- Sales, profit forecasts revised lower in April review document
- CEO says WeWork needs to do better ‘managing the nickel’
WeWork Cos., one of the most valuable venture-backed private companies, cut forecasts earlier this year and told employees it has to change its “spending culture” to continue to thrive, according to a company document and video recordings obtained by Bloomberg.Some of our prior posts:
The document and comments by WeWork Chief Executive Officer Adam Neumann paint a picture of a ballooning startup trying to adjust some inflated expectations, though the company said this week its business is stronger than ever.
Founded in 2010 in New York, WeWork has raised more than $1.4 billion to build and run a network of co-working offices that spans 23 cities in seven countries. After securing more than $400 million at a $16 billion valuation in its most recent financing in March, WeWork produced in late April an internal financial review document that slashed a 2016 profit forecast by 78 percent, cut its revenue estimate by 14 percent and disclosed a 63 percent surge in projected negative cash flow.
The lower revenue projection was due to building openings that were delayed, some by more than six months, according to the document. The review also cited higher spending on construction and lower-than-expected remodeling subsidies from landlords, particularly outside the U.S.
Neumann said in all-hands meetings on May 9 and May 23 that the company had to rein in costs and get its finances in line. He mentioned other highly valued startups that have been cutting employees or closing down due to uncontrolled expenses.
“Our business is performing incredibly well and is stronger than ever,” WeWork said in a statement e-mailed to Bloomberg on Thursday. The April document “was prepared months ago for scenario planning purposes and does not reflect our robust operating momentum. We achieved our best sales month ever in June with over 7,000 desks sold, and in August we will open over 10,000 desks, the most in the company’s history. Occupancy levels for buildings open more than 12 months average 97%. WeWork has an entrepreneurial spirit and consequently, we want to operate as efficiently as possible while always striving for the best possible member experience.”
The company also said the financial review document given to Bloomberg was stolen and that it has “referred this corporate theft to the U.S. Attorney’s office,” according to the statement....MORE
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