it spent in the second quarter. After the SPAC merger, WeWork had $1.3 billion of cash on its balance sheet.
The work-from-home trend ushered in by the pandemic has prompted many companies to curb their appetite for office space under traditional leases. WeWork hopes that these companies will use its space when they do want workers to get together. And in the third quarter, physical memberships, which give customers access to WeWork spaces, jumped to 432,000, up from 386,000 in the second quarter, though the latest number was still below the 480,000 in the third quarter of last year.
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November 15, 2021 at 09:42PM
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