WeWork's First Public Earnings Report Shows Narrowing Losses, Year-Over-Year Revenue Decline
Now that its long, strange trip from a failed IPO to merger with a special-purpose acquisition company is complete, WeWork is just another publicly traded enterprise.
The flexible office space provider released its earnings report for the third quarter on Monday, the first since officially going public in October. In the quarter, WeWork reported a net loss of $844M, an improvement of more than $100M over the nearly $1B it lost in Q3 of 2020, Reuters reports. The smaller loss was largely a result of cost-cutting measures over the intervening year, as its Q3 revenue was $661M, compared to over $810M in the same period of 2020. The quarter still represented an improvement over Q2, when revenue totaled $593M.
WeWork ended the third quarter with 766,000 workstations across its consolidated portfolio, down from 770,000 in Q2 and from 962,000 in Q3 of last year. Its total membership grew from 406,000 in Q2 to 464,000 this past quarter while its physical occupancy grew from 50% to 56%, according to the earnings report. Including 30,000 memberships that have been committed but not moved in, WeWork's occupancy will reach 60%.
Enterprise memberships, which come from agreements with larger companies, accounted for 47% of WeWork's total memberships, the first time in at least a year such memberships were less than half of its total. WeWork's consolidated portfolio excludes locations in China, India and Israel, which were spun off into separate companies and now only bring in licensing fees, the company said in its report.
In a meeting with investors ahead of completion of WeWork's merger with BowX Acquisition Corp. in October, WeWork CEO Sandeep Mathrani estimated the company would lose a total of $1.5B in 2021 before turning profitable at some point next year. Though Mathrani has presided over a period of belt-tightening, he told investors WeWork will resume growing its location count in Q4 and beyond.
Though it is still not a revenue-generating company, WeWork's value, when compared with its projected earnings in 2023, is in line with its largest publicly traded competitor, IWG. Though SoftBank Group remains the company's largest shareholder by far, the days of excess driven by former CEO Adam Neumann and SoftBank head Masayoshi Son appear to be over.
CORRECTION, NOV. 16, 10:10 A.M. ET: A previous version of this article did not fully contextualize WeWork's Q3 results. The story and headline have been updated.