WeWork Records Higher Loss In Q4 2022
GLOBAL – Coworking space operator WeWork posted a loss of US$527 million during the last quarter of 2022, surpassing the US$328 million loss expected by analysts, according to a recent report from Bloomberg.
At the same time, the company recorded a lower revenue of US$848 million compared to analysts’ estimate of about US$859 million.
Nonetheless, the coworking space operator demonstrated a glimmer of potential for future profitability. WeWork revealed that it saw positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in December 2022 — a notable change from its cash-burning history, particularly during the term of its former CEO Adam Neumann.
After scuttling its planned initial public offering (IPO) in 2019 and being severely hit during the COVID-19 pandemic, current Chief Executive Sandeep Mathrani has been slashing costs, which is helping the company inch towards profitability, but the goal is still far off.
Ever since Mathrani took over as WeWork’s CEO in 2020, he’s been forecasting that the coworking space operator would become profitable soon. In 2020, he stated that the company was poised to be profitable by the end of 2021. Then in an earnings call in Q4 2022, he said WeWork “should have a path to cash flow positive by 2023.”
For Q1 2023, the coworking space operator is expecting to record a revenue of between US$830 million and US$855 million, with an adjusted loss of US$25 million or breaking even at best.
Notably, WeWork has rescinded rental agreements for dozens of office buildings that no longer make financial sense. The coworking space operator has also been growing new sources of revenue, such as on-demand memberships.
Overall, occupancy for its coworking centres have been slowly increasing after reaching rock-bottom during the onset of the virus outbreak. In Q4 2022, WeWork’s overall occupancy rate hit 75 percent versus 71 percent during the preceding quarter.