WeWork Reports Third Quarter 2021 Results

2021.11.15

WeWork Inc. (NYSE: WE) ("WeWork"), one of the leading global flexible space providers, today reported financial results for its third quarter ending on September 30, 2021.

  • Total revenue for the third quarter was $661 million, an 11% increase compared to total revenue of $593 million in the prior quarter.
  • Adjusted EBITDA loss was $356 million for the third quarter, a $93 million improvement relative to the prior quarter Adjusted EBITDA loss of $449 million.1
  • WeWork ended the third quarter with pro forma cash and unfunded cash commitments of $2.3 billion, including $477 million of available cash on hand as of September 30, 2021, $1.2 billion of net proceeds from the business combination with BowX, $550 million currently available under the Senior Secured Notes facility, the repayment of the $350 million secured commercial paper facility and $450 million currently available under the $1.75 billion letter of credit facility.

Company Operating Results

  • As of September 30, 2021, WeWork's global real estate portfolio consisted of 764 locations across 38 countries, supporting approximately 932,000 workstations and 546,000 physical memberships.
  • WeWork’s consolidated real estate portfolio included 631 locations across 33 countries, supporting approximately 766,000 workstations and 432,000 physical memberships.
  • Consolidated gross desk sales totaled 155,000 in the third quarter, or 9.3 million square feet sold. Consolidated new desk sales totaled 84,000 in the third quarter.
  • Physical occupancy continued to trend upwards to 56% across consolidated operations as of the end of September, up from 50% at the end of Q2 2021. Including the incremental 30,000 net memberships that are already contracted to move in, physical occupancy would increase to 60%.
  • All Access memberships increased to 32,000 in the third quarter, up from 20,000 in Q2 2021. These All Access memberships represent an additional four percentage points of occupancy.

Company Consolidated Financial Results1

  • Revenue of $661 million in the third quarter increased from $593 million in the second quarter. Revenue in September was $230 million, making it the fifth consecutive month of revenue growth and the highest monthly revenue recorded in 2021.
  • Net loss of $844 million in the quarter, which included $262 million of non-cash and non-recurring expenses, primarily from Depreciation, Amortization and Impairments.
  • Adjusted EBITDA loss of $356 million for the quarter, represents a $93 million improvement relative to the second quarter Adjusted EBITDA loss of $449 million.
  • Operating Cash Flow was $(380) million for the third quarter. Free Cash Flow was $(430) million, which was an improvement of $219 million relative to the prior quarter.
  • On October 20, 2021, WeWork and BowX Acquisition Corp. ("BowX") announced the closing of their business combination. The combined company was named "WeWork Inc." and began trading on the New York Stock Exchange under the ticker symbol “WE” starting October 21, 2021. The business combination provided WeWork with the previously announced gross cash proceeds of approximately $1.3 billion.
  • Pro forma for the closing of the business combination with BowX, WeWork ended the third quarter with cash and unfunded cash commitments of $2.3 billion, which includes $477 million of available cash on hand as of September 30, 2021, $1.2 billion of net proceeds from the business combination, $550 million currently available under the Senior Secured Notes facility, the repayment of the $350 million secured commercial paper facility and $450 million of current availability under the $1.75 billion LC facility.
  • The Company regularly evaluates market conditions to enhance its capital structure and diversify its investor base, and from time to time may refinance, redeem, repurchase or otherwise modify existing debt, or issue equity or equity-linked securities.

Space-as-a-Service:

Q3 saw a continuation of the strong momentum seen in the second quarter of 2021. WeWork's consolidated gross desk sales, which include renewals, of 155,000 equates to 9.3 million square feet sold in the third quarter. New desk sales totaled 84,000 in the same period. In October, WeWork reported preliminary gross desk sales of 45,000, equating to 2.7 million square feet, and preliminary new desk sales of 25,000.

WeWork continued to take an outsized share of overall market leasing activity compared to traditional commercial office leasing activity. While WeWork accounts for about half a percent of the U.S. office inventory, the Company sold the equivalent of over 9% of U.S. office leasing activity in the third quarter. At the market-level, WeWork's Q3 gross sales in Manhattan were equivalent to 20% of the traditional office market take-up while WeWork's portfolio of 7 million square feet accounts for approximately 1% of total office stock. WeWork saw similar leasing activity in a number of its largest markets; WeWork's gross sales equated to 37% of London’s traditional office take-up and 13% of Paris' take-up while accounting for approximately 1% of stock in the two markets, and 23% of Boston's take-up in the third quarter, where WeWork represents approximately 2% of the office stock.

WeWork’s consolidated physical memberships increased to 432,000, for a physical occupancy rate of 56% as of the end of September. Including incremental net memberships that are contracted to move in, physical occupancy would increase to 60%. As of October, preliminary physical occupancy had increased three percentage points to 59%. Including net memberships that are contracted to move in, preliminary October physical occupancy was 61%.

Access:

All Access memberships were 32,000 at the end of September, an increase of 60% quarter-over-quarter, or approximately 1,000 memberships per week. By October, preliminary All Access memberships had increased to 38,000. To continue expanding the member acquisition funnel for Access products, WeWork has successfully signed and launched affinity partnerships with American Express, Uber, American Airlines, Brex, and, more recently, Better Mortgage, recruiter.com and Union Square Ventures.

WeWork Workplace:

As companies increasingly embrace more flexible and hybrid work strategies, the WeWork Workplace experiential management offering provides a turnkey solution to manage how and where employees work across assets and markets. Leveraging the software that the company has built over the past 10 years to manage its own spaces, power online booking, and optimize utilization through back-end data analysis, WeWork believes its proprietary technology can be used by third party organizations across their real estate portfolios.

In October, WeWork solidified a strategic business investment with Cushman & Wakefield to market its workplace management software. This announcement built on WeWork's existing management agreement with Hudson’s Bay Company to manage and operate SaksWorks locations in the Tri-State area, including Brookfield Place and the Saks Fifth Avenue New York flagship in Manhattan, Manhasset, Greenwich, and Eastchester.

Last month, WeWork announced an agreement with Ivanhoé Cambridge to open a flexible space offering in Place Ville Marie, one of Montreal’s iconic and prestigious real estate complexes. Anticipated to open in Spring of 2022, the 11,000 square foot space will leverage WeWork’s management expertise and provide flexible space solutions as an amenity to Ivanhoé’s tenants. The partnership further demonstrates the value of WeWork’s hospitality and management expertise as certain landlords look for opportunities to enrich their offerings to tenants with flexibility and community.

Together, the Cushman & Wakefield, Hudson's Bay Company and Ivanhoé Cambridge agreements reflect WeWork's ability to tailor its product suite to suit unique needs of members and landlords alike.

About WeWork

WeWork was founded in 2010 with the vision to create environments where people and companies come together and do their best work. Since opening our first location in New York City, we’ve grown into a global flexible space provider committed to delivering technology-driven flexible solutions, inspiring spaces, and unmatched community experiences. Today, we’re constantly reimagining how the workplace can help everyone, from freelancers to Fortune 500s, be more motivated, productive, and connected. For more information about WeWork, please visit us at https://wework.com.

Forward-Looking Statements

Certain statements made in this press release may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Although WeWork believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, WeWork’s ability to refinance, extend, restructure or repay near and intermediate term debt; its indebtedness; its ability to raise capital through equity issuances, asset sales or the incurrence of new debt; retail and credit market conditions; impairments; its liquidity demand; changes in general economic conditions, including as a result of the COVID-19 pandemic; delays in customers and prospective customers returning to the office and taking occupancy as a result of the COVID-19 pandemic and the emergence of the Delta variant leading to a parallel delay in receiving the corresponding revenue; and WeWork's inability to implement its business plan or meet or exceed its financial projections. Forward-looking statements speak only as of the date they are made. WeWork Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports and other documents filed with the U.S. Securities and Exchange Commission. WeWork may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Use of Non-GAAP Financial Measures

This press release includes certain financial measures not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), including Adjusted EBITDA and Free Cash Flow (including on a forward-looking basis). These financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to net loss or other measures of profitability, liquidity or performance under GAAP. You should be aware that WeWork’s presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. WeWork believes that these non-GAAP measures of financial results (including on a forward-looking basis) provide useful supplemental information to investors about WeWork. WeWork’s management uses forward-looking non-GAAP measures to evaluate WeWork’s projected financials and operating performance. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Non-GAAP Financial Definitions

Adjusted Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization (“Adjusted EBITDA”)

We supplement our GAAP results by evaluating Adjusted EBITDA, a non-GAAP measure. We define "Adjusted EBITDA" as net loss before income tax (benefit) provision, interest and other (income) expense, depreciation and amortization expense, stock-based compensation expense, expense related to stock-based payments for services rendered by consultants, income or expense relating to the changes in fair value of assets and liabilities remeasured to fair value on a recurring basis, expense related to costs associated with mergers, acquisitions, divestitures and capital raising activities, legal, tax and regulatory reserves or settlements, significant legal costs incurred by WeWork in connection with regulatory investigations and litigation regarding WeWork's 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, as defined in Note 1 of the Notes to the Condensed Consolidated Financial Statements included in our Quarterly Report for the quarter ended September 30, 2021, net of any insurance or other recoveries, significant non-ordinary course asset impairment charges and, to the extent applicable, any impact of discontinued operations, restructuring charges, and other gains and losses on operating assets.

Free Cash Flow

Because of the limitations of Adjusted EBITDA, as noted above, we also supplement our GAAP results by evaluating Free Cash Flow, a non-GAAP measure. Free Cash Flow is defined as cash flow from operating activities less cash purchases of property and equipment, each as presented in WeWork's Condensed Consolidated Statements of Cash Flows calculated in accordance with GAAP. Free Cash Flow is both a performance measure and a liquidity measure that we believe provides useful information to management and investors about the amount of cash generated by or used in the business. Free Cash Flow is also a key metric used internally by our management to develop internal budgets, forecasts and performance targets.

Key Performance Supplemental Information

 

(Amounts in ones, except percentages)

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

 

September 30,
2020

Other key performance indicators:

 

 

 

 

 

 

 

 

 

Consolidated Locations (1), (2), (3)

 

 

 

 

 

 

 

 

 

Workstation capacity

766,000

 

 

770,000

 

 

804,000

 

 

865,000

 

 

962,000

 

Physical Memberships

432,000

 

 

386,000

 

 

378,000

 

 

387,000

 

 

480,000

 

All Access and Other Legacy Memberships

32,000

 

 

20,000

 

 

15,000

 

 

13,000

 

 

34,000

 

Memberships

464,000

 

 

406,000

 

 

393,000

 

 

401,000

 

 

514,000

 

Physical Occupancy Rate

56

%

 

50

%

 

47

%

 

45

%

 

50

%

Enterprise Membership Percentage

47

%

 

51

%

 

52

%

 

52

%

 

54

%

Unconsolidated Locations (1), (2), (3)

 

 

 

 

 

 

 

 

 

Workstation capacity

165,000

 

 

168,000

 

 

160,000

 

 

166,000

 

 

57,000

 

Physical Memberships

114,000

 

 

110,000

 

 

97,000

 

 

89,000

 

 

27,000

 

Memberships

114,000

 

 

111,000

 

 

97,000

 

 

89,000

 

 

27,000

 

Physical Occupancy Rate

69

%

 

66

%

 

61

%

 

54

%

 

47

%

Total Locations

 

 

 

 

 

 

 

 

 

Workstation capacity

932,000

 

 

937,000

 

 

963,000

 

 

1,030,000

 

 

1,020,000

 

Physical Memberships

546,000

 

 

496,000

 

 

475,000

 

 

476,000

 

 

507,000

 

All Access and Other Legacy Memberships

32,000

 

 

20,000

 

 

15,000

 

 

13,000

 

 

34,000

 

Memberships

578,000

 

 

517,000

 

 

490,000

 

 

490,000

 

 

542,000

 

Physical Occupancy Rate

59

%

 

53

%

 

49

%

 

46

%

 

50

%

 

 

 

 

 

 

 

 

 

 

(1)

For certain key performance indicators the amounts we present are based on whether the indicator relates to a location for which the revenues and expenses of the location are consolidated within our results of operations ("Consolidated Locations") or whether the indicator relates to a location for which the revenues and expenses are not consolidated within our results of operations, but for which we are entitled to a management fee for our advisory services ("Unconsolidated Locations"). As of September 30, 2021, IndiaCo, ChinaCo and Israel locations are our only Unconsolidated Locations

(2)

Effective October 2, 2020, the Company deconsolidated ChinaCo and as a result, beginning with the fourth quarter of 2020, the workstation capacity, memberships, occupancy and enterprise memberships percentages for Consolidated Locations excludes the impact of ChinaCo locations, and they are included in Unconsolidated Locations, with no impact on Total Locations. Prior to October 2, 2020, ChinaCo was still consolidated and therefore the key performance indicators for ChinaCo are included in Consolidated Locations.

(3)

On June 1, 2021, we closed a franchise agreement with Ampa and transferred the building operations and obligations of our Israel locations to Ampa. Beginning on June 1, 2021, our Israel locations are no longer Consolidated Locations and are classified as Unconsolidated Locations.

LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

September 30,

 

December 31,

(Amounts in thousands, except share and per share amounts)

2021

 

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents (1)

$

477,244

 

 

$

800,535

 

Accounts receivable and accrued revenue, net of allowance of $77,468 and $107,806 as of September 30, 2021 and December 31, 2020, respectively

133,695

 

 

176,521

 

Other current assets (including related party amounts of $0 and $780 as of September 30, 2021 and December 31, 2020, respectively)

402,150

 

 

352,172

 

Total current assets

1,013,089

 

 

1,329,228

 

Property and equipment, net

5,707,310

 

 

6,859,163

 

Lease right-of-use assets, net

13,412,306

 

 

15,107,880

 

Restricted cash (1)

11,275

 

 

53,618

 

Equity method and other investments

197,942

 

 

214,940

 

Goodwill

676,932

 

 

679,351

 

Intangible assets, net

58,257

 

 

49,896

 

Other assets (including related party amounts of $545,180 and $699,478 as of September 30, 2021 and December 31, 2020, respectively)

878,766

 

 

1,062,258

 

Total assets (1)

$

21,955,877

 

 

$

25,356,334

 

 

 

 

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses (including amounts due to related parties of $76,739 and $14,497 as of September 30, 2021 and December 31, 2020, respectively)

$

602,777

 

 

$

723,411

 

Members’ service retainers

385,946

 

 

358,566

 

Deferred revenue (including amounts from related parties of $5,771 and $9,717 as of September 30, 2021 and December 31, 2020, respectively)

134,691

 

 

176,004

 

Current lease obligations (including amounts due to related parties of $22,295 and $10,148 as of September 30, 2021 and December 31, 2020, respectively)

853,011

 

 

847,531

 

Other current liabilities (including amounts due to related parties of $0 and $900 as of September 30, 2021 and December 31, 2020, respectively)

437,046

 

 

83,755

 

Total current liabilities

2,413,471

 

 

2,189,267

 

Long-term lease obligations (including amounts due to related parties of $506,746 and $436,074 as of September 30, 2021 and December 31, 2020, respectively)

18,401,347

 

 

20,263,606

 

Unsecured related party debt

2,200,000

 

 

1,200,000

 

Convertible related party liabilities, net

50,482

 

 

418,908

 

Long-term debt, net

659,379

 

 

688,356

 

Other liabilities

246,278

 

 

221,780

 

Total liabilities (1)

23,970,957

 

 

24,981,917

 

Commitments and contingencies(Note 16)

 

 

 

Convertible preferred stock; 959,370,218 shares authorized as of September 30, 2021, and 499,018,795 and 368,912,507 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

8,379,182

 

 

7,666,098

 

Redeemable noncontrolling interests

276,162

 

 

380,242

 

 

 

 

 

LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS – (CONTINUED)

(UNAUDITED)

 

September 30,

 

December 31,

(Amounts in thousands, except share and per share amounts)

2021

 

 

2020

 

Equity

 

 

 

Legacy WeWork shareholders' equity (deficit):

 

 

 

Common stock Class A; par value $0.001; 941,647,617 shares authorized as of September 30, 2021, and 176,731,955 and 41,512,605 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

177

 

 

 

42

 

 

Common stock Class B; par value $0.001; 234,910,597 shares authorized as of September 30, 2021 and zero and 129,382,459 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

 

129

 

 

Common stock Class C; par value $0.001; 50,967,800 shares authorized as of September 30, 2021, and 24,132,575 and 25,168,938 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

24

 

 

 

25

 

 

Common stock Class D; par value $0.001; 234,910,597 shares authorized as of September 30, 2021, and zero shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

Additional paid-in capital

2,776,772

 

 

 

2,188,319

 

 

Accumulated other comprehensive income (loss)

(26,573

)

 

 

(158,810

)

 

Accumulated deficit

(13,427,090

)

 

 

(9,703,490

)

 

Total Legacy WeWork shareholders' deficit

(10,676,690

)

 

 

(7,673,785

)

 

Noncontrolling interests

6,266

 

 

 

1,862

 

 

Total equity

(10,670,424

)

 

 

(7,671,923

)

 

Total liabilities and equity

$

21,955,877

 

 

 

$

25,356,334

 

 

 

 

 

 

 

(1)

The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). As of September 30, 2021 and December 31, 2020, total assets of consolidated VIEs, after intercompany eliminations, were $2.9 billion and $2.1 billion, respectively, including $100.7 million and $166.6 million of cash and cash equivalents, respectively, and $10.1 million and $10.0 million of restricted cash, respectively. Total liabilities of consolidated VIEs, after intercompany eliminations, were $2.5 billion and $1.7 billion as of September 30, 2021 and December 31, 2020, respectively. Creditors of VIEs do not have recourse against the general credit of the Company, except relating to certain lease guarantees totaling $13.5 million and $14.6 billion as of September 30, 2021 and December 31, 2020, respectively, provided by Legacy WeWork to certain landlords of the VIEs. See Note 5 for additional details.

The accompanying notes are an integral part of these condensed consolidated financial statements.

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(Amounts in thousands, except share and per share data)

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue (including related party revenue of $28,496 and $44,906 for the three months and $116,190 and $129,383 for the nine months ended September 30, 2021 and 2020, respectively. See Note 17)

$

661,031

 

 

 

$

810,752

 

 

 

$

1,852,362

 

 

 

$

2,749,369

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Location operating expenses—cost of revenue (exclusive of depreciation and amortization of $162,418 and $182,967 for the three months and $508,044 and $534,585 for the nine months ended September 30, 2021 and 2020, respectively, shown separately below)

752,493

 

 

 

924,363

 

 

 

2,351,305

 

 

 

2,729,165

 

 

Pre-opening location expenses

40,367

 

 

 

60,741

 

 

 

117,206

 

 

 

226,660

 

 

Selling, general and administrative expenses(1)

233,928

 

 

 

387,248

 

 

 

733,430

 

 

 

1,312,349

 

 

Restructuring and other related costs

15,934

 

 

 

18,964

 

 

 

481,979

 

 

 

155,180

 

 

Impairment/(gain on sale) of goodwill, intangibles and other assets

87,541

 

 

 

253,625

 

 

 

629,126

 

 

 

809,584

 

 

Depreciation and amortization

170,816

 

 

 

197,964

 

 

 

535,157

 

 

 

588,120

 

 

Total expenses (including related party expenses of $21,209 and $19,772 for the three months and $59,462 and $65,296 for the nine months ended September 30, 2021 and 2020, respectively. See Note 17)

1,301,079

 

 

 

1,842,905

 

 

 

4,848,203

 

 

 

5,821,058

 

 

 

 

 

 

 

 

 

 

Loss from operations

(640,048

)

 

 

(1,032,153

)

 

 

(2,995,841

)

 

 

(3,071,689

)

 

 

 

 

 

 

 

 

 

Interest and other income (expense), net:

 

 

 

 

 

 

 

Income (loss) from equity method and other investments

5,096

 

 

 

2,526

 

 

 

(19,414

)

 

 

(44,585

)

 

Interest expense (including related party expenses of $(103,713) and $(76,498) for the three months and $(288,455) and $(171,530) for the nine months ended September 30, 2021 and 2020, respectively. See Note 9 and Note 17)

(121,306

)

 

 

(92,956

)

 

 

(339,134

)

 

 

(231,046

)

 

Interest income

5,142

 

 

 

4,151

 

 

 

14,597

 

 

 

12,893

 

 

Foreign currency gain (loss)

(102,859

)

 

 

112,049

 

 

 

(140,784

)

 

 

(37,936

)

 

Gain (loss) from change in fair value of related party financial instruments (See Note 9)

7,462

 

 

 

13,550

 

 

 

(343,360

)

 

 

805,863

 

 

Loss on extinguishment of debt

 

 

 

(1,041

)

 

 

 

 

 

(77,336

)

 

Total interest and other income (expense), net

(206,465

)

 

 

38,279

 

 

 

(828,095

)

 

 

427,853

 

 

 

 

 

 

 

 

 

 

Pre-tax loss

(846,513

)

 

 

(993,874

)

 

 

(3,823,936

)

 

 

(2,643,836

)

 

Income tax benefit (provision)

2,251

 

 

 

(5,586

)

 

 

(5,031

)

 

 

(21,701

)

 

Net loss

(844,262

)

 

 

(999,460

)

 

 

(3,828,967

)

 

 

(2,665,537

)

 

Net loss attributable to noncontrolling interests:

 

 

 

 

 

 

 

Redeemable noncontrolling interests — mezzanine

42,130

 

 

 

39,461

 

 

 

106,250

 

 

 

643,224

 

 

Noncontrolling interest — equity

(268

)

 

 

18,736

 

 

 

(883

)

 

 

33,352

 

 

Net loss attributable to Legacy WeWork

$

(802,400

)

 

 

$

(941,263

)

 

 

$

(3,723,600

)

 

 

$

(1,988,961

)

 

Net loss per share attributable to Class A and Class B common stockholders (see Note 15):

 

 

 

 

 

 

 

Basic

$

(4.54

)

 

 

$

(5.51

)

 

 

$

(21.31

)

 

 

$

(11.65

)

 

Diluted

$

(4.54

)

 

 

$

(5.51

)

 

 

$

(21.31

)

 

 

$

(11.65

)

 

Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders, basic and diluted

176,708,911

 

 

 

170,715,288

 

 

 

174,750,082

 

 

 

170,699,512

 

 

 

 

 

 

 

 

 

 

(1)

Includes cost of revenue in the amount of $28.7 million and $67.1 million for the three months and $61.4 million and $209.6 million for the nine months ended September 30, 2021 and 2020, respectively. Excludes depreciation and amortization of none and none for the three months and none and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively, shown separately below.

The accompanying notes are an integral part of these condensed consolidated financial statements.

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine Months Ended
September 30,

(Amounts in thousands)

2021

 

 

2020

 

Cash Flows from Operating Activities:

 

 

 

Net loss

$

(3,828,967

)

 

 

$

(2,665,537

)

 

Adjustments to reconcile net loss to net cash from operating activities:

 

 

 

Depreciation and amortization

535,157

 

 

 

588,120

 

 

Impairment of property and equipment

 

 

 

3,541

 

 

Impairment/(gain on sale) of goodwill, intangibles and other assets

629,126

 

 

 

809,584

 

 

Non-cash transaction with principal shareholder

428,289

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

77,336

 

 

Stock-based compensation expense

164,023

 

 

 

55,865

 

 

Cash paid to settle employee stock awards

 

 

 

(3,141

)

 

Issuance of stock for services rendered, net of forfeitures

(2,272

)

 

 

14,995

 

 

Non-cash interest expense

157,787

 

 

 

119,603

 

 

Provision for allowance for doubtful accounts

20,033

 

 

 

53,549

 

 

(Income) loss from equity method and other investments

19,414

 

 

 

44,585

 

 

Distribution of income from equity method and other investments

3,210

 

 

 

 

 

Foreign currency (gain) loss

140,784

 

 

 

37,936

 

 

Change in fair value of financial instruments

343,360

 

 

 

(805,863

)

 

Contingent consideration fair market value adjustment

 

 

 

(122

)

 

Changes in operating assets and liabilities:

 

 

 

Operating lease right-of-use assets

1,161,406

 

 

 

646,995

 

 

Current and long-term lease obligations

(1,252,360

)

 

 

724,205

 

 

Accounts receivable and accrued revenue

(10,624

)

 

 

(46,425

)

 

Other assets

(37,506

)

 

 

(48,651

)

 

Accounts payable and accrued expenses

32,961

 

 

 

(92,228

)

 

Deferred revenue

(38,279

)

 

 

61,489

 

 

Other liabilities

(6,377

)

 

 

6,349

 

 

Deferred income taxes

1,720

 

 

 

119

 

 

Net cash provided by (used in) operating activities

(1,539,115

)

 

 

(417,696

)

 

Cash Flows from Investing Activities:

 

 

 

Purchases of property and equipment

(202,589

)

 

 

(1,252,833

)

 

Capitalized software

(29,433

)

 

 

(18,538

)

 

Change in security deposits with landlords

3,778

 

 

 

(3,094

)

 

Proceeds from asset divestitures and sale of investments, net of cash divested

10,832

 

 

 

1,170,766

 

 

Contributions to investments

(26,704

)

 

 

(93,357

)

 

Net cash provided by (used in) investing activities

(244,116

)

 

 

(197,056

)

 

 

 

 

 

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (CONTINUED)

(UNAUDITED)

 

 

Nine Months Ended
September 30,

(Amounts in thousands)

2021

 

 

2020

 

Cash Flows from Financing Activities:

 

 

 

Principal payments for property and equipment acquired under finance leases

(3,397

)

 

 

(2,959

)

 

Proceeds from issuance of debt

 

 

 

34,309

 

 

Proceeds from unsecured related party debt

1,000,000

 

 

 

600,000

 

 

Proceeds from LC Debt Facility

698,705

 

 

 

 

 

Repayments of debt

(349,011

)

 

 

(813,140

)

 

Repayment of security deposit loan

(7,942

)

 

 

 

 

Debt and equity issuance costs

 

 

 

(11,578

)

 

Proceeds from exercise of stock options and warrants

2,417

 

 

 

149

 

 

Proceeds from issuance of noncontrolling interests

30,000

 

 

 

100,628

 

 

Distributions to noncontrolling interests

 

 

 

(317,611

)

 

Payments for contingent consideration and holdback of acquisition proceeds

(2,523

)

 

 

(35,706

)

 

Proceeds relating to contingent consideration and holdbacks of disposition proceeds

12,177

 

 

 

 

 

Additions to members’ service retainers

330,358

 

 

 

305,432

 

 

Refunds of members’ service retainers

(291,828

)

 

 

(455,530

)

 

Net cash provided by (used in) financing activities

1,418,956

 

 

 

(596,006

)

 

Effects of exchange rate changes on cash, cash equivalents and restricted cash

(1,359

)

 

 

(4,301

)

 

Net increase (decrease) in cash, cash equivalents and restricted cash

(365,634

)

 

 

(1,215,059

)

 

Cash, cash equivalents and restricted cash—Beginning of period

854,153

 

 

 

2,200,688

 

 

Cash, cash equivalents and restricted cash—End of period

$

488,519

 

 

 

$

985,629

 

 

 

 

 

 

 

 

September 30,

(Amounts in thousands)

2021

 

2020

Cash and cash equivalents

$

477,244

 

 

$

876,323

 

Restricted cash

11,275

 

 

109,306

 

Cash, cash equivalents and restricted cash

$

488,519

 

 

$

985,629

 

 

 

 

 

 

Nine Months Ended
September 30,

(Amounts in thousands)

2021

 

2020

Supplemental Cash Flow Disclosures:

 

 

 

Cash paid during the period for interest (net of capitalized interest of $0 and $2,981 during 2021 and 2020, respectively)

$

138,029

 

 

$

70,430

 

Cash received for operating lease incentives — tenant improvement allowances

306,413

 

 

1,062,704

 

Cash received for operating lease incentives — broker commissions

670

 

 

15,830

 

Supplemental Disclosure of Non-cash Investing & Financing Activities:

Property and equipment included in accounts payable and accrued expenses

78,795

 

 

279,485

 

Conversion of related party liabilities to into Preferred Stock

711,786

 

 

 

Creator Awards production services reimbursement obligation payable to SoftBank reclassified to additional paid-in capital

 

 

21,641

 

Distribution of investment to noncontrolling interest holder

 

 

6,646

 

 

 

 

 

Additional ASC 842 Supplemental Disclosures

 

 

Nine Months Ended September
30,

(Amounts in thousands)

2021

 

 

2020

Cash paid for fixed operating lease costs included in the measurement of lease obligations in operating activities

$

1,720,517

 

 

 

$

1,560,186

 

Cash paid for interest relating to finance leases in operating activities

3,225

 

 

 

3,533

 

Cash paid for principal relating to finance leases in financing activities

3,398

 

 

 

2,959

 

Right-of-use assets obtained in exchange for finance lease obligations

866

 

 

 

920

 

Right-of-use assets obtained in exchange for operating lease obligations, net of modifications and terminations

(1,279,474

)

 

 

177,409

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

A reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA is set forth below:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(Amounts in thousands)

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

$

(844,262

)

 

 

$

(999,460

)

 

 

$

(3,828,967

)

 

 

$

(2,665,537

)

 

Income tax (benefit) provision(a)

(2,251

)

 

 

5,586

 

 

 

5,031

 

 

 

21,701

 

 

Interest and other (income) expenses, net(a)

206,465

 

 

 

(38,279

)

 

 

828,095

 

 

 

(427,853

)

 

Depreciation and amortization(a)

170,816

 

 

 

197,964

 

 

 

535,157

 

 

 

588,120

 

 

Restructuring and other related costs(a)

15,934

 

 

 

18,964

 

 

 

481,979

 

 

 

155,180

 

 

Impairment/(gain on sale) of goodwill, intangibles and other assets(a)

87,541

 

 

 

253,625

 

 

 

629,126

 

 

 

809,584

 

 

Stock-based compensation expense(b)

4,040

 

 

 

9,029

 

 

 

61,932

 

 

 

43,847

 

 

Stock-based payments for services rendered by consultants(b)

1

 

 

 

5,161

 

 

 

(2,272

)

 

 

14,995

 

 

Change in fair value of contingent consideration liabilities(c)

 

 

 

72

 

 

 

 

 

 

(122

)

 

Legal, tax and regulatory reserves and settlements

258

 

 

 

280

 

 

 

7,754

 

 

 

1,353

 

 

Legal costs related to regulatory investigations and litigation(d)

2,735

 

 

 

19,996

 

 

 

25,054

 

 

 

41,013

 

 

Expense related to mergers, acquisitions, divestitures and capital raising activities

2,724

 

 

 

(125

)

 

 

6,533

 

 

 

6,214

 

 

Adjusted EBITDA

$

(355,999

)

 

 

$

(527,187

)

 

 

$

(1,250,578

)

 

 

$

(1,411,505

)

 

 

 

 

 

 

 

 

 

(a)

As presented on our condensed consolidated statements of operations.

(b)

Represents the non-cash expense of our equity compensation arrangements for employees, directors, and consultants.

(c)

Represents the change in fair value of the contingent consideration associated with acquisitions as included in selling, general and administrative expenses on the condensed consolidated statements of operations.

(d)

Legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, net of any insurance or other recoveries. See section entitled "Legal Matters" in Note 16 of the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report for details regarding the related regulatory investigations and litigation matters.

A reconciliation of net cash provided by (used in) operating activities, the most comparable GAAP measure, to Free Cash Flow is set forth below:

 

Nine Months Ended
September 30,

(Amounts in thousands)

2021

 

 

2020

 

Net cash provided by (used in) operating activities (a)

$

(1,539,115

)

 

 

$

(417,696

)

 

Less: Purchases of property and equipment (a)

(202,589

)

 

 

(1,252,833

)

 

Free Cash Flow

$

(1,741,704

)

 

 

$

(1,670,529

)

 

 

 

 

 

(a)

As presented on our condensed consolidated statements of cash flows.

________________________________
1
Throughout this release, we make certain references to Non-GAAP financial or operating metrics. Please see “Non-GAAP Financial Definitions” for more detailed discussion and explanations of the various non-GAAP financial measures cited in this release.

Source We Work
Category: Investor Relations

Investors
Chandler Salisbury
investor@wework.com

Media
Nicole Sizemore
press@wework.com

 

Source: We Work