WeWork losses continue but firm sees glimmer of hope
Softbank-backed firm is spending slightly less and member retention improved
WeWork is still losing money, but the flex-office provider is hoping big changes in the office market will favor the beleaguered firm.
Revenues continued to decline at WeWork in the third quarter, but it’s spending slightly less than it was in the second quarter, Reuters reported, citing a company memo. WeWork revenue declined 8 percent from the second quarter to $811 million, but the company spent only $517 million negative free cash flow, an improvement on the $671 million it hemorrhaged in the second quarter.
The company memo also said that member retention has improved since dropping off in the spring, when office buildings emptied out in response to the first wave of the coronavirus. In September, the loss of desks reached its lowest level since March.
Despite the optimism from executives, questions remain about WeWork’s long-term viability — it has yet to achieve profitability — and the resilience of the office sector overall. A study conducted by the Partnership for New York City in October found that just 15 percent of Manhattan workers expect to return to the office this year.
Signs that WeWork’s woes are lessening may be more of an indication of just how severely the company was affected by the turn away from office buildings. In March, WeWork laid off hundreds of its workers, and layoffs continued into the spring. WeWork’s chief executive officer Sandeep Mathrani said in May that the company had paid 80 percent of its rent, but an August lawsuit alleged the company skipped payments for three months at its Lincoln Road location in Miami.
[Reuters] — Georgia Kromrei