Compass CTO Joseph Sirosh is parting ways with the firm in its latest bid to manage expenses and become profitable. According to an August 17 regulatory filing, Sirosh sold more than 222,460 shares between August 17-19 and collected $868,000 in proceeds.
More than $900 million has been pumped into Compass’s technology platform, according to Bloomberg, and while the technology has been favorably viewed by agents across the company, it hasn’t made a difference in the company’s profitability.
This money has gone to acquire tech-focused companies, like the customer relationship management, or CRM, platform Contactually, Glide, which is used by the California Association of Realtors to digitize the administrative paperwork of home sales, and Modus Technologies, a title platform that Compass shut down last month as part of the company’s sweeping austerity measures.
It also went to hire “a team of over 1,500 highly experienced product and engineering professionals based out of our innovation hubs in New York, Seattle, Washington D.C. and several cities in India,” according to the 2021 annual report, filed with the Securities and Exchange Commission in February. Compass declined to specify for this article how many tech employees were laid off as part of its June layoffs.
Committed to its tech platform
However, they did assure RealTrends that they are committed to its in-house technology platform. When asked if they would consider moving to a third-party platform like RE/MAX did, a company spokesperson responded, “Absolutely not, we have just restructured our tech leadership team to report to our Chief Operating Officer Greg Hart, who previously ran the Amazon Prime Video tech team.
He went on to say, “With the successful rollout of the Compass technology platform, Compass now enters its next phase with the largest technology team in our industry, focused on enhancing and building tools that help our over 28,000 agent-entrepreneurs grow their businesses. We are excited to announce that Kendra Shimmell and Shay Artzi will step into the roles of Head of Product and Head of Engineering.”
Cost-cutting at Compass
Compass, which ranked No. 1 by sales volume in the 2022 RealTrends 500 has struggled to turn a profit after losing $101 million in the second quarter this year.
The firm attributed the net loss to “higher expenses related to strategic business initiatives, non-cash stock compensation, depreciation and amortization as well as restructuring charges due to the cost-saving actions announced on June 14.” The brokerage’s largest expense was for “commissions and other related expenses,” which came in at $1.62 billion.
Reffkin recently announced a pivot in business strategy — called their “Plan for Transformation” — noting that the firm will no longer offer recruitment incentives. Compass has long been known to pay incentives and sign-on bonuses to incentivize agents and teams to join the company.
In June, Compass announced a lay off of 10% of its workforce or 450 workers.
