Sacra estimates WeWork hit $3.2B in revenue in 2019, representing 94% year-over-year growth from $1.8B in 2018. However, revenue growth slowed significantly during COVID-19, with 2020 revenue dropping to approximately $2.2B.

The company's revenue mix has shifted dramatically toward enterprise customers, which now represent 60% of revenue compared to just 18% in 2016. Key enterprise clients include TikTok, Mastercard, Microsoft, Citigroup and Deloitte, with average enterprise commitment lengths of 23 months versus shorter terms for small business customers.

WeWork's core revenue comes from leasing office space at a markup, with an average 20% contribution margin at mature locations after 24 months. The company has expanded into additional revenue streams including "All Access" memberships ($299/month) and Powered by We, which provides office management services to enterprises.

Despite strong top-line growth, WeWork has struggled with profitability due to high operating costs and $40B+ in lease obligations. The company's 2020 occupancy dropped from 85% to 66% during COVID-19, though enterprise customers helped stabilize revenue. WeWork has focused on improving unit economics by exiting unprofitable locations and reducing operating expenses from 86% of revenue in 2018 to an estimated 50% in 2019.

WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey in New York City, initially launching a single coworking space called Green Desk before expanding into the WeWork brand.

WeWork found product-market fit as a flexible office space provider for startups and small businesses who needed professional workspaces without long-term lease commitments. The product solved a key pain point for growing companies that couldn't predict their space needs 5-10 years in advance.

The core product is a fully-furnished, ready-to-use office space that can be rented on flexible terms. Members get immediate access to professional amenities including conference rooms, phone booths, printing facilities, and high-speed internet. The spaces are designed to foster collaboration through shared common areas while still providing private areas for focused work.

WeWork evolved to serve enterprise clients by offering customizable office suites that could accommodate larger teams while maintaining flexibility. Their "All Access" membership allows individuals to work from any WeWork location globally, while dedicated offices provide teams with their own private space.

The product includes a mobile app for booking meeting rooms, connecting with other members, and managing workspace access. Community managers at each location handle day-to-day operations and organize networking events to facilitate connections between members.

WeWork is a flexible workspace provider that transforms long-term commercial real estate leases into short-term, subscription-based office solutions for businesses and individuals. The company leases large office spaces on 10-15 year terms, renovates them into modern collaborative workspaces, and subleases them at a premium through flexible membership plans.

Their core revenue comes from membership fees, with pricing varying by location and commitment level. In prime markets like London, hot desks start at £285 monthly while private offices begin at £450 monthly. Enterprise clients, which now represent 40% of revenue, typically sign longer 15-month commitments with volume discounts.

WeWork's competitive advantage stems from its ability to maximize space efficiency through sophisticated office design and management - averaging 60 square feet per employee versus the industry standard of 200-400. The company is evolving beyond pure arbitrage by offering "Powered by We" - an enterprise service where WeWork manages and optimizes clients' existing office spaces for a fee. This capital-light franchise model, similar to hotel chains like Marriott, allows WeWork to expand without taking on lease liabilities.

The company also generates ancillary revenue through services like meeting room rentals, event spaces, and community programming that create additional value for members beyond just workspace.

WeWork operates in the flexible workspace market, which includes traditional office landlords, specialized coworking operators, and emerging property technology companies.

IWG (formerly Regus) is the largest competitor with 3,306 locations and 445k workstations globally. Unlike WeWork's focus on dense urban markets and enterprise clients, IWG operates across a broader range of cities with a more traditional serviced office model. The Office Group and Industrious target premium urban markets with a focus on high-end amenities and enterprise customers.

Major commercial landlords like Vornado and Boston Properties have begun offering their own flexible workspace solutions. These landlords typically convert portions of existing buildings into coworking spaces, leveraging their real estate portfolios but lacking WeWork's operational expertise and brand recognition. Some have opted to partner with operators like Industrious and Convene rather than compete directly.

A new category of competitors is emerging through the "Powered by We" model, where companies provide workspace management software and services without directly operating spaces. This includes companies like Breather and Knotel that focus on space-as-a-service technology platforms for landlords and enterprise clients. These companies compete with WeWork's enterprise offerings while avoiding the capital intensity of leasing and operating physical locations.

The market remains highly fragmented - the top six players control only 51% of market share by revenue. Competition is intensifying as the shift toward flexible workspaces accelerates, with JLL predicting 30% of office space will be flexible by 2030.

WeWork has tailwinds from the shift to flexible work arrangements and enterprise adoption of flexible office space, with opportunities to expand into adjacent markets like office management services and real estate technology platforms.

The enterprise segment now represents 40% of WeWork's revenue and is growing faster than other segments. Large companies are increasingly seeking flexible office solutions to support distributed workforces and reduce long-term lease commitments. WeWork estimates their total addressable market at $1.6 trillion across 280 target cities globally, with current penetration of only 0.2% in their markets.

WeWork's "Powered by We" offering packages their expertise in office design, operations and community management as a service for landlords and enterprises. This capital-light expansion allows WeWork to generate revenue from spaces they don't lease directly. The company has already secured partnerships with major property investors like Nuveen and Ivanhoe Cambridge, suggesting strong potential for this model to scale.

WeWork has developed proprietary technology for space utilization, booking systems, and community engagement. By leveraging data from hundreds of locations, WeWork could expand into providing building management software and analytics to property owners. The global property management software market is projected to reach $23 billion by 2025. WeWork's scale and operational expertise position them well to capture share in this growing market.

The company's ability to transform from a pure co-working provider into an integrated real estate services platform could significantly expand their revenue potential beyond just lease arbitrage, similar to how Marriott evolved from owning hotels to primarily managing properties and licensing their brand.

Duration mismatch exposure: WeWork signs long-term leases (15-20 years) while generating revenue from short-term memberships and flexible workspace agreements. During economic downturns, this mismatch could create severe cash flow problems as members can quickly reduce space or leave entirely while WeWork remains obligated to pay landlords. While the company has increased enterprise customers to 60% with longer commitments, the average lease length of 15 months still falls far short of WeWork's own lease obligations.

Capital-intensive growth model: WeWork's expansion requires massive upfront investments to build out new locations before they can generate revenue. With only 30% of locations considered mature and profitable, the company burns significant cash maintaining newer locations that take 24+ months to achieve target margins. This model demands continuous capital raising to fund growth, making WeWork vulnerable if financing conditions tighten.

Commoditization of flexible workspace: As more landlords develop their own flexible workspace offerings and competitors like IWG expand, WeWork's core product risks becoming commoditized. While WeWork has tried to differentiate through community and services, these offerings are increasingly standard across the industry. The company's high valuation assumes it can maintain premium pricing despite growing competition in what is fundamentally a real estate arbitrage business.