Friday, August 10, 2018

"WeWork is getting a lot bigger, but so are its losses"

With Alexandra Scaggs leaving FT Alphaville for Barron's* it appears there is an ecological niche that needs to be filled—WeWork.
From Axios:
WeWork saw its revenue, losses and membership grow substantially in the second quarter of 2018, according to an investor presentation provided by the company. It also disclosed that it has struck a large new investment agreement with SoftBank.

Bottom line: The co-working company continues to move toward a 2019 IPO.

Revenue: Q2 revenue was $422 million, of which $368 million came via membership fees, versus $342 million in Q1 revenue and $198 million in Q2 2017 revenue.
Losses: Net loss was $723 million for the first half of 2018, versus $154 million in the first half of 2017. Adjusted EBITDA was negative $141 million, versus $63 million for the first half of 2017.
  • The big drivers included increased expenses for sales and marketing, market expansion and asset depreciation.
Unit economics: WeWork created a novel metric called "community-adjusted EBITDA," which more than doubled year-over-year to $107 million.

Total memberships more than doubled in the past year, now coming in at 268,000.
  • That's a 22% increase between the end of March and the end of June, which is an acceleration from a 18% growth rate for the prior quarter.
  • Around 25% of WeWork members are now enterprise customers for companies like Amazon, General Electric, J.P. Morgan and Pepsi. This matters because enterprise clients have lower churn than traditional ones.
  • Total occupancy climbed quarter-over-quarter from 82% to 84%. That latter figure includes 81% for new locations and 90% for "mature" locations that have been open for at least 18 months.
WeWork added 53 locations in Q2, and now has 287 locations in 77 cities in 23 countries....

*This dropped from one of the feedreaders yesterday:
and because there was no notice on her Twitter feed or at FTAV, the decision was taken to hold off on linking.
I hope she had time to speak to Izabella before Barron's went public.

**I find it almost impossible to resist descending into Elmer-Fuddspeak, also known among linguists as Fuddian, when thinking about WeWork.
Fortunately (or unfortunately) The Dialectizer can do translations of entire blocks of text. For example the first part of the Axios story is rendered:
WeWowk saw its wevenue, wosses and membewship gwow substantiawwy in the second qwawtew of 2018, accowding to an investow pwesentation pwovided by the company. It awso discwosed that it has stwuck a wawge new investment agweement wif SoftBank.

Bottom wine: De co-wowking company continues to move towawd a 2019 IPO.

Wevenue: Q2 wevenue was $422 miwwion, of which $368 miwwion came via membewship fees, vewsus $342 miwwion in Q1 wevenue and $198 miwwion in Q2 2017 wevenue.

Wosses: Net woss was $723 miwwion fow the fiwst hawf of 2018, vewsus $154 miwwion in the fiwst hawf of 2017. Adjusted EBITDA was negative $141 miwwion, vewsus $63 miwwion fow the fiwst hawf of 2017.

De big dwivews incwuded incweased expenses fow sawes and mawketing, mawket expansion and asset depweciation, uh-hah-hah-hah.

Unit economics: WeWowk cweated a novew metwic cawwed "community-adjusted EBITDA," which mowe than doubwed yeaw-ovew-yeaw to $107 miwwion, uh-hah-hah-hah....
We'll have more WeWork tomorrow.
I am so sorry.