WeWork said Tuesday it has “substantial doubt” about its ability to stay in business, according to the company’s second quarter earnings release.
“As a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern,” said WeWork’s Interim Chief Executive Officer David Tolley.
WeWork went public in 2021, after it had tried to do so two years earlier in 2019 but was forced to delay its initial public offering (IPO) amid questions over the company’s value and corporate governance. The fallout led to reports of excessive spending from former CEO and founder Adam Nuemann, who later stepped down.
The New York-based office-sharing company said its ability to stay in business is dependent on the outcome of the management’s plan to improve liquidity and profitability over the next 12 months. The company said it plans to reduce rent and tenancy costs by negotiating more favorable lease terms, limit capital expenditures and seek additional capital by issuing debt, stock or selling assets.
WeWork leases buildings and divides them into spaces to sublet to its members, including freelancers, small businesses, and startups who do not want to pay for a permanent space. The company experienced an increase in operating expenses over time and depended on cash infusions from investors.
The company reported a net loss of $397 million in the second quarter, an improvement from the net loss of $635 million in 2022.
Tolley did note the company’s revenue growth, writing, “In a difficult operating environment, we have delivered solid year-over-year revenue growth and dramatic profitability improvements.”
“Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships,” Tolley continued.
Tolley said the company is confident in its ability to “meet the evolving workplace needs of businesses of all sizes across sectors and geographies.”
The Associated Press contributed to this report.
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