In a report that company leaders described as “outstanding,” Compass revealed Wednesday that during the third quarter of 2021 its saw a meaningful jump in revenue relative to last year, but also a major spike in losses.
Overall, the company pulled in $1.74 billion between July and September. That’s a 47 percent year-over-year increase, which Compass achieved thanks to its agents closing 62,349 transactions, a 36 percent year-over-year jump. At the same time, however, the brokerage also lost $100 million, up from $14 million during the same period last year.
Though revenue was up compared to a year ago, it didn’t quite reach the all-time high point of the previous quarter, when Compass raked in nearly $2 billion. That represented an impressive 186 percent jump compared to one year prior. Compass also only lost $7 million during the second quarter of this year.
Nevertheless, company founder and CEO Robert Reffkin characterized the third quarter’s results as good news. He said revenue was a third quarter record for Compass, and noted that seasonality appears to have returned — which would explain the revenue dip relative to the second quarter of the year.
The takeaway, then, appears to be that while the second quarter of this year was a clear and significant victory, the third quarter was a more qualified success, showing a company that is still growing but also spending in order to achieve that growth.
The company’s adjusted third quarter EBITDA (earnings with interest, taxes, depreciation, and amortization) ultimately was $12 million, up from $11 million during the same period in 2020.
Robert Reffkin
In the report, Reffkin said Compass agents “outperformed in a highly competitive market.”
“The Compass platform, services and support continue to create business value and growth for our agents, who delivered a 36 percent increase in transactions, outperforming the industry where transactions decreased 1 percent during the same period,” Reffkin also said in the report. “Our national market share was 5.4 percent in the quarter, up from 4.1 percent in the same quarter last year.”
However, that 5.4 percent market share was down from 6.2 percent during the second quarter of 2021.
Wednesday’s report further notes that Compass had an average of 11,616 agents during the third quarter of the year. That’s an increase of 987 compared to the quarter before. During his call with investors, Reffkin said Compass saw its “biggest ever week of adding new agents.” He also attributed the company’s victories to its agent population, saying the “heart of Compass is our agents.”
“Ninety percent of homebuyers and sellers rely on agents to help guide them,” Reffkin said on the call, adding a moment later that “the data shows that this is not changing any time soon.”
In the hours leading up to the publication of Wednesday’s report, Compass stock was trading in the low $12 range. That was down for the day, as well as from earlier this year when shares debuted on the stock market at more than $20. In after hours trading, shares dipped into the mid $11 range.
Credit: Google
The company’s market cap as of the end of trading Wednesday stood at about $4.8 billion.
Compass’ shares have struggled during the company’s time on the stock market, and ultimately hit a low point last month when they were trading just above $10.
The tumble was part of a broader trend that saw investors cool somewhat on a number of real estate companies including Zillow and eXp, which along with Compass have seen share prices fall significantly since high points in late winter. In some cases, shares have continued a downward trend despite companies’ generally positive financial reports.
In past months, that was the case with Compass. In August, for instance, the company revealed that it brought in record high revenue during the second quarter of 2021, while simultaneously trimming losses. The report boosted Compass’ share price by several dollars, but the gains had entirely evaporated by the beginning of October.
Compass held its first earnings report as a public company in May. At the time, it revealed that it brought in $1.1 billion in revenue during the first three months of 2021 and saw a net loss of $212 million.
In addition to financial results, Wednesday’s earnings report also revealed that total sessions on Compass’ technology platform increased 31 percent year-over-year in the third quarter. During the call with investors, Reffkin added that the platform is one of the major distinguishing features it has relative to other companies.
And, Reffkin ultimately concluded that “Compass is in the strongest position its ever been in.”
Update: This post was updated after publication with additional information from Compass’ earnings report and with remarks from a call company leaders held with investors.
