WeWork’s losses narrow but are still huge
Shared workspace company expects revenue to surge 30% this year
WeWork’s quarterly losses narrowed throughout 2021, but the year’s total was a sobering reminder of the flex office company’s struggle to regain its former glory.
WeWork’s stock tumbled around 3 percent Friday, then rebounded, after the company reported a $4.4 billion net loss for the year. That’s up from losses of $3.1 billion in 2020 and $3.3 billion in 2019.
As of midday the stock was trading at around $5, just off a record low earlier this month. It has given up more than half its value since going public at a $9 billion valuation via a SPAC merger with Menlo Park, Calif.-based BowX Acquisition Corp. in October.
On an earnings call Friday, CEO Sandeep Mathrani denied earlier reports that the company was in talks to raise new equity capital at the discounted valuation.
“We have no intent to issue equity,” Mathrani said. “We were never in the market to have a broader equity issuance.”
On a shorter time frame, the company’s results presented a more favorable picture of the flex office business, which came into question as former CEO Adam Neumann made an ignominious exit in 2019 and the company fumbled its first attempt to go public.
WeWork’s net losses totaled $803 million in the fourth quarter, down from $844 million in the third, as revenue climbed to $718 million from $661 million.
The company expects $4 billion in revenue in 2022 — a 30 percent gain year-over-year — with employers and workers looking to hybrid work models in the wake of pandemic office shutdowns.
“As companies recognize the need for purposeful engagement and intentional collaboration and design a strategy tailored to the unique needs of their people and businesses, we are seeing a greater shift to flex,” CEO Sandeep Mathrani said on an earnings call Friday.
The company’s flex office spaces were 63 percent occupied at quarter-end, up from 56 percent three months earlier. Occupancy is a function of gross and new desk sales, churn and capacity.
Consolidated gross desk sales, which include renewals, totaled 164,000 in the fourth quarter, up from 155,000 in the third.
WeWork has suspended its expansion plans in Russia in response to that nation’s invasion of Ukraine and is “executing on divesting operations in the region,” Mathrani said on the Friday call. Earlier this month the company had said it would continue to operate in Russia on a tentative basis.