WeWork slashed cash burn in first quarter

WeWork burnt through $482m of cash in the first three months of the year as new management at the lossmaking office space provider worked to cut expenses before coronavirus upended its business.

The outlay was 60 per cent lower than the pace in the previous quarter when the company burnt through $1.4bn.

Kimberly Ross, WeWork’s chief financial officer, said the group had $3.9bn of cash and cash commitments at the end of the first quarter, down from $4.4bn at the end of 2019. Sales increased 45 per cent from the previous year to $1.1bn.

The company has been focused on reducing costs since it abandoned its initial public offering last year and has cut headcount this year, according to people briefed on the matter.

It has also moved to renegotiate leases with its landlords, hiring real estate advisers JLL and Newmark to assist with the process.

An email to employees on Thursday offered a snapshot of the company as it began to confront the coronavirus crisis, which has left the majority of its offices in Europe and North America sparsely populated.

The figures also continued to reflect the pace of expansion that took WeWork to the brink of running out of money before a rescue deal with its Japanese investor SoftBank late last year.

The number of locations the company had around the world had risen to 828 at the end of March from 739 at year-end, the email stated, and WeWork’s membership count — which includes freelancers as well as employees of large corporate clients such as Visa — swelled to 693,000 from 662,000.

Large corporate clients accounted for 45 per cent of WeWork members in the first quarter, up 2 percentage points from the end of 2019, it added.

The company had collected more than 70 per cent of the rent it was owed in April, WeWork said, and it was working to provide relief to small and midsized businesses affected by the pandemic.

In her message to employees, Ms Ross wrote: “The world is navigating uncharted territory and this current climate is undoubtedly having an impact on every business.”

The shift by many businesses to keep employees at home to curtail the spread of coronavirus has raised questions about when and whether WeWork tenants will return.

Sandeep Mathrani, the property industry veteran appointed to lead the company this year, said earlier this week that he expected large clients to need extra office space to appropriately distance their staff during and after the crisis.

“We spent the entire month of April spending tens of millions of dollars getting our spaces ready,” he said in an interview on CNBC television.

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