Tech-fueled brokerage Compass revealed Thursday that it earned $1.4 billion in revenue during the first three months of 2022, an improvement over the prior year, while also losing slightly less money than it did at the beginning of 2021.
The numbers, from the company’s latest earnings report, specifically show that revenue rose 25 percent year-over-year. At the same time, Compass also lost $188 million during the quarter, which is down from a loss of $212 million during the first quarter of last year.
The report further shows that Compass agents inked a total of 47,367 deals between January and March 2022 — a company best. That’s up 18 percent year-over-year, and bucks a trend that saw transactions decline for other companies that recently reported earnings. Overall, the report notes, industry-wide transactions fell 5 percent year-over-year during the quarter.
All of this indicates that in the first three months of 2022, Compass surpassed its own performance from the same period in 2021, as well as beat the industry average for the quarter. Founder and CEO Robert Reffkin celebrated these results Thursday.
“Compass agents have consistently demonstrated their ability to grow in a variety of market conditions, and in the first quarter, they grew market share to 6.1 percent, our second-highest market share quarter ever,” Reffkin said in the report. “This is even more impressive since the first quarter is typically our slowest volume quarter.”
However, Compass last reported earnings in February, at which time it revealed that during the final three months of 2022, its revenue jumped 31 percent. That means the company’s revenue growth slowed slightly in the first quarter of this year compared to the end of last year.
Beyond earnings, Thursday’s report revealed that Compass had an average of 12,574 agents during the first quarter of the year.
Going into Thursday’s earnings, Compass stock rose to around $4.50 per share — an increase of nearly $0.50 compared to the price in the morning. However, that price was still markedly down for the week and month, and compared to last April when the company went public. At that time, shares were trading above $20.
After Compass published its earnings report, company stock briefly spiked to $5 per share in after-hours trading before ultimately settling at about $4.67.
Of course, numerous real estate stocks have taken a hit over the past year, and the stock market itself has been sputtering in recent months — dragging down the share prices of many larger companies, particularly those with technology-based businesses.
In any case, Compass had a market cap of about $1.9 billion as of the close of the markets on Thursday.
Compass’ report comes at the tail end of an earnings season in which many real estate companies announced strong results and solid profits. However, at the same time, many of those same companies also forecast “headwinds” on the horizon for the housing industry, suggesting that perhaps the boom times of the last two years are petering out.
Thursday’s report also comes at a time of change and growth for Compass. Significantly, late last month the brokerage dethroned Realogy, now renamed Anywhere, atop the Mega 1000 list that ranks brokerages by sales volume. Additionally, at the same time that Compass released its earnings report Thursday, it also announced that Chief Financial Officer Kristen Ankerbrandt will leave the company and Chief Product Officer Greg Hart will become the brokerage’s chief operating officer.
During a call with investors, Reffkin alluded to both Compass’ recent victories and to the same kinds of headwinds that leaders at other companies referenced. Among other things, he repeatedly described the current real estate landscape as “turbulent,” and added that “we have entered these difficult times as the number one agent in the United States.”
Reffkin also said Compass is “managing the business to ensure we will not require additional capital,” and noted that his company could thrive during a “prolonged downturn.”
“We will do more with less,” Reffkin said, adding that “we believe this will strengthen the company even more.”
He also said he expects Compass to continue gaining market share no matter what happens to home prices. Asked about the impacts of a market downturn, Reffkin said he could envision it impacting the amount of investment companies are willing to make in third-party providers of tools, though he doesn’t see the “market being bad enough to wash out a bunch of traditional brokerage firms.”
Ankerbrandt also weighed in during the call and said the market is facing a “significant amount of pressure.”
“The first six weeks of the second quarter have resulted in tougher times across all industries,” she said.
However, Ankerbrandt also said Compass has “actively managed our expenses and is prudent with our cash.” And despite “uncertainty,” Ankerbrandt pointed to data showing upticks in both inventory and mortgage applications as positive news.
“Homeowners,” she said, “continue to show signs that they will not be deterred by the current interest rate environment.”
Update: This post was updated after publication with additional information from Compass’ earnings report and investor call, as well as with additional background information.