Compass: We can survive slump of 6 to 9 months

SoftBank-backed brokerage laid off 15% of staff in March

National /
Apr.April 14, 2020 05:45 PM
Compass CEO Robert Reffkin (Credit: Getty Images; iStock)

Compass CEO Robert Reffkin (Credit: Getty Images; iStock)

Compass is one of the richest residential brokerages, fortified with $1.5 billion in venture capital. Now facing an uncertain economic future, the company said it has enough cash to withstand a slump of two or three quarters.

“We can sustain a downturn for six months, eight months, nine months,” CEO Robert Reffkin said during an interview on Los Angeles agent Danny Brown’s podcast, The Deal. “We have the capital to be able to do so.”

Reffkin’s comments come as the SoftBank-backed firm faces a potential 50 percent drop in revenue thanks to the coronavirus pandemic. The firm, valued at $6.4 billion, sold $88 billion worth of real estate last year, up from $45.5 billion in 2018. As of October 2019, it was projecting $2 billion in 2019 revenue and said it had run-rate revenue of $3 billion.

Last month, Compass laid off 15 percent of its staff — roughly 375 people — in anticipation of an “economic standstill.” At the time, Reffkin projected a steep revenue decrease over the next six months.

On the podcast, he said Compass was in a lucky position, and that firms that are not so well capitalized are likely to pursue mergers or partnerships to stay afloat.

He noted, too, that Compass has seen an uptick in agents joining the firm. “We’re able to onboard agents virtually,” he said. “The great agents always gain market share in a downturn. It’s a question of how much market share you can gain.”

Residential firms around the country have laid off and furloughed employees in recent weeks, as have other VC-backed companies in real estate, including WeWork, Lyric and Sonder.

On the podcast, Reffkin predicted the residential market is likely to bounce back as early as this summer. He said that he personally made two offers on property last week. “I know the buildings, I know the neighborhood,” he said.

Write to E.B. Solomont at [email protected]

— Reporting by Erin Hudson


Related Articles

arrow_forward_ios
L-R: Douglas Elliman CEO Scott Durkin, Serhant CEO Ryan Serhant, Brown Harris Stevens CEO Bess Freedman, The Real Deal's Hiten Samtani (Photos by Paul Dilakian)
Top resi execs talk brand building, tech and politics at TRD NYC event
Top resi execs talk brand building, tech and politics at TRD NYC event
Vanke US managing director Kai-yan Lee, RFR’s Aby Rosen and 100 East 53rd Street (Vanke US, Getty, M18 Public Relations)
With Aby Rosen out, Chinese developer slashes Midtown condo prices
With Aby Rosen out, Chinese developer slashes Midtown condo prices
Robert Reffkin, founder and CEO, Compass (Getty Images, iStock)
Compass reports $188M first-quarter loss, CFO’s resignation
Compass reports $188M first-quarter loss, CFO’s resignation
Expansion teams: Residential brokerages take on new frontiers
Expansion teams: Residential brokerages take on new frontiers
Expansion teams: Residential brokerages take on new frontiers
David Cone, ex-Yankees and Mets star pitcher turned broadcaster, in front of 160 West 12th Street in the West Village (Getty Images, Google Maps, Compass StreetEasy)
Ex-Yankees, Mets star David Cone sells West Village condo
Ex-Yankees, Mets star David Cone sells West Village condo
Joseph Beckerle and Pooneet Kant (CTC, Compass, iStock)
Compass acquires California title and escrow provider
Compass acquires California title and escrow provider
Justice Barry Ostrager, Realogy CEO Ryan Schneider and Compass CEO Robert Reffkin (NYCourts, Getty Images, Realogy, iStock, Illustration by Kevin Cifuentes for The Real Deal)
Judge recuses himself from Realogy-Compass suit over property dispute
Judge recuses himself from Realogy-Compass suit over property dispute
LA-based Carl Gambino expands in New York with Compass
LA-based Carl Gambino expands in New York with Compass
LA-based Carl Gambino expands in New York with Compass
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...