WeWork is still growing phenomenally — and losing a lot of money

WeWork’s growth is accelerating as the office-rental firm adds more locations and tenants. But the company is still spending a lot to achieve that growth.

WeWork generated $422 million in the second quarter, according to a financial presentation shared with Recode, representing 113 percent year-over-year growth. That’s faster growth than in prior quarters. Based on June’s revenue, it’s now on a $1.8 billion annual run rate.

But the company is still losing money. Its net loss was $723 million in the first half of the year on about $764 million of revenue. That’s a larger loss than the same period a year ago, when it lost $154 million on $362 million of revenue.

In an interview with Recode, WeWork CFO Artie Minson said the losses reflect the large capital expenditure it takes to open up new offices, which require time before they become profitable.

WeWork also famously reports a vanity metric called “community-adjusted” earnings before interest, taxes, depreciation and amortization. This is supposed to show how profitable the bare bones of the business would be, without the expenses it spends on growth. Here, it says it’s becoming more profitable — $202 million in the first half of 2018, up from $95 million at the same time last year.

Other notes from WeWork’s docs:

• There are now 268,000 WeWork members — people who use a WeWork space or its office services — which is more than double the number from a year ago. Occupancy rates increased to 84 percent across WeWork’s 287 locations, up from 78 percent occupancy a year ago.

• Overall, average revenue per member decreased to $6,641 on an annualized basis, down from $7,022 this time last year. Minson said this is because WeWork has grown its presence in relatively less-expensive markets like Mexico City. But on a constant city basis, the company is taking in more revenue per head.
• Big corporate clients — tenants who work at companies with more than 1,000 people — now make up 25 percent of WeWork’s membership, up from 17 percent at the same time last year.

The company also announced another $1 billion investment from SoftBank in the form of convertible debt.