Year in review: Cash-flow positive Compass faces resi headwinds
Could Compass be suffering under the weight of its own expectations?
The firm spent much of its first cash-flow positive year buying up competitors and duking it out with major industry players over private listings, generating positive headlines and stock moves for its financial and strategic wins.
Compass reported its first-ever cash flow-positive period in the second quarter of 2023. It was an important milestone after a year-long cost-cutting campaign and a first in its life as a public company. It kept positivity in the following quarter, but fell into losses while finishing the year.
It returned to cash flow positivity in the first quarter of 2024 and marked a full year in its results announced in May. Compass upped its free cash flow in the first quarter to $19.5 million and narrowed its net losses by $82 million to $51 million — only for its stock to fall 19 percent the following day.
While Compass continued to improve many of its key operating metrics, the company's ability to return on its massive investment remains unclear, while CEO Robert Reffkin's continues big swings against Clear Cooperation Policy.
Compass put up by far the worst May of its publicly-traded competitors, watching its stock fall to $5.91 from $7.81 to close the month, down 24 percent.
Douglas Elliman was the only other brokerage to see its stock price swing double-digit percentage points, but its value went in the other direction. The beleaguered brokerage saw its price jump over 60 percent, from $1.69 to $2.72, on news that it received a merger offer from Anywhere Real Estate.
The offer for Elliman — which some have speculated could be a target for Reffkin's firm as well — comes after Compass had added a number of brokerages in the last year, including @properties and Christie's International Real Estate. In March, there were reports that Compass was nearing a deal for Berkshire Hathaway HomeServices, which were later denied by HomeServices executives.
After arguably exceeding expectations for most of 2024, Compass opened 2025 with a bit of dud, missing consensus estimates on revenue and earnings per share, according to Yahoo Finance. Analysts responded by moving full-year breakeven projection to 2026 from 2025.
'We took down our forecasts pretty massively,' said Needham analyst Bernie McTernan, noting much of that was related to a weak housing market. But in a critical moment for Compass being able to cut its way to profitability and create a flywheel for agent growth with its recent inventory push, 'I don't think the thesis is shaken,' he added.
A Compass spokesperson said that the 'miss relative to consensus was largely driven by volatility that we began to observe in mid-March as the news around tariffs caused a pause in activity.' They added that the reduced analyst forecasts were driven by lower-than-expected overall market growth.
The company also suffered a blow on a strategic front when Zillow unveiled an updated listing policy that appeared to target Compass' three-phased marketing strategy, which involves listing homes without publishing them on the MLS. 'It definitely seems like Zillow took one of the legs out from under the stool,' McTernan said.
Compass, which has taken in over $2 billion in equity investment and has an earnings multiple more in line with a tech company than a brokerage, also has more pressure to perform like a growth stock.
Although Compass managed to hit a profitable second quarter last year, it ended the year with a net loss of over $154 million. The company has splurged on a number of acquisition deals in the past year, which has been a major revenue driver and helped increase its market share to a record 6 percent.
For Reffkin, a housing market boom could be the thing that vaults the company into profitability as its gross profit numbers can finally begin to outstrip its operating expenses — but that bull market appears further and further away, raising questions about how Compass will continue to float its losses in the meantime.
'When they're growing revenue, fixed costs are great,' McTernan said.
One workaround for the company has been the use of stock-based compensation to incentivize employees and recruit agents, which CFO Kalani Reelitz said he expects to be managed down to $100 million per year. But the company still has over $277 million in unrecognized stock-based compensation, all of which will weigh on the company's long-term trajectory.
'We have a well-defined path to reducing our annual stock-based compensation over the next three years,' a Compass spokesperson said. 'The $277 million is factored into the $100 million target we expect over the long term, so it is not a concern for us.'
The company recognized over $30 million of stock-based compensation in the first quarter of last year, down slightly from the year prior.
While Reffkin has maintained that he will be aggressive in seeking M&A opportunities, the less costly growth trajectory relies on continued organic agent recruitment. On the earnings call, Reelitz said that he continued to hear that Compass' 'inventory strategy, the depth of inventory [and] the three-phase marketing' have helped in agent recruitment.
Last year, Reffkin said that in 2025 Compass would have more off-MLS and make-me-move inventory on Compass.com than any publicly searchable active market, incentivizing buyers and agents to work with the firm. Halfway through this year, that expectation looks all but shot as Zillow and a number of MLSes have challenged Compass' hegemony play.
Earlier this year, Compass sued Seattle-based Northwest MLS for interfering with the company's private exclusive model, claiming at one point the listing service shut off its access to the listing service's data feed until Compass removed all of its private exclusive inventory from the market.
At the Compass' annual retreat held in early June, Reffkin confirmed to agents that Zillow would 'say every private listing is banned' if Compass didn't remove references to private exclusive listings from its website.
'Does it feel to anyone that we've been discouraged from our private listings, or is it just me?' Reffkin asked the audience, claiming that listing services have flouted a National Association of Realtors' policy that prohibits listing services from discouraging the use of office exclusives.
Last month, the California Regional MLS voted in approval of a NAR amendment that would remove the office exclusive carve-out that currently allows Compass' private exclusives to exist.
The conversation shift has put Compass on the defensive for the first time since it began waging its battle for the repeal of the Clear Cooperation Policy. Now the company is simply fighting to maintain what existed one year ago.
For Reffkin, the solution remains the same — just keep growing, which is what he told over 1,200 Compass agents at the firm's annual retreat.
'If every one of you doubles your business, if every one of you doubles your listings, we can't be bullied anymore,' he said. 'That is the path.'
Compass scored first cash flow positive year in 2024
Compass narrows losses amid surge in deals, mergers
This article originally appeared on The Real Deal. Click here to read the full story.
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Miami Herald
2 days ago
- Miami Herald
Zillow says it's fighting for buyers. Compass says it's fighting for sellers. What if neither is fighting for you?
As two real estate giants escalate a war over how homes should be listed for sale online, both sides say they're acting in the interest of consumers. Both sides also stand to make a lot of money if they win. The issue intensified at the end of 2024, when Compass, the country's largest brokerage by sales volume, began advising its sellers to use a three-phased marketing approach - making their homes visible only to Compass agents and clients as a "private" listing, making them viewable only via and reserving the option to later make them public on popular house-hunting sites like Redfin and Zillow. In the real estate industry, listings are currency. Faced with thousands of them disappearing from its site, Zillow punched back. The Seattle-based company, starting at the end of June, plans to block any former private listings from appearing on its site - an ultimatum it hopes brings an end to Compass's practice of selectively sharing listings before they appear on big search portals. Redfin will follow with a similar ban in September. Each of these players pitches itself as a pro-consumer brand. Compass says its selective marketing approach offers sellers privacy and control. Some sellers want to market to more exclusive groups before their home appears on big listing sites, which feature details like days on market and price cuts, which can signal a seller is willing to negotiate on price. Zillow and Redfin say they are for transparency in the market, which is good for both homebuyers and sellers. The only way to know a home's true price, they argue, is to advertise it as broadly as possible. But Brian Boero, chief executive of 1000watt, a marketing agency for residential real estate companies, says their pro-consumer stances are largely just messaging. "These companies are using the consumer as almost like a human shield here to protect their business interests," Boero said. "They may believe these things sincerely, but this is first and foremost about rational self-interest." Should Compass win the private listings war, it would upend the paradigm in home listings that buyers have grown used to over the last two decades. When Zillow and Redfin arrived in the mid-2000s, they promised to democratize the home search, pulling back the curtain on a market once controlled by agents and the local databases they operated called multiple listing services. For buyers, the experience changed overnight: Homes that were once buried in classified ads or hidden in books that could only be viewed alongside a broker were suddenly just a click away. Sellers' agents at first rejoiced - they didn't have to work as hard to advertise their properties, and listing on the sites was free. But someone was paying: buyers' agents. When a prospective buyer clicks a listing's "Contact an Agent" button, Zillow or Redfin sells that inquiry to a paying agent. They also take as much as 40% of the agent's commission if they close the sale. Brokerages like Compass have long bristled at the steep fee. But as home sales drag for a third straight year, Compass is trying to change the game. By publishing listings exclusively on it cuts out the referral middlemen. "Organized real estate has been implementing rules that have been stripping homeowners and their agents of flexibility and choice," Rory Golod, president of Growth and Communications at Compass, said in an interview. "They are trying to monopolize where inventory goes and how people sell." Redfin and Zillow, of course, have their own interests to protect - as well as the model that's come to shape the modern home-buying experience. "This isn't just about Zillow or Redfin - the internet has changed home search for the better, where every buyer can have access to all of the inventory," said Joe Rath, Redfin's head of industry relations. "Gatekeeping in any form is antithetical to the internet." Matt Kreamer, Zillow's spokesperson, said that transparency is core to Zillow's philosophy: "We believe that home listings that are available to some buyers should be available to all buyers," he said. Their calls for openness also happen to preserve their business: more listings, more traffic, more fees. Ultimately, Boero, the marketing chief, believes that Zillow's market power will force Compass to blink. "Zillow is the most powerful brand in the history of housing," Boero said. "You just can't imagine not having your home on Zillow as a home seller - it sounds like a stupid thing to have happen." But others see an opportunity for Compass to prevail in bringing traffic directly to its site. "Southwest Airlines didn't sell tickets on any of the online aggregators for years, and they're doing great," said Mike DelPrete, a real estate tech consultant. "People look at multiple sources." The dispute appears to be heading toward a compromise that would allow both Compass and the listing aggregators to uphold their business models, rather than a solution centered around buyers and sellers. Redfin's Joe Rath said his company would be open to hiding certain data, like days on market and price drops, if that's what it took to keep listings public. "We would much rather give ground there and have the listing," he said, "than not have the listing at all." Because all of these companies are paid a percentage of a home's ultimate sales price, it benefits both the brokerages and the search portals to keep buyers in the dark about details that might lead to a lower price. The battle over transparency, it seems, has limits. Whether Compass or the search portals win, both victories would also preserve an as-yet unshakable status quo in real estate: a 2% to 3% commission for buyers' agents. A landmark legal settlement earlier this year threatened that fee structure paradigm - but so far, traditional models have held, although a few flat-fee agencies have broken the mold. So why are the rules governing home listings decided by two major corporations that stand to benefit from pushing prices as high as possible? "With how important housing is to our economy, society and individuals, there is a question of why the information about homes for sale isn't federally regulated," Boero said. But government intervention in home sales isn't likely to happen at the federal level under President Donald Trump, who has promoted deregulation and free markets. The state's regulator, the California Department of Real Estate, lacks the legal authority to make a ruling on private listings that would tip the scales toward either Compass or Zillow. But it can, for example, require agents to give sellers adequate warning on the financial consequences of not appearing on the major home listing sites, said Summer Goralik, a former investigator with the department who now works as a compliance consultant to brokerages. "They'll need to explore whether brokers are breaching fiduciary duty to sellers," Goralik said. "Are they giving all of the information that seller needs to make an informed decision about listing privately?" For her part, Goralik doesn't believe the push for private sales and putting listings back into the brokerages' hands helps buyers or sellers. "A wide-scale campaign for private listings seems to do more harm than good," she said. "It seems like we'd be going back in time. I'm for the future." Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Newsweek
3 days ago
- Newsweek
New Coursera CEO Greg Hart on the Future of Learning at Work
Greg Hart became CEO of Coursera in February, taking over after the retirement of Jeff Maggioncalda, who had been leading the education technology company since 2017. Hart was previously the chief product officer at Compass, the real estate brokerage that went public in 2021. Before that, he spent 23 years at Amazon, where he led some of the company's most well-known product teams, including Alexa and Prime Video. Coursera filed for IPO in 2021 and is nearing profitability, reporting a net loss of $7.8 million on $179 million revenue after Q1 2025. Coursera's CEO sat down with Newsweek for a conversation about his new job, training and the future of work. Editor's Note: This interview has been lightly edited for length and clarity. Coming from Amazon and Compass, what made the opportunity to lead Coursera interesting to you? The opportunity to join Coursera was unbelievably appealing because of the mission and the societal good. 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Because obviously, if you're in education, there's the need certainly to learn about Gen AI and its impact, but there's also the need to understand deeply what that means for your institution, right, and how you keep that institution evolving and meeting its needs for its learners, students.
Yahoo
3 days ago
- Yahoo
Year in review: Cash-flow positive Compass faces resi headwinds
Could Compass be suffering under the weight of its own expectations? The firm spent much of its first cash-flow positive year buying up competitors and duking it out with major industry players over private listings, generating positive headlines and stock moves for its financial and strategic wins. Compass reported its first-ever cash flow-positive period in the second quarter of 2023. It was an important milestone after a year-long cost-cutting campaign and a first in its life as a public company. It kept positivity in the following quarter, but fell into losses while finishing the year. It returned to cash flow positivity in the first quarter of 2024 and marked a full year in its results announced in May. Compass upped its free cash flow in the first quarter to $19.5 million and narrowed its net losses by $82 million to $51 million — only for its stock to fall 19 percent the following day. While Compass continued to improve many of its key operating metrics, the company's ability to return on its massive investment remains unclear, while CEO Robert Reffkin's continues big swings against Clear Cooperation Policy. Compass put up by far the worst May of its publicly-traded competitors, watching its stock fall to $5.91 from $7.81 to close the month, down 24 percent. Douglas Elliman was the only other brokerage to see its stock price swing double-digit percentage points, but its value went in the other direction. The beleaguered brokerage saw its price jump over 60 percent, from $1.69 to $2.72, on news that it received a merger offer from Anywhere Real Estate. The offer for Elliman — which some have speculated could be a target for Reffkin's firm as well — comes after Compass had added a number of brokerages in the last year, including @properties and Christie's International Real Estate. In March, there were reports that Compass was nearing a deal for Berkshire Hathaway HomeServices, which were later denied by HomeServices executives. After arguably exceeding expectations for most of 2024, Compass opened 2025 with a bit of dud, missing consensus estimates on revenue and earnings per share, according to Yahoo Finance. Analysts responded by moving full-year breakeven projection to 2026 from 2025. 'We took down our forecasts pretty massively,' said Needham analyst Bernie McTernan, noting much of that was related to a weak housing market. But in a critical moment for Compass being able to cut its way to profitability and create a flywheel for agent growth with its recent inventory push, 'I don't think the thesis is shaken,' he added. A Compass spokesperson said that the 'miss relative to consensus was largely driven by volatility that we began to observe in mid-March as the news around tariffs caused a pause in activity.' They added that the reduced analyst forecasts were driven by lower-than-expected overall market growth. The company also suffered a blow on a strategic front when Zillow unveiled an updated listing policy that appeared to target Compass' three-phased marketing strategy, which involves listing homes without publishing them on the MLS. 'It definitely seems like Zillow took one of the legs out from under the stool,' McTernan said. Compass, which has taken in over $2 billion in equity investment and has an earnings multiple more in line with a tech company than a brokerage, also has more pressure to perform like a growth stock. Although Compass managed to hit a profitable second quarter last year, it ended the year with a net loss of over $154 million. The company has splurged on a number of acquisition deals in the past year, which has been a major revenue driver and helped increase its market share to a record 6 percent. For Reffkin, a housing market boom could be the thing that vaults the company into profitability as its gross profit numbers can finally begin to outstrip its operating expenses — but that bull market appears further and further away, raising questions about how Compass will continue to float its losses in the meantime. 'When they're growing revenue, fixed costs are great,' McTernan said. One workaround for the company has been the use of stock-based compensation to incentivize employees and recruit agents, which CFO Kalani Reelitz said he expects to be managed down to $100 million per year. But the company still has over $277 million in unrecognized stock-based compensation, all of which will weigh on the company's long-term trajectory. 'We have a well-defined path to reducing our annual stock-based compensation over the next three years,' a Compass spokesperson said. 'The $277 million is factored into the $100 million target we expect over the long term, so it is not a concern for us.' The company recognized over $30 million of stock-based compensation in the first quarter of last year, down slightly from the year prior. While Reffkin has maintained that he will be aggressive in seeking M&A opportunities, the less costly growth trajectory relies on continued organic agent recruitment. On the earnings call, Reelitz said that he continued to hear that Compass' 'inventory strategy, the depth of inventory [and] the three-phase marketing' have helped in agent recruitment. Last year, Reffkin said that in 2025 Compass would have more off-MLS and make-me-move inventory on than any publicly searchable active market, incentivizing buyers and agents to work with the firm. Halfway through this year, that expectation looks all but shot as Zillow and a number of MLSes have challenged Compass' hegemony play. Earlier this year, Compass sued Seattle-based Northwest MLS for interfering with the company's private exclusive model, claiming at one point the listing service shut off its access to the listing service's data feed until Compass removed all of its private exclusive inventory from the market. At the Compass' annual retreat held in early June, Reffkin confirmed to agents that Zillow would 'say every private listing is banned' if Compass didn't remove references to private exclusive listings from its website. 'Does it feel to anyone that we've been discouraged from our private listings, or is it just me?' Reffkin asked the audience, claiming that listing services have flouted a National Association of Realtors' policy that prohibits listing services from discouraging the use of office exclusives. Last month, the California Regional MLS voted in approval of a NAR amendment that would remove the office exclusive carve-out that currently allows Compass' private exclusives to exist. The conversation shift has put Compass on the defensive for the first time since it began waging its battle for the repeal of the Clear Cooperation Policy. Now the company is simply fighting to maintain what existed one year ago. For Reffkin, the solution remains the same — just keep growing, which is what he told over 1,200 Compass agents at the firm's annual retreat. 'If every one of you doubles your business, if every one of you doubles your listings, we can't be bullied anymore,' he said. 'That is the path.' Compass scored first cash flow positive year in 2024 Compass narrows losses amid surge in deals, mergers This article originally appeared on The Real Deal. Click here to read the full story.
