As WeWork Cos. grows globally, the startup is also packing more people into its rental office spaces. The move helped drive revenue up 110 per cent to US$342 million last quarter, according to a staff email Thursday about the co-working company’s financial performance.
The occupancy rate for WeWork buildings, where startups and large companies rent office space, rose to 82 per cent at the end of the first quarter, up from 73 per cent a year ago, according to the email viewed by Bloomberg. WeWork expanded to 73 cities in the quarter from 40 a year earlier and more than doubled membership to 220,000. The company is increasing sales and customers at a faster rate than cities, which suggests it’s squeezing more out of existing markets.
In the latest financial disclosure, WeWork again included a nonstandard earnings metric it calls community-adjusted EBIDTA, despite drawing derision from analysts in the past. It was US$95 million in the first quarter. The figure accounts for expenses associated with running its buildings — such as high-speed internet, dedicated staff and rent — but leaves out central operations, such as HR and legal, as well as “growth expenses” associated with expanding to new markets and building products. The email didn’t disclose losses using generally accepted accounting principles.
WeWork lost US$933 million on sales of US$886 million in 2017, according to documents associated with a bond sale in April. While the company started out by offering monthly leases to entrepreneurs, freelancers and small businesses, it has been increasingly targeting larger companies and offering them an easy way to set up satellite offices and even rent out entire floors in WeWork buildings. Enterprise customers account for 24 per cent of memberships now, compared with 14 per cent in the first quarter of 2017, according to the email.
Because it’s privately held, WeWork isn’t required to report financial numbers to the public, but it shared a similar set of metrics with Bloomberg in February. More financial details came out as part of the April bond offering, when it sold US$702 million in bonds rated as junk by credit agencies. The numbers at the time showed impressive revenue growth but mounting losses.
The New York-based company, founded in 2010, was most recently valued at about US$20 billion, though an executive from SoftBank Group Corp., a major WeWork investor, said at a conference in London this week that the startup was looking to raise funds at a US$35 billion valuation. If WeWork were to secure a deal, it would become America’s second-most-valuable technology startup, behind Uber Technologies Inc.