- WeWork secures £840 million of new financing from SoftBank Group Corp.
- The shared workspace provider reduces its cash burn rate by almost 50%.
- The commercial real estate firm concludes Q2 with £3.13 billion of cash.
WeWork said on Thursday that it has successfully reduced its rate of cash burn by almost 50% as compared to the start of the year. It also announced to have secured an additional £840 million financing from SoftBank Group Corp (TYO:9984) that currently has a majority stake in WeWork. Previously, SoftBank had pulled out of a £2.41 billion tender offer in April that had left WeWork in crisis.
Shares of SoftBank lost roughly 1.5% on Friday. The Japanese conglomerate closed the regular session at £45.34 per share versus its year to date low of £19.26 per share in March when the impact of COVID-19 was at its peak. Having a hard time choosing an online stockbroker to start trading? Here’s a top few to choose from.
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WeWork concludes Q2 with £3.13 billion of cash
In an email sent to WeWork’s employees, the company acknowledged the impact of the ongoing Coronavirus pandemic on its Q2 results, but expressed confidence in its robust financial position that it said was sufficient to combat the economic blow. SoftBank also published its financial results earlier this week that recorded £9.00 billion of net profit in the fiscal first quarter.
At £673.23 million, WeWork’s revenue in the fiscal second quarter came in 9% lower as compared to the same quarter last year. In the prior quarter, however, the shared workspace provider had registered an even higher £840 million of revenue. Its cash burn at the end of Q1 stood at £267.91 million.
The American commercial real estate company boasted to have concluded the second quarter with £3.13 billion of cash. The figure also accounts for the new £840 million financing from SoftBank and other unfunded cash commitments.
Earlier this year in July, WeWork said it was hoping to turn cash flow positive next year.
WeWork had 612 thousand members at the end of Q2
According to the New York-based firm, it had 612 thousand members in total at the end of Q2 versus a higher 693 thousand that it had noted at the end of the first quarter. 48% of its members, it added, came from businesses that had more than 500 employees.
WeWork planned on going public last year in August with an Initial Public Offering (IPO) that was expected to value the company at £25.88 billion. Following corporate mismanagement lawsuits, however, the company withdrew its filing for an IPO in September 2019. The litigation pushed it into a massive management shake-up and weighed heavily on its performance in the past 12 months.