Three months after cutting 10 percent of its workforce to prepare for worsening market headwinds, New York City-based brokerage Compass announced on Tuesday another round of layoffs concentrated within its technology department.
Bloomberg reported the news Tuesday morning after obtaining an internal memo from CEO Robert Reffkin to Compass employees and agents. Reffkin said the layoffs were part of the brokerage’s cost-reduction strategy and promised the brokerage’s technology services wouldn’t be impacted.
Robert Reffkin
“Today we reduced the size of some of our non-agent-facing teams, focused on areas that do not impact your day-to-day experience,” Reffkin said in the memo.
A Compass spokesperson declined to share exactly how many people were let go or what severance packages they would be offered. However, Bloomberg’s dive into the company’s latest regulatory filings with the Securities and Exchange Commission (SEC) provided a clue into how large the layoffs were.
In the filings, Compass estimated it will take a pre-tax charge of $23 to $26 million to provide severance to employees laid off during the third quarter of the year. Bloomberg estimated there are 700 people left on the brokerage’s tech team — half of the 1,500 Reffkin touted during Compass’ annual All-Hands in Austin last November.
The news outlet stopped short of pinning down the number of layoffs, but the suggestion appeared to be that hundreds of employees from the technology department were axed.
The former Amazon and Microsoft executive was credited with spearheading Compass’ quest to create the ultimate end-to-end platform for its agents and their clients; however, the brokerage noted it was time to “enter its next phase.”
“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,” noted a previous Inman article.
A Compass spokesperson declined to offer a number of people laid off when Inman called for comment on Tuesday. However, they did provide a written statement reiterating the strength of Compass’ tech department.
“I want to be clear on the strength of our tech leadership at the moment. Our CTO was replaced by Shay Artzi as Head of Engineering,” the statement read. “Shay has 25 years of tech experience, 14 patents, has a Ph.D. from MIT, worked at Amazon and IBM, and was previously a CTO.”
“He reports to Greg Hart, our COO, who previously reported directly to Jeff Bezos [and] ran Amazon Prime Video with a 2,000 person technology team reporting to him, before he launched Amazon Alexa,” it added.
Last week, Hart revealed part of his blueprint for Compass, which focuses on remedying the company’s longstanding issue with spending — a move that has kept them from reaching profitability even with billions in funding from venture capital funds.
“[Our earnings results are] a backdrop to us making sure that we’re taking the right steps as a company on our path toward profitability,” he said. “So making sure we’re looking at all our costs really closely and streamlining our operations to get more efficient.”
“I firmly believe that in a downturn the companies that are the strongest are in the best position to survive,” he added. “I think our platform is a massive asset for Compass because it helps us be more proactive, it attracts agents to Compass, and it helps agents stay at Compass.”
Although the company is showing a strong front, Compass’ stocks took another tumble after the news of its latest layoffs.
Compass stock opened at $2.68 per share on Tuesday, but closed 6.13 percent down at $2.52 per share. In after-hours trading, the brokerage experienced a small bump back up to $2.62 per share.
Its market cap stands at $1.21 billion.
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