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Compass’ costs to scale, LinkedIn and Zynga founders to take Hippo public National /
Compass’ cost of doing business
Ahead of its buzzed-about IPO, Compass offered investors a peek at its financials via an S-1 filed March 1.
Highlights from the 263-page document include the fact that Compass took in $3.7 billion in revenue last year, four times its revenue of $884.7 million in 2018. The tech-focused resi brokerage also lost $270.2 million in 2020, down from $388 million in 2019.
But one key takeaway is how much Compass spent to grow to its current size: 19,000 agents with $151.7 billion in sales last year.
Compass CEO Robert Reffkin (iStock, Getty/Illustration by Kevin Rebong for The Real Deal)
Since 2018, Compass has spent more than $300 million to scale its business, buying other brokerages and tech companies to support its “end-to-end platform,” according to the company’s IPO filing.
Backed by $1.5 billion in venture capital from investors including Fidelity, Wellington and SoftBank, Compass’ growth story has been unmatched in residential real estate. The brokerage aggressively courted agents after launching in 2012, but six years later, it switched gears and began scooping up firms wholesale.
Generally speaking, Compass’ acquisition strategy is to buy brokerages in markets that are top priorities for recruitment. Recent purchases of technology companies indicate Compass is not above buying a ready-made platform instead of building it in-house.
Robert Reffkin | Photo credit: Compass
Reffkin was away from his New York home often in 2018, as Compass added more than 170 offices, in big markets like San Diego, Dallas, Seattle, Atlanta, Austin, Houston, Nashville and others. It acquired Pacific Union International Real Estate,Avenue Properties and a number of real estate brokerages that stood in the way of the company’s big market share goals.
“I don’t think I’ve ever seen anybody grow as fast as they have over the past three years,” Steve Murray, the president of Real Trends told Inman.
Two years later, 2020 couldn’t have been a larger dichotomy. If 2018 was spent on the road, in airports, and corporate conference rooms, 2020 was spent at home, as a global health crisis raged.