Table of Contents (3) Average Months to Open from Possession Date Net Capex per Workstation Added (1) Based on “White Box” build defined as standard configuration of space and no demolition. While the amount of time required to open a new location depends on a number of factors, including availability of the premises and the level of construction required, our locations typically open approximately four to six months after we take possession. (2) Based on independent third-party survey of brokers in top geographic markets, weighted based on the geographic mix of our membership base as of June 1, 2019. (3) Net capex per workstation added represents gross capital expenditures for projects (excluding capitalized costs unrelated to sellable workstation capital projects and internal capitalized payroll) completed in the period presented, regardless of when the costs were incurred, less the total tenant improvement allowance provided per the terms of the leases associated with the projects completed in the period presented, regardless of when the cash collection for such tenant improvement allowance occurred, divided by the total number of workstations delivered in connection with the projects completed in the period presented. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Expenditures and Tenant Improvement Allowances” for additional information about this metric. Net capex per workstation added for the first half of 2019 reflects gross capital expenditures of approximately $1.3 billion, less tenant improvement allowances of approximately $0.5 billion divided by 273,000 workstations delivered, in each case in connection with projects completed during the period from January 1, 2019 to June 30, 2019. Net capex per workstation added for 2017-2018 reflects gross capital expenditures of approximately $2.9 billion, less tenant improvement allowances of approximately $1.5 billion, divided by 352,000 workstations delivered, in each case in connection with projects completed during the period from January 1, 2017 to December 31, 2018. Net capex per workstation added for 2015-2016 reflects gross capital expenditures of approximately $1.0 billion, less tenant improvement allowances of approximately $0.5 billion, divided by 92,000 workstations delivered, in each case in connection with projects completed during the period from January 1, 2015 to December 31, 2016. Net capex per workstation added for 2014 reflects gross capital expenditures of approximately $0.2 billion, less tenant improvement allowances of approximately $0.1 billion, divided by 14,000 workstations delivered, in each case in connection with projects completed during the period from January 1, 2014 to December 31, 2014. During the build phase, locations incur pre-opening location expenses consisting primarily of lease cost expense. Given the impact of free-rent periods, lease cost expense recorded in accordance with GAAP typically exceeds cash payments required to be made during this phase. Of the lease cost expense included within pre-opening location expenses in the year ended December 31, 2018, approximately 85% was non-cash expense. We also begin to incur sales and marketing expenses during this phase as our global-local sales team begins to sell memberships. Our ability to continue to grow our platform at an accelerated pace depends on our ability to quickly and cost-effectively build out new locations and sell memberships prior to opening. Our ability to maintain or reduce our net capex per workstation added and our member acquisition costs will have a significant impact on the overall investment required to continue to grow our business at an accelerated pace. Fill • 425,000 workstations (23% of total) as of June 1, 2019 • Location opens and ramps up (0-24 months) • Revenue is generated • Contribution margin is generated once breakeven occupancy is achieved • Generally, limited capital expenditures incurred related to new floor openings • Tenant improvement reimbursements are generally received During this phase, we focus on optimizing utilization of space at our locations by driving membership sales using global sales teams, local community teams, broker partners and our online presence to help fill our spaces. We start to generate revenue and contribution margin when we open our space to members. We believe it takes 24 months for a location to hit maturity—the point at which most of the floors will have been open for 18 months and occupancy will have stabilized for the location. 82