WeWork secures $1.1b from SoftBank after slashing cash burn

Co-working firm WeWork has secured a US$1.1 billion commitment from majority owner SoftBank after slashing its cash burn rate almost by half from the end of 2019.

Photo credit: WeWork

While its second quarter results showed the impacts of the Covid-19 pandemic on its business, WeWork’s financial position remained sound, the company said in an email to employees seen by Reuters.

“Our early efforts to become a more streamlined, cash-conscious organization puts us in a better position to adapt quickly, navigate new realities, and deliver our future business objectives,” WeWork chief financial officer Kimberly Ross wrote in the email.

The exec also said that WeWork generated US$882 million in revenue for the second quarter, a 9% jump compared to its results a year ago. Last quarter, WeWork reported a revenue of US$1.1 billion, while its cash burn stood at US$482 million.

According to the email, WeWork ended the quarter with 612,000 members, down from 693,000 in the previous quarter. The company said that 48% of its members were enterprise customers or companies with 500 or more employees.

Ross added that the company has US$4.1 billion in cash and unfunded cash commitments, which include SoftBank’s US$1.1 billion commitment.

That amount is the last of the debt facilities included in a wide-ranging transaction announced in October 2019, a source at SoftBank told Reuters. During that time, the Japanese conglomerate was reportedly in discussions to own at least 70% of WeWork with a US$4 billion to US$5 billion injection after the co-working firm’s failed attempt at going public.