Thank you, Renju. On behalf of Kotak Institutional Equities, I welcome you on the earnings call of WeWork India Management Limited.

Representing the management, we have Mr. Karan Virwani, Managing Director and CEO; Mr.

Clifford Lobo, CFO; and Mr. Vinayak Parameswaran, Chief Investment Officer.

Without wasting more time, I'll hand over the call to the management for their opening remarks. Over to you, Karan.

Thank you, Murtuza. Good morning, everyone, and thank you for joining us.

While Q2 marked our public listing, Q3 clearly demonstrates the continuous operational excellence, deepened adoption, and the product suite and the way that we're monetizing it across WeWork India. We no longer are just growing, we're doubling down on the strength of our community, growth levers, with clear focus on sustainable profitability.

Q4 is a strong reflection on this focus within the organization. WeWork India today serves over 100,000 members across 73 centers in eight cities, underscoring our position as core workplace infrastructure for enterprises, GCCs, and fast-growing Indian corporates, as well as global startups.

For the last 12 months, we've added 20,000 desks, a 20% year-over-year increase in capacity. More importantly, though, occupied desks grew nearly 30% year over year, while portfolio occupancy reached close to about 84%, the highest we've seen.

This demand translated into a record revenue of 640 crores for Q3 FY '26, which is up nearly 10% quarter on quarter and 27% year over year. What structurally differentiates WeWork India is our ability to serve the entire workspace lifecycle on a single platform.

We support startups, MSMEs that are seeking flexibility; enterprises requiring speed and optionality; and GCCs that need custom, single-tenant, enterprise-grade solutions. Managed office exemplifies this advantage.

In just two years, we have scaled our managed office business to 26,000 desks across 1.7 million square foot, now contributing 21% of total revenue, with an annualized run rate exceeding nearly 530 crores, and growing at a rate of 63% CAGR over the last two years. Crucially, managed offices are executed only against committed demand, ensuring immediate utilization and disciplined capital deployment.

You should refer to our shareholder letter to understand more about the unit economics and the potential of both the spec business as well as the managed office return profiles. Operationally, we're the strongest that we've ever been.

Our sales velocity hit a record high, with desk sales surging 41% year over year to nearly 38,000 desks in the first nine months of the year. Mature centers operating close to about 87% occupancy, while growth centers ramped rapidly to about 66%, well ahead of historical stabilization curves.

The operating strength translated into an EBITDA pre-ESOP of close to about 141 crores and post-ESOP of close to about 135 crores, up 14% quarter on quarter and nearly 48% year over year. The margins expanded to about 21%, and I strongly believe that EBITDA is one of the key metrics that reflects our financial performance and represents undiluted profitability.

PAT surged to about 52 crores in this quarter, which is up 32% quarter on quarter and nearly 512% year over year, highlighting strong conversion of the operating gains into actual net profitability. We delivered the highest ever ROCE of close to about 33%, outperforming listed companies in the comparable industry, and according to us, any other real estate-adjacent type of platform that measures a similar metric.

Our future capacity and pipeline is also highly visible and disciplined, with the current total capacity of about 8.2 million square foot and approximately 123,000 seats. Nearly 40% of the incremental growth is already locked in through signed leases and LOIs.

This takes our total planned capacity to about 11.4 million square foot and roughly about 171,000 seats over time, with a phased ramp-up to 8.7 million square foot by March of this financial year and about 10.3 million square foot by March of the following financial year, which is March '27. There is still some additional supply which we have under discussion for the next financial year of FY '27.

Importantly, a large part of this pipeline is demand-backed, particularly from enterprises and managed office commitments, which is ensuring strong utilization and returns even in the coming financial year. Beyond March '27, we continue to engage selectively on FY '27 and FY '28 opportunities, keeping expansion measured, capital-efficient, and returns accretive.

With that, I'm going to hand it over to Clifford, who'll walk you through all of our financial performance in greater detail.

Thank you, Karan, and good morning, everyone. Let me take you through the key financial performance highlights of our quarter 3 FY '26.

As stated in the last call, we continue to evaluate our performance on an IGAP equivalent basis, which is really a true reflection of our operational performance when translated into financials. Also emphasizing again, we believe that EBITDA is the North Star metric for evaluating financial performance as it reflects true profitability.

We reported quarterly revenues of 640.3 crores in quarter 3 FY '26, up 9.6% quarter on quarter and a 27% year on year driven by higher capacity, improving utilization, and sustained price resilience. Growth was driven across all three revenue streams of our business.

Core operations or workspace as a service generated 532.3 crores of revenue, which grew by 7.3% quarter on quarter and a 24.1% year on year. Our digital products, including WeWork All Access, Virtual Office, On Demand, and Workplace, contributed 19.8 crores of revenue.

While remaining the same as last quarter, it grew 23% year on year. Value-added services contributed to 85.9 crores of revenue, growing 38.3% quarter on quarter and a 69.4% year on year.

While all our VAS contributing revenue lines grew, this hyper-growth was driven by realized customization revenue from large deals in the current quarter. Profitability continued to scale meaningfully.

Post-ESOP EBITDA for quarter 3 FY '26 stood at 134.6 crores with a margin of 21%, up 13.7% quarter on quarter and a 47.6% year on year. This reflects continuing operating leverage, translating into margin expansion of 70 bps quarter on quarter and 293 bps year on year.

Bottom-line performance strengthened sharply, with profit after tax of 52 crores, a margin of 8%, in quarter 3 FY '26, up 32.3% quarter on quarter and a staggering 511.8% year on year, highlighting the increasing conversion of operating gains into net profitability. Our PAT margins expanded by 140 bps quarter on quarter and a 643 bps year on year.

At this scale, financially, we continue to retain leadership position across benchmarked peers. Our cost discipline continues to drive margin expansion.

Rent per RSF increased just 3.6% year on year, while operating costs per RSF improved by 6.4% year on year. Center-level EBITDA margins improved to 28.7%, up 140 bps quarter on quarter and a 170 bps year on year.

Corporate overheads remained stable at around 8% of revenue. We continue to focus on cost discipline across our direct and indirect expenses.

Free cash flow from operations increased to 203.8 crores in quarter 3 FY '26, up 113.7% quarter on quarter from 95.4 crores in quarter 2 FY '26 and a 119.3% year on year from 93 crores in quarter 3 FY '25. This scale of recurring free cash flow comfortably funds speculative growth through internal accruals.

We will evaluate raising cost-efficient debt for large managed office transactions in the future. Our CapEx outflow for the quarter stood at 141.1 crores.

CapEx spend per desk for the quarter is 1.5 lakh, slightly higher than the last quarter's 1.3 lakh per desk. This increase is primarily driven by the fact that of the 7.1k desks opened in the last quarter, 80% were managed offices, where CapEx is driven by clients' requirements.

Return on capital employed continues to scale meaningfully, increasing to 32.6% in quarter 3 FY '26, up 1,049 basis points quarter on quarter and a 1,531 basis points year on year. We evaluate ROCE using a transparent, economically grounded framework consistent with mature operator-led branded businesses, designed to measure returns on the actual capital deployed.

On this basis, our ROCEs are structurally superior, not only within the Indian flex workspace market, but also relative to other real estate-linked branded operator plays such as hospitals and hotels. As of Q3 FY '26, our net debt stands at 110.4 crores compared to 310.5 crores in the previous quarter.

We also received the full settlement of the ICD of 153 crores from the promoter group in the current quarter. Our average cost of borrowing has declined by 560 bps over the past year from a 15.5% to a 9.9%, primarily due to renegotiations with our lenders and retirement of high-cost debt.

We've also secured a three-notch upgrade in our credit rating from a BBB to an A over the last 12 months. We remain laser-focused on profitable, self-funded growth and delivering sustained value creation for our shareholders.

Thank you. We now open the floor for questions.

Good morning, everyone. Firstly, congratulations to the team for a great performance.

I have got three questions. Should I ask them all together or would you prefer it one by one?

One by one, but maybe stick to two questions.

Yeah. Firstly, broadly on the expansion plan now that we have outlined, right, in terms of the seat signing.

This for March '26 is 8.7 million square feet, right, and whatever for '27. Is this seat addition likely to be a little back-ended towards the second half of the year next year or it will be spread evenly through the year in terms of the seat addition?

Because I think we are at 8.2, 8.3, and you said we'll get to 8.7 this year and over 10 next year. Just to help us understand that part, yeah.

Yeah. Actually, a lot of it is going to be more front-ended towards Q1 and Q2 with some of the signed capacity that we have already being in design and some starting fit-out in this quarter.

We're looking at a pretty decent expansion within the Q1 and Q2 of next financial year and then some evening out towards the end of the year as well. Like we mentioned, we're still in discussion on certain deals for next financial year that haven't yet been finalized and potential of some new managed office deals that we are in the process of RFPs, etc., that might convert also.

Sure. Just as a follow-up to that, our managed offices share is now 20% plus on the revenue front.

Whatever with the pipeline, the visibility we have now the next couple of years, where do you see the overall managed office share getting to over the next couple of years for us?

If you look at even next year's expansion, right, it's roughly 2/3, 1/3 in terms of WeWork spaces still contributing 2/3 of the expansion and managed office being about 1/3 of next year's expansion. Roughly 20,000 seats to 10,000 seats for managed office.

We sort of envisage that expansion to continue. Like we've said that for managed office business, it is a highly risk-averse type of growth that we strategized.

We only grow that business based on deals that we have won and we're not taking any speculative space to grow that business. It will really depend on how many RFPs, how many deals we win and sort of look at that expansion.

Today, it seems like we are definitely in the top one to two contenders on most of the tier-one deals in the market. In the last year, I would say that we've won more than we've ever won in the past, which shows that we're now a true player even in the managed office segment itself.

That's how we'll sort of look at it. I think it will incrementally move up as a percentage of revenue closer to 30% in the next 24 months.

As we continue to grow the WeWork business, that scale is also increasing.

Sure. Just the final question, it's mainly for Clifford, I guess.

There are around 340 crores of CapEx, I think, in the nine months. Any full-year number for '26 you would like to share and any broad guidance for FY '27 for the CapEx considering our expansion plans?

Yeah. Thank you.

Yeah. Typically, we'd see about between 300 to 400 crores of CapEx on the speculative business, which is the WeWork-branded business.

Now, the managed office business is layered on top, so that completely depends on what kind of clientele, what kind of custom requirements they need in terms of CapEx. We'd have to speculate on that, but 300 to 400 on the speculative side is, I think, a fair estimate.

So 450 to 500 crores run rate overall for this year, next year is on an average? Is that a fair sort of

That's roughly where we're ending up. If you see even just last quarter's spend of close to about 140 crores on CapEx was higher than our usual run rate purely because of these two large deals that we did which the clients are looking to spend a lot more than our typical spend on WeWork spaces.

If our average CapEx is roughly about 3,300, 3,500 bucks on carpet, some of these customers are asking us to spend closer to about 8,000 rupees a square foot, it's a significant increase. That also means higher revenue, higher return on those deals as well.

Okay. That's interesting.

Right. Thank you very much.

I'll come back in the queue if I have more questions. All the best.

Thank you.

Sorry, I was on mute. Firstly, I'd like to congratulate on a great set of numbers.

My first question is, what are the drivers of the increase in ROCE by 10% on a QoQ basis? Why is there a surplus due to working capital in this quarter?

I think the ROCE increases largely, you've seen the quarter-on-quarter movements in Q1, operating leverage is really kicking in, which is driving ROCEs. In terms of surplus SR that's contributing to cash is basically these large managed office deals that we've signed up recently, and we see uptick on the service return from these deals.

Okay. The OCF to EBITDA is 1.5 times of EBITDA, right?

Is it sustainable on a QoQ basis? Do we expect this to go down later on?

I think where we're at is at a good place. I wouldn't want to give us any give you any guidance on going forward, but I think this is sustainable given the fact that there's still operating leverage in the business.

I think I think it's just important to understand what this comprises of, right? It's really EBITDA that we're generating, which is pure cash.

Over and above that, we collect some security deposits from our customers. That might vary depending on the size of the deal, how many desks we've sold in that quarter, the value of those transactions, etc.

There might be some variability within that. Then there's some working capital kind of changes that also benefit us in the quarter that might move it up.

I think at the very least, you want to take base case of whatever the EBITDA is, plus some percentage on top of that, which typically ends up being anywhere between 20 and 40 crores of security deposits that we tend to get within that quarter. Then any upside on top of that could move this number up.

That's really true cash that the business is getting and cash that we're able to deploy into CapEx or whatever we need.

Okay. Lastly, despite a 4% increase in occupancy levels, your EBITDA margins increased only 75% on a QoQ basis.

Is there a pricing pressure which is driving the margins down or is it due to the managed office deals which are being done at a lower rate? Can we expect the margins to go up in the future?

Yeah. Actually, there were a few one-timers in the cost line items, which is why this impact is there.

There's some IPO expenses that we are still getting billed within this quarter. There was some corporate spend that we did or some cost sitting in this for a design-build project that we did, which was outside of our business's usual type of business.

That direct cost is currently sitting within the corporate G&A bucket. If you kind of negate for that, you would have seen a higher expansion in the margin.

Since these are one-timers, we sort of view that in the next quarter will even out in some way.

Okay. What is the margin for FaaS?

Can you just tell that?

We don't bifurcate the VAS margins because it's extremely hard to do. Some costs continue to sit in our assets, which are already being accounted for, and there are multiple line items within the VAS revenue that we're able to generate also.

We don't bifurcate on it. It'll be hard for me to give you an exact margin.

I was asking about the fit-out as a service. There is a cost in our P&L, right?

What is the margin expected in that segment?

On the design-build project, which we've just done very few, we've not officially launched a brand or launched it as a proper business yet. The margins are roughly about 10% to 15% if I account for cost of goods sold of the actual CapEx spend from the customer also.

Do you expect this revenue stream to increase in the future?

We do, and we'll be formally probably announcing something in the coming quarter. As of right now, we've been experimenting and just doing one or two projects, which we actually did for our own internal companies to start building the capability.

Once we're ready to launch and potentially next year, we'll start looking at it becoming another revenue stream for the company.

All right. Thank you.

That'll be it from my side. I wish you all the luck.

Thank you.

Yeah. Hi.

Congratulations on a good set of numbers. I would like to know your views upon the deferred tax assets.

I see there was a recognition of around 285 crores as at March 31, 2025. Since we are posting our PAT positive quarter of quarter 2 and quarter 3, there was no corresponding DTA reversal being made.

Can you highlight something?

That was a one-time actual recognition, which we've never done in the past. The stand we've taken internally is we'll evaluate deferred tax on an annual basis, which is, I think, the most appropriate way to look at your tax profitability in future years.

We will look at it again in the end of next quarter at the fiscal year-end and then make appropriate adjustments to the financials. The way we look at operational metrics is on pre-tax.

We don't want to get muddled with tax reversals and imports.

Hello, am I audible, sir?

Yeah. Thank you for the opportunity.

What I wanted to ask is what are the realizations like revenue per seat and CapEx incurred per seat?

On the CapEx incurred per seat, I think Cliff walked you through it. For this quarter, it's roughly about 1.5 lakhs, slightly above our normal due to some of the larger enterprise deals that we've done in this quarter.

In terms of realization per seat, on a unit basis, if you look at, we're still at the 2.8 revenue to rent ratio, which means that we're generating roughly 2.8x on whatever rentals or whatever costs that we have in the business. I'm not sure if that's what you're referring to in terms of realization or is there another metric that you're looking for.

Okay. In number terms, what would be the revenue per seat per unit?

Yeah. I think today on a total ARPU per seat, we're looking at somewhere in the range of 22,000 if I layer on all of the revenue streams on it, which is roughly in line with what we've always been at and kind of holding strong in that realm.

Got it. Can you help me with the breakeven levels, suppose you're incurring CapEx for a seat and then what time would it take for the breakeven?

If you see our return on CapEx is roughly about 35%, right, 33%, 34% in this quarter. CapEx breakeven is basically happening in a period of 3 years or 36 months.

That continues to be how we've been performing. In fact, it's got slightly better as occupancies, etc., have been going up.

That's something that we've been pretty disciplined on and actually if you take out the managed office, kind of CapEx additions that we did in the last quarter, you'll see that our CapEx per desk for WeWork spaces has come down slightly. The return profiles on some of the spaces continue to get better.

Okay. Thank you.

What I wanted to understand is suppose you're doing CapEx for a number of seats, at what occupancy levels does it come at breakeven?

Today, operational breakeven across the portfolio, including mature and the growth centers, are roughly about 54.8%, and that's where we're breaking even.

Sir. Thank you so much.

Thank you.

Good afternoon, team. Thanks for taking my questions.

With no material change in the office leasing and flex workspaces

Sure, is this better?

Thank you for taking my questions, team. With no material change in the office leasing environment and flex workspaces continuing to account for approximately 21% of total office leasing, please help me understand what drove the impressive improvement in the occupancy over the quarter and how you expect occupancy to trend going forward.

Also, what was the total leasable area over 3Q '26?

Sure. Just to maybe correct, obviously, the macro environment has improved meaningfully even just in the last 12 months.

If you look at any of the commercial leasing data, India has reached record highs when it comes to commercial leasing driven by a lot of sectors. GCCs obviously being one of it, but general business activity, business growth is happening.

There's return to office from some of the large global tech businesses, which is driving a lot more demand for new fresh space as some of these workers were working from home during COVID. I think there are many things at play in different pockets of the country.

Flex continues to dominate and be top one or two total tenants or large tenants taking up space in the market. You'll see that our occupancies clearly have moved up.

Our mature building occupancies are at 87%. I see that trend happening at the entire sector and not across just us as an operator, which is a great sign, which shows that the overall market adoption, etc., is growing.

Now, just highlight our sales velocity itself. In the first nine months of this last financial year, we've done close to about 38,000 desks that we sold.

That is a 41% increase in sales velocity year over year, which is all going into the centers that we brought on towards the end of the year and the beginning of this year and then also new centers that we've brought on in this financial year as well. We're clearly seeing the adoption shift happen.

We're seeing a transition from conventional to flex. We're seeing new take-up or new requirements increasingly asking for flex as options.

Then we're also seeing the managed office RFPs or the managed office business RFPs in scale and size and also type of companies increasing much beyond what we even could have imagined maybe two to three years back when we started this. Indications for next year also are quite strong.

We've won a few large deals for the following years and these are high-spend, high-value deals. I think overall, our thesis, the tailwinds, all of that is definitely playing out.

If you go through the shareholder letter that we have, there are a few case studies in there which show you how the value proposition of the platform of having both flex and managed office and the digital products business is able to cater to any type of workspace requirement. I think it's superior to any other commercial platform, definitely on the traditional side, but even within the flex operators that we've strategically built an advantage on.

I think what we were kind of telling the market before our IPO and everything that we've charting out is definitely playing out and we think it's going to continue for the next few quarters.

Understood. I noticed that total leasable area added to your portfolio has been trending upwards.

What has changed that is helping WeWork achieve this, and what are the challenges to adding even larger amounts of leasable area into the portfolio?

We consistently always said that we'll be looking at this sort of 20,000 seat additions year over year. We've expanded that for the next year closer to about 30,000.

We're looking at at least having pipeline for even FY '28 at a similar level. This is really being driven by the indications from the velocity itself that we're seeing in the business, right?

While the capacity addition comes in later, the velocity that we're seeing today on a month-on-month basis is giving us confidence to have higher expansion without compromising on margins, occupancy, or having any risk to the business. That's how really the plan is built out over the next two to three years.

WeWork desk additions continue to stay in that 15 to 20,000 desk additions year over year speculatively. Then if we layer a managed office business, which has been historically about 10,000 desks, 8 to 10,000 desks that we've been able to win and do within the year, that's how we're getting to this 30-odd thousand kind of seat additions that we'd at least have visibility on in the next few years.

If you just translate sort of that 38,000 seats that we've sold just in the last nine months to square footage, it's roughly about 2.5 million square foot of leasing that we've done just in this year. We operate a REIT as well, the Embassy REIT.

The Embassy REIT did close to about 3 million or slightly over 3 million in the same period of time. You'll see a platform that is obviously much newer and doing smaller volume of deals per deal is able to do just sort of 70% to 80% of what a traditional REIT is able to do in terms of leasing, which are super-high high-quantum, high-value type of transactions.

I think that gives you some indication of how fast the segment and us as an operator is growing.

Understood. Lastly, I see that enterprise clients contributed approximately 74% of revenue over the quarter, but managed offices made up about 21% of overall portfolio revenue.

Please help me understand who you categorize as an enterprise client, and what is the usual leasing preference in terms of seats for these clients, and are there any non-enterprise clients who are likely to lease managed offices?

Right. While managed office is 20% and those will always largely be the enterprise segment, we classify enterprises in pretty much three categories: small, medium, and large.

Small being anyone between about 300-odd desks in average; medium being anywhere over 500; and large enterprises being over 1,000 full-time employees that an organization might have, not necessarily seats with us. The reason that you see that 74% of our business is also enterprises is because enterprises end up taking space with us within WeWork spaces also.

We have multiple enterprises over the last eight years who have full floors, who have part wings, who have dedicated offices within our WeWork flex spaces. Then we also over the last two years have grown this managed office business, which is now 20% of the entire portfolio.

Just notably in this last quarter, we've done a large deal for a large global e-commerce business, the largest e-commerce business in the world in Chennai. They've taken dedicated seats for a five-year term with us in a WeWork space, which we aren't classifying within this managed office type of demand.

Understood. Thank you very much.

Have a nice day.

Thank you.

Yeah. Hi, team.

Am I audible?

Yeah. Hi, team.

Congratulations on a great set of numbers. Three questions from my side.

Could you please share how much revenue from a top client and top center is coming?

You mean revenue concentration or contribution?

Concentration. How much revenue is coming from top client and top

One second. Just give me a second.

I'll tell you that number. Roughly about 21% of our revenue comes from the top 10 customers.

It's highly diversified in terms of concentration and we don't have any single tenant that's contributing a large part of the overall revenue, if that answers your question.

This is on the client side, and what about the center? Top center, how much will be contributing to our revenue?

We're distributed across now 73 locations, typically each of average size. I don't have that number on handy, but this could change depending on occupancies, deals that we've done, new transactions that we bring in.

Maybe I can send you that separately once we have that number.

Sure. We can take on that later.

My second question is on the retention rate. How has been the retention rate overall for us till now?

How is it on the managed contract segment?

Retentions have been in that 75%, 80% range, which is typically where we are. Certain quarters or certain months you might have a large enterprise churn or whatever it is.

I think the good part is if I look at last year to this year, the overall net additions have been actually significantly higher, which means we've been able to retain more customers while filling up more seats. Today, about 50% of our revenue still comes from our internal customers itself growing with us.

If you look at the velocity, you look at the total net adds in terms of members from the start of the year till today versus last year, you'll see there's a meaningful increase, which is reflected in that velocity and also the speed of the occupancy movement. The occupancy movement wouldn't have been able to move in this range if we had a higher churn than we usually do.

Retentions are pretty good. Overall NPS, which is a Net Promoter Score, the experience score that we measure our customers, also has hit record high of roughly about 73 points for this last quarter, which is just slightly above what we had in Q2 as well.

Got it. Two questions from the management contract side.

Sir, you mentioned that in the seats are quite customized in that, and the CapEx per seat is usually more than for the flex space. What is the commitment term on the management office side?

Is there a minimum seat commitment in that? How is the CapEx recovery in these segments?

You'll see that our total commitment terms have significantly gone up on an overall basis. I think roughly 4 months on aggregate just from last year, which is nearly a 30%, 40% increase in commitment terms.

Managed office commitment terms typically tend to be in the 3 to 5-year range depending on the deal that we have. That is something that we hold strong on because it's very important for us that we are recovering that committed CapEx within the term of these managed office deals and not extending that amortization period post any lock-in or term given by these large customers, which we're able to do on the WeWork side of the business.

This is something, by the way, if you look at our shareholder letter, you'll see a detailed sort of description of it and how the depreciation is also treated across these two businesses purely because of that and what the EBITDA margin differences are when that happens. The managed office businesses, I would say, are between 3 to 5 years in terms of total commitment that we're able to get.

The CapEx get recovered in the committed timeframe, right?

That's right.

What is the minimum seat requirement if anyone wants to opt for the managed office space?

We don't particularly have a minimum requirement. We've even done 6,000 square foot of managed office in the past.

I think increasingly what we're seeing is an average of roughly about 30,000 square foot are the type of deals that we get. We've always said we want to focus on the top tier of the demand, top tier of the type of customers that we go after, and also the value in the type of deals that we do.

We do try to focus more of our efforts on winning large-value deals. These typically end up being about 30,000 seats, closer to maybe 80 to 100,000 in some cases.

Got it. My next question is on the value-added services.

Looking at the revenue, that is growing at a strong rate. How should we see this growing forward, and what are the levers for it?

That's right. Like I mentioned, we have a bunch of services within that.

We are working on trying to figure out a strategy even for next year on how we are able to generate more from VAS. Typically, it's been in the range of whatever 12% to 14% of our overall revenue.

I think that's a safe assumption for you to make even on an ongoing steady-state basis of at minimum where it will be. If we're able to find opportunities to increase that, we will.

Like we mentioned in this quarter, sometimes we get this large sort of customization revenue. That's something that we've seen grow over the last year as we do more enterprise deals, and we're doing larger deals that companies want us to spend slightly more than what our base spend would be in some cases, especially in WeWork-branded spaces.

We're able to see that revenue grow up over the last 12 months.

Got it. Just one clarification to know if I heard you correct.

You mentioned that we are looking forward to adding 30,000 seats in '27 and possibly in '28 as well. Is that right?

That's the visibility that we have as of right now, and it's highly likely. There are some assets which are still under construction, etc.

There may be some movement, if you look at it in this point of time between FY and FY. That's roughly the plan that we have.

At least for FY '27, we're pretty certain we'll be in that 30,000 desk sort of range.

Got it. How should we look at the margins?

Margins, we've always delivered or we've been delivering this 20%, 21% margin. We were able to do that this year even with a heavy CapEx growth.

We were able to do it last year also with a heavy CapEx growth. We think that next year also will be in a very similar level.

Margin and growth go hand in hand. If we ever pull back on bringing on new centers for whatever reason, you'll see this expansion happening.

You see the mature building margins have grown to about 28%. Corporate overheads, even with the one-time spends that we had in this last quarter on the IPO expenses, etc., are still at about 8%.

If that comes down as a percentage of revenue, which it should, and center-level margins continue to see some improvement, there will be some margin expansion. Again, depends on timing of leases that we bring on new assets, the ramp-up of those.

I would say 20%, 21% is what we're looking at with the consistent capacity addition that we spoke about today.

Got it. That helps.

This last question on the rent escalation clause. What is the clause for rent escalation with our suppliers and with our clients?

Yeah. Our leases are 10-year leases with three, typically 3 to 4-year lock-ins.

There's a rental escalation of roughly about 12% to 15% every 3 years, which you're seeing even in the rent cost increase in this quarter was roughly about 3.6% year over year, approximately. That's the contracted lease escalations that we have.

Client contracted escalations are between 6% to 7%. That's also the pricing CAGR that we've seen over the last few years, in terms of improvement in pricing of the business.

It's 6% to 7% annually, right?

That's right.

Yeah. Thanks a lot, and good luck.

Thank you.

Hi, and congrats on the strong quarter. Karan, a couple of questions.

Firstly, on the manage side, and I was going through the very helpful shareholder letter that you guys have printed. You're talking about EBIT margins in low single digit.

Why are you sort of really pursuing this business then?

I think, while obviously in the initial term there is the lower single-digit margins, when a renewal in this business happens, that will clearly flip those margins even because we would have got all of the CapEx recovered over there. We saw that with a contract that we've had of Microsoft which got renewed in this year for another five-year term, so that is something that is definitely playing out.

The other thing is that it's clearly bringing us some stability in contracted revenues, in holding occupancies, and we've said that we always look at this business as a dual-engine growth, right? The managed office business will bring us stability, longer-term contracts, and high-value revenues, and the WeWork business brings us high growth, ability to expand our margins, improve pricing, sell VAS on top of the business.

We're clearly seeing that companies want multiple formats of working, and the idea for WeWork India is to be a one-stop-shop platform for all workspace requirements. With that, we have our digital products business that allows for super-remote, super-flexible type work; our WeWork business that gives you plug-and-play scalability and geographic flexibility as well as contract flexibility; and the managed office business that gives you highly bespoke spaces, highly customized, and long-term spaces.

Companies are flowing through different products, through different geographies with us, and the idea would be to not need to look to any other operator for any type of requirement that you have, and we would basically be able to suffice and give you whatever you need. Thank you for reading the shareholder letter.

I would encourage a lot more people to do that, but there are a few case studies in that also that really outline why both are important for us.

Okay. Hope is basically that monetization, at least in the later part of the cycle, will go up, and then these margins will look much better, right, broadly?

That's what we are looking at.

That's yes, and also at an EBITDA level and a cash generation level, it's an extremely strong business. It allows us to generate a lot of free cash that we're able to use to grow in the business.

Because of these contracts, we're able to raise extremely cheap CapEx debt also. That is one, but also I think you need to look at it from a acquisition and growth of accounts standpoint, right?

By having these multiple products and that, I'm able to go deeper into the requirements of a lot of companies, I'm able to make sure that these accounts stay with us and continue to grow with us. It's also a factor of being able to really capture and cater to this large enterprise demand that we have, and think of it as a larger net that we're able to have that most other players in the market don't have both sides of this business.

Got it. Karan, secondly, we are seeing very strong office demand across board, right?

From flex guys as well as in REITs, we can see that. Now, how difficult it is for you right now to procure quality new offices?

Are the rents really high? Is the spread still manageable, or you think in say another 12 odd months the situation will be very much in landlord's favor and you will struggle?

It's in landlord's favor today, I would say, especially in the Grade A supply that we're looking at. We've been focused on this Grade A type of expansion.

You will see from the AUM that we have signed up already and visibility of we are comfortable at least for a 24-month period in terms of already agreed on deals and the right type of capacity that we would want to grow the business in the next 24 months. From that standpoint, we don't see any major issue.

I think it'll actually work in our favor because if we're able to take more of the capacity, more of the supply that's there faster than a lot of the end users, we tend to be able to get the demand from the end users because there are requirements outpacing the type of supply that you're seeing there. Vacancy rates have come down.

If I look at all of the REITs, our occupancies are above 90-ish percent pretty much across the board. Like we spoke about during our road shows during the IPO as well, our relationships with the top 20 developers, 30 developers are extremely strong today.

We're talking portfolio-level capacity additions with them. We don't talk singular assets, singular floors.

We're talking multiple assets, geographies, and that allows us to be able to lock in sort of the supply a lot quicker. We've already done that now for the next 24 months, we're in a pretty comfortable place when it comes to the expansion.

Right. Lastly, you can just help me with the let's say the next two, three quarters.

I think we're going to see a lot of aggressive space expansion. The margin should be in the current 21% plus minus sort of bracket, or you think they could be little lower and then go up again in the second half of next year?

Yeah. It will dip and then go back up like you saw this year as well.

Like we mentioned, there's some front-loading of CapEx coming in Q1, Q2. You would sort of envisage a similar ramp like you would have seen kind of this year.

That's typically how our business will always be. Leases or the costs, the fixed costs come in ahead of the revenue, and then the revenue ramps up and then it starts flowing through EBITDA and cash finally as the occupancies go up.

Think of the average margin for the year to be very much the same, but there will be dips and expansions in the margin as the year goes by.

Great. Thank you, and all the best.

Thank you.

Hi, good morning, and congrats on a very strong set of numbers. I have seen your center-level margin has been expanding over a couple of quarters.

Could you please highlight what are the levers for this? Is this a supply-led margin expansion or is it driven by favorable demand scenario?

What will be your steady-state center-level margins going ahead?

It's just ramp-up of centers like I was just talking about in the previous question. The rents and the assets come ahead of the revenue, right?

All the fixed costs will have some impact on the overall center-level margin and overall company-level EBITDA. As those fill up, you'll see the operating leverage kick in, occupancies cross the breakeven thresholds of roughly about 55%.

In the last quarter, you would have seen our growth centers were just about 55%. This quarter, it's at about 66%.

Also the mature buildings were at roughly about 82%, I think, last quarter. They grew to about 87% this quarter.

All of that incremental revenue just flows down to margin and then down to profitability and cash flow. That's clearly the major component.

Then like we've said, the VAS revenue growing on top of that, digital products contributing on top of that, all of that adds to the center-level margin. It's finally occupancy-driven business.

If we take these occupancies up to 90%, you'll see center-level margins upwards of 30%, 35% also hitting.

Okay. On the occupancy side, since you just mentioned that REITs have a large portfolio, despite they have been hitting an occupancy of more than 90%.

In our scenario, since we are heading to the highest occupancy in the industry, do we see also meeting the occupancy level of REITs? Is it likely because of your managed offices or your WeWork or workplaces are also getting higher occupancy?

How things are improving for you? See,

REITs don't grow. REITs are not adding capacity at all on a year-over-year basis.

They have existing portfolios where they sign 10-year leases, they don't need to manage or really fill up that much space, nor are they adding capacity that suppresses occupancy within one quarter and then have to ramp it up again. They're traditional assets and a very asset-heavy business.

We have an asset-light growth model. We're able to add a lot more capacity quarter on quarter, year over year, and we're growing at I don't know, at least three to four times that of a REIT from a capacity standpoint.

If ever in the next I don't know, decade, we decide that we want to stop adding capacity, we can easily get even to 100%, right, of occupancy. We have certain centers that are already sitting at 100 and even higher than 100% if you layer on VAS and other revenue streams that we're generating from the center.

Is it possible? It's already happening in certain pockets.

Just because we're adding capacity, we'll be at some available capacity, which is something we want to keep because that gives us growth and revenue as well.

Okay. Last question on GCC.

The industry has seen a strong ramp-up from GCC in last say in last 2, 2.5 years. How GCC clients are ramping up for you, and how do you see the visibility going ahead?

Yeah. So 40% of our revenue or 40% of our member mix comes from GCCs today.

We have tried to adopt a few strategies, but overall, what we're seeing in the market is there's been a clear increase in the volumes and the number of companies now coming into India and setting up their own capability centers. We see that there is a big chunk of mid-tier businesses and nano GCCs that start with very small headcount: 50, 25, 200, those type of FTEs when they enter India.

For that, our model is highly beneficial. It allows them to enter without any upfront cost, without signing extremely long-term leases.

They're able to grow quickly through our WeWork spaces and eventually take our managed office space. They want quality spaces and they want to be in locations that are Grade A because that allows them to attract the best talent in the country and be around where the best talent actually stays.

The other thing that we've done in the last quarter, we've strategically launched partnerships with about eight GCC-as-a-service businesses where we've signed MOUs, including one of our own internal companies called Embark that handholds GCCs to set up in India. What we are planning to do and the way that we're looking to do it is we want to be just a real estate infrastructure partner for a lot of these companies.

The friction points of taking real estate, fitting it out, managing vendors, allowing companies to grow, having speed to market, being able to set up within 4 to 6 months in India, they're not able to do on their own without someone who specializes in it. We are building and have built the specialization in this.

We have the capacity in the right locations and the type of product that these GCCs want. We're in a good place to cater to them, and it's something as a funnel we see that we are finding ways to open over and above what brokers and IPCs are able to give us through some of these MOUs with these GCC-as-a-service providers.

Great. One data point.

What percentage of your clients are multi-city, multi-center?

I don't have the exact percentage number. I think maybe roughly 30%

to 40%. Great.

Thank you, and wish you all the best.

Hi. Thanks for the opportunity.

I wanted to understand more on the depreciation policy of yours. Let's assume you have one center.

The whole building you have taken it on lease for around 10 to 15 years on a straight lease, and you have two floors particularly for a managed office and one floor is for the WeWork workspace format which you have. How will you be spreading your depreciation costs in such a case?

As far as the speculative business is concerned, right, where we take on space, we depreciate the fit-outs across the lease. Our managed office typically have back-to-back leases.

We'd arrange for separate leases for managed office spaces, and those would be depreciated over the commitment term of the deal. Depreciation kicks in as soon as the buildings are opened, and the entire fit-out is depreciated over the lease terms, whether it's the managed office lease term or the speculative lease of 5 plus 5 or 10 years.

Okay.

If you actually just refer to the shareholder letter which is available on the website, we've explained this in extreme detail and can go through it. If you have any other further questions, we can obviously answer that specifically.

I think what Clifford described is how we've kept the discipline between the two businesses on that.

Sure.

Hi, sir. My question is regarding the GCCs that we are signing off.

These clients Shiva,

Is it better now?

Hi, is this better now?

My question is regarding the GCCs that we are signing up. These clients, have they used WeWork before in other regions outside India, and did that help them in choosing WeWork India?

I'm just trying to understand how much WeWork's brand value is contributing in client acquisition.

I think there are definitely cases where we do have customers that have used or at least experienced WeWork somewhere in the other parts of the world, if not as an entire company. The end-user decision maker obviously is aware of the product and has in some way, shape, or form used the product.

To give you how many deals are exactly WeWork members and not, I don't have that off-hand, but yeah, so that's definitely an example. There are definitely new companies that are clearly entering India that haven't taken any flexible spaces in any other part of the world.

India is a new market for them. They're setting up offices in India, and this model makes more sense than taking a conventional lease.

There are definitely deals that we've signed up that this is the first time that they're using a WeWork space also.

Right. Is there any ballpark percentage figure you could say with regards to client who have used both WeWork global and India?

Don't have a percentage, but if I have to look at maybe the top 10, 20 customers that we have, roughly 30% to 50% have used or do use WeWork somewhere in the world because most of these companies are really large global businesses, and we definitely have a global relationship with a lot of these companies.

Sure, yeah. Thank you for that.

One last question. How different is the revenue per seat for a managed office and branded workspaces?

If you

again, I wouldn't say it's materially different, but if you can just refer to the shareholder letter, we've given it in detail. In both cases, I think we try to stick to the 2.5 to 2.8x revenue to rent ratio.

The pricing will also reflect that when we've done those deals.

Sure, sir. Thank you for that.

Hi. Congratulations for good set of numbers.

Sir, just wanted to check it out since our incremental contribution is coming from managed office and the new seats, if you can share your perspective specially on the competitive landscape. Given the way industry is evolving like a lot of new players are also getting into it and large RFPs are coming in, firstly, how is the competitive intensity and profitability?

Secondly, like you also mentioned about the rent is also in favor of the landlord, how is that for revenue to rent ratio for this particular business? Thirdly, if this contribution keep on increases, from the directional perspective from next 2 to 3-year perspective, how should we see the EBITDA margin?

Yeah. Clearly, we over the last eight years have built the brand or our brand to be, I would say, the most trusted for global multinationals, large Indian corporates, and the top tier of companies in the country today.

It started off with flex WeWork spaces. In the last two years, we've clearly done large, high-value deals, including with last quarter for some of the largest companies in the world.

The expertise that we've built, the execution capability, and the trust that exists in the market that we will be able to deliver high-quality managed spaces or WeWork spaces, I think, is established and pretty clear today. That is reflected in the size, scale of the business, in the velocity that we're winning in terms of deals, and also some of the large RFPs that we've won in the last year and also in the coming year.

While there is a long tail of operators, I think it's clear and it's becoming more and more clear as time goes by, and especially post the listing, that there's a separation between the top few and the large long tail that exists. This business is an extremely capital-intensive business.

It's a cash flow-driven business. You need to deploy CapEx and know how to execute quickly and have a supply chain that is able to deliver better than anyone in the market, and eventually that ends up being the experience that your customers get, which we believe we are doing better than anyone today in the market.

For a customer standpoint, from the brokers and the end-user standpoint, I don't think we get muddled too much with the long tail of smaller operators and other operators. Especially in cases where experience for the employee is top priority and quality of space and product is top priority, we are the clear winner in more cases than less.

I think that is giving us confidence in being able to grow this business and also know that we'll win most deals because of this expertise that we built and the overall brand that we have in the country, which again is clearly reflected in the numbers and in the type of deals that we're doing. Now as this obviously increases as a contribution of the business, you'll see at an EBITDA level the managed office business is equally strong as a WeWork spaces.

In fact, because they're always at 100% occupancies, that you will see EBITDA margins being at a center level roughly 40% to 45%, at a corporate level same 30% to 35%. At an EBITDA level, they will contribute meaningfully to the business as we continue to grow while bringing stability also to the business.

I would say that it will only help improve the margins of the business as we grow this business line.

Okay. Thank you.

Thanks a lot, sir.

Yeah. I just would love to thank everyone for joining the call and being part of this earnings and also this Q3 being such a strong quarter for us.

As always and like we've mentioned, our focus is on delivering the best quality workspace experience for all of our customers across segments. We continue to focus on profitable growth, sustainable growth, and also figuring out how we always balance revenue growth, profitability, and our return profiles as disciplined as possible.

We will continue to do that and create value for all shareholders involved. Thank you very much, and look forward to catching up in the next quarter.