Losses dominate but revenue rises in WeWork’s Q3 results

WeWork reported an 11% rise in revenue in the third quarter as the company hailed a continuation of “strong momentum” – despite incurring a net loss of $844m.

Total revenue came to $661m – up from $593m in Q2  – while physical occupancy in its offices rose from 50% to 56%.

In its first results since listing on the New York Stock Exchange, WeWork reported that net losses have fallen from a high of £2.1bn in Q1 2021. However, in the nine months to 30 September, losses have totalled $3.8bn – 43.6% above the same period in 2020.

At the time of writing, WeWork’s share price has risen 2% to $9.42 following the publication of its results. This is 28.5% below its peak closing price of $13.18 on 25 October, days after the company went public via a SPAC.

New partnerships

Management deals have become a central part of WeWork’s product, and the company has started to partner with landlords and asset managers across real estate to roll out its WeWork Workplace management software.

These partnerships include deals with Cushman & Wakefield and Ivanhoé Cambridge, with the latter planning to open an 11,000 sq ft flexible office space in Montreal’s Place Ville Marie.

In its results announcement, WeWork said: “The partnership [with Ivanhoé Cambridge] further demonstrates the value of WeWork’s hospitality and management expertise as certain landlords look for opportunities to enrich their offerings to tenants with flexibility and community.”

Growth in leases

WeWork’s desk sales totalled 9.3m sq ft in Q3, bringing its physical occupancy rate to 56%. According to the results, its sales in the US were the equivalent of 9% of the entire country’s traditional office leasing activity, despite WeWork accounting for half a percent of office stock across the US.

The company calculated that figure by extrapolating a square footage for the desks that it sold – total number of desks multiplied by 60 sq ft per desk – and comparing that with total office leases in the wider market.

By the same metric, WeWork’s activity in London was the equivalent of 37% of total traditional office leasing activity in the UK capital in Q3 2021.

Although the comparison between WeWork desk activity and office leases is not exactly like-for-like, the implication is that there is an active market for flexible workspace in global cities that operators have to respond to.