The company recorded a net loss of $ 270.2 million in 2020.
New York City-based real estate agent Compass filed its S-1 document with the US Securities and Exchange Commission on Monday, which gave the public its first glimpse into the growing company’s financial details and business plan.
“Our goal is to give agents everything they need to serve their customers, grow their business and realize their entrepreneurial potential in one place. Simple, seamless and integrated, ”said Robert Reffkin, CEO of Compass, in a letter attached to the filing.
“We’re replacing today’s complex, paper-based home buying and selling process with a fully digital end-to-end platform that enables real estate agents to deliver an exceptional experience for every buyer and seller.”
The filing, a requirement for Compass to go public, resulted in company revenue of $ 3.7 billion in 2020, a huge jump from the $ 2.4 billion the company posted the previous year.
By comparison, Realogy, the country’s largest real estate holding company and market share leader, had sales of $ 6.7 billion in 2020. Another listed real estate agent, Redfin, raised $ 886.1 million.
Compass recorded a huge net loss of $ 388 million in 2019, which according to filings slowed to $ 270.2 million in 2020.
The filing also mentions that Compass “may not be able to achieve profitability and that we may continue to suffer significant losses in the future,” suggesting a number of reasons.
These reasons include expansion into new markets, a decline in the volume of real estate transactions, increased competition in the industry, increased costs for retaining and recruiting agents, and changes in the fee structure.
Compass reported a cumulative deficit of $ 1.1 billion as of December 31, 2020.
The company also announced that it had reached 4 percent of the U.S. market share in 2020, equivalent to $ 152 billion in residential real estate – a four-fold increase from 2018.
Much of the company’s filing focused on its technical ambitions for agents as a runway for future growth. Though Reffkin also said in the note that he started Compass because of his mother, Ruth, a real estate agent who raised him as a single mother.
Reffkin pointed out the challenges she faced because her agent did not have the resources to support her.
Real estate agents, according to the memorandum, “are an underserved group of business owners,” and Compass aims to provide them with an end-to-end platform to grow their business. Current real estate technologies do not adequately address the market, it says in the files.
“At Compass, we’re obsessed with agents,” added Reffkin. “We have built a business that is completely agent-centric: when agents are successful, Compass is successful.”
“Our obligation to the agent is not conditional and not temporary. It is fundamental to our vision, our strategy and our success – and it always will be. “
The filing also revealed that Reffkin owns only 2.4 percent of the company’s Class A common stock. SoftBank Vision Fund, Compass’ top investor, now owns 34.8 percent of the company’s Class A common stock.