IWG is a neglected market leader undergoing a positive strategic change
A refreshed and refocused company could do the trick in waking up investors to IWG's steady flagship workplace business (its company owned business).
International Workplace Group: Work Hard, Share Harder
Turning office space into opportunity: why IWG is the Airbnb of the hybrid work revolution.
LON:IWG
GBp226.40-2.92%
Updated: May 02, 2025
Financials & Real Estate
mediumeurope
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
IWG is successfully broadening its core business reach in a smart way
It's still early days but IWG's strategy to refocus its workplace new business on both its managed & franchised and digital professional services businesses could pay off for shareholders
Their ongoing balance sheet clean up has further to run
IWG's balance sheet transformation has come a long way already. Its capital light business focus is well purposed to deliver both future cash flow generation and capital management driven upside
Bear Case
Adj. EBITDA margins could be challenged to substantially expand
IWG 's ambitious $1BN Adj EBITDA target requires continuing margin improvement. All eyes will be on how much operating leverage IWG can achieve on the expense side.
RevPar growth trends will be closely watched for a slowdown
This will be important gage for investor to judge the unit pricing power of their "room revenue concept" driven business.
The risk of macro headwinds impeding companies employment plans
Any economic slowdown and weakness in the employment market (for office jobs) could impact demand for IWG's workspace. An unfriendly trade war looms as a near-term risk that could trigger this kind of economic slowdown.
Executive Summary
IWG operates a global network of office space, co-working and virtual office spaces and meeting rooms. It conducts business under multiple workspace brands: Regus, Spaces, HQ, and Signature. It current office footprint encompasses over ~4,000 different locations across 120 different countries (revenue wise is >50% in Europe, 40% US, 10% Asia). Investment thesis wise, IWG's core workplace business is in a good place and the company is rolling out a value added growth strategy toward asset light revenues and has embarked on a balance sheet deleveraging process. The combination of these company drivers should drive better earnings growth and enhance share price performance.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
IWG is a neglected market leader undergoing a positive strategic change
Continuing top-down investor debates on the future of hybrid/work from home working have inadvertently led many investors to underappreciate the nucleus of IWG's business, its market-leading company-owned workplace business. This consists of ~800k rooms (defined as 7 SQM), 2,800 locations across 120 countries and contributes 87% of their group revenues. This business is not focused on growing its footprint (in terms of rooms or centres) but instead on per unit pricing power (+5-7% annual RevPar growth) and on driving margin improvement (gross contribution margins from 13% in 2021 to 25% in 2024). Trading at ~5x EV/EBITDA handily discounts IWG's market-leading owned workplace business in addition to their capital-light/services new business focus and their deleveraged balance sheet.
IWG is successfully broadening its core business reach in a smart way
IWG new business growth focus is on expanding its capital light workspace business (managed & franchise format) and its digit tools & services business (under its Works brand). Together, these are only 13% of group revenues but are 25% of gross contribution margins. Their managed & franchise which requires no capex investment is responsible for virtually all of IWG's room and center growth. Currently, this capital light business has 185k rooms across 1,116 locations. IWG opened 624 new workplace locations and 66k new rooms in 2024 (95% was from managed/franchise). Pipeline wise, they project asset light rooms to expand by 216k rooms by YE 2026 and bring revenue potential of USD 45m (or 60% of 2024 base) at gross contribution margins of 100%. Their digital tools and services business grow by 8% (ex-large contract exiting) and posted gross contribution margins of 50%. This business covers all the bases as far as workplace tech and logistics as an outsourced service for investors/landlords.
Their ongoing balance sheet clean up has further to run
The most exciting development for IWG has been the progress they have made deleveraging their balance sheet (reducing net debt/adj. EBITDA from 2.3x in 2022 to 1.3x in 2024). This has been achieved via a concurrent jump in adj. EBITDA generated and a paydown of debt (both long term and convertible debt). IWG has taken advantage of its strengthened balance sheet to refinance USD 1.4BN of debt and currently sits with USD 436 mil of dry powder in its revolving credit facility. This has already translated into improved capital management with a $50 million share buyback announced in early March 2025 (which together with a progressive dividend is a yield of ~3%). Further return of capital is in the cards as their capital light strategy will continue to reduce their need for growth capex ($88mil in 2024 vs. $173mil in 2022) which will directly improve their free cash flow generation and facilitate further debt paydown.
Catalysts
The key events that could drive investment opportunities and shift markets.
Growth in capital-light businesses = room growth
This is comprised of both their managed/franchise workspace business and their digital tools and services business - together, these are 25% of gross contribution margins. The managed/franchise business is the growth engine from a small base (has more than doubled to 79m in 2024 from 32m in 2021). IWG projects the # of managed/franchised rooms can double by 2026 (adding 216k rooms to the current 185k base).
Further deleveraging + declining capex = more capital management
IWG is optimistic about further reducing its net gearing (next stop is 1x ND/Adj EBIDTA). A further pullback in growth capex (from 5% of revenues) would have a favourable impact on cash flow generation and the ability to reduce net debt. They should pave the way from the $65 million of capital returned in 2025 = a good first step, so to speak.
Lofty EBITDA target and a potential stock re-rating on the cards
The market is not yet pricing in at all a trajectory toward their ambitious $1Bn of adj EBITDA target (from USD 557m in 2024). Although only trading at 5x EV/EBITDA puts IWG shares in a good position to re-rate higher if their asset-light strategy can deliver both revenue growth and more generous capital management in a decent macro employment market.
Key Risks
Key pieces of information about the business risks that you need to know about.
Adj. EBITDA margins could be challenged to substantially expand
Adjusted EBITDA margins have improved from 11% in 2012 to 15% in 2024. Improved gross contribution margins from all three business segments have underpinned most of the improvement, and their business mix going forward will favour better margins. The biggest expense outlay to watch for savings is their rental costs (35% of revenues), which come from their main owned business segment. Overhead expense efficiencies will need to come into play at some point.
RevPar growth trends will be closely watched for a slowdown
RevPar (Revenue per Available Room ) is the methodology for evaluating unit pricing that the company has promoted to investors (similar to the approach used for hotel management companies). For IWG's company-owned business, expectations are for some modest growth in RevPar (+1% in 2024, +6% in 2023). While the expectation for IWG's managed/franchise business RevPar is $250 per room at maturity (current declining trends are misleading due to less mature locations).
The risk of macro headwinds impeding companies employment plans
Since COVID-19 trends have been favourable for employment expansion and demand for workspace, especially with the changed dynamic of hybrid working. An economic slowdown or stalled capex cycle could hit office employment and thus demand for workspace.
Follow the Experts
Quickly navigate key insights from industry experts and leverage their knowledge and market intelligence.
Expert Insights
article
“While IWG’s financial results for 2024 slightly underperformed expectations, the company’s strong expansion, capital-light approach, and strategic buyback reflect a solid foundation for growth moving in 2025.”
Expert Insights
x
"$IWG is the most mispriced business I own. If it was listed in the US, I think stock would be 2x current levels."
x
$IWG has great earnings and the stock is flat. CPI shows signs of cooling and $IWG is +7%. Really shows you what has been moving stocks over the last year...
x
More and more office landlords will turn to $IWG to help manage & fill their empty(ing) space
Expert Insights
article
"Now it still has a market capitalization in the billions of dollars while WeWork … doesn’t."
Expert Insights
Investor Materials
Access the most recent investor updates published by the company.
Key Investor Materials
Annual Report 2024
ArticleInvestor day New York 2023
PDFInvestor Presentation 2024
PDFSustainability
ESG
ArticleThe future of work: a cleaner hybrid future
PDFWhile Google, Amazon and others continue to lay off employees, companies see hybrid work as a cost-saver
PDFExternal Insights
A curated collection of third-party content relevant to the company and sector to help inform your investment decision.
Hybrid working
Hybrid working demand sends IWG revenues to record high
ArticleFuture expansion
Mark Dixon plans ambitious expansion with 2,000 new centress
ArticleFinancial Performance
IWG founder sells £68.5m in shares to repay bank loan
ArticleIWG founder Mark Dixon sells £68.5m worth of shares to repay a Deutsche Bank loan, retaining 25.2% ownership in the company. IWG shares drop following the sale.
Research
IWG buoyed by workers returning to the office
International Workplace Group (IWG) has reported an uptick in revenue boosted by strong growth in its managed and franchised properties.
Olympia developers sign up IWG to provide flexible office space
IWG’s space will spanning the entire 5th floor level of the One Olympia building
IWG maintains full-year guidance amid US listing talk
Wework rival IWG has said it is on track to meet full-year profit and debt reduction forecasts after warnings over rising costs in March.
Mark Dixon Plans Ambitious Expansion with 2,000 New IWG Offices
Mark Dixon, the chief executive and founder of IWG is embarking on ambitious plans to open 2,000 new offices across the UK within the next five years.
Flexible workspace provider IWG reports record revenues
Firm also reports doubling of profits as overwhelming majority of office-based organisations opt for hybrid model after pandemic
IWG shares rally on pledge to bring back dividend
Shares in IWG PLC advanced 4.1% after it announced a resumption of dividends ahead of an investor day in New York. The workspace provider that owns Regus...
IWG Founder Sells £68.5m in Shares to Repay Bank Loan
IWG founder Mark Dixon sells £68.5m worth of shares to repay a Deutsche Bank loan, retaining 25.2% ownership in the company. IWG shares drop following the sale.
Team
Meet the experienced professionals leading our organization
Mark Dixon
Charlie Steel
François Pauly
Douglas Sutherland
What the Pro's Are Asking
Here are the questions that professional investors are asking before making an investment decision.
How resilient is IWG’s business model to economic downturns?
Investors want to know how IWG’s capital-light model will hold up in an economic slowdown. The company’s reliance on franchising and managed partnerships helps mitigate risk by avoiding heavy capital investments. However, demand for office space can be cyclical, so investors are interested in how IWG can maintain high occupancy and profitability during economic downturns, particularly in uncertain markets.
What is IWG’s strategy for maintaining competitive pricing in a crowded market?
Investors are asking how IWG plans to stay competitive as more companies enter the flexible workspace market. The company plans to maintain pricing flexibility while emphasizing service quality and customer experience. IWG’s scalable capital-light model helps it manage pricing pressures, but investors are watching to see how it balances competitive pricing with maintaining its premium offering.
How does IWG plan to scale its operations in new regions?
Investors want to know how IWG will expand into new regions like Asia and Latin America. The company’s franchise and managed partnership model is well-suited for global expansion, but local market dynamics, real estate access, and regulatory hurdles will be challenges. IWG’s ability to secure strategic locations and manage risk will be key to its success in new markets.
How does IWG plan to double EBITDA?
Through a mix of margin expansion in its core leased business, rapid growth in managed/franchised locations, and rising contributions from its digital booking platform, IWG is targeting to double EBITDA from ~$500M to $1B over the medium term. Key to this growth is the capital-light strategy, which enhances operating leverage and improves the company’s ability to scale efficiently across geographies.
Why shift to US GAAP accounting?
Current IFRS reporting inflates the perceived debt burden due to lease accounting. US GAAP presents a clearer view of operating leverage and could unlock broader interest from US-based investors and screen-based funds. It also aligns more closely with how management internally evaluates performance, making external reporting more reflective of the business’s true economics.