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WeWork’s losses nearly quadrupled to $ 2.1 billion in the first quarter of this year, as the partner company bleed more than a quarter of its members and disbursed hundreds of millions of dollars for restructure your real estate portfolio.
Documents viewed by the Financial Times showed blockages and remote work in the pandemic caused WeWork’s losses to increase dramatically compared to the $ 556 million net loss suffered during the first three months of 2020, which was slightly affected by the coronavirus pandemic.
A deal with ousted co-founder Adam Neumann also meant about $ 500 million in loss, a person close to the company said.
The losses suffered so far this year add to a $ 3.2 billion loss in 2020, revealed in documents shown to potential WeWork investors and revised by the FT.
WeWork’s quarterly revenue fell nearly 50 percent year-over-year, from $ 1.1 billion to $ 598 million, and the company lost about 200,000 customers, according to documents seen by FT. The number of WeWork “members” dropped from 693,000 in March 2020 to 490,000 a year later.
Restructuring and other related costs went from $ 56 million in the first quarter of 2020 to $ 494 million in the first quarter of 2021, as WeWork came out of unprofitable places.
The results underscore the scope of the WeWork challenge, which told potential investors in March that full-year revenue would rise rapidly from $ 3.2 billion last year to $ 7 billion in 2024. It is planning a second attempt at listing later this year.
The company expanded aggressively in the face of an initial public offering scheduled for 2019, hiring leases in top-tier office buildings in major global cities such as London and New York. Caused by billions of dollars in investments from SoftBank, its main sponsor, the company’s valuation reached $ 47 billion in 2019.
But the valuation fell as investors examined the company’s strong spending and steady losses, as well as the eccentric culture instilled by Neumann. Ultimately, the planned IPO was withdrawn and Neumann relinquished his role as chief executive.
The person close to the company added that WeWork has access to $ 2.2 billion in liquidity and, excluding one-off losses, “is well on track operationally and financially.”
WeWork declined to comment.
Sandeep Mathrani, who took over as executive director in February last year, WeWork is cutting costs. Sales, general and administrative expenses nearly halved to $ 274 million between the first quarter of 2020 and the first quarter of 2021. The costs associated with opening new offices and operating existing ones existing fell about $ 160 million to $ 852 million in the same period.
With a new direction that promises a more sober approach, WeWork is once again trying to make itself public through a merger with BowX Acquisition, a special-purpose acquisition company created by Vivek Ranadivé, founder of California-based software group Tibco. at a valuation of $ 9 billion. .
The deal will provide $ 1.3 billion in cash to WeWork, $ 800 million from institutional investors such as Starwood Capital, Fidelity and BlackRock, and $ 483 million in cash that BowX raised in its initial public offering.
Additional reports by Andrew Edgecliffe-Johnson
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