WeWork to cut 41,000 desks in drive for efficiency
Revenue rose and losses narrowed in the third quarter as the coworking giant continued its “disciplined and strategic” transformation.
As part of that transformation, WeWork plans to close about 40 of its “underperforming” locations in the US, totalling 41,000 workstations.
The company said it expects the closures to reduce top-line revenue, though adding that this would eventually add $140m in annual adjusted EBITDA due to lower expenses.
Revenue in Q3 2022 totalled $817m, up 23.6% on the same period last year. Net losses in the quarter fell to $629m (2021: $844m).
Physical occupancy hit 72%, rising four percentage points from last year, while physical memberships rose 23% to 671,000.
Though its physical locations are recovering, WeWork is focusing on both management agreements and flexible memberships. WeWork’s access products, which offer monthly memberships to coworking spaces around the world, saw revenue rose 135% to $47m in the third quarter.
The company also signed for 20 new locations around the world with a mix of management, revenue sharing and traditional leases.
Sandeep Mathrani, CEO and chairman of WeWork, said: “Our third quarter results illustrate how our disciplined and strategic approach to transforming our business and delivering holistic solutions for a new world of work are paying off. The long-term value of flexibility is clear, and we remain focused on strengthening our business while navigating a volatile macroeconomic environment.
“As evidenced by our growth in revenue, reduced costs, optimised portfolio and reinforced balance sheet, we are leveraging all the tools at our disposal to continue executing against our goals.”
WeWork’s results follow IWG reporting a similar 25% rise in revenue driven by capital-light contracts.
WeWork’s share price has risen nearly 50% from a low of $2.01 less than a month ago. However, the operator is still trading at almost 80% below its share price on 22 October 2021 after completing a merger with BowX Acquisition Corp, the SPAC that took WeWork public.
A wave of SPACs – blank cheque companies created to list target businesses – last year resulted in several proptech and real estate IPOs. However, as enthusiasm waned, these companies have seen their market caps plummet.
At the time of writing, Opendoor, which recently laid off 18% of its employees, is down 94.6% on its February 2021 high. Matterport is trading at $3.50 per share, down from $27.86 in November 2021, despite a recent surge off the back of better-than-expected third quarter results.
Meanwhile, a deal to take access control company Brivo public fell through earlier this year.
Brivo has since agreed a $75m credit facility with Runway Growth Capital “to continue developing its successful ecosystem of access control solutions”.