The Strategist

WeWork reveals financial results in the run-up to IPO

08/16/2019 - 09:51

WeWork coworking spaces chain, the most expensive US startup, revealed its financial performance in the run-up to the IPO. The company's revenue for the year doubled, and the loss grew by 25%.

The American coworking spaces operator We Company (operated under the WeWork brand until January) published a preliminary prospectus. The company has not yet specified how many shares and at what price it plans to sell.

We Company indicates that it intends to raise $ 1 billion, but as Bloomberg notes, this figure is preliminary until the terms of the initial offering are more accurately indicated.

A prospectus sent to the U.S. Securities and Exchange Commission reports that in the first six months of 2019, We Company doubled its revenue compared to the first half of last year, from $ 764 million to $ 1.5 billion. Loss compared to the same period increased by 25% - from $ 722 million to $ 904 million. The document also shows that over the past three years, the company's losses have grown in proportion to income. In 2016, We Company earned $ 436 million with a loss of $ 429 million, and in 2017 it lost $ 933 million while earning $ 886 million. In 2018, the company lost $ 1.9 billion with revenues of $ 1.8 billion.

Such indicators are not the most attractive for a business that is getting ready for an IPO, The New York Times notes. In early July, CNBC announced that the company planned to borrow $ 3-4 billion in order to boost finance growth and show its ability to be profitable before the initial offering.

The company plans to conduct an IPO in September, writes The Wall Street Journal. However, informed sources told the newspaper that the deadlines could be shifted due to unfavorable market conditions. The papers will be sold under the ticker “WE”, and the JPMorgan Chase and Goldman Sachs banks will act as the IPO’s underwriters.

WeWork was founded in the USA by Adam Neumann and Miguel McKelvey in 2010. In the prospectus, We Company reported that in 2019, individuals and companies entered into 527,000 “membership agreements” with it - in 2018 there were 268,000 such agreements. Now the company operates in 27 countries.

WeWork is among the unicorns supported by major banks and companies, including SofBank Vision Fund, Benchmark, T. Rowe Price, Fidelity and Goldman Sachs. In the last round of private investment, WeWork was valued at $ 47 billion. Now it is the most expensive startup in the United States, notes The Wall Street Journal. The fact that the company applied for an IPO became known in April.