According to its earnings report released last Thursday, WeWork brought in $815 million in revenue in the second quarter of 2022, up 7% from the first quarter of the year. WeWork’s occupancy hit 72% in the second quarter, the highest it’s been since the pandemic began and matching the company’s pre-pandemic levels in late 2019.
Occupancy aside, the company’s total losses in Q2 painted a less rosy picture of the nascent public company. The firm burned through $635 million in the second quarter, up from $504 million in the first quarter of 2022, as a potential recession and continued work from home put pressure on the office market.
Its second-quarter losses were still 31% less than the $923 million the company lost in the same quarter last year.
As a result of the report, the company’s shares fell as much as 5% during trading last Thursday.
According to CEO Sandeep Mathrani, WeWork is still on track to break even on earnings before interest, taxes, depreciation, and amortization by the end of this year. If foreign currency exchange had held at the rates WeWork projected, its revenue would have been $841 million, Bisnow reported.
“We have been steadily selling desks and growing our base for well over a year because companies have needed a way to quickly adapt to a new and unknown environment,” Mathrani said during a call with investors last week. “In the face of inflation and recessionary pressures, not only does that need exist, but on top of that, companies need a solution that can help reduce costs and future-proof workplace strategies.”
Chief Financial Officer Andre Fernandez, who also joined the call for the first time since joining the company in June, affirmed WeWork’s higher cash burn in Q2 was mostly due to deferred financing costs and unrealized foreign exchange losses on intercompany loans.
“As the business becomes increasingly profitable on the gross margin level, we will have greater non-U.S. dollar earnings that will be subject to greater [foreign exchange]movements,” said Fernandez.
Despite these higher losses, WeWork’s memberships grew 5% from the first quarter to the second quarter, to 658,000 members. The company sold 73,000 new desks compared to the 83,000 it sold in the first quarter of 2022. Its average lease term ranged from 14 months for small- to medium-sized businesses to 25 months for its enterprise clients, according to Mathrani.
Moreover, WeWork joined a growing number of firms jumping into the office software market in July and partnered with Yardi Systems to launch WeWork Workplace, a platform that will let companies manage their office space similarly to the way WeWork does for its outposts, and so far has 11 clients.
With $625M of cash in hand and nearly $1.7B in total liquidity, including access to a $500M credit facility that it has not drawn on, WeWork is in a more stable financial position than when it went public via a special-purpose acquisition company last October.