REG - Intnl Workplace Grp - Q1 2025 Trading Update

International WorkplaceAnnouncement

06/05/2025 07:00

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RNS Number : 3423H  International Workplace Group PLC  06 May 2025

 

6 May 2025

 

FIRST QUARTER TRADING STATEMENT

 

International Workplace Group plc, the world's largest hybrid workspace
platform with a network in over 120 countries through workspace, professional
services and digital brands such as Regus, Spaces, HQ, Signature and Instant
Offices, issues its first quarter trading statement for the three months ended
31 March 2025.

 

GROWTH AND CONTINUED CASH GENERATION DRIVING INCREASED SHARE BUYBACK

PROGRAMME AND LEVERAGE REDUCTION

 ●    System-wide revenue of $1,057m, growth of 2% on a year-over-year basis
 ●    Network and coverage expansion continues with higher signings and openings
      year-over-year
      o                                         Q1 2025 signings 224 (2024: 212)
      o                                         Q1 2025 openings 165 (2024: 142)
 ●    Company-owned division year-over-year revenue growth of 3% in open centres
 ●    Managed & Franchised division year-over-year system revenue growth of 23%
      leading to 43% growth in fee income in the quarter
 ●    Delivering in-line with capital allocation policy driven by cash generation:
      o                                         Reduction in net financial debt by $83m in the 12 months to 31 March 2025 and
                                                further reduction in net financial debt during the quarter
      o                                         As of today, completed over $30m of the $50m share buyback programme announced
                                                on 4 March 2025
 ●    Increasing share buyback programme from $50m to $100m, with the
      already-announced $50m expected to be completed by the H1 2025 announcement on
      5 August
 ●    Maintaining FY 2025 guidance with pre-IFRS 16 EBITDA range of $580-$620m on a
      constant currency basis and further leverage reduction

 

Mark Dixon, Chief Executive of International Workplace Group plc, said:

"I am delighted with our start to 2025 despite uncertainty globally. March was
a record sales month, and lead indicators such as enquiries and tours are
running at all-time highs in the US despite the challenging macroeconomic
backdrop. We continue to see signings, and openings grow as we further expand
our network and coverage, allowing the flywheel of our business model to keep
delivering greater cashflow whilst requiring less capital to grow than
historically. We are delighted to continue to deliver returns to our
shareholders whilst simultaneously reducing debt in-line with our targets."

SUMMARY FINANCIALS

 ($m)                                                         Q1 2025  Q1 2024

                                                                                Change
 System-wide revenue                                          1,057    1,035    2%
    Managed & Franchised                                      171      139      23%
    Company-owned                                             802      799      0%
    Company-owned (Open Centres)                              790      764      3%
    Digital & Professional Services                           84       97       (13)%
    Digital & Professional Services underlying revenue        84       83       2%
 Group revenue                                                909      912      0%
 Net financial (debt) (1)                                     (708)    (791)

1.         Before the application of IFRS 16 as defined in the
Alternative Performance measures section of the 2024 Annual Report and
Accounts

 

Managed & Franchised: momentum in system-revenue and fee income continues

Total fee revenue increased 43% in the quarter on a year-over-year basis as
system-revenue grew by 23% as previously signed rooms evolve into openings,
and already open rooms continue to mature. At the end of Q1, we had 202,000
rooms open, and a further 192,000 rooms signed, not yet open. We expect to see
an increase in the run-rate of room and centre openings in Q2 2025 vs Q1 2025.
Once these rooms are all open and mature, they are expected to produce
system-wide revenues of $1.5bn per year.

                                     Q1 2025  Q1 2024  Growth
 System (Partner) revenue ($m)       171      139      23%
 RevPAR ($)                          301      388      (22)%
     Managed                         165      215      (23)%
     Franchised                      470      469      0%
 Fee revenue ($m)                    23       16       43%
 Rooms open                          202,000  141,000  43%
 Centres open                        1,232    800      54%
 Rooms opened in the period (net)    16,000   18,000   (11)%
 Centres opened in the period (net)  116      118      (2)%
 Rooms in pipeline                   192,000  138,000  39%
 New centre deals signed             196      179      9%

 

 

Company-owned: more revenue growth

Company-owned saw a return to revenue growth driven by 3% growth in open
centre revenues and margins continued to expand on a year-over-year basis. We
signed 28 new locations and opened 43 in the quarter - the majority of these
centres are capital-light in nature. Net growth capex continues to fall
year-over-year in line with our strategy to grow via our capital-light
operating model.

                                     Q1 2025  Q1 2024  Growth
 Revenue ($m)(2)                     802      799      0 %
 Revenue (Open Centres)              790      764      3%
 RevPAR ($)                          344      346      (1)%
 Rooms open                          774,000  769,000  1 %
 Centres open                        2,881    2,826    2%
 Rooms opened in the period (net)    (1,000)  (3,000)
 Centres opened in the period (net)  8        (6)

2. Network rationalization has had an impact on revenue growth while
contributing to margin expansion on a year-over-year basis

 

 

RevPAR

RevPAR is a monthly average KPI, defined as the system-wide revenue of the IWG
Network (excluding Digital & Professional Services and excluding centres
opened and closed during the year), divided by the number of available rooms,
which is defined as 7 square metres across all usable space. Given the scale
of the growth and room additions that the Company is adding to the Network,
RevPAR excluding centres opened in 2024 is presented below to show RevPAR
progression excluding the impact of centres not yet mature.

It is expected that the higher-growth segments will show a falling
year-over-year RevPAR because new locations that have opened are not yet
mature are contained within the calculation.

 

 System RevPAR ($, monthly average)  Q1 2025  Q1 2025 ex 2024 Openings  Q1 2024  % change
 Managed & Franchised                301      421                       388      (22)%
 Managed                             165      286                       215      (23)%
 Franchised and JVs                  470      486                       469      0%
 Company-Owned                       344      355                       346      (1)%
 IWG Network                         336      363                       352      (5)%

 

Digital & Professional Services

Digital & Professional Services is focused on capturing the full value
chain from the structural growth of hybrid working through continued
investment in and development of the platform by adding new services and
geographies to its operations. Underlying revenues, which exclude an exited
contract, grew by 2%.

 ($m)                Q1 2025  Q1 2024  Growth
 Revenue             84       97       (13)%
 Underlying revenue  84       83(3)    2%

   3. Excluding the impact of an exited contract

 

Financing and Net Debt

 ($m)                              31 March 2025    31 Dec 2024    31 March 2024
 Cash                              144              148            170
 Drawn RCF                         -                -              (521)
 2027 0.5% Convertible Bond(4)     (173)            (193)          (419)
 2030 6.5% Corporate Bond(4)       (653)            (648)          0
 Other                             (26)             (19)           (21)
 Pre-IFRS 16 net financial debt    (708)            (712)          (791)

4. Corporate Bond and Convertible Bond principal are net of derivative hedges
to remove USD FX volatility

Net financial debt reduced over the quarter driven by:

·      Improved cash flows from our revenue growth, cost control and
continued focus on our capital-light operating model

·      2027 0.5% Convertible Bond: £1m ($23m) repurchase in March 2025
(at a weighted average price of 96.5%), representing a total consideration
of £17m ($22m))

·      Interest payments on the 2030 6.5% Corporate Bond being made on a
semi-annual basis in June 2025 ($31m) and December 2025 ($28m)

Offset by:

·      Repurchase of 4,362,944 shares for $10m as part of the share
buyback programme as at 31 March 2024

·      Annual cash bonus payment, as accrued for at 31 December 2024

·      Foreign exchange impacts ($4m) of a weakening USD against EUR
increasing the carrying value of the unhedged portion of the 2030 6.5%
Corporate Bond. The remaining unhedged portion was fully hedged on 11 April
2025.

 

 

Outlook and guidance

Whilst the Group's core activities are not directly impacted by trade tariffs,
we are cautious given the macroeconomic uncertainty and volatility. March was
a record month for sales both globally and in the US; to date we have seen no
impact on signings or openings.

Accordingly, our expectations for 2025 remain unchanged. We see continued
growth in pre-IFRS 16 EBITDA with FY 2025 expectation of $580m to $620m on a
constant currency basis, net debt/EBITDA continuing to fall and centre
openings and signings above FY 2024 levels.

Saying that, we believe that the impact of the US tariffs on the global
economy remains unknown. In the medium term we continue to target $1bn
pre-IFRS 16 EBITDA. We also reiterate our commitment to maintaining an
Investment Grade credit rating (at BBB) and we expect to continue to reduce
leverage on a net debt / EBITDA basis. We would also reduce the rate of our
share buyback programme if doing so would maintain leverage below year-end
2024 levels on a net debt / EBITDA basis, or to maintain our BBB credit
rating.

We expect US GAAP to be implemented for the half year 2025 results, and the
Group will host investor workshops to discuss the impact of these changes
before the Group's interim results.

 

Financial calendar

 20 May 2025      Annual General Meeting
 30 May 2025      Final 2025 dividend payment date
 5 August 2025    2025 Interim Results
 4 November 2025  Third Quarter 2025 Trading Update
 4 December 2025  Investor Day in New York City

 

 

Details of results presentation

Mark Dixon, Chief Executive Officer, and Charlie Steel, Chief Financial
Officer, will be hosting a conference call for analysts and investors at 9am
UK time.

Please pre-register through PC, Mac, iOS or Android to attend the conference
call using the link below:
https://brunswickgroup.zoom.us/webinar/register/WN_CG-A_6ZtSLuzkCBh1THTqQ
(https://brunswickgroup.zoom.us/webinar/register/WN_CG-A_6ZtSLuzkCBh1THTqQ)

 

Further information

International Workplace Group plc

 Mark Dixon       Chief Executive Officer
 Charlie Steel    Chief Financial Officer
 Richard Manning  Head of Investor Relations

 

Brunswick Tel: +44 (0) 20 7404 5959

  Nick Cosgrove

  Greg Dawson

 

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