WeWork is preparing to cut at least 4,000 jobs in a bid to achieve financial stability and those layoffs could be announced as early as this week, The New York Times reported late Sunday.
The start-up could lay off 2,000 to 2,500 employees in its main office-space renting business, two people with knowledge of the matter told the Times. Another 1,000 staff are expected to leave as WeWork sells or shuts down noncore businesses such as a private school in Manhattan, New York, while another 1,000 building maintenance employees would be transferred to an external contractor, according to the Times.
As many as 6,000 employees could ultimately be laid off, one person told the Times.
WeWork declined to comment.
WeWork Chairman Marcelo Claure confirmed layoffs were coming this week in a memo sent to employees Monday that was obtained by CNBC. The memo did not say how many layoffs were expected. The company will hold an all-hands meeting on Friday to go over the changes coming to the company, according to the memo.
Here's the full text of Claure's memo:
This coming week is an important one in the future of WeWork. We are marking our 10th anniversary since WeWork broke ground and started what was nothing short of a reinvention of the way people work, and we are just getting started.
We will need a more efficient, more focused and even more customer-centric organization to grow and continue to help our members change the way they work, and meet their needs. That requires changing WeWork's team to match our customer-centric priority.
As I said at our last All Company Meeting, in the areas of the business that do not directly support our core business goals, we have to make some necessary job eliminations. This is difficult, especially given the energy and commitment so many have contributed. But it is necessary and we are taking steps to provide support and implement these actions in a way that respects and recognizes our colleagues' service. Through this process, which will start in earnest this week in the U.S., we are going to eliminate and scale back certain functions and responsibilities, which will increase efficiency and also accountability. These actions will make us stronger and better able to generate even more opportunities over the coming months and years.
In fact, we have been hard at work defining our immediate next steps to shape the future of WeWork, and I am looking forward to sharing those with you directly at the All Company Meeting that we had originally scheduled for tomorrow. On further reflection and out of respect for the people who will be separated this week, we are rescheduling our All Company Meeting to Friday at 10:00 a.m. New York time. I apologize for the late notice and any inconvenience.
Last week, WeWork told investors it lost $1.25 billion on revenue of $934 million in the third quarter — losses were up more than 150% from the same period a year ago.
Following its rapid global expansion, including into cities with sky-high rent, WeWork faced a tumultuous few months: In September, it withdrew plans to go public and CEO Adam Neumann was replaced after attracting scrutiny from investors. In October, the start-up received a $5 billion rescue package from SoftBank, through which the Japanese conglomerate took 80% ownership of WeWork. Without the deal, WeWork would have run out of cash by the end of October, CNBC previously reported.
Previous reports have said layoffs were expected as part of WeWork's attempts to turn its fortunes through painful cost-cutting measures.
WeWork rents out office spaces to start-ups, freelancers and enterprises by investing in real estate in some of the most expensive markets around the world. It makes money back over time as companies and individuals pay their rent or membership fees.
--CNBC's Sally Shin contributed to this report.