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Compass CEO hails IPO as a fundraising event amid ‘challenging’ market

by Alex Wilhelm

While several tech companies are opting to delay their IPOs in the face of less-than-enthusiastic market demand for their shares, real estate tech company Compass forged ahead and went public today. After pricing its shares at $18 apiece last night, the low end of a lowered IPO price range, Compass shares closed the day up just under 12% at $20.15 apiece.

TechCrunch caught up with Compass CEO and founder Robert Reffkin to chat about his company’s debut in the market’s suddenly choppy waters for tech and tech-enabled debuts.

Regarding whether Compass is a tech company or a real estate brokerage, Reffkin — who raised the comparison himself — used the opportunity to note that companies like Amazon or Tesla aren’t only one thing. Amazon is a logistics company, an e-commerce company, a cloud-computing business and a media concern all at the same time. Price that.

The argument was good enough for Compass to sell 25 million shares — a lowered amount — at its IPO price for a gross worth $450 million. That, the CEO said, was his company’s goal for its public offering.

Sparing TechCrunch the usual CEO line about an IPO not being a destination but merely one stop on a longer journey at that juncture, Reffkin instead argued that putting nine figures of capital into his company was his objective, not a particular price or resulting valuation.

That might sound simple, but as Kaltura and Intermedia Cloud Communications have pushed their IPOs back, it’s a (Read more...)

Kaltura puts debut on hold. Is the tech IPO window closing?

by Alex Wilhelm

The Exchange just yesterday discussed a downward revision in the impending Compass IPO and the disappointing Deliveroo flotation as signals that market demand for high-growth, unprofitable tech shares could be slipping. Recent news underscores the possibly chilling conditions. This morning, Kaltura, a technology company that provides video streaming software and services, delayed its IPO. JioForMe reports that the postponement comes after Kaltura’s “valuation demand was lower than expected.”

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TechCrunch noted yesterday that Kaltura had not released a second, higher IPO price range. The fact stood out given how hot the public markets had proven in recent months for new tech offerings. Kaltura’s S-1 filing detailed accelerating revenue growth, which at the time we thought would be more than enough to fetch the company an attractive initial public valuation.

It appears that Kaltura was also surprised that it was not trending toward a higher IPO price.

In another sign of how quickly the temperature for new tech flotations may have chilled, digital comms firm Intermedia Cloud Communications also delayed its IPO today. In a release, CEO Michael Gold said the decision is due “to challenging current conditions in the market for initial public offerings, especially for technology companies.”

Challenging current conditions? For IPOs? For tech IPOs? That’s new.

Uh-oh

Axios reporter Dan Primack noted this morning that SPAC formation appears to be slowing. Mix that into the (Read more...)

Compass S-1 Deep Dive

by Nima Wedlake

Compass, a technology-enabled real estate brokerage, filed its S-1 in early March with plans to raise about $550 million as part of an initial public offering. The company updated its S-1 last week to include a share price range of $18-$19 (down from $23-$26 in the initial S-1), implying a post-money valuation of about $7.2 billion. Compass plans to trade on the New York Stock Exchange under the ticker “COMP” and the IPO is being underwritten by which is being underwritten by Goldman Sachs, Morgan Stanley and Barclays.

Founded in 2012 by Robert Reffkin and Ori Allon, Compass has rapidly grown to become one of the largest independent real estate brokerages in the country, with over 19,000 agents who facilitated more than $150 billion in total transaction value in 2020. The company has raised $1.6 billion since its founding, from investors including SoftBank Group, Wellington Management Capital, Institutional Venture Partners & Thrive Capital. Its last private round was a $500 million Series G completed in November 2019, which valued the company at a $6.5 billion post-money valuation.

In this post, I’ll dig into the Compass S-1, including the company’s financials, product strategy and valuation expectations as a public company. In particular, I’ll review some of the key themes highlighted by the Compass management team throughout the S-1: the central role of the agent in a real estate transaction, the company’s focus on top agent acquisition, and the role of technology as a key differentiator.

Financial Metrics

Compass has earned (Read more...)

SoftBank makes mountains of cash off of human laziness

by Natasha Mascarenhas

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another crazy week, but did our best to get through as much of it as we could. Here’s the rundown, in case you are reading along with us!