Even with the start of a new year, Compass remains focused on cutting costs. On Thursday, the New York-based brokerage filed an 8K form with the Securities and Exchange Committee announcing its fourth round of layoffs since June 2022.
This latest workforce reduction is part of the company’s “ongoing cost reduction initiatives to manage the business during the current macroeconomic environment, as referenced in its third quarter earnings conference call,” according to the filing.
While the filing did not specify the size of the layoff, it did note that the workforce reduction did not impact the U.S. technology engineering team, as the brokerage said it will continue to prioritize its technology platform.
As a result of the layoff, Compass estimates it will incur pre-tax cash charges of approximately $10 million to $12 million for severance and other termination benefits for employees whose roles were or are being eliminated during the first quarter of 2023.
In the SEC filing, the firm stated that it believes no additional material actions will need to be taken to realize the top end of this annualized range in the second quarter of 2023.
In addition, Compass stated that it believes “its actions make it possible to achieve below the middle of the $850-$950 million range of annualized operating expense by the fourth quarter of 2023 without future workforce reduction,” and that “its actions allow for a path to achieve positive free cash flow in 2023 accounting for market scenarios that are worse than Fannie Mae’s negative 22.6% estimate for residential real estate transaction volume (price and units) in 2023.”
The SEC filing also stated that the firm intends to closely monitor ongoing market developments and adjust expenses accordingly.
A spokesperson told RealTrends that Compass did not wish to comment beyond what was in the Form-8K.