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Startups

WeWork losses widen to $1.25bn as expansion ramps up

Troubled office-sharing business doubles in size as record number of desks added

A WeWork office space in New York: The company will cut side businesses to try to stem chronic losses.   © AP

NEW YORK (Reuters) -- The We Company, owner of WeWork, said on Wednesday net losses in the third quarter widened to $1.25 billion from $497 million a year earlier as its money-losing shared-office business doubled in size with a record number of desks added to its network.

WeWork opened 97 new sites in the third quarter, its biggest quarterly expansion ever, taking its total number of offices to 625 as of Sept. 30 from 528 at the end of June, a presentation of its earnings that was provided to bondholders showed.

The company also increased the number of cities in which it operates by 16, increasing its worldwide footprint to a total of 127 and the number of countries in which it has sites by four to 33, the presentation, which Reuters reviewed, showed.

The number of desks it offers customers rose to a record 115,000 in the quarter to reach 719,000, including its India affiliate. A year earlier it only had 354,000 desks.

The company had $2 billion in cash at the end of the third quarter, with $600 million of that from three affiliates in Asia.

WeWork also had $3.4 billion in commitments from SoftBank, which gained control of the company in October, and another $1.5 billion in existing warrants from SoftBank that were exercised last month, the presentation showed.

Gross profit from the sale of workplace memberships and service revenue rose in the third quarter to $808 million from $454 million in the year-ago quarter.

WeWork shelved its plans to go public on Sept. 30 after investors grew wary of its losses, business model and corporate governance that had forced former chief executive and co-founder Adam Neumann to resign a week earlier.

The company, valued at $47 billion when it registered to go public in August, saw its valuation plummet as it bled cash, leading SoftBank to bail out WeWork with a pledge of $6.5 billion in October.

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