SEC Flags Cash-Flow Measure That Made WeWork Look Profitable (1)

The parent of WeWork, Lyft Inc., and Peloton Interactive Inc. have all been touting a cash-flow metric that shows that their core services are profitable—after subtracting key costs like rent, marketing, and stock compensation.

For We Co., the subleasing company that operates WeWork, that meant subtracting roughly $900 million worth of cash and noncash leasing costs plus other building expenses from its member and service-generated revenue. Using a version of the metric known as contribution margin, the company reported a $142 million profit for the first half of 2019—compared to a $904 million net loss under U.S. generally accepted ...