WeWork losses mount but 'seismic shift' in office use seen helping recovery
By Herbert Lash NEW YORK (Reuters) - WeWork Companies LLC's revenue declined in the third quarter but its cash burn slowed, a company memo showed on Thursday, with management confident the shared-workplace provider can weather the hit to the office sector from COVID-19. Quarterly revenue slid 8% from the second quarter to $811 million (£618 million), while the company posted cash burn of $517 million, less than $671 million a quarter ago, WeWork said in a memo to employees seen by Reuters. WeWork also said it successfully exited 66 locations that were open or were to be opened and that it amended 150 lease arrangements that resulted in an estimated reduction of $1.5 billion in long-term liabilities
By Herbert Lash
NEW YORK (Reuters) - WeWork Companies LLC's revenue declined in the third quarter but its cash burn slowed, a company memo showed on Thursday, with management confident the shared-workplace provider can weather the hit to the office sector from COVID-19.
Quarterly revenue slid 8% from the second quarter to $811 million (£618 million), while the company posted cash burn of $517 million, less than $671 million a quarter ago, WeWork said in a memo to employees seen by Reuters.
WeWork also said it successfully exited 66 locations that were open or were to be opened and that it amended 150 lease arrangements that resulted in an estimated reduction of $1.5 billion in long-term liabilities.
WeWork said member retention improved and renewal rates stabilized with the loss of desks in September at its lowest level since March when COVID-19 shut down businesses around the world and left offices vacant.
The pandemic has accelerated a "seismic shift" in the office sector that has put flexibility - an industry byword for the short-term leases the company embraces - and WeWork at the forefront, the memo signed by Chief Executive Sandeep Mathrani and Chief Financial Officer Ben Dunham said.
"This is our moment, and I know that together, we will continue to define the future of work," they said.
WeWork said the results, which were reported earlier to holders of its junk bond, showed signs of key metrics stabilizing. Companies with more than 500 employees represented 54% of all members, an increase of "enterprise" clients from 48% in the prior quarter, though overall memberships fell 11%.
The company increased its global footprint to 859 locations and WeWork reported about $3.6 billion of cash and unfunded cash commitments at the end of the third quarter.
The firm dropped "The We Company" name in October, reverting to its WeWork brand to focus on its core office-sharing business, the most significant move since Japanese tech giant SoftBank, its majority owner, installed new management after a disastrous effort to go public in 2019.
The memo said the company was on track to achieve its goals, but did not say whether it would reach profitability in 2021 as it has stated before.
While COVID-19 has hit WeWork's cash flow, longer-term changes in office usage are seen potentially supporting its business model.
Zach Aarons, co-founder of property-focused venture capital firm MetaProp, said WeWork may be able to withstand the economic downturn better than other office space providers.
The coronavirus pandemic has fueled corporate demand for shorter leases as employees increasingly work from home, which should help WeWork, Aarons said.
Fitch Ratings in October cut WeWork's bond and credit rating deeper into junk territory on concerns about an industry shift to hybrid workplace models that lead to permanently lower workspace demand.
Fitch sees WeWork attaining modestly positive free cash flow in 2022 after its burn rate slows to about $900 million next year but it may need additional funding beyond a $3.3 billion financing commitment from SoftBank.
(Reporting by Herbert Lash; Editing by Sam Holmes)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.