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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

15 mins ago - Politics & Policy

Democrats propose raising debt ceiling through midterms

Speaker of the House Nancy Pelosi and Senate Majority Leader Chuck Schumer. Photo: Stefani Reynolds/Bloomberg via Getty Images

House and Senate leadership announced on Monday that they plan to attach a proposal to raise the debt ceiling through Dec. 2022 to a short-term, government funding bill. The bill must pass before the end of the month or Congress risks a shutdown.

Why it matters: Democrats are taking a huge risk by trying to force through an increase of the debt limit in its must-pass funding bill. The move is wishful thinking on behalf of Democrats who are hoping they can get at least 10 centrist Republicans to balk, as well as an effort to put Republicans on record opposing it.

Biden to stress U.S. does not seek new Cold War in UN speech

Photo: Al Drago/Getty Images

President Biden will use his first address before the UN General Assembly to lay out his vision for an era of "intensive diplomacy" with allies and "vigorous competition" with great powers — without a Cold War with China.

Why it matters: Biden will take the podium in New York on Tuesday with his own international credibility in question after the chaotic withdrawal from Afghanistan. His administration also is struggling to build international momentum to fight climate change, the pandemic and rising global authoritarianism.

5 hours ago - Health

Biden administration to lift travel ban for fully vaccinated international travelers

Photo: Win McNamee/Getty Images

White House COVID-19 response coordinator Jeff Zients announced on Monday that the Biden administration will allow fully vaccinated travelers from around the world to enter the U.S. beginning in November.

Why it matters: The announcement comes as President Biden seeks commitments from countries to donate vaccines to the global COVAX initiative. He is expected to host a COVID summit on the sidelines of the UN General Assembly this week, and many of the countries attending have expressed frustration with the travel ban.

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