WE Wework Inc. - 10-K

Item 1A. Risk Factors

In addition to the other information contained in this Form 10-K, including the matters addressed under the heading “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the following risk factors in this Form 10-K before investing in our securities. The risk factors described below disclose both material and other risks, and are not intended to be exhaustive and are not the only risks facing us. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and cash flows in future periods or are not identified because they are generally common to businesses.

Unless otherwise noted or the context otherwise requires, all references in this section to the “Company,” “we,” “us” or “our” refer to the business of WeWork and its subsidiaries following the consummation of the Business Combination; except that, with respect to references to the Company’s lease obligations, the “Company” refers to the WeWork subsidiary that is a party to such lease.

Summary of Risk Factors

• The price of our Class A Common Stock and warrants may be volatile.

• Future resales of Class A Common Stock may cause the market price of our securities to drop significantly, even if our business is doing well.

• If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline.

• We may not be able to continue to retain existing members, many of whom enter into membership agreements with short-term commitments, or to attract new members in sufficient numbers or at sufficient rates to sustain and increase our memberships or at all.

• We have a history of losses and we may be unable to achieve profitability (as determined in accordance with GAAP).

• We have a history of operating losses and negative cash flow and failure to fully consummate the Transactions may adversely effect the Company's liquidity and long-term prospects.

• Our success depends on our ability to maintain the value and reputation of our brand and the success of our strategic partnerships.

• We have reduced and may continue to reduce the overall size of our organization and we are likely to experience voluntary attrition, which may present challenges in managing our business.

• We and our subsidiaries may not be able to generate sufficient cash to service all of our indebtedness and other obligations and may be forced to take other actions to satisfy our obligations, which may not be successful.

• Our only material assets are our indirect interests in the WeWork Partnership (as defined below), and we are accordingly dependent upon distributions from the WeWork Partnership to pay dividends and taxes and other expenses. Our debt facilities also impose or may in the future impose certain restrictions on our subsidiaries making distributions to us.

• We may be subject to securities litigation, which is expensive and could divert management attention.

• Our internal control, financial systems and procedures need further development for a public company and a company of our global scale.

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• We rely on a combination of proprietary and third-party technology systems to support our business and member experience, and, if these systems experience difficulties, our business, financial condition, results of operations and prospects may be materially adversely affected.

• Failure to comply with anti-money laundering requirements could subject us to enforcement actions, fines, penalties, sanctions and other remedial actions.

Risks Relating to the Company’s Business

The COVID-19 pandemic had a significant impact on the Company’s business, financial condition, results of operations and cash flows, and recovery from the pandemic may take longer than anticipated.

The global spread and unprecedented impact of COVID-19, including variants of the virus, significantly disrupted and created additional risks to the Company’s and its joint venture partners’ businesses, the industry and the economy.

The COVID-19 pandemic continues to present uncertainty, including with respect to delays in customers and prospective customers returning to the office and changes in the preferences of customers and prospective customers with respect to remote or hybrid work arrangements. This has caused, and may continue to cause, a parallel delay in receiving the corresponding revenue. The Company also experienced a reduction in new sales volume at its locations, which negatively affected, and may continue to negatively affect, the Company’s results of operations. The Company was also, and may continue to be, adversely impacted by member churn, non-payment (or delayed payment) from members or members seeking payment concessions or deferrals or cancellations as a result of the COVID-19 pandemic. In addition, Consolidated Location physical memberships declined, which negatively affected our results of operations throughout 2020 and 2021. See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations––Key Factors Affecting the Comparability of Our Results––COVID-19 and Impact on our Business.” The Company’s business has been and could continue to be adversely impacted by members or potential members considering remote and hybrid office space arrangements and how quickly, if at all, the Company can return to pre-COVID-19 pandemic levels of operations.

The Company may not be able to continue to retain existing members, many of whom enter into membership agreements with short-term commitments, or to attract new members in sufficient numbers or at sufficient rates to sustain and increase its memberships.

The Company principally generates revenues through the sale of memberships. Due to the COVID-19 pandemic, the effect of rising inflation and general economic uncertainty, the Company has experienced, and may continue to experience, higher levels of membership agreement terminations, including terminations of membership agreements prior to the expiration of the committed term . In addition, as economic recovery and return to work patterns may differ significantly in the locations where the Company operates, local and regional membership activity may vary significantly from historical patterns and from aggregated trends. In many cases, members may terminate their membership agreements with the Company at any time upon as little notice as one calendar month, generally for a fee. During the year ended December 31, 2022, on average, approximately 5% of physical memberships were month-to-month commitments and could be terminated in a given month. Similarly, there are also longer-term or multi-year memberships that come up for renewal each month pursuant to the ordinary course terms of the contract, generally evenly throughout the year. During the year ended December 31, 2022, on average, approximately 6% of physical memberships (excluding month-to-month commitments) came up for renewal each month. Members may cancel their memberships for many reasons, including a perception that they do not make sufficient use of the Company’s solutions and services, that they need to reduce their expenses or that alternative work environments may provide better value or a better experience. Negative publicity surrounding the Company may also result in an increase in membership agreement terminations, a decrease in the Company’s ability to attract new members, weaker sales, and slower ramp-up of the Company’s new locations.

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The Company’s results of operations could be adversely affected by declines in demand for its memberships. Demand for its memberships has been and may continue to be negatively affected by public health concerns, slow economic recovery following the COVID-19 pandemic, and changing return to work patterns and could also be affected by a number of factors, including geopolitical uncertainty, competition, cybersecurity incidents, decline in the Company’s reputation and saturation in the markets where the Company operates. For example, reduced sales volume as a result of a slower than expected recovery in WeWork’s business following the COVID-19 pandemic and recent economic uncertainty has negatively affected and may continue to affect the Company’s results of operations. Prevailing general and local economic conditions may also negatively affect the demand for its memberships, particularly from current and potential members that are small- and mid-sized businesses and may be disproportionately affected by adverse economic conditions.

If the Company is unable to replace members who may terminate their membership agreements, the Company’s cash flows and the Company’s ability to make payments under its lease agreements may be adversely affected. These same factors that reduce demand for its memberships may not have the same impact on a landlord that has longer commitments from its tenants than the Company has from its members.

The Company must continually add new members both to replace departing members and to expand its current member base. The Company may not be able to attract new members in sufficient numbers to fully replace departing members. In addition, the revenue the Company generates from new members may not be as high as the revenue generated from existing members because of discounts the Company may offer to these new members, which have increased in recent periods, and the Company may incur marketing or other expenses, including referral fees, to attract new members, which may further offset its revenues from these new members. For these and other reasons, the Company could continue to experience a decline in its revenue growth, which could adversely affect its results of operations.

An economic downturn or subsequent declines in market rents may result in increased member terminations and could adversely affect the Company’s results of operations.

While the Company believes that it has a durable business model in all economic cycles, there can be no assurance that this will be the case. A significant portion of the Company’s member base consists of small- and mid-sized businesses and freelancers who may be disproportionately affected by adverse economic conditions. In addition, the Company’s concentration in specific cities magnifies the risk to the Company of adverse localized economic conditions in those cities or the surrounding regions. For the year ended December 31, 2022 , the Company generated the majority of its revenue from locations in the United States and the United Kingdom . The majority of the Company’s 2022 revenue from locations in the United States was generated from locations in the greater New York City, San Francisco, and Boston markets . A majority of its locations in the United Kingdom are in London . Economic downturns in these markets or other markets in which the Company is growing its number of locations may have a disproportionate effect on the Company’s revenue and its ability to retain members, in particular among members that are small- and mid-sized businesses, and thereby require the Company to expend time and resources on sales and marketing activities that may not be successful and could impair its results of operations. Additionally, an outbreak of a contagious disease, such as COVID-19 or variants of the virus or any similar illness, has had and may in the future have a disproportionate effect on businesses located in large metropolitan areas (such as those listed above), as larger cities may be more likely to institute a quarantine or “shelter-in-place.” Furthermore, the Company has experienced, and may continue to experience, increased churn and non-payment from members negatively affected by the COVID-19 pandemic. In addition, the Company’s business may be affected by generally prevailing economic conditions in the markets where it operates, which can result in a general decline in real estate activity, reduce demand for its solutions and services and exert downward pressure on its revenue.

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The long-term and fixed-cost nature of the Company’s leases may limit the Company’s operating flexibility and could adversely affect its liquidity and results of operations.

The Company’s leases are primarily entered into by and through special purpose entity subsidiaries. The Company currently leases a significant majority of its locations under long-term leases that, with limited exceptions, do not contain early termination provisions. The Company’s obligations to landlords under these agreements extend for periods that generally significantly exceed the length of its membership agreements with its members, which in certain cases may be terminated by the Company’s members upon as little notice as one calendar month. The average length of the initial term of the Company's leases is approximately 15 years, and the average term of its membership agreements is 19 months. As of December 31, 2022, the Company’s subsidiaries’ future undiscounted minimum lease cost payment obligations under signed operating and finance leases was $27.9 billion and committed sales contracts to be recognized as revenue in the future totaled approximately $2.5 billion .

The Company’s leases generally provide for fixed monthly or quarterly payments that are not tied to space utilization or the size of its member base, and nearly all of its leases contain minimum rental payment obligations. There are a small number of leases under a revenue sharing model with no minimum rent amount. As a result, in locations where the Company does not generate sufficient revenue from members at a particular space, including if members terminate their membership agreements with the Company and the Company is not able to replace these departing members or the Company ceases to operate at leased spaces, the Company’s lease cost expense exceeds its revenue. In addition, the Company may not be able to negotiate lower fixed monthly payments under its leases at rates which are commensurate with the rates at which the Company may agree to lower its monthly membership fees, which may also result in its rent expense exceeding its membership and service revenue. At certain locations, the Company has not been able to, and may not be able to, reduce its rent under the lease or otherwise terminate the lease, whether in accordance with its terms or by negotiation.

If the Company experiences a prolonged reduction in revenues at a particular leased location, its results of operations in respect of that space would be adversely affected unless and until the lease expires or the Company is able to assign the lease or sublease the space to a third party or otherwise renegotiate the terms of the lease or an exit from that space. The Company’s ability to assign a lease or sublease for a particular space to a third party may be constrained by provisions in the lease that restrict these transfers without notice to, or the prior consent of, the landlord. Additionally, the Company could incur significant costs if it decides to assign or sublease unprofitable leases, as the Company may incur transaction costs associated with finding and negotiating with potential transferees, and the ultimate transferee may require upfront payments or other inducements. The Company is also party to a variety of lease agreements and other occupancy arrangements, including management agreements and participating leases, containing a variety of contractual rights and obligations that may be subject to interpretation. The Company’s interpretation of such contracts may be disputed by its landlords or members, which could result in litigation, damage to its reputation or contractual or other legal remedies becoming available to such landlords and members and may impact its results of operations.

While the Company’s leases are often held by special purpose entities, the Company’s consolidated financial condition and results of operations depend on the ability of its subsidiaries to perform their obligations under these leases over time. The Company’s business, reputation, financial condition and results of operations depend on the Company’s ongoing compliance with its leases. In addition, the Company provides credit support in respect of its leases in the form of letters of credit, limited corporate guarantees (mostly from a subsidiary of the Company), cash security deposits and surety bonds. See the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Lease Obligations.” The applicable landlords have and could draw under the letters of credit or demand payment under the surety bonds, which amounts would need to be funded by the Company or one of its subsidiaries, which has adversely affected and could further adversely affect the Company’s financial condition and liquidity. In addition, under the Company’s surety bonds, the applicable surety has the right to increase their collateral to 100% of the outstanding bond amounts, including cash collateral or letters of credit, at any time the surety bonds are outstanding. Some

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sureties have already exercised this option. In certain circumstances, landlords have drawn under the letters of credit or demanded payment under the surety bonds in accordance with the terms of the applicable lease and security instrument. In addition, a small number of landlords have sued to enforce the corporate guarantees. The Company is also increasingly pursuing strategic alternatives to pure leasing arrangements, including management agreements, participating leases and other occupancy arrangements with respect to spaces. Some of the Company’s agreements contain penalties that are payable in the event the Company terminates the arrangement.

The Company has a history of losses and it may be unable to achieve profitability (as determined in accordance with GAAP).

The Company had an accumulated def icit of $16.2 billion , $14.1 billion and $9.7 billion as of December 31, 2022, 2021, and 2020, respectively, and had net losses of $2.3 billion, $4.6 billion, and $3.8 billion for the years ended December 31, 2022, 2021, and 2020 respectively. The Company’s accumulated deficit and net losses, which are GAAP financial metrics, historically resulted primarily from the substantial investments required to grow its business, including a significant increase in the number of locations in which the Company operates. The operation of non-core businesses in the past has also contributed to accumulated deficit and net loss historically. The Company’s rapid growth placed a significant strain on the Company’s resources. In addition, the Company has in recent periods incurred restructuring and other related costs in connection with both lease termination charges and lease amendment or exit costs resulting from the Company’s global real estate portfolio optimization efforts as well as employee-related payments resulting from the Company’s workforce realignment. The impacts of the COVID-19 pandemic on the Company’s business have also contributed to the losses incurred during the years ended December 31, 2022, 2021, and 2020.

While the Company has substantially completed a strategic restructuring with the goal of creating a leaner, more efficient organization to support its long-term goal of sustainable growth, there is no assurance that the Company will be successful in realizing the benefits of this plan. The Company’s operating costs and other expenses may be greater than it anticipates, and its investments to make its business and its operations more efficient may not be successful. Increases in the Company’s costs, expenses and investments may reduce its margins and materially adversely affect its business, financial condition and results of operations.

The Company has a history of operating losses and negative cash flow and failure to fully consummate the Transactions could have a material adverse effect on the Company's business, operating results, financial condition, liquidity and long-term prospects

The Company has a history of operating losses, and our capital needs have historically been funded through equity and debt offerings . In March 2023, the Company entered into a series of agreements relating to the Transactions, which, if and once implemented, would result in the reduction of the Company’s net debt by approximately $1.5 billion, extend maturity of the Company’s senior notes from 2025 to 2027 and result in additional new funding and rolled over capital commitments of approximately $1.0 billion.

In the event that we are unable to complete the Transactions or otherwise raise sufficient alternative fundings to reduce the Company's significant debt and enhance its liquidity on acceptable terms, we may be required to delay, limit or curtail our operations or otherwise impede our business strategy, which may have a material adverse effect on our business, operating results, financial condition, and long-term prospects.

These alternative fundings may include (subject to market conditions) capital markets transactions, repurchases, redemptions, exchanges or other refinancings of the Company’s existing debt, the potential issuance of equity securities, the potential sale of additional assets and businesses and/or other strategic transactions and/or other measures. These alternatives involve significant uncertainties, potential delays, significant costs and other risks, and there can be no assurance that any of these alternatives will be available on acceptable terms, or at all, in the current market environment or in the foreseeable future.

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The Company’s ability to pursue any alternate transaction will depend on, among other things, the Company’s business plans, operating performance, investor demand and the condition of the capital markets. The agreements governing the Company’s current indebtedness, and that will govern the Company’s indebtedness following the Transactions, also contain or will contain a number of restrictive covenants that impose significant operating and financial restrictions on the Company and may limit its ability to engage in any alternate transaction. The Company’s failure to consummate the Transactions or to otherwise deleverage could have important consequences, including the following:

• the Company’s ability to continue as a going concern could be adversely affected;

• the Company’s ability to obtain financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements, could be adversely affected;

• the Company would be required to dedicate a substantial portion of our cash flows to debt payments instead of for other purposes;

• the Company’s ability to attract and retain employees and capitalize on business opportunities may be adversely affected;

• the Company could be placed at a competitive disadvantage compared to its competitors that may have less debt;

• the Company’s flexibility in planning for and reacting to changes in the industry in which the Company competes could be limited; and

• the Company’s vulnerability to general adverse economic conditions could increase.

The Company’s success depends on its ability to maintain the value and reputation of its brand and the success of its strategic partnerships.

The Company’s brand is integral to its business. Maintaining, promoting and positioning the Company’s brand will depend largely on the Company’s ability to provide a consistently high-quality member experience and on its marketing and community-building efforts. To the extent its locations, workspace solutions or product or service offerings are perceived to be of low quality or otherwise are not compelling to new and existing members, the Company’s ability to maintain a positive brand reputation may be adversely affected.

In addition, failure by third parties on whom the Company relies but whose actions it cannot control, such as joint venture partners, general contractors and construction managers who oversee its construction activities, or their respective facilities management staff, to uphold a high and consistent standard of workmanship, ethics, conduct and legal compliance could subject the Company to reputational harm based on their association with it and its brand.

The Company believes that much of its reputation depends on word-of-mouth and other non-paid sources of opinion, including on the internet. Unfavorable publicity or consumer perception or experience of the Company’s solutions, practices, products or services could adversely affect the Company’s reputation, resulting in difficulties in attracting and retaining members, landlords and business partners (including joint venture partners), difficulties in attracting and retaining employees, regulatory scrutiny, litigation, and limiting the success of the Company’s community-building efforts and the range of solutions, products and services the Company is able to offer.

To the extent that the Company is unable to maintain a positive brand reputation organically and to contend with increased competition, the Company may need to increase or enhance its marketing efforts to attract new members, which would increase its sales and marketing expenses both in absolute terms and as a percentage of its revenue.

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The Company may be unable to adequately protect or prevent unauthorized use of its intellectual property rights and the Company may be prevented by third parties from using or registering its intellectual property.

To protect its intellectual property rights, the Company relies on a combination of trademark, copyright, trade dress, patent and trade secret protection laws, protective agreements with its employees and third parties and physical and electronic security measures. The Company has obtained a strategic set of intellectual property registrations and applications, including for the WeWork brand, in certain jurisdictions throughout the world. Nevertheless, these applications may not proceed to registration or issuance or otherwise be granted protection. We may not be able to adequately protect or enforce our intellectual property rights or prevent others from copying or using the Company’s intellectual property in certain jurisdictions throughout the world and in jurisdictions where intellectual property laws may not be adequately developed or favorable to the Company. In addition, third parties may attack the Company’s trademarks, including the WeWork brand, by opposing said applications or canceling registrations on a variety of bases, including validity and non-use. Third parties have in the past and may, from time to time in the future, claim that the Company is infringing their intellectual property rights or challenge the validity or enforceability of the Company’s intellectual property rights, and the Company may not be successful in defending these claims. These claims, even if they are without merit, could result in the prevention of the Company registering or enforcing its intellectual property. These claims can also cause the Company to stop using certain intellectual property and force the Company to rebrand or redesign our marketing, product, or technology. Additionally, the agreements and security measures the Company has in place may be inadequate or otherwise fail to effectively accomplish their protective purposes. In some cases, the Company may need to litigate these claims or negotiate a settlement that can include a monetary payment or license arrangement or cause us to stop using certain intellectual property. This may also trigger certain indemnification provisions in third-party license agreements. The Company may be unable to defend its proprietary rights or prevent infringement or misappropriation without substantial expense to it and negatively impact its intellectual property rights.

Third parties may also infringe or misappropriate the Company’s intellectual property rights, including the WeWork brand, and the Company may not be successful in asserting intellectual property rights against third parties. There may be instances where we may need to resort to litigation or other proceedings to enforce our intellectual property rights. Enforcement of this type can be costly and result in counterclaims or other claims against the Company, including action against our trademark applications and registrations.

In addition, we license certain intellectual property rights, including the WeWork brand, to joint venture partners and other third parties, including granting our third-party licensed locations the right to use our intellectual property in connection with their operation of certain locations. If a licensee fails to maintain the quality of the services used in connection with our trademarks, the Company’s rights to and the value of our trademarks could be diminished. Failure to maintain, control and protect the WeWork brand and other intellectual property could negatively affect the Company’s ability to acquire members, and ultimately, negatively affect our business. If the licensees misuse our intellectual property, then this could lead to third-party claims against the Company and could negatively affect the WeWork brand.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal system in certain foreign jurisdictions, particularly those in certain developing countries, do not favor the enforcement of trademarks, patents, trade secrets and other intellectual property protection which could make it difficult for the Company to stop the infringement, misappropriation or other violation of its intellectual property rights, or the marketing of competing products or services in violation of its proprietary rights in these jurisdictions. The Company may not prevail in any such proceedings that it initiates and the damages or other remedies awarded to the Company, if any, may not be commercially meaningful.

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If the measures the Company has taken to protect the WeWork brand and its other proprietary rights are inadequate to prevent unauthorized use or misappropriation by third parties or if the Company is prevented from using intellectual property due to successful third-party claims, the value of the WeWork brand and other intangible assets may be diminished and its business and results of operations may be adversely affected.

Cyber-attacks could negatively affect the Company’s business.

The Company has been in the past and may be in the future subject to attempted or actual cyber-attacks or other cyber incidents targeting the Company’s systems and its information. This could result in the breach, theft, loss, or fraudulent use of our or our members’ data, including proprietary or confidential business information and the personal data of our members, employees, and other parties. Although we have implemented security measures and processes designed to protect our systems and the information we maintain, we still may not be able to prevent cyber-attacks and security breaches. Any breach of our systems or data, or failure or alleged failure to adequately prevent or mitigate such a breach, could significantly disrupt our operations, damage our reputation, and give rise to employees, members or government authorities initiating legal or regulatory actions asserting that the Company violated applicable laws and regulations, potentially resulting in significant costs and liabilities and a loss of business that could be material.

The Company is undergoing a transformation in its business plan under new management and there can be no assurances that this new business strategy will be successful.

Following the withdrawal of the Company’s registration statement on Form S-1 in connection with its attempted initial public offering in 2019, there have been substantial changes in the Company’s management and business plan. The Company’s new strategic plan emphasizes achieving positive Adjusted EBITDA through expense management and streamlined operations, focusing on optimizing the Company’s existing real estate portfolio of domestic and international locations and executing well on its current pipeline of locations before seeking growth opportunities.

As part of this plan, beginning in the fall of 2019, the Company began a global review of its locations to optimize its real estate portfolio. This has resulted in strategically executing full or partial lease exits for locations with more limited prospects of profitability. Between December 31, 2019 and December 31, 2022, the Company and its joint venture partners negotiated over 700 lease amendments or exits with landlord partners around the world, resulting in an approximately $10.7 billion reduction to future lease payments and a reduction in total lease security of approximately $3.6 billion, in each case including ChinaCo prior to the ChinaCo Deconsolidation. However, this process is ongoing and there can be no assurance that these efforts will continue to be successful in reducing the Company’s overall lease costs. In connection with these optimization efforts, at certain locations the Company has withheld, is withholding, or may in the future withhold rent payments for some period of time. In a small number of cases, the Company’s real estate portfolio optimization efforts have resulted in litigation threatened or filed by landlords. As the process continues, additional litigation could result and the Company could be exposed to breach of contract, eviction or other claims that could result in direct and indirect costs to the Company and could result in other operational disruptions that could harm the Company's reputation, brand and results of operations. During the years ended December 31, 2022 and 2021 , the Company incurred lease-related termination costs in connection with the aforementioned strategic lease terminations, substantially all being equal to or less than the security coverage of each lease. The Company continues to incur such costs and the Company anticipates that there will be additional lease termination fees paid in the future, substantially all of which are expected to be equal to or less than the security coverage of each applicable lease. See the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations–– Key Factors Affecting the Comparability of Our Results––Restructuring and Impairments .” In addition, as a result of these lease amendments and exits, there is a risk of potential churn or disruption in the member experience for those that are relocated to a nearby building. See “ —The long- term and fixed-cost nature of the Company’s leases may limit its operating flexibility and could adversely affect its liquidity and results of operations. ”

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The Company’s business depends on hiring, developing, retaining and motivating highly skilled and dedicated team members, and failure to do so, including turnover in the Company’s senior management and other key personnel, could have a material adverse effect on the Company’s business.

The Company strives to attract, motivate, and retain team members who share a dedication to the member community and the Company’s vision, but given the increasingly competitive market for talent, the Company may not be successful in doing so. The Company’s U.S.-based team members, including most of its senior management, work for the Company on an at-will basis. Other companies, including competitors, may be successful in recruiting and hiring team members away from the Company, and it may be difficult for the Company to find suitable replacements on a timely basis, on competitive terms or at all.

In addition, the Company has experienced and may continue to experience operational disruptions in the process of building out a new senior management team. Changes to or turnover among senior management or other key personnel could disrupt the Company’s strategic focus or create uncertainty for management, employees, members, partners, landlords and stockholders. These changes, and the potential failure to retain and recruit senior management and other key employees, could have a material adverse effect on the Company’s operations and ability to manage the day-to-day aspects of its business. Unexpected or abrupt departures may result in the failure to effectively transfer institutional knowledge and may impede our ability to act quickly and efficiently in executing our business strategy as we devote resources to recruiting new personnel or transitioning existing personnel to fill those roles.

If the Company is unable to effectively manage employee turnover and retain existing key personnel or timely address its hiring needs or successfully integrate new hires, its employee morale, productivity and retention could suffer, which could adversely affect its business, financial condition and results of operations. In addition, we may experience employee turnover as a result of the ongoing "great resignation" occurring throughout the economy.

Additionally, the success of each of the Company’s new and existing locations depends on its ability to hire and retain dedicated community managers and community team members. If the Company enters new geographic markets and launches new solutions, products and services, the Company may experience difficulty attracting employees in the areas it requires.

The Company has reduced and may continue to reduce the overall size of its organization and is likely to experience voluntary attrition, which may present challenges in managing its business.

During and since the third quarter of 2019, the Company has implemented reductions in its workforce and may consider further reductions in the future. As of December 31, 2022, on a consolidated basis, we had reduced our global workforce by approximately 70% as compared to the third quarter of 2019 and by approximately 2% as compared to December 31, 2021 through reductions in force, voluntary attrition not replaced, divestitures and joint venture arrangements. These workforce reductions have resulted in and may result in the loss of some longer-term employees and expertise and the reallocation and combination of certain roles and responsibilities across the organization, all of which could adversely affect the Company’s operations. Given the complexity and nature of the Company’s business, it must continue to implement and improve its managerial, operational and financial systems, manage its locations and continue to recruit and retain qualified personnel. This could be made more challenging by the workforce reductions and additional measures the Company may take to reduce costs. As a result, the Company’s management may need to divert a disproportionate amount of its attention away from day-to-day strategic and operational activities and devote a substantial amount of time to managing these organizational changes. Further, workforce reductions and additional cost containment measures may have unintended consequences, such as attrition beyond the Company’s intended workforce reductions, reduced employee morale and employment-related litigation. Employees who are not affected by the workforce reductions may seek alternate employment, which could require the Company to obtain additional support at unplanned additional expense.

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The Company has significantly moderated and may continue to moderate its growth.

The Company’s historical growth rates prior to the end of 2019 are not expected to be indicative of its future growth. The Company has significantly moderated and may continue to moderate its growth. The Company plans to continue to open locations in which it has already signed a lease while also negotiating strategic lease restructurings and exits as part of its real estate optimization efforts. The Company’s future growth will be driven by a variety of factors, including member demand and the availability of new locations priced at a level that would enable the Company to construct the location and operate it profitably on an individual location basis. As the Company optimizes its real estate portfolio, such opportunities to expand in new and existing geographies may become more limited.

If the Company is unable to maintain or negotiate satisfactory arrangements in respect of spaces that it occupies, its ability to service its members may be impaired.

Subsidiaries of the Company currently lease real estate for the majority of its locations while the Company is pursuing asset-light arrangements such as management agreements, joint ventures and other occupancy arrangements with real estate owners. The Company may not receive the same possessory rights under such alternative arrangements as it does in a traditional landlord-tenant relationship. Instead, the Company’s ability to continue to serve its members at spaces occupied pursuant to these alternative arrangements depends on its relationships with strategic partners.

With respect to leases, the Company’s renewal options are typically tied to the then-prevailing net effective rent in the open market (typically leases include a floor of the rent then in effect under the lease). As a result, increases in rental rates in the markets in which the Company operates, particularly in those markets where initial terms under its leases are shorter, could adversely affect the Company’s business, financial condition, results of operations and prospects.

In addition, the Company’s ability to extend an expiring lease on favorable terms or to secure an alternate location will depend on then-prevailing conditions in the real estate market, such as overall rental cost increases, competition from other would-be tenants for desirable leased spaces and its relationships with current and prospective building owners and landlords, and may depend on other factors that are not within its control. If the Company is not able to renew or replace an expiring lease, it may incur significant costs related to vacating that space, surrendering or restoring any tenant improvements, and redeveloping whatever alternative space it is able to find in such subregion, if any. The Company’s ability to extend an expiring lease on favorable terms may be more difficult as a result of the negative publicity the Company has experienced and the Company's strategic lease restructurings and exits.

In addition, if the Company elects to or is forced to vacate a space, it could lose members who purchased memberships based on the design, location or other attributes of that particular space and may not be interested in relocating to the other spaces it has available. Further, landlords could re-lease vacated spaces in competition with the Company’s other locations.

The Company has engaged in transactions with related parties, and such transactions present possible conflicts of interest and could have an adverse effect on its business and results of operations.

The Company has entered into transactions with related parties, including its significant stockholders, former executive officers and current and former directors and other employees. In particular, all transactions between the Company and SBG (including with respect to the Company’s debt financing arrangements with SVF II are related party transactions. As of December 31, 2022, the aggregate amounts outstanding under the Company’s debt financing arrangements with SBG included $1.1 billion in outstanding letters of credit issued under the Senior LC Tranche, $350 million outstanding under the Junior LC Tranche and $1.65 billion in outstanding indebtedness under the 5.00% Senior Notes, Series I (each as defined below). As of December 31, 2022, the Company had the ability to draw up to $500 million of Secured Notes under the Secured NPA with SVF II, subject to applicable restrictive covenants in the agreements governing the Company’s indebtedness. In January 2023, the Company issued and sold $250 million of Secured Notes to SVF II pursuant to the Secured NPA, as a result of

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which $250 million of commitment remains available under the Secured NPA as of the date hereof (which amount, together with any outstanding Secured Notes issued pursuant to the Secured NPA, will be reduced to approximately $446 million in the aggregate from and after February 2024). In February 2023, the commitment under the Junior LC Tranche was increased to $470 million and the commitment under the Senior LC Tranche was reduced to $960 million . For additional information, see “ —Risks Relating to the Company’s Financial Condition—The terms of the Company’s indebtedness restrict its current and future operations, particularly its ability to respond to changes or take certain actions, including some of which may affect completion of the Company’s strategic plan .” In March 2023, the Company entered into certain agreements relating to a series of comprehensive Transactions with certain parties, including SVF II and certain affiliates thereof, which, among other things, would result in the exchange of the 5.00% Senior Notes, Series I, for a combination of newly issued New Second Lien Exchangeable Notes, New Third Lien Exchange Notes and shares of Class A Common Stock and the roll over of $300 million of the $500 million commitment from SVF II under the Secured NPA to purchase Secured Notes, including $250 million in aggregate principal amount of Secured Notes currently outstanding, into $300 million of New First Lien Notes, which, at the Company’s option, would be issued to SVF II in full and outstanding at the closing of the Transactions or issuable to SVF II from time to time in whole or in part pursuant to a new note purchase agreement. See “ Item 1. Business––The Transactions .” The significant amount of indebtedness owed, and expected to be owed following the consummation of the Transactions, by the Company to SBG and commitments from SBG to or for the benefit of the Company could present possible conflicts of interest that could have an adverse effect on the Company’s business and results of operations. In addition, as further described below, SVF II WW Holdings (Cayman) Limited received warrants to purchase additional stock in connection with certain modifications to the debt financings described above, and received warrants to purchase additional stock in connection with the consummation of the Business Combination. There are and are likely to continue to be other arrangements in which WeWork and SBG are participants related to taxes, corporate governance, debt financings, expense reimbursement and other operations. SBG and certain of its affiliates are substantial stockholders of WeWork and have substantial influence of matters of corporate governance for WeWork, resulting in possible conflicts of interests.

In addition, the Company has in the past entered into several transactions with landlord entities in which an ownership interest is or previously was held by Adam Neumann, the Company’s former chief executive officer and a former member of the Company’s board of directors. See “ Certain Relationships and Related Transactions, and Director Independence ” for additional information. As part of the Company’s restructuring, the Company is in ongoing discussions to exit certain leases with related parties. Transactions with any landlord entity in which related parties hold ownership interests present potential for conflicts of interest, as the interests of the landlord entity and its stockholders may not align with the interests of the Company with respect to, for example, the exercise of contractual remedies under these leases, such as the treatment of events of default. As is the case for all lease terminations where there are outstanding tenant improvements amounts owed, any forgiveness of tenant improvements owed for related party transactions is treated as consideration for the terminations.

The Company may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have an adverse effect on the Company’s business and results of operations or may result in government enforcement actions, investigations or other litigation. Upon the closing of the Business Combination, WeWork adopted a new related party transaction policy that requires the approval of the audit committee for any proposed related party transaction except to the extent that such related party transaction has been approved by the disinterested members of the board of directors of the Company. Following the Business Combination, the Board also formed a special committee of independent directors to review, evaluate and negotiate certain transactions involving SBG given its and its affiliates' ownership interests in the Company and representation on the Board.

Additionally, the Company has agreed to indemnify certain of its current and former directors and executive officers and stockholders under the WeWork Amended and Restated Certificate of

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Incorporation (the "Charter") and various other agreements. In 2022, the Company agreed to reimburse certain indemnified parties for certain legal expenses incurred and may be required to pay more in legal fees related to these indemnifications in the future. These indemnification arrangements and associated payments may have an adverse effect on the Company’s business and results of operations.

The Company has entered into an agreement that grants Mr. Neumann board observer rights, although Mr. Neumann has not exercised such rights to-date. Beginning on February 26, 2022, Mr. Neumann, or if requested by SBG, a designee of Mr. Neumann’s (who shall be subject to SBG’s approval), shall have the right to observe meetings of WeWork’s board of directors (and certain committees thereof) in a non-voting observer capacity. Mr. Neumann, or his designee, is also entitled to copies of written materials provided to directors, subject to certain conditions as set forth in the agreement. Mr. Neumann’s observer rights shall terminate when he ceases to beneficially own equity securities of WeWork (including WeWork Partnership Class A Common Units) representing at least 15,720,950 shares of WeWork Class A Common Stock (on an as-converted basis and as adjusted for stock splits, dividends and the like).

Although we expect that Mr. Neumann or his representative may express views or may ask questions at board meetings, there is no contractual entitlement beyond attending such meetings in a customary nonvoting observer capacity, and the Company's board and committee meetings would be presided over by the relevant chairpersons and subject to such procedures governing conduct of the meeting as may be adopted by the board or relevant committee. The agreement governing the observer right does not entitle Mr. Neumann to participate in any conversations among directors outside of formal meetings of our board and its applicable committees. Similarly, the agreement does not give Mr. Neumann the right to influence decisions to be made or actions to be taken by the WeWork board or committees. Mr. Neumann will participate in meetings of the WeWork board and its applicable committees as a nonvoting board observer — not as a director.

The agreement governing the observer right requires that Mr. Neumann or his representative agree to hold in confidence all information provided under such agreement. WeWork has also reserved the right under such agreement to withhold information and exclude Mr. Neumann or his representative from any meeting or portion thereof to the extent reasonably likely to adversely affect the attorney-client privilege between WeWork and its counsel or result in disclosure of trade secrets or a conflict of interest, or if there has been a violation of Mr. Neumann’s restrictive covenant obligations to WeWork.

A significant part of the Company’s international growth strategy and international operations may be conducted through joint ventures or other management arrangements.

The Company’s international growth strategy includes and has historically included entering into joint ventures or franchise agreements in non-U.S. jurisdictions, such as Latin America, Israel, Greater China, Japan, South Africa and the broader Asia-Pacific region. The Company’s success in these regions is therefore partially dependent on third parties whose actions the Company cannot control.

Certain changes to those arrangements occurred during 2020. In April 2020, the Company closed the PacificCo Roll-up (as defined below) and issued 28,489,311 shares of convertible Legacy WeWork Series H-1 Preferred Stock to SVF Endurance (Cayman) Limited ("SVFE"), making WeWork Asia Holding Company B.V. (“PacificCo”) a wholly owned subsidiary of the Company.

On September 3, 2020, affiliates of Trustbridge Partners ("TBP") signed definitive investment documentation with WeWork Greater China Holding Company B.V. ("ChinaCo") and its shareholders pursuant to which (i) certain affiliates of TBP agreed to invest $200 million in ChinaCo in exchange for newly issued preference shares of ChinaCo and (ii) other ChinaCo shareholders (including the Company and SVFE) agreed to have their interests in ChinaCo restructured (the “Trustbridge Transaction”). The initial closing of the Trustbridge Transaction occurred on October 2, 2020, resulting in affiliates of TBP becoming the controlling and largest shareholders of ChinaCo. The Company’s joint venture with affiliated investment funds of SVFE in Japan is expected to continue.

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Separately, the Company intends, as part of its strategic plan, to pursue additional joint ventures and other strategic partnerships, including management agreements and alternative deal structures with variable rent. In particular, the Company is building a framework to further support joint venture, franchise, and/or licensing arrangements under which it may transfer a controlling equity interest in its operations in certain markets to a local partner while earning a percentage of revenue from, and in some cases r etaining minority ownership in, such operations. For example, in June 2021, we closed a transaction with Ampa Group (“ Ampa ”), one of the leading real estate companies in Israel, pursuant to which Ampa will have the exclusive right to operate WeWork’s business in Israel (the “ Israel Transaction ”). In September 2021, an affiliate of SBG and the Company also closed on the formation of a new joint venture (“ LatamCo ”) to operate the Company’s businesses in Brazil, Mexico, Colombia, Chile and Argentina under the WeWork brand and in February 2022 the Company's business in Costa Rica became part of LatamCo. In March 2023, we closed a transaction with SiSebenza group (“SiSebenza”), a pan-African real estate investor, pursuant to which SiSebenza will assume ownership of WeWork’s existing business in South Africa and will have exclusive rights to operate and grow the WeWork franchise across South Africa, Ghana, Kenya, Nigeria, Mauritius and (the “Africa Transaction”).

The Company’s partners in these joint ventures and other arrangements may have interests that differ from those of the Company, and the Company may disagree with its partners as to the resolution of a particular issue or as to the management or conduct of the business in general. These arrangements may also carry high inherent anti-corruption compliance risk and lead to anti-corruption violations and related enforcement actions. In addition, the Company has entered into and may continue to enter into agreements that provide its partners with exclusivity or other preemptive rights in agreed-upon geographic areas, which may limit the Company’s ability to pursue business opportunities in the manner that the Company desires. Generally, in a joint venture or franchise relationship, we have undertaken not to operate our business in the specific region other than through the party who has entered into an agreement with WeWork. These agreements also generally contain non-compete provisions whereby we agree not to compete with the counterparty in the applicable region and agree to provide an opportunity for the counterparty to participate in new ventures launched by the Company in the applicable region.

The Company’s strategic business plan includes, among other elements, optimization of its real estate portfolio and the development of a joint venture model, and any such optimization and joint venture efforts may not be successful.

As part of the Company’s strategic plan, it intends to pursue growth through localized, market-driven models. In particular, the Company intends to pursue joint venture or franchise arrangements in which the Company licenses, for a fee to an operator of flexible space in a location in which we do not operate, the use of the WeWork technology and services for managing and powering flexible work spaces and access to our customer base. These business models are unproven and there can be no assurance that the Company will be successful in these efforts.

Some of the counterparty risks the Company faces with respect to its members are heightened in the case of Enterprise Members.

Enterprise Members, which often sign membership agreements with longer terms and for a greater number of memberships than other non-Enterprise Members, accounted for 46% , 48% , and 49% of the Company’s total membership and service revenue for the years ended December 31, 2022, 2021 , and 2020 , respectively. Memberships attributable to Enterprise Members generally account for a high proportion of the Company’s revenue at a particular location, and some of its locations are occupied by just one Enterprise Member. In addition, increasing Enterprise Members is a continuing part of the Company’s overall strategy. A default by an Enterprise Member under its agreement with the Company could cause a significant reduction in the operating cash flow generated by the location where that Enterprise Member is situated. The Company would also incur certain costs following an unexpected vacancy by an Enterprise Member. Given the greater amount of space generally occupied by any Enterprise Member relative to the Company’s other members, the time and effort required to execute a definitive agreement with an Enterprise Member is greater than the time and effort required to execute membership agreements with individuals or small- or mid-sized businesses, and accordingly, replacing an

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Enterprise Member after an unexpected vacancy by such Enterprise Member could require a significant amount of the Company’s time, energy and resources. In addition, in some instances, the Company offers configured solutions that require it to customize the workspace to the specific needs and brand aesthetics of the Enterprise Member, which may increase its build-out costs and its net capital expenditures per workstation added. If Enterprise Members were to delay commencement of their membership agreements, fail to make membership fee payments when due, declare bankruptcy or otherwise default on their obligations to the Company, the Company may be forced to terminate the membership agreements of such Enterprise Members with the Company, which could result in sunk costs and transaction costs that are difficult or impossible for the Company to recover.

The Company is exposed to risks associated with the development and construction of the spaces it occupies.

Opening new locations subjects the Company to risks that are associated with development projects in general, such as delays in construction, contract disputes and claims, fines or penalties levied by government authorities relating to the Company’s construction activities, and reliance on third parties for products used in the Company’s locations. The Company may also experience delays opening a new location as a result of delays by the building owners or landlords in completing their base building work or as a result of its inability to obtain, or delays in its obtaining, all necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations. The Company traditionally has sought to open new locations on the first day of a month and delays, even if the delay only lasts a few days, can cause it to defer opening a new location by a full month. Failure to open a location on schedule may damage the Company’s reputation and brand and may also cause it to incur expenses in order to rent and provide temporary space for its members or to provide those members with discounted membership fees.

In developing its spaces, the Company generally relies on the continued availability and satisfactory performance of unaffiliated third-party general contractors and subcontractors to perform the actual construction work and, in many cases, to select and obtain certain building materials, including in some cases from sole- source suppliers of such materials. As a result, the timing and quality of the development of the Company's occupied spaces depends on the performance of these third parties on the Company’s behalf.

The Company does not have long-term contractual commitments with general contractors, subcontractors or materials suppliers, except for pricing agreements with certain major materials suppliers. The prices the Company pays for the labor or materials provided by these third parties, or other construction-related costs, could unexpectedly increase, which could have an adverse effect on the viability of the projects the Company pursues and on its results of operations and liquidity. Skilled parties and high-quality materials may not continue to be available at reasonable rates in the markets in which the Company pursues its construction activities.

In addition, the Company sources some of the products that it uses in its spaces from third-party suppliers. Although the Company tests the products it purchases from these third-party suppliers, the Company may not be able to identify any or all defects associated with those products. If a member or other third party were to suffer an injury from the products the Company uses in its space, the Company may suffer damage to its reputation, and may be exposed to possible liability.

The people the Company engages in connection with a construction project are subject to the usual hazards associated with providing construction and related services on construction project sites, which can cause personal injury and loss of life, damage to or destruction of property, plant and equipment, and environmental damage. The Company’s insurance coverage may be inadequate in scope or coverage amount to fully compensate it for any losses it may incur arising from any such events at a construction site it operates or oversees. In some cases, general contractors and their subcontractors may use improper construction practices or defective materials. Improper construction practices or defective materials can result in the need to perform extensive repairs to the Company’s spaces, loss of revenue

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during the repairs and, potentially, personal injury or death. The Company also can suffer damage to its reputation, and may be exposed to possible liability, if these third parties fail to comply with applicable laws.

The Company incurs costs relating to the maintenance, refurbishment and remediation of its spaces.

The terms of its leases generally require that the Company ensure that the spaces it occupies are kept in good repair throughout the term of the lease. The terms of its leases may also require that the Company remove certain fixtures and improvements to the space or return the space to the landlord at the end of the lease term in the same condition it was delivered to the Company, which, in such instances, will require removing all fixtures and improvements to the space at the end of the lease term. The costs associated with this maintenance, removal and repair work may be significant and vary depending on the lease.

The Company also anticipates that it will be required to periodically refurbish its spaces to keep pace with the changing needs of its members. Extensive refurbishments may be more costly and time-consuming than the Company expects and may adversely affect the Company’s results of operations and financial condition. The Company’s member experience may be adversely affected if extensive refurbishments disrupt its operations at its locations.

Supply chain interruptions and certain payment processes may increase the Company’s costs or reduce its revenues.

The Company depends on the effectiveness of its supply chain management systems to ensure reliable and sufficient supply, on reasonably favorable terms, of materials used in its construction and development and operating activities, such as furniture, lighting, millwork, wood flooring, security equipment and consumables. The materials the Company purchases and uses in the ordinary course of its business are sourced from a wide variety of suppliers around the world. Disruptions in the supply chain have resulted and may continue to result from the COVID-19 pandemic, and may also result from weather-related events, natural disasters, pandemics, trade restrictions, tariffs, border controls, acts of war, terrorist attacks, third-party strikes or ineffective cross dock operations, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions or other factors beyond the Company's control. In the event of disruptions in the Company’s existing supply chain, the labor and materials it relies on in the ordinary course of its business may not be available at reasonable rates or at all. In some cases, the Company may rely on a single source for procurement of construction materials, services or other supplies in a given region. Any disruption in the supply of certain materials could disrupt operations at the Company’s existing locations or significantly delay its opening of a new location, which may cause harm to its reputation and results of operations.

In addition, third-party suppliers may require payment upfront or deposits. As a result, the Company may not be able to obtain the most favorable pricing, which may increase the Company’s costs or reduce its revenues. Additionally, lowered credit limits provided by a number of the Company’s suppliers may limit its purchasing power.

If the Company’s pricing and related promotional and marketing plans are not effective, its business and prospects may be negatively affected.

The Company’s business and prospects depend on the impact of pricing and related promotional and marketing plans and its ability to adjust these plans to respond quickly to economic and competitive conditions. If the Company’s pricing and related promotional and marketing plans are not successful, or are not as successful as those of competitors, its revenue, membership base and market share could decrease, thereby adversely impacting its results of operations.

If we are unable to maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our securities may be harmed.

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Pursuant to Section 404 ("Section 404") of the Sarbanes-Oxley Act (the "Sarbanes-Oxley Act”) and the related rul es adopted by the SEC and the Public Company Accounting Oversight Board, our management is required to report on the effectiveness of our disclosure controls and internal control over financial reporting. During the year ended December 31, 2022, we were a “smaller reporting company” as defined under the Exchange Act and, as a non-accelerated filer, we were not yet subject to the requirement under Section 404 that our auditor deliver an attestation report on the effectiveness of our disclosure controls and internal control over financial reporting . Following our transition to accelerated filer status, we are required to include in this Form 10-K an attestation report on the effectiveness of our disclosure controls and internal control over financial reporting. If we are unable to maintain effective internal control over financial reporting, we may not have adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a public company or comply with the requirements of the SEC or Section 404. This could result in a restatement of our financial statements, the imposition of sanctions, including the inability of registered broker dealers to make a market in our common stock, or investigation by regulatory authorities. Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory requirements or by disclosure of an accounting, reporting or control issue could adversely affect the trading price of our securities and our business. Material weaknesses in our internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Additionally, we do not expect that our internal control systems, even if deemed effective and well established, will prevent all errors and all fraud. Internal control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

The Company relies on a combination of proprietary and third-party technology systems to support its business and member experience, and, if these systems experience difficulties, the Company’s business, financial condition, results of operations and prospects may be materially adversely affected.

The Company uses a combination of proprietary technology and technology provided by third-party service providers to support its business and its member experience. For example, the WeWork app, which the Company developed in-house but which incorporates third-party and open source software, connects local communities and develops and deepens connections among its members, both at particular spaces and across its global network.

The Company also uses technology of third-party service providers to help manage the daily operations of its business. For example, the Company relies on its own internal systems as well as those of third-party service providers to process membership payments and other payments from its members.

To the extent the Company experiences difficulties in the development or operation of technologies and systems the Company uses to manage the daily operations of its business or that the Company makes available to its members, the Company’s ability to operate its business, retain existing members and attract new members may be impaired. The Company may not be able to attract and retain sufficiently skilled and experienced technical or operations personnel and third-party contractors to operate and maintain these technologies and systems, and its current product and service offerings may not continue to be, and new product and service offerings may not be, supported by the applicable third-party service providers on commercially reasonable terms or at all.

Moreover, the Company may be subject to claims by third parties who maintain that its service providers’ technology infringes the third party’s intellectual property rights. Although the Company’s agreements with its third-party service providers often contain indemnities in the Company’s favor with respect to these eventualities, the Company may not be indemnified for these claims or the Company may not be successful in obtaining indemnification to which the Company is entitled.

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Also, any harm to the Company's members’ or third party service providers’ personal computers or other devices caused by its or a third party service provider’s software, such as the WeWork app, WiFi or other sources of harm, such as hackers or computer viruses, could have an adverse effect on the member experience, the Company’s reputation and its results of operations and financial condition.

The Company uses third-party open source software components, which may pose particular risks to its proprietary software, technologies, products and services in a manner that could negatively affect the Company’s business.

The Company uses open source software in its WeWork app and other services and will continue to use open source software in the future. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. To the extent that the Company’s services depend upon the successful operation of open source software, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our app or other services and injure our reputation.

Some open source licenses contain requirements that licensees make available source code for modifications or derivative works created based upon the type of open source software used, or grant other licenses to intellectual property. If the Company combines its proprietary software with open source software in a certain manner, it could, under certain open source licenses, be required to release or license the source code of its proprietary software to the public. From time to time, the Company may be subject to claims claiming ownership of, or demanding release of, the source code for such open source software, the software and/or derivative works that are developed using such open source licensed software, requiring the Company to provide attributions of any open source software incorporated into its distributed software, or otherwise seeking to enforce the terms of the applicable open source license. These claims could also result in litigation, require the Company to purchase a costly license or require the Company to devote additional resources to re-engineer its software or change its products or services, any of which could have an adverse effect on the Company’s business and results of operations.

If the Company’s proprietary information or data it collects and stores, particularly billing and personal data, were to be accessed by unauthorized persons, the Company’s reputation, competitive advantage and relationships with its members could be harmed and its business could be materially adversely affected.

The Company generates and processes significant amounts of proprietary, sensitive and otherwise confidential information relating to its business and operations, including confidential and personal data relating to its members, potential members, suppliers, business partners, employees and potential employees. The data are maintained on the Company’s own systems as well as the systems of third-party service providers.

Similar to other companies, the Company’s information technology systems face the threat of insider threats or cyber-attacks, such as security breaches, exfiltration, phishing scams, malware and denial-of-service attacks. The Company’s systems or the systems of its third-party service providers could experience unauthorized intrusions or inadvertent data breaches, which could result in the exposure or destruction of the Company’s proprietary information or members’ data and the disruption of business operations.

Because techniques used to obtain unauthorized access to systems or sabotage systems change frequently and may not be known until launched against the Company or its service providers, the Company and its service providers may be unable to anticipate these attacks or implement adequate preventative measures. In addition, any party who is able to illicitly obtain identification and password credentials could potentially gain unauthorized access to the Company’s systems or the systems of its third-party service providers. If any such event occurs, the Company may have to spend significant capital

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and other resources to notify affected individuals, regulators and others as required under applicable law, mitigate the impact of the event and develop and implement protections to prevent future events of that nature from occurring. From time to time, employees make mistakes with respect to security policies that are not always immediately detected by compliance policies and procedures. These can include errors in software implementation or a failure to follow protocols and patch systems. Employee errors, even if promptly discovered and remediated, may disrupt operations or result in unauthorized disclosure of confidential information. The Company has experienced unauthorized breaches of its systems in the past, which the Company believes did not have a material effect on its business.

If a data security incident occurs, or is perceived to have occurred, the Company may be the subject of negative publicity and the perception of the effectiveness of its security measures and its reputation may be harmed, which could damage the Company’s relationships and result in the loss of existing or potential members and adversely affect its results of operations and financial condition. In addition, even if there is no compromise of member information, the Company could incur significant regulatory fines, be the subject of litigation or enforcement proceedings or face other claims. In addition, the Company’s insurance coverage may not be sufficient in type or amount to cover it against claims related to security breaches, cyber-attacks and other related data and system incidents.

If new operating rules or interpretations of existing rules are adopted regarding the processing of credit cards and the Company is unable to comply with such new rules or interpretations, the Company could lose the ability to give members the option to make electronic payments, which could result in the loss of existing or potential members and adversely affect the Company's business.

The Company’s reputation, competitive advantage, financial position and relationships with its members could be materially harmed if the Company is unable to comply with complex and evolving data protection and privacy laws and regulations, and the costs and resources required to achieve compliance may have a materially adverse impact on its business.

The processing, collecting, and use of personal data is governed by privacy laws and regulations enacted in the jurisdictions in which the Company operates. These laws and regulations continue to evolve and may be inconsistent from one jurisdiction to another. Having to comply with varying privacy laws and regulations increases the cost and complexity of doing business.

For example, the Company is subject to the European Union’s (“ EU ”) and United Kingdom’s (“ UK ”) General Data Protection Regulation (“ GDPR ”). The GDPR imposes significant obligations on entities that process personal data originating in the European Economic Area. Because the EU and UK GDPR are still relatively recent, their interpretation continues to evolve, leading to significant uncertainty concerning their interpretation and enforcement. Brazil, South Africa, and several other countries have enacted similar data protection laws.

European Union (“EU”) legislators are preparing a new privacy regulation to amend and replace the ePrivacy Directive (2002/58/EC). This change in the law on an EU level may have significant impact on the legal requirements for electronic communication including the operation of and user interaction with websites (such as possibly requiring browsers to block access and use of device data and storage by default) and the placement of cookies and similar technologies. Other governmental authorities in the markets in which the Company operates are also considering additional and potentially diverging legislative and regulatory proposals that would increase the level and complexity of regulation on Internet display, disclosure and advertising activities. Additionally, there is currently increased attention on cookies and tracking technologies in Europe and elsewhere, with EU regulators taking a strict approach to enforcement in this area. These changes could lead to substantial costs, require system changes, limit the effectiveness of the Company’s marketing activities and subject the Company to additional liabilities.

The persistent uncertainty about data transfers from the EU and what transfer mechanisms and safeguards are compliant with the GDPR presents a challenge to all entities who transfer data outside the US, including the Company. This uncertainty could lead to non-compliance resulting in governmental

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enforcement actions, litigation, fines and penalties or adverse publicity which could have an adverse effect on our reputation and business.

Additionally, the California Consumer Privacy Act (“ CCPA ”), which provides enhanced data privacy rights for consumers and new operational requirements for companies, was further expanded by the California Privacy Rights Act, with the majority of the new provisions becoming effective on January 1, 2023. The CCPA gives California residents the right to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared. The CCPA provides for civil penalties for violations, and creates a private right of action for security breaches that could lead to consumer class actions and other litigation against the Company. Other U.S. states have adopted or are in the process of considering legislation similar to California’s legislation, and the U.S. Congress is considering such legislation. This trend may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. In addition, these legal authorities co-exist with general consumer protection and privacy laws that are actively enforced in connection with privacy and data protection that affect commerce, and there are a number of private lawsuits that have been filed in the U.S. under various common law and statutory legal theories based on the placement of cookies and similar technologies and other privacy practices. The costs of compliance with, and other burdens imposed by these and other international data privacy laws could have a materially adverse impact on the Company’s business. Any failure or perceived failure by the Company to comply with U.S. or international data privacy and security laws, including requirements around data subject rights, data transfers, data deletion, and appropriate controls, could expose the Company to regulatory enforcement actions, fines, private lawsuits or reputational damage.

Failure to comply with marketing and consumer protection laws could result in fines or restrict the Company’s business practices.

The Company is expanding its business through new digital and e-commerce products. The Company may not be in compliance with consumer protection laws (such as Procuraduria Federal del Consumidor and Restore Online Shoppers’ Confidence Act), unfair contract clauses, sales, marketing and advertising laws or other similar laws in certain jurisdictions. These laws, as well as any changes in these laws, could negatively affect current or planned digital and e-commerce product offerings and subject the Company to regulatory review and fines and an increase in lawsuits. Consumer protection laws may be interpreted or applied by regulatory authorities in a manner that could require the Company to make changes to its operations or incur fines, penalties, litigation or settlement expenses and refunds which may result in harm to its business.

The Company has not obtained and may not obtain all regulatory approvals from government agencies and may not be in compliance with telecommunications laws associated with the Company’s anticipated product offerings prior to marketing and launching these products in certain jurisdictions. If the Company does not comply with any current or future state regulations that apply to its business, the Company could be subject to substantial fines and penalties and may have to restructure its product offerings, exit certain markets, or raise the price of its products, any of which could ultimately harm its business and results of operations. Any enforcement action by the regulators, which may be a public process, could hurt the Company’s reputation in the industry, impair its ability to sell products to its customers and harm its business.

The Company plans to continue operating its business in markets outside the United States, which will subject it to risks associated with operating in foreign jurisdictions.

Expanding operations into markets outside the United States was historically an important part of the Company’s growth strategy. The Company expects that operations in markets outside the United States will continue to represent a significant portion of its business in the coming years.

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While the Company plans to prioritize operating internationally in certain markets through localized, market-driven models, including through joint ventures, the success and profitability of its business in non-U.S. markets will continue to depend on its ability to attract local members. The solutions, products and services the Company, or its joint venture partners, offers or determines to offer in the future may not appeal to potential members in all markets in the same way it appeals to its members in markets where the Company currently operates. In addition, local competitors may have a substantial competitive advantage over the Company in a given market because of their greater understanding of, and focus on, individuals and organizations in that market, as well as their more established local infrastructure and brands. The Company may also be unable to hire, train, retain and manage the personnel the Company requires in order to manage its international operations effectively, on a timely basis or at all, which may limit the Company’s ability to operate effectively in these markets and negatively impact its financial performance in these markets. Further, the Company may experience variability in the terms of its leases (including rent per square foot) and in its capital expenditures as the Company moves into new markets.

Operating in international markets, which may require operating through new localized, market-driven models in accordance with the Company’s strategic plan, requires significant resources and management attention and subjects the Company to regulatory, economic and political risks that may be different from and incremental to those that the Company faces in the United States, including:

•    the need to adapt the design and features of its locations and products and services to accommodate specific cultural norms and language differences;

•    difficulties in understanding and complying with local laws and regulations in foreign jurisdictions, including local labor laws, tax laws, environmental regulations and rules and regulations related to occupancy of its locations;

•    varying local building codes and regulations relating to building design, construction, safety, environmental protection and related matters;

•    significant reliance on third parties with whom the Company may engage in joint ventures, strategic alliances or ordinary course contracting relationships whose interests and incentives may be adverse to or different from the Company’s or may be unknown to the Company;

•    varying laws, rules, regulations and practices regarding protection and enforcement of intellectual property rights, including trademarks;

•    varying marketing and consumer protection laws, regulations and related practices;

•    laws and regulations regarding consumer and data protection, telecommunications requirements, privacy and security, and encryption that may be more restrictive than comparable laws and regulations in the United States;

•    corrupt or unethical practices in foreign jurisdictions that may subject the Company to compliance costs, including competitive disadvantages, or exposure under applicable anti-corruption and anti- bribery laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”);

•    compliance with applicable export and import controls and economic and trade sanctions, such as sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control;

•    fluctuations in currency exchange rates and compliance with foreign exchange controls and limitations on repatriation of funds; and

•    unpredictable disruptions as a result of security threats or political or social unrest and economic instability.

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Finally, continued expansion in markets outside the United States may require significant financial and other investments. These investments include developing relationships with local partners and third-party service providers, property sourcing and leasing, marketing to attract and retain new members, developing localized infrastructure and services, further developing corporate capabilities able to support operations and international trade compliance in multiple countries, and potentially entering into strategic transactions with companies based outside the United States and integrating those companies with the Company’s existing operations. If the Company continues to invest time and resources to expand its operations outside the United States, but cannot manage these risks effectively, the costs of doing business in those markets, including the investment of management attention, may be prohibitive, or the Company’s expenses may increase disproportionately to the revenue generated in those markets.

As the Company continues to grow in new and existing markets using varying models, certain metrics may be impacted by the geographic mix of its locations. While the Company intends to pursue profitable growth in accordance with its strategic plan, the Company’s overall results of operations could be negatively impacted if lower margin markets, including markets such as Latin America and Southeast Asia, were to become a larger portion of the Company’s real estate portfolio. Margins may also be negatively impacted by an increase in the percentage of the real estate portfolio subject to joint venture arrangements, which may reduce the Company’s down-side risk but could also limit up-side potential as we share in profits with our partners.

The Company faces risks arising from strategic transactions such as acquisitions, divestitures, joint ventures , strategic partnerships and other similar arrangements that it evaluates, pursues and undertakes.

The Company periodically evaluates potential strategic transactions such as acquisitions, divestitures, joint ventures, strategic partnerships and other similar arrangements, and it has historically pursued and undertaken certain of those opportunities. The process of acquiring and integrating another company or technology or entering into a strategic partnership alliance or joint venture could create unforeseen operating difficulties and expenditures and could entail unforeseen liabilities that are not recoverable under the relevant transaction agreements or otherwise.

On March 1, 2022, WeWork closed the acquisition of Common Desk, a Dallas-based coworking operator with 23 locations in Texas and North Carolina, that operates a majority of its locations under asset-light management agreements with landlords to minimize operational and capital expenses. There can be no assurance that we will realize the anticipated benefits of the acquisition of Common Desk.

The Company also previously divested certain assets or businesses that no longer fit with its strategic direction or growth targets, including businesses that the Company had acquired. For example, the Company has divested several non-core businesses, including Meetup Holdings, Inc. ("Meetup"), Managed by Q Inc. ("Managed by Q"), Flatiron School LLC and its affiliates ("Flatiron"), Effective Technology Solutions, Inc.("SpaceIQ"), Teem Technologies, Inc. ("Teem"), Conductor Inc. ("Conductor") and Fieldlens.

Furthermore, t o streamline operations and facilitate asset-light expansion outside of the United States, the Company sometimes enters into joint ventures, strategic partnerships and other similar arrangements in which the Company licenses, for a fee, to an operator of flexible space in a location in which we do not operate, the use of WeWork’s technology and services for managing and powering flexible work spaces and access to our customer base . Currently, our operations in China, India, Israel, Japan, South Africa and certain countries in Latin America operate pursuant to such arrangements.

The transactions described above involve significant risks and uncertainties, including:

•    inability to find potential sellers, buyers or partners for acquisitions, divestitures, joint ventures , strategic partnerships and other similar arrangements ;

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•    inability to obtain favorable terms for the Company’s acquisitions, divestitures, joint ventures , strategic partnerships and other similar arrangements ;

•    failure to effectively transfer liabilities, contracts, facilities and employees to buyers or partners;

•    requirements that the Company retain or indemnify sellers, buyers or partners against certain liabilities and obligations;

•    the possibility that the Company will become subject to third-party claims arising out of such acquisitions, divestitures, joint ventures , strategic partnerships or other similar arrangements ;

•    inability to reduce fixed costs previously associated with the divested assets or business or in markets where the Company enters into a joint venture arrangement, strategic partnership or other similar arrangement;

•    disruption of the Company’s ongoing business and distraction of management;

•    loss of key employees who leave as a result of an acquisition, divestiture, joint venture , strategic partnership and other similar arrangement ; and

•    loss of members from WeWork locations to other flex workspace providers in similar locations.

Because acquisitions, divestitures, joint ventures, strategic partnerships and other similar arrangements are inherently risky, the transactions may not be successful and may, in some cases, harm the Company’s operating results or financial condition and we may not realize the benefits of any such transactions. In addition, such transactions may negatively affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

The Company has entered into certain agreements that may limit its ability to directly acquire ownership interests in properties, and its control and joint ownership of certain properties with third-party investors may create conflicts of interest.

The Company holds an ownership interest in the WeCap Investment Group, its real estate acquisition and management platform, through its majority ownership of the general partner and manager entities that manage the activities of real estate acquisition vehicles managed or sponsored by the WeCap Investment Group. In connection with the establishment of the real estate investment platform, WeCap Investment Group, the Company agreed that WeCap Holdings Partnership would be the exclusive general partner and WeWork Capital Advisors LLC would be the exclusive investment manager for any real estate acquisition vehicles managed by, or otherwise affiliated with, the Company and its controlled affiliates and associated persons. The Company also agreed to make commercial real estate and other real estate-related investment opportunities that meet WeCap Investment Group’s mandate available to the WeCap Investment Group on a first-look basis, with certain limited exceptions. Because of these requirements, which are in effect at least until there are no real estate acquisition vehicles managed or sponsored by the WeCap Investment Group that are actively deploying capital, the Company may be required to acquire ownership interests in properties through the WeCap Investment Group that the Company otherwise could have acquired through one of its operating subsidiaries, which may prevent the Company from realizing the full benefit of certain attractive real estate opportunities.

Additionally, the WeCap Investment Group primarily focuses on acquiring, developing and managing properties that the WeCap Investment Group believes could benefit from the Company’s occupancy or involvement, and the Company expects a subsidiary to occupy or be involved with a meaningful portion of the properties acquired by real estate acquisition vehicles managed or sponsored by the WeCap Investment Group. The Company’s ownership interest in the WeCap Investment Group may create situations where its interests with respect to the exercise of the WeCap Investment Group’s management rights in respect of assets owned or controlled by the WeCap Investment Group, as well as the WeCap Investment Group’s duties to limited partners or similar members in real estate acquisition vehicles

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managed or sponsored by the WeCap Investment Group, may be in conflict with the Company’s own independent economic interests as a tenant and operator of its locations. For example, conflicts may arise in connection with decisions regarding the structure and terms of the leases entered into between the Company and the WeCap Investment Group, tenant improvement allowances, or guarantee or termination provisions. Conflicts of interest may also arise in connection with the exercise of contractual remedies under such leases, such as treatment of events of default.

The Company’s ownership interest in the WeCap Investment Group may impact its financial condition and results of operations.

WeCap Investment Group’s financial performance is significantly correlated with the activities of real estate acquisition vehicles managed or sponsored by the WeCap Investment Group, and a significant portion of any income to the WeCap Investment Group is expected to be received, if at all, at the end of the holding period for one or more given assets or the term of one or more given real estate acquisition vehicles. In addition, a broad range of events or circumstances could cause any real estate acquisition vehicle managed or sponsored by the WeCap Investment Group to fail to meet its objectives. In light of the long-dated and uncertain nature of any income to the WeCap Investment Group, the WeCap Investment Group’s financial performance may be more variable than the Company expects, both from period to period and overall. Accordingly, because of the Company’s ownership interest in the WeCap Investment Group, the WeCap Investment Group’s performance and activities, including the nature and timing of the WeCap Investment Group transactions, may affect the comparability of the Company’s financial condition and results of operations from period to period, in each case to the extent required to be directly included in its Consolidated Financial Statements in accordance with GAAP.

Additionally, although the Company does not generally expect this to be the case, investments through real estate acquisition vehicles managed or sponsored by the WeCap Investment Group may require that the Company directly incur or guarantee debt, which the Company expects will typically be through loans secured by assets or properties that the WeCap Investment Group acquires. For example, an entity in which the Company previously held an interest with the WeCap Investment Group and others incurred a secured loan to purchase certain property in New York City in 2019, which the Company had leased from that entity. Until the secured loan was repaid in connection with the sale of the property in March 2020, it was recourse to WeWork Companies LLC and Legacy WeWork in certain limited circumstances, and WeWork Companies LLC and Legacy WeWork also provided performance guarantees relating to the lease and development of that property.

The Company may not be able to compete effectively with others.

While the Company considers itself to be a leader in the flexible space market, with one of the largest real estate portfolios and core competencies in finding, building, filling and operating new locations, the growing shift toward flexible office space may encourage people to launch competing flexible workspace offerings. If new companies decide to launch competing solutions in the markets in which the Company operates, or if any existing competitors obtain a large-scale capital investment, the Company may face increased competition for members.

In addition, some of the services the Company offers or plans to offer are provided by one or more large, national or international companies, as well as by regional and local companies of varying sizes and resources, some of which may have accumulated substantial goodwill in their markets. Some of the Company’s competitors may also be better capitalized than the Company is, have access to better lease terms than it does, have operations in more jurisdictions than the Company does or be able or willing to provide services at a lower price than the Company is. The Company’s inability to compete effectively in growing or maintaining its membership base could hinder its growth or adversely impact its operating results.

The Company’s limited operating history and evolving business make it difficult to evaluate its current business and future prospects.

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The Company’s limited operating history and the evolution of its business make it difficult to accurately assess its future prospects. It may not be possible to discern fully the economic and other business trends that the Company is subject to. Elements of its business strategy are new and subject to ongoing development as its operations mature. In addition, it may be difficult to evaluate the Company’s business because there are few other companies that offer the same or a similar range of solutions, products and services as the Company does.

Certain of the measures the Company uses to evaluate its financial and operating performance are subject to inherent challenges in measurement and may be impacted by subjective determinations and not necessarily by changes in its business.

The Company tracks certain operational metrics, including key performance indicators such as memberships and projections, with internal systems and tools that are not independently verified by any third party. Certain of the Company’s operational metrics are also based on assumptions or estimates of future events. In particular, the number of open locations, pre-opening locations and pipeline locations is compiled from a number of data sources depending on the phase of the location within the lifecycle that the Company attributes to its locations. For open locations, workstation capacity for shared workspace offerings, which account for a subset of its standard workspace solutions, is estimated on a location-by-location basis by its design and regional community teams based on demand and the characteristics and distinct local personality of the relevant community. Meanwhile, for pre-opening and pipeline locations, workstation capacity is estimated by its real estate and design teams based on its building information modeling software, and includes estimated workstation capacity for locations that are the subject of a draft term sheet or lease that may not result in a signed lease agreement or an open location.

The Company’s internal systems and tools have a number of limitations, and its methodologies for tracking these metrics may change over time. In addition, limitations or errors with respect to how the Company measures data or with respect to the data that the Company measures may affect its understanding of certain details of its business, which could affect its long-term strategies. If the internal systems and tools the Company uses to track these metrics understate or overstate performance or contain algorithmic or other technical errors, the data the Company reports may not be accurate. If the Company discovers material inaccuracies with respect to these figures, its reputation may be significantly harmed, and its results of operations and financial condition could be adversely affected.

If the Company’s employees were to engage in a strike or other work stoppage or interruption or seek to unionize, the Company’s business, results of operations, financial condition and liquidity could be materially adversely affected.

If disputes with the Company’s employees arise, or if its workers engage in a strike or other work stoppage or interruption or seek to unionize, the Company could experience a significant disruption of, or inefficiencies in, its operations or incur higher labor costs, which could have a material adverse effect on its business, results of operations, financial condition and liquidity. In addition, some of the Company’s employees outside of the United States are represented or may seek to be represented by a labor union or workers’ council.

The Company is subject to litigation, investigations and other legal proceedings which could adversely affect its business, financial condition and results of operations.

The Company has in the past been, is currently and expects to continue in the future to be a party to or involved in pre-litigation disputes, individual actions, putative class actions or other collective actions, U.S. and foreign government regulatory inquiries and investigations and various other legal proceedings arising in the normal course of its business, including with members, employees, landlords and other commercial partners, securityholders, third-party license holders, competitors, government agencies and regulatory agencies, among others. For a description of certain pending legal proceedings and ongoing regulatory matters not in the ordinary course of business, see the section entitled “ Legal Matters” in Note 26 of the notes to WeWork’s Consolidated Financial Statements included elsewhere in this Form 10-K

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and the sections entitled “ —Risks Relating to the Company's Business—The long-term and fixed- cost nature of the Company’s leases may limit the Company’s operating flexibility and could adversely affect its liquidity and results of operations .” and “–– The Company is undergoing a transformation in its business plan under new management and there can be no assurances that this new business strategy will be successful. ”

Management intends to vigorously defend these cases and cooperate in these investigations. However, there is a reasonable possibility that the Company could be unsuccessful in defending these claims and could incur a loss. It is not currently possible to estimate a range of reasonably possible loss above the aggregated reserves. The Company also cannot offer any assurances regarding the scope of these investigations, the nature of any actions that these or other regulatory parties will take, or the timing within which they will be resolved.

Negative publicity may lead to additional investigations or lawsuits. Often these cases raise complex factual and legal issues, and the result of any such litigation, investigation or other legal proceeding is inherently unpredictable. Claims against the Company, whether meritorious or not, could require significant amounts of management’s time and attention and the Company’s resources to defend, could result in significant media coverage and negative publicity and could be harmful to the Company’s reputation, its brand and its business. If any of these legal proceedings or government inquiries were to be determined adversely to the Company or result in an enforcement action or judgment against the Company, or if the Company were to enter into settlement arrangements, the Company could be exposed to monetary damages or be forced to change the way in which it operates its business, which could have an adverse effect on the Company’s business, financial condition, results of operations and cash flows. In addition, the Company may incur substantial legal fees and related expenses in connection with defending any investigations or lawsuits and fulfilling certain indemnification obligations.

The Company’s business could be adversely affected by natural disasters, public health crises, political crises or other unexpected events for which the Company may not be sufficiently insured.

Natural disasters and other adverse weather and climate conditions, public health crises, political crises, terrorist attacks, war and other political instability or other unexpected events could disrupt the Company’s operations, damage one or more of its locations or prevent short- or long-term access to one or more of its locations. In particular, another outbreak of a contagious disease or similar public health threat as was experienced with the COVID-19 pandemic, particularly as it may impact the Company’s operations and supply chain, may have a material impact on the Company’s business, results of operations and financial condition. Many of the Company’s locations are located in the vicinity of disaster zones, including flood zones in New York City and potentially active earthquake faults in the San Francisco Bay Area and Mexico City, and many of its locations are concentrated in metropolitan areas or located in or near prominent buildings, which may be the target of terrorist or other attacks. Although the Company carries comprehensive liability, fire, extended coverage and business interruption insurance with respect to all of its consolidated locations, there are certain types of losses that the Company does not insure against because they are either uninsurable or not insurable on commercially reasonable terms. Should an uninsured event or a loss in excess of the Company’s insured limits occur, the Company could lose some or all of the capital invested in, and anticipated future revenues from, the affected locations, and the Company may nevertheless continue to be subject to obligations related to those locations.

Economic and political instability and potential unfavorable changes in laws and regulations in international markets could adversely affect the Company’s results of operations and financial condition.

The Company’s business may be affected by political instability and potential unfavorable changes in laws and regulations in international markets in which it operates. Adverse consequences could include, but are not limited to: global economic uncertainty and deterioration, volatility in currency exchange rates, adverse changes in regulation of the real estate industry, disruptions to the markets the Company invests in and the tax jurisdictions it operates in (which may adve rsely impact tax benefits or liabilities in these or

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other jurisdictions), and negative impacts on the operations and financial conditions of the Company’s tenants.

The UK and EU have signed an EU-UK Trade and Cooperation Agreement, which became provisionally applicable on January 1, 2021, and has been formally applicable since May 1, 2021. Many of the regulations that now apply in the UK following the transition period (including financial laws and regulations, tax, intellectual property rights, data protection laws, supply chain logistics, environmental, health and safety laws and regulations, immigration laws and employment laws) could be amended in the future as the UK determines its new approach, which may result in significant divergence from EU regulations. This lack of clarity could lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate. Given this ongoing uncertainty, the Company cannot predict how the Brexit process will finally be implemented and is continuing to assess the potential impact, if any, of these events on its operations, financial condition, and results of operations.

Additionally, there are concerns regarding potential changes in the future relationship between the United States and various other countries, most significantly China, with respect to trade policies, treaties, government regulati ons and tariffs. It remains unclear how the United States or foreign governments will act with respect to tariffs, international trade agreements and policies. The implementation by China or other countries of higher tariffs, capital controls, new adverse trade policies or other barriers to entry could have an adverse impact on the Company’s business, financial condition and results of operations.

The conflict between Russia and Ukraine has resulted in the imposition by the U.S. and other nations of sanctions and other restrictive actions against Russia and certain banks, companies and individuals in Russia, which may make it difficult or impossible for us to repatriate profits from our operations in Russia or to make or receive payments from our landlords, suppliers and customers in Russia, among other impacts on our business locally. More generally, the conflict has led to and could lead to further disruptions in the global financial markets and economy, including, without limitation, currency volatility, inflation and instability in the global capital markets. The Company has suspended all expansion plans in Russia and is in the process of divesting our operations in Russia. A continuation of conflict in Ukraine and the divestment of or inability to divest our operations in Russia could result in an adverse impact on our businesses, operations and assets.

Risks Relating to the Company’s Financial Condition

The Company’s indebtedness and other obligations could adversely affect its financial condition and liquidity.

As of December 31, 2022, the Company had (i) $669 million in aggregate principal amount outstanding on the 7.875% Senior Notes and (ii) $550 million in aggregate principal amount outstanding on the 5.00% Senior Notes, Series II, each of which are held by public noteholders. In addition, as of December 31, 2022, the amounts outstanding under the Company’s debt financing arrangements with SBG included $1.1 billion in outstanding letters of credit issued under the Senior LC Tranche, under which SVF II is a co-obligor, $350 million outstanding under the Junior LC Tranche, under which SBG is a co-obligor, and $1.65 billion in aggregate principal amount outstanding under the 5.00% Senior Notes, Series I, under which an affiliate of SBG is a noteholder. In February 2023, the commitment under the Junior LC Tranche was increased to $470 million and the commitment under the Senior LC Tranche was reduced to $960 million.

As of December 31, 2022, there remained $21 million in remaining letter of credit availability under the Senior LC Facility. Upon effectiveness of the Sixth Amendment to the Credit Agreement, $1.1 billion of standby letters of credit were outstanding under our Senior LC Facility, of which none were drawn. In addition, as of the Sixth Amendment to the Credit Agreement, approximately $100 million of contingent obligations in respect of letters of credit issued under our Senior LC Facility are required to be cash collateralized, in the amount of 105% of the stated amount thereof. As of December 31, 2022, the Company had the ability to draw up to $500 million of Secured Notes under the Secured NPA with SVF II, subject to applicable restrictive covenants in the agreements governing the Company’s indebtedness. In

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January 2023, the Company issued and sold $250 million of Secured Notes to SVF II pursuant to the Secured NPA, as a result of which $250 million of commitment remains available under the Secured NPA as of the date hereof (which amount, together with any outstanding Secured Notes issued pursuant to the Secured NPA, will be reduced to approximately $446 million in the aggregate from and after February 2024). In March 2023, the Company entered into the Transaction Support Agreement, which, among other things, limited the Company’s ability to draw the remaining $250 million in aggregate principal amount of Secured Notes under the Secured NPA during the period from the entry into the Transaction Support Agreement to the closing of the Transactions as follows: (i) a draw request of $50.0 million which may be made no earlier than April 1, 2023; (ii) a subsequent draw request of no more than $75.0 million which may be made no earlier than May 1, 2023; (iii) another subsequent draw request of no more than $75.0 million which may be made no earlier than June 1, 2023; and, if applicable, (iv) a draw request of $50 million thereafter.

If the Company makes additional draws on the Company’s debt financing arrangements with SBG or affiliates thereof, the Company’s total indebtedness will be substantially increased, which could intensify the risks related to its high level of debt. In addition, the Company has $25 million of outstanding principal on other loans.

In March 2023, the Company entered into a series of agreements related to the Transactions. Pursuant to such agreements, the applicable parties have agreed to support, approve, implement and enter into definitive documents covering the following transactions, among other things: (i) certain offers to exchange all of the outstanding 7.875% Senior Notes and 5.00% Senior Notes, Series II, for a combination of newly issued New Second Lien Notes, New Third Lien Notes and shares of Class A Common Stock, as applicable, and the concurrent issuance of $500 million in aggregate principal amount of New First Lien Notes, (ii) the exchange of all of the outstanding 5.00% Senior Notes, Series I, for a combination of newly issued New Second Lien Exchangeable Notes, New Third Lien Exchangeable Notes and shares of Class A Common Stock, as applicable, to one or more Softbank Noteholders, (iii) the rollover of $300 million of the $500 million commitment from SVF II under the Secured NPA to purchase Secured Notes, including $250 million in aggregate principal amount of Secured Notes currently outstanding, into $300 million of New First Lien Notes, which, at the Company’s option, would be issued to SVF II in full and outstanding at the closing of the Transactions or issuable to SVF II from time to time in whole or in part pursuant to a new note purchase agreement and (iv) the issuance of 35 million shares of Class A Common Stock in a private placement at a purchase price of $1.15 per share at the closing of the Transactions and up to $175 million of New First Lien Notes issuable from time to time at the Company’s option pursuant to a new note purchase agreement to a third party investor. See “Item 1. Business––The Transactions.”

The Company’s high level of debt, including following the consummation of the Transactions, could have important consequences, including the following:

•    limiting its ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements, and increasing its cost of borrowing;

•    requiring a substantial portion of its cash flows to be dedicated to payments on its obligations instead of for other purposes; and

•    increasing its vulnerability to general adverse economic and industry conditions and limiting its flexibility in planning for and reacting to changes in the industry in which the Company competes.

Subject to the limits contained in the indentures governing the 7.875% Senior Notes, the 5.00% Senior Notes (as defined below) and the Secured Notes, and the Company’s other obligations and debt agreements, including the Credit Agreement, and, following the consummation of the Transactions, the indentures governing the New Notes, the Company and its subsidiaries will also be able to incur additional debt, lease obligations and other obligations from time to time. If the Company or its subsidiaries do so, the risks related to its high level of debt could intensify. In addition, the agreements governing our indebtedness contain restrictive covenants that limit our ability to engage in activities that

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may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt.

The Company and its subsidiaries may not be able to generate sufficient cash to service all of their indebtedness and other obligations and may be forced to take other actions to satisfy such obligations, which may not be successful.

The Company and its subsidiaries’ ability to make scheduled payments or refinance its obligations depends on their financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond the Company’s control. The Company and its subsidiaries may be unable to maintain a level of cash flows from operating activities sufficient to permit them to pay the principal, premium, if any, and interest on their indebtedness or to pay their lease obligations.

If the Company and its subsidiaries’ cash flows and capital resources are insufficient to fund their obligations, the Company and its subsidiaries could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance their indebtedness and other obligations. The Company and its subsidiaries may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow them to meet their scheduled debt obligations. The agreements that govern the Company and its subsidiaries’ indebtedness restrict their ability to dispose of certain assets and use the proceeds from those dispositions and may also restrict their ability to raise debt or certain types of equity capital to be used to repay other indebtedness when it becomes due. The Company or its subsidiaries may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any obligations then due. See the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

In addition, the Company conducts a substantial portion of its operations through its subsidiaries. Accordingly, repayment of its indebtedness is dependent on the generation of cash flow by its subsidiaries and their ability to make such cash available to the Company by dividend, debt repayment or otherwise. In the event that the Company’s subsidiaries are unable to generate sufficient cash flow, the Company may be unable to make required principal and interest payments on its indebtedness.

If the Company or its subsidiaries cannot make scheduled payments on their debt, or if the Company or its subsidiaries violate certain covenants in their debt agreements and such violations are not cured or waived within the applicable time periods, the Company or its subsidiaries will be in default and, as a result, lenders under any of their existing and future indebtedness could declare all outstanding principal and interest to be due and payable, the lenders under their debt instruments could terminate their commitments to issue letters of credit, their secured lenders could foreclose against the assets securing such borrowings and the Company or its subsidiaries could be forced into bankruptcy or liquidation.

As of December 31, 2022, the Company had future undiscounted minimum lease cost payment obligations under signed operating and finance leases of $27.9 billion . If the Company is unable to service its obligations under the lease agreements for particular properties, the Company may be forced to vacate those properties or pay compensatory or consequential damages to the landlord, which could adversely affect its business, reputation and prospects. However, as of December 31, 2022, the total security packages provided by the Company and its subsidiaries in respect of those lease obligations was approximately $4.0 billion , representing less than 15% of future undiscounted minimum lease cost payment obligations. See “ —Risks relating to the Company’s Business—The long-term and fixed-cost nature of the Company’s leases may limit its operating flexibility and could adversely affect its liquidity and results of operations.”

In addition, the Company’s $287 million in cash and cash equivalents as of December 31, 2022, included cash and cash equivalents of $61 million of its consolidated variable interest entities (“ VIEs ”), which will

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be used first to settle obligations of the VIE. Remaining assets may only be distributed to the VIEs’ owners, including the Company, subject to the liquidation preferences of certain noncontrolling interest holders and any other preferential distribution provisions contained within the operating agreements of the relevant VIEs. In addition to these amounts, the Company had restricted cash of $5 million as of December 31, 2022. The Credit Agreement requires the Company and its Subsidiaries (as defined in the Credit Agreement) to maintain substantially all cash and cash equivalents in accounts with the administrative agent, subject to certain exceptions, and to maintain a certain amount of cash and cash equivalents in accounts that are subject to an account control agreement in favor of the administrative agent. Furthermore, the Credit Agreement requires the Company to cash collateralize 105% of the amount of letters of credit issued and outstanding in excess of the total commitments under the Senior LC Tranche. As of the Sixth Amendment to the Credit Agreement, approximately $100 million of contingent obligations in respect of letters of credit issued under our Senior LC Facility are required to be cash collateralized pursuant to the terms of the Credit Agreement.

Some of the cash that appears on the Company’s balance sheet may not be available for use in the Company’s business or to meet the Company’s debt obligations.

Although the Company may be permitted to use cash deposits from members in the operation of its business until such members demand its return, if required by local law, the Company may need to place cash deposits in separate accounts. In these instances, these cash deposits are blocked and not available for other uses in the Company’s business. In addition, at times the Company is required to make cash deposits to support bank guarantees and outstanding letters of credit supporting its obligations under certain office leases or amounts the Company owes to certain vendors from whom it purchases goods and services. These cash deposits are not available for other uses as long as the bank guarantees are outstanding. In addition, the Credit Agreement requires the Company and its Subsidiaries (as defined in the Credit Agreement) to maintain substantially all cash and cash equivalents in accounts with the administrative agent, subject to certain exceptions, and to maintain a certain amount of cash and cash equivalents in accounts that are subject to an account control agreement in favor of the administrative agent. Furthermore, the Credit Agreement requires the Company to cash collateralize 105% of the amount of letters of credit issued and outstanding in excess of the total commitments under the Senior LC Tranche. As of the date hereof, approximately $100 million of contingent obligations in respect of letters of credit issued under our Senior LC Facility are required to be cash collateralized pursuant to the terms of the Credit Agreement.

Further, total assets of consolidated VIEs included $61 million of cash and cash equivalents and $3 million of restricted cash as of December 31, 2022. The assets of consolidated VIEs can only be used to settle obligations of the VIE. Finally, certain countries in which the Company does business have regulations that restrict the Company’s ability to send cash out of the country without incurring taxes or meeting other requirements. In light of the foregoing factors, the amount of cash that appears on the Company’s balance sheet may overstate the amount of liquidity the Company has available to meet its business needs or debt obligations, including obligations under the 7.875% Senior Notes, the 5.00% Senior Notes and the Secured Notes and, following the consummation of the Transactions, the New Notes.

The Company may require additional capital to operate its business, comply with cash collateral obligations under the Credit Agreement and refinance its outstanding indebtedness, which may not be available on terms acceptable to it or at all.

The Company incurred net losses in the years ended December 31, 2022 , 2021 , and 2020, and its primary source of funding since late 2019 has been through agreements with SBG or affiliates thereof, including the Unsecured NPA (as defined below), the Secured NPA, and the Credit Agreement. In March 2023, the Company entered into a series of agreements related to the Transactions intended to reduce the Company’s significant debt and enhance its liquidity. If the Company is not able to achieve its goals to become profitable and cash flow positive in the near-term or if it requires additional capital to expand its business, it may require additional financing, in addition to the Transactions. The Company’s future

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financing requirements will also depend on many factors, including the number of new locations to be opened, its net membership retention rate, the impacts of the COVID-19 pandemic on its business, the timing and extent of spending to support the development of its business, its ability to reduce capital expenditures and the expansion of its sales and marketing activities, and potential joint venture arrangements. Furthermore, the Credit Agreement requires the Company to cash collateralize 105% of the amount of letters of credit issued and outstanding in excess of the total commitments under the Senior LC Tranche. In addition, a substantial portion of the Company’s indebtedness, including the 7.875% Senior Notes, the 5.00% Senior Notes and the Secured Notes, is scheduled to mature in 2025. If implemented in full, the Transactions would refinance and extend the maturity of the 7.875% Senior Notes, the 5.00% Senior Notes and the Secured Notes to 2027. The Company’s ability to obtain additional financing, including in addition to the Transactions, will depend on, among other things, its business plans, operating performance, investor demand and the condition of the capital markets at the time the Company seeks financing. Additional capital may not be available to the Company from SBG or affiliates thereof or from other sources or, if available, may not be available on terms acceptable to the Company or on a timely basis. Failure of the Company to obtain additional capital on favorable terms or at all in order to operate its business, comply with cash collateral obligations under the Credit Agreement, or refinance its outstanding indebtedness, including following the consummation of the Transactions, may have a material adverse effect on the Company’s business, financial condition and results of operations.

The terms of the Company’s indebtedness restrict its current and future operations, particularly its ability to respond to changes or take certain actions, including some of which may affect completion of the Company’s strategic plan.

The agreements governing the Company’s indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on the Company and may limit its ability to engage in acts that may be in its long-term best interest, including restrictions on its ability to incur indebtedness (including guarantee obligations), incur liens, enter into mergers or consolidations, dispose of assets, enter into affiliate transactions, pay dividends, make acquisitions and make investments, loans and advances. The agreements that will govern the Company’s indebtedness to be issued in connection with the Transactions will contain significant additional restrictions which will further limit the Company’s ability to engage in the above-listed transactions.

These restrictions may affect the Company’s ability to execute on its business strategy, limit its ability to raise additional debt or equity financing to operate its business, including during economic or business downturns, and limit its ability to compete effectively or take advantage of new business opportunities.

The Company has incurred and may incur in the future significant costs related to the development of its workspaces, which the Company may be unable to recover in a timely manner or at all.

Development of a workspace for members typically takes several months from the date the Company takes possession of the space under the relevant lease to the opening date. During this time, the Company incurs substantial upfront costs without recognizing any revenues from the space.

To the extent that our members (in particular Enterprise Members) require configured solutions, we generally enter into multi-year membership agreements to help offset any increased upfront costs related to the development of these workspaces. The Company expects the capital expenditures associated with the development of its workspaces to continue to be one of the primary costs of its business. See the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” If the Company is unable to complete its development and construction activities for any reason, including an inability to secure adequate funding, or conditions in the real estate market or the broader economy change in ways that are unfavorable, the Company may be unable to recover these costs in a timely manner or at all. The Company’s development activities are also subject to cost and schedule overruns as a result of many factors some of which are beyond its control and ability to foresee, including increases in the cost of materials and labor.

While many of the Company’s existing leases provide for reimbursement by the landlord or building owner of a portion of the construction and development expenses the Company incurs, the Company may not

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continue to be granted these provisions in future leases that the Company negotiates. Additionally, the Company’s landlords or building owners may not reimburse the Company for these expenses in a timely manner or at all, in which case the Company could exercise its available remedies under the lease. To be eligible for reimbursement of these development expenses, the Company is also required to compile invoices, lien releases and other paperwork from its contractors, which is a time-consuming process that requires the cooperation of third parties whom the Company does not control. The Company has a tracking mechanism and process for enforcing its right to collect reimbursements, however, it may make errors in pursuing these reimbursement entitlements in accordance with the strict requirements of the landlords or building owners the Company deals with. In addition, the Company is subject to counterparty risk with respect to these landlords and building owners.

Changes to accounting rules or regulations and the Company’s assumptions, estimates and judgments may adversely affect the reporting of the Company’s business, financial condition and results of operations.

The Company’s Consolidated Financial Statements are prepared in accordance with GAAP. New accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. For example, in February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases, codified as ASC 842, Leases. This update required a lessee to recognize on its balance sheet right-of-use assets and lease liabilities for any leases with a lease term of more than twelve months. The Company adopted ASC 842 early in connection with the preparation of its financial statements as of and for the twelve months ended December 31, 2019, and the adoption had a material impact on the Company’s consolidated balance sheet. The Company had lease right-of-use assets, net totaling approximately $11.2 billion and lease obligations totaling approximately $16.6 billion included on its consolidated balance sheet as of December 31, 2022. Other future changes to accounting rules or regulations could have a material adverse effect on the reporting of the Company’s business, financial condition and results of operations.

Additionally, the Company’s assumptions, estimates and judgments related to complex accounting matters could significantly affect its results of operations. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and related disclosures. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. These estimates form the basis for judgments about the carrying values of assets, liabilities and equity, as well as the amount of revenue and expenses that are not readily apparent from other sources. As the COVID-19 pandemic has adversely affected and may continue to adversely affect the Company’s revenues and expenditures, the extent and duration of restrictions and the overall macroeconomic impact of the pandemic will have an effect on estimates used in the preparation of our financial statements. The Company’s financial condition and results of operations may be adversely affected if its assumptions change or if actual circumstances differ from those in its assumptions.

Fluctuations in exchange rates may adversely affect the Company.

The Company’s international businesses typically earn revenue and incur expenses in local currencies, primarily the British Pound, Euro, Japanese Yen and Chinese Yuan (prior to the ChinaCo Deconsolidation). For example, the Company earned approximately 56% , 55%, and 50% of its revenues from subsidiaries whose functional currency is not the U.S. dollar for the years ended December 31, 2022, 2021 and 2020, respectively. Because its Consolidated Financial Statements are reported in U.S. dollars, the Company is exposed to currency translation risk when the Company translates the financial results of its consolidated non-U.S. subsidiaries from their local currency into U.S. dollars. As foreign currency exchange rates change, translation of the statements of operations of the Company’s international businesses into U.S. dollars affects period-over-period comparability of its operating results. Any strengthening of the U.S. dollar against one or more of these currencies could materially adversely affect the Company’s business, financial condition and results of operations.

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Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of WeWork’s income or other tax returns could adversely affect WeWork’s financial condition and results of operations.

WeWork is subject to income taxes in the United States, and its tax liabilities are subject to the allocation of expenses in differing jurisdictions. WeWork’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

•    changes in the valuation of WeWork’s deferred tax assets and liabilities;

•    expected timing and amount of the release of any tax valuation allowances;

•    tax effects of stock-based compensation;

•    costs related to intercompany restructurings;

•    changes in tax laws, regulations or interpretations thereof; or

•    lower than anticipated future earnings in jurisdictions where WeWork has lower statutory tax rates and higher than anticipated future earnings in jurisdictions where WeWork has higher statutory tax rates.

In addition, WeWork may be subject to audits of income, sales and other transaction taxes by taxing authorities. Outcomes from these audits could have an adverse effect on WeWork’s financial condition and results of operations.

Risks Relating to Laws and Regulations Affecting the Company’s Business

The Company’s extensive foreign operations and contacts with landlords and other parties in a variety of countries subject it to risks under U.S. and other anti-corruption laws, as well as applicable export controls and economic sanctions.

The Company is subject to various domestic and international anti-corruption laws, such as the FCPA, as well as other similar anti-bribery and anti-kickback laws and regulations. There may in the future be allegations of corruption against the Company and its employees. These laws and regulations prohibit the Company’s employees, representatives, contractors, business partners and agents from authorizing, offering, providing, or accepting payment or benefits for the purpose of improperly influencing the recipient or intended recipient. These laws also require that the Company keep accurate books and records and maintain compliance procedures designed to prevent any such actions. Under these laws, the Company may become liable for the actions of its directors, officers, employees, agents or other strategic or local partners or representatives over whom the Company may have little actual control.

The Company uses third-party representatives to perform services such as obtaining or retaining business, permits, approvals, and contracts. Additionally, the Company is continuously engaged in sourcing and negotiating new locations in high-risk jurisdictions around the world, and certain of the landlords, real estate agents or other parties with whom the Company interacts may be government officials or agents, even without its knowledge. The Company can be held liable for the corrupt or other illegal activities of its employees, representatives, contractors, business partners, and agents, even if it does not explicitly authorize or have actual knowledge of such activities.

The Company’s potential exposure to liability under anti-corruption laws, including the FCPA, will increase as the Company continues to increase its international sales and business operations, and, consequently, its contacts with foreign government officials or agents.

Additionally, as the Company pursues its strategy of entering into management agreements, joint ventures and other partnerships with local partners in non-U.S. jurisdictions, its use of intermediaries, and therefore its potential exposure to liability under anti-corruption laws, including the FCPA, are likely to

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increase. Noncompliance with these laws, including any activities over the past five years, could subject the Company to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage and other consequences.

Similarly, the Company’s international sales and business operations expose it to potential liability under a wide variety of U.S. and international laws and regulations relating to economic sanctions and export and import controls and economic and trade sanctions, such as those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. In the event that the Company engages in any conduct, intentionally or not, that facilitates money laundering, terrorist financing, or certain other unlawful activities, or that violates sanctions or otherwise constitutes sanctionable activity, including dealings with restricted persons or entities, the Company could be subject to substantial fines, sanctions, civil or criminal penalties, competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect its results of operations and its financial condition.

Failure to comply with anti-money laundering (“AML”) requirements could subject the Company to enforcement actions, fines, penalties, sanctions and other remedial actions.

The Company is subject to AML laws and regulations in various jurisdictions. Violations of such laws or regulations, even if inadvertent or unintentional, could result in fines, sanctions or other penalties, including consent orders against the Company, which could have significant reputational or other consequences and could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is in the process of improving and, in some instances, implementing controls pursuant to AML legal and regulatory requirements, and will continue to do so as and when new applicable requirements are enacted. The expenses associated with implementing, improving and maintaining such controls are not yet fully known, but may prove to be significant. Moreover, regulators have broad authority to enforce AML laws and regulations and may challenge whether the Company’s controls comply with AML requirements or whether the Company maintains an adequate compliance program, either of which could lead to one or more of the consequences described above.

The Company’s business is subject to a variety of U.S. and non-U.S. laws, many of which are evolving and could limit or otherwise negatively affect its ability to operate its business.

Laws and regulations are continuously evolving, and compliance is costly and can require changes to the Company’s business practices and significant management time and effort. It is not always clear how existing laws apply to the Company’s business model. The Company strives to comply with all applicable laws, but the scope and interpretation of the laws that are or may be applicable to it is often uncertain and may conflict across jurisdictions.

Existing local building codes and regulations, and any future changes to these codes or regulations, may increase its development costs or delay the development of its workspaces.

The Company’s development activities are subject to local, state and federal laws, as well as oversight and regulation in accordance with local building codes and regulations relating to building design, construction, safety, environmental protection and related matters. The Company is responsible for complying with the requirements of individual jurisdictions and must ensure that its development activities comply with varying standards by jurisdiction. Any existing or new government regulations or ordinances that relate to the Company’s development activities may result in significant additional expenses to the Company and, as a result, might adversely affect its results of operations.

Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes the Company pays and therefore its financial condition and results of operations.

As a global company, the Company is subject to taxation in numerous countries, states and other jurisdictions. Tax laws, regulations and administrative practices in various jurisdictions may be subject to

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significant change, with or without notice, due to economic, political and other conditions, and significant judgment is required in applying the relevant provisions of tax law.

If such changes were to be adopted or if the tax authorities in the jurisdictions where the Company operates were to challenge its application of relevant provisions of applicable tax laws, its financial condition and results of operations could be adversely affected.

Acquisitions of the Company’s stock may limit the Company’s ability to use some or all of its net operating loss and net capital loss ("NOL") carryforwards in the future.

As of December 31, 2022 , the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $7.6 billion , of which approximately $6.7 billion may be carried forward indefinitely and $0.9 billion will begin to expire starting in 2033 if not utilized . The Company also had net capital loss carryforwards of $137 million as of December 31, 2022 , which if unused, will expire in 2026 . Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change net operating loss carryforwards and net capital loss carryforwards, respectively, to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50% over such stockholders’ lowest percentage ownership during the testing period (generally three years). As a result of transactions occurring in 2019, an ownership change of the Company occurred for purposes of Section 382 of the Code, imposing limitations on the use of our net operating loss and net capital loss carryforward amounts. The ownership change may impact the timing of the availability of, or our ability to use, these losses.

The potential issuance of our equity in the Transactions will count towards an ownership change. If an ownership change were to occur, as a result of the Transactions or otherwise (including as a result of the issuance of equity upon the exchange of an exchangeable note or warrant or otherwise as a result of the Business Combination), Section 382 of the Code would impose an annual limit on the amount of NOLs we could use to reduce our taxable income going forward and, as a result, could increase our U.S. federal income tax liability. The annual limit under Section 382 of the Code is generally derived by multiplying the fair market value of the Company’s equity immediately before the ownership change by the federal long-term tax-exempt rate, which is 2.92% for ownership changes occurring in March 2023 and 3.04% for ownership changes occurring in April 2023. While the Company does not believe that the Transactions, taken by themselves, will cause an ownership change, calculations under Section 382 are complex and depend in part on facts outside of the Company’s control, and issuances, sales, and/or exchanges of the Company’s Class A Common Stock (including potentially relatively small transactions and transactions beyond the Company’s control), taken together with prior and contemplated transactions with respect to Class A Common Stock, could trigger an ownership change and therefore a limitation on the Company’s ability to utilize its NOL carryforwards.

Limitations imposed on the Company’s ability to utilize net operating loss and net capital loss carryforwards could cause U.S. federal income taxes to be paid earlier than such taxes would be paid if such limitations were not in effect and could cause certain of such net operating loss and net capital loss carryforwards to expire unused, in each case reducing or eliminating the benefit of such net operating loss and net capital loss carryforwards.

Certain non-U.S. Holders of our capital stock or other equity securities including Class A Common Stock, in certain situations, could be subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of such capital stock or equity securities.

We believe that we have been, in the past, and might be, as of the date of this prospectus, a United States real property holding corporation (“USRPHC”) under the Foreign Investment in Real Property Tax Act (“FIRPTA”). Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property

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interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). If we have been a USRPHC during the shorter of (i) a non-U.S. Holder’s holding period for shares of our capital stock or other equity securities or (ii) the five-year period preceding such non-U.S. Holder’s disposition of such shares of our capital stock or equity securities, such non-U.S. Holder may be subject to U.S. federal income tax on gain from the disposition of those shares of our capital stock or equity securities under FIRPTA at generally applicable U.S. federal income tax rates, in which case such non-U.S. Holder would also be required to file U.S. federal income tax returns with respect to such gain. In addition, a purchaser of shares from a non-U.S. Holder may be required to withhold U.S. tax in an amount equal to 15% of the gross proceeds from such a purchase. Any non-U.S. Holder acquiring Class A Common Stock may be subject to these rules if we are (or become) a USRPHC while such non-U.S. Holder holds the Class A Common Stock.

If, at any time during the calendar year, any class of our stock is regularly traded on an established securities market, the tax described above applies only in the case of a non-U.S. Holder who beneficially owned more than 5% of the total fair market value of that class of interests at any time during the five-year period ending either on the date of the disposition of such interest or other applicable determination date, and the withholding requirements described above would not apply. Our stock is currently traded on the NYSE and we expect our stock to be regularly quoted by brokers or dealers making a market in our stock during each calendar quarter in which our stock is so traded, which is expected to satisfy the requirement that our stock be regularly traded on an established securities market for the aforementioned gain recognition and withholding exceptions to apply. However, no assurances can be given that, at any given time, our stock or other equity securities will be treated as “regularly traded on an established securities market” for purposes of FIRPTA. Non-U.S. Holders of our capital stock or other equity securities should consult with their own tax advisors concerning the U.S. federal income tax consequences of the sale, exchange or other disposition of our capital stock or other equity securities.

Failure by certain of the Company’s subsidiaries in complying with laws and regulations applicable to investment platforms, including the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), could result in substantial harm to its reputation and results of operations.

Certain of the Company’s subsidiaries are subject to laws and regulations applicable to investment platforms, including those applicable to investment advisers under the Advisers Act. The Advisers Act imposes numerous obligations and duties on registered investment advisers, including record-keeping, operating and marketing requirements, disclosure obligations and prohibitions on self-dealing. The failure of any of these subsidiaries to comply with the Advisers Act could cause the SEC to institute proceedings and impose sanctions for violations, including censure, or to terminate the registration of its subsidiaries as investment advisers or prohibit them from serving as an investment adviser to SEC-registered funds. Similarly, these subsidiaries rely on exemptions from various requirements of ERISA to the extent these subsidiaries receive investments by benefit plan investors. The failure of the Company’s relevant subsidiaries to comply with these laws and regulations could irreparably harm its reputation or lead to litigation or regulatory or other legal proceedings, any of which could harm its results of operations.

Risks Relating to the Company’s Organizational Structure

The Company’s only material assets are its indirect interests in The We Company Management Holdings L.P. (the “WeWork Partnership”), and the Company is accordingly dependent upon distributions from the WeWork Partnership to pay dividends and taxes and other expenses. The Company’s debt facilities also impose or may in the future impose certain restrictions on the Company’s subsidiaries making distributions to the Company.

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The Company is a holding company and has no material assets other than an indirect general partner interest and indirect limited partner interests in the WeWork Partnership and various intercompany receivables from other consolidated subsidiaries. The Company has no independent means of generating revenue. The Company intends to cause its subsidiaries (including the WeWork Partnership) to make distributions in an amount sufficient to cover all applicable taxes and other expenses payable and dividends, if any, declared by it. The agreements governing the Company’s debt facilities impose, and agreements governing the Company’s future debt facilities are expected to impose, certain restrictions on distributions by WeWork Companies LLC to WeWork, and may limit its ability to pay cash dividends. The terms of any credit agreements or other borrowing arrangements the Company or its subsidiaries enter into in the future may impose similar restrictions. To the extent that WeWork needs funds, and any of its direct or indirect subsidiaries is restricted from making such distributions under these debt agreements or applicable law or regulation, or is otherwise unable to provide such funds, it could materially adversely affect the Company’s liquidity and financial condition.

If WeWork were deemed an “investment company” under the Investment Company Act of 1940 (the “1940 Act”) as a result of its ownership of the WeWork Partnership, applicable restrictions could make it impractical for it to continue its business as contemplated and could have a material adverse effect on its business.

A person may be deemed to be an “investment company” for purposes of the 1940 Act if it owns investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items), absent an applicable exemption. WeWork has no material assets other than its interest in the WeWork Partnership. Through its interests in the general partner of the WeWork Partnership, WeWork generally has control over all of the affairs and decision making of the WeWork Partnership. Furthermore, the general partner of the WeWork Partnership cannot be removed as general partner of the WeWork Partnership without the approval of WeWork. On the basis of WeWork’s control over the WeWork Partnership, the Company believes that the indirect interest of WeWork in the WeWork Partnership is not an “investment security” within the meaning of the 1940 Act. If WeWork were to cease participation in the management of the WeWork Partnership, however, its interest in the WeWork Partnership could be deemed an “investment security,” which could result in WeWork being required to register as an investment company under the 1940 Act and becoming subject to the registration and other requirements of the 1940 Act.

The 1940 Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies. Among other things, the 1940 Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the issuance of stock options and impose certain governance requirements. The Company intends to conduct its operations so that WeWork will not be deemed to be an investment company under the 1940 Act. However, if anything were to happen which would require WeWork to register as an investment company under the 1940 Act, requirements imposed by the 1940 Act, including limitations on its capital structure, ability to transact business with affiliates and ability to compensate key employees, could make it impractical for the Company to continue its business as currently conducted, impair the agreements and arrangements between and among WeWork, the WeWork Partnership, members of its management team and related entities or any combination thereof and materially adversely affect its business, financial condition and results of operations.

Our Charter provides that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our Charter provides that the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and any appellate court thereof is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

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•    any derivative action or proceeding brought on our behalf;

•    any action asserting a breach of fiduciary duty;

•    any action asserting a claim against us or our directors, officers, or employees arising under the Delaware General Corporation Law, our Charter, or our bylaws;

•    any action as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and

•    any action asserting a claim against us that is governed by the internal-affairs doctrine.

This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

Our Charter also provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933 (the "Securities Act").

The choice of forum provisions in our Charter may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. We cannot be certain that a court will decide that this provision is either applicable or enforceable, and if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. In addition, although the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court were facially valid under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum selection clause.

Additional Risks Relating to Ownership of our Class A Common Stock

The price of our Class A Common Stock and warrants may be volatile.

The price of our Class A Common Stock, as well as warrants, may fluctuate due to a variety of factors, including:

•    changes in the industries in which we and our customers operate;

•    developments involving our competitors;

•    changes in laws and regulations affecting our business;

•    variations in our operating performance and the performance of our competitors in general;

•    actual or anticipated fluctuations in our quarterly or annual operating results;

•    publication of research reports by securities analysts about us or our competitors or our industry;

•    the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

•    actions by stockholders, including the sale by the PIPE Investors (defined below) of any of their shares of our Class A Common Stock;

•    additions and departures of key personnel;

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•    commencement of, or involvement in, litigation;

•    changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

•    the volume of shares of our Class A Common Stock available for public sale; and

•    general economic and political conditions, such as the effects of the COVID-19 pandemic, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.

These market and industry factors may materially reduce the market price of our Class A Common Stock and warrants regardless of our operating performance.

In certain instances, NYSE may delist our Class A Common Stock from quotation on its exchange, which could limit investors’ ability to sell and purchase our securities and subject us to trading restrictions.

Our Class A Common Stock is currently listed on the NYSE under the trading symbol “WE.” However, if the price of our Class A Common Stock drops and if the average closing price of our Class A Common Stock is less than $1.00 over a consecutive 30 trading-day period our common stock may be suspended and/or delisted in accordance with Section 802.01C of the NYSE’s Listed Company Manual. If our common stock is not listed on NYSE, we could face significant material adverse consequences, including:

• a limited availability of market quotations for our securities;

• reduced liquidity;

• a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our Class A Common Stock;

• a limited amount of news and analyst coverage for our company; and

• a decreased ability to issue additional securities or obtain additional financing in the future.

If our common stock becomes subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on NYSE, and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore shareholders may have difficulty selling their shares.

We do not intend to pay cash dividends for the foreseeable future.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. We are currently not

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permitted to pay cash dividends under the Credit Agreement. A ny future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deem relevant. As a result, you may not receive any return on an investment in Class A Common Stock unless you sell your Class A Common Stock for a price greater than that which you paid for it.

If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline.

The trading market for our Class A Common Stock will depend in part on the research and reports that analysts publish about our business. We do not have any control over these analysts. If one or more of the analysts downgrade our Class A Common Stock or publish inaccurate or unfavorable research about our business, the price of our Class A Common Stock would likely decline. If few analysts cover us, demand for our Class A Common Stock could decrease and our Class A Common Stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us regularly.

We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our Class A Common Stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation and investigations or past investigations and litigation may resurface in the future. Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business.

Future resales of Class A Common Stock may cause the market price of our securities to drop significantly, even if our business is doing well.

Following the expiration of the lock-up agreements entered into in connection with the Business Combination stockholders of WeWork that were party to such agreements are no longer restricted from selling shares of WeWork common stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of WeWork common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could increase volatility in our share price or reduce the market price of our Class A Common Stock.

The obligations associated with being a public company involve significant expenses and will require significant resources and management attention, which may divert from our business operations.

As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires the filing of annual, quarterly and current reports with respect to a public company’s business and financial condition. The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective internal control over financial reporting. As a result, we will continue to incur significant legal, accounting and other expenses that Legacy WeWork did not previously incur. Our entire management team and many of our other employees need to devote substantial time to compliance, and may not effectively or efficiently manage its transition into a public company.

These rules and regulations will result in us incurring substantial legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these rules and regulations will likely make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

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Non-U.S. holders of our capital stock, in certain situations, could be subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of our capital stock.

We believe that we were, as of the date of the Business Combination, and might be, as of the date of this Form 10-K, a United States real property holding corporation (" USRPHC ") under the Foreign Investment in Real Property Tax Act (" FIRPTA "). Generally, a corporation is a USRPHC if the fair market value of its U.S. real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). If we have been a USRPHC during the shorter of a non-U.S. holder’s holding period for shares of our capital stock or the five-year period preceding such non-U.S. holder’s disposition of such shares of our capital stock, any such non-U.S. holder may be subject to U.S. federal income tax on gain from disposition of those shares of our capital stock under FIRPTA, in which case such non-U.S. holder would also be required to file U.S. federal income tax returns with respect to such gain. In addition, a purchaser of such shares from a non-U.S. holder may be required to withhold U.S. tax in an amount equal to 15% of the gross proceeds from such a purchase.

Non-U.S. holders of our capital stock should consult with their own tax advisors concerning the U.S. federal income tax consequences of the sale, exchange or other disposition of our capital stock.

The historical financial results of Legacy WeWork included elsewhere in this Form 10-K may not be indicative of what WeWork’s actual financial position or results of operations would have been.

The historical financial results of Legacy WeWork included elsewhere in this Form 10-K do not reflect the financial condition, results of operations or cash flows that Legacy WeWork would have achieved as a public company during the periods presented or those WeWork will achieve in the future. This is primarily the result of the following factors: (i) WeWork will incur additional ongoing costs as a result of the Business Combination, including costs related to public company reporting, investor relations and compliance with the Sarbanes Oxley Act; and (ii) WeWork’s capital structure will be different from that reflected in Legacy WeWork’s historical financial statements. WeWork’s financial condition and future results of operations could be materially different from amounts reflected in its historical financial statements included elsewhere in this Form 10-K, so it may be difficult for investors to compare WeWork’s future results to historical results or to evaluate its relative performance or trends in its business.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

WeWork is the leading global flexible workspace provider, serving a membership base of businesses large and small through our network of 779 locations, including 622 Consolidated Locations (as defined in the section entitled "Key Performance Indicators") , around the world as of December 2022. With our global footprint, we have worked to establish ourselves as the preeminent brand within the space-as-a-service category by combining best-in-class locations and design with member-first hospitality and exceptional community experiences. Since new management was instituted in 2020, we immediately began to execute a strategic plan to transform our business. With a more efficient operating model and cost conscious mindset, moving forward we expect to pursue profitable growth and focus on the digitization of our real estate in order to enhance our product offerings, and expand and diversify our membership base, while continuously meeting the growing demand for flexibility.

WeWork’s core business offering provides flexibility across space, time and cost. Whether users are looking for a dedicated desk, a private office or a fully customized floor, our members have the flexibility to choose the amount of space they need and scale with us as their businesses grow. Members also have the optionality to choose the type of membership that works for them, with a range of flexible offerings that provide access to space on a monthly subscription basis, through a multi-year membership agreement or on a pay-as-you-go basis. Additionally, a WeWork membership provides members with portability of cost, giving our members the flexibility to move part or all of an existing commitment to a new market, region or country.

Membership agreements provide our members with access to space along with certain baseline amenities and services, such as private phone booths, internet, high-speed business printers and copiers, mail and packaging handling, front desk services, 24/7 building access, unique common areas and daily enhanced cleaning for no additional cost.

Beyond the amenities offered, we believe that our community team is what sets us apart from other space providers in the industry. With a member-first mindset, our community teams provide an exceptional level of hospitality by not only overseeing onsite operations and supporting day-to-day needs, but also focusing on cultivating meaningful relationships with and between our members to deliver a premium experience.

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By providing all of the overhead services required to find and operate office space, WeWork significantly reduces the complexity and cost of leasing real estate to a simplified membership model.

In the wake of the COVID-19 pandemic, we accelerated our efforts to digitize our real estate offering through the launch of the WeWork All Access and WeWork On Demand products (collectively, "WeWork Access"). WeWork All Access is a monthly subscription-based model that provides members with access to book space at any participating WeWork location within their home country. Through WeWork All Access, members can book dedicated desks, conference rooms and private offices right from their phones – enabling users to choose when, where and how they work. WeWork On Demand provides users pay-as-you-go access to book individual workspace or conference rooms at nearby WeWork locations, giving members the flexibility to book individual workspace by the hour or conference rooms by the day on the WeWork On Demand mobile app.

Key Performance Indicators

To evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions, we rely on our financial results prepared in accordance with GAAP, non-GAAP measures, and the following key performance indicators.

For certain key performance indicators, the amounts we present are based on whether the indicator relates to a location for which the revenues and expenses of the location are consolidated within our results of operations ("Consolidated Locations") or whether the indicator relates to a location for which the revenues and expenses are not consolidated within our results of operations, but for which we are entitled to a management fee for our advisory services ("Unconsolidated Locations"). As of December 31, 2022, our locations in India, the Greater China region, Israel, and certain Common Desk Inc. ("Common Desk") locations under management agreements are our only Unconsolidated Locations.

Unless otherwise noted, we present our key performance indicators as an aggregation of Consolidated Locations and Unconsolidated Locations ("Systemwide Locations"). As presented in this Form 10-K, certain amounts, percentages and other figures have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars or percentage amounts of changes may not represent the arithmetic summation or calculation of the figures that precede them. Any totals of key performance indicators presented as of a period end reflect the count as of the first day of the last month in the period. First-of-the-month counts are used because the economics of those counts generally impact the results for that monthly period, and most move-ins and openings occur on the first day of the month.

Workstation Capacity

Workstation capacity represents the estimated number of workstations available at total open locations.

Workstation capacity is a key indicator of our scale and our capacity to sell memberships across our network of locations. Our future sales and marketing expenses and capital expenditures will be a function of our efforts to increase workstation capacity. The cost at which we build out our workstations affects our capital expenditures, and the cost at which we acquire memberships and fill our workstations affects our sales and marketing expenses. As of December 2022, we had total workstation capacity of 906 thousand, down less than 1% from 912 thousand as of December 2021, with the decrease as a direct result of the Company's continued operational restructuring efforts to exit leases throughout 2022.

Workstation capacity is presented in this Form 10-K rounded to the nearest thousand. Workstation capacity is based on management’s best estimates of capacity at a location based on our inventory management system and sales layouts and is not meant to represent the actual count of workstations at our locations.

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Memberships

Memberships are the cumulative number of physical memberships, WeWork All Access memberships, and WeMemberships (the latter of which are certain predecessor products). Physical memberships provide access to a workstation and represent the number of memberships from our various product offerings, including our standard dedicated desks, private offices and customized floors. WeWork All Access memberships are monthly memberships providing an individual with access to participating WeWork locations. WeMemberships are legacy products that provide member user login access to the WeWork member network online or through the mobile application as well as access to service offerings and the right to reserve space on an à la carte basis, among other benefits. Each physical membership, WeWork All Access membership, and other legacy memberships is considered to be one membership.

The number of memberships is a key indicator of the adoption of our global membership network, the scale and reach of our network and our ability to fill our locations with members. Memberships also represent monetization opportunities from our current and future service offerings. Memberships are presented in this Form 10-K rounded to the nearest thousand. Memberships can differ from the number of individuals using workspace at our locations for a number of reasons, including members utilizing workspace for fewer individuals than the space was designed to accommodate.

As of December 2022, we had 754 thousand total memberships, an increase of 19% from 635 thousand memberships as of December 2021. This increase in total memberships included a 16% increase in physical memberships and a 54% increase in WeWork All Access and Other Legacy Memberships.

Physical Occupancy Rate

Physical occupancy rates are calculated by dividing physical memberships by workstation capacity in a location. Physical occupancy rates are a way of measuring how full our workspaces are. As of December 2022, our physical occupancy rate was 75%, compared to 65% as of December 2021. The increase in physical occupancy rate was primarily due to a 16% increase in physical memberships as members continue returning to the office.

Physical Membership Average Revenue per Membership

Physical membership monthly average revenue per membership ("ARPM") is calculated by dividing membership and service revenue less WeWork Access revenue and Unconsolidated Locations management fee revenue by Consolidated Locations cumulative physical memberships in the period. For example, a member that is active for ten months of the year would represent ten cumulative physical memberships. Physical membership monthly ARPM is a way of measuring the impact of revenue due to changes in price or rate. For the year ended December 31, 2022, our physical membership monthly ARPM was $481, compared to $487 as of December 31, 2021.

A calculation of Physical Membership Monthly ARPM is set forth below:

(Amounts in millions, except memberships in thousands and ARPM in ones)

Year Ended December 31,

Membership and service revenue

WeWork Access revenue

Unconsolidated Locations management fee revenue

Consolidated Locations Physical Membership and Service revenue

Consolidated Locations cumulative physical memberships

Physical Membership Monthly ARPM

Enterprise Physical Membership Percentage

Enterprise memberships represent memberships attributable to Enterprise Members, which we define as organizations with 500 or more full-time employees. Enterprise Members are strategically important for

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our business as they typically sign membership agreements with longer-term commitments and for multiple solutions, which enhances our revenue visibility.

Enterprise physical membership percentage represents the percentage of our memberships attributable to these organizations. There is no minimum number of workstations that an organization needs to reserve in order to be considered an Enterprise Member. For example, an organization with 700 full-time employees that pays for 50 of its employees to occupy workstations at our locations would be considered one Enterprise Member with 50 memberships. As of December 2022, 46% of our Consolidated Locations physical memberships were attributable to Enterprise Members, down from 47% as of December 2021. For the year ended December 31, 2022, Enterprise Memberships accounted for 46% of membership and service revenue compared to 48% for the year ended December 31, 2021.

Non-GAAP Financial Measures

To evaluate the performance of our business, we rely on both our results of operations prepared in accordance with GAAP as well as certain non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, and constant-currency presentation of certain financial measures. These non-GAAP measures, as discussed further below, are not defined or calculated under principles, standards or rules that comprise GAAP. Accordingly, the non-GAAP financial measures we use and refer to should not be viewed as a substitute for financial measures calculated in accordance with GAAP and we encourage you not to rely on any single financial measure to evaluate our business, financial condition, or results of operations. These non-GAAP financial measures are supplemental measures that we believe provide management and our investors with a more detailed understanding of our performance. Our definitions of Adjusted EBITDA, Free Cash Flow, and constant-currency described below are specific to our business and you should not assume that they are comparable to similarly titled financial measures that may be presented by other companies.

Adjusted EBITDA

We supplement our GAAP financial results by evaluating Adjusted EBITDA, which is a non-GAAP measure. We define "Adjusted EBITDA" as net loss before income tax (benefit) provision, interest and other (income) expenses, net, depreciation and amortization, restructuring and other related (gains) costs, impairment expense/(gain on sale) of goodwill, intangibles and other assets, stock-based compensation expense, stock-based payments for services rendered by consultants, change in fair value of contingent consideration liabilities, legal, tax and regulatory reserves or settlements, legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, as defined in Note 1 of the Notes to the Consolidated Financial Statements included in this Form 10-K, net of any insurance or other recoveries, and expense related to mergers, acquisitions, divestitures and capital raising activities.

A reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA is set forth below:

Year Ended December 31,

(Amounts in millions)

Net loss (1)

Income tax (benefit) provision (1)

Interest and other (income) expenses, net (1)

Depreciation and amortization (1)

Restructuring and other related (gains) costs (1)

Impairment expense/(gain on sale) of goodwill, intangibles and other assets (1)

Stock-based compensation expense (2)

Other, net (3)

Adjusted EBITDA

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(1) As presented on our Consolidated Statements of Operations.

(2) Represents the non-cash expense of our equity compensation arrangements for employees, directors, and consultants.

(3) Other, net includes the remaining adjustments described above and are included in Selling, general and administrative expenses on the Consolidated Statements of Operations.

When used in conjunction with GAAP financial measures, we believe that Adjusted EBITDA is a useful supplemental measure of operating performance because it facilitates comparisons of historical performance by excluding non-cash items such as stock-based payments, fair market value adjustments and impairment charges and other amounts not directly attributable to our primary operations, such as the impact of restructuring costs, acquisitions, disposals, non-routine investigations, litigation and settlements. Depreciation and amortization relate primarily to the depreciation of our leasehold improvements, equipment and furniture. These capital expenditures are incurred and capitalized subsequent to the commencement of our leases and are depreciated over the lesser of the useful life of the asset or the term of the lease. The initial capital expenditures are assessed by management as an investing activity, and the related depreciation and amortization are non-cash charges that are not considered in management’s assessment of the daily operating performance of our locations. As a result the impact of depreciation and amortization is excluded from our calculation of Adjusted EBITDA. Restructuring and other related (gains) costs relate primarily to the decision to slow growth and terminate leases and are therefore not ordinary course costs directly attributable to the daily operation of our locations. In addition, while the legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions are cash expenses, these are not expected to be recurring after the matters are resolved and they do not represent expenses necessary for our business operations.

Adjusted EBITDA is also a key metric used internally by our management to evaluate performance and develop internal budgets and forecasts.

Adjusted EBITDA has limitations as an analytical tool, should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and does not provide a complete understanding of our operating results as a whole. Some of these limitations are:

• it does not reflect changes in, or cash requirements for, our working capital needs;

• it does not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt;

• it does not reflect our tax expense or the cash requirements to pay our taxes;

• it does not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments;

• although stock-based compensation expenses are non-cash charges, we rely on equity compensation to compensate and incentivize employees, directors and certain consultants, and we may continue to do so in the future; and

• although depreciation, amortization and impairments are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and this non-GAAP measure does not reflect any cash requirements for such replacements.

Free Cash Flow

Because of the limitations of Adjusted EBITDA, as noted above, we also supplement our GAAP results by evaluating Free Cash Flow, a non-GAAP measure. We define "Free Cash Flow" as net cash provided by (used in) operating activities less purchases of property, equipment and capitalized software, each as presented in the Company's Consolidated Statements of Cash Flows and calculated in accordance with GAAP.

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The prior years' financial information has been reclassified to conform to the current year presentation for the aggregation of capitalized software of $47 million, $40 million and $23 million during the years ended December 31, 2022, 2021 and 2020, respectively, and purchases of property and equipment into one financial statement line item, "Purchases of property, equipment and capitalized software".

A reconciliation of net cash provided by (used in) operating activities, the most comparable GAAP measure, to Free Cash Flow is set forth below:

Year Ended December 31,

(Amounts in millions)

Net cash provided by (used in) operating activities (1)

Less: Purchases of property, equipment and capitalized software (1)

Free Cash Flow

(1) As presented on our Consolidated Statements of Cash Flows.

Free Cash Flow is both a performance measure and a liquidity measure that we believe provides useful information to management and investors about the amount of cash generated by or used in the business. Free Cash Flow is also a key metric used internally by our management to develop internal budgets, forecasts and performance targets.

Free Cash Flow has limitations as an analytical tool, should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and does not provide a complete understanding of our results and liquidity as a whole. Some of these limitations are:

• it only includes cash outflows for purchases of property, equipment and capitalized software and not for other investing cash flow activity or financing cash flow activity;

• it is subject to variation between periods as a result of changes in working capital and changes in timing of receipts and disbursements;

• although non-cash GAAP straight-line lease costs are non-cash adjustments, these charges generally reflect amounts we will be required to pay our landlords in cash over the lifetime of our leases; and

• although stock-based compensation expenses are non-cash charges, we rely on equity compensation to compensate and incentivize employees, directors and certain consultants, and we may continue to do so in the future.

Constant-Currency

The U.S. dollar is the functional currency of our consolidated and unconsolidated entities operating in the United States. For our consolidated and unconsolidated entities operating outside of the United States, we generally assign the relevant local currency as the functional currency, as the local currency is generally the principal currency of the economic environment in which the foreign entity primarily generates and expends cash. As exchange rates may fluctuate between periods, revenue and operating expenses, when converted into U.S. dollars, may also fluctuate between periods. During the years ended December 31, 2022 and 2021 our results of operations were primarily impacted by fluctuations in the U.S. dollar-British Pound and U.S. dollar-Euro.

We supplement our GAAP financial results and Adjusted EBITDA by evaluating our results on a constant-currency basis. We believe that the disclosure of our financial results on a constant-currency basis is a useful supplemental measure of operating performance because it facilitates comparisons of historical performance by excluding the effects of foreign currency volatility. We calculate our constant-currency results by translating the prior year functional currency results at the current period actual foreign currency exchange rate. The presentation of financial results on a constant-currency basis should be

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considered in addition to, but not a substitute for, measures of financial performance reported in accordance with GAAP.

The following table sets forth the constant-currency impact of foreign exchange for certain financial measures on the Company’s Consolidated Results of Operations and Adjusted EBITDA for the years ended December 31, 2022 and 2021:

Year Ended December 31,

Change

Change

(Amounts in millions, except percentages)

Actual Currency

Actual Currency

FX Impact

Actual Currency

Constant Currency

Revenue

Expenses:

Location operating expenses—cost of revenue (1)

Pre-opening location expenses

Selling, general and administrative expenses (2)

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Depreciation and amortization

Total expenses

Loss from operations

Adjusted EBITDA (3)

(1) Exclusive of depreciation and amortization shown separately on the Depreciation and amortization line in the amount of $602 million and $672 million for the years ended December 31, 2022 and 2021, respectively.

(2) Includes cost of revenue in the amount of $35 million and $91 million during the years ended December 31, 2022 and 2021, respectively.

(3) See section entitled " Key Performance Indicators — Non-GAAP Financial Measures — Adjusted EBITDA " for a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA.

The following table sets forth the constant-currency impact of foreign exchange for certain financial measures on the Company’s Consolidated Results of Operations and Adjusted EBITDA for the years ended December 31, 2021 and 2020:

Year Ended December 31,

Change

Change

(Amounts in millions, except percentages)

Actual Currency

Actual Currency

FX Impact

Actual Currency

Constant Currency

Revenue

Expenses:

Location operating expenses—cost of revenue (1)

Pre-opening location expenses

Selling, general and administrative expenses (2)

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Depreciation and amortization

Total expenses

Loss from operations

Adjusted EBITDA (3)

(1) Exclusive of depreciation and amortization shown separately on the Depreciation and amortization line in the amount of $672 million and $715 million for the years ended December 31, 2021 and 2020, respectively.

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(2) Includes cost of revenue in the amount of $91 million and $249 million during the years ended December 31, 2021 and 2020, respectively.

(3) See section entitled " Key Performance Indicators — Non-GAAP Financial Measures — Adjusted EBITDA " for a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA.

Key Factors Affecting the Comparability of Our Results

Foreign Currency Translation

As a global company, the comparability of our results of operations may be impacted by fluctuations in the foreign currency exchange rates used to translate our financial results to the U.S. dollar in countries where the U.S. dollar is not the functional currency. As the U.S. dollar strengthens relative to the functional currencies of our international operations, our international revenues will be unfavorably impacted, and as the U.S. dollar weakens relative to other functional currencies our international revenues will be favorably impacted.

See section above entitled " Key Performance Indicators — Non-GAAP Financial Measures — Constant Currency " for more information on how we supplement our financial results by evaluating them on a constant currency basis.

Restructuring, Impairments and Asset Dispositions

In September 2019, we commenced an operational restructuring program to improve our financial position and refocus on our core space-as-a-service business, establishing an expected path to profitable growth.

During the year ended December 31, 2021, we were successful in achieving a 37% reduction totaling $594 million in total costs associated with Selling, general and administrative expenses as compared to the year ended December 31, 2020. During the year ended December 31, 2022, we achieved an additional 27% reduction totaling $276 million compared to the year ended December 31, 2021. During the year ended December 31, 2022, we terminated leases associated with a total of 35 previously opened locations and 5 pre-open locations compared to 98 previously opened locations and 8 pre-open locations terminated during the year ended December 31, 2021, bringing the total terminations since the beginning of the restructuring to 252.

In conjunction with the efforts to right-size our real estate portfolio, the Company has also successfully amended over 500 leases for a combination of partial terminations to reduce our leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes. These amendments and full and partial lease terminations have resulted in an estimated reduction of approximately $10.7 billion in total future undiscounted fixed minimum lease cost payments that were scheduled to be paid over the life of the original executed lease agreements, including changes to the obligations of ChinaCo which occurred during the period it was consolidated.

Management is continuing to evaluate our real estate portfolio in connection with our ongoing restructuring efforts and expects to exit additional leases over the remainder of the restructuring period. The Company anticipates that there may be additional impairment, restructuring and related costs during 2023, consisting primarily of lease termination charges, other exit costs and costs related to ceased use buildings, as the Company is still in the process of finalizing its operational restructuring plans.

In connection with our operational restructuring program, and our refocus on our core space-as-a-service offering, we were successful in the disposition of certain non-core operations in 2020 including:

• Flatiron, acquired in 2017, was sold in August 2020;

• SpaceIQ, a workplace management software platform acquired in 2019, was sold in May 2020;

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• Meetup, a web-based platform that brings people together for face to face interactions acquired in 2017, was sold in March 2020, with the Company retaining a 9% noncontrolling equity interest, accounted for as an equity method investment;

• Managed by Q, a workplace management platform acquired in 2019, was sold in March 2020;

• The 424 Fifth Venture (see Note 10 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details) real estate investment, acquired in 2019, was sold in March 2020; and

• Teem, a software-as-a-service workplace management solution acquired in 2018, was sold in January 2020.

There were no dispositions during the years ended December 31, 2022 or 2021. Revenue generated prior to the disposition of the non-core offerings listed above is recorded in Other Revenue during the year ended December 31, 2020.

As of December 31, 2022, we believe that the positive changes we have made and our focused business plan with enhanced cost discipline will set the stage for our future success as we continue to increase our membership offerings and expand our footprint strategically through flexible and capital light growth alternatives .

As the Company continues to execute on its operational restructuring program and experiences the benefits of our efforts to create a leaner, more efficient organization, results may be less comparable period over period.

See Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information regarding our restructuring activities and impairment.

COVID-19 and Impact on our Business

In late 2019, an outbreak of COVID-19 had emerged and by March 11, 2020, the World Health Organization declared COVID-19 a pandemic. Since that time, COVID-19 has resulted in various governments imposing numerous restrictions, including travel bans, quarantines, stay-at-home orders, social distancing requirements and mandatory closure of “non-essential” businesses.

The Company had been adversely impacted by member churn, non-payment (or delayed payment) from members or members seeking payment concessions or deferrals or cancellations as a result of the COVID-19 pandemic. Throughout 2020, Consolidated Locations physical memberships declined from 584 thousand as of December 2019, including 59 thousand physical memberships in ChinaCo prior to the ChinaCo Deconsolidation (discussed below), to 387 thousand as of December 2020. In 2021, Consolidated Locations physical memberships further declined to 378 thousand as of March 2021, and started to rebound in the second quarter of 2021 resulting in 469 thousand Consolidated Locations physical memberships as of December 2021. These changes in physical memberships negatively affected our results of operations throughout 2020 and 2021. In order to retain our members, we offered additional discounts or deferrals that negatively impacted our net loss, net cash provided by (used in) operating activities, Adjusted EBITDA and Free Cash Flow. The physical monthly ARPM declined from $503 to $487 during the years ended December 31, 2020 and December 31, 2021, respectively. Although we have experienced indicators of recovery from the COVID-19 pandemic through the increase in physical memberships to 547 thousand as of December 2022, the physical monthly ARPM during the year ended December 31, 2022, declined slightly to $481 which is mainly attributable to the foreign currency impact on revenue as shown above in section entitled "— Key Performance Indicators — Constant Currency".

The Company is continuing to actively monitor its accounts receivable balances in response to the COVID-19 pandemic and ceased recording revenue on certain existing contracts where collectability is

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not probable. During the year ended December 31, 2022, there were no significant additions or recoveries on such contracts.

In the wake of the onset of the COVID-19 pandemic, we accelerated our efforts to digitize our real estate offering through the launch of the WeWork Access products.

ChinaCo Deconsolidation

In September 2020, the shareholders of ChinaCo executed a restructuring and Series A subscription agreement (the "ChinaCo Agreement"). Pursuant to the ChinaCo Agreement, among other things, the rights of the ChinaCo shareholders were amended such that upon the Initial Investment Closing, WeWork no longer retained the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and as a result, WeWork was no longer the primary beneficiary of ChinaCo and ChinaCo was deconsolidated from the Company's Consolidated Financial Statements on October 2, 2020 (the "ChinaCo Deconsolidation"). As such, the Company's consolidated results of operations for the year ended December 31, 2020 include nine months of consolidated ChinaCo revenue and expense activity. Beginning on October 2, 2020, our remaining 21.6% ordinary share investment, valued at $26 million upon the ChinaCo Deconsolidation, is accounted for as an unconsolidated equity method investment.

During the fourth quarter of 2020, the Company recorded a loss on the ChinaCo Deconsolidation of $153 million included in impairment/(gain on sale) of goodwill, intangibles and other assets in the consolidated statement of operations. During the first quarter of 2021, the Company discontinued applying the equity method on the ChinaCo investment when the carrying amount was reduced to zero, resulting in a loss of $29 million included in equity method investments in the Consolidated Statements of Operations.

See also Note 10 and Note 13 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for defined terms and additional details regarding the ChinaCo Agreement and the ChinaCo Deconsolidation, and discontinuation of applying the equity method, respectively.

Components of Results of Operations

We assess the performance of our locations differently based on whether the revenues and expenses of the location are consolidated within our results of operations, which we refer to as Consolidated Locations, or whether the revenues and expenses of the location are not consolidated within our results of operations but for which we are entitled to a management fee for our services, such as locations (“IndiaCo locations,” "ChinaCo locations," "Israel locations," and certain Common Desk locations, and collectively, Unconsolidated Locations) operated by WeWork India Services Private Limited, TBP, Ampa, and Common Desk, respectively. Beginning with the fourth quarter of 2020, ChinaCo locations are included in Unconsolidated Locations. Prior to and during the nine months ended September 30, 2020, ChinaCo locations were included in Consolidated Locations. The term “locations” includes only Consolidated Locations when used in the sections entitled “—Components of Results of Operations" and "—Comparison of the years ended December 31, 2022, 2021 and 2020” but includes both Consolidated Locations and Unconsolidated Locations when used elsewhere in this Form 10-K.

Revenue

Revenue includes membership and service revenue as well as other revenue as described below.

Membership revenue represents membership fees, net of discounts from sales of physical memberships ("WeWork Membership revenue") and membership fees, net of discounts from sales of WeWork All Access Memberships, WeWork On Demand and WeMemberships (collectively, "WeWork Access revenue"). We derive a significant majority of our revenue from recurring membership fees. The price of each membership varies based on the type of workplace solution selected by the member, the geographic location of the space occupied, and any monthly allowances for business services, such as conference room reservations and printing or copying allotments, that are included in the base membership fee. All

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memberships include access to our community through the WeWork app. Membership revenue is recognized monthly, on a ratable basis, over the life of the agreement, as access to space is provided. From time to time, members may terminate long term membership agreements for an early termination fee. The early termination fees are recognized as a component of Membership revenue and is amortized over the remaining duration of the membership agreement.

Service revenue primarily includes additional billings to members for ancillary business services in excess of the monthly allowances mentioned above. Services offered to members include access to conference rooms, printing, photocopies, initial set-up fees, phone and IT services, parking fees and other services.

Service revenue also includes commissions we earn from third-party service providers. We offer access to a variety of business and other services to our members, often at exclusive rates, and receive a percentage of the sale when one of our members purchases a service from a third party. These services range from business services to lifestyle perks. Service revenue also includes any management fee income for services provided to IndiaCo locations, ChinaCo locations, Israel locations (subsequent to the franchise agreement on June 1, 2021), and certain Common Desk locations. Service revenue is recognized on a monthly basis as the services are provided.

Service revenue does not include any revenue recognized related to other non-core offerings not related to our space-as-a-service offering.

Other revenue primarily includes our former Powered by We design and development services in which we offered on-site office management that provides integrated design, construction and space management services.

Design and development services performed are recognized as revenue over time based on a percentage of contract costs incurred to date compared to the total estimated contract cost. The Company identifies only the specific costs incurred that contribute to the Company’s progress in satisfying the performance obligation. Contracts are generally segmented between types of services, such as consulting contracts, design and construction contracts, and operate contracts. Revenues related to each respective type of contract are recognized as or when the respective performance obligations are satisfied. When total cost estimates for these types of arrangements exceed revenues in a fixed-price arrangement, the estimated losses are recognized immediately.

Other revenue also includes revenue generated from various other non-core offerings, not directly related to the revenue we earn under our membership agreements through which we provide space-as-a-service. For example, the revenue generated by the following during the periods prior to their disposition or wind down during the year ended December 31, 2020, are all classified as other revenue: Flatiron, Meetup, SpaceIQ, Managed by Q, Teem, Prolific, Waltz and WeGrow (collectively, our "non-core operations" or "non-core offerings"). See the section entitled "—Key Factors Affecting Comparability of Our Results—Restructuring, Impairment, and Asset Dispositions" above.

Also included in other revenue is other management and advisory fees earned. Other revenues are generally recognized over time, on a monthly basis, as the services are performed.

Location Operating Expenses

Location operating expenses include the day-to-day costs of operating an open location and exclude pre-opening costs, depreciation and amortization and general sales and marketing, which are separately recorded.

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Lease Cost

Our most significant location operating expense is lease cost. Lease cost is recognized on a straight-line basis over the life of the lease term in accordance with GAAP based on the following three key components:

• Lease cost contractually paid or payable represents cash payments due for base and contingent rent, common area maintenance amounts and real estate taxes payable under the Company’s lease agreements, recorded on an accrual basis of accounting, regardless of the timing of when such amounts were actually paid.

• Amortization of lease incentives represents the amortization of amounts received or receivable for tenant improvement allowances and broker commissions (collectively, “lease incentives”), amortized on a straight-line basis over the terms of our leases.

• Non-cash GAAP straight-line lease cost represents the adjustment required under GAAP to recognize the impact of "free rent" periods and lease cost escalation clauses on a straight-line basis over the term of the lease. Non-cash GAAP straight-line lease cost also includes the amortization of capitalized initial direct costs associated with obtaining a lease.

Other Location Operating Expenses

Other location operating expenses typically include utilities, ongoing repairs and maintenance, cleaning expenses, office expenses, security expenses, credit card processing fees and food and beverage costs. Location operating expenses also include personnel and related costs for the teams managing our community operations, including member relations, new member sales and member retention and facilities management.

Pre-Opening Location Expenses

Pre-opening location expenses include all expenses incurred while a location is not open for members. The primary components of pre-opening location expenses are lease cost expense, including our share of tenancy costs (including real estate and related taxes and common area maintenance charges), utilities, cleaning, personnel and related expenses and other costs incurred prior to generating revenue. Personnel expenses are included in pre-opening location expenses as we staff our locations prior to their opening to help ensure a smooth opening and a successful member move-in experience. Pre-opening location expenses also consist of expenses incurred during the period in which a workspace location has been closed for member operations and all members have been relocated to a new workspace location, prior to management's decision to enter negotiations to terminate a lease.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses consist primarily of personnel and stock-based compensation expenses related to our corporate employees, technology, consulting, legal and other professional services expenses, and costs for our corporate offices, such as costs associated with our billings, collections, purchasing and accounts payable functions. Also included in SG&A expenses are general sales and marketing efforts, including advertising costs, member referral fees, and costs associated with strategic marketing events, and various other costs we incur to manage and support our business.

SG&A expenses also include cost of goods sold in connection with our former Powered by We on-site office design, development and management solutions and the costs of services or goods sold related to our various other non-core offerings described above in the periods prior to their disposition or wind down.

Also included are corporate design, development, warehousing, logistics and real estate costs and expenses incurred researching and pursuing new markets, solutions and services, and other expenses related to the Company's growth and global expansion incurred during periods when the Company was

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focused on expansion. These costs include non-capitalized personnel and related expenses for our development, design, product, research, real estate, growth talent acquisition, mergers and acquisitions, legal, technology research and development teams and related professional fees and other expenses incurred such as growth related recruiting fees, employee relocation costs, due diligence, integration costs, transaction costs, contingent consideration fair value adjustments relating to acquisitions, write-off of previously capitalized costs for which the Company is no longer moving forward with the lease or project and other routine asset impairments and write-offs.

We expect that overall SG&A expenses will decrease as a percentage of revenue over time as we continue to execute on our operational restructuring plans aimed to enhance our operating efficiency and leverage the historical investments in people and technology that we have made to support the growth of our global community.

Restructuring and Other Related (Gains) Costs and Impairment Expense/(Gain on Sale) of Goodwill, Intangibles and Other Assets

See the section entitled " — Key Factors Affecting Comparability of Our Results—Restructuring and Impairments" above for details surrounding the components of these financial statement line items.

Depreciation and Amortization Expense

Depreciation and amortization primarily relates to the depreciation expense recorded on our property and equipment, the most significant component of which are the leasehold improvements made to our real estate portfolio.

Interest and Other Income (Expense)

Interest and other income (expense) is comprised of interest income, interest expense, earnings from equity method and other investments, foreign currency gain (loss), and gain (loss) from change in fair value of warrant liabilities.

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Consolidated Results of Operations

The following table sets forth the Company’s Consolidated Results of Operations and other key metrics for the years ended December 31, 2022, 2021 and 2020:

(Amounts in millions)

Year Ended December 31,

Consolidated Statements of Operations information:

Revenue:

Consolidated Locations membership and service revenue

Unconsolidated Locations management fee revenue

Other revenue

Total revenue

Expenses:

Location operating expenses—cost of revenue (1)

Pre-opening location expenses

Selling, general and administrative expenses (2)

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Depreciation and amortization

Total expenses

Loss from operations

Interest and other income (expense), net

Pre-tax loss

Income tax benefit (provision)

Net loss

Noncontrolling interests

Net loss attributable to WeWork Inc.

(1) Exclusive of depreciation and amortization shown separately on the depreciation and amortization line in the amount of $602 million, $672 million and $715 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(2) Includes cost of revenue in the amount of $35 million, $91 million and $249 million during the years ended December 31, 2022, 2021 and 2020, respectively.

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Other key performance indicators (in thousands, except for percentages):

December 31,

Consolidated Locations

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships (1)

Physical Occupancy Rate

Enterprise Physical Membership Percentage

Unconsolidated Locations

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships

Physical Occupancy Rate

Systemwide Locations

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships (1)

Physical Occupancy Rate

(1) Consolidated Locations and Systemwide Locations Memberships include WeMemberships of 2 thousand, 3 thousand and 6 thousand as of December 2022, 2021 and 2020, respectively. WeMemberships are legacy products that provide member user login access to the WeWork member network online or through the mobile application as well as access to service offerings and the right to reserve space on an à la carte basis, among other benefits.

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Consolidated Results of Operations as a Percentage of Revenue

The following table sets forth our Consolidated Statements of Operations information as a percentage of revenue for the years ended December 31, 2022, 2021 and 2020:

Year Ended December 31,

Revenue

Expenses:

Location operating expenses—cost of revenue (1)

Pre-opening location expenses

Selling, general and administrative expenses (1)

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Depreciation and amortization

Total operating expenses

Loss from operations

Interest and other income (expense), net

Pre-tax loss

Income tax benefit (provision)

Net loss

Noncontrolling interests

Net loss attributable to WeWork Inc.

(1) Exclusive of depreciation and amortization shown separately on the depreciation and amortization line.

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Comparison of the years ended December 31, 2022, 2021 and 2020

Revenue

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in million, except percentages)

Physical membership and service revenue

WeWork Access revenue

Total membership and service revenue

Other revenue

Total revenue

Foreign currency impact

Constant-currency total revenue

Total revenue increased $675 million and 26%, or 33% on a constant-currency basis. This increase was primarily driven by total membership and service revenue, which increased $734 million to $3,201 million for the year ended December 31, 2022, from $2,467 million for the year ended December 31, 2021. The increase in membership and service revenue was primarily driven by a 17% increase in physical memberships to approximately 547 thousand physical memberships as of December 2022 from approximately 469 thousand physical memberships as of December 2021, resulting in monthly average physical memberships increasing 28% to approximately 521 thousand for the year ended December 31, 2022 from approximately 408 thousand monthly average physical memberships for the year ended December 31, 2021. Physical membership monthly ARPM has remained consistent for the years ended December 31, 2022 and 2021, which is mainly attributable to the negative foreign currency impact seen above. See section below entitled "Quarterly Results of Operations" for the physical memberships as of each sequential quarterly period.

In response to the COVID-19 pandemic affecting physical memberships and related revenues, we continue to focus our efforts on digitizing our real estate offering through WeWork All Access and WeWork On Demand, which has resulted in an increase of All Access memberships to approximately 70 thousand as of December 2022 from approximately 45 thousand as of December 2021. The increase in WeWork All Access memberships also resulted in an increase of our WeWork Access revenue to $178 million during the year ended December 31, 2022 from $71 million during the year ended December 31, 2021. See section above entitled "Key Factors Affecting the Comparability of Our Results - COVID-19 and Impact on our Business" for further details on COVID-19.

The increases in revenue discussed above were partially offset by a 57% decrease in other revenue to $44 million for the year ended December 31, 2022, from $103 million for the year ended December 31, 2021. This decrease was primarily driven by the decrease in revenue to $23 million from $69 million for the years ended December 31, 2022 and 2021, respectively, related to the 424 Fifth Property development agreement, which reached substantial completion during the three months ended June 30, 2022. See Note 19 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information on the development agreement.

See Note 19 and Note 28 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details on remaining revenue commitments and geographic concentration of revenue, respectively.

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Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Physical membership and service revenue

WeWork Access revenue

Total membership and service revenue

Other revenue

Total revenue

Foreign currency impact

Constant-currency total revenue

ChinaCo included in consolidated results:

ChinaCo Membership and service revenue

ChinaCo Other revenue

Total revenue excluding ChinaCo

Total revenue decreased $846 million primarily driven by membership and service revenue, which decreased $666 million to $2,467 million for the year ended December 31, 2021, from $3,133 million for the year ended December 31, 2020. The decrease in membership and service revenue was primarily driven by a 21% decrease in monthly average physical memberships to approximately 408 thousand for the year ended December 31, 2021 from approximately 518 thousand monthly average physical memberships for the year ended December 31, 2020. We also continued to offer COVID-19 related discounts to retain our members, decreasing the average revenue per physical member by 3% from for the year ended December 31, 2021 compared to the year ended December 31, 2020. Throughout 2021, the Company reached settlement agreements with members on certain contracts in which we ceased recognizing revenue for where we deemed collectability was not probable previously and recognized revenue related to these recoveries of approximately $19 million during the year ended December 31, 2021. For additional information, see the section entitled "Key Factors Affecting the Comparability of Our Results—COVID-19 and Impact on our Business" above. In response to the COVID-19 pandemic and the decline in average physical memberships during the year ended December 31, 2021, we accelerated our efforts to digitize our real estate offering through the launch of the WeWork All Access and WeWork On Demand products in 2021, attributing to $71 million of revenue during the year ended December 31, 2021.

Included in net decreases in membership and service revenue discussed above was a decrease of approximately $204 million in membership and service revenue related to ChinaCo. ChinaCo was deconsolidated as of October 2, 2020 and therefore contributed to consolidated membership and service revenue for nine months during the year ended December 31, 2020 but not during the same period in 2021.

Additionally, there was a 64% decrease in other revenue, which decreased to $103 million for the year ended December 31, 2021, from $283 million for the year ended December 31, 2020. This $180 million decrease primarily related to a $122 million decrease in revenue generated from our Powered by We solution, primarily Powered by We development services. Included within 2021 Powered by We development services is approximately $69 million related to a development project scheduled to be completed during 2022. There was also a $48 million decrease in other revenue primarily due to the sale of non-core ventures that were sold in 2020 as a result of our plan to refocus on our core space-as-a-service business. The remaining $10 million net decrease is related to decreases in revenue from various other offerings, of which $2 million related to ChinaCo revenue.

See Note 19 and Note 28 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details on remaining revenue commitments and geographic concentration of revenue, respectively.

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Location Operating Expenses

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Location operating expenses

Impact of foreign exchange

Constant-currency location operating expenses

Location operating expenses decreased $171 million and 6%, or 1% on a constant-currency basis. This decrease was due primarily to continued lease terminations and a decline in real estate operating lease costs primarily as a result of COVID-19 and related cost cutting strategies. As a percentage of total revenue, location operating expenses for the year ended December 31, 2022 decreased by 30 percentage points to 90% compared to 120% for the year ended December 31, 2021. The decrease in location operating expenses as a percentage of total revenue is attributed to both our continued cost cutting strategies compounded by a period over period increase in revenue discussed above.

The Company terminated leases associated with a total of 35 previously open locations and 5 pre-open locations during the year ended December 31, 2022 and 98 previously open locations and 8 pre-open locations during the year ended December 31, 2021. The location decreases were partially offset by the opening of 36 locations and acquired 4 Consolidated Locations as part of the Common Desk acquisition during the year ended December 31, 2022 and the opening of 30 locations during the year ended December 31, 2021. During the year ended December 31, 2022, the Company also successfully amended over 70 leases which include partial terminations to reduce our leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes.

Our most significant location operating expense is real estate operating lease cost, which includes the following components and changes:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total real estate operating lease cost

The following table includes the components of real estate operating lease cost included in location operating expenses as a percentage of membership revenue:

Year Ended December 31,

Change %

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total real estate operating lease cost

The $126 million decrease in non-cash GAAP straight-line lease cost was driven by continued lease terminations during the year ended December 31, 2022, decreases in lease cost escalations and the end of free rent periods. The decrease in non-cash GAAP straight-line lease cost is also attributed to the decrease in our weighted average remaining lease term. The impact of straight-lining lease cost typically increases straight-line lease cost adjustments in the first half of the life of a lease, when lease cost recorded in accordance with GAAP exceeds cash payments made, and then decreases lease cost in the

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second half of the life of the lease, when lease cost is less than the cash payments required. The impact of straight-lining of lease cost nets to zero over the life of a lease.

The $60 million decrease in lease cost contractually paid or payable was generally due to continued lease terminations and partially offset by amendments during the year ended December 31, 2022.

The $13 million decrease in amortization of lease incentives benefit was primarily due to locations that incurred amortization of lease incentive benefits during the year ended December 31, 2021 no longer incurring amortization during the year ended December 31, 2022 due to the lease terminations discussed above.

The remaining net decrease in all other location operating expenses consisted of decreases related to bad debt expense, stock-based compensation and parking expense. These decreases were offset by an increase in consumables, operating costs and utilities during the year ended December 31, 2022, driven by an increase in physical occupancy to 75% as of December 2022 from 63% as of December 2021.

Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Location operating expenses

Impact of foreign exchange

Constant-currency location operating expenses

ChinaCo included in consolidated results:

ChinaCo location operating expenses

Total location operating expenses excluding ChinaCo

Location operating expenses decreased $458 million due primarily to a decrease of approximately $266 million in location operating expenses related to ChinaCo. ChinaCo was deconsolidated as of October 2, 2020 and therefore contributed to consolidated location operating expenses during the year ended December 31, 2020 but not during the same period in 2021. The remaining $192 million decrease was primarily due to decline in office expenses, payroll, consulting fees and physical occupancy, including real estate operating lease costs primarily as a result of COVID-19 and cost cutting strategies. As a percentage of total revenue, location operating expenses for the year ended December 31, 2021 increased by 16 percentage points to 120% compared to 104% for the year ended December 31, 2020. The increase in location operating expenses as a percentage of total revenue was primarily impacted by the overall decline in average revenue, discussed above.

During the year ended December 31, 2021, the Company terminated leases associated with a total of 98 previously open locations. Management is continuing to evaluate our real estate portfolio in connection with its ongoing restructuring efforts and may exit additional leases during 2022. The location decreases were partially offset by the opening of 30 locations during the year ended December 31, 2021, of which, 5 were previously placed back into pre-open and re-opened during the year ended December 31, 2021.

During the year ended December 31, 2021, the Company also successfully amended over 230 leases for a combination of partial terminations to reduce our leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes.

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Our most significant location operating expense is real estate operating lease cost, which includes the following components and changes:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total real estate operating lease cost

The following table includes the components of real estate operating lease cost included in location operating expenses as a percentage of membership revenue:

Year Ended December 31,

Change %

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total real estate operating lease cost

The $107 million decrease in lease cost contractually paid or payable was generally due to continued lease terminations during the year ended December 31, 2021, and the ChinaCo Deconsolidation in 2020.

The $149 million decrease in non-cash GAAP straight-line lease cost was driven by continued lease terminations during the year ended December 31, 2021, the ChinaCo Deconsolidation in 2020, decreases in lease cost escalations and the end of free rent periods. The impact of straight-lining lease cost typically increases straight-line lease cost adjustments in the first half of the life of a lease, when lease cost recorded in accordance with GAAP exceeds cash payments made, and then decreases lease cost in the second half of the life of the lease when lease cost is less than the cash payments required. The impact of straight-lining of lease cost nets to zero over the life of a lease.

The $18 million decrease in amortization of lease incentives benefit was primarily due to locations that incurred amortization of lease incentive benefits during the year ended December 31, 2020 no longer incurring amortization during the year ended December 31, 2021 mainly through lease terminations.

The remaining net decrease in all other location operating expenses consisted of decreases related to bad debt expense, cleaning expenses, the purchase of COVID-19 prevention supplies during 2020, and other office expenses as a result of a reduction in the use of certain locations during the year ended December 31, 2021 as a result of COVID-19. Additionally, the decrease was also due to the reductions in operating costs as a result of the Company's efforts to create a more efficient organization, including payroll and consulting expenses. These were offset by an increase in repairs and maintenance, utilities and other various operating costs during the year ended December 31, 2021.

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Pre-Opening Location Expenses

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Pre-opening location expenses

Impact of foreign exchange

Constant-currency pre-opening location expenses

Pre-opening location expenses decreased $38 million to $121 million, primarily as a result of a net decrease in lease costs from location openings and terminating leases at locations that were previously closed for member operations.

Our most significant pre-opening location expense is real estate operating lease cost for the period before a location is open for member operations, which includes the following components and changes:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total pre-opening location real estate operating lease cost

Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Pre-opening location expenses

Impact of foreign exchange

Constant-currency pre-opening location expenses

ChinaCo included in consolidated results:

ChinaCo pre-opening location expenses

Total pre-opening location expenses excluding ChinaCo

Pre-opening location expenses decreased $114 million to $159 million, primarily as a result of the Company's decision in the fourth quarter of 2019 and first half of 2020 to decelerate the growth rate of our platform and to focus on increasing the profitability of our existing portfolio of locations. During the years ended December 31, 2021 and 2020, there was an average of approximately 60 and 115 locations where we had taken possession of the new leased spaces but the location had not yet opened for member operations, respectively. Included in the 60 pre-open locations was an average of approximately 15 locations that were closed for member operations and all members have been relocated to a new workspace location during the year ended December 31, 2021, but management has not yet ceased use of the building.

Included in the net decreases discussed above was a decrease of approximately $13 million in pre-opening expenses related to ChinaCo. ChinaCo was deconsolidated as of October 2, 2020 and therefore contributed to consolidated pre-opening expenses for nine months during the year ended December 31, 2020 but none during the year ended December 31, 2021.

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Our most significant pre-opening location expense is real estate operating lease cost for the period before a location is open for member operations, which includes the following components and changes:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Lease cost contractually paid or payable

Non-cash GAAP straight-line lease cost

Amortization of lease incentives

Total pre-opening location real estate operating lease cost

The $19 million decrease in lease cost contractually paid or payable was generally the result of the decrease in the number of pre-opening locations described above.

The $111 million decrease in non-cash GAAP straight-line lease cost is primarily driven by the decrease in pre-opening locations and fewer free rent periods associated with our pre-opening locations as described above. During the year ended December 31, 2021 and 2020, lease cost recorded in accordance with GAAP exceeded cash payments required to be made. As the number of pre-opening locations at the end of each period has decreased as described above, so too have non-cash GAAP straight-line lease costs relating to those pre-open locations. The impact of straight-lining of lease cost nets to zero over the life of a lease.

The $20 million decrease in amortization of lease incentives benefit was driven by the decrease in pre-opening locations discussed above.

Selling, General and Administrative Expenses

Comparison of the years ended December 31, 2022 and 2021

Year ended December 31,

Change

(Amounts in millions, except percentages)

Selling, general and administrative expenses

Impact of foreign currency

Constant-currency selling, general and administrative expenses

SG&A expenses decreased $276 million and 27%, or 25% on a constant-currency basis, to $735 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. As a percentage of total revenue, SG&A expenses decreased by 16 percentage points to 23% for the year ended December 31, 2022, compared to 39% for the year ended December 31, 2021, driven primarily by our continued focus on our goal of creating a leaner, more efficient organization. During the year ended December 31, 2022, compared to the year ended December 31, 2021, there were decreases of $75 million in cost of revenue attributable to non-core businesses that have been, or are being, wound down as the Company has refocused on its core space-as-a-service. This decrease is partly related to the 424 Fifth Property development agreement which reached substantial completion during the three months ended June 30, 2022. See Note 19 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information on the development agreement. As a result of slowing our growth, continued focus on creating a leaner, more efficient organization and our recent reduction in workforce, there was a $66 million decrease in employee compensation and benefits expenses; and a $52 million decrease of stock-based compensation. Additionally there was a $48 million decrease due to legal, tax and regulatory reserves or settlements.

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Comparison of the years ended December 31, 2021 and 2020

Year ended December 31,

Change

(Amounts in millions, except percentages)

Selling, general and administrative expenses

Impact of foreign exchange

Constant-currency selling, general and administrative expenses

ChinaCo included in consolidated results:

ChinaCo selling, general and administrative

expenses

Total selling, general and administrative expenses excluding ChinaCo

SG&A expenses decreased $594 million to $1.0 billion for the year ended December 31, 2021, from the year ended December 31, 2020. Included in the $594 million decrease is a $69 million decrease in SG&A expenses related to ChinaCo. ChinaCo was deconsolidated as of October 2, 2020 and therefore contributed to consolidated SG&A expenses for nine months during the year ended December 31, 2020 but none during the year ended December 31, 2021. As a percentage of total revenue, SG&A expenses decreased by 8 percentage points to 39% for the year ended December 31, 2021, compared to 47% for the year ended December 31, 2020, driven primarily by our decision during the fourth quarter of 2019 and into 2020 to slow our growth and focus on our goal of creating a leaner, more efficient organization resulting in reductions in headcount, including a $310 million decrease in employee compensation and benefits expenses, professional fees and other expenses. In addition, as a result of the temporary business interruption caused by the COVID-19 pandemic, the Company was proactive in taking steps to delay or reduce spending in areas such as marketing with a steady increase in marketing costs during the year ended December 31, 2021 but an overall decrease of $29 million in advertising and promotional expenses compared to the year ended December 31, 2020. We also incurred fewer variable sales costs that are driven by our portfolio stabilization throughout 2021 and increased expense management, specifically on broker agreements during the year ended December 31, 2021, such as member referral fees which declined by $29 million during year ended December 31, 2021.

Included in the decrease in SG&A expenses was a $158 million decrease in cost of revenue attributable to our former Powered by We solution and non-core businesses that were sold or wound down as the Company has refocused on its core space-as-a-service offering.

Partially offsetting the increases discussed above included an increase of $53 million of stock-based compensation for the year ended December 31, 2021, compared to the year end December 31, 2020.

Restructuring and other related (gains) costs

Comparison of the years ended December 31, 2022 and 2021

Year ended December 31,

Change

(Amounts in millions, except percentages)

Restructuring and other related (gains) costs

Impact of foreign exchange

Constant-currency restructuring and other related (gains) costs

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Restructuring and other related (gains) costs decreased $634 million to $(200) million for the year ended December 31, 2022, primarily due to a $526 million decrease in employee termination costs, including the following transactions:

Year ended December 31,

Change

(Amounts in millions, except percentages)

Excess value paid from a principal shareholder to We Holding LLC and the fair value of stock purchased in connection with the Settlement Agreement (Note 5 and Note 24)

Modification of WeWork Partnership Profits Interest Units in connection with the Settlement Agreement (Note 5 and Note 24)

Other employee termination costs

Total employee termination costs

The decrease in restructuring and other related (gains) costs was also due to a $73 million decrease in costs related to ceased use buildings and a $17 million decrease in legal and other exit costs. There was also an $18 million increase in gains on terminated leases associated with a total of 35 previously open locations and 5 pre-open locations during the year ended December 31, 2022. Management is continuing to evaluate the Company's real estate portfolio in connection with its ongoing restructuring efforts and expects to exit additional leases.

For additional information on restructuring and other related (gains) costs, see Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and " —Key Factors Affecting Comparability of Our Results—Restructuring and Impairments " above.

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Comparison of the years ended December 31, 2021 and 2020

Year ended December 31,

Change

(Amounts in millions, except percentages)

Restructuring and other related (gains) costs

Impact of foreign exchange

Constant-currency restructuring and other related (gains) costs

Restructuring and other related (gains) costs increased $227 million to $434 million for the year ended December 31, 2021, primarily due to a $366 million increase in employee termination costs, including the following transactions:

Year ended December 31,

Change

(Amounts in millions, except percentages)

Excess amount paid from a principal shareholder to We Holding LLC and the fair value of stock purchased in connection with the Settlement Agreement (Note 5 and Note 24)

Modification of WeWork Partnership Profits Interest Units in connection with the Settlement Agreement (Note 5 and Note 24)

Other employee termination costs

Total employee termination costs

The restructuring cost increase was also due to $140 million increase in costs related to ceased use buildings.

Restructuring and other related (gains) costs was offset by a $274 million increase to gains on terminated leases associated with a total of 98 previously open locations and a $6 million decrease in legal and other exit costs. Management is continuing to evaluate our real estate portfolio in connection with its ongoing restructuring efforts and may exit additional leases during 2022.

For additional information on Restructuring and other related (gains) costs, see Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and " —Key Factors Affecting Comparability of Our Results—Restructuring and Impairments " above.

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Comparison of the years ended December 31, 2022 and 2021

Year ended December 31,

Change

(Amounts in millions, except percentages)

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Impact of foreign exchange

Constant-currency Impairment expense/(gain on sale) of goodwill, intangibles and other assets

In connection with the operational restructuring program and related changes in the Company's leasing plans discussed above and the impacts on our operations from certain macroeconomic events such as COVID-19 , the conflict between Russia and Ukraine, potential economic recession, rising interest rates, and/or inflation, the Company has recorded impairment expenses on our long-lived assets. Impairment expense/(gain on sale) of goodwill, intangibles and other assets decreased $245 million to $625 million for the year ended December 31, 2022 and included the following components:

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Year ended December 31,

Change

(Amounts in millions)

Impairment and write-off of long-lived assets associated with restructuring

Impairment expense, other

Impairment of intangible assets

Gain on sale of assets

Total

Due to uncertainty surrounding the Company's intent to complete certain software projects as a result of unforeseen delays and cost overruns, the Company concluded in the fourth quarter of 2022 that there was an impairment of such capitalized software related intangible assets. The Company recorded impairment charges and other write-offs of certain intangible assets, impairing such assets to a carrying value of zero, for impairment charges of $36 million for the year ended December 31, 2022.

For additional information on impairments, see Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and " —Key Factors Affecting Comparability of Our Results—Restructuring and Impairments " above.

Comparison of the years ended December 31, 2021 and 2020

Year ended December 31,

Change

(Amounts in millions, except percentages)

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Impact of foreign exchange

Constant-currency Impairment expense/(gain on sale) of goodwill, intangibles and other assets

In connection with the operational restructuring program and related changes in the Company's leasing plans and planned or completed disposition or wind down of certain non-core operations and projects, and the impacts of COVID-19 on our operations, the Company has also recorded various other non-routine write-offs, impairments and gains on sale of goodwill, intangibles and various other long-lived assets. Impairments/(gain on sale) of goodwill, intangibles and other assets decreased $486 million to $870 million for the year ended December 31, 2021 and included the following components in year:

Year ended December 31,

(Amounts in millions)

Impairment and write-off of long-lived assets associated with restructuring

Impairment of long-lived assets primarily associated with COVID-19

Gain on sale of assets

Loss on ChinaCo Deconsolidation

Impairment of assets held for sale

Total

For additional information on impairments, see Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and " —Key Factors Affecting Comparability of Our Results—Restructuring and Impairments " above.

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Depreciation and Amortization Expense

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Depreciation and amortization expense

Impact of foreign exchange

Constant-currency depreciation and amortization expense

Depreciation and amortization expense decreased $68 million and 10%, or 6% on a constant-currency basis, and for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily driven by a decrease in depreciable assets as a result of the decrease in the number of our Consolidated Locations and workstation capacity and impairment expenses incurred throughout 2021 and into 2022.

Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Depreciation and amortization expense

Impact of foreign exchange

Constant-currency depreciation and amortization expense

Depreciation and amortization expense decreased $70 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily driven by a $39 million decrease related to the ChinaCo Deconsolidation. The remaining decrease in depreciation and amortization expense is due to the decrease in number of our Consolidated Locations and workstation capacity throughout 2021.

Interest and Other Income (Expense), Net

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Income (loss) from equity method investments

Interest expense

Interest income

Foreign currency gain (loss)

Gain (loss) on change in fair value of warrant liabilities

Interest and other income (expense), net

Interest and other income (expense), net increased $233 million to $(698) million for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily driven by a $354 million increase on net gain due to the change in fair value of warrant liabilities due to a $343 million loss on the SoftBank Senior Unsecured Notes Warrant and 2020 LC Facility Warrant during the year ended December 31, 2021. During the year ended December 31, 2022, the Private Warrants were the only warrant liabilities outstanding, with an initial fair value at issuance of $18 million. The warrant liabilities are remeasured each reporting date to fair value through their exercise dates, with such adjustments driven by changes in the Company's stock price. See Note 16 and Note 18 of the notes to

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the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details on the Private and Public Warrants, and the fair value measurement of the Private Warrants, respectively.

Interest expense increased by $61 million, driven primarily by a $58 million increase from the accelerated amortization of deferred financing costs in connection with the amendments to the Credit Agreement. See Note 26 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information on the Credit Agreement.

Foreign currency losses increased by $51 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily driven by the foreign currency denominated intercompany transactions that are not of a long-term investment nature as a result of our prior international expansion and currency fluctuations against the U.S. dollar. The $185 million foreign currency loss during the year ended December 31, 2022 was primarily impacted by fluctuations in the U.S. dollar-British Pound and U.S. dollar-Euro.

Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Income (loss) from equity method investments

Interest expense

Interest income

Foreign currency gain (loss)

Gain (loss) on change in fair value of related party financial instruments

Loss on extinguishment of debt

Interest and other income (expense), net

Interest and other income (expense), net decreased $1.5 billion to $(931) million for the year ended December 31, 2021 compared to the year ended December 31, 2020. The decrease was primarily driven by a $1.2 billion decrease on net gain due to the change in fair value of related party financial instruments. The related party financial instruments are remeasured to fair value through their exercise dates, with such adjustments driven by changes in the Company's stock price. See Note 18 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details on these related party financial instruments.

Foreign currency gains decreased by $283 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020, primarily driven by decrease in the foreign currency denominated intercompany transactions that are not of a long-term investment nature as a result of our prior international expansion and currency fluctuations against the dollar. The $134 million foreign currency loss during the year ended December 31, 2021 was primarily impacted by fluctuations in the U.S. dollar-Euro, U.S. dollar-British Pound, U.S. dollar-Mexican Peso, and U.S. dollar-South Korean Won exchange rates.

Interest expense increased by $124 million primarily due to a $84 million increase in interest expense due to the increased principal balance of the 5.00% Senior Notes, and a $32 million increase in deferred financing costs related to the 5.00% Senior Notes and the Credit Agreement and related amendment .

During the year ended December 31, 2020 the Company recognized a $77 million loss on extinguishment of debt due to the extinguishment of certain other loans as a result of principal prepayments, with no comparable activity during the year ended December 31, 2021.

The loss from equity method investments decreased $27 million during the year ended December 31, 2021 compared to the year ended December 31, 2020. This decrease was primarily due to equity pick-ups to earnings and gains on sale of equity method investments partially offset by the Company's loss on

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its investment in ChinaCo and credit losses related to available-for-sale debt securities. See Note 13 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further details on equity method and other investments.

Income Tax Benefit (Provision)

Comparison of the years ended December 31, 2022 and 2021

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Income tax benefit (provision)

There was a $3 million net increase for the year ended December 31, 2022, compared to the year ended December 31, 2021, which was primarily due to the increase in current income tax expense in jurisdictions without net operating losses and withholding tax accruals partially offset by the release in valuation allowance.

Our effective income tax rate during the year ended December 31, 2022 and 2021 was lower than the U.S. federal statutory rate primarily due to the effect of certain non-deductible permanent differences, the effect of our operating in jurisdictions with various statutory tax rates, and valuation allowances. For additional information, see Note 21 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K .

Comparison of the years ended December 31, 2021 and 2020

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Income tax benefit (provision)

There was a $17 million net decrease in the tax provision for the year ended December 31, 2021, compared to the year ended December 31, 2020, was primarily due to the deconsolidation of ChinaCo in 2020, rate changes in certain non-US jurisdictions and lower withholding taxes paid. This was partially offset by additional valuation allowance recorded during year ended December 31, 2021.

Our effective income tax rate during the years ended December 31, 2021 and 2020 was lower than the U.S. federal statutory rate primarily due to the effect of certain non-deductible permanent differences, the effect of our operating in jurisdictions with various statutory tax rates, and valuation allowances. For additional information, see Note 21 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K .

Net Loss Attributable to Noncontrolling Interests

During 2017 through 2022, various consolidated subsidiaries issued equity to other parties in exchange for cash as more fully described in Note 10 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. As we have the power to direct the activities of these entities that most significantly impact their economic performance and the right to receive benefits that could potentially be significant to these entities, they remain our consolidated subsidiaries, and the interests owned by the other investors and the net income or loss and comprehensive income or loss attributable to the other investors are reflected as noncontrolling interests on our Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss, respectively.

The increase in the net loss attributable to noncontrolling interests from year ended December 31, 2021 to the year ended December 31, 2022 of $68 million, is primarily due to the issuance of noncontrolling

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interests of LatamCo in September 2021 and conversion of WeWork Partnership Profits Interest Units into WeWork Partnership Class A common units (discussed below).

In October 2021, Mr. Neumann converted 19,896,032 vested WeWork Partnership Profits Interest Units into WeWork Partnership Class A common units. As a result of the 2.72% ownership of the WeWork Partnership during the year ended December 31, 2022, the Company allocated a loss of $56 million through noncontrolling interests, as compared to $16 million for the year ended December 31, 2021.

See Note 13 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for discussion of the Company’s non-consolidated VIEs.

The decrease in the net loss attributable to noncontrolling interests from the year ended December 31, 2021, as compared to the year ended December 31, 2020 of $512 million is primarily due to our decision during the fourth quarter of 2019 and first half of 2020 to slow our growth and focus on our goal of creating a leaner, more efficient organization. Included during the year ended December 31, 2020, were increases in net losses incurred by the JapanCo, ChinaCo (prior to the ChinaCo Deconsolidation), and PacificCo (prior to the PacificCo Roll-up), while during the year ended December 31, 2021, only JapanCo and LatamCo were included, as PacificCo became wholly owned and ChinaCo was deconsolidated.

Net Loss Attributable to WeWork Inc.

As a result of the factors described above, we recorded a net loss attributable to WeWork Inc. of $(2.0) billion for the year ended December 31, 2022 compared to $(4.4) billion and $(3.1) billion for the years ended December 31, 2021 and 2020, respectively.

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Quarterly Results of Operations

The following table sets forth certain unaudited financial and operating information for the quarterly periods presented and certain non-GAAP financial measures. The quarterly information includes all adjustments (consisting of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the information presented. This information should be read in conjunction with the Consolidated Financial Statements and related notes thereto included elsewhere in this Form 10-K.

Three Months Ended

(Amounts in millions, except ARPM in ones)

December 31,

September 30,

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

Revenue:

Consolidated Locations membership and service revenue

Unconsolidated Locations management fee revenue and cost reimbursement revenue

Other revenue

Total revenue

Expenses:

Location operating expenses—cost of revenue (1)

Pre-opening location expenses

Selling, general and administrative expenses (1)

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Depreciation and amortization

Total expenses

Loss from operations

Interest and other income (expense), net

Pre-tax loss

Income taxes benefit (provision)

Net loss

Net loss attributable to noncontrolling interests

Net loss attributable to WeWork Inc.

Adjusted EBITDA (2)

Net cash provided by (used in) operating activities

Less: Purchases of property, equipment and capitalized software

Free Cash Flow (3)

Physical Membership Monthly ARPM (4)

(1) Exclusive of depreciation and amortization shown separately on the depreciation and amortization line.

(2) Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA is set forth below:

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Three Months Ended

(Amounts in millions)

December 31,

September 30,

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

Net loss

Income tax (benefit) provision

Interest and other (income) expense

Depreciation and amortization

Restructuring and other related (gains) costs

Impairment expense/(gain on sale) of goodwill, intangibles and other assets

Stock-based compensation expense

Other, net

Adjusted EBITDA

(3) Free Cash Flow is a non-GAAP financial measure. A reconciliation of Free Cash Flow to net cash provided by (used in) operating activities is presented in the table above.

(4) A calculation of Physical Membership Monthly ARPM, an operating metric, is set forth below:

Three Months Ended

(Amounts in millions, except memberships in thousands, and ARPM in ones)

December 31,

September 30,

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

Membership and service revenue

WeWork Access revenue

Unconsolidated Locations management fee revenue

Consolidated Locations Physical Membership and Service revenue

Consolidated Locations cumulative physical memberships

Physical Membership Monthly ARPM

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Other key performance indicators (in thousands, except for revenue in millions and percentages):

December 31,

September 30,

June 30,

March 31,

December 31,

September 30,

June 30,

March 31,

December 31,

Consolidated Locations

Membership and service revenues

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships

Physical Occupancy Rate

Enterprise Physical Membership Percentage

Unconsolidated Locations

Membership and service revenues (1)

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships

Physical Occupancy Rate

Systemwide Locations

Membership and service revenues (2)

Workstation Capacity

Physical Memberships

All Access and Other Legacy Memberships

Memberships

Physical Occupancy Rate

(1) Unconsolidated membership and service revenues represents the results of Unconsolidated Locations that typically generate ongoing management fees for the Company at a rate of 2.75-4.00% of applicable revenue.

(2) Systemwide Location membership and service revenues represents the results of all locations regardless of ownership.

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Liquidity and Capital Resources

Until we consummate the Transactions (if consummated), we expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, expenses, capital expenditures, lease security, other investments and repurchases or repayments of outstanding indebtedness and other liabilities will include:

• Cash on hand of $287 million of cash and cash equivalents as of December 31, 2022, of which $61 million is held by our consolidated VIEs that will be used first to settle obligations of the VIEs and is also subject to the restrictions, including with respect to declaring dividends, as discussed below;

• The ability to draw up to $250 million in Secured Notes under the Secured NPA. As of December 31, 2022, $500 million of Secured Notes remained available to be drawn, of which $250 million was drawn by us in January 2023, and which remaining $250 million may be drawn by us as follows: subject to the terms of the Secured NPA and subject to the following schedule: (i) a draw request of $50 million which may be made no earlier than April 1, 2023; (ii) a subsequent draw request of no more than $75 million which may be made no earlier than May 1, 2023; (iii) another subsequent draw request of no more than $75 million which may be made no earlier than June 1, 2023; and, if applicable, (iv) a draw request of $50 million thereafter; and

• The $960 million Senior LC Tranche (which decreased from $1.25 billion in February 2023) and the $470 million Junior LC Tranche (which increased from $350 million in February 2023). Upon the effectiveness of the Sixth Amendment to the Credit Agreement, the additional $120 million letter of credit under the Junior LC Tranche was issued and drawn in full for the benefit of the Company.

In March 2023, the Company entered into a series of agreements related to the Transactions. Pursuant to such agreements, the applicable parties have agreed to support, approve, implement and enter into definitive documents covering the following transactions, among other things: (i) certain offers to exchange all of the outstanding 7.875% Senior Notes and 5.00% Senior Notes, Series II, for a combination of newly issued New Second Lien Notes, New Third Lien Notes and shares of Class A Common Stock, as applicable, and the concurrent issuance of $500 million in aggregate principal amount of New First Lien Notes, (ii) the exchange of all of the outstanding 5.00% Senior Notes, Series I, for a combination of newly issued New Second Lien Exchangeable Notes, New Third Lien Exchangeable Notes and shares of Class A Common Stock, as applicable, to an affiliate of SBG, (iii) the rollover of $300 million of the $500 million commitment from SVF II under the Secured NPA to purchase Secured Notes, including $250 million in aggregate principal amount of Secured Notes currently outstanding, into $300 million of New First Lien Notes, which, at the Company’s option, would be issued to SVF II in full and outstanding at the closing of the Transactions or issuable to SVF II from time to time in whole or in part pursuant to a new note purchase agreement and (iv) the issuance of 35 million shares of Class A Common Stock in a private placement at a purchase price of $1.15 per share at the closing of the Transactions and up to $175 million of New First Lien Notes issuable from time to time at the Company’s option pursuant to a new note purchase agreement to a third party investor. See “ Item 1. Business––The Transactions .” In the event that we are unable to complete the Transactions or otherwise raise sufficient alternative fundings on acceptable terms, we may be required to delay, limit or curtail our operations or otherwise impede our business strategy, which may have a material adverse effect on our business, operating results, financial condition, long-term prospects and would impact our ability to continue as a going concern. See “Risk Factors––Risks Relating to the Company’s Financial Condition––The Company has a history of operating losses and negative cash flow and failure to fully consummate the Transactions could have a material adverse effect on the Company's business, operating results, financial condition, liquidity and long-term prospects."

The Company's strategic plan used for evaluating liquidity includes limited future growth initiatives, such as signing new leases, and continued execution of our operational restructuring program. The actual

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timing at which we may achieve profitability and positive cash flow from operations depends on a variety of factors, including the occupancy of our locations, the rates we are able to charge, the success of our cost efficiency efforts, economic and competitive conditions in the markets where we operate, general macroeconomic conditions, the pace at which we choose to grow and our ability to add new members and new products and services to our platform.

Alternate long-term growth plans may require raising additional capital. The Company regularly evaluates alternatives for efficiently funding our operations and/or refinancing our existing indebtedness and paying any related accrued interests, premiums and fees, which may include, among other things, issuance of additional equity or debt financing and other opportunistic financing transactions, subject to prevailing market conditions and other considerations. Our future financing requirements and the future financing requirements of our consolidated VIEs will depend on many factors, including the number of new locations to be opened, our net member retention rate, the timing and extent of spending to support the development of our platform, the expansion of our sales and marketing activities and potential investments in, or acquisitions of, businesses or technologies. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. In addition, the incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that restrict our operations.

The Company's liquidity forecasts are based upon continued execution of its operational restructuring program and also includes management's best estimate of the currently evolving macroeconomic landscape, including a potential economic recession, rising interest rates, inflation, and the slower than expected recovery in certain markets from the impact that the COVID-19 pandemic. These factors may continue to have an impact on WeWork's business and its liquidity needs; however, the extent to which the Company's future results and liquidity needs are further affected will largely depend on the delays in location openings, our members' renewal of their membership agreements, the effect on demand for WeWork memberships, any permanent shifts in working from home and the Company's ongoing lease negotiations with its landlords, among others. WeWork believes continued execution of its operational restructuring program and its current liquidity position will be sufficient to help it alleviate the continued near-term uncertainty and meet near-term requirements. Its assessment assumes a continued growth in its revenues and occupancy. If the Company does not experience a continued recovery consistent with its projected timing, additional capital sources may be required, the timing and source of which are uncertain. There is no assurance the Company will be successful in securing additional sources of financing if and when needed.

During the year ended December 31, 2022, our primary sources of cash were from membership receipts and the Junior LC Tranche draw. Our primary uses of cash included fixed operating lease cost and capital expenditures associated with the design and build-out of our spaces. We have also incurred costs related to our operational restructuring including lease termination fees, legal fees and other exit costs. Cash payments of restructuring liabilities, net totaled $213 million during the year ended December 31, 2022. Pre-opening location expenses, SG&A expenses and cash payments made for acquisitions and investments have also historically included large discretionary uses of cash which can and have been scaled back to the extent needed based on our future cash needs. We also may elect to repurchase or retire amounts of our outstanding debt for cash, through open market repurchases or privately negotiated transactions with certain of our debt holders, although there is no assurance we will do so.

We believe our sources of liquidity described above and in more detail below, including the consummation in full of the Transactions, will be sufficient to meet our obligations as of December 31, 2022 over the next 12 months from the date of this Form 10-K.

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Consolidated Variable Interest Entities ("VIEs")

As of December 31, 2022, our consolidated VIEs held the following, in each case after intercompany eliminations:

December 31, 2022

(Amounts in millions)

SBG JVs (1)

Other VIEs (2)

Cash and cash equivalents

Restricted cash

Total assets

Total liabilities

Redeemable stock issued by VIEs

Total net assets (3)

(1) The “SBG JVs” as of December 31, 2022 include only JapanCo and LatamCo. As of December 31, 2022, JapanCo and LatamCo were prohibited from declaring dividends (including to us) without approval of an affiliate of SoftBank Group Capital Limited. As a result, any net assets of JapanCo and LatamCo would be considered restricted net assets to the Company as of December 31, 2022. The net assets of the SBG JVs include membership interest in JapanCo issued to affiliates of SBG with liquidation preferences totaling $500 million as of December 31, 2022 and ordinary shares in LatamCo totaling $80 million as of December 31, 2022 that are redeemable upon the occurrence of event that is not solely within the control of the company. After reducing the net assets of the SBG JVs by the liquidation preference associated with such membership interest and redeemable ordinary shares, the remaining net assets of the SBG JVs is negative as of December 31, 2022.

(2) "Other VIEs” includes the WeCap Manager and WeCap Holdings Partnership.

(3) Total net assets represents total assets less total liabilities and redeemable stock issued by VIEs after the total assets and total liabilities have both been reduced to remove amounts that eliminate in consolidation.

Based on the terms of the arrangements as of December 31, 2022, the assets of our consolidated VIEs will be used first to settle obligations of the VIEs. Remaining assets may then be distributed to the VIEs' owners, including us, subject to the liquidation preferences of certain noncontrolling interest holders and any other preferential distribution provisions contained within the operating agreements of the relevant VIEs. Other than the restrictions relating to our SBG JVs discussed in note (1) to the table above, third-party approval for the distribution of available net assets is not required for any of our consolidated VIEs as of December 31, 2022. See the section entitled "— 7.875% Senior Notes " below for a discussion on additional restrictions on the net assets of WeWork Companies LLC.

As of December 31, 2022, creditors of our consolidated VIEs do not have recourse against the general credit of the Company except with respect to certain lease guarantees we have provided to landlords of our consolidated VIEs, which guarantees totaled $11 million as of December 31, 2022. In addition, as of December 31, 2022, the Company also continues to guarantee $4 million of lease obligations of ChinaCo.

We do not expect distributions from our consolidated VIEs or unconsolidated investments to be a significant source of liquidity and our assessment of our ability to meet our capital requirements over the next 12 months does not assume that we will receive distributions from those entities.

Sources of Liquidity

As of December 31, 2022, we had $22 million of principal debt maturing within the next 12 months and our total debt consisted of the following:

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Maturity

Year

Interest

Rate

Outstanding Principal Balance

(Amounts in millions, except percentages)

5.00% Senior Notes

7.875% Senior Notes

Junior LC Tranche (1)

Other Loans

Total debt, excluding deferred financing costs

(1) As of December 31, 2022, the reimbursement obligations under the Junior LC Tranche bear interest at the Term SOFR Rate with a floor of 0.75%, plus 6.50%, as further described below.

For further information on our debt, please see Note 17 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

7.875% Senior Notes

In April 2018, we issued $702 million in aggregate principal amount of 7.875% Senior Notes (the "7.875% Senior Notes") in a private offering. The 7.875% Senior Notes will mature on May 1, 2025 and bear interest at 7.875% per annum, payable semi-annually in cash. We received gross proceeds of $702 million from the issuance of the 7.875% Senior Notes. As of December 31, 2022, $669 million in aggregate principal amount of 7.875% Senior Notes remains outstanding.

The indenture that governs the 7.875% Senior Notes (the “Unsecured Indenture”) restricts us from incurring indebtedness or liens or making certain investments or distributions, subject to a number of exceptions. Certain of these exceptions included in the Unsecured Indenture are subject to us having Minimum Growth-Adjusted EBITDA (as defined in the Unsecured Indenture) for the most recent four consecutive fiscal quarters. For incurrences in fiscal years ending December 31, 2022-2025, the Minimum Growth-Adjusted EBITDA required for the immediately preceding four consecutive fiscal quarters is $2.0 billion. For the four quarters ended December 31, 2022, the Company's Minimum Growth-Adjusted EBITDA, as calculated in accordance with the Unsecured Indenture, was less than the $2.0 billion requirement effective as of January 1, 2022. As a result, we were restricted in our ability to incur certain new indebtedness in certain circumstances, unless such Minimum Growth-Adjusted EBITDA increases above the threshold required. The restrictions of the Unsecured Indenture do not impact our ability to access the unfunded commitments pursuant to the Secured NPA.

Subsequent to the Company's July 2019 legal entity reorganization, WeWork Companies LLC (the “Issuer”), a wholly-owned subsidiary of the Company, and WW Co-Obligor Inc., a wholly-owned subsidiary of the Issuer (the “Co-Obligor” and, together with the Issuer, the “Issuers”) became co-issuers of the 7.875% Senior Notes. The 7.875% Senior Notes are also fully and unconditionally guaranteed by the Company and certain of the Issuer’s subsidiaries. The Company and the other subsidiaries that sit above the Issuer in our legal structure are holding companies that conduct substantially all of their business operations through the Issuer. As of December 31, 2022, based on the covenants and other restrictions of the Unsecured Indenture, the Issuer is restricted in its ability to transfer funds by loans, advances or dividends to the Company and, as a result, all of the net assets of the Issuer are considered restricted net assets of the Company. See " Supplementary Information — Consolidating Balance Sheet" included in Part II, Item 8 of this Form 10-K for additional details regarding the net assets of the Issuer.

For the year ended December 31, 2022, our non-guarantor subsidiaries represented approximately 57% of our total revenue, approximately 26% of loss from operations, and approximately 30% of our Adjusted EBITDA (as defined in the Unsecured Indenture). As of December 31, 2022, our non-guarantor subsidiaries represented approximately 48% of our total assets, and had $0.8 billion of total liabilities, including trade payables but excluding intercompany liabilities and lease obligations.

5.00% Senior Notes

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On December 27, 2019, the Issuer, the Co-Obligor and StarBright WW LP (the “Notes Purchaser”), an affiliate of SBG, entered into the Master Senior Unsecured Notes Note Purchase Agreement (as amended, waived or otherwise modified from time to time, the “Unsecured NPA”), pursuant to which the Notes Purchaser agreed to purchase from the Issuers up to $2.2 billion of 5.00% Senior Notes due 2025 (the “5.00% Senior Notes”). Starting on July 10, 2020, the Issuers issued and sold $2.2 billion of 5.00% Senior Notes in multiple closings to the Notes Purchaser and entered into a Senior Notes Indenture, dated as of July 10, 2020 (the “Original Unsecured Indenture”), by and among the Issuers, the guarantors party thereto, and U.S. Bank Trust Company, National Association (as successor trustee). As of December 31, 2022, an aggregate principal amount of $2.2 billion of 5.00% Senior Notes were issued and none remained available for draw under the Unsecured NPA. The 5.00% Senior Notes will mature on July 10, 2025 and bear interest at 5.00% per annum, payable semi-annually in cash. However, because the associated warrants obligate the Company to issue shares in the future, the implied interest rate upon closing was approximately 11.69%.

Pursuant to the Unsecured NPA, the Notes Purchaser may notify the Issuer that it intends to engage an investment bank or investment banks to offer and sell all or a portion of the 5.00% Senior Notes outstanding to third-party investors in a private placement. On December 16, 2021, following the Notes Purchaser’s exercise of its resale rights under the Unsecured NPA, the Issuers amended and restated the Original Unsecured Indenture (as so amended, the “A&R Unsecured Indenture”) to subdivide the 5.00% Senior Notes into two series, one of which consisted of $550 million in aggregate principal amount of 5.00% Senior Notes due 2025, Series II (the "5.00% Senior Notes, Series II"), and the other consisted of the remaining $1.65 billion in aggregate principal amount of 5.00% Senior Notes due 2025, Series I (the "5.00% Senior Notes, Series I"), and the Notes Purchaser (through certain initial purchasers) resold the 5.00% Senior Notes due 2025, Series II, to qualified investors in a private offering exempt from registration under the Securities Act. The 5.00% Senior Notes, Series I, remain held by the Notes Purchaser. The A&R Unsecured Indenture contains negative covenants that are substantially similar to those included in the Unsecured Indenture, as further described above.

Secured Notes

The Issuers are party to that certain Amended and Restated Master Senior Secured Notes Note Purchase Agreement, dated as of October 20, 2021, as amended by Amendment No. 1, dated as of December 16, 2021, and Amendment No. 2, dated as of November 9, 2022 (as further amended, waived or otherwise modified from time to time, “Secured NPA”), with SVF II, pursuant to which SVF II agreed to purchase from the Issuers up to $500 million of Senior Secured Notes due 2025 (the “Secured Notes”), with a scheduled step down to approximately $446 million in February 2024.

The Secured NPA allows the Issuers to issue and sell to SVF II every 30 days up to the maximum remaining capacity of Secured Notes available thereunder, with minimum draws of $50 million. Pursuant to the Secured NPA, SVF II may notify the Issuer that it intends to engage an investment bank or investment banks to offer and sell all or a portion of the Secured Notes outstanding or to be issued in connection with a draw notice to third-party investors in a private placement. In addition, pursuant to the Secured NPA, as thereafter modified, the Issuer is required to pay SVF II a commitment fee of $10 million (2.00% of the $500 million commitment available under the Secured NPA), to be paid in quarterly installments beginning on January 10, 2024. Following the entry into the Transaction Support Agreement (as defined herein) in March 2023, the Company may draw upon the remaining $250 million in aggregate principal of Secured Notes, each draw subject to the terms of the Secured NPA, subject to the following schedule: (i) a draw request of $50 million which may be made no earlier than April 1, 2023; (ii) a subsequent draw request of no more than $75 million which may be made no earlier than May 1, 2023; (iii) another subsequent draw request of no more than $75 million which may be made no earlier than June 1, 2023; and if applicable, (iv) a draw request of $50 million thereafter.

As of December 31, 2022, no draw notices had been delivered pursuant to the Secured NPA and no Secured Notes were outstanding. In January 2023, the Issuers issued and sold $250 million of Secured Notes to SVF II under the Secured NPA and entered into a Senior Secured Notes Indenture, dated as of

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January 3, 2023 (the “Secured Indenture”), by and among the Issuers, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent. The Secured Notes will mature on March 15, 2025 and bear interest (i) until February 15, 2024, at 7.50% per annum, payable semi-annually in cash, and (ii) from and after February 15, 2024 and until maturity, at 11.00% per annum, payable in-kind. The Secured Indenture contains negative covenants that are substantially similar to those included in the Unsecured Indenture, as further described above, subject to certain changes to reflect existing commitments and indebtedness outstanding at the time of entry into the Secured Indenture.

Credit Agreement

The Company is party to the that certain Credit Agreement, dated as of December 27, 2019 (as amended or otherwise modified from time to time, including by that certain Sixth Amendment to the Credit Agreement, dated as of February 15, 2023 (the “Sixth Amendment to the Credit Agreement”), the “Credit Agreement”). As of December 31, 2022, the Credit Agreement provided for a $1.25 billion senior tranche letter of credit facility (the “Senior LC Tranche”), which decreased to $960 million in February 2023 in connection with the Sixth Amendment and is scheduled to terminate in March 2025, and a $350 million junior tranche letter of credit facility (the “Junior LC Tranche”), which increased to $470 million in February 2023 in connection with the Sixth Amendment and is scheduled to terminate in March 2025. As of December 31, 2022, $1.1 billion of standby letters of credit were outstanding under the Senior LC Facility, of which none were drawn. As of December 31, 2022, there was $21 million in remaining letter of credit availability under the Senior LC Facility.

In connection with the reduction of the Senior LC Tranche capacity in February 2023, the Company funded $136 million of cash collateral. Upon effectiveness of the Sixth Amendment to the Credit Agreement, $1.1 billion of standby letters of credit were outstanding under the Senior LC Facility, of which none were drawn. In addition, as of the Sixth Amendment to the Credit Agreement, approximately $100 million of contingent obligations in respect of letters of credit issued under the Senior LC Facility are required to be cash collateralized, in the amount of 105% of the stated amount thereof.

On May 10, 2022, the Company and the other parties thereto entered into the Fourth Amendment to the Credit Agreement (the "Fourth Amendment to the Credit Agreement") pursuant to which the then existing facilities under the Credit Agreement were amended and subdivided into a $1.25 billion Senior LC Tranche, which was scheduled to decrease to $1.05 billion in February 2023, and the $350 million Junior LC Tranche. The letter of credit under the Junior LC Tranche was issued and drawn for the benefit of WeWork Companies LLC in full upon effectiveness of the Fourth Amendment to the Credit Agreement. At the time of entry into the Fourth Amendment to the Credit Agreement, the termination date of the Junior LC Tranche was November 30, 2023 and the termination date of the Senior LC Tranche was February 9, 2024. Following the entry into the Fourth Amendment to the Credit Agreement, the reimbursement obligations under the Junior LC Tranche bore interest at the Term SOFR Rate (as defined in the Credit Agreement), with a floor of 0.75%, plus 6.50%, with an option to convert all or a portion of the outstanding obligations to the ABR (as defined in the Fourth Amendment to the Credit Agreement) plus 5.50% on or after August 10, 2022.As a result of the Fourth Amendment to the Credit Agreement, the reimbursement obligations under the Junior LC Tranche were voluntarily repayable at any time, subject to a prepayment fee such that the minimum return to the letter of credit participants under the Junior LC Tranche on the Junior LC Tranche reimbursement obligations was an amount equal to the sum of 6.50% (the Applicable Margin of the Junior LC Tranche reimbursement obligations) and 2.00% of the total principal amount of the Junior LC Tranche reimbursement obligations, as set forth in the Fourth Amendment to the Credit Agreement. Obligations of WeWork Companies LLC and its restricted subsidiaries under the Junior LC Tranche are subordinated in right of payment to the obligations under the Senior LC Tranche to the extent of the value of the collateral securing such obligations.

In December 2022, the Company and the other parties thereto entered into the Fifth Amendment to the Credit Agreement (the "Fifth Amendment to the Credit Agreement") to, among other things, (i) extend the termination date of the Senior LC Tranche to March 14, 2025, (ii) replace SBG with SVF II as an obligor

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with respect to the Senior LC Tranche and (iii) reduce the Senior LC Tranche to $1.1 billion, with a subsequent automatic decrease to $930 million on February 10, 2023. The reimbursement obligations under the Senior LC Tranche were amended to an amount equal to the sum of (i) 6.00% - 6.75%, based on the relevant Rating Level Period (as defined in the Fifth Amendment to the Credit Agreement), and (ii) 2.00% of the total principal amount of the Senior LC Tranche reimbursement obligations, as set forth in the Fifth Amendment to the Credit Agreement. The Fifth Amendment to the Credit Agreement provided for the resignation of SBG as the obligor and assumption by SVF II of all of SBG's obligations with respect to the Senior LC Tranche. The Fifth Amendment to the Credit Agreement provided that the total senior letter of credit tranche commitments may be increased to an amount not to exceed $1.25 billion until February 10, 2023 and $1.05 billion thereafter with additional commitments. The Fifth Amendment to the Credit Agreement also provides that if letter of credit reimbursements under the senior letter of credit tranche are made by SVF II, the commitments in respect of the senior letter of credit tranche will be reduced by a corresponding amount.

In February 2023, the Company and the other parties thereto entered into the Sixth Amendment to the Credit Agreement. Pursuant to the Sixth Amendment to the Credit Agreement, among other things, (i) the Junior LC Tranche was increased by $120 million to $470 million, (ii) the termination date of the Junior LC Tranche was extended from November 30, 2023 to March 7, 2025, (iii) the interest margin applicable to the Junior LC Tranche was increased from 6.50% to 9.90% for reimbursement obligations, and (iv) the Senior LC Tranche was increased from $930 million to $960 million. The additional $120 million letter of credit under the Junior LC Tranche was issued and drawn for the benefit of WeWork Companies LLC in full upon effectiveness of the Sixth Amendment to the Credit Agreement. The reimbursement obligations under the Junior LC Tranche remain voluntarily repayable at any time, subject to a prepayment fee in connection with prepayments made during the 18 months following the date of the Sixth Amendment to the Credit Agreement, in the amount of the net present value of interest that would have accrued on such amounts prepaid from the prepayment date to the date that is 18 months following the date of the Sixth Amendment to the Credit Agreement, discounted by the Federal Funds Effective Rate (as defined in the Credit Agreement).

During the years ended December 31, 2022 and 2021, the Company recognized $20 million and none, respectively, in interest expense in connection with the Junior LC Tranche.

The Senior LC Tranche and Junior LC Tranche are guaranteed by substantially all of the domestic wholly-owned subsidiaries of WeWork Companies LLC (collectively the “Guarantors”) and are secured by substantially all the assets of WeWork Companies LLC and the Guarantors, in each case, subject to customary exceptions.

Certain of our outstanding letters of credit under the Senior LC Tranche include annual renewal provisions under which the issuing banks can elect not to renew a letter of credit if the next annual renewal extends the LC period beyond March 14, 2025, the current termination date of the Senior LC Tranche. If a letter of credit is not renewed, the landlord may elect to draw the existing letter of credit before it expires, in which case either WeWork or SVF II would be obligated to repay the issuing bank immediately (after application of any Cash Collateral as defined in and pursuant to the terms of the Credit Agreement). The Company intends to extend the maturity of the Senior LC Tranche such that there are no material payments under these renewal provisions. The Company has not yet agreed to any final terms for any such extension and its execution and terms are uncertain and subject to change. The Company cannot give any assurances that any such extension will be completed on acceptable terms, or at all.

The Company/SBG Reimbursement Agreement

In connection with the Credit Agreement, WeWork Companies LLC also entered into a reimbursement agreement, dated as of February 10, 2020 (as amended, the "Company/SBG Reimbursement Agreement"), with SBG pursuant to which (i) SBG agreed to pay substantially all of the fees and expenses payable in connection with the Credit Agreement, (ii) the Company agreed to reimburse SBG for certain of such fees and expenses (including fronting fees up to an amount 0.125% on the undrawn

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and unexpired amount of the letters of credit, plus any fronting fees in excess of 0.415% on the undrawn and unexpired amount of the letters of credit) as well as to pay SBG a fee of 5.475% on the amount of all outstanding letters of credit and (iii) the Guarantors agreed to guarantee the obligations of WeWork Companies LLC under the Company/SBG Reimbursement Agreement. In December 2021, the Company/SBG Reimbursement Agreement was amended following the entry into the Amended Credit Support Letter to, among other things, change the fees payable by WeWork Companies LLC to SBG to (i) 2.875% of the face amount of letters of credit issued under the Credit Agreement (drawn and undrawn), payable quarterly in arrears, plus (ii) the amount of any issuance fees payable on the outstanding amounts under the Credit Agreement, which as of December 31, 2021, was equal to 2.6% of the face amount of letters of credit issued under the Senior LC Facility (drawn and undrawn). In May 2022, in connection with the Fourth Amendment to the Credit Agreement, the Company/SBG Reimbursement Agreement was amended to clarify that the payment obligations of certain fees and expenses in respect of the Junior LC Tranche related to the Fourth Amendment to the Credit Agreement are the responsibility of the Company and not SBG, as described above.

In December 2022, the Company, SBG and SVF II entered into an Amended and Restated Reimbursement Agreement (as further amended or otherwise modified from time to time, the "A&R Reimbursement Agreement"), which amended and restated the Company/SBG Reimbursement Agreement, to, among other things, (i) substitute SVF II instead of SBG with respect to the Senior LC Tranche, (ii) retain SBG's role with respect to the Junior LC Tranche and (iii) amend the fees payable by the Company such that no fees will be owed to SVF II in respect of the senior letter of credit issued through February 10, 2024 and thereafter fees will accrue at 7.045% of the face amount of the Senior LC Tranche, compounding quarterly and payable at the earlier of March 14, 2025 and termination or acceleration of the Senior LC Tranche.

In February 2023, the Company, SBG and SVF II entered into the First Amendment to the A&R Reimbursement Agreement to, among other things, substitute SVF II instead of SBG with respect to the Junior LC Tranche and adjust the Company's reimbursement rights and obligations to each party accordingly. In addition the amendment modified the fees payable by the Company under the A&R Reimbursement Agreement, such that no fee would be owed to SVF II in respect of the Junior LC Tranche through November 30, 2023 and thereafter fees would accrue at 6.5% of the aggregate reimbursement obligations thereunder, compounding quarterly and payable at the earlier of March 7, 2025 and termination or acceleration of the Junior LC Tranche.

LC Debt Facility

In May 2021, the Company entered into a loan agreement with a third party to raise up to $350 million of cash in exchange for letters of credit issued from the LC Facility (the “LC Debt Facility”). The third party will issue a series of discount notes to investors of varying short term (1-6 month) maturities and make a matching discount loan to WeWork Companies LLC. WeWork Companies LLC will pay the 5.475% issuance fee on the letter of credit, the 0.125% fronting fee on the letter of credit and the interest on the discount note. At maturity, the Company has the option, based on prevailing market conditions and liquidity needs, to roll the loan to a new maturity or pay off the loan at par. No loans drawn under the LC Debt Facility can have maturity dates that extend beyond the termination date of the Senior LC Facility.

In connection with the Merger Agreement, the Company agreed to not enter into loan facilities utilizing the LC Debt Facility without consent from SBG. In May 2021, the Company entered into a letter agreement with SBG pursuant to which SBG consented to the LC Debt Facility and the Company agreed to certain restrictions that will apply to the LC Debt Facility, including that (i) until such time as no amounts remain undrawn by the Company under the $2.2 billion 5.00% Senior Notes, amounts issued under the LC Debt Facility will not exceed $100 million, (ii) the Company would repay all amounts outstanding under the LC Debt Facility within 30 days after the closing of the Business Combination, and (iii) the prior written consent of SBG will be required for the first draw under the LC Debt Facility that occurs after closing of the Business Combination.

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Bank Facilities

In February 2020, in conjunction with the availability of the initial facility under the Credit Agreement, our 2019 Credit Facility and 2019 LC Facility (each as defined below) were terminated. As of December 31, 2022, $6 million remains outstanding in a letter of credit issued under the 2019 LC Facility and is secured by a new letter of credit issued under the Senior LC Tranche.

Other Letter of Credit Arrangements

The Company has also entered into various other letter of credit arrangements, the purpose of which is to guarantee payment under certain leases entered into by JapanCo and other fully owned subsidiaries. There was $3 million of standby letters of credit outstanding under these other arrangements that are secured by $3 million of restricted cash at December 31, 2022.

Uses of Cash

Contractual Obligations

The following table sets forth certain contractual obligations as of December 31, 2022 and the timing and effect that such obligations are expected to have on our liquidity and capital requirements in future periods:

(Amounts in millions)

2028 and beyond

Total

Non-cancelable operating lease commitments (1)

Finance lease commitments, including interest

Construction commitments (2)

Asset retirement obligations (3)

Debt obligations, including interest (4)

5.00% Senior Notes (5)

Warrant liabilities (6)

Total

(1) Future undiscounted fixed minimum lease cost payments for non-cancelable operating leases, inclusive of escalation clauses and exclusive of lease incentive receivables and contingent lease cost payments, that have initial or remaining lease terms in excess of one year as of December 31, 2022. Excludes an additional $0.5 billion relating to executed non-cancelable leases that have not yet commenced as of December 31, 2022. See Note 20 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details.

(2) In the ordinary course of our business, we enter into certain agreements to purchase construction and related contracting services related to the build-outs of our locations that are enforceable and legally binding and that specify all significant terms and the approximate timing of the purchase transaction. Our purchase orders are based on current needs and are fulfilled by the vendors as needed in accordance with our construction schedule.

(3) Certain lease agreements contain provisions that require us to remove leasehold improvements at the end of the lease term. When such an obligation exists, we record an asset retirement obligation at the inception of the lease at its estimated fair value. These obligations are recorded as liabilities on our Consolidated Balance Sheets as of December 31, 2022.

(4) Primarily represents principal and interest payments on 7.875% Senior Notes, LC Debt Facility and other loans as of December 31, 2022.

(5) Primarily represents principal and interest payments on 5.00% Senior Notes as of December 31, 2022.

(6) Represents the fair value as of December 31, 2022, of the Company's obligation to deliver 7,773,333 shares in respect of the Company’s outstanding Private Placement Warrants, as defined and as further described in Note 16 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

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Lease Obligations

The future undiscounted fixed minimum lease cost payment obligations under operating and finance leases signed as of December 31, 2022 were $27.9 billion. A majority of our leases are held by individual special purpose subsidiaries, and as of December 31, 2022, the total security packages provided by the Company and its subsidiaries in respect of these lease obligations was approximately $4.0 billion in the form of corporate guarantees, outstanding standby letters of credit, cash security deposits to landlords and surety bonds issued, representing less than 15% of future undiscounted minimum lease cost payment obligations. In addition, individual property lease security obligations on any given lease typically decrease over the life of the lease, although we may continue to enter into new leases in the ordinary course of our business.

Capital Expenditures and Tenant Improvement Allowances

Capital expenditures are primarily for the design and build-out of our spaces, and include leasehold improvements, equipment and furniture. Our leases often contain provisions regarding tenant improvement allowances, which are contractual rights to reimbursements paid by landlords for a portion of the costs we incur in designing and developing our workspaces. Tenant improvement allowances are reflected in the Consolidated Financial Statements upon lease commencement as our practice and intent is to spend up to or more than the full amount of the tenant improvement allowance that is contractually provided under the terms of the contract.

Over the course of a typical lease with tenant improvement allowances, we incur certain capital expenditures that we expect to be reimbursed by the landlords pursuant to provisions in our leases providing for tenant improvement allowances but for which we have not yet satisfied all conditions for reimbursement and, therefore, the landlords have not been billed at the time of such capital expenditures. Thus, while such receivables are reflected in our Consolidated Financial Statements upon lease commencement, the timing of the achievement of the applicable milestones and billing of landlords will impact when reimbursements for tenant improvement allowances will be received, which may impact the timing of our cash flows.

We monitor gross and net capital expenditures, which are primarily associated with our leasehold improvements, to evaluate our liquidity and workstation development efforts. We define net capital expenditures as the gross purchases of property, equipment and capitalized software, as reported in “cash flows from investing activities” in the Consolidated Statements of Cash Flows, less cash collected from landlords for tenant improvement allowances. While cash received for tenant improvement allowances is reported as “cash flows from operating activities” in the Consolidated Statements of Cash Flows, we consider cash received for tenant improvement allowances to be a reduction against our gross capital expenditures in the calculation of net capital expenditures.

As the payments received from landlords for tenant improvement allowances are generally received after certain project milestones are completed, payments received from landlords presented in the table below are not directly related to the cash outflows reported for the capital expenditures reported.

The table below shows our gross and net capital expenditures for the periods presented:

(Amounts in millions)

Year Ended December 31,

Gross capital expenditures

Cash collected for tenant improvement allowances

Net capital expenditures

Our ability to negotiate lease terms that include significant tenant improvement allowances has been and may continue to be impacted by our expansion into markets where such allowances may be less common. Our capital expenditures have also been and may continue to be impacted by our focus on

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enterprise members, who generally require more customization than a traditional workspace, resulting in higher build-out costs. However, we expect any increase in build-out costs resulting from expansion of configured solutions for our growing enterprise member base to be offset by increases in committed revenue, as enterprise members often sign membership agreements with longer terms and for a greater number of memberships than our other members. Future decisions to enter into long-term revenue-sharing agreements with building owners, rather than more standard fixed lease arrangements, may also impact future cash inflows relating to tenant improvement allowances and cash outflows relating to capital expenditures.

In the ordinary course of our business, we enter into certain agreements to purchase construction and related contracting services related to the build-outs of our operating locations that are enforceable, legally binding, and that specify all significant terms and the approximate timing of the purchase transaction. Our purchase orders are based on current needs and are fulfilled by the vendors as needed in accordance with our construction schedule. As of December 31, 2022, we have issued approximately $60 million in such outstanding construction commitments. As of December 31, 2022, we also had a total of $178 million in lease incentive receivables, recorded as a reduction of our long-term lease obligations on our Consolidated Balance Sheets. Of the total $178 million lease incentive receivable, $181 million was accrued at the commencement of the respective lease but unbilled as of December 31, 2022.

Summary of Cash Flows

Comparison of the years ended December 31, 2022 and 2021

A summary of our cash flows from operating, investing and financing activities for the years ended December 31, 2022 and 2021 is presented in the following table:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effects of exchange rate changes

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - Beginning of period

Cash, cash equivalents and restricted cash - End of period

Operating Cash Flows

Cash used in operating activities consists primarily of the revenue we generate from our members and the tenant improvement allowances we receive offset by rent, real estate taxes, common area maintenance and other operating costs. In addition, uses of cash from operating activities consist of employee compensation and benefits, professional fees, advertising, office supplies, utilities, cleaning, consumables, and repairs and maintenance related payments as well as member referral fees and various other costs of running our business.

The $1,179 million decrease in net cash used in operating activities from the year ended December 31, 2022 compared to the year ended December 31, 2021, was primarily attributable to the increase in total revenues of $675 million due to the continued impact of COVID-19 in 2021 and recovery during the year ended December 31, 2022. The decrease in net cash used in operating activities was also attributed to net savings achieved for the year ended December 31, 2022 through the continuation of our operational

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restructuring program and progress towards our efforts to create a more efficient organization which drove a decrease in location operating expenses, pre-opening location operating expenses, and selling, general and administrative expenses. Net cash used in operating activities also decreased due to a $211 million decrease in restructuring liability net payments, and a $44 million increase in distributions from equity method investments. The decrease in net cash used in operating activities was partially offset by $242 million decrease in cash received for operating lease incentives - tenant improvement allowances and $51 million increase in cash paid for interest.

Included in our cash flow from operating activities was $102 million of cash used by consolidated VIEs for the year ended December 31, 2022, compared to $113 million of cash used by consolidated VIEs for the year ended December 31, 2021.

Investing Cash Flows

The $53 million decrease in net cash used in investing activities from the year ended December 31, 2022 compared to the year ended December 31, 2021, was primarily due to $31 million increase in proceeds from asset divestitures and sale of investments and $19 million decrease in contributions to investments. The decrease in net cash used in investing activities also included $18 million in cash proceeds received as distributions from investments during the year ended December 31, 2022 compared to none during the year ended December 31, 2021. This decrease in net cash used in investing activities was partially offset by the net cash paid of $9 million for the acquisition of Common Desk during the year ended December 31, 2022.

Financing Cash Flows

The $1,941 million decrease in net cash provided by financing activities for the year ended December 31, 2022 compared to the year ended December 31, 2021, was primarily due to $1,209 million and $1,000 million in proceeds received from the Business Combination and PIPE financing, net of issuance costs paid, and draws on the 5.00% Senior Notes, respectively, during the year ended December 31, 2021 with no comparable activity during the year ended December 31, 2022. The decrease in net cash provided by financing activities also included $19 million decrease in additions to members' service retainers, net of refunds to members' service retainers and debt and equity issuance costs of $21 million during the year ended December 31, 2022. The decreases in cash flows provided by financing activities was partially offset by $350 million reduction of repayments of debt, net of proceeds from issuance of debt.

Comparison of the years ended December 31, 2021 and 2020

A summary of our cash flows from operating, investing and financing activities for the years ended December 31, 2021 and 2020 is presented in the following table:

Year Ended December 31,

Change

(Amounts in millions, except percentages)

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effects of exchange rate changes

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - Beginning of period

Cash, cash equivalents and restricted cash - End of period

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Operating Cash Flows

Cash used in operating activities consists primarily of the revenue we generate from our members and the tenant improvement allowances we receive offset by rent, real estate taxes, common area maintenance and other operating costs. In addition, uses of cash from operating activities consist of employee compensation and benefits, professional fees, advertising, office supplies, warehousing, utilities, cleaning, consumables, and repairs and maintenance related payments as well as member referral fees and various other costs of running our business.

The $1.1 billion increase in net cash used in operating activities from the year ended December 31, 2021 compared to the year ended December 31, 2020, was primarily attributable to the decrease in total revenues of $846 million due to the continued impact of COVID-19 in 2021. The increase in net cash used in operating activities was also driven by a decrease of $928 million in tenant improvement allowances received during the year ended December 31, 2021. The increase was partially offset by net savings achieved for the year ended December 31, 2021 through the continuation of our operational restructuring program and progress towards our efforts to create a leaner, more efficient organization which drove a decrease in location operating expenses, pre-opening location expenses, and SG&A expenses of $957 million, net of $239 million decrease in non-cash lease costs and $30 million increase in Adjusted EBITDA addbacks discussed above in "— Key Performance Indicators — Adjusted EBITDA ". Also partially offsetting the increase in net cash used in operating activities is a decrease of $45 million in cash payments made on restructuring liabilities.

Included in our cash flow from operating activities was $113 million of cash used by consolidated VIEs for the year ended December 31, 2021, compared to $36 million of cash used by consolidated VIEs for the year ended December 31, 2020.

Investing Cash Flows

The $97 million decrease in net cash used in investing activities from the year ended December 31, 2021 compared to the year ended December 31, 2020, was primarily due to $1.1 billion decrease in cash paid for purchases of property and equipment, a $72 million decrease in contributions to investments, and a decrease in the net cash deconsolidated totaling $54 million in connection with the October 2020 ChinaCo Deconsolidation. This decrease in net cash used in investing activities was partially offset by the divestiture proceeds of $1.2 billion received during the year ended December 31, 2020, primarily related to the sale of the 424 Fifth Property held by the 424 Fifth Venture and also including proceeds from the sale of Meetup, Managed by Q, Teem, SpaceIQ, Flatiron, and certain non-core corporate equipment, compared to no divestitures during the year ended December 31, 2021.

Financing Cash Flows

The $2.4 billion net increase in cash flows provided by financing activities for the year ended December 31, 2021 compared to the year ended December 31, 2020, was primarily due to $1.2 billion of proceeds from Business Combination and PIPE financing, net of issuance costs paid. Also included in the increase in cash flows provided by financing activities is an $813 million debt repayment and $320 million distribution to noncontrolling interest holders during the year ended December 31, 2020, both primarily related to the sale of the 424 Fifth Property, with no comparable activity during the year ended December 31, 2021. These increases in cash flows provided by financing activities for the year ended December 31, 2021 compared to the year ended December 31, 2020, were partially offset by a $200 million decrease in proceeds received from draws on the 5.00% Senior Notes.

Off-Balance Sheet Arrangements

Except for certain letters of credit and surety bonds entered into as security under the terms of several of our leases, our unconsolidated investments, and the unrecorded construction and other commitments set forth above, we did not have any off-balance sheet arrangements as of December 31, 2022. Our

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unconsolidated investments are discussed in Note 13 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

Critical Accounting Estimates, Significant Accounting Policies and New Accounting Standards

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. GAAP applicable to a going concern. This presentation contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described below. The Consolidated Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern. In connection with the preparation of the Consolidated Financial Statements pursuant to ASC 250-40, Presentation of Financial Statements — Going Concern (“ASC 250-40”) , management evaluated whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these Consolidated Financial Statements are issued. As further discussed in Note 2 to the Consolidated Financial Statements, our losses and projected cash needs, combined with our current liquidity level, initially raised substantial doubt about the Company’s ability to continue as a going concern. Management’s plan to improve the Company’s liquidity and successfully alleviate the substantial doubt includes (1) restructuring existing debt and raising additional capital and, (2) taking additional operational restructuring actions furthering the plan that commenced following a change in leadership in 2020. Management believes that the expected impact on our liquidity and cash flows resulting from Management’s plan are sufficient to enable the Company to meet its obligations for at least twelve months from the issuance date and alleviate the conditions that initially raised substantial doubt about the Company's ability to continue as a going concern.

Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting policy estimate to be critical if: (1) we must make assumptions that were uncertain when the estimate was made; and (2) changes in the estimate, or selection of a different estimate methodology could have a material effect on our consolidated results of operations or financial condition. While we believe that our estimates, assumptions and judgments are reasonable, they are based on information available when the estimate or assumption was made. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments due to unforeseen events or otherwise could have a material impact on our financial position or results of operations.

This includes the net operating income assumptions in the Company's long-lived asset impairment testing, the timing of capital expenditures and fair value measurement changes for assets and liabilities that the Company measures at fair value and its assessment of its ability to continue to meet its obligations as they come due.

The Company's net operating assumptions and liquidity forecasts are based upon continued execution of its operational restructuring program and also includes management's best estimate of the currently evolving macroeconomic landscape, including a potential economic recession, rising interest rates, inflation, and the slower than expected recovery in certain markets from the impact that the COVID-19 pandemic. These factors may continue to have an impact on WeWork's business and its liquidity needs; however, the extent to which the Company's future results and liquidity needs are further affected will largely depend on the delays in location openings, our members' renewal of their membership agreements, the effect on demand for WeWork memberships, any permanent shifts in working from home and the Company's ongoing lease negotiations with its landlords, among others.

The critical accounting estimates, assumptions and judgments that we believe to have the most significant impact on our Consolidated Financial Statements are described below. See Note 2 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K f or additional

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information related to critical accounting estimates and significant accounting policies, including details of recent accounting pronouncements that were adopted and not yet adopted as of December 31, 2022.

Leases

At lease commencement, we recognize a lease obligation and corresponding right-of-use asset based on the initial present value of the fixed lease payments using our incremental borrowing rates for our population of leases. The incremental borrowing rate represents the rate of interest we would have to pay to borrow over a similar term, and with a similar security, in a similar economic environment, an amount equal to the fixed lease payments. The commencement date is the date we take initial possession or control of the leased premise or asset, which is generally when we enter the leased premises and begin to make improvements in preparation for its intended use.

Our leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. We utilized a model consistent with the credit quality for our outstanding debt instruments to estimate our specific incremental borrowing rates that align with applicable lease terms.

Renewal options are typically solely at our discretion and are only included within the lease obligation and right-of-use asset when we are reasonably certain that the renewal options would be exercised.

Variable lease payments that depend on an index or rate are included in lease payments and are measured using the prevailing index or rate at lease inception or the measurement date. Changes to the index or rate are recognized in the period of change.

We evaluate our right-of-use assets for recoverability when events or changes in circumstances indicate that the asset may have been impaired. In evaluating an asset for recoverability, we consider the future cash flows expected to result from the continued use of the asset and the eventual disposition of the asset. If the sum of the expected future cash flows, on an undiscounted basis, is less than the carrying amount of the asset, an impairment loss equal to the excess of the carrying amount over the fair value of the asset is recognized.

Asset Retirement Obligations

Certain lease agreements contain provisions that require us to remove leasehold improvements at the end of the lease term. When such an obligation exists, we record an asset retirement obligation at the inception of the lease at its estimated fair value. The associated asset retirement costs are capitalized as part of the carrying amount of the leasehold improvements and depreciated over their useful lives. The asset retirement obligation is accreted to its estimated future value as interest expense using the effective-interest rate method.

Impairment of Goodwill

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the assets acquired less liabilities assumed in connection with the acquisition. Goodwill is not amortized, but instead is tested for impairment at least annually in the fourth quarter of each year as of October 1 at each reporting unit level, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired, and is required to be written down when impaired.

The guidance for goodwill impairment testing begins with an optional qualitative assessment to determine whether it is more likely than not that goodwill is impaired. The Company is not required to perform a quantitative impairment test unless it is determined, based on the results of the qualitative assessment, that it is more likely than not that goodwill is impaired. The quantitative impairment test is prepared at the reporting unit level. In performing the impairment test, management compares the estimated fair values of the applicable reporting units to their aggregate carrying values, including goodwill. If the carrying amounts of a reporting unit including goodwill were to exceed the fair value of the reporting unit, an

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impairment loss is recognized within our Consolidated Statements of Operations in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The process of evaluating goodwill for impairment requires judgments and assumptions to be made to determine the fair value of the reporting unit, including discounted cash flow calculations, assumptions market participants would make in valuing each reporting unit and the level of the Company’s own share price. We completed our annual assessment of goodwill in the October 2022 and determined that there was no impairment of goodwill.

An unfavorable change in our expectations for the financial performance of our reporting unit, particularly long-term growth and profitability, would reduce the fair value of our reporting unit. The currently evolving macroeconomic landscape, including a potential economic recession, rising interest rates, and/or inflation, could result in slower than expected growth as companies and individuals may defer returning back to the office until a future time or consider remote and hybrid office space strategies. This continued impact may have a negative impact to the valuation assumptions which may reduce the fair value of our reporting unit. Should such events occur and it becomes more likely than not that a reporting unit’s fair value has fallen below its carrying value, we will perform an interim goodwill impairment test(s), in addition to the annual impairment test. Future impairment tests may result in a goodwill impairment, depending on the outcome of the quantitative impairment test. We would include goodwill impairment charges in impairment expense/(gain on sale) of goodwill, intangibles and other assets in the accompanying Consolidated Statements of Operations.

Impairment of Long‑Lived Assets

Long‑lived assets, including property and equipment, right-of-use assets, capitalized software, and other finite-lived intangible assets, are evaluated for recoverability when events or changes in circumstances indicate that the asset may have been impaired. In evaluating an asset for recoverability, the Company considers the future cash flows expected to result from the continued use of the asset and the eventual disposition of the asset. If the sum of the expected future cash flows, on an undiscounted basis, is less than the carrying amount of the asset, an impairment loss equal to the excess of the carrying amount over the fair value of the asset is recognized.

In connection with operational restructuring program described in Note 5 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K and related changes in the Company's leasing plans and planned or completed disposition of certain non-core operations, as well as the impact to the Company's business as a result of COVID-19, the Company has also recorded various other non-routine write-offs, impairments and gains on sale of goodwill, intangibles and various other assets. These non-routine charges totaled $625 million, $870 million, and $1,356 million during the years ended December 31, 2022, 2021, and 2020, respectively, and are included as impairment expense/(gain on sale) of goodwill, intangibles and other assets in the accompanying Consolidated Statements of Operations.

An unfavorable change in our expectations for the financial performance of our long-lived assets, particularly the expected future cash flows either a result of a potential termination or impact of the currently evolving macroeconomic landscape, would reduce the fair value of our long-lived assets. We will perform quarterly long-lived asset impairment tests and future impairment tests may result in a further impairment. We would include goodwill impairment charges in impairment expense/(gain on sale) of goodwill, intangibles and other assets in the accompanying Consolidated Statements of Operations.

Income Taxes, Deferred Taxes and Valuation Allowance

The Company accounts for income taxes under the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences

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are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the tax rates are enacted. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. As of December 31, 2022, the Company had a deferred tax assets of $8.4 billion, partially offset by a valuation allowance of $6.0 billion and deferred tax liabilities of $2.3 billion.

We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. The Company has recorded a full valuation allowance on its net deferred tax assets in most jurisdictions, however in certain jurisdictions, the Company did not record a valuation allowance where the Company had profitable operations, or the Company recorded only a partial valuation allowance due to the existence of deferred tax liabilities that will partially offset the Company’s deferred tax assets in future years. As of December 31, 2022, we concluded, based on the weight of all available positive and negative evidence, that a portion of our deferred tax assets are not more likely than not to be realized. As such a valuation allowance in the amount of $6.0 billion has been recognized on the Company’s deferred tax assets. The net change in valuation allowance for 2022 was an increase of $0.3 billion.

See Note 21 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details regarding income taxes.

Stock-based Compensation

Stock-based compensation expense attributable to equity awards granted to employees and non-employees is measured at the grant date based on the fair value of the award. For employee awards, the expense is recognized on a straight-line basis over the requisite service period for awards that actually vest, which is generally the period from the grant date to the end of the vesting period. For non-employee awards, the expense for awards that actually vest is recognized based on when the goods or services are provided.

We expect to continue to grant stock-based awards in the future, and, to the extent that we do, our stock-based compensation expense recognized in future periods will likely continue to represent a significant expense.

We estimate the fair value of stock option awards granted using the Black-Scholes-Merton option pricing formula (the “Black-Scholes Model”) and a single option award approach. This model requires various significant judgmental assumptions in order to derive a final fair value determination for each type of award, including the expected term, expected volatility, expected dividend yield, risk-free interest rate, and fair value of our stock on the date of grant. The expected option term for options granted is calculated using the “simplified method.” This election was made based on the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is based on similar entities whose stock is publicly traded. We use the historical volatilities of similar entities due to the lack of sufficient historical data for our common stock price. Dividend yields are based on our history and expected future actions. The risk-free interest rate is based on the yield curve of a zero coupon U.S. Treasury bond on the date the stock option award was granted with a maturity equal to the expected term of the stock option award. All grants of stock options generally have an exercise price equal to or greater than the fair market value of such common stock on the date of grant.

The Company estimated the fair value of the WeWork Partnerships Profits Interest Units awards in connection with the modification of the original stock options using the Hull-White model and a binomial lattice model in order to apply appropriate weight and consideration of the associated distribution threshold and catch-up base amount.  The Hull-White model requires similar judgmental assumptions as the Black-Scholes Model used for valuing the Company's options.

Because there has historically been no public market for our stock, the fair value of our equity has historically been approved by our board of directors or the compensation committee thereof as of the date

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stock-based awards were granted. In estimating the fair value of stock, we use the assistance of a third-party valuation specialist and considered factors we believe are material to the valuation process, including but not limited to, the price at which recent equity was issued by us to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, economic and market conditions, and estimates of weighted average cost of capital. We believe the combination of these factors provides an appropriate estimate of our expected fair value and reflects the best estimate of the fair value of our common stock at each grant date.

Subsequent to executing the Merger Agreement through the Business Combination (as defined in Note 1 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K ), we determined the value of our common stock based on the observable daily closing price of BXAC's stock (ticker symbol "BOWX") multiplied by the exchange ratio in effect for such transaction date. Subsequent to the Business Combination, we determined the value of our common stock based on the observable daily closing price of WeWork's stock (ticker symbol "WE").

We have elected to recognize forfeitures of stock-based awards as they occur. Recognition of any compensation expense relating to stock grants that vest contingent on the completion of an initial public offering or "Acquisition" (as defined in the 2015 Plan detailed in Note 24 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K) as deferred until the consummation of such offering or Acquisition. These performance-based vesting conditions (based upon the occurrence of a liquidity event (as defined in the 2015 Plan and related award agreements) were deemed satisfied upon the closing of the Business Combination.

Other Fair Value Measurements

Other critical accounting estimates include the valuation of our warrant liabilities which are remeasured to fair value on a recurring basis, with the corresponding gain or loss included in our gain (loss) from change in fair value of warrant liabilities. The warrant liabilities as of December 31, 2022, were valued using the level 2 input of the fair value of our public warrants traded on the NYSE under the ticker "WEWS".

See Note 18 of the notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional details regarding fair value measurements.

Consolidation and Variable Interest Entities

We are required to consolidate entities deemed to be VIEs in which we are the primary beneficiary. We are considered to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE.

Revenue Recognition

We recognize revenue under the five-step model required under ASC 606, which requires us to identify the relevant contract with the member, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations identified and recognize revenue when (or as) each performance obligation is satisfied.

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our members to make required payments. If the financial condition of a specific member were to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

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