WeWork's chairman says that the company is "on track" to positive cash flow next year following a drastic restructuring program and a surge in demand for flexible office space.
Speaking to the Financial Times, WeWork executive chairman Marcelo Claure said that the startup is now a year ahead of its financial goals due to workplace culture changes caused by COVID-19.
The coronavirus pandemic and subsequent lockdowns proved to be a catalyst to a more widely-accepted work from home model, with offices closing and leases ending entirely. However, as social restrictions ease, some businesses may find themselves in need of flexible options for office work -- and it is this arena that WeWork, despite a turbulent few years, may be able to capitalize on.
Claure said WeWork has experienced a rapid rise in demand since the start of the pandemic, with some companies attempting to create smaller, satellite offices away from their headquarters -- therefore keeping staff distant enough but also providing an alternative to home offices.
The executive told the FT in an interview that operating profitability should be met by the end of 2021.
WeWork is backed by SoftBank. The Japanese conglomerate's Vision Fund has poured over $14 billion into the company, which began as an attractive prospect to Silicon Valley investors.
It was not long, however, until WeWork's valuation was slashed from $47 billion to $2.9 billion due to controversies surrounding former WeWork CEO Adam Neumann, a failed attempt at an IPO, dubious sales practices and cash-burning at an astronomical rate, eventually forcing SoftBank to step in and try to rescue its investment by way of restructuring and the appointment of WeWork CEO Sandeep Mathrani in February.
WeWork has also undergone rapid restructuring, including the loss of over 8,000 members of staff, the sale of non-critical assets, and lease renegotiation.
In April, SoftBank withdrew a $3 billion tender offer, citing a failure to meet closing conditions and the existence of pending criminal and civil investigations. Neumann, set to profit from the offer, has since launched a lawsuit claiming that SoftBank has not met its contractual obligations.
SoftBank founder Masayoshi Son has previously branded investment in WeWork as a mistake.
"Everybody thought WeWork was mission impossible," Claure told the publication. "And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets."
If the prediction comes into fruition, this will be good news for SoftBank -- a company that has reported historical financial losses due in part to the WeWork investment. SoftBank recently launched a 4.5 trillion yen ($41 billion) share buyback and debt reduction scheme to bolster its financial position.
Previous and related coverage
- SoftBank sees ¥700 billion loss from WeWork investment
- Life after lockdown: Your office job will never be the same - here's what to expect
- Former WeWork CEO Adam Neumann sues SoftBank over withdrawn tender offer
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