Compass is back to its cost cutting measures. In an email sent to the brokerage’s agents on Tuesday, CEO Robert Reffkin announced the firm’s third round of layoffs in the past four months.
Reffkin, who titled the subject line of his email, “Our path to profitability,” told agents that the reductions occurred in non-agent facing teams and were “focused on areas that do not impact your day-to-day experience.”
According to the email, the largest reduction came from the technology team. In a February regulatory filing, Compass said it had over 1,500 product and technology employees across the world.
“We are fortunate to be in a position where we can reduce our costs while still being able to invest and create more for you than any other company in the industry,” Reffkin wrote in the email, noting that the tech team still numbers over 700.
In a regulatory filing, Compass said Tuesday that it estimates a pre-tax cash charge of between $23 million and $26 million related to severance and other benefits to terminated employees in the third quarter.
This is the second round of layoffs impacting the firm’s technology team. The layoffs implemented by Compass last month also hit the technology team and included the firing of the firm’s CTO Joseph Sirosh. (Compass does not have plans to replace Sirosh.)
The brokerage’s first round of layoffs came in June, when Compass announced a lay off of 10% of its workforce or 450 workers.
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.
The company plans to cut its expenses by $320 million this year.
In his email, Reffkin noted that these layoffs are in line with the goals he laid out for the brokerage during its second-quarter earnings call, including his plan to eliminate “a significant amount of costs in the business.”
“As entrepreneurs, you are no strangers to making hard decisions for the long-term success of your businesses,” Reffkin wrote. “I am more excited than ever about what we are building together.”