WeWork Inc. (NYSE: WE) ("WeWork"), the leading global flexible
space provider, disclosed financial results today for the three and
six months ended June 30, 2023. Second quarter highlights
include:
- Consolidated revenue for the second quarter 2023 was $844
million, an increase of 4% year-over-year and up 7% for the first
half 2023 year-over-year.
- Net loss was $(397) million, a $238 million improvement
year-over-year, and an improvement of $443 million for the first
half 2023 year-over-year.
- Adjusted EBITDA was $(36) million, a $98 million improvement
year-over-year and a $281 million improvement for the first half
2023 year-over-year.
- Consolidated physical occupancy was 72% at the end of the
second quarter 2023, an increase from 70% at the end of the second
quarter 2022.
(Amounts in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Consolidated Revenue
$
844
$
815
$
1,693
$
1,580
Net loss
(397
)
(635
)
(696
)
(1,139
)
Adjusted EBITDA(1)
(36
)
(134
)
(65
)
(346
)
(1) Adjusted EBITDA is a non-GAAP measure.
See Appendix for reconciliation and other information.
“In a difficult operating environment, we have delivered solid
year-over-year revenue growth and dramatic profitability
improvements,” David Tolley, Interim Chief Executive Officer,
commented. “Excess supply in commercial real estate, increasing
competition in flexible space and macroeconomic volatility drove
higher member churn and softer demand than we anticipated,
resulting in a slight decline in memberships.”
“We are confident in our ability to meet the evolving workplace
needs of businesses of all sizes across sectors and geographies,
and our long term company vision remains unchanged,” continued
Tolley. “Although we have more work to do, the talent and energy of
the WeWork team is extraordinary and we are resolutely focused on
delivering for our members for the long term. The company’s
transformation continues at pace, with a laser focus on member
retention and growth, doubling down on our real estate portfolio
optimization efforts, and maintaining a disciplined approach to
reducing operating costs.”
Space-as-a-Service:
- As of June 30, 2023, WeWork's systemwide real estate portfolio
consisted of 777 locations across 39 countries, supporting
approximately 906,000 workstations and 653,000 physical
memberships, equating to physical occupancy of 72%, and a decrease
in physical memberships of 1% year-over-year.
- As of June 30, 2023, WeWork’s consolidated real estate
portfolio consisted of 610 locations across 33 countries, which
supported approximately 715,000 workstations and 512,000 physical
memberships, equating to physical occupancy of 72%, and a decrease
in physical memberships of 3% year-over-year.
- Average revenue per physical member was $502 in the second
quarter of 2023, an increase of 4% from the second quarter
2022.
WeWork Access: All Access consolidated memberships were
approximately 75,000 in the second quarter of 2023, an increase of
21% year-over-year.
Liquidity On May 5, 2023, the Company closed on its
previously announced debt exchange and restructuring transactions.
As of June 30, 2023, the Company had $680 million of liquidity,
consisting of $205 million of cash and $475 million of capacity
under its delayed draw, first lien notes, of which $175 million
were drawn in July 2023.
In addition, as disclosed in WeWork’s Quarterly Report for the
three and six months ended June 30, 2023 (the “Second Quarter
10-Q”), as a result of the Company’s losses and projected cash
needs, combined with increased member churn and current liquidity
levels, substantial doubt exists about the Company’s ability to
continue as a going concern. The Company’s ability to continue as a
going concern is contingent upon successful execution of
management’s plan to improve liquidity and profitability over the
next 12 months, which includes, without limitation:
- Reducing rent and tenancy costs via restructuring actions and
negotiation of more favorable lease terms;
- Increasing revenue by reducing member churn and increasing new
sales;
- Controlling expenses and limiting capital expenditures;
and
- Seeking additional capital via issuance of debt or equity
securities or asset sales.
Earnings Conference Call: WeWork management will host an
earnings conference call at 8:00 a.m. EDT on August 9, 2023.
Earnings call details will be available on WeWork’s Investor
Relations website at investors.wework.com. Questions must be
submitted in advance to investor@wework.com. Please visit the
Investors section of the Company’s website at investors.wework.com
for event information.
Source: We Work Category: Investor Relations, Earnings
About WeWork WeWork Inc.
(NYSE: WE) was founded in 2010 with the vision to create
environments where people and companies come together and do their
best work. Since then, we’ve become the leading global flexible
space provider committed to delivering technology-driven turnkey
solutions, flexible spaces, and community experiences. For more
information about WeWork, please visit us at 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 implement its business
plan; WeWork’s ability to refinance, extend, restructure or repay
outstanding debt; its outstanding indebtedness; its liquidity needs
to operate its business and execute its strategy, and related use
of cash; its ability to raise capital through equity issuances,
asset sales or the incurrence of debt; WeWork’s ability to fully
execute actions and steps that would be probable of mitigating the
existence of substantial doubt regarding its ability to continue as
a going concern; retail and credit market conditions; higher cost
of capital and borrowing costs; impairments; its current and
projected liquidity needs; changes in general economic conditions,
including as a result of inflation, the COVID-19 pandemic and the
conflict in Ukraine; WeWork’s expectations regarding its exits of
underperforming locations, including the timing of any such exits
and its ability to retain its members; delays in customers and
prospective customers returning to the office and taking occupancy,
or changes in the preferences of customers and prospective
customers with respect to remote or hybrid working, as a result of
the COVID-19 pandemic leading to a parallel delay, or potentially
permanent change, in receiving the corresponding revenue; the
health of the commercial real estate market; and the impact of
foreign exchange rates on WeWork’s financial performance.
Forward-looking statements speak only as of the date they are made.
WeWork 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 (the “SEC”).
WeWork undertakes no duty or obligation to update or revise these
forward-looking statements, whether as a result of new information,
future developments, or otherwise, except as required by law.
Use of Non-GAAP Financial Measures and
Other Performance Indicators This press release includes
certain financial measures not presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”): Adjusted EBITDA and Free Cash Flow. 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.
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, net depreciation and amortization, 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
Consolidated Financial Statements included in our Second Quarter
10-Q, filed with the SEC on August 8, 2023, net of any insurance or
other recoveries, significant non-ordinary course asset impairment
charges and restructuring and other related (gains)/costs.
Free Cash Flow We also supplement our GAAP results by
evaluating Free Cash Flow, a non-GAAP measure. Free Cash Flow is
defined as net cash provided by (used in) operating activities less
purchases of property, equipment and capitalized software, each as
presented in the Company's consolidated statements of cash flows
and 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.
(Other key performance indicators (in
thousands, except for revenue in millions and
percentages)):
June 30, 2023
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
Other key performance
indicators:
Consolidated
Locations(1)
Membership and service revenues
$
835
$
838
$
834
$
809
$
796
Other revenue
4
5
10
2
14
Consolidated total revenue, excluding
Unconsolidated Locations Management fees
$
839
$
843
$
844
$
811
$
810
Workstation Capacity
715
720
731
756
749
Physical Memberships
512
527
547
536
528
All Access and Other Legacy
Memberships
75
75
70
67
62
Memberships
587
602
617
603
589
Physical Occupancy Rate
72
%
73
%
75
%
71
%
70
%
Enterprise Physical Membership
Percentage
41
%
45
%
46
%
47
%
45
%
Unconsolidated
Locations(1)
Membership and service revenues(2)
$
135
$
133
$
129
$
132
$
134
Workstation Capacity
191
184
175
173
172
Physical Memberships
141
137
135
135
133
All Access and Other Virtual
Memberships
2
2
1
1
—
Memberships
143
139
136
136
134
Physical Occupancy Rate
74
%
75
%
77
%
78
%
77
%
Systemwide
Locations
Membership and service revenues(3)
$
970
$
971
$
963
$
941
$
930
Consolidated other revenue
4
5
10
2
14
Systemwide revenue(3)
$
974
$
976
$
973
$
943
$
944
Workstation Capacity
906
904
906
928
922
Physical Memberships
653
664
682
671
661
All Access and Other Legacy
Memberships
77
77
71
68
62
Memberships
730
741
754
739
723
Physical Occupancy Rate
72
%
73
%
75
%
72
%
72
%
(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 June 30, 2023, our India, China, Israel, South
Africa and certain Common Desk locations are our only
Unconsolidated Locations.
(2)
Unconsolidated membership and service
revenues represents the results of Unconsolidated Locations that
typically generate ongoing management fees for the Company at rates
ranging from 2.75% to 7.00% of applicable revenue.
(3)
Systemwide Location membership and service
revenues represents the results of all locations regardless of
ownership.
WEWORK INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
June 30,
December 31,
(Amounts in millions, except share and
per share amounts)
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
205
$
287
Accounts receivable and accrued revenue,
net of allowance of $8 as of June 30, 2023 and $13 as of December
31, 2022
118
109
Prepaid expenses
135
138
Other current assets
286
155
Total current assets
744
689
Property and equipment, net
3,860
4,391
Lease right-of-use assets, net
9,275
11,243
Equity method and other investments
49
63
Goodwill and intangible assets, net
735
737
Other assets (including related party
amounts of $75 as of June 30, 2023 and $384 as of December 31,
2022)
400
740
Total assets
$
15,063
$
17,863
Liabilities
Current liabilities:
Accounts payable and accrued expenses
$
455
$
526
Members’ service retainers
434
445
Deferred revenue
112
151
Current lease obligations
883
936
Other current liabilities
305
172
Total current liabilities
2,189
2,230
Long-term lease obligations
13,280
15,598
Long-term debt, net (including amounts due
to related parties of $458 as of June 30, 2023 and $1,650 as of
December 31, 2022)
2,910
3,208
Other liabilities
277
282
Total liabilities
18,656
21,318
Commitments and contingencies
Redeemable noncontrolling interests
(33
)
(20
)
Equity
WeWork Inc. shareholders' equity
(deficit):
Preferred stock; par value $0.0001;
100,000,000 shares authorized, zero issued and outstanding as of
June 30, 2023 and December 31, 2022
—
—
Common stock Class A; par value $0.0001;
4,874,958,334 shares authorized, 2,112,965,359 shares issued and
2,110,021,147 shares outstanding as of June 30, 2023, and
1,500,000,000 shares authorized, 711,106,961 shares issued and
708,162,749 shares outstanding as of December 31, 2022
—
—
Common stock Class C; par value $0.0001;
25,041,666 shares authorized, 19,938,089 shares issued and
outstanding as of June 30, 2023 and December 31, 2022
—
—
Treasury stock, at cost; 2,944,212 shares
held as of June 30, 2023 and December 31, 2022
(29
)
(29
)
Additional paid-in capital
13,004
12,387
Accumulated other comprehensive income
(loss)
97
149
Accumulated deficit
(16,790
)
(16,177
)
Total WeWork Inc. shareholders'
deficit
(3,718
)
(3,670
)
Noncontrolling interests
158
235
Total equity
(3,560
)
(3,435
)
Total liabilities and equity
$
15,063
$
17,863
WEWORK INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except share and
per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
844
$
815
$
1,693
$
1,580
Expenses:
Location operating expenses—cost of
revenue (exclusive of depreciation and amortization of $149 and
$150 for the three months ended and $290 and $308 for the six
months ended June 30, 2023 and 2022, respectively, shown separately
below)
725
736
1,449
1,472
Pre-opening location expenses
8
38
15
85
Selling, general and administrative
expenses
150
189
305
397
Restructuring and other related (gains)
costs
(107
)
(26
)
(165
)
(156
)
Impairment expense/(gain on sale)
263
36
340
127
Depreciation and amortization
156
158
304
329
Total expenses
1,195
1,131
2,248
2,254
Loss from operations
(351
)
(316
)
(555
)
(674
)
Interest and other income (expenses),
net:
Interest expense (including related party
expenses of $44 and $132 for the three months ended and $124 and
$222 for the six months ended June 30, 2023 and 2022,
respectively)
(102
)
(159
)
(223
)
(272
)
Foreign currency gain (loss)
20
(157
)
51
(201
)
Other income (expense), net
41
—
33
10
Total interest and other income
(expenses), net
(41
)
(316
)
(139
)
(463
)
Pre-tax loss
(392
)
(632
)
(694
)
(1,137
)
Income tax benefit (provision)
(5
)
(3
)
(2
)
(2
)
Net loss
(397
)
(635
)
(696
)
(1,139
)
Net loss attributable to noncontrolling
interests:
Redeemable noncontrolling interests —
mezzanine
10
15
16
36
Noncontrolling interest — equity
38
43
67
91
Net loss attributable to WeWork Inc.
$
(349
)
$
(577
)
$
(613
)
$
(1,012
)
Net loss per share attributable to Class A
common stockholders:
Basic
$
(0.21
)
$
(0.76
)
$
(0.51
)
$
(1.33
)
Diluted
$
(0.21
)
$
(0.76
)
$
(0.51
)
$
(1.33
)
Weighted-average shares used to compute
net loss per share attributable to Class A common stockholders,
basic and diluted
1,626,430,041
761,552,438
1,199,105,476
760,620,470
WEWORK INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June
30,
(Amounts in millions)
2023
2022
Cash Flows from Operating
Activities:
Net loss
$
(696
)
$
(1,139
)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation and amortization
304
329
Impairment expense/(gain on sale)
340
127
Stock-based compensation expense
6
26
Non-cash interest expense
57
149
Non-cash debt extinguishment
(35
)
—
Foreign currency (gain) loss
(51
)
201
Other non-cash operating expenses
15
42
Changes in operating assets and
liabilities:
Operating lease right-of-use assets
1,895
610
Current and long-term lease
obligations
(2,320
)
(798
)
Accounts receivable and accrued
revenue
1
14
Other assets
4
(22
)
Accounts payable and accrued expenses
(42
)
(90
)
Deferred revenue
(40
)
2
Other liabilities
32
14
Net cash provided by (used in) operating
activities
(530
)
(535
)
Cash Flows from Investing
Activities:
Purchases of property, equipment and
capitalized software
(116
)
(175
)
Other investing
(5
)
2
Net cash provided by (used in) investing
activities
(121
)
(173
)
Cash Flows from Financing
Activities:
Proceeds from issuance of debt
1,277
350
Proceeds from issuance of stock
34
—
Repayments of debt
(652
)
(4
)
Debt and equity issuance costs
(48
)
(17
)
Additions to members’ service
retainers
178
213
Refunds of members’ service retainers
(191
)
(169
)
Other financing
(4
)
35
Net cash provided by (used in) financing
activities
594
408
Effects of exchange rate changes on cash,
cash equivalents and restricted cash
(3
)
(3
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(60
)
(303
)
Cash, cash equivalents and restricted
cash—Beginning of period
299
935
Cash, cash equivalents and restricted
cash—End of period
$
239
$
632
June 30,
(Amounts in millions)
2023
2022
Cash and cash equivalents
$
205
$
625
Restricted cash - current
29
—
Cash and cash equivalents held for
sale
5
—
Restricted cash
—
7
Cash, cash equivalents and restricted
cash, including cash held for sale
$
239
$
632
A reconciliation of net loss, the most comparable GAAP measure,
to Adjusted EBITDA is set forth below:
Three Months Ended June
30,
Six Months Ended June
30,
(Amounts in millions)
2023
2022
2023
2022
Net loss(1)
$
(397
)
$
(635
)
$
(696
)
$
(1,139
)
Income tax (benefit) provision(1)
5
3
2
2
Interest and other (income) expenses,
net(1)
41
316
139
463
Depreciation and amortization(1)
156
158
304
329
Restructuring and other related (gains)
costs(1)
(107
)
(26
)
(165
)
(156
)
Impairment expense/(gain on sale)(1)
263
36
340
127
Stock-based compensation expense(2)
3
13
6
26
Other, net(3)
—
1
5
2
Adjusted EBITDA
$
(36
)
$
(134
)
$
(65
)
$
(346
)
(1)
As presented on our Condensed Consolidated Statements of
Operations.
(2)
Represents the non-cash expense of our equity compensation
arrangements for employees, directors, and consultants.
(3)
Other, net includes stock-based payments for services rendered
by consultants, change in fair value of contingent consideration
liabilities, legal, tax and regulatory reserves or settlements, net
of any insurance or other recoveries, and expense related to
mergers, acquisitions, divestitures and capital raising activities,
all as included in selling, general and administrative expenses on
the Consolidated Statements of Operations.
A reconciliation of net cash provided by (used in) operating
activities, the most comparable GAAP measure, to Free Cash Flow is
set forth below:
Six Months Ended June
30,
(Amounts in millions)
2023
2022
Net cash provided by (used in) operating
activities (1)
$
(530
)
$
(535
)
Less: Purchases of property, equipment and
capitalized software (1)
(116
)
(175
)
Free Cash Flow
$
(646
)
$
(710
)
(1)
As presented on our Condensed Consolidated
Statements of Cash Flows.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808215543/en/
Investors Kevin Berry investor@wework.com
kevin.berry2@wework.com Media press@wework.com
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