Robert Reffkin, CEO of Compass, speaks on stage on November 6, 2019 in New York City.
Brad Barket | Getty Images
Compass, a real estate brokerage firm with more than 19,000 agents nationwide, went public on Monday and told potential investors that revenue rose 56% last year as firms soared. housing prices.
Founded in 2012, the New York-based company has tried to bring advanced technology to real estate agents by providing them with better data, marketing tools and customer relationship software than with a typical brick brokerage.
Compass is among the many tech-savvy real estate companies that benefit from a flood of venture capital money that has allowed start-ups to grow rapidly while burning cash. Revenue rose to $ 3.7 billion last year from $ 2.4 billion in 2019, but the company spent 88 percent of its sales on commissions and “other transaction-related expenses.”
The net loss for the year was reduced to $ 270.2 million, from $ 388 million in 2019 and its cash and cash equivalents were down 20% to $ 440.1 million.
Compass was last valued at about $ 6.4 billion in a 2019 funding round led by SoftBank’s Vision Fund, which also invested in office rental company WeWork, the home investment site OpenDoor and the construction technology company Katerra. OpenDoor went public late last year through a reverse merger and is now worth more than $ 17 billion, while WeWork is still trying to recover from a near collapse in 2019. SoftBank owns 35% of Compass Class A shares.
Residential real estate has been a booming market for the past year, driven by Covid-19 and the closures that forced people to work from home. Realizing that remote work is here to stay, the owners have wanted to move to more desirable places, but the new offer has been limited, which has led to an increase in prices.
House prices rose nationwide by 10.4% in December, compared with a year earlier, according to S&P CoreLogic Case-Shiller house price indices. This is the strongest annual growth rate in more than six years and one of the largest annual gains in the index’s more than 30-year history.
Like many real estate businesses, Compass faced challenges at the start of the pandemic due to home stay orders and uncertainty surrounding the economy. The company cut 15% of its workforce in March 2020.
However, business rebounded sharply in the second half of the year and “total transactions increased to 144,784, 66% more than in 2019, despite the effect of the COVID-19 pandemic,” Compass said. at the presentation.
Shares of online real estate site Zillow have tripled over the past year, while shares of Redfin have risen almost the same.
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