WeWork to exit 40 US locations to cut costs, revenue outlook disappoints

10 Nov, 2022

WeWork Inc said on Thursday it will exit about 40 locations across the United States and forecast current-quarter revenue below estimates as the flexible workspace provider faces high expenses and a strong US dollar.

The company has been working to curb its real estate footprint and reduce headcount as it grapples with long-term lease obligations that stood at $15.57 billion as of September-end. Some of WeWork’s tenants, in contrast, are only on short-term leases.

WeWork went public in 2021 after a two-year struggle and currently has a market cap of around $1.77 billion. Its pre-IPO valuation was once pegged at nearly $50 billion.

Its shares were down 1.6% at $2.39 in premarket trade on Thursday.

The closures, of about 41,000 workstations, are expected to pull down revenue but the simultaneous cost reductions will contribute roughly $140 million to annual adjusted core earnings, it said.

The company did not disclose which US locations it would exit.

The New York-based firm also reported third-quarter revenue of $817 million, below market expectations of $865 million, according to a Refinitiv poll of five analysts.

Net loss per diluted share came in at 75 cents per share, below estimates for a loss of 45 cents.

WeWork expects fourth-quarter revenue to be between $870 million and $890 million, below expectations of $923.8 million.

The company also said it extended the maturity date of its $500 million senior secured notes from February 2024 to March 2025. The notes remained undrawn at the end of the quarter.

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