WeWork Pulls in Less Revenue Than Predicted in Q4
By Celia Young February 16, 2023 1:33 pm
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WeWork’s revenue grew less than analysts expected in the fourth quarter of 2022, as tech sector layoffs and fears over a potential recession weigh on the company’s business.
The coworking giant brought in $848 million in revenue in the fourth quarter, up 3.6 percent from the previous quarter but less than the $859 million analysts predicted WeWork would bring in during that time, Bloomberg reported.
Meanwhile, WeWork’s net quarterly losses shrank from $629 million in the third quarter to $527 million in the fourth quarter, according to the company. Despite the improvement, that was still almost 61 percent more than the $328 million analysts expected WeWork to lose in the fourth quarter, Bloomberg reported.
WeWork CEO Sandeep Mathrani said during a Thursday earnings call that layoffs among WeWork’s clients have “impacted” some of its locations, but didn’t specify how. Even so, occupancy rates in its locations stood at 75 percent, a slight improvement compared to the previous quarter.
The coworking company itself laid off 300 employees across the world earlier this year, largely because the company shuttered 40 underperforming locations starting at the end of 2022. It also shrunk its headquarters at Dock 72 in Brooklyn.
Those reductions helped WeWork bring its estimated administrative expenses down 10 percent to $650 million in the fourth quarter of 2022, Mathrani said.
“As evidenced by our growth in revenue, reduced costs, optimized portfolio and reinforced balance sheet, we are leveraging all the tools at our disposal to continue executing against our goals,” Mathrani said in a statement.
Mathrani took control of WeWork in 2020 with the goal of getting the company to turn a profit, after it came under fire for its cash-burning business model and failed initial public offering attempt in 2019. But the pandemic, a potential recession and WeWork’s debts have hampered the firm.
WeWork carried about $1 billion in long-term debt as of the end of 2022, compared to the just $666 million it held at the end of 2021, according to its fourth-quarter earnings report. In December, Fitch downgraded WeWork’s credit rating to one of its lowest ranks, thanks to its cash problems and macroeconomic conditions in 2023.
The firm’s biggest backer, SoftBank Group, has helped WeWork stay afloat by investing more than $10 billion in the business through the end of 2022, The Wall Street Journal reported. In January, WeWork secured another $250 million in debt from an affiliate of SoftBank, half of the $500 million it can borrow from SoftBank under its debt contract, according to a WeWork spokesperson.
Celia Young can be reached at cyoung@commercialobserver.com.
