WeWork exits 40 US locations but celebrates global expansion

  • WeWork is performing well year on year, but investors are disappointed with the latest results.
  • Due to slower than expected growth in the US market, WeWork will exit 40 locations in the country.
  • The company has said these closures will contribute $140 million to annual EBITDA.

Flexible workspace provider WeWork has released its financial results for the third quarter of the year.

There is a lot for the firm to celebrate with revenue increasing 24 percent year over year to $817 million. While losses from operations amount to $336 million, this figure is dropping each year. However it doesn’t appear to be dropping fast enough.

This because the firm announced that it intends to exit 40 locations in the United States by the end of November.

“These closures are expected to reduce top-line revenue; however, they are expected to also reduce rent, tenancy and building operating expenses, and, once fully implemented, are expected to contribute approximately $140 million to annual Adjusted EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortisation]” said WeWork.

These closures appear to be linked to slower than expected growth in the region but the US is not the only market. WeWork has also pointed to slower than expected growth in Canada and Japan. Whether there are closures planned for those regions is not clear at this stage.

In the same breath however, WeWork celebrated the fact that it signed new management and revenue share agreements at 20 new locations globally.

Unfortunately these new locations weren’t enough to keep the confidence of investors. Following these results, CNBC reports that WeWork’s stock price fell 1.7 percent on the back of this news.

Locally, WeWork has three locations with two in Johannesburg and one in Cape Town. It’s unclear whether these locations will continue to exist. For the time being at least they are still operational.

And as the world continues to open up again following the COVID-19 pandemic, WeWork is set to enable flexible work agreements at its locations. The company is also showing strong signs of growth year over year so we wouldn’t count them out just yet.


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