WeWork Offers Business Update But Questions Still Remain

In its report, the company focused on non-GAAP measures and self-defined metrics.

On its continuing road to an IPO via a SPAC merger, WeWork recently released a “Business Update on Sales Momentum, Accelerating Recovery.” The company, which did not reply to a GlobeSt.com request for additional information, stated, “As vaccine distribution expands, global restrictions ease, and companies begin to action their hybrid return-to-work strategies, WeWork continues to see an improvement in leading indicators such as desk sales, churn rates and occupancy across its portfolio.”

The company focused on non-GAAP measures and self-defined metrics. It stated that the current portfolio “included 767 locations across 38 countries, supporting 947,000 workstations and 505,000 total memberships.” Total occupancy for the company rose from 50% in March to 53% in May.

WeWork also said it “continues to pursue franchising and other capital-light partnerships opportunistically” and that it “announced a joint venture with SoftBank Latin America Fund that provides SoftBank Latin America Fund with the exclusive right to operate the WeWork brand in Argentina, Brazil, Chile, Colombia and Mexico.”

SoftBank overall has been one of the big investors in the company, before and through the time when it unsuccessfully tried to use the traditional IPO route, as well as after.

At the time of the SPAC announcement, there were some raised eyebrows among real estate and financial vets. While some said the 2.5 multiple of a 2020 $3.2 revenue run rate wasn’t excessive, the company’s stated path to profitability needed 70% margins by 2023.

“This level of incremental margin is not unheard of, but for an early-stage growth business, growing its top-line north of 20%, this may be a challenge to come by,” Matt Dmytryszyn, director of investments at registered investment advisor Telemus, told GlobeSt.com at the time.

This new update was, in some views, thin on information. There were no dollar amounts, no GAAP data, no way to see progress toward profitability or even financial sustainability.

“The words-to-substance ratio of this release is too small to be measured, as are, I suspect, the prospects for investors,” Nell Minow, vice chair of ValueEdge Advisors and a long-time corporate governance expert and shareholder advocate, tells GlobeSt.com. “Pro tip: next time instead of words like ‘sequential increases’ provide actual numbers.”

Eventually, more detail would be expected when the SPAC merger completes, and the company must report GAAP and other information to shareholders under SEC requirements.