WeWork Losses Narrow Sharply, Desk Sales Hit Highest Mark Since Pandemic

WeWork, which went public in October through a merger with a special-purpose acquisition company, said Thursday its quarterly loss narrowed sharply as membership sales increased and workers returned to the company's locations.

During the first quarter of 2022, the company's net loss was $435M, or 57 cents per share, down significantly from the same quarter in 2021, when the coworking giant turned in a net loss of $2B. 

WeWork lost more than $4.4B in all of 2021, an increase from about $3.1B in 2020, though almost half of its losses for 2021 were in the first quarter, so this year's improvement was compared to an especially bad quarter for the company. 

Last quarter, the coworking giant increased its revenue and cut its expenses. Revenue rose to $765M for the quarter, up 28% year-over-year, while total expenses were cut nearly in half compared with a year ago. The company's total expenses last quarter were $1.1B, down from $2.1B in Q1 2021. The drop in expenses was partly facilitated by a $130M gain from lease terminations.

WeWork also reported that gross desk sales for the quarter were the highest since the pandemic began in the Q1 2020, with 166,000 desks sold in the first quarter, or the equivalent of about 10M SF.

Investors, who have been skittish about WeWork stock since it became available, responded positively on Thursday, with share prices up more than 8% by midmorning. Over the last six months, WeWork stock has been down about 40%.

The company's current operations represent "a more sound and disciplined operating model," according to WeWork CEO Sandeep Mathrani, who took the helm of the company after founder Adam Neumann left in the wake of a botched initial public offering in 2019.

Mathrani said that his company stands to benefit from the new reality of hybrid work arrangements among corporations and their workers, who are turning to coworking providers for flexibility.

“As evidenced by our recently announced partnership with Yardi, WeWork can be a solution for optimizing space utilization in a flexible hybrid work environment," Mathrami said.

In April, WeWork and Yardi Systems partnered to form a platform that will offer companies the option to coordinate booking desks, private offices or conference rooms for hybrid workers in any WeWork location. The platform is slated to launch in July.

Physical occupancy came in at 67% as of the end of the first quarter, a 4 percentage point increase from Q4, the company reported. WeWork’s physical occupancy including signed but not occupied memberships totaled 70% at the end of Q1 2022, also a 4 percentage point increase from the previous quarter.

The company further said it improved its liquidity during the quarter, with $350M of debt backed by Brookfield Asset Management. WeWork has 765 locations worldwide with about 916,000 desks and 626,000 memberships.