WeWork Reports First Quarter 2021 Results

  • WeWork continues to make significant progress in transformation of its business and strategic optimization efforts
  • Desk sales and occupancy trends improved sequentially during Q1 and WeWork has experienced continued strong momentum in Q2
  • Global desk sales increased sequentially throughout Q1, from 24k in January, to 25 in February and 38k in March, for a total of 87k desk sales in the quarter, or approximately 4 million square feet signed
  • Enterprise sales driving strong demand for WeWork’s suite of flexible product offerings; Enterprise represented 60% of total contract value signed in Q1
  • Adjusted EBITDA in Q1 2021 was slightly better than Q1 2020

NEW YORK--()--WeWork, the leading flexible space provider, reported results on May 17, 2021 for the three months ended March 31, 2021.

Company Operating Results:1

  • As of March, WeWork’s global real estate portfolio included 774 locations across 38 countries, supporting approximately 963,000 workstations and 490,000 memberships.
  • Enterprise Membership of 51% was in-line with the prior quarter, and the average commitment term for Enterprise members increased to approximately 27 months.
  • Gross desk sales were approximately 87,000, representing an increase of 19% quarter over quarter. Enterprise represented 60% of the total contract value for the first quarter.
  • Total Occupancy increased to 50% relative to 47% in the prior quarter.

Company Consolidated Financial Results:2,3

  • First quarter total revenue was $598 million, a quarter over quarter decline of 10%, driven by WeWork’s exits of non-core businesses.
  • Net loss was $2,062 million for the first quarter, net of $553 million of interest and other (income) expense (including $352 million change in fair value of related party transactions (SoftBank warrants), $99 million in net interest expense, $71 million of foreign currency loss and $31 million of other expenses), restructuring costs of $494 million driven by non-cash SoftBank stock purchases and settlement with Adam Neumann, impairment of $299 million driven by building exits, depreciation and amortization of $184 million, stock-based compensation of $51 million, $31 million in legal costs, and $3 million of income tax provision, resulting in Adjusted EBITDA of negative $446 million.
  • Adjusted EBITDA was negative $446 million for the first quarter, which is an improvement of $26 million relative to the prior quarter and an improvement of $3 million as compared to Q1 2020 Adjusted EBITDA of $449 million. Adjusted EBITDA includes $20 million of rent expense that is associated with buildings pending lease exit.
  • Free Cash Flow was negative $663 million for the first quarter, representing a decline of $35 million compared to the prior quarter.
  • Available liquidity was $2.2 billion as of quarter-end and included $719 million of cash on hand.

Space as a Service Sales Update:1

WeWork continued to see encouraging signs of recovery with sales activity, a critical indicator of future revenue, ramping over the first quarter, as the company achieved gross desk sales of 24k in January, 25k in February, and 38k in March. March represented the first month where the Company achieved both positive net desk sales and positive net membership gains since February 2020. Accelerating demand contributed to total gross desk sales of over 87k in the quarter, which equates to approximately 4 million square feet and over $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. 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. Sales pipeline is strong with $1.9 billion of committed revenue for 2021, including revenue realized in the first quarter.

Digitization of Real Estate - All Access and On Demand:

WeWork continued to see strong demand across WeWork’s All Access and On Demand products, with All Access memberships reaching 15k at the end of March, an increase 100% quarter over quarter. This demand is primarily attributable to the company’s continued focus on securing strategic partnerships with companies like American Express and, most recently, Uber to be included within their Rewards Hub.

Platform - Asset-light Model:

WeWork continues to pursue franchising and other capital-light partnerships opportunistically. In April, the company finalized its franchising agreement with AMPA, a long-time local regional partner, for WeWork’s Israel assets. To date, the company has franchised India, China, and Israel, which collectively represent 138 locations, 172k desks, and 105k memberships, as of March. WeWork is actively pursuing additional franchising and licensing opportunities across other regions, most notably in several of its Latin American markets.

Portfolio Optimization and Cost Savings Initiatives Update:2,3

WeWork continued to make progress on its real estate portfolio optimization efforts. Specifically, WeWork terminated 21 leases and executed 76 lease amendments during the first quarter, for a total over 110 full lease exits and over 280 lease amendments since the beginning of 2020. WeWork estimates that it has achieved $275 million in cumulative rent savings since the beginning of 2020 as a direct result of its ongoing strategic optimization efforts, excluding full and partial terminations.

WeWork has also continued to strategically rationalize its SG&A expenses4. In the first quarter, the company realized an additional $79 million in SG&A expense savings compared to the prior quarter, resulting in an annual run-rate of $804 million in SG&A expenses.

Capital Expenditures:3

This quarter, WeWork incurred $122 million in gross capital expenditures while recouping $128 million in tenant improvement allowances, for a total of $6 million in cash inflows for the quarter. This compares to gross capital expenditures of $642 million and tenant improvement allowances of $486 million for a total of $156 million in net cash outflow in the prior year.

Liquidity Update:

WeWork ended the quarter with $2.2 billion in cash and unfunded cash commitments including $719 million of available cash on hand, $400 million of remaining capacity on the unsecured notes, and full capacity available on the $1.1 billion Senior Secured Notes facility as of the end of the quarter.

Subject to customary closing conditions and regulatory approval, the $1.3 billion in proceeds from WeWork’s pending merger with BowX and the related PIPE investments, as well as the replacement of its $1.1 billion Senior Secured notes facility that expires in August 2021 with a new $550 million in Senior Secured notes facility, the company’s pro-forma liquidity would be approximately $3 billion.

About WeWork Inc.

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 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. Although the Company 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, the Company’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 demands, and economic conditions. The Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports filed with the U.S. Securities and Exchange Commission. The Company 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.

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, free cash flow and Adjusted EBITDA margin (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.


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 in connection with the Company’s defense against regulatory investigations and litigation regarding the Company’s 2019 cancelled initial public offering and the related execution of the SoftBank Transactions, 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 the Company's condensed consolidated statements of cash flows calculated in accordance with GAAP. Free Cash Flow 90 is both a performance measure and a liquidity measure that 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.

Adjusted Selling, General, and Administrative Expenses (“Adjusted SG&A”)

We supplement GAAP SG&A with Adjusted SG&A which excludes certain non-cash and non-operating discrete components and, in our view, provides a better understanding of underlying SG&A expenditures. For the purposes of this release, Adjusted SG&A is equivalent to GAAP SG&A adjusted for certain non-operating or non-cash items including: stock-based compensation expenses, stock-based payments for services rendered by consultants, legal, tax, and regulatory reserves and settlements, legal costs related to regulatory investigations and litigations, expense related to mergers, acquisitions, divestitures, and capital raising activities, and straight line amortization of lease costs.

Additional Information and Where to Find It

This communication relates to a proposed transaction between WeWork Inc. (the “Company”) and BowX Acquisition Corp. (“BowX”). This communication is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of the Company, the combined company or BowX, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended. BowX has filed a registration statement on Form S-4 (the “S-4 registration statement”) with the Securities and Exchange Commission (the “SEC”), which includes a document that serves as a preliminary prospectus and proxy statement of BowX, referred to as a proxy statement/prospectus. After the S-4 registration statement has been declared effective, a proxy statement/prospectus will be sent to all BowX shareholders. BowX also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of BowX are urged to read the S-4 registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction.

Investors and security holders will be able to obtain free copies of the S-4 registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by BowX through the website maintained by the SEC at www.sec.gov.

Participants in the Solicitation

BowX and its directors and executive officers may be deemed to be participants in the solicitation of proxies from BowX’s shareholders in connection with the proposed transaction. A list of the names of the directors and executive officers of BowX and information regarding their interests in the business combination is set forth in BowX’s registration statement on Form S-1 (Registration No. 333-239941) originally filed with the SEC on July 17, 2020. Additional information regarding the interests of such persons and other persons who may be deemed participants in the solicitation are contained in the S-4 registration statement and the proxy statement/prospectus. You may obtain free copies of these documents as described in the preceding paragraph.

1 Includes operating metrics related to unconsolidated China and India joint ventures.
2 Throughout this release, we may make certain references to Non-GAAP financial or operating metrics. Please see "Non-GAAP Supplemental Measures" for more detailed discussion and explanations of the various non-GAAP financial measures cited in this release.
3 Excludes China, which was deconsolidated in October 2020, and India, unless otherwise noted.
4 SG&A excludes stock-based compensation and payments for services rendered, legal, tax, and regulatory reserves and settlements, legal costs related to regulatory investigations and litigations, expenses related to mergers, acquisitions, and divestitures, and capital raising activities, as these items are not included in Adjusted EBITDA.


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Julia Sullivan


Investor Inquiries:

Press Inquiries:
Julia Sullivan