General view of WeWork Weihai Road flagship is seen on April 12, 2018 in Shanghai, China. World’s leading co-working space company WeWork will acquire China-based rival naked Hub for 400 million U.S. dollars. (Photo by Jackal Pan/Visual China Group via Getty Images)
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After a turbulent year, WeWork is set to see positive cash flow and profits in 2021, a year ahead of schedule, company chairman Marcelo Claure said in an interview with the Financial Times published Sunday.
A massive cost-cutting drive helped the company shore up its finances while the coronavirus pandemic has led to robust demand for WeWork’s flexible office space, Claure told the FT in an interview.
“Everybody thought WeWork was mission impossible. [That we had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets,” Claure was quoted by the FT as saying.
In the last several months the New York-based shared office space company, backed by Softbank, slashed more than 8,000 jobs, sold off non-core business units and terminated leases on building space in New York and Baltimore, the FT reported.
Last year, WeWork set out on a mission to cut costs and spending, after high-profile IPO plans went awry. Nine months ago, Softbank had to rescue it with a multibillion dollar package before it ran out of cash entirely. The two are still locked in lawsuits over the bailout, which initially included a $3 billion share buyout of WeWork by the Japanese conglomerate but was never carried out. WeWork’s valuation plummeted from $47 billion in early 2019 to $2.9 billion in March.
As the transition from office-based to home-based remote work continues, Claure says this increases the appeal of WeWork’s pitch to companies that want satellite offices for their employees or want workspace available just a few days per week. Microsoft, Citigroup, Mastercard and TikTok-owner ByteDance have signed new leases with WeWork in the last month, the FT reported.
Still, several tenants canceled their leases or failed to pay rent as the pandemic hit businesses globally, and WeWork saw $482 million in cash burn between January and March alone. Claure said revenues during the crisis were flat, though second-quarter figures have yet to be reported.
Claure was made chairman in October of last year after co-founder Adam Neumann stepped down as CEO.
Read the full report in The Financial Times.