WeWork sees ‘encouraging signs’ despite US$2bn net loss
Despite suffering a hefty net loss in Q1 2021, the office-sharing firm saw sales activity pick up to its highest level since 2019.
- WeWork posted a quarterly net loss of US$2.06 billion
- The flexible office space provider also saw revenue plunge 46% year-on-year
- This comes ahead of a planned US listing via a merger with special purpose acquisition company BowX Acquisition Corp
- Nevertheless, the company said it ‘continued to see encouraging signs of recovery’ from a sales standpoint
- Buy and sell WeWork stocks after its initial public offering (IPO) with an IG account
WeWork’s first quarter revenue falls by 46%
WeWork reported a net loss of US$2.06 billion for the first quarter of 2021, ahead of its IPO in the US.
The flexible office space provider posted a first quarter total revenue of US$598 million, which is a year-on-year decline of 46% from Q1 2020’s US$1.1 billion, driven by its exits from non-core businesses.
Net loss was US$2.062 billion for the first quarter, mostly due to US$553 million of interest and other (income) expense (including US$352 million change in fair value of related party transactions, namely SoftBank warrants), and restructuring costs of US$494 million driven by non-cash SoftBank stock purchases and settlement with former CEO Adam Neumann.
Adjusted EBITDA was thus negative US$446 million for the first quarter, which is a year-on-year improvement of US$3 million.
WeWork revealed in March that it will go public via a merger with SPAC BowX Acquisition Corp.
The merger valued WeWork at around US$9 billion, representing a steep drop from the US$47 billion valuation that it was given during a 2019 private funding round led by SoftBank Group Corp.
BowX’s shares closed 2.5% higher following WeWork’s earnings update.
Gross desk contracts hit highest level since Q4 2019
However, looking beyond the financial results, the company says it ‘continued to see encouraging signs of recovery’ with sales activity, a critical indicator of future revenue, increasing in the first quarter.
The company achieved gross desk sales of 24,000 in January 2021, 25,000 in February, and 38,000 in March.
March represented the first month where WeWork achieved both positive net desk sales and positive net membership gains since February 2020.
Accelerating demand contributed to total gross desk sales of over 87,000 in the quarter, equating to approximately four million square feet and over US$850 million of total contract value signed, the highest level achieved in a quarter since Q4 2019.
‘The sales strength we saw throughout Q1 has continued into April and May, with 28 of WeWork’s 112 total markets over 60% physical occupancy in April,’ the company said in a media release.
Tour volume also returned to pre-pandemic levels and overall average commitment length increased to 21 months, with Enterprise average commitment length increasing to 27 months.
Finally, WeWork’s sales pipeline appears to be ‘strong’, with US$1.9 billion of committed revenue for 2021.
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