Compass Dramatically Trims Losses, Sees Rocketing Revenue In Q2
The brokerage lost $7 million last quarter, a vast improvement over both the previous quarter and last year. The results earned plaudits from investors. Here’s what you need to know.
Compass took in nearly $2 billion in revenue between April and June of this year, a new high-water mark for the company. The brokerage also managed to vastly cut its losses, according to a new earnings report released on Monday.
For the second quarter, Compass earned $1.95 billion in revenue, which was up 186 percent year over year. Perhaps even more notably, Compass’ net loss during the second quarter of 2021 came in at $7.1 million. By comparison, the firm reported a net loss of $212 million in the first quarter, though that included a one-time payment of $149 million for stock-based compensation from the company’s April 1 initial public offering. One year ago, during the second quarter of 2020, Compass experienced a net loss of more than $84 million.
Citing the strong performance in recent months, the report goes on to note that Compass “now expects to achieve Adjusted EBITDA profitability in full-year 2022, a year sooner than previously expected.”
Company founder and CEO Robert Reffkin celebrated Compass’ agents in the report.
“This past quarter Compass agents strongly outperformed their peers in one of the most competitive real estate markets in recent memory, delivering nearly $2 billion of revenue and $71 million of Adjusted EBITDA as the Compass platform continued to drive growth in agent productivity,” Reffkin said.
Between April and June, Compass had an average of 10,629 agents. That’s up 817 from the previous quarter and more than 2,000 compared to the same period one year prior, according to the report.
The report goes on to reveal that Compass agents closed 65,743 transactions during the second quarter of 2021, up 140 percent year-over-year. Compass agents did an average of 6.2 deals each between April and June.
During a call with investors Monday evening, Reffkin said many other real estate companies are interested in cutting costs, while Compass is “uniquely focused on how to create more value for agents and help them grow their business.” Reffkin also said that by next summer Compass will give its agents a single technology platform that will cover every aspect of the transaction, meaning they won’t need any third party software.
“The full transaction experience will be integrated into a single experience,” Reffkin said.
Compass also plans to continue expanding geographically, Refkin said, and will focus on the future in the kinds of “upper and mid tier” markets where it has so far made significant inroads.
Reffkin added at another point during the call with investors that Compass is “in the strongest position we have ever been in as a company.”
Monday’s report also notes that Compass grew its market share to 6.2 percent during the second quarter of the year, up from 3.3 percent during the second quarter of 2020.
Compass stock spent most of Monday steadily climbing and was trading at around $15.28 per share when the markets closed. That was up from recent days when shares were trading at less than $13, but down compared to April, when the company’s shares first debuted and briefly fetched more than $20.
Compass shares spiked Monday after the company published its earnings and were trading at more than $16 after hours.
Compass had a market cap of just over $6 billion as of the time the stock market closed Monday.
When Compass last reported its earnings in May — which was the company’s first report since going public — it revealed it brought in $1.1 billion in revenue between January and March of this year. The company’s agents also did 40,268 deals during that period.
This quarter, many large real estate companies have reported strong earnings. Among them, eXp Realty pulled in $1 billion in revenue, which was a similar year-over-year jump to Compass’s revenue growth. Keller Williams (which is not publicly traded and doesn’t report the same numbers as other companies) saw transactions grow 35 percent year-over-year.
However, even amid a strong earnings season generally, Compass’ progress cutting its losses and moving toward profitability is noteworthy.
During his call with investors, Reffkin was also upbeat about the future, saying he envisions a strong housing market. He described a variety of “tailwinds” in the housing industry including high demand, low interest rates and demographics, and concluded the market has “incredibly strong fundamentals.”
“Remember, when you hear about 10 offers being put in on a home only one is chosen,” Reffkin added, “meaning nine buyers are still in the market.”
Update: This post was updated after publication with additional information from Compass’ earnings report and a call company leaders held for investors.