Office share provider WeWork has received new financing in a $1.1 billion commitment from SoftBank Group. The financing comes after WeWork began slashing its cash burn rate by about half from last year.
The new financing was made public to employees on Thursday through the owner. In an email to employees, WeWork which has been losing money noted that the current coronavirus pandemic significantly impacted its second-quarter results, as reported by Reuters on August 14th.
The company Chief Financial officer Kimberly Ross, however, affirmed that the financial position remains strong. She noted that the company has made efforts towards streamlining its operations to be a cash-conscious entity.
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She added that the efforts have placed the company in a better position to adapt to the changing business environment.
Q2 results increases by 9%
The officer further announced that the company’s second-quarter revenues increased by 9% to $882 million, compared to last year. During the first quarter of this year, the company’s revenue stood at $1.1 billion with a cash burn of $482 million.
It is worth noting that, in the second-quarter results, the WeWork workforce was 612,000 a drop from 693,000 in the first quarter.
Before the company made the new financing announcement, WeWork had a month earlier stated that it projected a positive cashflow in 2021. Currently, the firm has $4.1 billion in cash and unfunded cash commitments, including the $1.1 billion SoftBank financing.
WeWork woes began when revelations about corporate mismanagement emerged. In a bid to salvage its position and image, the company conducted a widescale management change even though there still exists lawsuits regarding a more than $3 billion tender offer to existing shareholders.