Receive free WeWork updates
We’ll send you a myFT Daily Digest email rounding up the latest WeWork news every morning.
WeWork, the US office space company SoftBank once valued at $47bn, has warned for the first time that it faces “substantial doubt” about its ability to continue as a going concern.
In a second-quarter earnings report that fell short of its guidance from three months ago, WeWork said its outlook depended on a series of plans including further restructuring and a search for additional capital over the next 12 months.
David Tolley, who has served as interim chief executive officer since Sandeep Mathrani stepped down as CEO in May, blamed challenging economic and property market conditions for a weaker than expected performance in recent months.
“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,” he said.
WeWork has been overhauling a cash-consuming business model since a failed attempt to go public in 2019, which precipitated the exit of co-founder Adam Neumann. It has exited or amended 590 leases, cutting about $12.7bn from future lease commitments. Tolley said it would be “doubling down on our real estate portfolio optimisation efforts”.
The company now has 512,000 members in 610 locations in 33 countries. Its memberships declined by 3 per cent year over year and occupancy in its buildings slipped from 73 per cent to 72 per cent.
On a consolidated basis — which excludes locations in China, Israel and South Africa where it receives a management fee — WeWork’s revenues rose 4 per cent to $844mn in the second quarter, reaching the low end of its previous guidance.
Net losses almost halved from $635mn a year ago, but a $36mn adjusted loss before interest, tax, depreciation and amortisation was far below the range it had told investors to expect.
Shares in WeWork, which eventually went public in 2021 by merging with a blank-cheque company, had already fallen by 95 per cent in the past year, and they fell by another third in after-hours trading to 14 cents. Its 2025 bonds last traded at 34 cents on the dollar.
The earnings miss comes just three months after the company completed a financial restructuring that cut its debt load by about $1.2bn. At the end of June it had $680mn of liquidity, it said, including $205mn of cash.
Continuing as a going concern would depend, it said, on a series of actions, including negotiating more favourable leases, controlling costs and seeking fresh capital via the issuance of debt or stock or asset sales.
Additional reporting by Harriet Clarfelt in New York
