Compass CEO Robert Reffkin sent an email to staff on Thursday morning informing employees of the latest staff reduction, marking the third round of layoffs in eight months.
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Compass is laying off more staff as the brokerage looks to further cut costs in the slowing housing market, according to a report.
CEO Robert Reffkin sent an email to staff Thursday morning informing them of the latest employee reduction, according to Insider.
The size of the layoff was not immediately clear, but it is the third round of cuts in the last eight months as the brokerage seeks to stem its losses — which tallied $154 million during the third quarter of 2022, up from $100 million a year earlier. A company spokesperson declined to specify the exact amount of employees specified.
Compass went public in April 2021 with an $8 billion valuation and expanded aggressively, tallying an average of 13,314 during the third quarter of 2022.
2022 saw its financial outlook worsen though as its losses increased and it failed to turn a profit, with observers and analysts calling it “unfixable” and “the worlds most unprofitable brokerage.” Amid falling home sales it’s seen its market cap fall to about $1 billion and its stock price plummet, sitting at $2.36 a share after trading at $20.15 per share during its first day on the market.
Compass has taken a number of cost cutting measures in an effort to save $320 million, including ditching stock and financial incentives in their recruitment package, which helped them grow so aggressively in recent years.
Insider reported that Reffkin told staff in an email that the layoffs come during “difficult economic times.” Indeed the housing market of the past few months has been difficult for brokerages, with high mortgage rates depressing home sales. Sales of existing homes in November were 35.4 percent below what they were the previous year.
In SEC filing filed Thursday morning, Compass said that it expected to spend between $10 and $12 million on severance related to the layoffs. It also said that the layoffs will not effects the company’s U.S. engineering team, and that it will continue to prioritize technology.
Last year, Compass said it had ” “over 1,500 highly experienced product and engineering professionals.” This was prior to the first of its three rounds of layoffs.
In June, the company let go of 450 employees across various corporate departments including marketing and other administrative support staff. October saw it let go of roughly half of its 1,500-person technology team. The brokerage’s tech platforms are another key part of its recruitment pitch to agents.