Real Estate Brokerage Firm Compass Inc. Going Public
New York-based real estate startup, Compass, which is backed by SoftBank, filed an IPO registration with the SEC on Monday, following a surge of more than $1.3 billion in revenue, due in large part to the ongoing housing boom.
Compass listed the size of the offering as $500 million, which may be subject to change as the firm unveils further details in a later filing. Goldman Sachs, Morgan Stanley and Barclays are underwriting the offering.
“When you invest in Compass, you’re investing in more than a company—you’re investing in the technology-powered future of the real estate agent and the enormous potential they represent,” said Compass Inc. CEO Robert Reffkin in a letter submitted with the IPO.
The firm intends to trade shares on the New York Stock Exchange under the ticker symbol “COMP.”
According to the filing, proceeds from the sale of shares are slated to go toward working capital and other corporate purposes like research and development, sales, marketing activities, general and administrative matters, and capital expenditures—among other things. However, the company does not currently have any binding agreements or commitments for acquisitions “outside the ordinary course of business” at the moment, according to the filing.
According to a Bloomberg article, SoftBank-related funds own about 35% of the Class A shares of Compass, while Reffkin, who has 2.4% of the Class A shares, currently owns all of the Class C shares.
Up to 5% of the Class A shares in the IPO will reportedly be reserved for licensed real estate agents affiliated with Compass and certain individuals. This may serve as a boon for the firm on the recruiting front.
Since launching almost a decade ago, Compass has touted offerings of advanced technology, marketing tools, CRM software and more to recruit thousands of agents. Among one of its more recent tactics has been its Agent Equity Program, which allows agents to invest a share of their commissions in exchange for stock options.
Compass’ IPO filing adds it to a growing list of real estate companies that have gone public, including Zillow, Realogy, eXp World Holdings, RE/MAX, Redfin and, most recently, Fathom Realty. In Compass’ case, the decision comes amid an uptick in earnings brought on by the pandemic-influenced housing market.
The New York-based brokerage’s revenue rose to $3.72 billion in 2020 from $2.39 billion the year prior—roughly a 56% YoY increase. The company also reported net losses were $388.0 million and $270.2 million in 2019 and 2020, respectively.
Like other companies, Compass struggled in the early days of the pandemic. The impact of COVID-19 protocols ultimately led to the firm laying off 15% of its employees.
“I invite you to join us, and the agents we serve, on this journey. Thanks to the hard work of thousands of Compass employees and agents, we have accomplished a great deal in our first eight years. But I assure you: we are just getting started,” said Reffkin in his IPO letter.
This is a developing story. Stay tuned to RISMedia for more updates.
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news ideas at jgrice@rismedia.com.
