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NEW YORK (Reuters) – The owner of money-losing shared office provider WeWork told employees on Thursday it has slashed its cash burn rate almost in half from the end of last year and obtained a $1.1 billion commitment in new financing from majority owner SoftBank (T:9984).
The We Company said in an e-mail to employees that its second-quarter results show the coronavirus pandemic has hurt business but its financial position remains strong.
“Our early efforts to become a more streamlined, cash-conscious organization puts us in a better position to adapt quickly, navigate new realities and deliver our future business objectives,” said Kimberly Ross, chief financial officer of WeWork, in the e-mail seen by Reuters.
Revenue in the quarter reached $882 million, a 9% increase from a year earlier, Ross said. WeWork in the first quarter reported revenue of $1.1 billion, the first time they had exceeded nine figures, and its cash burn was $482 million.
WeWork has $4.1 billion in cash and unfunded cash commitments, including the new $1.1 billion in new financing, Ross said. WeWork in July indicated it expected to be cash flow positive in 2021, according to the Financial Times.
WeWork ended the quarter with 612,000 members, of which 48% were from prized “Enterprise” customers, businesses with 500 employees or more.
The results were released almost a year to the day it announced plans to go public, when the company was valued at $47 billion and looked poised to be one of the year’s hottest IPOs.
WeWork soon entered a tailspin as revelations of corporate mismanagement emerged. The company has since undergone an enormous management shake-up and remains enmeshed in lawsuits over a $3 billion tender offer to existing shareholders.
