Good afternoon —
Because a slew of real estate and mortgage companies went public over the last six months, we can now peer into their businesses at a much more granular level as they publish earnings. But it's not just their numbers — often the most interesting part is the growth strategies they outline.
This is the first earnings period for Compass as a publicly traded company and they reported $1.1 billion in revenue for the first three months of 2021. Even though that's an 80% leap from revenue in the first quarter of 2020, the company still reported a net income loss of $212 million, thanks mostly to real estate commissions. Ouch.
So what's their strategy going forward?
Compass CEO Robert Reffkin said the brokerage is "expanding our adjacent service business" into title and escrow, and plans to provide mortgage services.
Asked on the earnings call what inroads Compass has made into title, Compass CFO Kristen Ankerbrandt would only say: "Adjacent services grew nicely. We are not going to disclose an exact amount.
As Senior Real Estate Reporter Matt Blake notes in the article, diversifying into title, escrow, and mortgage is the playbook used by HomeServices to maintain profitability, and it is utilized by most brokerages.
Compass is growing fast, entering Rhode Island, Delaware and Tampa, Florida, in the first quarter, bringing the total number of markets served to 47. As we've said all year, the competition for title and settlement services continues to grow. The efficiencies the industry has worked hard to cultivate in the last decade make these "adjacent services" even more attractive to new players looking to beef up their bottom line.
Until next week —
Sarah Wheeler
HousingWire Editor in Chief
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