Despite soaring home prices that helped it generate $1.6 billion in revenue, Compass reported a loss of nearly $175 million in the fourth quarter, up from the $100 million lost in the third quarter and $40 million in the same period in 2020.
All told, the brokerage, which went public in April, lost nearly half a billion dollars last year, it reported in its quarterly earnings Wednesday.
As home sales spiked nationwide, the company continued to burn cash to attract new agents and expand into new markets.
While annual revenue jumped 72.6 percent to $6.4 billion last year, operating expenses increased 80.3 percent to a whopping $6.9 billion.
Achieving positive cash flow would be “the ultimate arbiter of financial success,” said Compass CEO Robert Reffkin — a goal he expects the company to accomplish by 2023.
To get there, Compass will need to scale back what it pays its agents, by far the company’s largest expense. The brokerage attributed over half of its losses in the fourth quarter — $93.4 million — to non-cash, stock-based compensation.
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Reffkin said Compass grew its headcount to over 26,000 agents in the quarter, including a net increase of 560 principal agents from the previous quarter, but it extended 31 percent fewer incentives than in its “prior record recruiting quarter” at the end of 2019. The brokerage is also “winding down the use of equity to recruit,” he said, while scaling back agent commissions by half a percentage point.
By midday Thursday, shares of the company had jumped more than 6 percent, trading above $9, though its stock is still down considerably from its debut above $20 last April.
Compass expanded into 25 additional markets last year, the firm reported, growing its national market share to 5.6 percent, up from 4 percent in 2020. Its agents closed 56,912 transactions — a 20 percent year-over-year increase.