Flexible workspace provider WeWork warned that “substantial doubt exists” about its ability to continue as a going concern unless it can improve liquidity and profitability over the next year.
The New York based company said its memberships, individuals or corporates around the world, fell because of a number of issues including increased competition and “macroeconomic volatility”.
Shares closed at 21 cents in New York on Tuesday having fallen steadily from $2.23 back at the beginning of February.
WeWork said in a separate statement it named four new directors to its board who Interim Chief Executive David Tolley said have “the deep financial expertise and robust business experience that” will “add immense value” as WeWork doubles down on “sustainably reducing costs, continuing to grow memberships and revenue, and strengthening” its balance sheet. Three board members stepped down.
Physical occupancy at its consolidated locations globally rose to 72% from 70% a year earlier but physical memberships fell 3% to 512,000. Enterprise physical membership, measuring demand from companies with at least 500 employees, also dropped to 41% of total membership from 45% a year earlier. As of June 30, WeWork had 610 consolidated locations across 33 countries that included about 715,000 workstations.
“Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships,” Tolley said in a statement.
Tolley became interim CEO after former CEO Sandeep Mathrani left in May after just three years on the job to join private-equity firm Sycamore Partners.
WeWork’s results came just after rival IWG, parent of Regus and Spaces brands, reported record revenue and said it was riding the wave of a global pivot toward hybrid working.