Wework India Management Ltd (NSE: WEWORK) Q3 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Unidentified Speaker
Karan Virwani — Member, Managing Director & Chief Executive Officer
Clifford Lobo — Chief Financial Officer
Analysts:
Adhidev Chattopadhyay — Analyst
Unidentified Participant
Yashas Gilganchi — Analyst
Yashowardhan Agarwal — Analyst
Abhinav Sinha — Analyst
Vikrant Kashyap — Analyst
Shamit Ashar — Analyst
Siva Prakash — Analyst
Deepak Purswani — Analyst
Presentation:
Unidentified Speaker
[Starts Abruptly] The highest we’ve seen. This demand translated into a record revenue of 640 crores for Q3FY26, 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 life cycle 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 deaths 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 its 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 was 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 a real estate adjacent type of platform that measures a similar metric.
Karan Virwani — Member, Managing Director & Chief Executive Officer
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 up to about 11.4 million square foot and and roughly about 171,000 seats over time with the phase 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 27th.
And there is still some additional supply which we have under discussion for the next financial year of FY27. 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 FY27 and FY28 opportunities, keeping this measured expansion capital efficient and keeping expansion measure capital efficient and returns accretive.
With that, I’m going to hand it over to Clifford who will walk you through all of our financial performance in greater detail.
Clifford Lobo — Chief Financial Officer
Thank you Karan and good morning everyone. Let me take you through the key financial performance highlights of our Quarter 3 FY26. As stated in the last call, we continue to evaluate our performance on an IGAAP 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 three FY26 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 Workspace 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 vast 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 three FY26 stood at 134.6 crores with a margin of 21% up 13.7% quarter on quarter and a 47% 47.6% year on year. This reflects continuing operating leverage translating into margin expansion of 70bps quarter on quarter and 293bps year on year. Bottom line performance strengthened sharply with profit after tax of 52 crores, a margin of 8% in quarter three FY26 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 140bps quarter on quarter and a 643bps 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 140bps quarter on quarter and 170bps 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 three FY26 up 113.7% quarter on quarter from 95.4 crores in quarter two FY26 and 119.3% year on year from 93 crores in quarter three FY25. 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. 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 seven 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 FY26 up 1,049 basis points quarter on quarter and 1531 basis points year on year. We evaluate ROCE using a transparent, economically grounded framework consistent with mature operator LED brand businesses designed to measure returns on the actual capital deployed. On this basis our ocs 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 FY26 our net debt stands at 110.4 crores compared to 310.5 crores in the previous quarter. We also received a full settlement of the ICD of 153 crores from the Promoter group in the current quarter. Our average cost of borrowing has declined by 560bps 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 triple B 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.
Questions and Answers:
Operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on a Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Adidev Chaturopadhyay with ICICI Securities. Please go ahead.
Adhidev Chattopadhyay
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? Hello. One. One by one.
Karan Virwani
But maybe stick to two questions.
Adhidev Chattopadhyay
Yeah, yeah, yeah, yeah. So. Firstly, broadly on the expansion plan now that we have outlined. Right. In terms of seed signing. So this for March 26, 8.7 million square feet. Right. And what number for 27. So is this seed addition likely to be little back ended to the second, towards the second half of the year next year or it will be spread evenly through the year in terms of the seed addition because we are currently, 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. So just. Just to help us understand that part.
Karan Virwani
Yeah, yeah. So actually a lot of it is going to be more front ended towards Q1 and Q2 with some of the sign capacity that we have already being in design and some starting fit out in this quarter. So we’re looking at a pretty decent expansion within the Q1 and Q2 of Next Financial year and then some evening or towards the end of the year as well. And 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, you know, deals that we are in the process of RFPs etc. That might convert also.
Adhidev Chattopadhyay
Okay, sure. And just as a follow up to that or managed offices share is now 20 plus on the revenue front. So whatever with the pipeline visibility we have now the next couple of years, where do you see the overall managed office share getting to the next couple of years for us?
Karan Virwani
So 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. So roughly 20,000 seats to, you know, 10,000 seats for managed office. And we sort of envisage that expansion to continue. We, you know, like we’ve said that for managed office business it is a highly risk averse type of growth that we’ve, that we strategize. So we only grow that business based on deals that we have won and we’re not taking any speculative space to grow that business.
And so it will really depend on how many RFPs, how many deals we win and sort of like look at that expansion today. It seems like we are definitely on the top one to two contenders on most of the tier one deals in the market. And in the last year I would say that we’ve won more than we’ve ever won in the past which shows that we are now a true player even in the managed office segment itself, and that’s how we sort of look at it. So I think it will incrementally move up as a percentage of revenue closer to 30% in the next 24 months. But as we continue to grow the WeWork business, You know that that scale is also increasing.
Adhidev Chattopadhyay
Sure. And just the final question is mainly for Clifford, I guess we’ve done around 340 crores of capex I think in the nine months. So any full year number for 26 you would like to share and any broad guidance for FY27 for the CapEx considering our expansion plans. Yeah, thank you.
Clifford Lobo
Yeah. So 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 layer on top. So you know, that completely depends on what kind of clientele, what kind of customer requirements they need in terms of capex. So it’d be tough to speculate on that. But 300 to 400 on the speculative side is I think a fair estimate.
Adhidev Chattopadhyay
Okay, so 450 to 500 crores run rate overall for this year, next year is an average. Is that a pair? Sort of.
Karan Virwani
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. So if our average CapEx is roughly about 3,300, 3,500 bucks on carpet, some of these customers asking us to spend closer to about 8,000, you know, rupees a square foot. So it’s a significant increase and you know, that also means higher revenue, higher return on, on those deals as well.
Adhidev Chattopadhyay
Okay. Okay. Yeah, that’s interesting. Yeah. Right. Okay, thank you very much. I’ll come back in the queue if I have more questions. All the best.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes from the line of Archit Kalra, an individual investor. Please go ahead. Mr. Kalra, please go ahead with the question. Mr. Kalra, please unmute yourself and go ahead with your question.
Unidentified Participant
I was on mute. Firstly, I’d like to congratulate on a great set of numbers. So my first question is what are the drivers of the increase in Roce by 10% on a QoQ basis? So why is there a surplus due to working capital in this quarter?
Karan Virwani
So I think the ROCE increase is largely. We’ve seen the quarter on quarter movement since Q1, so operating leverage really kicking in which is driving ROCE 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 or from these deals.
Unidentified Participant
Okay, so the OCF to EBITDA is 1.5 times of EBITDA. Right. So is it sustainable on a QOQ basis? Do we expect this to go down later on?
Karan Virwani
I think where we’re at is at a good place. I wouldn’t want to give us any guide, give you any guidance on going forward, but I think this is sustainable given the fact that there’s some operating leverage in the business.
Clifford Lobo
So yeah, I think, yeah, I think it’s just important to understand what this comprises of. Right. So it’s really EBITDA that we’re generating which is, which is pure cash. Over and above that we collect some security deposits from our customers. So that might vary depending on the size of the deal, how many desks we sold in that quarter, the value of those transactions, etc. So there might be some variability within that and then there’s some working capital kind of changes that also benefit us in the quarter that might move it up.
So 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. And then any upside on top of that could move this, you know, move this number up. And that’s really true cash that the business is getting and cash that we’re able to deploy into, you know, CapEx or whatever we need.
Unidentified Participant
Okay. Lastly, despite a 4% increase in occupancy levels, your EBITDA margins increase only 75% on a QOQ basis. So 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?
Karan Virwani
Yeah, so actually there were a few 1 timers in the cost line items which is why this implementation, there’s some IPO expenses that we are still getting billed in within this quarter there were some corporate spends that we did or some cost sitting in this for a design build project that we did which was outside of our business as usual type of business. So that direct cost is currently sitting within the corporate GNA bucket. If you kind of negate for that, you would have seen a higher expansion in the margin. And, and since these are one timers, we sort of like view that in the next quarter will even out in some way.
Unidentified Participant
Okay, so what is the margin for? Fascinating.
Unidentified Participant
Can you just tell that.
Karan Virwani
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. So we don’t bifurcate on it. I mean, yeah, like it would be hard for me to give you an exact model.
Unidentified Participant
I was asking about the fit out as a service. There is a cost in your pl. Right. So what is the margin expected in that segment?
Karan Virwani
So on the design build projects which we’ve just done, very few. We’ve not officially launched a brand or launched it as a, as a proper business yet, but 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.
Unidentified Participant
And do you expect this revenue stream to increase in the future?
Karan Virwani
We do and we’ll be formally probably announcing something in the coming quarter. But as of right now, you know, 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. And once we’re ready to launch and you know, potentially next year, we’ll start looking at it becoming another revenue stream for the company.
Unidentified Participant
All right, thank you. That’ll be it from my side and I wish you all the luck.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes from the line of Nihal Jain and individual investor. Please go ahead.
Unidentified Participant
Yeah. Hey, 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 on as at March 35, 2025. But since we are, you know, posting a pat positive quarter of quarter two and quarter three, there was no corresponding DTA reversal being made. Can you highlight something?
Karan Virwani
Yeah. So 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 defer tax on an annual basis because I think that’s the most appropriate way to look at your tax profitability in future years. So we will look at it again in the end of next quarter and the fiscal year end and then make appropriate adjustments to the financials. But all of our, I mean the way we look at operational metrics is all pre tax. We don’t want to get muddled with, you know, tax reversals and accruals. Sorry, does that answer.
Operator
Thank you. We have lost the line of the participant. We’ll promote the next. That is from the line of Jianch and individual investor. Please go ahead. Mr. Jianch, please go ahead with the question. Mr. Jiansh, please unmute yourself and go ahead with the question. Since there is no reply from the line of. Mr. Jiyansh will move to the next. The next question comes from the line of Amar Ahir with the redone capital. Please go ahead.
Unidentified Participant
Hello, Am I audible, sir?
Operator
Yes, please go ahead.
Unidentified Participant
Yeah, so thank you for the opportunity. So what I wanted to ask is what is the realization like revenue per seat and the capex incurred per seat?
Karan Virwani
So on the capex incurred per seat, I think, you know, Cliff walked you through it. For this quarter, it’s roughly about 1 and a half lakhs slightly above our normal due to some of the larger and enterprise deals that we’ve done in this quarter. In terms of realization proceed, we hold on, you know, 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, you know, roughly 2.8x on whatever rentals or whatever cost that we have in the, in the business. I’m not sure if that’s what you’re referring to in terms of realization or is that another metric that you’re looking for? Okay, like button number terms like what would the, what would the revenue per seat like per unit? Yeah, I think today on a total revenue based on a total arpam 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 run.
Unidentified Participant
Okay, got it. And can you tell me, help me with the breakeven levels? Like, suppose you’re incurring capex for a seat and then what time would it take for the breakeven
Karan Virwani
If you see a return on capex is roughly about 35%. Right. 33, 34% in this quarter. So capex breakeven is basically happening in a period of three years or 36 months. That continues to be how we’ve been performing. In fact, it’s got slightly better as occupancy, et cetera, have been going up. But that’s something that we’ve been pretty disciplined on. And actually if you take out the managed office, you know, kind of capex additions that we did in the last quarter, you’ll see that our capex per desk for rework spaces has come down slightly. And so the return profiles on some of the spaces continue to get better.
Unidentified Participant
Okay, thank you. What I wanted to understand is like suppose you’re doing capex for a number of seats, at what occupancy levels does it come at breakeven today?
Karan Virwani
Operational break even across the portfolio, including mature and the growth centers are roughly about 54.8% and that’s why we’re breaking even.
Unidentified Participant
Okay, so thank you so much.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes on the line of Yeshas Kilganji with Pop Capital Markets Ltd. Please go ahead.
Yashas Gilganchi
Good afternoon team. Thank you for taking my questions. With no material change in of the office leasing.
Operator
Sorry for interrupting. Mr. Gilganji, can you speak a little louder and come a little closer to the mic?
Yashas Gilganchi
Sure. Is this better?
Operator
Yeah. Please go ahead.
Yashas Gilganchi
Thank you for taking my questions, team. With no material change in the office leasing environment and flex workspaces continue to account for approximately 21% of total office leasing. Please help me understand what drove the impressive improvement in occupancy over the quarter and how you expect occupancy to trend going forward. Also, what was the total leasable area over 3Q26.
Karan Virwani
So I mean, just to maybe correct, you know, obviously the macro environment has improved meaningfully even in the just in the last 12 months, if you look at any of the commercial leasing data, you know, India has reached record highs when it comes to commercial leasing driven by, you know, a lot of sectors. GCC is obviously being one of it. But gc, 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.
So 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. And you’ll see that, you know, our occupancies clearly have moved up. Our mature building occupancies at 87%. But I see that trend happening at the entire sector and not across, you know, just us as an operator, which is a great. Which shows that the overall market, adoption, et cetera, 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 deaths 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 brought on in this financial year as well. So we’re clearly seeing the adoption shift happen. We’re seeing a transition from conventional to flex. We are seeing new take up or new requirements increasingly asking for flex as options. And 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. So I think overall our thesis, the tailwinds, all of that is definitely playing out. And if you go through the shareholder letter that we have, there are a few case studies in there which show 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 and I think is 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. And yeah, I mean, I think what we were kind of telling the market before our IPO and you know, everything that we were charting up is definitely playing out and we think it’s going to continue for the next few quarters.
Yashas Gilganchi
Okay, understood. I noticed that total leasable area added to your portfolio has been trending upward. What has changed that is helping wework achieve this and what are the challenges to adding even more, even larger amounts of leasable area into the portfolio?
Karan Virwani
You know, we’ve consistently always said that we’d be looking at this sort of like 20,000 seat additions year over year. We’ve expanded that for the next year, you know, closer to about 30,000. And we’re looking at at least having pipeline for even FY28, you know, at a similar. This is really being driven by the indication from the velocity itself that we’re seeing in the business. Business. Right. We 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 adding any risk to the business. So 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. And then if we lay out a managed office business, which has been historically about 10,000 desk, 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 or thousand kind of seat additions that we 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 two and a half million square foot of leasing that we’ve done just in this year. And 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. So you’ll see a platform that is obviously much newer and doing smaller volume of deals per deal is able to do, you know, just sort of like 70 to 80% of what a traditionally 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, you know, the segment and us as an operator is growing. Understood, understood.
Yashas Gilganchi
And 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 a managed offices?
Karan Virwani
Right. So you know, while managed office is 20% and those will always largely be the enterprise segment, we, you know, classify enterprises in pretty much like, you know, three categories, small, medium and large. Small being anyone between, you know, about 300 odd decimal average, medium being anywhere over 500 and and large enterprises being over 1000 full time employees that the organization might have so not necessarily seats with us. And the reason that you see that 74% of our business is also enterprise is because enterprise. End up taking space with us within WeWork spaces. Also like we have multiple enterprises, you know over the last eight years where full floors who have part wings, who have dedicated offices within our WeWork Flex spaces. And then we also over the last two years have grown this managed office business which you know is now 20% of the of the entire portfolio. Just notably in this last quarter we would, you know 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.
Yashas Gilganchi
Understood. Thank you very much. Have a nice evening.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes from the line of Yasha Varden Agarwal with IIFL Capital Asset Management Ltd. Please go ahead.
Yashas Gilganchi
Yeah. Hi team. Am I audible?
Operator
Yep. Yes.
Yashas Gilganchi
Yeah. First of all congratulations on good set of number few questions from my side. So could you please share how much revenue from a top client and top center is coming?
Karan Virwani
You mean revenue con concentration or contribution?
Yashowardhan Agarwal
Yeah, concentration. So how much, how much revenue is coming from top line?
Karan Virwani
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. So it’s highly diversified in terms of concentration and you know we’re not sort of like yeah, we don’t have any single tenant that’s contributing a large part of the overall revenue if that answers your question.
Yashowardhan Agarwal
Yes, on the client side. And what about the center? Top center must be contributing how much to our revenue?
Karan Virwani
Top center contributing? No, I mean we’re distributed across now 73 locations, you know, typically each of average size. So I don’t have that number on handy but this could change depending on occupancies, deals that we’ve done, you know, new transactions that we, that we bring in. So maybe I can send you that separately once we have that number. Sure, we’ll connect on that later.
Yashowardhan Agarwal
My second question is on the retention rate. So how has been the retention rate overall? For us till now and how is it on the management, on the management managed contract side.
Karan Virwani
So retentions have been in that 75, 80% range which is typically where we, you know, are certain quarters or certain months. You might have a large enterprise churn or whatever it is. But I think the good part is across. 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. And today about 50% of our revenue still comes from our internal customers itself growing with us. So 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. And the occupancy movement wouldn’t have been able to move in this range if we had a higher churn than we usually do.
So retentions are pretty good. And overall nps, which is the 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.
Yashowardhan Agarwal
Got it. Question from the management contract side. So since you mentioned that in the seats are quite customized in that and the capex per seat is usually more than for the flex space. So how, so how what is the commitment term on the management office side and is there a minimum seat commitment in that and how is the capex recovery in these segments?
Karan Virwani
So you’ll see that our total commitment terms have significantly gone up on an overall basis like I think roughly four months on aggregate just from last year, which is, you know, nearly a 30, 40% increase in commitment terms. Managed office commitment terms typically tend to be in the three to five year range depending on the deal that we have.
And 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 are able to do on the wework side of the business is something by the way, if you look at our shareholder letter, you will see a detailed, you know, sort of description of it and how the depreciation is also treated across these two businesses. Purely because of that and what the EBIT margin differences are when that happens. But the, the manage of his businesses I would say are between, you know, three to five years in terms of total commitment that we were able to get.
Yashowardhan Agarwal
And our capex get recovered in the commitment time frame.
Karan Virwani
Right? That’s right.
Yashowardhan Agarwal
And what is the minimum seat requirement if anyone wants to opt for the manage of his pay?
Karan Virwani
We don’t particularly have like a minimum requirement. We haven’t done 6,000 square foot of managed office in the past. But 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. Like 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, and also the value in the type of deals that we do. So we do try to focus more of our efforts on winning large value deals. These typically meant to typically end up being above 30,000 seats, closer to maybe 80 to 100,000 in some cases.
Yashowardhan Agarwal
Got it. The next question is on the value added services. If I look at the revenue that is growing at its firm rate, so how should we see this moving forward and what are the levers for it?
Karan Virwani
That’s right. I mean like I mentioned, we have a bunch of services, you know, within that we are working on trying to figure out a strategy even for next year on how we, you know, are able to generate more from bas. But typically it’s been in the range of whatever like you know, 12 to 14% of our overall revenue. I think that’s safe assumption for you to make even on an ongoing steady state basis of at minimum where it will be and if we’re able to find opportunities to increase that, we will. And you know, like we mentioned in this quarter, sometimes we get this large, you know, sort of like 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 vivo branded spaces. And so we’re able to see that revenue grow up over the last 12 months.
Yashowardhan Agarwal
Got it. Just in clarification, 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?
Karan Virwani
That’s a visibility that we have as of right now and. It’s highly likely, you know, there are some assets which are still under construction, et cetera. So there may be some movement in the, you know, if you look at it in this point of time between FY and fy. But yeah, that’s roughly the plan that we have. At least for FY27. We’re pretty certain we’ll, we’ll be in that, you know, 30,000 deaths sort of range.
Yashowardhan Agarwal
And how should we look at the margins?
Karan Virwani
Margins? You know, 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 and 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 will see this expansion happening. You see the mature building margins have grown to about 28%. Corporate overheads, even with the one time spend that we had in this last quarter on the IPO, expenses etc are still at about 8%. So if that comes down as a percentage of revenue, which it should, and center level margins continue to see some improvement, you know, there will be some margin expansion but 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.
Yashowardhan Agarwal
Got it. That hits me a lot this last question on the rent escalation clause. So what is the clause for rent estimation with our suppliers and with the clients?
Karan Virwani
Yeah, our leases are 10 year leases with three, you know, typically three to four year lock ins. There’s a rental escalation of roughly about 12 to 15% every three years which you’re seeing even in the rental cost increase in this quarter was roughly about 3.6% year over year, you know, approximately. So that’s, that’s a contracted lease escalations that we have. Client contracted escalations are between 6 to 7%. And that’s also the pricing CAGR that we’ve seen over the last few years. You know, in terms of improvement in pricing of the business.
Yashowardhan Agarwal
6 to 7% annually, right?
Karan Virwani
That’s right.
Yashowardhan Agarwal
Yeah. Thanks a lot and good luck.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes from the line of Abhinav Sinha with Jeffries. Please go ahead.
Abhinav Sinha
Hi and congrats on the strong quarter current couple of questions. So firstly on the managed side and you know I was. Going through the very helpful shareholder letter that you guys have printed. So you’re talking about EBIT margins in low single digits. So I mean why are you sort of like really pursuing this business then?
Karan Virwani
So I think the, you know, while obviously in the initial term there is the lower single digit margins when a renewal in this business happens that will clearly, you know, flip those margins even. Because we would have sort of appreciated or 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 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 the margins, improve pricing, sell VAS on top of the business. And 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. And with that we have our digital products business that allows for super remote, super flexible type work. 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. And 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. You, you know, thank you for reading the shareholder letter. I would encourage a lot more people to do that but there are a few case studies and that also that really outline, you know, why both are important for us.
Abhinav Sinha
Okay, so 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. I mean that’s what we are looking at.
Karan Virwani
That’s yes. And also, I mean at an EBITDA level and a cash generation level they’re extremely, you know, it’s an extremely strong business that allows us to generate a lot of free cash that we’re able to use to growing the business because of these contracts were able to raise extremely cheap capex debt also. And so that is one. But also I think you need to look at it from acquisition and growth of account standpoint 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. So 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 are able to have that most other players in the market don’t have. Both sides of this business.
Abhinav Sinha
Got it. Secondly, and we are seeing very strong office demand cross board. Right? I mean from flex guys as well as in Reed, we can see that now how difficult it is for you right now to procure quality new offices. Are the rents like really high? Is the spread still manageable or you think in say another 12 odd month the situation will be very much in landlord’s favor and you will struggle.
Karan Virwani
It’s in landlords favor even today I would say especially in the grade A supply that we’re looking at. But 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 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. So from that standpoint point we don’t see any major issue. I think it will actually work in our favor because if we’re able to take more of the capacity, more of a 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. Their vacancy rates have come down. If I look at all of the REITs that occupancy is at night above 90% pretty much across the board.
And like we spoke about during, you know, our roadshows during the IPO as well, our relationships with the top 20 developers, 30 developers, are extremely strong today. We’re talking portfolio level, you know, capacity additions with them. We don’t talk singular assets, singular flows. We’re talking multiple assets geographies and that allows us to be able to lock in sort of the supply a lot quicker. And we’ve already done that now for the next 24 months. So we’re in a pretty comfortable place when it comes to the expansion.
Abhinav Sinha
Right. And 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. So the margins should be in the current 21% plus minus sort of bracket or you think they could be a little lower and then go up again in the second half of next year.
Karan Virwani
Yeah, it will, I mean it will dip and then go back up like you know you saw this year as well like we mentioned, you know there’s some front loading of capital capex coming in Q1, Q2. So you would sort of massage a similar ramp like you would have seen kind of this year. And 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. So yeah, I mean 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.
Abhinav Sinha
Great. Thank you and all the best.
Karan Virwani
Thank you.
Operator
Thank you. Next question comes from the line of Vikrant Kashyap with Asian Market Securities. Please go ahead.
Vikrant Kashyap
Hi, good morning and congrats on a very strong set of number. I have seen your center level margin has been expanding over a couple of quarters or could you please highlight what are the levers for them? This is the supply led margin expansion or has been driven by favorable demand scenario. So and what will be your steady state center level margins going ahead?
Karan Virwani
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. So all the fixed cost will have some impact on the overall center level margin and overall company level ebitda. And as those fill up you will 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%.
And also the mature buildings were at roughly about 82% I think last quarter they grew to about 87% this quarter. So all of that incremental revenue just flows down to margin and then down to profitability and cash flow. So that’s clearly the major component. And then like we said the vast revenue growing on top of that Digital products contributing on top of that, all of that adds to the center level margin. And it’s finally occupancy. Driven business. If we, if we take these occupancies up to 90%, you will see, you know, center level margins upwards of 30, 35% also hitting.
Vikrant Kashyap
Okay. And on the occupancy side, since you just mentioned that REITs have been so large a large portfolio despite they have been hitting an occupancy of more than 90%. So in our scenarios, since we are heading to the highest occupancy in the industry, so do we see also meeting the occupancy level of REITs and is it likely because of your managed offices or your workplaces are also getting higher occupancy, how things are improving for you.
Karan Virwani
The REITs. REITs don’t grow like REITs are not adding capacity at all on a year over year basis. They have existing portfolios where they sign 10 year leases. So they need to manage or really fill up that much space. Nor are they adding capacity that suppresses occupancy within 1/4 and then have to ramp it up again. So they’re traditional assets and 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 by growing at, I don’t know, like at least three to four times that of a REIT from a capacity, you know, standpoint. So 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, even higher than 100% if you layer on BAS and other revenue streams that we, that we’re generating from the center.
So yeah, I mean is it possible? It’s, it’s already happening in certain pockets but just because we’re adding capacity, you know, we will always be, will be at some available capacity, which is something we want to keep because that gives us growth and revenue as well.
Vikrant Kashyap
Okay, last question on gcc. So the industry has seen a strong ramp up from GCSes in last, say last two, two and a half years. And so how, how GCC clients are ramping up for you and how do you see the visibility going ahead?
Karan Virwani
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 a bit of clear increase in the volumes and the number of companies now coming into India and you know, 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. And for that our model is highly beneficial. It allows them to enter without any upfront costs, without signing extremely long term leases. They’re able to grow quickly through our WeWork spaces and eventually take a 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 you know, be around where the best talent actually stays. The other thing that we’ve done in the last quarter, you know, we strategically launched partnerships with about eight GCC as a Service businesses where we signed MOUs including one of our own internal companies called Embark that you know, 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. You know 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 four to six 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. So we’re in a good place to cater to them and it’s something as a funnel. We see, you know, 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.
Vikrant Kashyap
Okay, great. One data point. What percentage of your clients are multi city, multi center?
Karan Virwani
I don’t have the exact percentage number. Any, any ballpark. I think maybe roughly 30 to 40%.
Vikrant Kashyap
Okay, great, thank you and wish you all the best.
Operator
Thank you. Next question comes on the line of Shamit with Amit Capital. Please go ahead.
Shamit Ashar
Yeah, hi, thanks for the opportunity. So I wanted to understand more on the depreciation policy of yours. So let’s assume you have one center, the whole building. You have taken it from 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 we work workspace format which you have. So how will you be spreading your depreciation costs in such a case?
Karan Virwani
So 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. So you know, we’d arrange for separate leases for managed office spaces and those would be depreciated over the commitment term of the deal and depreciation kicks in as soon as the buildings are open and you know, the entire fit out depreciated over the lease terms, whether it’s the managed office lease term or the speculative lease of five plus five or ten years.
Clifford Lobo
If you actually just refer to the shareholder letter which is available on the website. We’ve explained this in extreme detail and you know, can go through it and if you have any other further questions we can obviously, you know, answer that specifically. But yeah, I think what Clifford described is how we’ve kept the discipline between the two businesses on depth.
Operator
Thank you. Next question comes from the line of Siva with I thought pms. Please go ahead.
Siva Prakash
Hi, so my question is regarding the GCCs that they are signing up. So these clients.
Operator
Sorry for interrupting you sound. Can you come a little closer to the mic and speak?
Siva Prakash
Is it better now?
Operator
Can I speak a little more louder?
Siva Prakash
Hi, is this better now? Yes, please go ahead. Yeah, so my question is regarding the GCCs that we are signing up. So these clients, have they used WeWork before in other regions outside India and did help them in choosing WeWork India. So I’m just trying to understand how much WeWork’s brand value is contributing in client acquisition.
Karan Virwani
I think there are definitely cases where we do have customers that have used or at least experienced WeWork somewhere in other parts of the world. If not, you know, as an entire company, the end user, decision maker, obviously aware of the product and as in some way shape or form use the product and you know, to give you how many deals are exactly WeWork members and not. I don’t have that all handy. But. Yeah, so that’s definitely an example. But there are definitely new companies that you know, are clearly entering India that haven’t take in 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 space. Sense than taking a conventional lease. So there are definitely deals that we signed up that this is the first time that they’re using a WeWorkspace also.
Siva Prakash
Right. Is there any ballpark percentage figure, you know, you could say with regards to client who has used both Vivo Global and India
Karan Virwani
Don’t have a percentage. But if I have to look at Maybe the top 10, 20 customers that we have, you know, 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, you know, global relationship with a lot of these companies.
Siva Prakash
Sure, yeah. Thank you for that. And one last question. How different is our revenue per seat for managed office and branded workspaces?
Karan Virwani
If you. Again it’s. I wouldn’t say it’s materially different but if you can, you know, 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 and so the pricing will also reflect that when we’ve done those deals.
Siva Prakash
Sure, yeah. Thank you for that.
Operator
Thank you. Next question comes on the line of Deepak Purswamy with Swan Investments. Please go ahead.
Deepak Purswani
Yeah, hi, congratulation for good setup number. So just wanted to check it out since our incremental contribution is coming from managed office in the new seats. If you can share your perspective especially on the competitive landscape given the way industry is evolving like lot of nuclear have 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 our core revenues to rent ratio for this particular business? And thirdly, if this contribution keep on increases from the directional perspective, from next two to three year perspective, how should we see the EBITDA margin?
Karan Virwani
Yeah, so you know 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 this last quarter for some of the largest companies in the world. So the expertise that we built, the execution capability and the trust that exists in the market that we will be able to deliver high quality managed spaces or rework spaces I think is established and pretty much clear today. And that is reflected in the size scale of the business and the velocity that we’re winning in terms of deals and also some of the large RFPs that we 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. And so it 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. And 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. So I think that is giving us confidence in being able to grow this business and also know that we will 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 the type of deals that we’re doing now. As this obviously increases as a contribution of the business, you will see at an EBITDA level, the managed office business is equally strong as a rework 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%. And so at an EBITDA level they will contribute meaningfully to the business as we continue to grow while bringing stability also to the business. So I would say that it will only help improve the margins of the business as we, as we grow this business line.
Deepak Purswani
Okay, thank you, thank you.
Karan Virwani
Thanks a lot sir.
Operator
Thank you. Ladies and gentlemen, due to time constraints we have reached the end of question and answer session.
Karan Virwani
I would now like to hand the conference over to the management for closing comments. Yeah, I just would love to thank everyone for joining the call and you know being part of the 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 you know, figuring out how we always balance, you know, revenue growth, profitability and our return profiles as disciplinely as possible and we will continue to do that and create value for all shareholders involved. So thank you very much and look forward to catching up in the next quarter.
Operator
Thank you on behalf of WeWork India Management Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.