IWG (LON:IWG) reported a stronger start to 2026, with executives saying demand for flexible workspace remained resilient despite macroeconomic uncertainty, geopolitical volatility and rising inflationary pressures.
In a first-quarter trading update, Mark Dixon said the company delivered 4% group revenue growth and 9% system-wide revenue growth, describing the system revenue performance as “the best we’ve seen so far.” He said the results reflected both demand resilience and the strength of IWG’s global platform.
Revenue Growth Led by Managed and Franchised Platform
Chief Financial Officer Charlie Steel said system-wide revenue rose 9% year-over-year to $1.17 billion, while group revenue increased 4% to $958 million. He said growth was increasingly being driven by IWG’s managed and franchised platform, which the company views as higher-margin, more scalable and more cash-generative.
In the managed and franchised business, system revenue increased 41% year-over-year in the first quarter to $260 million, while fee income rose 70%. Recurring managed fee income grew 80% year-over-year to GBP 16 million for the quarter, which Steel said reflected both new openings and the maturity curve of existing centers.
The company also reported continued expansion of its network. Dixon said IWG signed a record 380 deals in the quarter and opened more than 200 centers. Steel said the managed and franchised segment now has 336,000 rooms open, with a further 231,000 signed but not yet opened. Once those rooms are open and mature, Steel said the segment has potential annual system revenue of more than $1.9 billion.
Company-Owned Business Returns to Revenue Growth
Dixon said the company-owned segment returned to headline revenue growth, giving IWG growth from both its capital-light platform and its company-owned units. Steel said company-owned revenue increased 2% year-over-year, while revenue per available room, or RevPAR, rose 6%.
Dixon also sought to address investor perceptions of the company-owned portfolio, saying it is “very cash generative and very low risk” and has been “largely de-risked and hedged” over many years. During the question-and-answer session, he said IWG plans to do more during 2026 to explain the structure and risk profile of the portfolio to investors.
On pricing, Dixon said prices declined last year but began improving through the third and fourth quarters and strengthened further in the first quarter. He said the company has a positive view on the future pricing curve and expects continued RevPAR improvement in both company-owned and managed and franchised operations during the year.
Guidance Maintained Despite Uncertainty
Steel said first-quarter performance was in line with expectations and that IWG is maintaining its full-year guidance. The company continues to expect:
- Adjusted EBITDA of $585 million to $625 million;
- Revenue growth of at least 4%;
- Recurring managed fee income of $80 million;
- Maintenance of an investment-grade credit rating.
Steel said IWG’s direct exposure to the Middle East is limited, though the company is monitoring the broader macroeconomic impact of the conflict, including global inflationary pressures. In response to an analyst question, Dixon said the Middle East represents “a couple of percent of revenue,” with roughly 70% to 80% of that in managed and franchised operations. He said current sales and performance in the region are down because of lower traffic, but managed and franchised signings have not been interrupted.
Dixon said broader uncertainty, including around artificial intelligence and future headcount needs, is encouraging companies to avoid long-term fixed commitments and seek more flexible workspace options. He said companies are focused on avoiding capital expenditures, securing shorter-term commitments, reducing space requirements and accessing globally scalable solutions.
Buybacks Continue as Cash Generation Improves
Steel said net debt increased during the quarter, primarily due to share buybacks, annual bonus payments and working capital timing effects. He said the company expects net debt to reduce from current levels by the end of the year, and later said it should return to year-end 2025 levels by the end of 2026. Steel added that IWG’s debt is fixed-rate, the company has no near-term financing requirements and management remains committed to maintaining an investment-grade rating.
The company has returned more than GBP 70 million to investors through share buybacks so far this year and more than GBP 230 million since its Investor Day in New York in December 2023, Steel said. IWG has announced a $100 million share buyback for 2026. In response to a question, Steel said Dixon has not sold shares pro rata into the buyback.
Cost Controls, AI and M&A
Executives said inflationary pressures have increased, particularly in areas such as energy and other costs that may ultimately affect salaries in some markets. Dixon said IWG is focused on keeping costs down and that improvements to its accounting and data systems are giving management better real-time visibility. He also said artificial intelligence could become a significant driver of cost efficiency over the coming years, although he cautioned that savings will take time to implement.
On mergers and acquisitions, Steel said IWG is not pursuing transformational deals. Dixon described activity as small, low-cost bolt-ons, with some companies joining the platform through managed and franchised arrangements to gain access to IWG’s network and operating model.
Dixon closed the call by reiterating that IWG delivered growth in both revenue and platform scale despite economic and geopolitical uncertainty. He said the managed and franchised business is scaling strongly, the company-owned segment is growing revenue, and the group’s risk profile is lower than investors often perceive.
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.
