Tech

WeWork chairman tells employees the plan is to have positive adjusted earnings by 2021

Key Points
  • WeWork's new chairman addressed employees at an all-hands meeting on Friday, shortly after the company said it would cut thousands of jobs.
  • Marcelo Claure said he aims to regain trust with both members and the public, as well as make sweeping changes to the business.
  • He told employees that WeWork aims to be free cash flow positive by 2023.
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WeWork aims for positive free cash flow by 2023

WeWork's new executive chairman, Marcelo Claure, held an all-hands meeting with employees on Friday and outlined his plans to get the embattled office-sharing company back on track and working towards profitability.

For over an hour, Claure spoke broadly about WeWork's values as well as the company's need to regain trust with both members and the public, CNBC has learned. The meeting followed WeWork's announcement on Thursday that it was laying off 2,400 employees, or about 19% of its total workforce.

Claure also shared details about WeWork's strategic plan, which was first presented to the board earlier this week. The company is now aiming to be adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) positive by 2021 and have positive free cash flow by 2023, Claure said. All that means WeWork will have better margins in its core business even if it's still recording net losses. 

For now, WeWork continues to bleed cash, reporting $1.25 billion in losses in the third quarter, a sharp increase from the same period a year earlier. The accumulating deficit shocked public market investors and forced WeWork to withdraw its IPO plans in September, six weeks after filing its prospectus. SoftBank, WeWork's biggest outside investor, forced out co-founder Adam Neumann and then put a rescue financing package in place, which gave the firm control over the company.

Marcelo Claure speaking at eMerge Americas in Miami on June 12, 2017.
David A. Grogan | CNBC

WeWork still plans to grow its office locations across the globe and is bringing in more executives from SoftBank. Claure, the Japanese conglomerate's operating chief, said on Friday that WeWork has hired two people from SoftBank: Michael Bucy as chief transformation officer and Ralf Wenzel as chief product and experience officer. WeWork is also bringing on Maurice Levy, former CEO of Publicis Groupe, as interim chief marketing and communications officer.

Claure laid out six areas of importance for WeWork as it moves forward, including focusing on the core office-sharing business, fostering a high-quality member and employee experience, improving its relationships with landlords and brokers, growing and expanding geographically in a smart and profitable way and adding more ways to monetize spaces.

He said the company intends to run the business with an owner mentality, meaning it will focus on financial discipline and establishing clearer goals and greater accountability. Much of the same language was reiterated in WeWork's recent "90-day game plan" that included sweeping changes to the business.

Claure then opened the floor to employees and took questions for about 30 minutes. Notably, Neumann wasn't mentioned once. Since his departure in September, the company has faced criticism for offering the ousted CEO an exit package worth up to $1.7 billion.

SoftBank is now in search of a new CEO for WeWork, while Sebastian Gunningham and Artie Minson have stepped in as co-CEOs.

WATCH: SoftBank to take control of WeWork

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SoftBank to take control of WeWork