WeWork loses $ 2.1 billion and a quarter of its members bitten by blockades

WeWork’s losses nearly quadrupled in the first quarter of this year, to $ 2.1 billion, as the partnership caused more than a quarter of its members to crisis and raised hundreds of millions of dollars to restructure its property portfolio.

Blocking documents viewed by the Financial Times and working on a remote pandemic made WeWork’s losses significantly higher than its $ 556 million net loss in the first three months of 2020, when the coronavirus pandemic had little impact.

The deal with CEO Adam Neumann also resulted in a loss of about $ 500 million, a person close to the company said.

WeWork’s quarterly revenue fell nearly 50% year-over-year to $ 1.1 billion and $ 598 million, and the company lost about 200,000 customers, according to documents viewed by FT. The number of WeWork “members” dropped from 693,000 in March 2020 to 490,000 a year later.

Restructuring and other related costs were $ 56 million in the first quarter of 2020 and $ 494 million in the first quarter of 2021 as we moved out of unprofitable WeWork locations.

The results underscore the measure of WeWork’s challenge, which told investors in March that full-year revenue would rise rapidly from $ 3.2 million last year to 2024 by 2024. This year, he plans to try for the second time.

The company aggressively expanded in anticipation of the initial public offering planned for 2019, leasing it to major office buildings in major cities like London and New York. SoftBank, its main sponsor, provided with billions of dollars in investments, the company had a valuation of $ 47 billion in 2019.

But the valuation fell apart when investors looked at the company’s large expenses and consistent losses, as well as the eccentric culture created by Neumann. Eventually, the planned IPO came out and Neumann left as chief executive.

A close friend of the company added that WeWork has $ 2.2 million in liquidity at its disposal and, excluding one-off losses, is “on the right track in economic and financial terms.”

WeWork has not commented.

Under the command of Sandeep Mathrani, who took over as CEO in February last year, WeWork is cutting costs. Sales, general and administrative expenses were reduced by almost half to $ 274 million between the first quarter of 2020 and the first quarter of 2021. The costs of opening new offices and running existing ones fell by about $ 160 million and about $ 852 million at the same time.

As the new management promises a more compact approach, WeWork is once again trying to make it public by joining the BowX Acquisition to achieve a special goal created by Vivek Ranadivé, the California-based Tibco software group, with a $ 9 billion valuation. .

The deal will channel $ 1.3 billion to WeWork, $ 800 million from institutional investments such as Starwood Capital, Fidelity and BlackRock, and $ 483 million from BowX’s initial public offering.

Additional news by Andrew Edgecliffe-Johnson