Compass has picked up a new chief financial officer in its attempt to get into the black.
Kalani Reelitz, former CFO and COO for Cushman & Wakefield Americas, is set to take over the role Nov. 15. The incoming executive, who is leaving the commercial brokerage giant after six years, said in a statement his arrival comes at a “critical time in the company’s journey to profitability.”
Prior to his tenure at Cushman, Reelitz spent 12 years in a variety of roles at Walgreens, including strategic and business integration, strategic finance, financial planning and analysis and internal audit.
Compass CEO Robert Reffkin in a statement cited Reelitz’s experience “helping large public companies grow profitably” as “an incredible asset as we accelerate our path to profitability.”
Reelitz’s hiring ends a two-month stretch during which the brokerage did not have a full-time CFO. The company announced in May CFO Kristen Ankerbrandt would be stepping down in early September, but didn’t name a successor. Reffkin has been filling the role on an interim basis.
Reelitz’s arrival comes as the real estate world waits with bated breath for Compass’ next earnings call, scheduled for Nov. 10. Despite becoming the nation’s largest brokerage by volume last year, just nine years after its founding, Compass has yet to post a profit.
That wasn’t an issue during its expansion phase, when it prioritized growth over profitability. But now the market has turned and its biggest backer, Softbank, has turned off the tap. That’s left Compass in a tricky situation: It needs to trim expenses without harming productivity, just as home sales are slowing.
Compass enacted two major rounds of layoffs earlier this year. The first came in June, affecting 450 employees, or roughly 10 percent of its full-time workforce. But it wasn’t enough to stop the bleeding.
The company revealed during its last earnings call it lost over $100 million in the second quarter. During the call, Reffkin announced it would no longer offer new agents equity or cash as a recruitment incentive, one of Compass’ most effective methods for landing top brokers. He also said the company would seek to cut $320 million from its budget.
Another substantial round of layoffs occurred in September, after a smaller wave in late August that included Chief Technology Officer Joseph Sirosh. Compass didn’t disclose how many employees were affected in the most recent round, but SEC filings showed it incurred costs of $23 million to $26 million in termination and severance benefits, roughly $10 million more than it did in the spring.
Company executives — and many of its agents — say they’re convinced the brokerage will pull through, saying the end of the equity program and the completed rollout of its $900 million tech platform will provide major cost savings.
Compass is far from the only company laying off employees amid a tumultuous market. Brokerage giant Anywhere has done the same, as have proptech companies Zillow and Redfin. The mortgage industry has been hit particularly hard by the slowdown.
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