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Compass going Public with an IPO

On the 1st of March 2021, a real estate brokerage company, Compass, filed documents with the US Security and Exchanges Commission (SEC). The company took this step to go public via an IPO on the New York Stock Exchange.

In a statement, the company stated that they had not determined the price range and the number of shares for the proposed offering. There isn’t a timeline provided for the IPO offering as it awaits the completion of the review process from the SEC.

Compass is a New York-based company founded by Robert Reffkin and Ori Allon as a real-estate brokerage startup in 2012. It has a seamless and all-digital platform for buying, renting, and selling real estate. Currently, the company works with 19385 real estate agents to give them quality data, marketing tools, and CRM software for delivering an exceptional experience to the clients. This helps in removing the paper-driven and antiquated workflow from real-estate brokerage processes.

In 2019, Compass got funds around $370 million in a financing round led by SoftBank, which raised its all-time funding to $1.5 billion. With that, it started recruiting real estate agents from rival firms, and its valuation soared to $6.4 billion. Also, the revenue for 2019 increased to $2.4 billion from $885 million in 2018.

There was a 56% jump in the revenue to $3.7 billion for Compass in 2020 because of the ever-rising housing prices. Although, the company spent 83% of its sales on commissions and other transaction-related expenses. Compass hasn’t yet made any profits as it posted net losses of $270 million for 2020 compared to last year’s figure of $388 million.

Compass faced challenges at the start of the COVID-19 pandemic due to the lockdown and uncertain economy. It had to cut off 15% of its staff during March 2020 to stay afloat as a business. However, the rebound in the real-estate business happened in the second half of 2020 as total transactions increased by 66% from 2019, notwithstanding the pandemic effects. There were a total of 144,784 real-estate transactions as housing prices increased nationally by 10.4% in December 2020 in comparison to prices a year prior.

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