WeWork on Thursday reported a smaller quarterly loss as it continued its efforts to turn a profit after the coronavirus pandemic upended its office-focused coworking business.
The company said second-quarter revenue increased 37% year-on-year to $815 million. WeWork’s net loss shrank 31% from the year-ago quarter to $635 million in the quarter ended June 30.
“Simply put, revenues are growing and expenses are continuing to come down,” said Alexander Goldfarb, managing director and senior research analyst at investment bank Piper Sandler.
And in a sign that more people can no longer work from their kitchen tables or living room sofas, WeWork’s occupancy rate rose to 72% in the fourth quarter, up from the fourth quarter of 2019. He said it would match quarterly occupancy rates. Membership increased 33% above pre-pandemic levels. From a year ago to 658,000, the highest ever. The company says it has 777 locations around the world, supporting about 917,000 desks.
“We have been steadily selling desks and growing our membership base for over a year as the world adapts to the pandemic and businesses needed a way to quickly adapt to new and unfamiliar environments.” said WeWork chief Sandeep Mathrani. The executive said in a conference call with analysts on Thursday.
As WeWork rebuilds its business, it’s benefiting from the easing of pandemic restrictions. The company, which leases many buildings in dense urban areas, is expanding its scope of operations to attract workers who want to return to the office, and is expanding its scope to add co-working spaces to residential buildings. He said he is looking for partnerships with developers.
WeWork can take advantage of the transition to hybrid work, but that typically poses a challenge for companies signing long-term leases of office space, said Vikram Malhotra, senior equity research analyst at Mizuho Americas. This is because WeWork’s offices are located in central business districts, allowing the company to serve tenants large and small. “Their service is truly differentiated,” Malhotra said.
WeWork leases flexible office space, from dedicated desks to entire floors, to tenants ranging from startups to Fortune 500 companies. In July, we introduced an app-based service that allows businesses to manage their space needs and book shared services like meeting rooms.
“It also helps our existing customers manage not just WeWork’s footprint, but their overall footprint,” Malhotra said of the service.
The income statement released on Thursday was WeWork’s second-quarter report, which made its market debut in October through a merger with a publicly traded shell company known as a special-purpose acquisition company.
WeWork shares fell 8.7% at the market close on Thursday.
