Real Estate Brokerage Compass Files for IPO

By McKenzie Carpenter Tuesday, March 2, 2021

The housing market experiences ebbs and flows constantly. While the state of the real estate market changes, the demand for buying or selling houses does not. Compass, a real estate brokerage business and app, recently filed for an IPO after experiencing a revenue jump.

A real estate app on a smartphone.

About the Real Estate Company and IPO Filing

Compass is an online real estate brokerage business and app that streamlines the buying and selling process for agents. Since Compass’s app technology makes the process faster and easier, agents are able to spend more time with clients.

Founded in 2012 in New York City, more than 19,000 agents use Compass, and the business app created by the real estate company is featured in more than 26 cities across the US. In addition, the real estate business has raised roughly $1.5 billion in funding, including investments from Fidelity and SoftBank Vision Fund. In 2020, the real estate company became the third-largest brokerage in the US by deal volume — $91 billion in sales in 2019. Additionally, the real estate company has helped more than 275,000 homebuyers and sellers.

Due to the growing success Compass has experienced, the company filed for an IPO on Monday after revenue increased 56% in 2020, resulting in about $3.7 billion. However, even though the real estate app still had immense success last year during the pandemic, the business lost $270 million overall in 2020.

Compass filing for an IPO comes on the heels of a challenging year. Due to the COVID-19 pandemic, the business had to lay off 15% of its staff. In addition to the staffing reduction, 80% of the concierge business was also reduced, and salaries were cut by 25%. Despite these early bumps in 2020, the company was able to bounce back and increase transactions by 66% in the second half of last year, as stated in the IPO filing.

The Real Estate Market

The COVID-19 pandemic was a huge contributing factor to a year full of unusual circumstances; however, the real estate market may not have suffered as much as other industries. As the number of people transitioning to working from home increased and at-home schooling became a necessity, comfortable home working spaces became a priority for buyers.

According to a report published by S&P CoreLogic Case-Shiller Home Price Indices, a high demand but a low supply of homes on the market led to home prices jumping to roughly 10.4% in December 2020 alone. CNBC reported this was the fastest home prices have gone up in seven years.

Despite the challenges COVID-19 threw at industries across the board, Compass and other real estate companies were still able to overcome the difficulties and experience quite a bit of growth.

About the Author

Headshot for author McKenzie Carpenter

McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.

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