WOTSO Reports 8% Q3 Revenue Growth, Adds 306 Desks Across Six New Locations
WOTSO reports an 8% year-over-year revenue increase in Q3 FY25, driven by rising occupancy and expanding desk capacity. The company plans six new flexspace locations across Australia and New Zealand, balancing owned and leased properties.
- Q3 FY25 revenue up 8% year-over-year
- Six new flexspace locations opening between Q4 FY25 and Q1 FY26
- Strong occupancy rates supporting revenue per available desk (RevPAD) growth
- Contribution margin growth signals robust profitability
- Ongoing rent dispute at North Strathfield site noted
WOTSO’s Flexspace Momentum
WOTSO (ASX: WOT) has released its Q3 FY25 update, showcasing continued momentum in its flexspace business with an 8% increase in revenue compared to the same period last year. This growth reflects the company’s strategic focus on expanding its suburban and regional footprint, a move that aligns with evolving workspace demands beyond traditional CBD locations.
The company’s network is set to grow significantly with six new locations scheduled to open between Q4 FY25 and Q1 FY26. These include sites in North Sydney, Jamisontown, Melbourne, Kogarah, and two in New Zealand (Whangārei and Te Tōangaroa). The mix of owned and leased properties demonstrates WOTSO’s flexible approach to scaling its portfolio while managing capital deployment.
Operational and Financial Discipline
WOTSO’s update introduces new financial metrics that shed light on the health of its business model. Occupancy rates remain robust, averaging around 79% in Q3 FY25, which supports a rising revenue per available desk (RevPAD) metric, now at $359. This interplay between occupancy and rate growth is central to WOTSO’s revenue expansion strategy.
In addition, the contribution margin has shown consistent improvement, underscoring not just top-line growth but also operational efficiency and profitability. The margin benefits from a rent structure within the WOT Group that ties rent payments to turnover, allowing costs to scale sustainably with revenue.
Challenges and Considerations
Despite the positive trajectory, WOTSO disclosed a rent dispute at its North Strathfield site, where the rent currently paid is below the contractually due amount. While this issue has not materially impacted overall growth, it introduces some uncertainty around future lease expenses and potential negotiations.
Investors should also note that some financial figures are unaudited and presented without granular detail, suggesting a cautious approach until full audited results are available. Nonetheless, the company’s focus on suburban and regional markets, combined with disciplined financial management, positions it well to capitalize on shifting workspace trends.
Looking Ahead
With six new locations poised to open shortly and a clear strategy to balance owned and leased assets, WOTSO is reinforcing its footprint in the flexspace sector. The company’s ability to maintain high occupancy and improve contribution margins will be critical to sustaining growth and delivering shareholder value in a competitive market.
Bottom Line?
WOTSO’s expanding footprint and improving margins signal a promising growth phase, but lease disputes and market dynamics warrant close monitoring.
Questions in the middle?
- How will the North Strathfield rent dispute resolve, and what impact might it have on margins?
- Can WOTSO sustain occupancy rates amid rapid expansion into new suburban and regional markets?
- What are the implications of the mix between owned and leased properties on WOTSO’s long-term capital structure?
