WeWork Inc. (NYSE: WE) ("WeWork"), one of the leading global
flexible space providers, today reported financial results for its
third quarter ending on September 30, 2021.
- Total revenue for the third quarter was $661 million, an 11%
increase compared to total revenue of $593 million in the prior
quarter.
- Adjusted EBITDA loss was $356 million for the third quarter, a
$93 million improvement relative to the prior quarter Adjusted
EBITDA loss of $449 million.1
- WeWork ended the third quarter with pro forma cash and unfunded
cash commitments of $2.3 billion, including $477 million of
available cash on hand as of September 30, 2021, $1.2 billion of
net proceeds from the business combination with BowX, $550 million
currently available under the Senior Secured Notes facility, the
repayment of the $350 million secured commercial paper facility and
$450 million currently available under the $1.75 billion letter of
credit facility.
Company Operating Results
- As of September 30, 2021, WeWork's global real estate portfolio
consisted of 764 locations across 38 countries, supporting
approximately 932,000 workstations and 546,000 physical
memberships.
- WeWork’s consolidated real estate portfolio included 631
locations across 33 countries, supporting approximately 766,000
workstations and 432,000 physical memberships.
- Consolidated gross desk sales totaled 155,000 in the third
quarter, or 9.3 million square feet sold. Consolidated new desk
sales totaled 84,000 in the third quarter.
- Physical occupancy continued to trend upwards to 56% across
consolidated operations as of the end of September, up from 50% at
the end of Q2 2021. Including the incremental 30,000 net
memberships that are already contracted to move in, physical
occupancy would increase to 60%.
- All Access memberships increased to 32,000 in the third
quarter, up from 20,000 in Q2 2021. These All Access memberships
represent an additional four percentage points of occupancy.
Company Consolidated Financial Results1
- Revenue of $661 million in the third quarter increased from
$593 million in the second quarter. Revenue in September was $230
million, making it the fifth consecutive month of revenue growth
and the highest monthly revenue recorded in 2021.
- Net loss of $844 million in the quarter, which included $262
million of non-cash and non-recurring expenses, primarily from
Depreciation, Amortization and Impairments.
- Adjusted EBITDA loss of $356 million for the quarter,
represents a $93 million improvement relative to the second quarter
Adjusted EBITDA loss of $449 million.
- Operating Cash Flow was $(380) million for the third quarter.
Free Cash Flow was $(430) million, which was an improvement of $219
million relative to the prior quarter.
- On October 20, 2021, WeWork and BowX Acquisition Corp. ("BowX")
announced the closing of their business combination. The combined
company was named "WeWork Inc." and began trading on the New York
Stock Exchange under the ticker symbol “WE” starting October 21,
2021. The business combination provided WeWork with the previously
announced gross cash proceeds of approximately $1.3 billion.
- Pro forma for the closing of the business combination with
BowX, WeWork ended the third quarter with cash and unfunded cash
commitments of $2.3 billion, which includes $477 million of
available cash on hand as of September 30, 2021, $1.2 billion of
net proceeds from the business combination, $550 million currently
available under the Senior Secured Notes facility, the repayment of
the $350 million secured commercial paper facility and $450 million
of current availability under the $1.75 billion LC facility.
- The Company regularly evaluates market conditions to enhance
its capital structure and diversify its investor base, and from
time to time may refinance, redeem, repurchase or otherwise modify
existing debt, or issue equity or equity-linked securities.
Space-as-a-Service:
Q3 saw a continuation of the strong momentum seen in the second
quarter of 2021. WeWork's consolidated gross desk sales, which
include renewals, of 155,000 equates to 9.3 million square feet
sold in the third quarter. New desk sales totaled 84,000 in the
same period. In October, WeWork reported preliminary gross desk
sales of 45,000, equating to 2.7 million square feet, and
preliminary new desk sales of 25,000.
WeWork continued to take an outsized share of overall market
leasing activity compared to traditional commercial office leasing
activity. While WeWork accounts for about half a percent of the
U.S. office inventory, the Company sold the equivalent of over 9%
of U.S. office leasing activity in the third quarter. At the
market-level, WeWork's Q3 gross sales in Manhattan were equivalent
to 20% of the traditional office market take-up while WeWork's
portfolio of 7 million square feet accounts for approximately 1% of
total office stock. WeWork saw similar leasing activity in a number
of its largest markets; WeWork's gross sales equated to 37% of
London’s traditional office take-up and 13% of Paris' take-up while
accounting for approximately 1% of stock in the two markets, and
23% of Boston's take-up in the third quarter, where WeWork
represents approximately 2% of the office stock.
WeWork’s consolidated physical memberships increased to 432,000,
for a physical occupancy rate of 56% as of the end of September.
Including incremental net memberships that are contracted to move
in, physical occupancy would increase to 60%. As of October,
preliminary physical occupancy had increased three percentage
points to 59%. Including net memberships that are contracted to
move in, preliminary October physical occupancy was 61%.
Access:
All Access memberships were 32,000 at the end of September, an
increase of 60% quarter-over-quarter, or approximately 1,000
memberships per week. By October, preliminary All Access
memberships had increased to 38,000. To continue expanding the
member acquisition funnel for Access products, WeWork has
successfully signed and launched affinity partnerships with
American Express, Uber, American Airlines, Brex, and, more
recently, Better Mortgage, recruiter.com and Union Square
Ventures.
WeWork Workplace:
As companies increasingly embrace more flexible and hybrid work
strategies, the WeWork Workplace experiential management offering
provides a turnkey solution to manage how and where employees work
across assets and markets. Leveraging the software that the company
has built over the past 10 years to manage its own spaces, power
online booking, and optimize utilization through back-end data
analysis, WeWork believes its proprietary technology can be used by
third party organizations across their real estate portfolios.
In October, WeWork solidified a strategic business investment
with Cushman & Wakefield to market its workplace management
software. This announcement built on WeWork's existing management
agreement with Hudson’s Bay Company to manage and operate SaksWorks
locations in the Tri-State area, including Brookfield Place and the
Saks Fifth Avenue New York flagship in Manhattan, Manhasset,
Greenwich, and Eastchester.
Last month, WeWork announced an agreement with Ivanhoé Cambridge
to open a flexible space offering in Place Ville Marie, one of
Montreal’s iconic and prestigious real estate complexes.
Anticipated to open in Spring of 2022, the 11,000 square foot space
will leverage WeWork’s management expertise and provide flexible
space solutions as an amenity to Ivanhoé’s tenants. The partnership
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.
Together, the Cushman & Wakefield, Hudson's Bay Company and
Ivanhoé Cambridge agreements reflect WeWork's ability to tailor its
product suite to suit unique needs of members and landlords
alike.
About WeWork
WeWork was founded in 2010 with the vision to create
environments where people and companies come together and do their
best work. Since opening our first location in New York City, we’ve
grown into a global flexible space provider committed to delivering
technology-driven flexible solutions, inspiring spaces, and
unmatched community experiences. Today, we’re constantly
reimagining how the workplace can help everyone, from freelancers
to Fortune 500s, be more motivated, productive, and connected. For
more information about WeWork, please visit us at
https://wework.com.
Forward-Looking
Statements
Certain statements made in this press release may be deemed
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended. These
forward-looking statements generally are identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Although WeWork
believes the expectations reflected in any forward-looking
statement are based on reasonable assumptions, it can give no
assurance that its expectations will be attained, and it is
possible that actual results may differ materially from those
indicated by these forward-looking statements due to a variety of
risks, uncertainties and other factors. Such factors include, but
are not limited to, WeWork’s ability to refinance, extend,
restructure or repay near and intermediate term debt; its
indebtedness; its ability to raise capital through equity
issuances, asset sales or the incurrence of new debt; retail and
credit market conditions; impairments; its liquidity demand;
changes in general economic conditions, including as a result of
the COVID-19 pandemic; delays in customers and prospective
customers returning to the office and taking occupancy as a result
of the COVID-19 pandemic and the emergence of the Delta variant
leading to a parallel delay in receiving the corresponding revenue;
and WeWork's inability to implement its business plan or meet or
exceed its financial projections. Forward-looking statements speak
only as of the date they are made. WeWork Company discusses these
and other risks and uncertainties in its annual and quarterly
periodic reports and other documents filed with the U.S. Securities
and Exchange Commission. WeWork may update that discussion in its
periodic reports, but otherwise takes no duty or obligation to
update or revise these forward-looking statements, whether as a
result of new information, future developments, or otherwise.
Use of Non-GAAP Financial
Measures
This press release includes certain financial measures not
presented in accordance with generally accepted accounting
principles in the United States (“GAAP”), including Adjusted EBITDA
and Free Cash Flow (including on a forward-looking basis). These
financial measures are not measures of financial performance in
accordance with GAAP and may exclude items that are significant in
understanding and assessing our financial results. Therefore, these
measures should not be considered in isolation or as an alternative
to net loss or other measures of profitability, liquidity or
performance under GAAP. You should be aware that WeWork’s
presentation of these measures may not be comparable to similarly
titled measures used by other companies, which may be defined and
calculated differently. WeWork believes that these non-GAAP
measures of financial results (including on a forward-looking
basis) provide useful supplemental information to investors about
WeWork. WeWork’s management uses forward-looking non-GAAP measures
to evaluate WeWork’s projected financials and operating
performance. Additionally, to the extent that forward-looking
non-GAAP financial measures are provided, they are presented on a
non-GAAP basis without reconciliations of such forward-looking
non-GAAP measures due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliations.
Non-GAAP Financial
Definitions
Adjusted Earnings Before Interest Expense, Income Tax,
Depreciation, and Amortization (“Adjusted EBITDA”)
We supplement our GAAP results by evaluating Adjusted EBITDA, a
non-GAAP measure. We define "Adjusted EBITDA" as net loss before
income tax (benefit) provision, interest and other (income)
expense, depreciation and amortization expense, stock-based
compensation expense, expense related to stock-based payments for
services rendered by consultants, income or expense relating to the
changes in fair value of assets and liabilities remeasured to fair
value on a recurring basis, expense related to costs associated
with mergers, acquisitions, divestitures and capital raising
activities, legal, tax and regulatory reserves or settlements,
significant legal costs incurred by WeWork in connection with
regulatory investigations and litigation regarding WeWork's 2019
withdrawn initial public offering and the related execution of the
SoftBank Transactions, as defined in Note 1 of the Notes to the
Condensed Consolidated Financial Statements included in our
Quarterly Report for the quarter ended September 30, 2021, net of
any insurance or other recoveries, significant non-ordinary course
asset impairment charges and, to the extent applicable, any impact
of discontinued operations, restructuring charges, and other gains
and losses on operating assets.
Free Cash Flow
Because of the limitations of Adjusted EBITDA, as noted above,
we also supplement our GAAP results by evaluating Free Cash Flow, a
non-GAAP measure. Free Cash Flow is defined as cash flow from
operating activities less cash purchases of property and equipment,
each as presented in WeWork's Condensed Consolidated Statements of
Cash Flows calculated in accordance with GAAP. Free Cash Flow is
both a performance measure and a liquidity measure that we believe
provides useful information to management and investors about the
amount of cash generated by or used in the business. Free Cash Flow
is also a key metric used internally by our management to develop
internal budgets, forecasts and performance targets.
Key Performance Supplemental
Information
(Amounts in ones, except
percentages)
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
September 30,
2020
Other key performance
indicators:
Consolidated
Locations (1), (2), (3)
Workstation capacity
766,000
770,000
804,000
865,000
962,000
Physical Memberships
432,000
386,000
378,000
387,000
480,000
All Access and Other Legacy
Memberships
32,000
20,000
15,000
13,000
34,000
Memberships
464,000
406,000
393,000
401,000
514,000
Physical Occupancy Rate
56
%
50
%
47
%
45
%
50
%
Enterprise Membership Percentage
47
%
51
%
52
%
52
%
54
%
Unconsolidated
Locations (1), (2), (3)
Workstation capacity
165,000
168,000
160,000
166,000
57,000
Physical Memberships
114,000
110,000
97,000
89,000
27,000
Memberships
114,000
111,000
97,000
89,000
27,000
Physical Occupancy Rate
69
%
66
%
61
%
54
%
47
%
Total
Locations
Workstation capacity
932,000
937,000
963,000
1,030,000
1,020,000
Physical Memberships
546,000
496,000
475,000
476,000
507,000
All Access and Other Legacy
Memberships
32,000
20,000
15,000
13,000
34,000
Memberships
578,000
517,000
490,000
490,000
542,000
Physical Occupancy Rate
59
%
53
%
49
%
46
%
50
%
(1)
For certain key performance
indicators the amounts we present are based on whether the
indicator relates to a location for which the revenues and expenses
of the location are consolidated within our results of operations
("Consolidated Locations") or whether the indicator relates to a
location for which the revenues and expenses are not consolidated
within our results of operations, but for which we are entitled to
a management fee for our advisory services ("Unconsolidated
Locations"). As of September 30, 2021, IndiaCo, ChinaCo and Israel
locations are our only Unconsolidated Locations
(2)
Effective October 2, 2020, the
Company deconsolidated ChinaCo and as a result, beginning with the
fourth quarter of 2020, the workstation capacity, memberships,
occupancy and enterprise memberships percentages for Consolidated
Locations excludes the impact of ChinaCo locations, and they are
included in Unconsolidated Locations, with no impact on Total
Locations. Prior to October 2, 2020, ChinaCo was still consolidated
and therefore the key performance indicators for ChinaCo are
included in Consolidated Locations.
(3)
On June 1, 2021, we closed a
franchise agreement with Ampa and transferred the building
operations and obligations of our Israel locations to Ampa.
Beginning on June 1, 2021, our Israel locations are no longer
Consolidated Locations and are classified as Unconsolidated
Locations.
LEGACY WEWORK
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
September 30,
December 31,
(Amounts in thousands, except share and
per share amounts)
2021
2020
Assets
Current assets:
Cash and cash equivalents (1)
$
477,244
$
800,535
Accounts receivable and accrued revenue,
net of allowance of $77,468 and $107,806 as of September 30, 2021
and December 31, 2020, respectively
133,695
176,521
Other current assets (including related
party amounts of $0 and $780 as of September 30, 2021 and December
31, 2020, respectively)
402,150
352,172
Total current assets
1,013,089
1,329,228
Property and equipment, net
5,707,310
6,859,163
Lease right-of-use assets, net
13,412,306
15,107,880
Restricted cash (1)
11,275
53,618
Equity method and other investments
197,942
214,940
Goodwill
676,932
679,351
Intangible assets, net
58,257
49,896
Other assets (including related party
amounts of $545,180 and $699,478 as of September 30, 2021 and
December 31, 2020, respectively)
878,766
1,062,258
Total assets (1)
$
21,955,877
$
25,356,334
Liabilities
Current liabilities:
Accounts payable and accrued expenses
(including amounts due to related parties of $76,739 and $14,497 as
of September 30, 2021 and December 31, 2020, respectively)
$
602,777
$
723,411
Members’ service retainers
385,946
358,566
Deferred revenue (including amounts from
related parties of $5,771 and $9,717 as of September 30, 2021 and
December 31, 2020, respectively)
134,691
176,004
Current lease obligations (including
amounts due to related parties of $22,295 and $10,148 as of
September 30, 2021 and December 31, 2020, respectively)
853,011
847,531
Other current liabilities (including
amounts due to related parties of $0 and $900 as of September 30,
2021 and December 31, 2020, respectively)
437,046
83,755
Total current liabilities
2,413,471
2,189,267
Long-term lease obligations (including
amounts due to related parties of $506,746 and $436,074 as of
September 30, 2021 and December 31, 2020, respectively)
18,401,347
20,263,606
Unsecured related party debt
2,200,000
1,200,000
Convertible related party liabilities,
net
50,482
418,908
Long-term debt, net
659,379
688,356
Other liabilities
246,278
221,780
Total liabilities (1)
23,970,957
24,981,917
Commitments and contingencies (Note
16)
Convertible preferred stock; 959,370,218
shares authorized as of September 30, 2021, and 499,018,795 and
368,912,507 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectively
8,379,182
7,666,098
Redeemable noncontrolling interests
276,162
380,242
LEGACY WEWORK
CONDENSED CONSOLIDATED BALANCE
SHEETS – (CONTINUED)
(UNAUDITED)
September 30,
December 31,
(Amounts in thousands, except share and
per share amounts)
2021
2020
Equity
Legacy WeWork shareholders' equity
(deficit):
Common stock Class A; par value $0.001;
941,647,617 shares authorized as of September 30, 2021, and
176,731,955 and 41,512,605 shares issued and outstanding as of
September 30, 2021 and December 31, 2020, respectively
177
42
Common stock Class B; par value $0.001;
234,910,597 shares authorized as of September 30, 2021 and zero and
129,382,459 shares issued and outstanding as of September 30, 2021
and December 31, 2020, respectively
—
129
Common stock Class C; par value $0.001;
50,967,800 shares authorized as of September 30, 2021, and
24,132,575 and 25,168,938 shares issued and outstanding as of
September 30, 2021 and December 31, 2020, respectively
24
25
Common stock Class D; par value $0.001;
234,910,597 shares authorized as of September 30, 2021, and zero
shares issued and outstanding as of September 30, 2021 and December
31, 2020, respectively
—
—
Additional paid-in capital
2,776,772
2,188,319
Accumulated other comprehensive income
(loss)
(26,573
)
(158,810
)
Accumulated deficit
(13,427,090
)
(9,703,490
)
Total Legacy WeWork shareholders'
deficit
(10,676,690
)
(7,673,785
)
Noncontrolling interests
6,266
1,862
Total equity
(10,670,424
)
(7,671,923
)
Total liabilities and equity
$
21,955,877
$
25,356,334
(1)
The Company's condensed
consolidated balance sheets include assets and liabilities of
consolidated variable interest entities (“VIEs”). As of September
30, 2021 and December 31, 2020, total assets of consolidated VIEs,
after intercompany eliminations, were $2.9 billion and $2.1
billion, respectively, including $100.7 million and $166.6 million
of cash and cash equivalents, respectively, and $10.1 million and
$10.0 million of restricted cash, respectively. Total liabilities
of consolidated VIEs, after intercompany eliminations, were $2.5
billion and $1.7 billion as of September 30, 2021 and December 31,
2020, respectively. Creditors of VIEs do not have recourse against
the general credit of the Company, except relating to certain lease
guarantees totaling $13.5 million and $14.6 billion as of September
30, 2021 and December 31, 2020, respectively, provided by Legacy
WeWork to certain landlords of the VIEs. See Note 5 for additional
details.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
LEGACY WEWORK
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
(Amounts in thousands, except share and
per share data)
2021
2020
2021
2020
Revenue (including related party revenue
of $28,496 and $44,906 for the three months and $116,190 and
$129,383 for the nine months ended September 30, 2021 and 2020,
respectively. See Note 17)
$
661,031
$
810,752
$
1,852,362
$
2,749,369
Expenses:
Location operating expenses—cost of
revenue (exclusive of depreciation and amortization of $162,418 and
$182,967 for the three months and $508,044 and $534,585 for the
nine months ended September 30, 2021 and 2020, respectively, shown
separately below)
752,493
924,363
2,351,305
2,729,165
Pre-opening location expenses
40,367
60,741
117,206
226,660
Selling, general and administrative
expenses(1)
233,928
387,248
733,430
1,312,349
Restructuring and other related costs
15,934
18,964
481,979
155,180
Impairment/(gain on sale) of goodwill,
intangibles and other assets
87,541
253,625
629,126
809,584
Depreciation and amortization
170,816
197,964
535,157
588,120
Total expenses (including related party
expenses of $21,209 and $19,772 for the three months and $59,462
and $65,296 for the nine months ended September 30, 2021 and 2020,
respectively. See Note 17)
1,301,079
1,842,905
4,848,203
5,821,058
Loss from operations
(640,048
)
(1,032,153
)
(2,995,841
)
(3,071,689
)
Interest and other income (expense),
net:
Income (loss) from equity method and other
investments
5,096
2,526
(19,414
)
(44,585
)
Interest expense (including related party
expenses of $(103,713) and $(76,498) for the three months and
$(288,455) and $(171,530) for the nine months ended September 30,
2021 and 2020, respectively. See Note 9 and Note 17)
(121,306
)
(92,956
)
(339,134
)
(231,046
)
Interest income
5,142
4,151
14,597
12,893
Foreign currency gain (loss)
(102,859
)
112,049
(140,784
)
(37,936
)
Gain (loss) from change in fair value of
related party financial instruments (See Note 9)
7,462
13,550
(343,360
)
805,863
Loss on extinguishment of debt
—
(1,041
)
—
(77,336
)
Total interest and other income (expense),
net
(206,465
)
38,279
(828,095
)
427,853
Pre-tax loss
(846,513
)
(993,874
)
(3,823,936
)
(2,643,836
)
Income tax benefit (provision)
2,251
(5,586
)
(5,031
)
(21,701
)
Net loss
(844,262
)
(999,460
)
(3,828,967
)
(2,665,537
)
Net loss attributable to noncontrolling
interests:
Redeemable noncontrolling interests —
mezzanine
42,130
39,461
106,250
643,224
Noncontrolling interest — equity
(268
)
18,736
(883
)
33,352
Net loss attributable to Legacy WeWork
$
(802,400
)
$
(941,263
)
$
(3,723,600
)
$
(1,988,961
)
Net loss per share attributable to Class A
and Class B common stockholders (see Note 15):
Basic
$
(4.54
)
$
(5.51
)
$
(21.31
)
$
(11.65
)
Diluted
$
(4.54
)
$
(5.51
)
$
(21.31
)
$
(11.65
)
Weighted-average shares used to compute
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
176,708,911
170,715,288
174,750,082
170,699,512
(1)
Includes cost of revenue in the
amount of $28.7 million and $67.1 million for the three months and
$61.4 million and $209.6 million for the nine months ended
September 30, 2021 and 2020, respectively. Excludes depreciation
and amortization of none and none for the three months and none and
$0.2 million for the nine months ended September 30, 2021 and 2020,
respectively, shown separately below.
The accompanying notes are an integral part of these condensed
consolidated financial statements.
LEGACY WEWORK
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September
30,
(Amounts in thousands)
2021
2020
Cash Flows from Operating
Activities:
Net loss
$
(3,828,967
)
$
(2,665,537
)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation and amortization
535,157
588,120
Impairment of property and equipment
—
3,541
Impairment/(gain on sale) of goodwill,
intangibles and other assets
629,126
809,584
Non-cash transaction with principal
shareholder
428,289
—
Loss on extinguishment of debt
—
77,336
Stock-based compensation expense
164,023
55,865
Cash paid to settle employee stock
awards
—
(3,141
)
Issuance of stock for services rendered,
net of forfeitures
(2,272
)
14,995
Non-cash interest expense
157,787
119,603
Provision for allowance for doubtful
accounts
20,033
53,549
(Income) loss from equity method and other
investments
19,414
44,585
Distribution of income from equity method
and other investments
3,210
—
Foreign currency (gain) loss
140,784
37,936
Change in fair value of financial
instruments
343,360
(805,863
)
Contingent consideration fair market value
adjustment
—
(122
)
Changes in operating assets and
liabilities:
Operating lease right-of-use assets
1,161,406
646,995
Current and long-term lease
obligations
(1,252,360
)
724,205
Accounts receivable and accrued
revenue
(10,624
)
(46,425
)
Other assets
(37,506
)
(48,651
)
Accounts payable and accrued expenses
32,961
(92,228
)
Deferred revenue
(38,279
)
61,489
Other liabilities
(6,377
)
6,349
Deferred income taxes
1,720
119
Net cash provided by (used in) operating
activities
(1,539,115
)
(417,696
)
Cash Flows from Investing
Activities:
Purchases of property and equipment
(202,589
)
(1,252,833
)
Capitalized software
(29,433
)
(18,538
)
Change in security deposits with
landlords
3,778
(3,094
)
Proceeds from asset divestitures and sale
of investments, net of cash divested
10,832
1,170,766
Contributions to investments
(26,704
)
(93,357
)
Net cash provided by (used in) investing
activities
(244,116
)
(197,056
)
LEGACY WEWORK
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS – (CONTINUED)
(UNAUDITED)
Nine Months Ended September
30,
(Amounts in thousands)
2021
2020
Cash Flows from Financing
Activities:
Principal payments for property and
equipment acquired under finance leases
(3,397
)
(2,959
)
Proceeds from issuance of debt
—
34,309
Proceeds from unsecured related party
debt
1,000,000
600,000
Proceeds from LC Debt Facility
698,705
—
Repayments of debt
(349,011
)
(813,140
)
Repayment of security deposit loan
(7,942
)
—
Debt and equity issuance costs
—
(11,578
)
Proceeds from exercise of stock options
and warrants
2,417
149
Proceeds from issuance of noncontrolling
interests
30,000
100,628
Distributions to noncontrolling
interests
—
(317,611
)
Payments for contingent consideration and
holdback of acquisition proceeds
(2,523
)
(35,706
)
Proceeds relating to contingent
consideration and holdbacks of disposition proceeds
12,177
—
Additions to members’ service
retainers
330,358
305,432
Refunds of members’ service retainers
(291,828
)
(455,530
)
Net cash provided by (used in) financing
activities
1,418,956
(596,006
)
Effects of exchange rate changes on cash,
cash equivalents and restricted cash
(1,359
)
(4,301
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(365,634
)
(1,215,059
)
Cash, cash equivalents and restricted
cash—Beginning of period
854,153
2,200,688
Cash, cash equivalents and restricted
cash—End of period
$
488,519
$
985,629
September 30,
(Amounts in thousands)
2021
2020
Cash and cash equivalents
$
477,244
$
876,323
Restricted cash
11,275
109,306
Cash, cash equivalents and restricted
cash
$
488,519
$
985,629
Nine Months Ended September
30,
(Amounts in thousands)
2021
2020
Supplemental Cash Flow
Disclosures:
Cash paid during the period for interest
(net of capitalized interest of $0 and $2,981 during 2021 and 2020,
respectively)
$
138,029
$
70,430
Cash received for operating lease
incentives — tenant improvement allowances
306,413
1,062,704
Cash received for operating lease
incentives — broker commissions
670
15,830
Supplemental Disclosure of Non-cash
Investing & Financing Activities:
Property and equipment included in
accounts payable and accrued expenses
78,795
279,485
Conversion of related party liabilities to
into Preferred Stock
711,786
—
Creator Awards production services
reimbursement obligation payable to SoftBank reclassified to
additional paid-in capital
—
21,641
Distribution of investment to
noncontrolling interest holder
—
6,646
Additional ASC 842 Supplemental
Disclosures
Nine Months Ended September
30,
(Amounts in thousands)
2021
2020
Cash paid for fixed operating lease costs
included in the measurement of lease obligations in operating
activities
$
1,720,517
$
1,560,186
Cash paid for interest relating to finance
leases in operating activities
3,225
3,533
Cash paid for principal relating to
finance leases in financing activities
3,398
2,959
Right-of-use assets obtained in exchange
for finance lease obligations
866
920
Right-of-use assets obtained in exchange
for operating lease obligations, net of modifications and
terminations
(1,279,474
)
177,409
The accompanying notes are an integral part of these condensed
consolidated financial statements.
A reconciliation of net loss, the most
comparable GAAP measure, to Adjusted EBITDA is set forth below:
Three Months Ended September
30,
Nine Months Ended September
30,
(Amounts in thousands)
2021
2020
2021
2020
Net loss
$
(844,262
)
$
(999,460
)
$
(3,828,967
)
$
(2,665,537
)
Income tax (benefit) provision(a)
(2,251
)
5,586
5,031
21,701
Interest and other (income) expenses,
net(a)
206,465
(38,279
)
828,095
(427,853
)
Depreciation and amortization(a)
170,816
197,964
535,157
588,120
Restructuring and other related
costs(a)
15,934
18,964
481,979
155,180
Impairment/(gain on sale) of goodwill,
intangibles and other assets(a)
87,541
253,625
629,126
809,584
Stock-based compensation expense(b)
4,040
9,029
61,932
43,847
Stock-based payments for services rendered
by consultants(b)
1
5,161
(2,272
)
14,995
Change in fair value of contingent
consideration liabilities(c)
—
72
—
(122
)
Legal, tax and regulatory reserves and
settlements
258
280
7,754
1,353
Legal costs related to regulatory
investigations and litigation(d)
2,735
19,996
25,054
41,013
Expense related to mergers, acquisitions,
divestitures and capital raising activities
2,724
(125
)
6,533
6,214
Adjusted EBITDA
$
(355,999
)
$
(527,187
)
$
(1,250,578
)
$
(1,411,505
)
(a)
As presented on our condensed
consolidated statements of operations.
(b)
Represents the non-cash expense
of our equity compensation arrangements for employees, directors,
and consultants.
(c)
Represents the change in fair
value of the contingent consideration associated with acquisitions
as included in selling, general and administrative expenses on the
condensed consolidated statements of operations.
(d)
Legal costs incurred by the
Company in connection with regulatory investigations and litigation
regarding the Company’s 2019 withdrawn initial public offering and
the related execution of the SoftBank Transactions, net of any
insurance or other recoveries. See section entitled "Legal Matters"
in Note 16 of the notes to the condensed consolidated financial
statements included elsewhere in this Quarterly Report for details
regarding the related regulatory investigations and litigation
matters.
A reconciliation of net cash provided by
(used in) operating activities, the most comparable GAAP measure,
to Free Cash Flow is set forth below:
Nine Months Ended
September 30,
(Amounts in thousands)
2021
2020
Net cash provided by (used in) operating
activities (a)
$
(1,539,115
)
$
(417,696
)
Less: Purchases of property and equipment
(a)
(202,589
)
(1,252,833
)
Free Cash Flow
$
(1,741,704
)
$
(1,670,529
)
(a)
As presented on our condensed consolidated
statements of cash flows.
________________________________ 1 Throughout this
release, we make certain references to Non-GAAP financial or
operating metrics. Please see “Non-GAAP Financial Definitions” for
more detailed discussion and explanations of the various non-GAAP
financial measures cited in this release.
Source We Work Category: Investor Relations
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211115005697/en/
Investors Chandler Salisbury investor@wework.com
Media Nicole Sizemore press@wework.com
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