Apr 26, 2018

Digging into WeWork's new financial metric

Photo by Jackal Pan/VCG via Getty Images

Axios has spoken to WeWork president and COO Artie Minson about "community adjusted EBITDA," a controversial new financial metric that appeared in his company's first-ever bond offering (which yesterday was upsized from $500 million to $700 million).

Bottom line: WeWork's intention is to best quantify its unit economics, as it continues to prepare for an IPO.

The introduction of community adjusted EBITDA generated much snickering on finance Twitter, thanks to this WSJ description:

"It subtracted not only interest, taxes, depreciation and amortization, but also basic expenses like marketing, general and administrative, and development and design costs."

Axios has since learned that the metric includes costs and expenses specific to existing WeWork facilities. More:

  • Community adjusted EBITDA includes all tenant fees, rent expense, staffing expense, facilities management expense, etc. for active WeWork buildings.
  • The exclusions are company-wide expenditures, which do not get pro rated. Much of that relates to growth efforts, although not all of it (executive salaries, for example).
  • One comp, and its not perfect, could be how Shake Shack reports "shack-level operating profit margins."
  • So yes it's still kind of silly, but less silly than it at first appears. And obviously the ratings agencies and bond markets didn't seem put off.

Below is additional WeWork financial data from the bond offering documents:

  • Revenue more than doubled between 2016 and 2017, from $436 million to $886 million. Nearly 93% of revenue is tied to membership.
  • Net loss increased by 117.2% to $933 million. The largest expense increase was general/admin (+294%), followed by sales and marketing (+230%).
  • $2.02 billion in cash at the end of 2017.

Go deeper

Trump slams Dems as GOP sues California over mail-out ballot plan

California Gov. Gavin Newsom during a February news conference in Sacramento, California. Photo: Justin Sullivan/Getty Images

President Trump accused Democrats of trying "Rig" November's general election as Republican groups filed a lawsuit against California Sunday in an attempt to stop Gov. Gavin Newsom (D) from mailing ballots to all registered voters.

Driving the news: Newsom signed an executive order this month in response to the coronavirus pandemic ensuring that all registered voters in the state receive a mail-in ballot.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 5,383,582 — Total deaths: 344,077 — Total recoveries — 2,158,031Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 1,640,972 — Total deaths: 97,679 — Total recoveries: 366,736 — Total tested: 14,163,195Map.
  3. World: White House announces travel restrictions on Brazil, coronavirus hotspot in Southern Hemisphere Over 100 coronavirus cases in Germany tied to single day of church services — Boris Johnson backs top aide amid reports that he broke U.K. lockdown while exhibiting symptoms.
  4. Public health: Officials are urging Americans to wear masks headed into Memorial Day weekend Report finds "little evidence" coronavirus under control in most statesHurricanes, wildfires, the flu could strain COVID-19 response
  5. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Public employees brace for layoffs.
  6. Federal government: Trump attacks a Columbia University study that suggests earlier lockdown could have saved 36,000 American lives.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 2 hours ago - Politics & Policy

Federal judge strikes down Florida law requiring felons to pay fines before voting

Gov. Ron DeSantis. Photo: oe Raedle/Getty Images

A federal judge on Sunday ruled that a Florida law requiring convicted felons to pay all court fines and fees before registering to vote is unconstitutional.

Why it matters: The ruling, which will likely be appealed by state Republicans, would clear the way for hundreds of thousands of ex-felons in Florida to register to vote ahead of November's election.