Compass, Inc. (COMP) Earnings Call Transcript
January 9, 2023
Earnings Call Speaker Segments
Real estate company Compass is undergoing its third round of job cuts in under 1 year, aiming to be cash flow-positive by mid-2023. Joining us here at the NYSE on set, Robert Reffkin, Compass Co-Founder and CEO. Robert, great to have you back here.
Glad to be here.
Let's talk about the layoffs. Third round, what's involved? And how does this move you towards that cash flow-positive goal that you stated for the middle of this year?
Yes. So we had announced expense reductions last week. I think it's worth noting, if we would have done that a year earlier, we would have been free cash flow-positive last year. And if the market would have grown last year as expected, we would have been free cash flow-positive. What happened is the Fed share came in and artificially reduced the revenue of our industry, bringing mortgage rates from an all-time low in January to a 20-year high in less than 9 months, creating the sharpest decline in real estate transactions on record more than 2008, which was a housing-driven financial crisis.
So when the CEO of Taylor Morrison -- the homebuilder, Taylor Morrison, comes out and says on air a couple of weeks ago, the housing's in recession, has been for a while, you agree?
I agree. But I believe that we will look back at Q4 as the bottom. And that Q1 may be the last great time to be a buyer for a while. We just saw that 42% of sellers are giving concessions, which is the greatest amount of concessions that sellers have given in over 10 years.
So it's all Jerome Powell's fault is what I heard you say. I mean did you overhire at all?
We, along with many other growth companies, built our expenses to meet demand that was there and was expected to be there for many years. But that demand led to inflation, which the Fed had to address.
You never know exactly what the right sizes, I guess, given how dynamic things are right now. But what makes you feel like you're at the right spot in terms of generating free cash flow and having the people you need to deliver on the opportunity but not too many?
Yes. So with what we announced last week, we believe we can be free cash flow-positive this year, accounting for a 25% decline in the market. That compares to Fannie Mae, which is -- they estimate is going to be down 22% this year. And MBA, Mortgage Bankers Association, National Association of Realtors believe this can be down much less.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete Compass, Inc. transcript - plus 251,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to Compass, Inc. earnings transcripts and 251,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.