WeWork Bled Over US$500 Million In Q3
USA – After burning through US$1.7 billion of its cash stockpile so far this year, including US$671 million in Q2, coworking space provider WeWork has spent another US$517 million during the third quarter, reported The Financial Times on Friday morning (13 November, SGT).
As a result, its cash stockpile fell from US$4.1 billion during the second quarter to US$3.6 billion in Q3, revealed an email sent by the company’s CEO Sandeep Mathrani to its staff on Thursday. Notably, the cash stockpile consists of cash in hand and commitments from SoftBank, WeWork’s largest investor.
The huge expenditure is closely watched as it determines whether the coworking space operator can survive the COVID-19 outbreak, which has severely affected the commercial property market, particularly office space. This after its valuation plummeted when it withdrew its initial public offering (IPO) in 2019 due to weak investor demand.
SoftBank Group International’s CEO Marcelo Claure, who took over as WeWork’s Executive Chairman amidst its financial troubles last year, said in July that the provider of flexible office space is expected to post positive free cash flow by 2021.
Mathrani is still seeking that goal, even though take-up of office premises has declined across the globe due to the pandemic, with WeWork losing many tenants as working from home became the norm.
In fact, the coworking space provider’s overall number of members across the globe fell 13 percent in the third quarter to 542,000, while sales dropped 13 percent on an annual basis. WeWork did not divulge its loss or profit for the quarter.
To trim down expenses, WeWork fired thousands of its workers and shuttered underperforming buildings. It also disposed assets, including online scheduling business Teem and The Wing, an office space provider focusing on women.
In the email, Mathrani told staff that the company has signed deals to shutter 66 of its coworking facilities. Nonetheless, it renegotiated the leases on over 150 other facilities, and it currently has 859 locations worldwide.
“While COVID-19 continues to present unique and uncertain challenges that we must actively manage, our results this quarter show signs of select key metrics stabilising,” Mathrani wrote in the email.
