THE owner of money-losing shared office provider WeWork told employees yesterday it has slashed its cash burn rate almost in half from the end of last year and obtained a US$1.1 bil (RM4.6 bil) commitment in new financing from majority owner SoftBank Group Corp.
The company said in an e-mail to employees that its second-quarter results show the coronavirus pandemic has hurt business but its financial position remains strong.
“Our early efforts to become a more streamlined, cash-conscious organization puts us in a better position to adapt quickly, navigate new realities and deliver our future business objectives,” said Kimberly Ross, chief financial officer of WeWork, in the email seen by Reuters.
Revenue in the quarter reached US$882 mill, a 9% increase from a year earlier, Ross said. WeWork in the first quarter reported revenue of US$1.1 bil, the first time it had exceeded nine figures, and its cash burn was US$482 mil.
WeWork has US$4.1 bil in cash and unfunded cash commitments, including the US$1.1 bil in new financing, Ross said.
WeWork in July indicated it expected to be cash flow positive in 2021, according to the Financial Times.
The US$1.1 bil is the last of the debt facilities included in a wide-ranging transaction announced in October 2019, a source at SoftBank said.
WeWork ended the quarter with 612,000 members, a decline from 693,000 in the prior quarter.
But 48% were from prized Enterprise customers, businesses with 500 employees or more.
The results were released almost a year to the day after it filed plans to go public, when the company was valued at US$47 bil and looked poised to be one of the year’s hottest IPOs.
WeWork soon entered a tailspin as revelations of corporate mismanagement emerged.
The company has since undergone an enormous management shake-up and remains enmeshed in suits over a US$3 bil tender offer to existing shareholders. – Aug 15, 2020, Reuters
