US tech-enabled real estate brokerage Compass posted a US$154 million loss last quarter, as the housing downturn continues to hit their bottom line.
The third quarter loss was up from US$101 million in the second quarter and US$100 million 12 months ago.
Compass Chief Executive Officer Robert Reffkin said despite the loss the company continues to take measures to improve its financial position.
“Against a backdrop of significant challenges for the housing industry, Compass continued to make progress in a number of important areas during the third quarter,” Mr Reffkin said.
“We continued to successfully roll out our enhanced national end-to-end workflow platform which we believe allows our agents to be the most productive in the industry and deliver their buyers and sellers a best-in-class experience.
“Over the longer term, I believe our platform offers important differentiation in the marketplace and it is a conduit to drive incremental revenue lift and cost efficiency.”
The company’s losses came from non cash–related expenses such as US$50 million in stock compensation, US$29 million in restructuring expenses associated with recent layoffs and US$21 million in depreciation and amortisation.
Mr Reffkin said reducing costs was a priority for the company.
“Importantly, in line with our major cost savings program announced in August, we have achieved significant cost reductions in our technology, engineering and general and administrative expenses,” he said.
“Actions taken in the third quarter and in progress are expected to deliver targeted non-GAAP operating expenses after commissions and other related expenses of between $1.05 billion and $1.15 billion exiting 2022.”
Over the third quarter, Compass was able to increase its market share to 4.6 per cent, up from 4.3 per cent 12 months ago.
They were also able to increase the total number of principal agents to 13,314, up 15 per cent from the same time last year.
Compass agents closed 54,606 in total transactions, down 12 per cent year-over-year, compared to a 21 per cent decline in transactions for the entire residential real estate market.
The company’s Gross Transaction Value (GTV) of US$57.3 billion, was down from US$69.1 billion at the same time last year.
According to Mr Reffkin, the weakness in the US housing market is likely to continue for some time,
“As we look ahead, we believe the housing market will remain challenged during 2023 before returning to stability and growth in the future,” he said.
“The Compass team remains laser-focused on providing our agents with technology, workflow tools, and marketing support to be successful in the market.
“At the same time, we are driving to implement fundamental cost productivity measures that will deliver profitability in the future.”