Robert Reffkin (Getty, Securities and Exchange Commission)
About to go public, Compass said it had $ 3.7 billion in revenue last year, but lost $ 270 million, according to an investor prospectus it presented on Monday.
The IPO process, known as the S-1 form, provides the clearest view of the company’s finances, which is probably the fastest growing residential brokerage in a generation. Compass’s revenue grew 56 percent in 2020 from $ 2.4 billion in 2019. It cut its losses from $ 388 million in 2019 and lost a total of $ 1.1 billion on December 31, 2020.
Founded in 2012, Compass has 19,000 agents and in 2020 became the third largest US broker in turnover, according to Real Trends data, with more than $ 91 billion in sales in 2019. The company raised $ 1 , 5 billion investors, including the SoftBank Group, and was last valued at $ 6.4 billion after a financing round in July 2019. Its rise was fueled by a combination of organic growth, agent recruitment and a flood of notable acquisitions. It currently has $ 440.1 million in cash available, shows the S-1.
The company submitted a draft registration statement to the United States Securities and Exchange Commission in early January, as The Real Deal first reported. The document presented today, however, will provide details to potential public market investors about their finances, their competitive landscape and their leadership.
The document revealed, for example, that co-founder Ori Allon left Compass’ board in February. Allon was previously executive chairman; his new title on the company’s website is “chief strategist”. Allon holds just over 1.9 million Class A common shares, or about 5.2 percent of the total Class A shares issued.
Robert Reffkin, co-founder and CEO, owns just over 860,000 Class A common shares, or about 2.4 percent of the total Class A shares issued. Reffkin also owns more than 1.5 million Class C common shares, giving him 20 votes per share.
Other major shareholders include SoftBank’s Vision Fund, which owns 34.8% of Class A common shares, through the subsidiary SVF Excalibur (Cayman) Limited. Discovery Capital Management, hedge lender Robert Citrone, owns 9.2% of Class A shares.
Spurred on by the heated housing market, Compass said it sold $ 151.7 billion in real estate in 2020, according to the S-1. Its transactions increased by 66% year on year. The company claims that it now holds about 4% of the US housing market.
The prospectus also cited the main legal battles that Compass is facing.
In 2014, the company was sued by Avi Dorfman, who claims to be a co-founder of Compass, but was later removed from the lawsuit. Compass called his case “opportunistic”.
Compass is also facing a wide-ranging lawsuit from rival Realogy, the parent company of Corcoran Group and Coldwell Banker. The public real estate giant sued in 2019, claiming Compass was involved in illicit commercial practices and predatory poaching. Compass defended its actions and sought arbitration in the case, which was denied. In January of this year, Compass sued Realogy, accusing the company of waging a “war of disinformation”.
This is a developing story. Please check again for updates.
Erin Hudson contributed reporting.