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WeWork's former CEO Adam Neumann. Photo by Bloomberg
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Why Tech ‘Run Rates’ Should Raise Eyebrows

Photo: WeWork's former CEO Adam Neumann. Photo by Bloomberg

When We Co.—the parent of WeWork—filed to go public last fall, its financial disclosures showed the company had “run rate revenue” of $2.4 billion as of Dec. 31 2018. But in a different spot in the IPO filing, WeWork reported its actual 2018 revenue as $1.8 billion—33% lower.

Run rate revenue has joined a host of other unorthodox financial metrics that companies in the tech industry—and elsewhere—use to market their business to investors. A run rate is a figure calculated by taking the revenue for the last month of a quarter and multiplying it by 12. Proponents say the metric can help outsiders understand the potential of fast-growing, early stage businesses. Critics say run rates can make a business seem bigger than it actually is—or will ever become.

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