- The We Company published its IPO prospectus last week, but analysts still have plenty of questions about the shared-workspace group.
- Rett Wallace, CEO of Triton Research, described the filing as a "masterpiece of obfuscation" in a Bloomberg interview.
- Wallace shared six questions he still has about the company — including its members, locations, and beer quotas — with Markets Insider.
- Read all of BI’s WeWork coverage here.
The We Company may have published its IPO prospectus last week, but analysts still have plenty of questions about the shared-workspace group.
Rett Wallace, CEO of Triton Research, described the filing as a "masterpiece of obfuscation" in a Bloomberg interview. "If the underlying facts were positive, why would a company go to so much trouble to prevent you from understanding them?"
Wallace shared six questions he still has about The We Company — including its members, locations, and beer quotas — with Markets Insider. We take a look at each one below.
Members and memberships
"Members and memberships are different — why not tell us the numbers for both, and over time so we can know how many memberships per member?" Wallace asked.
The We Company defines "members" as individuals and organizations that have membership agreements with it, and "memberships" as the total number of memberships those members purchase.
For example, an organization that pays for 50 employees to have workstations at WeWork locations would be counted as one member with 50 memberships.
The We Company revealed memberships nearly doubled to 527,000 in the year to June 30 in its IPO filing. They’ve also more than doubled every year since 2014. Moreover, 35% of new memberships in 2018 were sold to organizations that were members at the end of 2017.
However, the group didn’t share how many members it has, or how that figure has changed over time. It only offered a few insights: half of its members were located outside the US as of June 2019, and it estimates there are 255 million potential members across its 280 target cities around the world.
"You give us the gross count of memberships and ‘net retention rates’ but don’t even mention membership churn," Wallace said. "Surely there is churn – what is it?"
Churn refers to the percentage of customers that stop using a product during a certain period of time. The We Company didn’t reveal its member churn rate in its IPO filing.
Instead, it shared that its net membership retention rate — the net effect of added or canceled memberships on total memberships — was 119% in the year to December 1, 2018. In other words, its members ended the year with nearly 20% more memberships than they started it with.
"You don’t give us the locations over time for all periods — have any locations ever closed?" Wallace asked.
The We Company has over 528 locations in 111 cities across 29 countries, according to its IPO filing. However, it didn’t share how that number has changed over time, or how many locations have closed.
Among the few details provided: just 30% of open locations were "mature" — open for at least 24 months — as of June 1.
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