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WeWork, the embattled coworking giant, reached a key milestone on its way to profitability in December despite missing the company’s own revenue projections for the fourth quarter of 2022, according to a Q4 earnings Thursday.
Company executives said WeWork had achieved adjusted EBITDA profitability for “the first time in WeWork’s history” or at least since going public in 2021, calling it a “historic milestone.” WeWork launched as a private company in 2010.
Adjusted EBITDA — or earnings before interest, taxes, depreciation and amortization — clocked in at negative $26 million, a 75 percent improvement quarter over quarter, and a $257 million improvement year over year.
“Our fourth quarter results demonstrate that we accomplished what we set out to do in fiscal year 2022 by staying focused on reducing expenses, optimizing our portfolio, growing revenue, and increasing occupancy,” WeWork CEO and Chairman Sandeep Mathrani said in a statement. “As a result, we crossed a historic milestone of achieving Adjusted EBITDA profitability in December — a testament to the hard work of our employees and the enduring value of our products.”
Shares of WeWork rose as much as 4 percent in pre-market trading.
Revenue for the fourth quarter hit $848 million, an 18 percent increase from the same quarter a year ago, but shy of the company’s own projections of between $870 and $890 million.
WeWork posted $527 million in net losses for the quarter, including approximately $348 million in non-cash expenses, an improvement from the third quarter when it lost $568 million and the fourth quarter of 2021, when it lost $803 million.
Consolidated physical occupancy for WeWork’s facilities clocked in at 75 percent and physical memberships increased by 17 percent year over year.
The company announced during its previous earnings call in November that it would be shuttering 40 underperforming locations in the United States. In January it announced it would lay off 300 employees in an effort to cut costs and become closer to profitability.
The fourth quarter report marks more than two years since WeWork became the poster child for startup excess and poor corporate management. Its attempt at an initial public offering proved disastrous and the company had to be bailed out by its chief public banker SoftBank.
Its eccentric founder Adam Neumann resigned in September 2019 and the company finally went public in October 2021. WeWork’s first earnings call as a public company was in November 2021.
As evidenced by the cost-cutting measures the company’s challenges are far from over even as its revenues improve. Its stock has lost three-quarters of its value since going public in 2021, bringing its worth to $1.9 billion, a fraction of the $47 billion valuation first placed on the company in 2019.
The startup’s saga was the subject of a dramatized miniseries earlier this year, HBO’s WeCrashed — which starred Jared Leto as Neumann. It dramatized the founder’s rise and highly publicized fall, as well as the financial woes he plunged the company into.
Neumann has since launched a new venture — Fl0w — which has been described by some observers as a WeWork-style residential rental startup. Neumann has pitched it as a shared housing concept with four pillars: an investment arm that buys buildings, a tech arm that manages them, a financial services arm that can collect rent and offer other unknown services and an equity sharing arm.