WeWork CEO Sandeep Mathrani is out

Sandeep Mathrani is stepping down as WeWork’s CEO, ending a three-year tenure largely focused on cost-cutting at the coworking giant, which has yet to turn a profit after raising billions from investors.

Mathrani will leave WeWork after next week to lead real estate investment at private equity firm Sycamore Partners, WeWork said, announcing the leadership change after markets closed Tuesday. Board member David Tolley will replace Mathrani as interim CEO while a committee seeks a permanent replacement. 

Previously the CEO of Brookfield Properties’ retail division, Mathrani arrived at WeWork in 2020 to replace ousted co-founder Adam Neumann in the top role. Mathrani’s run as chief executive was capped by a late round of financial maneuvering that included a large debt restructuring and a reverse stock split in an attempt to juice WeWork’s share price and avoid being delisted from the New York Stock Exchange. 

WeWork stock closed Tuesday at an all-time low of 35 cents per share. It risks being delisted if its price does not rise back above one dollar.

“Over the last three years we have restored the brand, grown revenue, right-sized the company, restructured our debt, and developed new product lines,” Mathrani said in a statement. “I am firm in my belief that this is WeWork’s moment.” 

Mathrani led WeWork to eliminate $2.3 billion in costs, over $1 billion in debt and generated revenue of $849 million last quarter, up from $593 million during the second quarter of 2021, according to the company. But profitability remains elusive.

WeWork burned through $700 million in cash last year, closing 2022 with $287 million in hand, down from the $924 million it had at its disposal at the start of last year. It reported a loss of $299 million in the first quarter of this year, an improvement from its loss of nearly $500 million in the same period last year.

WeWork’s credit worthiness was downgraded by ratings agency S&P Global following its debt restructuring with Softbank in March, despite the elimination of $1.4 billion in debt and extending the maturity of the remaining $1.6 billion by another two years, to 2027. 

On WeWork’s latest earnings call, Mathrani predicted that the company would be cash-flow positive by the end of 2024, after previously saying the company would be profitable by the end of this year.

Mathrani received $6.4 million in compensation last year, the company reported Monday, down from $21 million in 2021.