IWG Shares Edged 2.1% Higher As Q3 Sales Surged on High Demand

The IWG PLC (LON: IWG) edged 2.05% higher after releasing its third-quarter (Q3)  trading statement for the three months ended 30th September 2023. IWG is the global leader in hybrid workspace solutions and operates popular brands like Regus and Spaces. The company is in 120 countries globally and has a network of 3,455 locations.

The company’s quarterly system revenue reached £830 million, marking an impressive constant currency growth of 8% year-on-year. A remarkable acceleration in capital-light centre growth was observed during Q3, with 200 new capital-light centre signings, bringing the year-to-date total to 582, a substantial increase of nearly 40% compared to all of 2022. 

The momentum from previous signings translated into openings, with 99 new centres opened in Q3 2023, compared to 32 in the same quarter of the previous year. This trend is expected to continue, contributing to higher fee income.

Notably, net financial debt decreased by £24 million during Q3 2023, reducing it to £634 million. This reduction was driven by robust revenue growth and disciplined cost management. The Group's financial outlook remains consistent with the statement made during the H1 results announcement on August 8, 2023.

IWG’s group revenue also increased by 7% to £736 million, highlighting the advantages of network growth, pricing strength, and additional services. The company continued its trend of signing new locations on a capital-light basis, which reduces capital-intensive exposure and operational leverage.

The momentum, seen in H1, persisted with the addition of 200 new capital-light centres signed in Q3 and 582 signed year-to-date. Additionally, the company maintains a robust pipeline of centres signed but have yet to open, with an average 10-month time frame for opening and an additional 18 months to achieve revenue maturity.

Worka, an integral part of IWG's strategy, continues to perform in line with management's expectations.

Mark Dixon, IWG plc’s Chief Executive Officer, 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.”

IWG share price. 

The IWG share price edged 2.05% higher to trade at 140.57p from Monday’s closing price of 137.75p.