WeWork IPO filing shows group lost almost $700m in first half

Company offers shared office space in 111 cities, including Dublin

WeWork has four live locations in Dublin and is also taking space in the redeveloped former Central Bank building on Dame Street. Photograph: The New York Times

WeWork has four live locations in Dublin and is also taking space in the redeveloped former Central Bank building on Dame Street. Photograph: The New York Times

 

The We Company, which owns WeWork, on Wednesday filed with regulators for an initial public offering and published detailed financial statements for the first time that showed it lost almost $700 million (€626 million) in the first half of 2019 while doubling revenue.

The preliminary filing with the US Securities and Exchange Commission takes it a step closer to a planned listing next month and comes at a time when stock markets are in turmoil due to a prolonged trade war between the United States and China.

The company, which offers shared office space in 111 cities, including Dublin, did not give any detail on the size of the offering or the exchange where it would list its shares.

The filing provides the most comprehensive financial picture yet of the company co-founded by its chief executive, Adam Neumann, in 2010. The company previously reported it lost nearly $2 billion in 2018, as it invests heavily to grow its business.

Among the disclosures in the filing, WeWork reported a net loss attributable to the company of $689.7 million in the six months ended June 30th, compared with a loss of $628.1 million a year earlier.

In the same period, revenue more than doubled to $1.54 billion.

JP Morgan Securities and Goldman Sachs are among a nine-member underwriting team for the IPO.

If it goes ahead with the IPO, WeWork would be the biggest company by value to list on the US stock market this year after ride-hailing company Uber Technologies.

An IPO would come at a time when an escalating trade war between the United States and China has made investors more risk-averse to new companies listing.

WeWork was valued in January at $47 billion in a private fundraising round, according to data provider PitchBook.

With its steep losses, WeWork faces some of the same headwinds. WeWork’s business model is based on short-term revenue agreements and long-term loan liabilities, and has been subject to some scepticism.

The company warned it had a history of losses and may not be able to turn a profit at a company level for the foreseeable future.

Shaken up

WeWork has shaken up office leasing by offering start-ups and entrepreneurs short-term contracts in lieu of traditional long-term leases. It also generates greater revenue per square foot than landlords by squeezing more people into a space.

The company operates in 528 locations in 111 cities across 29 countries. It has four live locations in Dublin and is also taking space in the redeveloped former Central Bank building on Dame Street.

Flexible office providers have dominated leasing in major gateway cities, most notably London, New York and San Francisco, a sign of growing demand by companies and not just the start-ups and entrepreneurs that put co-working on the map.

While WeWork is the flag bearer, several operating models exist. The industry, which JLL estimates will account for 30 per cent of leasing in a decade, is likely to end up like hotels with various services and customer niches.

WeWork, whose current investors include Japan’s SoftBank Corp, did not disclose how much it was looking to raise in the IPO or what valuation it would aim for.

This will come in an amended IPO filing, which would precede a 10-day IPO roadshow to meet potential investors.

The company will ultimately look to raise several billion dollars in the IPO following a substantial debt offering. – Reuters