Business Wire | Nov 15, 2021 07:30AM EST

WeWork Reports Third Quarter 2021 Results

Nov. 15, 2021

NEW YORK--(BUSINESS WIRE)--Nov. 15, 2021--WeWork Inc. (NYSE: WE) ("WeWork"), one of the leading global flexible space providers, today reported financial results for its third quarter ending on September 30, 2021.

* Total revenue for the third quarter was $661 million, an 11% increase compared to total revenue of $593 million in the prior quarter. * Adjusted EBITDA loss was $356 million for the third quarter, a $93 million improvement relative to the prior quarter Adjusted EBITDA loss of $449 million.1 * WeWork ended the third quarter with pro forma cash and unfunded cash commitments of $2.3 billion, including $477 million of available cash on hand as of September 30, 2021, $1.2 billion of net proceeds from the business combination with BowX, $550 million currently available under the Senior Secured Notes facility, the repayment of the $350 million secured commercial paper facility and $450 million currently available under the $1.75 billion letter of credit facility.

Company Operating Results

* As of September 30, 2021, WeWork's global real estate portfolio consisted of 764 locations across 38 countries, supporting approximately 932,000 workstations and 546,000 physical memberships. * WeWork's consolidated real estate portfolio included 631 locations across 33 countries, supporting approximately 766,000 workstations and 432,000 physical memberships. * Consolidated gross desk sales totaled 155,000 in the third quarter, or 9.3 million square feet sold. Consolidated new desk sales totaled 84,000 in the third quarter. * Physical occupancy continued to trend upwards to 56% across consolidated operations as of the end of September, up from 50% at the end of Q2 2021. Including the incremental 30,000 net memberships that are already contracted to move in, physical occupancy would increase to 60%. * All Access memberships increased to 32,000 in the third quarter, up from 20,000 in Q2 2021. These All Access memberships represent an additional four percentage points of occupancy.

Company Consolidated Financial Results1

* Revenue of $661 million in the third quarter increased from $593 million in the second quarter. Revenue in September was $230 million, making it the fifth consecutive month of revenue growth and the highest monthly revenue recorded in 2021. * Net loss of $844 million in the quarter, which included $262 million of non-cash and non-recurring expenses, primarily from Depreciation, Amortization and Impairments. * Adjusted EBITDA loss of $356 million for the quarter, represents a $93 million improvement relative to the second quarter Adjusted EBITDA loss of $449 million. * Operating Cash Flow was $(380) million for the third quarter. Free Cash Flow was $(430) million, which was an improvement of $219 million relative to the prior quarter. * On October 20, 2021, WeWork and BowX Acquisition Corp. ("BowX") announced the closing of their business combination. The combined company was named "WeWork Inc." and began trading on the New York Stock Exchange under the ticker symbol "WE" starting October 21, 2021. The business combination provided WeWork with the previously announced gross cash proceeds of approximately $1.3 billion. * Pro forma for the closing of the business combination with BowX, WeWork ended the third quarter with cash and unfunded cash commitments of $2.3 billion, which includes $477 million of available cash on hand as of September 30, 2021, $1.2 billion of net proceeds from the business combination, $550 million currently available under the Senior Secured Notes facility, the repayment of the $350 million secured commercial paper facility and $450 million of current availability under the $1.75 billion LC facility. * The Company regularly evaluates market conditions to enhance its capital structure and diversify its investor base, and from time to time may refinance, redeem, repurchase or otherwise modify existing debt, or issue equity or equity-linked securities.

Space-as-a-Service:

Q3 saw a continuation of the strong momentum seen in the second quarter of 2021. WeWork's consolidated gross desk sales, which include renewals, of 155,000 equates to 9.3 million square feet sold in the third quarter. New desk sales totaled 84,000 in the same period. In October, WeWork reported preliminary gross desk sales of 45,000, equating to 2.7 million square feet, and preliminary new desk sales of 25,000.

WeWork continued to take an outsized share of overall market leasing activity compared to traditional commercial office leasing activity. While WeWork accounts for about half a percent of the U.S. office inventory, the Company sold the equivalent of over 9% of U.S. office leasing activity in the third quarter. At the market-level, WeWork's Q3 gross sales in Manhattan were equivalent to 20% of the traditional office market take-up while WeWork's portfolio of 7 million square feet accounts for approximately 1% of total office stock. WeWork saw similar leasing activity in a number of its largest markets; WeWork's gross sales equated to 37% of London's traditional office take-up and 13% of Paris' take-up while accounting for approximately 1% of stock in the two markets, and 23% of Boston's take-up in the third quarter, where WeWork represents approximately 2% of the office stock.

WeWork's consolidated physical memberships increased to 432,000, for a physical occupancy rate of 56% as of the end of September. Including incremental net memberships that are contracted to move in, physical occupancy would increase to 60%. As of October, preliminary physical occupancy had increased three percentage points to 59%. Including net memberships that are contracted to move in, preliminary October physical occupancy was 61%.

Access:

All Access memberships were 32,000 at the end of September, an increase of 60% quarter-over-quarter, or approximately 1,000 memberships per week. By October, preliminary All Access memberships had increased to 38,000. To continue expanding the member acquisition funnel for Access products, WeWork has successfully signed and launched affinity partnerships with American Express, Uber, American Airlines, Brex, and, more recently, Better Mortgage, recruiter.com and Union Square Ventures.

WeWork Workplace:

As companies increasingly embrace more flexible and hybrid work strategies, the WeWork Workplace experiential management offering provides a turnkey solution to manage how and where employees work across assets and markets. Leveraging the software that the company has built over the past 10 years to manage its own spaces, power online booking, and optimize utilization through back-end data analysis, WeWork believes its proprietary technology can be used by third party organizations across their real estate portfolios.

In October, WeWork solidified a strategic business investment with Cushman & Wakefield to market its workplace management software. This announcement built on WeWork's existing management agreement with Hudson's Bay Company to manage and operate SaksWorks locations in the Tri-State area, including Brookfield Place and the Saks Fifth Avenue New York flagship in Manhattan, Manhasset, Greenwich, and Eastchester.

Last month, WeWork announced an agreement with Ivanho Cambridge to open a flexible space offering in Place Ville Marie, one of Montreal's iconic and prestigious real estate complexes. Anticipated to open in Spring of 2022, the 11,000 square foot space will leverage WeWork's management expertise and provide flexible space solutions as an amenity to Ivanho's tenants. The partnership further demonstrates the value of WeWork's hospitality and management expertise as certain landlords look for opportunities to enrich their offerings to tenants with flexibility and community.

Together, the Cushman & Wakefield, Hudson's Bay Company and Ivanho Cambridge agreements reflect WeWork's ability to tailor its product suite to suit unique needs of members and landlords alike.

About WeWork

WeWork was founded in 2010 with the vision to create environments where people and companies come together and do their best work. Since opening our first location in New York City, we've grown into a global flexible space provider committed to delivering technology-driven flexible solutions, inspiring spaces, and unmatched community experiences. Today, we're constantly reimagining how the workplace can help everyone, from freelancers to Fortune 500s, be more motivated, productive, and connected. For more information about WeWork, please visit us at https://wework.com.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "pipeline," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Although WeWork believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to, WeWork's ability to refinance, extend, restructure or repay near and intermediate term debt; its indebtedness; its ability to raise capital through equity issuances, asset sales or the incurrence of new debt; retail and credit market conditions; impairments; its liquidity demand; changes in general economic conditions, including as a result of the COVID-19 pandemic; delays in customers and prospective customers returning to the office and taking occupancy as a result of the COVID-19 pandemic and the emergence of the Delta variant leading to a parallel delay in receiving the corresponding revenue; and WeWork's inability to implement its business plan or meet or exceed its financial projections. Forward-looking statements speak only as of the date they are made. WeWork Company discusses these and other risks and uncertainties in its annual and quarterly periodic reports and other documents filed with the U.S. Securities and Exchange Commission. WeWork may update that discussion in its periodic reports, but otherwise takes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Use of Non-GAAP Financial Measures

This press release includes certain financial measures not presented in accordance with generally accepted accounting principles in the United States ("GAAP"), including Adjusted EBITDA and Free Cash Flow (including on a forward-looking basis). These financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to net loss or other measures of profitability, liquidity or performance under GAAP. You should be aware that WeWork's presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. WeWork believes that these non-GAAP measures of financial results (including on a forward-looking basis) provide useful supplemental information to investors about WeWork. WeWork's management uses forward-looking non-GAAP measures to evaluate WeWork's projected financials and operating performance. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.

Non-GAAP Financial Definitions

Adjusted Earnings Before Interest Expense, Income Tax, Depreciation, and Amortization ("Adjusted EBITDA")

We supplement our GAAP results by evaluating Adjusted EBITDA, a non-GAAP measure. We define "Adjusted EBITDA" as net loss before income tax (benefit) provision, interest and other (income) expense, depreciation and amortization expense, stock-based compensation expense, expense related to stock-based payments for services rendered by consultants, income or expense relating to the changes in fair value of assets and liabilities remeasured to fair value on a recurring basis, expense related to costs associated with mergers, acquisitions, divestitures and capital raising activities, legal, tax and regulatory reserves or settlements, significant legal costs incurred by WeWork in connection with regulatory investigations and litigation regarding WeWork's 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, as defined in Note 1 of the Notes to the Condensed Consolidated Financial Statements included in our Quarterly Report for the quarter ended September 30, 2021, net of any insurance or other recoveries, significant non-ordinary course asset impairment charges and, to the extent applicable, any impact of discontinued operations, restructuring charges, and other gains and losses on operating assets.

Free Cash Flow

Because of the limitations of Adjusted EBITDA, as noted above, we also supplement our GAAP results by evaluating Free Cash Flow, a non-GAAP measure. Free Cash Flow is defined as cash flow from operating activities less cash purchases of property and equipment, each as presented in WeWork's Condensed Consolidated Statements of Cash Flows calculated in accordance with GAAP. Free Cash Flow is both a performance measure and a liquidity measure that we believe provides useful information to management and investors about the amount of cash generated by or used in the business. Free Cash Flow is also a key metric used internally by our management to develop internal budgets, forecasts and performance targets.

Key Performance Supplemental Information

(Amounts in ones, September June 30, March 31, December Septemberexcept 30, 2021 2021 31, 30,percentages) 2021 2020 2020

Other keyperformance indicators:

ConsolidatedLocations ^(1), (2), (3)

Workstation 766,000 770,000 804,000 865,000 962,000 capacity

Physical 432,000 386,000 378,000 387,000 480,000 Memberships

All Access andOther Legacy 32,000 20,000 15,000 13,000 34,000 Memberships

Memberships 464,000 406,000 393,000 401,000 514,000

Physical 56 % 50 % 47 % 45 % 50 %Occupancy Rate

EnterpriseMembership 47 % 51 % 52 % 52 % 54 %Percentage

UnconsolidatedLocations ^(1), (2), (3)

Workstation 165,000 168,000 160,000 166,000 57,000 capacity

Physical 114,000 110,000 97,000 89,000 27,000 Memberships

Memberships 114,000 111,000 97,000 89,000 27,000

Physical 69 % 66 % 61 % 54 % 47 %Occupancy Rate

Total Locations

Workstation 932,000 937,000 963,000 1,030,000 1,020,000 capacity

Physical 546,000 496,000 475,000 476,000 507,000 Memberships

All Access andOther Legacy 32,000 20,000 15,000 13,000 34,000 Memberships

Memberships 578,000 517,000 490,000 490,000 542,000

Physical 59 % 53 % 49 % 46 % 50 %Occupancy Rate



(1)

For certain key performance indicators the amounts we present are based on whether the indicator relates to a location for which the revenues and expenses of the location are consolidated within our results of operations ("Consolidated Locations") or whether the indicator relates to a location for which the revenues and expenses are not consolidated within our results of operations, but for which we are entitled to a management fee for our advisory services ("Unconsolidated Locations"). As of September 30, 2021, IndiaCo, ChinaCo and Israel locations are our only Unconsolidated Locations

(2)

Effective October 2, 2020, the Company deconsolidated ChinaCo and as a result, beginning with the fourth quarter of 2020, the workstation capacity, memberships, occupancy and enterprise memberships percentages for Consolidated Locations excludes the impact of ChinaCo locations, and they are included in Unconsolidated Locations, with no impact on Total Locations. Prior to October 2, 2020, ChinaCo was still consolidated and therefore the key performance indicators for ChinaCo are included in Consolidated Locations.

(3)

On June 1, 2021, we closed a franchise agreement with Ampa and transferred the building operations and obligations of our Israel locations to Ampa. Beginning on June 1, 2021, our Israel locations are no longer Consolidated Locations and are classified as Unconsolidated Locations.

For certain key performance indicators the amounts we present are based on whether the indicator relates to a location for which the revenues and expenses of the location are consolidated within our results of operations ("Consolidated Locations") or whether the indicator relates to a location(1) for which the revenues and expenses are not consolidated within our results of operations, but for which we are entitled to a management fee for our advisory services ("Unconsolidated Locations"). As of September 30, 2021, IndiaCo, ChinaCo and Israel locations are our only Unconsolidated Locations

Effective October 2, 2020, the Company deconsolidated ChinaCo and as a result, beginning with the fourth quarter of 2020, the workstation capacity, memberships, occupancy and enterprise memberships percentages(2) for Consolidated Locations excludes the impact of ChinaCo locations, and they are included in Unconsolidated Locations, with no impact on Total Locations. Prior to October 2, 2020, ChinaCo was still consolidated and therefore the key performance indicators for ChinaCo are included in Consolidated Locations.

On June 1, 2021, we closed a franchise agreement with Ampa and transferred(3) the building operations and obligations of our Israel locations to Ampa. Beginning on June 1, 2021, our Israel locations are no longer Consolidated Locations and are classified as Unconsolidated Locations.

LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30,

December 31,

(Amounts in thousands, except share and per share amounts)

2021

2020

Assets

Current assets:

Cash and cash equivalents (1)

$

477,244

$

800,535

Accounts receivable and accrued revenue, net of allowance of $77,468 and $107,806 as of September 30, 2021 and December 31, 2020, respectively

133,695

176,521

Other current assets (including related party amounts of $0 and $780 as of September 30, 2021 and December 31, 2020, respectively)

402,150

352,172

Total current assets

1,013,089

1,329,228

Property and equipment, net

5,707,310

6,859,163

Lease right-of-use assets, net

13,412,306

15,107,880

Restricted cash (1)

11,275

53,618

Equity method and other investments

197,942

214,940

Goodwill

676,932

679,351

Intangible assets, net

58,257

49,896

Other assets (including related party amounts of $545,180 and $699,478 as of September 30, 2021 and December 31, 2020, respectively)

878,766

1,062,258

Total assets (1)

$

21,955,877

$

25,356,334

Liabilities

Current liabilities:

Accounts payable and accrued expenses (including amounts due to related parties of $76,739 and $14,497 as of September 30, 2021 and December 31, 2020, respectively)

$

602,777

$

723,411

Members' service retainers

385,946

358,566

Deferred revenue (including amounts from related parties of $5,771 and $9,717 as of September 30, 2021 and December 31, 2020, respectively)

134,691

176,004

Current lease obligations (including amounts due to related parties of $22,295 and $10,148 as of September 30, 2021 and December 31, 2020, respectively)

853,011

847,531

Other current liabilities (including amounts due to related parties of $0 and $900 as of September 30, 2021 and December 31, 2020, respectively)

437,046

83,755

Total current liabilities

2,413,471

2,189,267

Long-term lease obligations (including amounts due to related parties of $506,746 and $436,074 as of September 30, 2021 and December 31, 2020, respectively)

18,401,347

20,263,606

Unsecured related party debt

2,200,000

1,200,000

Convertible related party liabilities, net

50,482

418,908

Long-term debt, net

659,379

688,356

Other liabilities

246,278

221,780

Total liabilities (1)

23,970,957

24,981,917

Commitments and contingencies (Note 16)

Convertible preferred stock; 959,370,218 shares authorized as of September 30, 2021, and 499,018,795 and 368,912,507 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

8,379,182

7,666,098

Redeemable noncontrolling interests

276,162

380,242

LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

September 30, December 31,

(Amounts in thousands, except share and per 2021 2020share amounts)

Assets

Current assets:

Cash and cash equivalents ^(1) $ 477,244 $ 800,535

Accounts receivable and accrued revenue, net ofallowance of $77,468 and $107,806 as of 133,695 176,521 September 30, 2021 and December 31, 2020,respectively

Other current assets (including related partyamounts of $0 and $780 as of September 30, 2021 402,150 352,172 and December 31, 2020, respectively)

Total current assets 1,013,089 1,329,228

Property and equipment, net 5,707,310 6,859,163

Lease right-of-use assets, net 13,412,306 15,107,880

Restricted cash ^(1) 11,275 53,618

Equity method and other investments 197,942 214,940

Goodwill 676,932 679,351

Intangible assets, net 58,257 49,896

Other assets (including related party amountsof $545,180 and $699,478 as of September 30, 878,766 1,062,258 2021 and December 31, 2020, respectively)

Total assets ^(1) $ 21,955,877 $ 25,356,334



Liabilities

Current liabilities:

Accounts payable and accrued expenses(including amounts due to related parties of $ 602,777 $ 723,411 $76,739 and $14,497 as of September 30, 2021and December 31, 2020, respectively)

Members' service retainers 385,946 358,566

Deferred revenue (including amounts fromrelated parties of $5,771 and $9,717 as of 134,691 176,004 September 30, 2021 and December 31, 2020,respectively)

Current lease obligations (including amountsdue to related parties of $22,295 and $10,148 853,011 847,531 as of September 30, 2021 and December 31, 2020,respectively)

Other current liabilities (including amountsdue to related parties of $0 and $900 as of 437,046 83,755 September 30, 2021 and December 31, 2020,respectively)

Total current liabilities 2,413,471 2,189,267

Long-term lease obligations (including amountsdue to related parties of $506,746 and $436,074 18,401,347 20,263,606 as of September 30, 2021 and December 31, 2020,respectively)

Unsecured related party debt 2,200,000 1,200,000

Convertible related party liabilities, net 50,482 418,908

Long-term debt, net 659,379 688,356

Other liabilities 246,278 221,780

Total liabilities ^(1) 23,970,957 24,981,917

Commitments and contingencies (Note 16)

Convertible preferred stock; 959,370,218 sharesauthorized as of September 30, 2021, and499,018,795 and 368,912,507 shares issued and 8,379,182 7,666,098 outstanding as of September 30, 2021 andDecember 31, 2020, respectively

Redeemable noncontrolling interests 276,162 380,242



LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS - (CONTINUED)

(UNAUDITED)

September 30,

December 31,

(Amounts in thousands, except share and per share amounts)

2021

2020

Equity

Legacy WeWork shareholders' equity (deficit):

Common stock Class A; par value $0.001; 941,647,617 shares authorized as of September 30, 2021, and 176,731,955 and 41,512,605 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

177

42

Common stock Class B; par value $0.001; 234,910,597 shares authorized as of September 30, 2021 and zero and 129,382,459 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

129

Common stock Class C; par value $0.001; 50,967,800 shares authorized as of September 30, 2021, and 24,132,575 and 25,168,938 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

24

25

Common stock Class D; par value $0.001; 234,910,597 shares authorized as of September 30, 2021, and zero shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

-

-

Additional paid-in capital

2,776,772

2,188,319

Accumulated other comprehensive income (loss)

(26,573

)

(158,810

)

Accumulated deficit

(13,427,090

)

(9,703,490

)

Total Legacy WeWork shareholders' deficit

(10,676,690

)

(7,673,785

)

Noncontrolling interests

6,266

1,862

Total equity

(10,670,424

)

(7,671,923

)

Total liabilities and equity

$

21,955,877

$

25,356,334

LEGACY WEWORK

CONDENSED CONSOLIDATED BALANCE SHEETS - (CONTINUED)

(UNAUDITED)

September 30, December 31,

(Amounts in thousands, except share and per 2021 2020 share amounts)

Equity

Legacy WeWork shareholders' equity (deficit):

Common stock Class A; par value $0.001;941,647,617 shares authorized as ofSeptember 30, 2021, and 176,731,955 and 177 42 41,512,605 shares issued and outstanding asof September 30, 2021 and December 31,2020, respectively

Common stock Class B; par value $0.001;234,910,597 shares authorized as ofSeptember 30, 2021 and zero and 129,382,459 - 129 shares issued and outstanding as ofSeptember 30, 2021 and December 31, 2020,respectively

Common stock Class C; par value $0.001;50,967,800 shares authorized as ofSeptember 30, 2021, and 24,132,575 and 24 25 25,168,938 shares issued and outstanding asof September 30, 2021 and December 31,2020, respectively

Common stock Class D; par value $0.001;234,910,597 shares authorized as ofSeptember 30, 2021, and zero shares issued - - and outstanding as of September 30, 2021and December 31, 2020, respectively

Additional paid-in capital 2,776,772 2,188,319

Accumulated other comprehensive income (26,573 ) (158,810 ) (loss)

Accumulated deficit (13,427,090 ) (9,703,490 )

Total Legacy WeWork shareholders' deficit (10,676,690 ) (7,673,785 )

Noncontrolling interests 6,266 1,862

Total equity (10,670,424 ) (7,671,923 )

Total liabilities and equity $ 21,955,877 $ 25,356,334



(1)

The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). As of September 30, 2021 and December 31, 2020, total assets of consolidated VIEs, after intercompany eliminations, were $2.9 billion and $2.1 billion, respectively, including $100.7 million and $166.6 million of cash and cash equivalents, respectively, and $10.1 million and $10.0 million of restricted cash, respectively. Total liabilities of consolidated VIEs, after intercompany eliminations, were $2.5 billion and $1.7 billion as of September 30, 2021 and December 31, 2020, respectively. Creditors of VIEs do not have recourse against the general credit of the Company, except relating to certain lease guarantees totaling $13.5 million and $14.6 billion as of September 30, 2021 and December 31, 2020, respectively, provided by Legacy WeWork to certain landlords of the VIEs. See Note 5 for additional details.

The accompanying notes are an integral part of these condensed consolidated financial statements.

The Company's condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs"). As of September 30, 2021 and December 31, 2020, total assets of consolidated VIEs, after intercompany eliminations, were $2.9 billion and $2.1 billion, respectively, including $100.7 million and $166.6 million of cash and cash equivalents, respectively, and $10.1 million and $10.0 million of(1) restricted cash, respectively. Total liabilities of consolidated VIEs, after intercompany eliminations, were $2.5 billion and $1.7 billion as of September 30, 2021 and December 31, 2020, respectively. Creditors of VIEs do not have recourse against the general credit of the Company, except relating to certain lease guarantees totaling $13.5 million and $14.6 billion as of September 30, 2021 and December 31, 2020, respectively, provided by Legacy WeWork to certain landlords of the VIEs. See Note 5 for additional details.

The accompanying notes are an integral part of these condensed consolidated financial statements.

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended Nine Months Ended September 30, September 30,

(Amounts inthousands, 2021 2020 2021 2020 except share andper share data)

Revenue(includingrelated partyrevenue of$28,496 and$44,906 for thethree months and$116,190 and $ 661,031 $ 810,752 $ 1,852,362 $ 2,749,369 $129,383 for thenine monthsended September30, 2021 and2020,respectively.See Note 17)



Expenses:

Locationoperatingexpenses-cost ofrevenue(exclusive ofdepreciation andamortization of$162,418 and$182,967 for thethree months and 752,493 924,363 2,351,305 2,729,165 $508,044 and$534,585 for thenine monthsended September30, 2021 and2020,respectively,shown separatelybelow)

Pre-openinglocation 40,367 60,741 117,206 226,660 expenses

Selling, generaland 233,928 387,248 733,430 1,312,349 administrativeexpenses^(1)

Restructuringand other 15,934 18,964 481,979 155,180 related costs

Impairment/(gainon sale) ofgoodwill, 87,541 253,625 629,126 809,584 intangibles andother assets

Depreciation and 170,816 197,964 535,157 588,120 amortization

Total expenses(includingrelated partyexpenses of$21,209 and$19,772 for thethree months and$59,462 and 1,301,079 1,842,905 4,848,203 5,821,058 $65,296 for thenine monthsended September30, 2021 and2020,respectively.See Note 17)



Loss from (640,048 ) (1,032,153 ) (2,995,841 ) (3,071,689 ) operations



Interest andother income (expense), net:

Income (loss)from equity 5,096 2,526 (19,414 ) (44,585 ) method and otherinvestments

Interest expense(includingrelated partyexpenses of $(103,713) and $(76,498) for thethree months and$(288,455) and $ (121,306 ) (92,956 ) (339,134 ) (231,046 ) (171,530) forthe nine monthsended September30, 2021 and2020,respectively.See Note 9 andNote 17)

Interest income 5,142 4,151 14,597 12,893

Foreign currency (102,859 ) 112,049 (140,784 ) (37,936 ) gain (loss)

Gain (loss) fromchange in fairvalue of related 7,462 13,550 (343,360 ) 805,863 party financialinstruments (SeeNote 9)

Loss onextinguishment - (1,041 ) - (77,336 ) of debt

Total interestand other income (206,465 ) 38,279 (828,095 ) 427,853 (expense), net



Pre-tax loss (846,513 ) (993,874 ) (3,823,936 ) (2,643,836 )

Income taxbenefit 2,251 (5,586 ) (5,031 ) (21,701 ) (provision)

Net loss (844,262 ) (999,460 ) (3,828,967 ) (2,665,537 )

Net lossattributable to noncontrollinginterests:

Redeemablenoncontrolling 42,130 39,461 106,250 643,224 interests -mezzanine

Noncontrollinginterest - (268 ) 18,736 (883 ) 33,352 equity

Net lossattributable to $ (802,400 ) $ (941,263 ) $ (3,723,600 ) $ (1,988,961 ) Legacy WeWork

Net loss pershareattributable toClass A and Class B commonstockholders(see Note 15):

Basic $ (4.54 ) $ (5.51 ) $ (21.31 ) $ (11.65 )

Diluted $ (4.54 ) $ (5.51 ) $ (21.31 ) $ (11.65 )

Weighted-averageshares used tocompute net lossper shareattributable to 176,708,911 170,715,288 174,750,082 170,699,512 Class A andClass B commonstockholders,basic anddiluted



(1)

Includes cost of revenue in the amount of $28.7 million and $67.1 million for the three months and $61.4 million and $209.6 million for the nine months ended September 30, 2021 and 2020, respectively. Excludes depreciation and amortization of none and none for the three months and none and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively, shown separately below.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Includes cost of revenue in the amount of $28.7 million and $67.1 million for the three months and $61.4 million and $209.6 million for the nine(1) months ended September 30, 2021 and 2020, respectively. Excludes depreciation and amortization of none and none for the three months and none and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively, shown separately below.

The accompanying notes are an integral part of these condensed consolidated financial statements.

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Nine Months Ended September 30,

(Amounts in thousands) 2021 2020

Cash Flows from Operating Activities:

Net loss $ (3,828,967 ) $ (2,665,537 )

Adjustments to reconcile net loss to net cash from operating activities:

Depreciation and amortization 535,157 588,120

Impairment of property and equipment - 3,541

Impairment/(gain on sale) of goodwill, 629,126 809,584 intangibles and other assets

Non-cash transaction with principal 428,289 - shareholder

Loss on extinguishment of debt - 77,336

Stock-based compensation expense 164,023 55,865

Cash paid to settle employee stock awards - (3,141 )

Issuance of stock for services rendered, (2,272 ) 14,995 net of forfeitures

Non-cash interest expense 157,787 119,603

Provision for allowance for doubtful 20,033 53,549 accounts

(Income) loss from equity method and other 19,414 44,585 investments

Distribution of income from equity method 3,210 - and other investments

Foreign currency (gain) loss 140,784 37,936

Change in fair value of financial 343,360 (805,863 ) instruments

Contingent consideration fair market value - (122 ) adjustment

Changes in operating assets and liabilities:

Operating lease right-of-use assets 1,161,406 646,995

Current and long-term lease obligations (1,252,360 ) 724,205

Accounts receivable and accrued revenue (10,624 ) (46,425 )

Other assets (37,506 ) (48,651 )

Accounts payable and accrued expenses 32,961 (92,228 )

Deferred revenue (38,279 ) 61,489

Other liabilities (6,377 ) 6,349

Deferred income taxes 1,720 119

Net cash provided by (used in) operating (1,539,115 ) (417,696 ) activities

Cash Flows from Investing Activities:

Purchases of property and equipment (202,589 ) (1,252,833 )

Capitalized software (29,433 ) (18,538 )

Change in security deposits with landlords 3,778 (3,094 )

Proceeds from asset divestitures and sale 10,832 1,170,766 of investments, net of cash divested

Contributions to investments (26,704 ) (93,357 )

Net cash provided by (used in) investing (244,116 ) (197,056 ) activities



LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)

(UNAUDITED)

Nine Months Ended September 30,

(Amounts in thousands)

2021

2020

Cash Flows from Financing Activities:

Principal payments for property and equipment acquired under finance leases

(3,397

)

(2,959

)

Proceeds from issuance of debt

-

34,309

Proceeds from unsecured related party debt

1,000,000

600,000

Proceeds from LC Debt Facility

698,705

-

Repayments of debt

(349,011

)

(813,140

)

Repayment of security deposit loan

(7,942

)

-

Debt and equity issuance costs

-

(11,578

)

Proceeds from exercise of stock options and warrants

2,417

149

Proceeds from issuance of noncontrolling interests

30,000

100,628

Distributions to noncontrolling interests

-

(317,611

)

Payments for contingent consideration and holdback of acquisition proceeds

(2,523

)

(35,706

)

Proceeds relating to contingent consideration and holdbacks of disposition proceeds

12,177

-

Additions to members' service retainers

330,358

305,432

Refunds of members' service retainers

(291,828

)

(455,530

)

Net cash provided by (used in) financing activities

1,418,956

(596,006

)

Effects of exchange rate changes on cash, cash equivalents and restricted cash

(1,359

)

(4,301

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(365,634

)

(1,215,059

)

Cash, cash equivalents and restricted cash-Beginning of period

854,153

2,200,688

Cash, cash equivalents and restricted cash-End of period

$

488,519

$

985,629

LEGACY WEWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)

(UNAUDITED)

Nine Months Ended September 30,

(Amounts in thousands) 2021 2020

Cash Flows from Financing Activities:

Principal payments for property and equipment (3,397 ) (2,959 ) acquired under finance leases

Proceeds from issuance of debt - 34,309

Proceeds from unsecured related party debt 1,000,000 600,000

Proceeds from LC Debt Facility 698,705 -

Repayments of debt (349,011 ) (813,140 )

Repayment of security deposit loan (7,942 ) -

Debt and equity issuance costs - (11,578 )

Proceeds from exercise of stock options and 2,417 149 warrants

Proceeds from issuance of noncontrolling 30,000 100,628 interests

Distributions to noncontrolling interests - (317,611 )

Payments for contingent consideration and (2,523 ) (35,706 ) holdback of acquisition proceeds

Proceeds relating to contingent consideration 12,177 - and holdbacks of disposition proceeds

Additions to members' service retainers 330,358 305,432

Refunds of members' service retainers (291,828 ) (455,530 )

Net cash provided by (used in) financing 1,418,956 (596,006 ) activities

Effects of exchange rate changes on cash, cash (1,359 ) (4,301 ) equivalents and restricted cash

Net increase (decrease) in cash, cash (365,634 ) (1,215,059 ) equivalents and restricted cash

Cash, cash equivalents and restricted 854,153 2,200,688 cash-Beginning of period

Cash, cash equivalents and restricted cash-End $ 488,519 $ 985,629 of period



September 30,

(Amounts in thousands)

2021

2020

Cash and cash equivalents

$

477,244

$

876,323

Restricted cash

11,275

109,306

Cash, cash equivalents and restricted cash

$

488,519

$

985,629

September 30,

(Amounts in thousands) 2021 2020

Cash and cash equivalents $ 477,244 $ 876,323

Restricted cash 11,275 109,306

Cash, cash equivalents and restricted cash $ 488,519 $ 985,629



Nine Months Ended September 30,

(Amounts in thousands)

2021

2020

Supplemental Cash Flow Disclosures:

Cash paid during the period for interest (net of capitalized interest of $0 and $2,981 during 2021 and 2020, respectively)

$

138,029

$

70,430

Cash received for operating lease incentives - tenant improvement allowances

306,413

1,062,704

Cash received for operating lease incentives - broker commissions

670

15,830

Supplemental Disclosure of Non-cash Investing & Financing Activities:

Property and equipment included in accounts payable and accrued expenses

78,795

279,485

Conversion of related party liabilities to into Preferred Stock

711,786

-

Creator Awards production services reimbursement obligation payable to SoftBank reclassified to additional paid-in capital

-

21,641

Distribution of investment to noncontrolling interest holder

-

6,646

Nine Months Ended September 30,

(Amounts in thousands) 2021 2020

Supplemental Cash Flow Disclosures:

Cash paid during the period for interest (net ofcapitalized interest of $0 and $2,981 during 2021 and $ 138,029 $ 70,430 2020, respectively)

Cash received for operating lease incentives - tenant 306,413 1,062,704 improvement allowances

Cash received for operating lease incentives - broker 670 15,830 commissions

Supplemental Disclosure of Non-cash Investing & Financing Activities:

Property and equipment included in accounts payable 78,795 279,485 and accrued expenses

Conversion of related party liabilities to into 711,786 - Preferred Stock

Creator Awards production services reimbursementobligation payable to SoftBank reclassified to - 21,641 additional paid-in capital

Distribution of investment to noncontrolling interest - 6,646 holder



Additional ASC 842 Supplemental Disclosures

Nine Months Ended September 30,

(Amounts in thousands)

2021

2020

Cash paid for fixed operating lease costs included in the measurement of lease obligations in operating activities

$

1,720,517

$

1,560,186

Cash paid for interest relating to finance leases in operating activities

3,225

3,533

Cash paid for principal relating to finance leases in financing activities

3,398

2,959

Right-of-use assets obtained in exchange for finance lease obligations

866

920

Right-of-use assets obtained in exchange for operating lease obligations, net of modifications and terminations

(1,279,474

)

177,409

The accompanying notes are an integral part of these condensed consolidated financial statements.

Additional ASC 842 Supplemental Disclosures

Nine Months Ended September 30,

(Amounts in thousands) 2021 2020

Cash paid for fixed operating lease costsincluded in the measurement of lease $ 1,720,517 $ 1,560,186 obligations in operating activities

Cash paid for interest relating to finance 3,225 3,533 leases in operating activities

Cash paid for principal relating to finance 3,398 2,959 leases in financing activities

Right-of-use assets obtained in exchange for 866 920 finance lease obligations

Right-of-use assets obtained in exchange foroperating lease obligations, net of (1,279,474 ) 177,409 modifications and terminations



The accompanying notes are an integral part of these condensed consolidated financial statements.

A reconciliation of net loss, the most comparable GAAP measure, to AdjustedEBITDA is set forth below:

Three Months Ended Nine Months Ended September 30, September 30,

(Amounts in 2021 2020 2021 2020 thousands)

Net loss $ (844,262 ) $ (999,460 ) $ (3,828,967 ) $ (2,665,537 )

Income tax(benefit) (2,251 ) 5,586 5,031 21,701 provision^(a)

Interest andother (income) 206,465 (38,279 ) 828,095 (427,853 ) expenses, net^(a)

Depreciationand 170,816 197,964 535,157 588,120 amortization^(a)

Restructuringand other 15,934 18,964 481,979 155,180 related costs^(a)

Impairment/(gain on sale)of goodwill, 87,541 253,625 629,126 809,584 intangiblesand otherassets^(a)

Stock-basedcompensation 4,040 9,029 61,932 43,847 expense^(b)

Stock-basedpayments forservices 1 5,161 (2,272 ) 14,995 rendered byconsultants^(b)

Change in fairvalue ofcontingent - 72 - (122 ) considerationliabilities^(c)

Legal, tax andregulatory 258 280 7,754 1,353 reserves andsettlements

Legal costsrelated toregulatory 2,735 19,996 25,054 41,013 investigationsand litigation^(d)

Expenserelated tomergers,acquisitions, 2,724 (125 ) 6,533 6,214 divestituresand capitalraisingactivities

Adjusted $ (355,999 ) $ (527,187 ) $ (1,250,578 ) $ (1,411,505 ) EBITDA



(a)

As presented on our condensed consolidated statements of operations.

(b)

Represents the non-cash expense of our equity compensation arrangements for employees, directors, and consultants.

(c)

Represents the change in fair value of the contingent consideration associated with acquisitions as included in selling, general and administrative expenses on the condensed consolidated statements of operations.

(d)

Legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company's 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, net of any insurance or other recoveries. See section entitled "Legal Matters" in Note 16 of the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report for details regarding the related regulatory investigations and litigation matters.

(a) As presented on our condensed consolidated statements of operations.

(b) Represents the non-cash expense of our equity compensation arrangements for employees, directors, and consultants.

Represents the change in fair value of the contingent consideration(c) associated with acquisitions as included in selling, general and administrative expenses on the condensed consolidated statements of operations.

Legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company's 2019 withdrawn initial public offering and the related execution of the SoftBank(d) Transactions, net of any insurance or other recoveries. See section entitled "Legal Matters" in Note 16 of the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report for details regarding the related regulatory investigations and litigation matters.

A reconciliation of net cash provided by (used in) operating activities, the most comparable GAAP measure, to Free Cash Flow is set forth below:

Nine Months EndedSeptember 30,

(Amounts in thousands)

2021

2020

Net cash provided by (used in) operating activities (a)

$

(1,539,115

)

$

(417,696

)

Less: Purchases of property and equipment (a)

(202,589

)

(1,252,833

)

Free Cash Flow

$

(1,741,704

)

$

(1,670,529

)

A reconciliation of net cash provided by (used in) operating activities, themost comparable GAAP measure, to Free Cash Flow is set forth below:

Nine Months Ended September 30,

(Amounts in thousands) 2021 2020

Net cash provided by (used in) operating $ (1,539,115 ) $ (417,696 ) activities ^(a)

Less: Purchases of property and equipment ^ (202,589 ) (1,252,833 ) (a)

Free Cash Flow $ (1,741,704 ) $ (1,670,529 )



(a)

As presented on our condensed consolidated statements of cash flows.

________________________________ 1 Throughout this release, we make certain references to Non-GAAP financial or operating metrics. Please see "Non-GAAP Financial Definitions" for more detailed discussion and explanations of the various non-GAAP financial measures cited in this release.

Source We Work Category: Investor Relations

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