Office space-sharing company WeWork moved one step closer to the public markets, when it filed the paperwork for parent The We Company’s initial public offering, giving investors a more detailed look at its business.
The company , which filed confidentially for an IPO last year, said it aims to raise $1 billion in the IPO, although that number is likely a placeholder until it sets terms. In its latest investment round in January, the company had a valuation of $47 billion. It did not disclose which exchange it wishes to list on, although it did offer that it will list under the ticker symbol “WE.”
JPMorgan /zigman2/quotes/205971034/composite JPM +1.06% and Goldman Sachs /zigman2/quotes/209237603/composite GS +1.45% are lead underwriters on the deal. The company is planning to list three classes of stock that carry different voting rights. The Class A stock will have one vote per share, the class B and class C shares will carry 20 votes per share with co-Founder and Chief Executive Adam Neumann expected to control most of the voting power once the deal is closed.
The prospectus reveals a company with a major focus on “community” – the word appears 150 times in the document, including in the opening sentence of the summary: “We are a community company committed to maximum global impact.”
The company’s stated mission is no less than “to elevate the world’s consciousness.” The front page includes the slogan: “We dedicate this to the energy of we – greater than any one of us but inside each of us.”
WeWork started as a single space located in lower Manhattan in 2010, and has grown to 528 locations in 111 cities across 29 countries. It has more than 527,000 memberships, or individuals that rent space in its shared offices, which offer a full suite of office services, including technology, mail pickup and delivery, communal spaces, fresh brewed coffee and fruit.
The company makes money by selling memberships, offering ancillary services and extending the global platform beyond the world of work, according to the prospectus. It has branched out to fully-furnished short- and long-term stay apartments and hotel rooms; it is behind Meetup, the platform that connects people who share interests or want to organize events; it opened an independent elementary school in New York in 2018.
As of June 30, WeWork had more than 12,500 employees, 7,500 of whom were located in the U.S.
Still, the company has significant losses that are unlikely to be reversed any time soon, and has long-term lease commitments of nearly $50 billion at a time when market signals are suggesting a downturn.
“While we believe that we have a durable business model in all economic cycles, there can be no assurance that this will be the case,” the prospectus cautions. “A significant portion of our member base consists of small- and midsize businesses and freelancers who may be disproportionately affected by adverse economic conditions.”
On Wednesday, the company updated the prospectus with the news that Harvard academic Frances Frei will join its board of directors once the IPO has been completed, an apparent response to criticism of its all-male board.
Frei, 56, is professor of technology and operations management at Harvard Business School. She has also done stints at ride-sharing company Uber Technologies Inc. /zigman2/quotes/211348248/composite UBER +3.38%
“Frances brings to our board of directors extensive experience researching and advising on corporate strategy, operations and culture, which our board of directors believes gives her particular insight into strategic planning and leadership,” the company said in an updated prospectus.
Here are five things to know about WeWork ahead of its IPO:
It has stopped using one unusual accounting metric, but is keeping others
WeWork has famously included unusual metrics to supplement the financial statements it provided in bond documents and media presentations in the past, including one controversial non-standard one it called “community adjusted EBITDA.”
That metric was supposed to measure net income before not only interest, taxes, depreciation, and amortization—or EBITDA— but also “building-and community-level operating expenses,” a category that included rent and tenancy expenses, utilities, internet, the salaries of building staff, and the cost of building amenities.
After apparent push back from the Securities and Exchange Commission, the company dropped that metric, which does not appear in the prospectus.