IWG Q3 Earnings Call Highlights

Key Points

• Q3 trading exceeded expectations: Systemwide revenue rose 12% year over year to $1.26 billion, while group revenue increased 9% to $1.03 billion. IWG surpassed 5,000 centers and said momentum is carrying into 2027.
• Managed and franchised operations drove growth: Segment systemwide revenue increased 27% and recurring management-fee revenue jumped 72%. The pipeline expanded to 287,000 contracted rooms, supporting IWG’s target of up to 1,000 annual openings through 2027.
• Guidance and shareholder returns strengthened: IWG retained its 2026 adjusted EBITDA range of $585 million-$625 million but expects to exceed the $599 million market consensus. The company raised its 2026 buyback program to up to $200 million while maintaining leverage expectations of roughly 1.4-1.5 times net debt to adjusted EBITDA.

IWG LON: IWG said third-quarter trading was ahead of consensus expectations, supported by accelerating systemwide revenue growth, expanding managed and franchised operations and cost efficiencies that management expects to continue into 2027.

Chief Executive Officer Christian Schmitz said the flexible-workspace provider’s network had surpassed 5,000 centers during the quarter. Systemwide revenue rose 12% year over year to $1.26 billion, while group revenue increased 9% to $1.03 billion. The company said its systemwide revenue run rate now exceeds $5 billion annually.

“Quarter three was a strong quarter,” Schmitz said. “We’re trading ahead of consensus, and we have good visibility to the year-end, and we are carrying real momentum into 2027.”

Managed and franchised business expands

Growth in IWG’s managed and franchised segment remained a central driver of the quarter. Managed and franchised systemwide revenue rose 27% to $287 million, while fee revenue increased 28% to $45 million. Recurring management-fee revenue climbed 72% to $19 million in the quarter and was up 80% to $54 million for the first nine months.

The segment had 380,000 rooms open at the end of the quarter, an increase of 37% from a year earlier, across nearly 2,400 centers. Managed and franchised locations represented 46% of IWG’s total locations, 33% of open rooms and 23% of systemwide revenue, according to Schmitz.

IWG’s signed pipeline grew to 287,000 rooms from 219,000 a year earlier, leaving 667,000 rooms either open or contracted. Chief Financial Officer Charlie Steel said that, when open and mature, the segment has the potential to generate annual system revenue of more than $2.2 billion.

The company signed 324 new centers during the quarter, matching the level recorded a year earlier. While room openings were lower during the quarter because of a greater proportion of smaller properties, year-to-date room openings rose 9% and center openings increased 16%.

Management maintained its expectation for up to 1,000 openings annually into 2027. Steel said the company is increasingly focused on signing larger and higher-quality centers, meaning the center-signing rate could remain at current levels while the room pipeline increases.

RevPAR reflects rapid network additions

Management addressed the decline in managed RevPAR, or revenue per available room, saying it reflected the addition of newly opened centers that are still progressing through their ramp-up periods.

Managed RevPAR was $189 for the segment, but rose to $237 when excluding 2025 openings, compared with $199 in the prior-year period. Steel said this demonstrated improving performance at mature centers. He added that managed rooms were reaching full maturity in about 30 months, rather than 24 months.

In the company-owned estate, revenue rose 8% to $969 million and RevPAR increased 2% to $388. Management said pricing and occupancy had remained stable entering the fourth quarter, providing visibility into year-end revenue.

Schmitz said growth was broad-based rather than being driven by a particular geography. Steel also said IWG had not seen a clear divergence in pricing or occupancy trends across the U.S., U.K. and continental Europe.

Costs, debt and shareholder returns

IWG said the revenue growth was achieved without an increase in its existing cost base. Steel said the company continues to experience some inflation in individual expense categories, including utilities, but is offsetting those pressures through technology investments, automation, artificial intelligence and improved operating efficiency.

“We’re just delivering fundamentally more for less,” Steel said, pointing to efficiencies in areas such as headcount per center.

Net debt declined to $874 million at the end of September from $880 million at the half-year. Steel said net debt would have fallen by $45 million during the quarter before $39 million of share buybacks. The company expects net debt to remain around current absolute-dollar levels in the fourth quarter, resulting in year-end net debt to adjusted EBITDA of roughly 1.4 to 1.5 times.

IWG returned $139 million to shareholders through buybacks in the first nine months, including $39 million in the third quarter, when it repurchased 15.8 million shares. The company has increased its full-year buyback program to up to $200 million.

Steel said the company continued to reduce its use of supply-chain financing arrangements. He characterized the third quarter as a normal operating and working-capital quarter, while noting that working-capital movements can vary over short periods.

Outlook and acquisitions

IWG retained its 2026 adjusted EBITDA guidance range of $585 million to $625 million, but said it now expects to exceed current market consensus of $599 million. Steel described that as a tightening of the guidance range, while acknowledging that others may view it as an upgrade.

For 2027, the company expects to issue formal EBITDA guidance in the first quarter of 2027 and said it currently expects that outlook to be in line with consensus. Management cited continued revenue momentum, a growing managed and franchised pipeline, stable company-owned operations and further cost efficiencies.

On acquisitions, Steel said IWG was satisfied with the integration of Design Offices, an acquisition completed earlier in the year. The company does not currently have transformational transactions in its pipeline, but said it would remain open to opportunistic portfolio roll-ins and other businesses that fit its strategy.

About IWG (LON:IWG)

IWG plc, together with its subsidiaries, provides workspace solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers office, coworking and collaboration, flexible and scalable, meeting, and lounges spaces; workplace recovery; memberships workspaces; and reception services and conference products. It provides its services franchise partners, landlords, and property owners under the Regus, Spaces, HQ, Signature, Basepoint, Stop & Work, The Office Operators, BizDojo, Open Office, No18, The Clubhouse, Central Working, and Copernico brands.

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