Resi Brokerage Compass lost 1M in Q2

Resi Brokerage Compass lost $101M in Q2


Compass CEO Robert Reffkin (Getty)

Compass suffered losses of $101.1 million in the second quarter, the residential brokerage said Monday, noting that it will embark on a “significant cost reduction program” as it grapples with a slower housing market.

The brokerage reported losses of $289 million for the first half of the year, according to an earnings release put out Monday. It expects losses of between $150 million and $225 million for the full calendar year, with full-year revenues projected at between $6.15 billion and $6.45 billion.

“Given the challenges the real estate market has faced so far this year and the likelihood that this difficult environment will continue for the foreseeable future, we are announcing a significant cost reduction program,” Compass CEO and co-founder Robert Reffkin said in the release. In an earnings call following the release, Reffkin said that “never in my time at Compass have we seen such a big downturn in such a short period of time.”

And he dropped a bombshell about one of Compass’ most effective recruitment tools: The company will no longer offer equity or cash incentives to new agents.

“I am focusing the comp efforts around the following three objectives,” Reffkin said. “One, generating free cash flow. Two, profitably gaining market share; and three, retaining our agents.” He noted that Compass continues to retain over 90 percent of its agents, and said retention figures had improved quarter-over-quarter.

Compass had $430.5 million in cash and cash equivalents at the end of the quarter, down from $618.3 million at the end of last year. Reffkin said that the firm would focus on reducing technology and incentive-related expenses, “while not reducing agent service levels to ensure our existing revenue base is not impacted. “

 

 



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