TIDMIWG TIDMTTM
RNS Number : 5449S
IWG PLC
07 November 2023
7th November 2023
THIRD QUARTER TRADING STATEMENT
IWG plc, the largest provider of hybrid workspace globally
including its Regus and Spaces brands with an unrivalled network of
3,455 locations across more than 120 countries, issues its third
quarter trading statement for the three months ended 30th September
2023.
CONTINUING TO DELIVER AS WORLD LEADER IN HYBRID WORKSPACE
-- Quarterly system revenue of GBP830m, representing constant
currency growth of 8% year-on-year
-- Acceleration of capital-light centre growth: 200
capital-light centre signings during Q3 taking the total to 582
year to date, almost 40% more than signed during all of 2022
-- Previous signings progressing through to openings (99 in Q3
2023 vs 32 in Q3 2022). This is expected to increase further,
driving higher fee income
-- Net financial debt reduced by GBP24m during Q3 2023 to
GBP634m with revenues and continued cost discipline driving cash
generation
-- No change in Group's financial outlook from the statement at H1 results on 8th August 2023
IWG will be hosting a Capital Markets Day in New York City on
5th December 2023.
Summary financials
Constant Actual Constant Actual
currency currency currency currency
Continuing operations Q3 Q3 9m 9m
(GBPm) Q3 2023 Q3 2022 YoY YoY 9m 2023 9m 2022 YoY YoY
----------------------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
System revenue(1) 830 812 +8% +2% 2,491 2,259 +11% +10%
Group revenue 736 726 +7% +1% 2,219 2,013 +11% +10%
Net financial
debt(2) 634 723 634 723
----------------------- -------- -------- ---------- ---------- -------- -------- ---------- ----------
1. System-wide revenue represents the total of all revenue made
by both non-consolidated and consolidated locations globally
2. Before the application of IFRS 16 (primarily relating to
operating leases) as defined in the Alternative performance
measures section of the 2022 Annual Report and Accounts
Momentum in quarterly revenue
System-wide revenue increased by 8% year-on-year to GBP830m in
the quarter driven by continued global demand for hybrid working
solutions. Group revenue increased by 7% to GBP736m illustrating
the benefit of network growth, pricing strength, and ancillary
services. As anticipated, FX was a headwind for the Group during Q3
2023, which has adversely affected revenue numbers on an actual FX
basis.
Continued momentum in capital-light operating model
The business continues to sign new locations on a capital-light
basis, meaning the Group will have less capital-intensive exposure
and lower operational leverage. The momentum which was evident in
H1 has continued with 200 new capital-light centres signed in Q3
and 582 signed year-to-date. This adds to an already healthy
pipeline of centres signed but not yet opened. As previously
guided, capital-light centres take on average 10 months to open and
a further 18 months to reach revenue maturity. Additionally, 212
centres which were signed up under the capital-light model have
opened during 2023 (consisting of managed, franchised and variable
rent centres).
Worka
Worka continues to perform in line with management's
expectations. To ensure Worka fully captures the value chain from
the structural growth market of hybrid working. Worka continues to
invest and develop the platform adding new services and geographies
to its operations. The company continues to generate attractive
cash flows. Worka has excellent potential for the future.
Continuing the reduction of net financial debt
Revenue growth, coupled with ongoing cost discipline, has
resulted in net financial debt reduction of GBP24m in the quarter
to GBP634m.
YoY YoY
Q3 2023 Q3 2022 change 9m 2023 9m 2022 change
-------------------------- -------- -------- -------- -------- -------- --------
Number of centres 3,455 3,323 +132 3,455 3,323 +132
Centre openings 99 32 +67 232 102 +130
Centre rationalisations (42) (44) (2) (122) (93) +29
-------------------------- -------- -------- -------- -------- -------- --------
Total new centre deals
signed 204 160 +44 604 285 +319
Of which capital light 200 147 +53 582 252 +330
-------------------------- -------- -------- -------- -------- -------- --------
Average total occupancy +20
(3) 73.5% 73.4% +10 bps 73.6% 73.4% bps
-------------------------- -------- -------- -------- -------- -------- --------
Embedded price, indexed
(4) 103 97 +6% 103 95 +8%
-------------------------- -------- -------- -------- -------- -------- --------
3. Occupancy excluding managed and franchised centres.
4. Price per square foot, Q1 2020 = 100
Capital Markets Day
To help the market better understand our business model, IWG
will be hosting a Capital Markets Day on 5th December 2023 in New
York City. Details of the event can be found using this link .
Mark Dixon, Chief Executive of IWG plc, said:
"The structural growth in hybrid working, combined with our
market position, has resulted in continued revenue momentum in the
third quarter of 2023. Our capital-light growth strategy is
continuing to deliver with around 40% more locations already signed
in 2023 than in the whole of 2022. Our revenue growth and cost
control are driving cash flow enabling us to continue to pay down
debt."
Outlook and guidance
The increasing demand for hybrid and flexible working solutions
continues to provide growth opportunities for the Group. In
particular, the market has facilitated acceleration of the growth
plans for our capital-light segment. Our active management of
costs, including those associated with supporting this accelerated
growth, has enabled us to maintain our strong financial performance
this year.
We confirm our financial outlook for 2023 and remain confident
that both EBITDA(2) and year-end net financial debt(2) will remain
in-line with management's expectations.
Further to the announcement regarding functional currency and
accounting standards consideration, IWG will report full-year 2023
results in GBP with plans to convert to USD with effect from 1st
January 2024. Adopting US GAAP remains under evaluation, with a
decision to be taken during H1 2024.
Financial Calendar
5th December 2023 - Capital Markets Day (New York City, USA)
5th March 2024 - 2023 FY Results (London, UK)
7th May 2024 - Q1 2024 Trading Update (Remote)
Details of conference call
Mark Dixon, Chief Executive Officer, and Charlie Steel, Chief
Financial Officer, will host a conference call for analysts and
investors at 9:00am GMT. To attend the conference call, please
pre-register through PC, Mac, iOS or Android, using this link .
Further information
IWG plc Brunswick Tel: + 44 (0) 20 7404
Mark Dixon, Chief Executive Officer 5959
Charlie Steel, Chief Financial Nick Cosgrove
Officer Peter Hesse
Richard Manning, Head of Investor
Relations
This trading update contains certain forward-looking statements
with respect to the operations of IWG plc. These statements and
forecasts involve risk and uncertainty because they relate to
events and depend upon circumstances that may or may not occur in
the future. There are a number of factors that could cause actual
results or developments to differ materially from those expressed
or implied by these forward-looking statements and forecasts.
Nothing in this announcement should be construed as a profit
forecast.
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END
QRTEAXFKEEDDFFA
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November 07, 2023 02:00 ET (07:00 GMT)
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