The We Company’s annual losses doubled to nearly $2 billion in 2018, the company said on Monday.
The co-working giant’s revenue also more than doubled, to $1.82 billion, but heavy spending toward worldwide expansion led to losses of $1.93 billion for the year, the Wall Street Journal reported.
We Company executives say that such heavy investment was necessary to build out new offices, which will make far more money than they cost to operate once they are open and well-leased.
New offices and expansion into lower-cost markets also led to declines in the company’s occupancy rate – from 84 to 80 percent in the fourth quarter, the company told bond investors in a presentation on Monday. The average revenue it makes from each member fell to $6,360, down 13.5 percent from early 2016 (which it attributed to moving into lower-cost markets).
WeWork, which rebranded as The We Company in January to highlight other business lines such as its co-living platform and schools, says it reached more than 400,000 members in 100 cities by the end of 2018, with about about one-third consisting of larger corporate clients. It was valued at $47 billion in January following a $2 billion funding round by SoftBank.
“We can offer you everything from a desk to an office to your headquarters or an entire fleet of buildings,” CFO Artie Minson said.
The company’s rapid expansion has been fueled by the billions of dollars it has received from SoftBank and its Vision Fund, though plans for further investment from the fund were recently scaled back from $16 billion to $2 billion amid reluctance from its Saudi and Emirati backers.
WeWork executives predicted years ago that the company would be profitable by now, the Journal noted. [WSJ] — Kevin Sun