WeWork tried to allay potential investor concerns about its widening losses in a quarterly financial report it gave to bondholders and the media Wednesday. It’s still losing a lot of money, but trying to convince investors its business model is different than, say, Uber’s. The office giant reported a $264 million loss in the first quarter, slightly narrower than the same period last year. Revenue more than doubled year over year to $728.3 million, including increasing international and large corporate customers.
One red flag for investors may be that the company’s metric to gauge whether it is making money on each building—community adjusted EBITDA—ticked down a couple points from the same time last year. In an interview with The Information, Artie Minson, WeWork’s CFO and co-president, pointed to the revenue opportunities years down the road using tenants it would capture now, even if it loses money up front.
“Whats really important is we’re investing money, and we get a real return on the investment, as opposed to just losing money,” Mr. Minson said.
It’s unclear whether Wall Street will buy in to that rationale if WeWork goes public toward the end of the year.
The company also is trying to clean up a public relations mess: Its CEO Adam Neumann won’t own personal stakes in buildings WeWork occupies anymore. This story from Bloomberg on the company’s new real estate fund—called ARK—is well worth a read.
It’s another colorful—some might say, frustrating—portrait of Neumann, whose “pie-in-the-sky” attitude has driven the company’s growth.