International Workplace Group Plc · LSE:IWG
International Workplace — FY2023 Earnings Presentation
31 slides from International Workplace's earnings presentation, Mar 5, 2024
Slide 1: Financial results for the full year ending 31.12.2023
‘IWG Financial results for the full year ending 31.12.2023 5 March 2024
Slide 2: Caution statement
2 2023 Full Year Results Caution statement No representations or warranties, express or This presentation may contain forward- The Company undertakes no obligation to implied are given in, or in respect of, this looking statements that are based on current revise or update any forward-looking presen
Slide 3: Mark Dixon, Founder & Chief Executive Officer
3 2023 Full Year Results Mark Dixon Founder & Chief Executive Officer
Slide 4: Investment Case
4 2023 Full Year Results Investment Case 1 Market leader in a future mega industry – Hybrid work 2 Fast capital light growth 3 Significant cash generation whilst growing 4 Global network and coverage advantage / Platform work 5 50% US 6 Structural cost advantage 7 Most tenured and experienced manage
Slide 5: The new normal
5 2023 Full Year Results the new normal of employees want flexibility in when and where they work1 of companies report better retention thanks to flexible working options2 of companies are planning a full shift to flexible working3 Evolution of hybrid working Traditional approach to Digital-first ap
Slide 6: Client drivers to transition to Hybrid
6 2023 Full Year Results Client drivers to transition to Hybrid Professional of CFOs say of HR professionals Costs Talent service of HRhybrid agree is professionals hybrid working working a significant agree hybrid working is an effective is an effective cost saver recruitment tool recruitment tool H
Slide 7: IWG at a glance: locations, rooms, users
IWG 7 2023 Full Year Results 3,514 locations 867 pipeline deals signed 120/44 countries/languages 895k rooms 8m users 500,000 companies
Slide 8: Hugely fragmented market
8 2023 Full Year Results Hugely fragmented market 3,514 500 • Lead the market 160 on innovation 150 • Multiple products # of locations developed • Well established R&D team • Data-rich history of activity 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 • IWG growth plans Source: WeWork e
Slide 9: The growth opportunity
9 2023 Full Year Results The growth opportunity $3.4trn $5.7trn $2trn c. $100bn c.$2.5bn c. $160bn Sources: Bloomberg, airbnb S-1 Filing, Uber S-1 Filing Total addressable market Market Cap.
Slide 10: 2023 highlights: highest-ever revenue and system-wide growth
1. Constant currency 2. Adjusted EBITDA pre IFRS 10 2023 Full Year Results • Highest-ever revenue with 10%1 growth in system-wide revenue to £3.34bn • Increasing footprint globally - c2x increase in the opening rate during 2023 from 2022 • Capital light pipeline strong with 839 locations signed duri
Slide 11: Medium term EBITDA target
IWG 11 11 2023 Full Year Results Medium term 2022 2023 target $1,200m $1,000m $800m $600m $400m $200m $0m Sources: Based on pre-IFRS EBITDA; GBP to USD FX: 1.25
Slide 12: Charlie Steel, Chief Financial Officer
12 2023 Full Year Results Charlie Steel Chief Financial Officer
Slide 13: 2023 Highlights
13 2023 Full Year Results 2023 Highlights Delivering the plan • Cashflow is building and will continue to grow across our three business units – Company Owned & Leased, Managed & Franchised, Worka - £207m cash generation before growth capex • Capex has reduced and will continue to decline • Net debt
Slide 14: With all divisions contributing
\ 14 2023 Full Year Results With all divisions contributing Gross Profit2 margin • 25% Gross Profit margin2 100% 50% 20% 25% • Managed & Franchised growth driven by existing centres maturing and new centres being added to the network 49% • Company-owned revenue driven by a 6% increase in RevPAR % gr
Slide 15: Why RevPAR is appropriate for IWG
15 2023 Full Year Results Why it’s appropriate for IWG • RevPAR is a well-understood measure used across many industries – such as hotels. • It is particularly relevant to IWG as it incorporates all revenues received across IWG’s expansive product portfolio and is a far more representative way of an
Slide 16: Growth across IWG network
16 2023 Full Year Results Growth across IWG network Preliminary results System RevPAR (£) • Group RevPAR +6% year-over-year to £291 Constant £ / % change 2023 2022 currency • Company-owned RevPAR +6% to £280 Managed & Franchised system-wide 381 392 +1% • RevPAR in Managed and Franchised increased Co
Slide 17: Signings now evolving into openings
17 2023 Full Year Results Signings now evolving into openings Centres signed 2023 2022 YoY YoY change in • Number of signings grew strongly year-over- change % year Total new centre deals signed 867 462 405 +88% • Total number of deals signed +88% and Of which capital light1 839 421 418 +99% number
Slide 18: Becoming more capital light
18 2023 Full Year Results Becoming more capital light 2023 System location movements by Dec-2022 Rooms Rooms Changed Dec-20231 • In line with our Strategy to pivot toward type (k rooms) Opened Rationalised capital-light assets – 92% of centres Conventional 566 +9 (21) +4 558 opened in 2023 were capi
Slide 19: Managed & Franchised fastest system revenue growth
IWG 19 2023 Full Year Results Managed & Franchised fastest system revenue growth FY 2022 Company Owned & Managed & Worka FY 2023 pre FX FX impact FY 2023 2023 Leased Franchised impact System-wide
Slide 20: Managed & Franchised: strong growth and great pipeline
20 2023 Full Year Results Strong growth and great pipeline FY 2023 (£m) Year-on-Year Growth • Fee income up 49% to £50m on £427m of System revenue System revenue 427 20% Gross profit 50 49% • Record 117,000 rooms signed during 2023 up 129% vs 2022 123 • Signings now evolving into openings at pace 11
Slide 21: Company Owned: margin focus delivering results
21 2023 Full Year Results Margin focus delivering results FY 2023 (£m) Year-on-Year Growth • Gross profit pre-rationalisations1 margin increased by > 400 bps to 20.4% Revenue 2,589 7% Gross profit 528 41% • RevPAR increased 6% to £280, delivering revenue growth of 7% to £2.59bn 20.4% 772 gross margi
Slide 22: Worka: strong margin delivery
22 2023 Full Year Results Strong margin delivery FY 2023 (£m) Year-on-Year Growth • Investment continuing in the market-leading hybrid working platform Revenue 319 18% Gross profit 160 16% • Continued progress with multiple bolt-on acquisitions and platform expansion, in line with strategy 50.2% 319
Slide 23: Higher non-centre investments
23 2023 Full Year Results Higher non-centre investments £m Centre Centre Other Capex • Controlling centre maintenance capex as we Maintenance Capex (net) Fitout Capex (net) (incl. M&A) continue to drive efficiencies throughout the Managed & Franchised 0 0 0 business Company Owned & (41) (55) (58) Fr
Slide 24: Strength across the board
24 2023 Full Year Results Strength across the board • All divisions performing strongly Pre-IFRS £m System Revenue Contribution 1 Overhead 2 Adjusted • Managed & Franchised driving revenues – Revenue 3 EBITDA cost investment in the partnerships team is Managed & Franchised now done and EBITDA from t
Slide 25: Margin delivery pre-rationalisations
25 2023 Full Year Results Margin delivery pre-rationalisations Preliminary results - £m 2023 2022 Constant Actual • Record revenue combined with cost discipline currency currency led to strong growth in gross profit before the System-wide revenue 3,335 3,088 10% 8% impact of rationalisations Group r
Slide 26: Expanding margins from Managed and Franchised expected
IWG 26 26 2023 Full Year Results Expanding margins from Managed and Franchised expected 1. Adjusted EBITDA before application of IFRS 16
Slide 27: Cash delivery increasing
27 2023 Full Year Results Cash delivery increasing Preliminary results - £m 2023 2022 Operating profit/(loss) 145 147 Depreciation & amortisation 1,182 1,189 • Cashflow from business activities almost Rationalisation impact 145 12 doubled year-over-year to £297m Rent income 60 50 Rent expense (1,106
Slide 28: Lower centre capex, increasing investment
28 2023 Full Year Results Lower centre capex, increasing investment • Managed & Franchise expansion has enabled us to grow whilst significantly reducing our centre-related capex £37m • Total capex has fallen by over 50% from 2019 peak £259m • New centre capex expected to continue to decline £82m • O
Slide 29: Continue to target 1x
IWG 29 29 2023 Full Year Results Continue to target 1x 2.3x Net debt / EBITDA 1.5x Net debt / £712m EBITDA £31m £608m £55m £11m £6m £522m £90m £93m Discretionary (£390m) Net financial debt CF before Maintenance Tax & Finance Convertible bond FX impact Net financial debt Net centre Acquisition cost,
Slide 30: ESG is important to both us and our customers
30 2023 Full Year Results ESG is important to both us and our customers • IWG empowers businesses and people everywhere to work more sustainably • As a solution to global workforces, and as a business, we are committed to ensuring our business activities achieve the highest level of environmental su
Slide 31: 2024 and beyond
31 2023 Full Year Results 2024 and beyond No change to expectations • No change to expectations • Medium term EBITDA run rate target of $1bn, including strong cashflow production – requires just over 10% CAGR from today • Successful transition to US$ as functional currency and the Board plans to upd
International Workplace Group — FY2023 Earnings Presentation on 6ix