WeWork India Management Ltd (WEWORK) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to WeWork India Management Limited's Q2 FY '27 earnings conference call. The presentation in this call is a concise version of the presentation uploaded on the company's website and shared with the stock exchanges. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Participants connected on webcast may click on the Ask a Question tab to join the question queue after the management's opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Virwani, MD and CEO. Thank you, and over to you, sir.
Karan Virwani (WeWork India Management Ltd): Thank you, Michelle, and good morning, everyone. Thank you for joining us for our Q2 and first half FY '27 results. As always, the financials we discuss today are on an IGAAP equivalent basis. The reconciliation to reported Ind AS is in the presentation and our shareholder letter. Before we turn to the numbers, I want to start where everything starts, everything we build starts. WeWork is the brand India's companies look for first when they choose where to work. We pioneered this category in India, we lead it today, and that brand is the foundation of everything that we do. Our vision is an ecosystem where people feel supported, energized, and inspired to do their best work. Our mission is to build spaces that don't just enable work, they elevate it. It shapes how we design WeWork spaces, how we operate it, and how our members experience it to the same standard day one in any city. The market around us has had another strong quarter. India absorbed 21 million sq ft of office space in Q3, up 6% year-over-year. With GCCs taking about 41% of it, flex took 24% of all leasing, about 5 million sq ft, which is up 21%, ahead of BFSI at 22% and tech at 15%. This It is now been India's largest occupier segment for three quarters running. Two nuggets from the quarter that stand out for us. Domestic companies took 47% of all leasing and flex operators drove half of that. Hyderabad led the country with 25% of Q3 leasing, a market where we have doubled down this year. The move to quality also continued, with 80% of completions in green-certified, and about 3/4 of leasing in buildings under 10 years old, the same segment our portfolio sits in. Flex has gone mainstream and branded workspaces are the most relevant form. Of India's billion-plus square foot of all office space, flex is about 123 million, organized flex about 83 million, and organized branded workspace, a category we pioneered, about 29 million. We operate about 10 million sq ft of WeWork-branded spaces, by our estimate, about 26% of the space and 34% of the revenue. That premium reflects how deeply our members build around us. Once a company is inside the ecosystem, WeWork becomes part of how it runs, not just where it sits. The demand it comes comes from a change in how companies plan. Few can say how how many people they will need or where a year from now they're going to be. And 5-plus-year leases have collapsed from 40% of enterprises to just 8%. A new hire joins in 45 to 60 days, while a team can be live in a WeWork space on day one with no fit-out and no CapEx. And companies are trading up to keep their people, with 55% of those planning to move planning a move to targeting better buildings. Loyalty in flex, it's never locked in, it's earned at every renewal. Companies choose WeWork first because the brand defines the category. 96% of companies that are not yet members
Karan Virwani (WeWork India Management Ltd): already know us against a 51% medium for other operators. We bring a global network of more than 600 locations in 37 countries with one in every four global Fortune 500 companies as a WeWork member worldwide. The backing of the Embassy Group and a relationship with India's leading developers put us in the right buildings with about 94% of our portfolio in Grade A across eight cities that takes roughly 95% of the country's Grade A absorption. They stay because the network grows with them. Our NPS is plus 79. More than 16,000 accounts work with us and of those using our physical spaces, nearly 30% work across more than one format moving from a day pass to a managed office floor floor without ever leaving the network. And 27% already buy from us beyond the desk. This is where the platform begins. This is a category we created and the one that we own. AI and macro uncertainty are reshaping how companies grow and they're now committed they're now commit to teams before they commit to buildings. Branded workspaces and WeWork branded workspaces are the most relevant answer to that. WeWork is the most future-ready form, one standard in every city, live from Day 1 and able to grow and shrink or move with the business. That's the story of this quarter. Demand is keeping pace with our largest openings, a platform is compounding beyond the desk and margins, returns, and cash all strengthening throughout the build. We added nearly 11.7 thousand desks in Q2, more than we've ever opened in a quarter taking us to 145.3 thousand desks across 85 centers in eight cities, which is up 27% year-over-year. With about 18.4 thousand added in the first half and about 4.5 thousand added more more added in October, we have passed the 22,000 mark that we set out for in Q1. Members grew 32.5% to about 121.7 thousand, ahead of capacity, and occupancy grew 357 basis points year-over-year to about 83.7% with mature centers at nearly 88%. The 114 basis points dip from Q1 is new capacity ramping up, and mature centers have edged up over the same period. Demand carried straight through to the numbers. Revenue grew nearly 31.6% year-over-year and 10% 10.1% quarter-over-quarter to about 768.7 crores. EBITDA grew faster at about 37.6% to about 162.9 crores with a margin up 138 basis points over Q1 to about 21.2%. PAT grew to about 67.4 crores sorry, PAT grew 67.4% to about 65.8 crores and pricing held with revenue to rent at all-time highs of 2.7x. Returns and cash moved the same way. ROCE reached 34.5%, which is up more than 12 points in a year. We closed September with a net cash of about 23 crores from a net debt of about 310 crores a year ago and with an A-plus rating and borrowing costs down 184 basis points to 8.5%, we're investing more and earning more on what we invest. The first half tells the same story at greater scale. Revenue grew 30% to about 1,466.7 crores, EBITDA 51% with a margin of 279 basis points and PAT more than doubled to 119 crores. H1 ROCE doubled to about 31.1% through the heaviest half first half of investments in our history. Over half of what we opened in Q2 was full from Day 1. Chennai added about 30 3,600 desks through a fully demand-backed managed office deal
Karan Virwani (WeWork India Management Ltd): Extension of one of our best performing mature WeWork branded spaces. Hyderabad added about 2,700 desks, all branded WeWork spaces in a market that's led India's leasing in Q3. And Pune added another 2,600 desks, which are all managed offices. Today, Bangalore remains our anchor at 54,000 desks. Hyderabad has overtaken Mumbai to become our second largest market at 20,000, and Pune is close behind at 17,000. The next phase is already secured. More than 9,000 desks under lease is signed and fit out. About 38,000 seats under LOIs, which gives us about 47,000 seats of incremental desks, 32% beyond what today's capacity is. We expect to reach about 150 to 155,000 by March of '27 and on the way to about 190 to 200,000 seats with supply for FY '28 and FY '29 already under negotiation. The base we are growing into is high quality and well-balanced. Enterprises contribute 77% of core revenue and Fortune 500 companies about 30%. GCCs account for nearly 41% of the overall mix, and with other global companies about 26%. No sector or customer dominates and our top 10 members together are 23% of overall revenue. Commitments are also well-matched. Locked-in core revenue grew nearly 66% to about 3,843 crores, covering the 1,421 crores of rent locked-in locked-in against it, which is about 2.7 times. Over the year, we added nearly Rs. 3 of contracted value to every rupee of rent. And members are committing for longer with the average term up to about 28 months that gives us strong visibility into quarters ahead. With that, I'll hand it over to Clifford to go in more detail.
Clifford (WeWork India Management Ltd): Thank you, Karan. And good morning, everyone. Let me start with how our new capacity is being absorbed, because everything else rests on it. Year-over-year, we added 30,800 desks and 29,800 members. Nearly a member for every desk. Our growth centers, those open for less than 12 months, are at 64.8% occupancy, up from 51.4% a year ago, on a cohort nearly 80% larger and well above our portfolio break even of 55.7%. Mature centers are at 87.7%, up 355 basis points. The highlight of this quarter is the platform. VAS grew 35% year-on-year to 79.6 crores and digital 46% to 29.2 crores. Together, they reached 108.8 crores, up 38%, well ahead of 31.7% growth in our core business, which grew to 657.7 crores. Revenue from operations grew 32.5% to 766.5 crores. These are also our highest margin revenue lines. Digital operates at close to 80% EBITDA margin and VAS is margin accretive. So as both keep growing faster than the core, they will continue contributing disproportionately to our profitability all the way down the PAT. The events, food, technology, customization, and digital access around our member's working day can all come from us. And every service they take, deepens the relationship ahead of renewals. In H1, revenue from operations was 1,453.8 crores, up 30.2%, with growth across every segment. Our mature base continues to absorb the cost of growth while widening margins. Center-level EBITDA grew 38.4% year-on-year to 214 crores with margin up 108, 109 basis points to 28.4%. In H1, center-level margin expanded 284 basis points to 28.1%. This was delivered with 25,000 desks still in growth centers.
Clifford (WeWork India Management Ltd): EBITDA grew 37.6% year-on-year and 17.8% quarter-on-quarter to 162.9 crores with margin expanding 138 basis points sequentially to 21.2%. The comparison with our previous expansion is instructive. When around 20,000 desks came online between Q3 FY '25 and Q1 FY '26, margin fell to 15% before recovering. This cycle has been more concentrated with nearly as many desks added in a single half, yet margin held at 19.8% in Q1 and grew to 21.2% in Q2. The operating leverage we have been building is already visible in our margins while the cycle is still underway. Growth is carrying through to the bottom line. PAT grew 67.4% year-on-year to 65.8 crores with margin up 183 basis points to 8.6%. In H1, EBITDA grew 50.6% to 301.2 crores and PAT 149.5% to 119 crores, more than 3x our H1 profits 2 years ago. Returns grew through our largest investment cycle. ROCE reached 34.5%, up a 590 basis points quarter-on-quarter and 1,235 basis points year-on-year. H1 ROCE doubled to 31.1% in a half in which CapEx grew 75%. The business is a cash-generating engine and that cash is compounding. Free cash flow from operations, or FCFO, was 237.7 crores this quarter, up a 149% year-on-year and 68% on Q1, at 1.5x EBITDA. In H1, FCFO more than doubled, up 157% to 379.8 crores, which is already nearly 2/3 of the 586 crores we generated in all of FY '26. That cash is funding our growth in full. After a 175.8 crores of CapEx in the quarter, we still generated 61.9 crores of free cash flow to the firm. In H1, that FCFO funded our entire 363.8 crores of CapEx, the largest we have ever deployed, and left a surplus of 16 crores. That surplus has strengthened the balance sheet. We closed September with a net cash of 23.1 crores compared with a net debt of 310.5 crores a year ago. Our credit rating was upgraded from an A- to A+ over the year and our average cost of borrowing fell 184 basis points to 8.5%. Our reported Ind AS basis PAT was 20.5 crores compared to a loss of 4.2 crores in Q1. The difference from our I-GAAP equivalent figures is lease accounting while Ind AS 116 and brokerage lease accounting under Ind AS 116 and brokerage. The full reconciliation is set out on slides 29 to 32. Margins, returns and cash, all strengthened through the largest investment cycle in our history. With that, I'll hand it back to Karan.
Karan Virwani (WeWork India Management Ltd): Thank you, Cliff. We've spent this year building. Our largest CapEx cycle is now live, and as these centers mature, our base becomes larger, stronger, and more resilient, unlocking operating leverage and delivering superior returns and a more profitable growth. Alongside it, the platform keeps widening. We are becoming the infrastructure companies run their workplace on, not the space that they sit in. That gives us more ways to grow, and gives our members more reasons to stay. All of this is powered by a business that generates more cash than it needs to grow. India's companies are planning around teams, not buildings, and WeWork-branded spaces are built for exactly that. This is how India works, and we've built the category for it. Thank you for your continued trust, and we're happy to take your questions.
Moderator: Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions, may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question
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Moderator: The first question is from Girish Choudhary from Avendus Spark, please go ahead.
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