Compass Inc. shares plummeted in after-hours trading Monday, after the real-estate brokerage and tech provider slashed its annual revenue guidance and revealed plans to cut costs due to a downturn in the housing market.
Compass COMP, -0.43% executives reduced their annual sales forecast by roughly $ 1.5 billion, with the current forecast calling for revenue of $ 6.15 billion to $ 6.45 billion after the previous guidance stated $ 7.6 billion to $ 8 billion. Executives also said they expect to seek $ 320 million in annually recurring costs for impending cuts.
“Given the challenges the real-estate market has faced so far this year and the likelihood that this difficult environment will continue for the foreseeable future, we are announcing a significant cost-reduction program,” Chief Executive Robert Reffkin said in a statement. “We have line of sight into each area that will drive these savings to our expenses, which we believe will enable us to be free-cash-flow positive in 2023. We expect to complete all targeted cost reductions by the end of this calendar year.”
Compass stock plunged 11% in after-hours trading immediately following the release of the results. Shares have already declined 48.5% so far this year, as the S&P 500 index SPX, +0.40% has dropped 10.2%.
For the second quarter, Compass reported a net loss of $ 101.2 million, or 24 cents a share, up from a loss of 2 cents a share a year ago. Revenue increased to $ 2.02 billion from $ 1.95 billion a year ago, but missed expectations. Analysts on average were projecting a loss of 17 cents a share on sales of $ 2.11 billion, according to FactSet.
For the third quarter, Compass executives’ forecast was way off from Wall Street’s expectations. Executives expect an adjusted-Ebitda loss of $ 65 million to $ 80 million on revenue of $ 1.4 billion to $ 1.5 billion, while analysts on average were modeling positive adjusted Ebitda of $ 45 million and revenue of $ 2.11 billion, according to FactSet.
Compass executives planned a conference call at 4:30 p.m. Eastern to further discuss the results.