Summary of Compass (COMP) FY Conference Call - May 14, 2025 Company Overview - Compass is the largest independent real estate brokerage firm in the U.S. by sold volume for four consecutive years, focusing on empowering agents with technology and a strong culture [3][4] - The company has a market share of 6% and operates with 37,000 agents, having invested $1.7 billion in its technology platform over the last twelve years [6] Financial Performance - Record first quarter results were reported, including record EBITDA and free cash flow [7] - Market share increased to the highest levels, with organic transaction growth of 7% while the overall market declined by 2%, resulting in a 9% faster growth rate [7] - Inorganic growth, including M&A, resulted in a 28% year-over-year increase, significantly outperforming the market [8] Growth Strategy - The company aims to grow through: 1. **Market Recovery**: Current existing home sales are at a low of 4 million, with potential growth to mid-cycle levels of 5.4 to 5.6 million homes, representing a 35% increase [11][12] 2. **Agent Recruitment**: 700 principal agents were hired in the last quarter, producing 2.5 times more than those who left [13] 3. **Accretive M&A**: Targeting four to six times EBITDA multiples, with recent acquisitions of top market companies [14] Agent Retention and Value Proposition - Compass achieved a 97% agent retention rate, significantly higher than the industry average of 70% [15] - The platform is the primary reason agents are attracted to Compass, providing tools that save time and lower operating costs [16][19] - The platform includes comprehensive features for both buy-side and sell-side workflows, enhancing agent efficiency [17][19] Marketing Strategy - The newly launched three-phase marketing strategy has seen nearly 50% of listings utilize it within two months of its introduction [30] - This strategy allows sellers to test aspirational prices privately before going public, reducing the risk of price drops [31][32] Industry Dynamics - The Clear Cooperation Policy (CCP) allows for private listings, which Compass leverages to create more private exclusives [35][41] - The company believes that offering more choices to sellers aligns with their interests and enhances agent performance [44][45] Market Outlook - Recent increases in purchase mortgage applications (up 13% and 19% year-over-year) indicate a potential recovery in the housing market [56] - The company anticipates a positive trend in home sales for May and June, contingent on macroeconomic stability [58] Earnings Power and Cost Discipline - In a recovering market, Compass expects significant revenue growth, with operational expenses maintained at a 3% to 4% organic increase [59][66] - The company emphasizes cost discipline as a permanent strategy, having reduced transaction service costs by 50% over two years [66] Conclusion - Compass is positioned to capitalize on market recovery through strategic growth initiatives, a strong technology platform, and a focus on agent success, while maintaining cost discipline and enhancing its market share through M&A activities [62][66]

Revenue and Transactions - Revenue for the three months ended March 31, 2025, was $1,356.2 million, an increase of $302.1 million, or 28.7%, compared to the same period in 2024[141]. - Total Transactions closed by agents reached 49,121, marking a 27.8% increase compared to the same period in 2024[131]. - Gross Transaction Value for the three months ended March 31, 2025, was $52.4 billion, an increase of 30.7% year-over-year[132]. - Gross Transaction Value represented 6.0% of residential real estate transacted in the U.S., up from 4.8% in the same period of 2024[133]. - Total transactions increased to 49,121, a rise of 27.8% from the prior year, largely attributed to brokerages acquired since April 2024[157][160]. - Gross transaction value reached $52.4 billion, up from $40.1 billion in the prior year, reflecting the growth in total transactions[157]. - Gross Transaction Value for the three months ended March 31, 2025, was $52.4 billion, an increase of 30.7% from the previous year, primarily driven by an increase in the number of agents on the platform[162]. - The Number of Principal Agents as of March 31, 2025, was 20,656, representing a 41.6% increase from the previous year, mainly due to agents from businesses acquired since April 2024[164]. Expenses and Losses - Operating expenses totaled $1,409.9 million, with commissions and related expenses accounting for $1,106.1 million, or 81.6% of revenue[141]. - The net loss attributable to Compass, Inc. for the three months ended March 31, 2025, was $50.7 million, compared to a net loss of $132.9 million in the same period of 2024[141]. - Commissions and other related expenses increased to $1,106.1 million for the three months ended March 31, 2025, up $243.8 million or 28.3% from the prior year, primarily driven by increased revenue[144]. - Sales and marketing expenses decreased to $91.7 million, down $1.7 million or 1.8% compared to the prior year, with a percentage of revenue dropping from 8.9% to 6.8%[145]. - Operations and support expenses rose to $96.7 million, an increase of $17.7 million or 22.4%, with the percentage of revenue slightly decreasing from 7.5% to 7.1%[146]. - Research and development expenses increased to $49.9 million, up $2.9 million or 6.2%, with the percentage of revenue decreasing from 4.5% to 3.7%[147]. - General and administrative expenses decreased significantly to $27.5 million, down $54.7 million or 66.5%, primarily due to a prior year litigation charge[148]. - Restructuring costs surged to $9.2 million, an increase of $7.7 million or 513.3% compared to the prior year, mainly due to severance and lease termination costs[149]. - Depreciation and amortization expenses increased to $28.8 million, up $8.0 million or 38.5%, driven by amortization of intangible assets from recent acquisitions[150]. - Net loss attributable to Compass, Inc. improved to $(50.7) million, a reduction of $82.2 million from $(132.9) million in the prior year, with the net loss margin improving from (12.6%) to (3.7%)[157]. Cash Flow and Financial Position - Cash flows from operations for the three months ended March 31, 2025, were $23.1 million, up from $8.6 million in the same period of 2024[175]. - The company generated $121.5 million in cash flows from operations for the year ended December 31, 2024[172]. - As of March 31, 2025, the company had cash and cash equivalents of $127.0 million and an accumulated deficit of $2.7 billion[172]. - Net cash used in investing activities for the three months ended March 31, 2025, was $164.5 million, primarily for acquisitions[177]. - The company had $50.0 million outstanding and $257.7 million available to be drawn under its Revolving Credit Facility as of March 31, 2025[172]. - As of March 31, 2025, the outstanding balance under the Concierge Facility is $25.4 million, with an interest rate of SOFR plus a margin of 2.75%[190]. - The outstanding balance under the Revolving Credit Facility is $50.0 million, with an interest rate of SOFR plus a margin of 1.50%[190]. - A 100-basis point change in market interest rates would not materially affect the interest expense based on current outstanding amounts[190]. Strategic Initiatives - The company launched Compass One, an all-in-one client dashboard, in February 2025, enhancing the client experience[128]. - The company acquired a firm with the exclusive rights to operate the Christie's International Real Estate brand in January 2025, expanding its market presence[123]. - The company has implemented significant cost reduction actions since 2022, allowing it to consistently generate positive operating cash flow[140]. - Adjusted EBITDA for the three months ended March 31, 2025, was $15.6 million, compared to a loss of $20.1 million in the same period of 2024, driven by higher revenue from an increased number of agents[168]. - Adjusted EBITDA margin for the three months ended March 31, 2025, was 1.2%, compared to a margin of -1.9% in the same period of 2024[167]. Currency and Market Exposure - The company primarily incurs operating expenses in local currencies, mainly in the United States, with limited exposure in Europe, the United Kingdom, India, and Canada[191]. - The company does not maintain significant foreign currency balances, resulting in limited exposure to exchange rate fluctuations[191]. - The company is contingently liable for escrow and trust deposits totaling $358.0 million as of March 31, 2025[181].

Compass, Inc. (COMP) came out with a quarterly loss of $0.05 per share versus the Zacks Consensus Estimate of a loss of $0.06. This compares to loss of $0.27 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 16.67%. A quarter ago, it was expected that this company would post a loss of $0.09 per share when it actually produced a loss of $0.08, delivering a surprise of 11.11%.Over the last four quarters, the company has surpassed ...

Financial Data and Key Metrics Changes - Revenue in Q1 increased by 28.7% year over year, reaching $1.36 billion, while adjusted EBITDA was a record $15.6 million, a significant improvement from a loss of $20.1 million in the previous year [4][20][25] - Total transactions increased by 27.8%, with organic transactions up 7.3%, contrasting with a 2.1% decline in the overall market [4][21] - The company generated $19.5 million in free cash flow, marking a new record for Q1 and an improvement from $5.9 million in the same quarter last year [26] Business Line Data and Key Metrics Changes - The title and escrow business saw strong momentum, with attach rates up 695 basis points year over year [6] - Principal agent retention grew to 96.6%, an increase of 30 basis points year over year, indicating strong agent loyalty [5] Market Data and Key Metrics Changes - Market share increased to 6%, up 125 basis points year over year and 95 basis points from Q4 [22] - Gross transaction value reached $52 billion, reflecting a 30.7% increase from the previous year [22] Company Strategy and Development Direction - The company aims to control organic operating expenses at a growth rate of 3% to 4% annually while expanding its agent base and enhancing agent productivity through its platform [14][15] - The acquisition of Christie's International Real Estate is expected to empower independent brokerages and enhance the company's market presence [6][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the volatility in March was due to market uncertainty related to tariff discussions, but they expect a recovery in transactions as stability returns to the market [20][44] - The company believes that the demand for homes is merely deferred rather than eliminated, anticipating that full-year transactions will align with previous expectations if market stability is maintained [44] Other Important Information - The company completed the acquisition of Christie's International Real Estate on January 13, 2025, which is expected to positively impact financial metrics and operational synergies [24][27] - The weighted average share count for Q1 was 550 million, with an expected increase due to the acquisition-related share issuance [27] Q&A Session Summary Question: What was revenue growth tracking ahead of the disruption in March? - Management indicated that revenue was tracking close to the midpoint of guidance before the March volatility, with April tracking expectations [40] Question: What is the latest with NAR's clear cooperation policy? - Management confirmed that the three-phase marketing strategy complies with NAR's updated policies and emphasizes homeowner choice [50][52] Question: How is the company addressing agent recruitment post-NAR changes? - Management reported strong organic recruitment, with 700 new agents added in Q1, indicating continued demand for the company's value proposition [61] Question: What are the churn trends in the quarter? - Churn was in line with historical levels, with no significant changes noted, and the company added agents instead of experiencing churn from the Christie's acquisition [75] Question: What does success look like for the three-phase marketing strategy? - Success is defined by agents continuing to differentiate themselves, gaining more listings, and achieving better terms for sellers [73][74]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 increased by 28.7% year over year, reaching $1.36 billion, while adjusted EBITDA was a record $15.6 million, a significant improvement from a loss of $20.1 million in the previous year [20][25][26] - Total transactions increased by 27.8%, with organic transactions up 7.3%, significantly outperforming the overall market, which saw a decline of 2.1% [4][21] - The company generated $19.5 million in free cash flow, marking a new record for Q1 and an improvement from $5.9 million in Q1 2024 [26] Business Line Data and Key Metrics Changes - The title and escrow business showed strong momentum, with attach rates up 695 basis points year over year [6] - Principal agent retention grew to 96.6%, reflecting the company's ability to retain talent in a competitive market [5] Market Data and Key Metrics Changes - Compass' market share increased to 6%, up 125 basis points year over year, indicating a strong competitive position [21] - Gross transaction value reached $52 billion, a 30.7% increase from the previous year, driven by a combination of increased transactions and a slight rise in average selling price [21] Company Strategy and Development Direction - The company aims to control organic operating expenses at a growth rate of 3% to 4% annually while expanding its market share through organic growth and M&A activities [14][15] - The acquisition of Christie's International Real Estate is expected to enhance the company's market position and provide access to new segments [6][24] - The three-phase marketing strategy is designed to empower agents and provide homeowners with more marketing choices, which is expected to drive future growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outpace the market despite recent volatility due to external factors such as tariff discussions [20][36] - The company anticipates continued growth in transactions and market share, driven by its strong agent recruitment and retention strategies [5][60] Other Important Information - The company ended Q1 with $127 million in cash and cash equivalents, with $50 million drawn on its revolver to fund acquisitions [27] - The guidance for Q2 2025 includes expected revenue in the range of $2 billion to $2.15 billion and adjusted EBITDA between $115 million and $135 million [28] Q&A Session Summary Question: What was revenue growth tracking ahead of the disruption in March? - Management indicated that revenue growth was tracking close to the midpoint of guidance before the March volatility, with April tracking expectations [40][41] Question: What is the latest with NAR's clear cooperation policy? - Management confirmed that the three-phase marketing strategy remains intact under the current rules, emphasizing homeowner choice [48][50] Question: How is the company addressing agent recruitment post-NAR changes? - Management noted that the demand for the three-phase marketing strategy continues to resonate with agents, particularly in the luxury segment [56][60] Question: What are the churn trends in the quarter? - Churn was in line with historical levels, with no significant changes noted, and the company added agents instead of experiencing churn [72][73] Question: How is the private exclusive listings strategy performing? - The majority of transactions that close as private exclusives are co-brokered with agents from other firms, indicating a collaborative approach [77][78] Question: How is the company thinking about market share in the context of M&A? - Management expressed optimism about continued market share gains through both organic growth and acquisitions, with a focus on top-performing agents [91][92]

1Q 2025 Business Update & Supplementary Information | 1 | | --- | Safe Harbor Statement This presentation includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding our future performance, including expected financial results for the second quarter of 2025, planned non-GAAP OPEX and free cash flow expectations for the full year of 2025, and our expectations for ...

Financial Performance - Revenue in Q1 2025 increased by 28.7% year-over-year to $1.4 billion, with organic revenue growth of 14.6%[5] - GAAP net loss for Q1 2025 was $50.7 million, an improvement of $82.2 million from a net loss of $132.9 million in Q1 2024[5] - Net loss attributable to Compass, Inc. for Q1 2025 was $50.7 million, compared to a net loss of $132.9 million in Q1 2024, indicating improved financial performance[29] - Net loss for Q1 2025 was $50.8 million, a significant improvement from a net loss of $133.0 million in Q1 2024, representing a reduction of approximately 62%[31] - Adjusted EBITDA for Q1 2025 was $15.6 million, a significant improvement from a loss of $20.1 million in Q1 2024[5] - Adjusted EBITDA for Q1 2025 was $15.6 million, compared to a negative $20.1 million in Q1 2024, indicating a turnaround in operational performance[33] Cash Flow and Expenses - Operating cash flow grew 169% year-over-year to a record $23.1 million, marking the fifth consecutive quarter of positive free cash flow at $19.5 million[1][5] - Free cash flow for Q1 2025 was $19.5 million, up from $5.9 million in Q1 2024, reflecting improved cash generation from operations[35] - Cash and cash equivalents at the end of Q1 2025 were $127.0 million, down from $165.9 million at the end of Q1 2024, showing a decrease of approximately 23%[31] - Operating expenses totaled $1,409.9 million in Q1 2025, up from $1,186.2 million in Q1 2024, reflecting a significant increase in commissions and related expenses[29] - Non-GAAP operations and support expenses increased to $92.0 million in Q1 2025 from $75.3 million in Q1 2024, highlighting a focus on operational efficiency[37] - The company incurred restructuring costs of $9.2 million in Q1 2025, compared to $1.5 million in Q1 2024, indicating ongoing adjustments to improve business structure[33] Growth and Market Position - Total transactions closed by Compass agents in Q1 2025 reached 49,121, an increase of 27.8% compared to Q1 2024, while organic transactions grew by 7.3%[9] - Quarterly market share rose to 6.0%, an increase of 125 basis points year-over-year, with organic market share growing by 82 basis points[9] - The number of principal agents increased by 41.6% year-over-year to 20,656, with a strong retention rate of 96.6%[9] - Gross Transaction Value (GTV) was $52.4 billion in Q1 2025, up 31% from $40.1 billion in Q1 2024[9] - The Christie's International Real Estate acquisition contributed 9.2% to revenue growth in the quarter[5] - Payments for acquisitions in Q1 2025 totaled $160.9 million, a substantial increase from $0.4 million in Q1 2024, reflecting aggressive growth through acquisitions[31] Future Projections - Q2 2025 revenue guidance is projected between $2.0 billion and $2.15 billion, with Adjusted EBITDA expected to be between $115 million and $135 million[12] - Non-GAAP OPEX is projected to be between $1.017 billion and $1.042 billion for 2025, including a 3-4% increase in OPEX from 2024[19] - Free cash flow is expected to be positive for the full year 2025[19] Assets and Goodwill - Total assets increased to $1,542.6 million as of March 31, 2025, up from $1,178.0 million at the end of 2024[27] - Goodwill rose to $472.3 million as of March 31, 2025, compared to $233.6 million at the end of 2024, reflecting recent acquisitions[27] Operational Efficiency - Compass aims to continuously innovate and expand its platform to enhance value for agents and improve operational efficiency[20] - GAAP sales and marketing expenses for Q1 2025 were $91.7 million, slightly down from $93.4 million in Q1 2024, reflecting cost management efforts[37] - Total capital expenditures for Q1 2025 were $3.6 million, compared to $2.7 million in Q1 2024, indicating increased investment in growth initiatives[35]

Revenue in Q1 Grew 28.7% YoY and Organic Revenue Grew 14.6% YoY Quarterly Market Share Grew 125bps YoY to a Record 6.0%; Organic Share Was Up 82bpsOperating Cash Flow Grew 169% YoY to a Record $23.1 Million in Q1NEW YORK, May 8, 2025 /PRNewswire/ -- Compass, Inc. (NYSE: COMP) ("Compass" or "the Company"), a leading tech-enabled real estate services company that includes the largest residential real estate brokerage in the United States by sales volume1, announced its financial results for the first quarter ...

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to limited upside or downside risks [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Company Analysis - Compass, Inc. (COMP) - Compass, Inc. (COMP) has shown a price increase of 1.7% over the past four weeks, indicating growing investor interest [4] - The stock has gained 4% over the past 12 weeks, with a beta of 2.8, suggesting it moves 180% higher than the market in either direction [5] - COMP has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] - An upward trend in earnings estimate revisions has led to a Zacks Rank 2 (Buy) for COMP, which is associated with strong momentum effects [7] - COMP is trading at a Price-to-Sales ratio of 0.71, suggesting it is undervalued at 71 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides COMP, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Viewpoint - The market anticipates Compass, Inc. (COMP) to report a year-over-year increase in earnings driven by higher revenues in its upcoming earnings report for the quarter ended March 2025 [1][2]. Earnings Expectations - The earnings report is expected to be released on May 8, 2025, with a consensus estimate of a quarterly loss of $0.06 per share, reflecting a year-over-year improvement of +77.8% [3][12]. - Revenues are projected to reach $1.42 billion, representing a 34.2% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 15.63% higher in the last 30 days, indicating a positive reassessment by analysts [4]. - The Most Accurate Estimate for Compass is higher than the Zacks Consensus Estimate, leading to an Earnings ESP of +21.05% [10][11]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of a potential earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [8]. - Compass currently holds a Zacks Rank of 2, suggesting a high likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Compass was expected to post a loss of $0.09 per share but actually reported a loss of $0.08, resulting in a surprise of +11.11% [12]. - Over the past four quarters, Compass has exceeded consensus EPS estimates three times [13]. Conclusion - Compass is positioned as a compelling candidate for an earnings beat, but investors should consider other influencing factors before making investment decisions [16].