Compass stock tumbles on negative news
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Compass stock tumbles on negative news
Compass stock fell 5 percent last week after five analysts said they now doubt Compass will break even by 2025. It recovered some but is still down 14 percent since reporting another $158 million in quarterly losses Tuesday.
Real Estate Investors Pull Back on Funding
The brokerage had to drastically alter course last year as its biggest investor, SoftBank, pulled back on funding, U.S. home sales suffered a historic slowdown and Compass burned through over $600 million.
Compass Real Estate Stock Price
Analyst Mike DelPrete previously predicted Compass will need to make $5.3 billion this year to break even. Revenue last quarter was $1.1 billion.
Beyond those headline numbers, the company’s annual report offers a more in-depth picture of its situation. Here are the biggest takeaways:
Compass Real Estate Layoffs
Compass had been shy about releasing the number of employees let go during its two rounds of layoffs last year. After reporting that 10 percent of staff was axed in June, it offered no specifics when making another round of cuts later that summer.
Although the number of laid-off employees remains a secret, Compass finished the year with nearly 1,600 fewer employees than it started 2022 with, a comparison of its annual reports shows.
Compass put its year-end workforce at just under 3,200, but that doesn’t include the most recent round of layoffs, in January.
SEC filings show Compass estimated the most recent round would trigger $10 million to $12 million in severance costs, compared with $15 million to $16 million for the first layoffs. That suggests head count is now under 3,000.
Though Compass pledged not to eliminate agent-facing roles, documents viewed by The Real Deal revealed that dozens of agent support positions were cut in the most recent round of layoffs. It’s unclear how many agent-experience managers and coordinators were affected company-wide, because cuts were decided at the local level, according to a Compass executive, who said the company is backfilling those positions when someone quits.
Agent retention
It’s likely Compass is seeing more churn than it used to. Compass’ principal agent retention rate remains over 90 percent, according to its annual filing, and COO Greg Hart said during the earnings call that the company has hired 1,000 brokers since August. Principal agents are defined as team leaders or agents operating independently.
But its headcount growth has sputtered, according to its fourth-quarter investor presentation. Compass’ number of principal agents grew by 112 in the quarter, yet its total number of agents rose by just 58. That means it lost more non-principal agents than it added.
Corofy placed Compass’ New York retention rate at 79 percent last year in its annual brokerage report.
Compass has not introduced new lines of businesses since teasing that it might during its second quarter earnings call last year. That means all its revenue — whether from attached services or sales — comes from agents. Retaining them will be crucial in the months ahead.
