Aug 9, 2018

WeWork is getting a lot bigger, but so are its losses

Photo by Jackal Pan/VCG via Getty Images

WeWork saw its revenue, losses and membership grow substantially in the second quarter of 2018, according to an investor presentation provided by the company. It also disclosed that it has struck a large new investment agreement with SoftBank.

Bottom line: The co-working company continues to move toward a 2019 IPO.


Revenue: Q2 revenue was $422 million, of which $368 million came via membership fees, versus $342 million in Q1 revenue and $198 million in Q2 2017 revenue.

Losses: Net loss was $723 million for the first half of 2018, versus $154 million in the first half of 2017. Adjusted EBITDA was negative $141 million, versus $63 million for the first half of 2017.

  • The big drivers included increased expenses for sales and marketing, market expansion and asset depreciation.

Unit economics: WeWork created a novel metric called "community-adjusted EBITDA," which more than doubled year-over-year to $107 million.

Expand chart
Data: WeWork; Chart: Andrew Witherspoon/Axios

Total memberships more than doubled in the past year, now coming in at 268,000.

  • That's a 22% increase between the end of March and the end of June, which is an acceleration from a 18% growth rate for the prior quarter.
  • Around 25% of WeWork members are now enterprise customers for companies like Amazon, General Electric, J.P. Morgan and Pepsi. This matters because enterprise clients have lower churn than traditional ones.
  • Total occupancy climbed quarter-over-quarter from 82% to 84%. That latter figure includes 81% for new locations and 90% for "mature" locations that have been open for at least 18 months.

WeWork added 53 locations in Q2, and now has 287 locations in 77 cities in 23 countries.


WeWork has signed a complex investment agreement with existing investor SoftBank.

  • SoftBank, by the end of August, will lead at least $1 billion in convertible preferred financing, which is subordinated to the bonds WeWork sold earlier this year. It comes with PIK interest of 2.8%, which won't kick in until after the first year.
  • WeWork also may raise at least another $1 billion through an associated deal in which SoftBank would participate, but not lead. That transaction, if it happens, comes with a minimum conversion valuation of $42 billion (unless there is an IPO).
  • The company acquired two general contracting firms as well, one in New York and one in London.
Balance Sheet

WeWork had $1.9 billion of cash on hand through the end of June, which is down from the $2.2 billion it had at the time of its bond offering.

  • Neither of those figures include around $600 million committed, but not yet wired, by SoftBank from an earlier transaction.
  • They also don't include $500 million raised in July for WeWork China, nor the new convertible note financing.

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