How WeWork Makes Money

WeWork generates most revenue from its flexible work-space locations in the U.S.

WeWork Companies Inc. operates as an office-space leasing company that offers flexible workspaces worldwide. The company—founded in 2010—enters into long-term lease agreements, renovates and furnishes its properties, and provides flexible lease options to tenants on a short-term basis.

WeWork's flexible workspaces include dedicated desks in shared offices spaces, standard offices, office suites with private amenities, and full-floor offices.

WeWork's workspaces are used by businesses and organizations of various sizes, from freelancers and small startups to Fortune 500 companies. WeWork operates in more than 700 locations globally in 150 cities and 38 countries.

WeWork's main rivals include Switzerland-based International Workplace Group (IWG.L), Servcorp Ltd based out of Australia, and Industrious—based out of New York City.

Key Takeaways

  • WeWork provides flexible workspace solutions, including traditional offices, shared workspaces, office suites with private amenities.
  • WeWork's workspaces are used by businesses and organizations, from freelancers and small startups to Fortune 500 companies.
  • WeWork operates in more than 700 locations globally in 150 cities and 38 countries.
  • WeWork began trading on the New York Stock Exchange (NYSE) under the ticker symbol "WE" on October 21, 2021.

WeWork Begins Trading on the NYSE

WeWork began trading on the New York Stock Exchange (NYSE) under the ticker symbol "WE" on October 21, 2021. The new publicly-traded company is the result of the merger between WeWork and BowX Acquisition Corporation, which closed on October 20, 2021.

The combined company provided WeWork with gross cash proceeds of approximately $1.3 billion prior to expenses. CEO Sandeep Mathrani and Executive Chairman Marcelo Claure will continue to lead the company.

CEO Sandeep Mathrani stated, "Today is a testament to the determination of our company to not only transform our business but also to adapt and deliver the options that today's workforce demands. As companies around the world reimagine their workplace, WeWork is uniquely positioned to offer the space and services that can power solutions built around flexibility."

WeWork's Financial Performance

WeWork generated $661 million in revenue in Q3 2021—an 11% increase compared to $593 million in the prior quarter. The company posted an adjusted EBITDA (or earnings before interest, taxes, depreciation, and amortization) loss of $356 million for the third quarter, which was $93 million higher than Q2 2021.

WeWork has a real estate portfolio of 764 locations in 38 countries, with approximately 932,000 workstations as of September 30, 2021. The company boasts 546,000 physical memberships with gross desk sales of 155,000 in Q3 2021, representing 9.3 million square feet sold. New desk sales were 84,000 for the quarter.

WeWork's occupancy rate is a key metric used to show the level of demand and to what extent the company's workspaces are being leased and utilized by clients. Physical occupancy increased to 56%, up from 50% in Q2 2021. However, the Q3 result was down slightly from the 58% occupancy rate reported for June 1, 2020. The decrease in the occupancy rate was primarily driven by the impacts of the coronavirus pandemic.

WeWork has yet to become a profitable business. Investor concerns about WeWork's losses and financial strength led to the ousting of co-founder Adam Neumann as chief executive officer (CEO). Since then, the company has refocused on its core business and hired real-estate-industry veteran Sandeep Mathrani as the new CEO.

WeWork's Business Segments

WeWork has increased its share of the overall market for office leasing versus traditional commercial office leasing. The company boasts that its real estate only accounts for half of 1% of the U.S. office inventory, yet its sales represented more than 9% of U.S. office leasing activity for Q3 2021.

WeWork's Q3 segment sales in Manhattan account for nearly 1% of total office space stock but represented 20% of the traditional office market take-up. Take-up is a metric used to gauge leasing activity over a period, representing the amount of space that's been occupied. The company's take-up in Boston was 23% in Q3 2021, representing 2% of the city's office stock.

WeWork posted similar results in international markets. According to the company, WeWork's gross sales represented 37% of London's traditional office take-up and in Paris—represented 13%, while only accounting for nearly 1% of the stock in those markets.

Article Sources

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