Compass reports $188M first-quarter loss, CFO’s resignation

Brokerage claims top spot for sales volume as CEO describes possible paths to profitability

National /
May.May 12, 2022 06:46 PM
Robert Reffkin, founder and CEO, Compass (Getty Images, iStock)

Robert Reffkin, founder and CEO, Compass (Getty Images, iStock)

Compass reported a first-quarter loss of $188 million and the departure of its chief financial officer as the tech-first brokerage sought to reassure investors about its path to profitability.

The firm recorded $1.4 billion in revenue for the quarter, up 25 percent from the same period a year ago, against $1.6 billion in expenses, for a loss of 45 cents per share — beating Wall Street’s consensus prediction of 48 cents per share. Its $188 million loss was an improvement over its $212 million loss from the same period last year.

“We are now the number-one real estate brokerage by sales volume,” CEO Robert Reffkin said on an earnings call Thursday.

Compass added 398 principal agents in the first quarter, bringing its total to 12,574, according to its earnings statement. It closed 47,367 transactions, a first-quarter record for the firm.

But as the brokerage gains agents, it will soon lose one of its top executives. Kristen Ankerbrandt said Thursday afternoon that she will step down as CFO in September and leave the brokerage to launch an investment fund. Ankerbrandt arrived at the firm in 2018, replacing former Flywheel executive Craig Anderson, who lasted less than a year in the role.

Compass has not named Ankerbrandt’s successor, but said that Greg Hart, who joined as chief product officer in 2020, is being promoted to COO.

Reffkin told investors that second- and third-quarter earnings would outpace last quarter, thanks to real estate’s inherent seasonality, and committed to not raising more investment. Compass has $476 million in cash and access to a $350 million credit line, it reported Thursday.

“We will do more with less,” said Reffkin of the belt-tightening. “We are managing the business to ensure we will not require additional capital.”

Reffkin floated various ways the brokerage could mitigate its cash burn, including slowing its expansion into new markets and its pace of acquisitions.

The company reduced its revenue projection for the second quarter to between $2 billion and $2.2 billion, citing rising interest rates and lack of supply in California, where it remains heavily concentrated.

“The purchasing power of the average buyer has decreased,” said Ankerbrandt.

Stock-based compensation, a recruiting tool that has helped Compass rapidly gain market share, continued to drag on its earnings and accounted for about a third of its losses. Compass recently scaled back its employee stock awards program, slowing its rollout and making employees wait longer to cash out completely.

Compass stock fell to a record-low $3.86 this week before rallying to $4.47 at the market close Thursday ahead of its earnings call. Its high mark for the quarter was $9.55 on January 3, down from more than $20 shortly after its initial public offering in April 2021.

One of Compass’ primary competitors, Douglas Elliman, also saw its stock trade at record lows this week. Its quarterly report revealed that spending $6.7 million to become a publicly traded company halved its profit from the same period a year ago.





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