[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section provides important cautionary information about forward-looking statements and associated risks [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents Compass, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents Compass, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes on business operations, accounting policies, acquisitions, debt, and other financial disclosures [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Total assets | $1,596.1 | $1,178.0 | | Total liabilities | $870.7 | $765.6 | | Total stockholders' equity | $725.4 | $412.4 | - Total assets increased by **$418.1 million (35.5%)** from December 31, 2024, to June 30, 2025, primarily due to increases in intangible assets and goodwill, reflecting recent acquisitions[19](index=19&type=chunk) - Total liabilities increased by **$105.1 million (13.7%)** over the same period, driven by higher commissions payable and revolving credit facility utilization[19](index=19&type=chunk) - Total stockholders' equity significantly increased by **$313.0 million (75.9%)** from December 31, 2024, to June 30, 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance over specific periods, including revenue, expenses, and net income | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Revenue | $2,059.6 | $1,700.6 | $3,415.8 | $2,754.7 | | Total operating expenses | $2,020.2 | $1,679.3 | $3,430.1 | $2,865.5 | | Income (loss) from operations | $39.4 | $21.3 | $(14.3) | $(110.8) | | Net income (loss) attributable to Compass, Inc. | $39.4 | $20.7 | $(11.3) | $(112.2) | | Net income (loss) per share, basic | $0.07 | $0.04 | $(0.02) | $(0.23) | - Revenue increased by **21.1%** for the three months and **24.0%** for the six months ended June 30, 2025, compared to the prior year periods[21](index=21&type=chunk) - Net income attributable to Compass, Inc. for the three months ended June 30, 2025, was **$39.4 million**, up from **$20.7 million** in the prior year, while the six-month period still showed a net loss of **$11.3 million**, a significant improvement from a **$112.2 million** loss in the prior year[21](index=21&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity, including capital contributions and accumulated earnings or losses | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Additional paid-in capital | $3,403.4 | $3,081.6 | | Accumulated deficit | $(2,683.5) | $(2,672.2) | | Total Compass, Inc. stockholders' equity | $719.9 | $409.4 | - Additional paid-in capital increased by **$321.8 million** for the six months ended June 30, 2025, primarily due to **$250.1 million** in share consideration for the Christie's International Real Estate acquisition and **$89.7 million** in stock-based compensation[27](index=27&type=chunk) - The accumulated deficit increased slightly by **$11.3 million** for the six months ended June 30, 2025, reflecting the net loss for the period[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the sources and uses of cash from operating, investing, and financing activities over specific periods | Cash Flow Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :----------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $95.9 | $53.6 | | Net cash used in investing activities | $(181.9) | $(26.5) | | Net cash provided by (used in) financing activities | $39.5 | $(8.2) | | Net (decrease) increase in cash and cash equivalents | $(46.5) | $18.9 | | Cash and cash equivalents at end of period | $177.3 | $185.8 | - Net cash provided by operating activities increased to **$95.9 million** for the six months ended June 30, 2025, from **$53.6 million** in the prior year, despite a net loss, due to non-cash adjustments[29](index=29&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Net cash used in investing activities significantly increased to **$181.9 million**, primarily due to **$172.0 million** in payments for acquisitions, net of cash acquired, for the six months ended June 30, 2025[29](index=29&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - Net cash provided by financing activities was **$39.5 million**, a reversal from a net cash outflow of **$8.2 million** in the prior year, driven by net proceeds from the Revolving Credit Facility and Concierge Facility[29](index=29&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Business and Basis of Presentation](index=12&type=section&id=1.%20Business%20and%20Basis%20of%20Presentation) This note describes the company's operations and the foundational principles used in preparing the financial statements - Compass, Inc. operates an end-to-end platform for residential real estate agents, offering cloud-based software for CRM, marketing, and client service, enhanced by proprietary data, analytics, AI, and machine learning[31](index=31&type=chunk) - The company primarily generates revenue from commissions paid by clients at the time of home transactions, with adjacent services like title, escrow, and franchise services comprising a smaller portion[32](index=32&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and estimation methods applied in the preparation of the financial statements - The preparation of financial statements involves significant management judgments and estimates, particularly for fair value of acquired assets, contingent consideration, useful lives of assets, impairment, and income taxes[36](index=36&type=chunk)[37](index=37&type=chunk) - Business combinations are accounted for using the acquisition method, allocating purchase consideration to acquired assets and liabilities at fair value, with any excess recorded as goodwill[38](index=38&type=chunk) - The company operates as a single operating and reportable segment, with the CEO evaluating financial information on a consolidated basis[39](index=39&type=chunk)[40](index=40&type=chunk) - Recently adopted accounting pronouncements include ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), with ASU 2024-03 (Disaggregation of Income Statement Expenses) currently being assessed for future impact[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [3. Acquisitions](index=14&type=section&id=3.%20Acquisitions) This note details the company's recent business acquisitions, including purchase consideration, goodwill, and intangible assets - On January 13, 2025, Compass acquired Christie's International Real Estate for **$153.0 million** in cash and **44.1 million** shares of Class A common stock (fair value estimated at **$250.1 million**), expanding into luxury real estate franchising[47](index=47&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) - The acquisition resulted in **$230.0 million** in goodwill and **$164.1 million** in identified intangible assets (trademarks, acquired technology, agent networks, affiliate network)[51](index=51&type=chunk) - Other acquisitions during the six months ended June 30, 2025, included a residential real estate brokerage and a title insurance and escrow settlement business, involving **$23.6 million** in cash and contingent consideration[57](index=57&type=chunk) Pro Forma Information (Six Months Ended June 30) | Metric | Actuals (Jan 13 - Jun 30, 2025) | Pro Forma (Six Months Ended Jun 30, 2025) | Pro Forma (Six Months Ended Jun 30, 2024) | | :---------------- | :------------------------------ | :---------------------------------------- | :---------------------------------------- | | Revenue | $274.2 million | $3,424.0 million | $3,001.9 million | | Net income (loss) | $10.0 million | $(17.0) million | $(117.9) million | [4. Fair Value of Financial Assets and Liabilities](index=17&type=section&id=4.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note describes the valuation methodologies and classifications for the company's financial assets and liabilities - Cash and cash equivalents (**$177.3 million** as of June 30, 2025) are classified as Level 1 financial instruments, valued using quoted prices in active markets[62](index=62&type=chunk) - Contingent consideration liabilities (**$30.8 million** as of June 30, 2025) are classified as Level 3 financial instruments, estimated using Monte-Carlo simulations with unobservable inputs[62](index=62&type=chunk)[64](index=64&type=chunk) [5. Debt](index=17&type=section&id=5.%20Debt) This note provides details on the company's debt instruments, including revolving credit facilities, interest rates, and covenants - The Concierge Facility, a **$75.0 million** revolving credit facility, was extended to July 31, 2027, and is used to finance the Compass Concierge Program, bearing interest at term SOFR plus **2.50%** (**7.24%** as of June 30, 2025)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - The Revolving Credit Facility provides **$350.0 million**, with **$50.0 million** outstanding and **$33.3 million** in letters of credit as of June 30, 2025, bearing interest at SOFR plus **1.50%** (**5.81%** as of June 30, 2025)[70](index=70&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - The company was in compliance with all financial covenants for both facilities as of June 30, 2025, including maintaining at least **$150.0 million** in liquidity and meeting consolidated revenue thresholds[68](index=68&type=chunk)[75](index=75&type=chunk) [6. Commitments and Contingencies](index=19&type=section&id=6.%20Commitments%20and%20Contingencies) This note outlines the company's legal obligations, pending lawsuits, and other potential financial liabilities - Compass settled the Gibson and Umpa antitrust cases nationwide for **$57.5 million**, with final approval granted in October 2024, resolving claims against the company and its agents[79](index=79&type=chunk)[86](index=86&type=chunk) - Several other antitrust lawsuits (March, Friedman, QJ Team, Peiffer, Grace, Fierro, Whaley, Batton II) are pending, with some stayed pending the appeal of the Gibson/Umpa settlement[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk) - The company is contingently liable for **$33.3 million** under letters of credit and **$364.5 million** in escrow and trust deposits as of June 30, 2025[89](index=89&type=chunk)[90](index=90&type=chunk) [7. Preferred Stock and Common Stock](index=21&type=section&id=7.%20Preferred%20Stock%20and%20Common%20Stock) This note describes the company's capital structure, including the number of shares issued and the voting rights of different stock classes - As of June 30, 2025, Compass had **523,306,435** shares of common stock issued and outstanding, comprising Class A (**513,184,002** shares) and Class C (**10,122,433** shares)[93](index=93&type=chunk) - Class A common stock carries one vote per share, Class B has no voting rights, and Class C common stock carries twenty votes per share, convertible to Class A under certain conditions[94](index=94&type=chunk)[95](index=95&type=chunk) [8. Stock-Based Compensation](index=22&type=section&id=8.%20Stock-Based%20Compensation) This note details the expense recognized for equity awards, including RSUs, and the remaining unrecognized compensation - Total stock-based compensation expense was **$55.2 million** for the three months and **$85.6 million** for the six months ended June 30, 2025, an increase from **$30.9 million** and **$63.8 million** in the prior year periods, respectively[105](index=105&type=chunk) - As of June 30, 2025, unrecognized stock-based compensation expense totaled **$327.6 million**, expected to be recognized over a weighted-average period of **2.3 years**[105](index=105&type=chunk) - The company issued **40.8 million** RSUs during the six months ended June 30, 2025, and reverted to a four-year ratable vesting schedule for new equity commitments starting in 2025[103](index=103&type=chunk)[104](index=104&type=chunk) [9. Income Taxes](index=24&type=section&id=9.%20Income%20Taxes) This note explains the company's income tax provisions, including benefits recognized and the valuation allowance on deferred tax assets - The company recognized an income tax benefit of **$3.1 million** for the six months ended June 30, 2025, primarily from a partial reduction in the valuation allowance related to the Christie's International Real Estate acquisition[107](index=107&type=chunk) - A full valuation allowance is maintained on all domestic net deferred tax assets due to factors including estimated future taxable income and historic profitability[108](index=108&type=chunk) [10. Net Income (Loss) Per Share Attributable to Compass, Inc.](index=25&type=section&id=10.%20Net%20Income%20(Loss)%20Per%20Share%20Attributable%20to%20Compass,%20Inc.) This note presents the calculation of basic and diluted earnings per share, reflecting the company's profitability on a per-share basis Net Income (Loss) Per Share Attributable to Compass, Inc. | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.07 | $0.04 | $(0.02) | $(0.23) | | Diluted EPS | $0.07 | $0.04 | $(0.02) | $(0.23) | - Basic and diluted EPS improved significantly year-over-year, with a positive **$0.07** for the three months ended June 30, 2025, compared to **$0.04** in the prior year, and a reduced loss of **$(0.02)** for the six-month period compared to **$(0.23)**[21](index=21&type=chunk)[112](index=112&type=chunk) - Weighted-average shares used in diluted EPS calculation for the three months ended June 30, 2025, included **13.1 million** incremental shares related to the Christie's International Real Estate acquisition's Share Consideration[112](index=112&type=chunk)[113](index=113&type=chunk) [11. Compass Concierge Receivables and Allowance for Credit Losses](index=26&type=section&id=11.%20Compass%20Concierge%20Receivables%20and%20Allowance%20for%20Credit%20Losses) This note describes the Concierge Program, its associated receivables, and the allowance for potential credit losses - The Compass Concierge Program offers services (Concierge Classic) and a loan program (Concierge Capital) to home sellers, with repayment due upon home sale, listing termination, or one year[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Concierge Receivables, net of allowance for credit losses (ACL), were **$38.3 million** as of June 30, 2025, with **96%** related to unsold properties[19](index=19&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) Allowance for Credit Losses (ACL) Activity (in millions) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :---------------- | :------------------------------- | :----------------------------- | | Beginning of period | $10.3 | $10.4 | | Allowances | $0.1 | $0.2 | | Net write-offs | $(0.1) | $(0.3) | | End of period | $10.3 | $10.3 | [12. Restructuring Activities](index=27&type=section&id=12.%20Restructuring%20Activities) This note details the costs and objectives of the company's restructuring efforts, aimed at improving efficiency and profitability - Restructuring costs for the six months ended June 30, 2025, totaled **$11.9 million**, more than doubling from **$5.8 million** in the prior year, primarily due to **$5.7 million** in severance-related personnel costs and **$6.2 million** in lease termination costs[124](index=124&type=chunk) - These activities are part of a broader plan to improve organizational alignment, drive cost efficiencies, and move towards profitability and positive free cash flow[123](index=123&type=chunk) - Future lease and lease-related payments for restructuring activities are estimated at **$35.6 million**, with **$6.5 million** due in the remainder of 2025[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Compass, Inc.'s financial condition and operational results, highlighting revenue growth driven by agent expansion and acquisitions, alongside detailed analysis of operating expenses, key business metrics, and liquidity. It also addresses the impact of macroeconomic conditions and industry changes [OVERVIEW](index=29&type=section&id=OVERVIEW) This section provides a high-level summary of the company's business model, market position, and recent strategic developments - Compass is a leading tech-enabled real estate services company, operating the largest brokerage in the U.S. by sales volume across **38 states** and Washington D.C., with approximately **37,700 agents**[129](index=129&type=chunk)[137](index=137&type=chunk) - The company acquired Christie's International Real Estate in January 2025, expanding into the global luxury real estate franchise sector[129](index=129&type=chunk)[131](index=131&type=chunk) - Revenue is primarily generated from gross sales commissions, with integrated services (title, escrow, mortgage) and the affiliate business representing smaller but growing portions[132](index=132&type=chunk) - The Compass platform, launched in February 2025, provides an end-to-end, AI-powered solution for agents and a client-facing dashboard (Compass One) for consumers[134](index=134&type=chunk)[135](index=135&type=chunk) [Operational Highlights for the Three Months Ended June 30, 2025](index=30&type=section&id=Operational%20Highlights%20for%20the%20Three%20Months%20Ended%20June%2030,%202025) This section presents key operational metrics for the quarter, demonstrating growth in transactions, value, and agent count Operational Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :----------------------- | :----- | :----- | :----------- | | Total Transactions | 73,025 | 60,390 | +20.9% | | Gross Transaction Value | $78.3B | $65.0B | +20.3% | | Number of Principal Agents | 20,965 | 16,997 | +23.3% | | U.S. Residential Real Estate Market Share | 6.09% | 5.13% | +0.96 pp | - Growth in Total Transactions, Gross Transaction Value, and Number of Principal Agents was primarily driven by recent acquisitions of residential real estate brokerages[138](index=138&type=chunk)[139](index=139&type=chunk)[174](index=174&type=chunk) [Seasonality and Cyclicality](index=31&type=section&id=Seasonality%20and%20Cyclicality) This section discusses how seasonal patterns and broader economic cycles influence the company's real estate business - The residential real estate market is seasonal, with highest transaction volume in spring and summer, leading to lower revenue in the first and fourth quarters[142](index=142&type=chunk) - The broader real estate industry is cyclical, influenced by economic conditions, interest rates, and mortgage lending standards, directly impacting the company's revenue growth rate[143](index=143&type=chunk) [Impact of the Macroeconomic Conditions and Recent Industry Practice Changes on the U.S. Residential Real Estate Market and Our Business](index=31&type=section&id=Impact%20of%20the%20Macroeconomic%20Conditions%20and%20Recent%20Industry%20Practice%20Changes%20on%20the%20U.S.%20Residential%20Real%20Estate%20Market%20and%20Our%20Business) This section analyzes the effects of high interest rates, new industry regulations, and cost reduction strategies on the company's operations - High interest rates and Federal Reserve policies have slowed the U.S. residential real estate market, leading to reduced consumer demand, declining affordability, and low inventory[144](index=144&type=chunk) - NAR's class action settlement introduced industry-wide practice changes, effective August 2024, including prohibiting buyer broker compensation in MLS listings and requiring written buyer-agent agreements[145](index=145&type=chunk) - Significant cost reduction actions since 2022 have enabled consistent positive operating cash flow, mitigating the impact of market slowdowns and industry changes[146](index=146&type=chunk) [RESULTS OF OPERATIONS](index=32&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance, including revenue and expense trends [Comparison of the Three and Six Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the company's financial results for the current and prior year periods, highlighting key drivers of change Revenue (in millions) | Period | 2025 | 2024 | $ Change | % Change | | :----------------------- | :------- | :------- | :------- | :------- | | Three Months Ended June 30 | $2,059.6 | $1,700.6 | $359.0 | 21.1% | | Six Months Ended June 30 | $3,415.8 | $2,754.7 | $661.1 | 24.0% | - Revenue growth was primarily driven by an increase in the number of agents on the platform, including those from businesses acquired since April 2024[148](index=148&type=chunk) Operating Expenses (in millions) | Expense Category | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Commissions and other related expense | $1,685.7 | $1,405.3 | $2,791.8 | $2,267.6 | | Sales and marketing | $96.4 | $94.9 | $188.1 | $188.3 | | Operations and support | $109.3 | $83.1 | $206.0 | $162.1 | | Research and development | $63.4 | $47.4 | $113.3 | $94.4 | | General and administrative | $33.3 | $22.9 | $60.8 | $105.1 | | Restructuring costs | $2.7 | $4.3 | $11.9 | $5.8 | | Depreciation and amortization | $29.4 | $21.4 | $58.2 | $42.2 | - Commissions and other related expense increased in absolute dollars due to higher revenue, but decreased as a percentage of revenue (**81.8%** vs **82.6%** for Q2) due to more favorable agent commission splits from recent acquisitions[149](index=149&type=chunk) - General and administrative expense decreased by **42.2%** for the six months ended June 30, 2025, primarily due to a **$57.5 million** litigation charge in the prior year, partially offset by acquisition-related transaction expenses and assumed costs[154](index=154&type=chunk)[156](index=156&type=chunk) - Depreciation and amortization increased by **37.4%** (QoQ) and **37.9%** (YoY) due to higher amortization of intangible assets from recent acquisitions[158](index=158&type=chunk) [KEY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES](index=38&type=section&id=KEY%20BUSINESS%20METRICS%20AND%20NON-GAAP%20FINANCIAL%20MEASURES) This section presents crucial operational and non-GAAP financial metrics used to assess the company's performance and efficiency Key Business Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Transactions | 73,025 | 60,390 | 122,146 | 98,839 | | Gross Transaction Value (in billions) | $78.3 | $65.0 | $130.7 | $105.1 | | Number of Principal Agents | 20,965 | 16,997 | 20,965 | 16,997 | | Net income (loss) attributable to Compass, Inc. (in millions) | $39.4 | $20.7 | $(11.3) | $(112.2) | | Net income (loss) attributable to Compass, Inc. margin | 1.9% | 1.2% | (0.3%) | (4.1%) | | Adjusted EBITDA (in millions) | $125.9 | $77.4 | $141.5 | $57.3 | | Adjusted EBITDA margin | 6.1% | 4.6% | 4.1% | 2.1% | - Total Transactions increased by **20.9%** (QoQ) and **23.6%** (YoY), primarily due to acquired brokerages[169](index=169&type=chunk) - Gross Transaction Value increased by **20.3%** (QoQ) and **24.3%** (YoY), driven by an increased number of agents on the platform[172](index=172&type=chunk) - Adjusted EBITDA significantly improved to **$125.9 million** (QoQ) and **$141.5 million** (YoY), with margins of **6.1%** and **4.1%** respectively, driven by higher revenue from agent growth[166](index=166&type=chunk)[180](index=180&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=42&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section evaluates the company's ability to meet its short-term and long-term financial obligations and fund operations - As of June 30, 2025, Compass had **$177.3 million** in cash and cash equivalents and an accumulated deficit of **$2.7 billion**[185](index=185&type=chunk) - The company generated **$95.9 million** in cash flow from operations for the six months ended June 30, 2025[185](index=185&type=chunk) - Compass has a **$350.0 million** Revolving Credit Facility, with **$50.0 million** outstanding and **$266.7 million** available to be drawn as of June 30, 2025, and was in compliance with all covenants[185](index=185&type=chunk) - Off-balance sheet arrangements include **$364.5 million** in escrow and trust deposits, for which the company is contingently liable[194](index=194&type=chunk) [CRITICAL ACCOUNTING ESTIMATES AND POLICIES](index=45&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20POLICIES) This section highlights accounting policies requiring significant management judgment and estimation, impacting financial reporting - No material changes to critical accounting policies and estimates were disclosed from the 2024 Form 10-K[197](index=197&type=chunk) - Business combinations are accounted for using the acquisition method, requiring estimates for fair value allocation of acquired assets and liabilities, with any excess recorded as goodwill[198](index=198&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=45&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to new accounting standards and their potential impact on the company's financial statements - Refer to Note 2 of the condensed consolidated financial statements for details on recently adopted and newly issued accounting pronouncements[200](index=200&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Compass, Inc.'s exposure to market risks, primarily focusing on interest rate fluctuations and foreign currency exchange rates, and the strategies employed to manage these risks [Interest Rate Risk](index=45&type=section&id=Interest%20Rate%20Risk) This section assesses the company's exposure to fluctuations in interest rates on its cash holdings and variable-rate debt - The company's cash and cash equivalents (**$177.3 million** as of June 30, 2025) are primarily in short-term interest-earning instruments, limiting exposure to fair value changes from interest rate fluctuations[202](index=202&type=chunk) - Debt facilities (Concierge Facility and Revolving Credit Facility) bear variable interest rates (SOFR-based), but a **100-basis point** change in market rates is not expected to materially impact interest expense due to current outstanding balances[203](index=203&type=chunk) [Foreign Currency Exchange Risk](index=46&type=section&id=Foreign%20Currency%20Exchange%20Risk) This section evaluates the company's exposure to currency fluctuations given its U.S. dollar functional currency and limited foreign operations - The company's functional and reporting currency is the U.S. dollar, with most revenue denominated in USD, resulting in limited foreign currency risk on sales[204](index=204&type=chunk) - Operating expenses are primarily in local currencies (U.S., Europe, UK, India, Canada), but significant foreign currency balances are not maintained, limiting exchange rate fluctuation exposure[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Compass, Inc.'s disclosure controls and procedures, confirming their effectiveness as of June 30, 2025, while noting the exclusion of a recently acquired entity from the internal control assessment scope [Evaluation of Disclosure Controls and Procedures](index=46&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls, with a note on the scope of internal control assessment - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[207](index=207&type=chunk) - The assessment of internal control over financial reporting for the recently acquired At World Properties Holdings, LLC was omitted, representing approximately **4%** of consolidated assets and **8%** of consolidated revenue[206](index=206&type=chunk) [Changes in Internal Control over Financial Reporting](index=46&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes occurred in the company's internal control over financial reporting - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[208](index=208&type=chunk) [Inherent Limitation on the Effectiveness of Internal Control over Financial Reporting and Disclosure Controls and Procedures](index=46&type=section&id=Inherent%20Limitation%20on%20the%20Effectiveness%20of%20Internal%20Control%20over%20Financial%20Reporting%20and%20Disclosure%20Controls%20and%20Procedures) This section acknowledges the inherent limitations of control systems, which provide reasonable but not absolute assurance - Management acknowledges that control systems provide only reasonable, not absolute, assurance against errors and fraud due to inherent limitations like faulty judgments, simple errors, circumvention, and resource constraints[209](index=209&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, and other significant corporate information [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed information on legal proceedings, including antitrust litigation, provided in Note 6 to the condensed consolidated financial statements - Information regarding legal proceedings is incorporated by reference from Note 6 to the condensed consolidated financial statements[210](index=210&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the 2024 Form 10-K, specifically adding a new risk related to recent changes in U.S. tariff policies and their potential adverse effects on the business - No material changes to risk factors from the 2024 Form 10-K, except for the addition of a new risk concerning the adverse effects of recent changes in U.S. tariff policies[211](index=211&type=chunk) - Changes in U.S. tariff policies, retaliatory tariffs, and trade tensions could disrupt supply chains, increase housing construction costs, and reduce transaction volume, materially affecting the business[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Securities](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20Securities) This section details unregistered sales of Class A common stock between April 1, 2025, and August 4, 2025, primarily for acquisition-related earnout and holdback payments - Issued **398,939** shares of Class A common stock on June 23, 2025, for earnout and holdback amounts from a prior acquisition[214](index=214&type=chunk) - Issued **78,238** shares of Class A common stock on July 30, 2025, for holdback amounts from a prior acquisition[215](index=215&type=chunk) - Issued **109,725** shares of Class A common stock on August 1, 2025, for a real estate brokerage acquisition, with potential future issuances up to **245,137** shares for earnout and holdback[216](index=216&type=chunk) - These issuances were exempt from registration under Section 4(a)(2) of the Securities Act[217](index=217&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[218](index=218&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - No mine safety disclosures were reported[219](index=219&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) This section covers an amendment to the Concierge Facility, the appointment and compensation arrangements for the new Chief Financial Officer, and a new Rule 10b5-1 trading arrangement for the General Counsel - The Concierge Facility was amended and extended on August 1, 2025, through July 31, 2027, with updated interest rates[220](index=220&type=chunk) - Scott Wahlers was appointed Chief Financial Officer, effective August 22, 2025, with an annual base salary of **$500,000**, a target cash bonus of **$500,000**, and a one-time RSU award valued at **$2.5 million**[221](index=221&type=chunk)[222](index=222&type=chunk) - Brad Serwin, General Counsel, adopted a new Rule 10b5-1 trading arrangement to sell up to approximately **949,532** shares of common stock, ending August 11, 2027[224](index=224&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including amendments to credit agreements, executive offer letters, certifications, and XBRL documents - Includes Amendment No. 2 to the Second Amended and Restated Revolving Credit and Security Agreement, and the Offer Letter for Scott Wahlers[226](index=226&type=chunk) - Certifications of Principal Executive Officer and Principal Financial Officer are furnished as Exhibits 32.1 and 32.2[226](index=226&type=chunk)[227](index=227&type=chunk)

分组1 - Compass, Inc. reported quarterly earnings of $0.07 per share, matching the Zacks Consensus Estimate, and an increase from $0.04 per share a year ago [1] - The company posted revenues of $2.06 billion for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 1.62%, and up from $1.7 billion year-over-year [2] - Compass shares have increased approximately 26% since the beginning of the year, outperforming the S&P 500's gain of 8.3% [3] 分组2 - The earnings outlook for Compass is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes [4] - The trend of estimate revisions for Compass was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $1.82 billion, and -$0.08 on revenues of $6.87 billion for the current fiscal year [7] 分组3 - The Internet - Software industry, to which Compass belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8]

Financial Data and Key Metrics Changes - Compass achieved record quarterly results with a revenue increase of 21.1% year over year, reaching $2.06 billion in Q2 2025 [21][24] - Adjusted EBITDA rose to $126 million, a 63% increase from $77 million in the same quarter last year, marking a new all-time high [5][24] - GAAP net income improved by 90% to $39.4 million compared to $20.7 million a year ago, also a record for quarterly GAAP net income [24] - Free cash flow reached $68 million, up from $40.4 million in Q2 2024, setting a new record for quarterly free cash flow [24][25] Business Line Data and Key Metrics Changes - Total transactions increased by 20.9%, with organic transactions up 6.3%, significantly outperforming the overall market where transactions decreased by 0.9% [5][21] - Title and escrow revenue reached an all-time high, with attach rates improving by nearly 700 basis points year over year [9][10] - Principal agent retention improved to 97.5%, with 832 gross principal agents recruited, a 53% increase year over year [6][21] Market Data and Key Metrics Changes - Market share increased to 6.09%, up 96 basis points from the previous year [22] - Gross transaction value was $78.3 billion, reflecting a 20.3% increase year over year [22] Company Strategy and Development Direction - The company aims to manage operating expenses prudently, recruit and retain agents, build a productive platform, pursue accretive M&A, and grow high-margin businesses [14][28] - The M&A pipeline is larger than ever, indicating strong demand for Compass in a challenging housing market [8][10] - The company is focusing on leveraging AI to enhance its platform and improve operational efficiency [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the current housing market remains challenging, but Compass has achieved record results, indicating strong demand for its services [4][8] - The company anticipates that competitors will be more adversely affected by market conditions due to their lack of capital and resources [8][10] - Management expressed confidence in the long-term strategy and the ability to generate significant adjusted EBITDA and free cash flow for shareholders [14][29] Other Important Information - The company announced the promotion of Scott Wallers to CFO following Kalani Reelitz's departure [18][20] - The integration of recent acquisitions is progressing well, with expectations for improved profitability in 2026 [28][29] Q&A Session Summary Question: Clarification on the $50 million benefit for next year - Management indicated that the $50 million benefit is expected to be a run-rate savings that will improve profitability and remain sustainable over time [34][36] Question: Industry shifts and future operational rules - Management discussed the ongoing tension between choice and control in the industry, emphasizing the need for sellers to have more marketing choices [38][40] Question: Changes in execution due to industry actions - Management confirmed that demand remains high and that Compass agents continue to gain market share despite industry challenges [49][50] Question: Appetite for acquisitions - Management expressed confidence in their capital position and indicated a strong interest in pursuing acquisitions [55][56] Question: Feedback on the Compass One dashboard - Management reported strong feedback on the Compass One dashboard, noting that it is transforming agent workflows and enhancing client transparency [63][64] Question: Update on July market trends - Management noted that July showed healthy signs with a 5% year-over-year increase in contract listings, reflecting delayed demand from the spring market [91][92]

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved record revenue of $2.06 billion, a 21.1% increase year-over-year, marking the highest quarterly revenue in its history [20][24] - Adjusted EBITDA reached $126 million, up 63% from $77 million in the same quarter last year, also a record high [5][24] - GAAP net income was $39.4 million, a 90% increase from $20.7 million a year ago, representing another record [24] - Free cash flow improved to $68 million from $40.4 million in Q2 2024, setting a new record for quarterly free cash flow [24] Business Line Data and Key Metrics Changes - Total transactions increased by 20.9%, with organic transactions up 6.3%, significantly outperforming the overall market where transactions declined by 0.9% [5][20] - Title and escrow revenue reached an all-time high, with attach rates for the title function nearing 75% for users of the one-click title feature [9][10] - The company successfully recruited 832 gross principal agents, a 53% increase year-over-year, marking the best recruiting quarter in its history [6][20] Market Data and Key Metrics Changes - Market share increased to 6.09%, up 96 basis points year-over-year and 8 basis points from Q1 [21] - Gross transaction value was $78.3 billion, reflecting a 20.3% increase from the previous year [21] Company Strategy and Development Direction - The company aims to manage operating expenses prudently, recruit and retain agents, build a productive platform, pursue accretive M&A, and grow high-margin businesses [13][27] - The company is focusing on leveraging AI to enhance its platform, aiming for a seamless integration of tools for agents [14][15] - The M&A pipeline is larger than ever, indicating strong demand for the company's services even in a challenging housing market [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform competitors, particularly in a slowing housing market [8][10] - The management highlighted the importance of advocating for agents and providing them with more choices, contrasting with the control exerted by portals and MLSs [7][39] - The company anticipates continued growth in revenue and adjusted EBITDA, with a focus on maintaining operational efficiencies [26][27] Other Important Information - The company has achieved over $600 million in operating expense savings over the last three years, with a disciplined growth rate of 3% to 4% [12][27] - The CFO, Kalani Rielitz, announced his departure, with Scott Wallers being promoted to CFO [17][19] Q&A Session Summary Question: Thoughts on the $50 million benefit for next year - Management indicated that the $50 million benefit is expected to be a run rate savings, improving profitability and remaining sustainable over time [34][36] Question: Industry shifts and future operations - Management noted a tug-of-war in the industry between choice and control, emphasizing the need for sellers to have more choices in marketing their homes [38][39] Question: Changes in execution due to industry actions - Management confirmed that demand remains high and that the private exclusives strategy has not changed significantly, with agents gaining market share [49][50] Question: Appetite for acquisitions - Management expressed confidence in their capital position and indicated a strong interest in pursuing acquisitions, driven by the current industry environment [56][57] Question: Feedback on platform engagement and agent dashboard - Management reported strong feedback on the Compass One dashboard, noting that it is transforming agents' workflows and increasing transparency for clients [65][66] Question: Update on macro conditions in July - Management observed healthy trends in July, with pending contracts up 5% year-over-year, reflecting delayed demand from the spring market [93][94]

2Q 2025 Business Update & Supplementary Information | 2Q 2025 | 2Q 2025 | 2Q 2025 | 2Q 2025 | | --- | --- | --- | --- | | Revenue | Adjusted EBITDA(1) | Adjusted EBITDA Margin(1) | Free Cash Flow(1) | | $2,059.6M | $125.9M | 6.1% | $68.0M | | +21% Y-o-Y | +$48.5M Y-o-Y | +150 BPS Y-o-Y | +$27.6M Y-o-Y | | 2Q 2025 | 2Q 2025 | 2Q 2025 | 2Q 2025 | | GAAP Net Income | Number of Principal Agents(2) | Gross Principal Agent | Market Share(4) | | | | Additions(3) | | | $39.4M | 20,965 | 832 | 6.09% | | +90% Y-o-Y | ...

[Q2 2025 Performance Overview](index=1&type=section&id=1.%20Q2%202025%20Performance%20Overview) Compass achieved record Q2 2025 results with ten all-time highs, outperforming the market in transaction growth and agent retention, demonstrating strong financial and operational performance [Executive Summary](index=1&type=section&id=1.1.%20Executive%20Summary) Compass, Inc. reported record second-quarter 2025 results, achieving ten all-time highs including market share, revenue, GAAP Net Income, and Adjusted EBITDA. The company significantly outperformed the market in transaction growth and agent retention, demonstrating a strong value proposition and positioning for future growth as the market normalizes - Compass achieved its best quarterly results in history, marked by **ten all-time highs**, including market share, Revenue, GAAP Net Income, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, T&E revenue, T&E attach, and weekly agent sessions on the platform[1](index=1&type=chunk) - The company added a record **832 principal agents organically** in Q2, the highest quarter for principal agent adds in its history, coupled with a **97.5% quarterly principal agent retention rate**[1](index=1&type=chunk) - Compass outperformed the market for **17 consecutive quarters**, with organic transactions growing by **6.3%** and total transactions by **20.9%** year-over-year, compared to a **0.9% decline in market transactions**[1](index=1&type=chunk) [Financial Highlights](index=1&type=section&id=1.2.%20Financial%20Highlights) In Q2 2025, Compass achieved substantial financial growth, with revenue increasing by 21.1% and GAAP Net Income surging by 90.3% year-over-year. The company also generated record positive operating and free cash flows, indicating strong financial health and operational efficiency Q2 2025 Key Financial Metrics (YoY Growth) | Metric | Q2 2025 Value | YoY Growth | Source Chunk | | :----------------------- | :-------------- | :--------- | :----------- | | Revenue | $2.06 billion | 21.1% | 5 | | GAAP Net Income | $39.4 million | 90.3% | 5 | | Adjusted EBITDA | $125.9 million | 63% | 5 | | Operating Cash Flow | $72.8 million | N/A | 5 | | Free Cash Flow | $68.0 million | N/A | 5 | - The Christie's International Real Estate acquisition contributed **10.4% of the revenue growth** in Q2 2025, with organic revenue growth up **8.7% year-over-year**[5](index=5&type=chunk) - GAAP Net Income for Q2 2025 included non-cash stock-based compensation expense of **$55.2 million** and depreciation and amortization of **$29.4 million**[5](index=5&type=chunk) [Operational Highlights](index=2&type=section&id=1.3.%20Operational%20Highlights) Compass demonstrated significant operational strength in Q2 2025, achieving record market share and substantial growth in principal agents and transactions. The company's proprietary technology platform also saw increased engagement and successful new product rollouts, enhancing agent productivity and client services Q2 2025 Key Operational Metrics (YoY Growth) | Metric | Q2 2025 Value | YoY Growth | Source Chunk | | :-------------------------- | :-------------- | :--------- | :----------- | | Quarterly Market Share | 6.09% | +96 bps | 9 | | Organic Market Share Growth | N/A | +40 bps | 9 | | Principal Agents | 20,965 | 23.3% | 9 | | Total Transactions | 73,025 | 20.9% | 9 | | Organic Transactions | N/A | 6.3% | 9 | | Gross Transaction Value (GTV) | $78.3 billion | 20.3% | 9 | | Organic GTV | $69.3 billion | N/A | 9 | - The Compass end-to-end proprietary technology platform reached an all-time high of **24 average weekly sessions per agent** in Q2, up **37% year-over-year**[9](index=9&type=chunk) - Key product highlights include: Compass Make-Me-Sell (**16,770 entries**), Compass One-Click Title & Escrow (**2x higher attach rate for users**), Compass One (used with **116,000 clients**), and Compass Reverse Prospecting (**115% growth in transactions** using it quarter-over-quarter)[9](index=9&type=chunk) [Business Outlook](index=2&type=section&id=2.%20Business%20Outlook) Compass provided a positive outlook for Q3 and full year 2025, projecting revenue and Adjusted EBITDA ranges, and reiterating its commitment to free cash flow positivity [Q3 2025 Outlook](index=2&type=section&id=2.1.%20Q3%202025%20Outlook) Compass provided a positive outlook for Q3 2025, projecting revenue between $1.725 billion and $1.850 billion, and Adjusted EBITDA in the range of $60 million to $80 million Q3 2025 Outlook | Metric | Q3 2025 Outlook | | :------------- | :-------------- | | Revenue | $1.725B - $1.850B | | Adjusted EBITDA | $60M - $80M | [Full Year 2025 Outlook](index=2&type=section&id=2.2.%20Full%20Year%202025%20Outlook) For the full year 2025, Compass updated its Non-GAAP OPEX guidance, reflecting a reduction from the prior range, and reiterated its expectation to be free cash flow positive Full Year 2025 Outlook | Metric | Full Year 2025 Outlook | | :---------------- | :--------------------- | | Non-GAAP OPEX | $1.010B - $1.020B | - The updated Non-GAAP OPEX range reflects a reduction from the prior range of **$1.017 billion to $1.042 billion**, including **$10 million from 2024 M&A**, **$105 million from the Christie's International Real Estate acquisition**, and **$12 million from other acquisitions**[8](index=8&type=chunk)[10](index=10&type=chunk) - Compass expects to be **free cash flow positive** for the full year 2025[10](index=10&type=chunk) [Company Information & Disclosures](index=3&type=section&id=3.%20Company%20Information%20%26%20Disclosures) This section details the Q2 2025 conference call, outlines the company's disclosure practices, provides a safe harbor statement for forward-looking information, defines non-GAAP financial measures, and offers a brief company overview and contact information [Conference Call & Disclosure](index=3&type=section&id=3.1.%20Conference%20Call%20%26%20Disclosure) Compass held a conference call on July 30, 2025, to discuss its Q2 2025 results and outlook, with access provided via its Investor Relations website. The company utilizes various channels, including its IR website, SEC filings, press releases, and social media, to disclose material information to investors - A conference call was held on Wednesday, **July 30, 2025, at 5:00 p.m. ET** to discuss Q2 2025 results and outlook, accessible via the Compass Investor Relations website[12](index=12&type=chunk) - Compass uses its Investor Relations website (https://investors.compass.com) as a primary channel for disclosing material information, in addition to SEC filings, press releases, public conference calls, webcasts, and various social media platforms[14](index=14&type=chunk) [Safe Harbor Statement](index=3&type=section&id=3.2.%20Safe%20Harbor%20Statement) The press release includes forward-looking statements based on estimates and assumptions, which are subject to various risks and uncertainties. These risks include general economic conditions, real estate industry health, interest rates, litigation, and the company's ability to innovate, compete, and integrate acquisitions, among others. Actual results may differ materially from these statements - Forward-looking statements in the press release, including future performance and financial results, are based on estimates and assumptions and are subject to risks and uncertainties[15](index=15&type=chunk) - Key risks include general economic conditions, the health of the U.S. real estate industry, high mortgage interest rates, ongoing antitrust litigation, decreases in commission income, low home inventory levels, and the ability to attract and retain agents[15](index=15&type=chunk) - Investors are advised to review 'Risk Factors' in the company's Form 10-K and 10-Q reports for more information on factors that could adversely affect the business[17](index=17&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=3.3.%20Non-GAAP%20Financial%20Measures) Compass presents non-GAAP financial measures such as Adjusted EBITDA, non-GAAP OPEX, free cash flow, and organic revenue growth to supplement GAAP statements. These measures are used for performance assessment, budgeting, and communication, providing a more consistent overview of operations, but should not be considered in isolation from GAAP results - Non-GAAP measures presented include Adjusted EBITDA, non-GAAP OPEX, free cash flow, and organic revenue growth, used for performance assessment, budgeting, and investor communication[18](index=18&type=chunk) - These non-GAAP measures have limitations as analytical tools and should be considered alongside GAAP measures like net income (loss), GAAP OPEX, operating cash flows, and revenue[18](index=18&type=chunk) - Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are provided in the financial statement tables within the press release[19](index=19&type=chunk) [About Compass](index=5&type=section&id=3.4.%20About%20Compass) Compass, founded in 2012, is a leading tech-enabled real estate services company and the largest residential real estate brokerage in the U.S. by sales volume. It provides an integrated, cloud-based platform to empower agents and includes Christie's International Real Estate, a global luxury brand - Compass is a leading tech-enabled real estate services company and the **largest residential real estate brokerage in the United States by sales volume**[20](index=20&type=chunk) - The company provides an end-to-end proprietary platform with integrated cloud-based software for CRM, marketing, client service, and brokerage functions, custom-built for the real estate industry[20](index=20&type=chunk) - The Compass network includes Christie's International Real Estate, a premier global luxury real estate brand with over **100 independently owned brokerage Affiliates in 50 countries and territories**[20](index=20&type=chunk) [Investor & Media Contacts](index=5&type=section&id=3.5.%20Investor%20%26%20Media%20Contacts) Contact information for investor relations and media inquiries is provided for Soham Bhonsle and Rory Golod, respectively - Investor Contact: Soham Bhonsle (soham.bhonsle@compass.com)[21](index=21&type=chunk) - Media Contact: Rory Golod (rory@compass.com)[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=4.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's financial position, operational performance, and cash flow activities through condensed consolidated balance sheets, statements of operations, and statements of cash flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=4.1.%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows an increase in total assets from $1,178.0 million at December 31, 2024, to $1,596.1 million at June 30, 2025, primarily driven by increases in intangible assets and goodwill. Total liabilities also increased, with a notable rise in commissions payable and the revolving credit facility Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $177.3 | $223.8 | | Accounts receivable, net | $96.9 | $48.6 | | Intangible assets, net | $221.1 | $73.8 | | Goodwill | $474.2 | $233.6 | | Total assets | $1,596.1 | $1,178.0 | | **Liabilities** | | | | Commissions payable | $154.3 | $82.8 | | Revolving credit facility | $50.0 | — | | Total liabilities | $870.7 | $765.6 | | **Stockholders' Equity** | | | | Total stockholders' equity | $725.4 | $412.4 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=4.2.%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, Compass reported significant revenue growth and a positive net income attributable to Compass, Inc., a substantial improvement from the prior year. Operating expenses also increased, particularly commissions and other related expenses Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $2,059.6 | $1,700.6 | $3,415.8 | $2,754.7 | | Commissions and other related expense | $1,685.7 | $1,405.3 | $2,791.8 | $2,267.6 | | Total operating expenses | $2,020.2 | $1,679.3 | $3,430.1 | $2,865.5 | | Income (loss) from operations | $39.4 | $21.3 | $(14.3) | $(110.8) | | Net income (loss) attributable to Compass, Inc. | $39.4 | $20.7 | $(11.3) | $(112.2) | | Net income (loss) per share, basic | $0.07 | $0.04 | $(0.02) | $(0.23) | | Total stock-based compensation expense | $55.2 | $30.9 | $85.6 | $63.8 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=4.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased significantly compared to the prior year, while investing activities resulted in a substantial net cash outflow due to payments for acquisitions. Financing activities provided net cash, primarily from drawdowns on the revolving credit facility Condensed Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $95.9 | $53.6 | | Net cash used in investing activities | $(181.9) | $(26.5) | | Net cash provided by (used in) financing activities | $39.5 | $(8.2) | | Net (decrease) increase in cash and cash equivalents | $(46.5) | $18.9 | | Cash and cash equivalents at end of period | $177.3 | $185.8 | - Payments for acquisitions, net of cash acquired, totaled **$172.0 million** for the six months ended June 30, 2025, significantly impacting investing activities[27](index=27&type=chunk) - Financing activities included **$70.0 million in proceeds** from drawdowns on the Revolving credit facility and **$20.0 million in repayments**[27](index=27&type=chunk) [Non-GAAP Reconciliations](index=9&type=section&id=5.%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, and Non-GAAP Operating Expenses, to their most directly comparable GAAP counterparts [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=9&type=section&id=5.1.%20Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 significantly increased to $125.9 million, up from $77.4 million in Q2 2024. This reconciliation adjusts GAAP net income by adding back non-cash expenses like depreciation, amortization, stock-based compensation, and other non-operating items Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Compass, Inc. | $39.4 | $20.7 | $(11.3) | $(112.2) | | Depreciation and amortization | $29.4 | $21.4 | $58.2 | $42.2 | | Stock-based compensation | $55.2 | $30.9 | $85.6 | $63.8 | | Restructuring costs | $2.7 | $4.3 | $11.9 | $5.8 | | Adjusted EBITDA | $125.9 | $77.4 | $141.5 | $57.3 | - Acquisition-related expenses for Q2 2025 included a **$2.7 million gain** related to changes in the fair value of contingent consideration[28](index=28&type=chunk) - The six months ended June 30, 2024, included a **$57.5 million litigation charge** related to Antitrust Lawsuits[28](index=28&type=chunk) [Reconciliation of Operating Cash Flows to Free Cash Flow](index=10&type=section&id=5.2.%20Reconciliation%20of%20Operating%20Cash%20Flows%20to%20Free%20Cash%20Flow) Free cash flow for Q2 2025 was $68.0 million, an increase from $40.4 million in Q2 2024. This is calculated by subtracting capital expenditures from net cash provided by operating activities Reconciliation of Operating Cash Flows to Free Cash Flow (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $72.8 | $45.0 | $95.9 | $53.6 | | Less: Capital expenditures | $(4.8) | $(4.6) | $(8.4) | $(7.3) | | Free cash flow | $68.0 | $40.4 | $87.5 | $46.3 | [Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses](index=11&type=section&id=5.3.%20Reconciliation%20of%20GAAP%20Operating%20Expenses%20to%20Non-GAAP%20Operating%20Expenses) This reconciliation adjusts GAAP operating expenses by excluding stock-based compensation and certain acquisition-related expenses or litigation charges to arrive at non-GAAP operating expenses. Non-GAAP figures show the underlying operational costs more clearly Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Sales and marketing** | | | | | | GAAP Sales and marketing | $96.4 | $94.9 | $188.1 | $188.3 | | Non-GAAP Sales and marketing | $87.6 | $86.6 | $172.5 | $172.1 | | **Operations and support** | | | | | | GAAP Operations and support | $109.3 | $83.1 | $206.0 | $162.1 | | Non-GAAP Operations and support | $102.3 | $78.7 | $194.3 | $154.0 | | **Research and development** | | | | | | GAAP Research and development | $63.4 | $47.4 | $113.3 | $94.4 | | Non-GAAP Research and development | $38.0 | $32.2 | $75.0 | $64.3 | | **General and administrative** | | | | | | GAAP General and administrative | $33.3 | $22.9 | $60.8 | $105.1 | | Non-GAAP General and administrative | $22.0 | $19.9 | $43.5 | $38.2 | - Stock-based compensation is a significant adjustment across all operating expense categories, totaling **$55.2 million** for Q2 2025[32](index=32&type=chunk) - Acquisition-related expenses of **$2.7 million** were excluded from GAAP Operations and support for Q2 2025[32](index=32&type=chunk) [Non-GAAP Operating Expenses Excluding Commissions and Other Related Expense](index=12&type=section&id=5.4.%20Non-GAAP%20Operating%20Expenses%20Excluding%20Commissions%20and%20Other%20Related%20Expense) This table provides a quarterly breakdown of non-GAAP operating expenses, excluding commissions and other related expenses, showing a trend of increasing operational costs from Q1 2024 to Q2 2025 Non-GAAP Operating Expenses Excluding Commissions and Other Related Expense (in millions) | Metric | March 31, 2024 | June 30, 2024 | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------------- | :------------- | :------------ | :----------------- | :---------------- | :------------- | :------------ | | Sales and marketing | $85.5 | $86.6 | $80.4 | $84.7 | $84.9 | $87.6 | | Operations and support | $75.3 | $78.7 | $80.2 | $79.6 | $92.0 | $102.3 | | Research and development | $32.1 | $32.2 | $32.9 | $33.6 | $37.0 | $38.0 | | General and administrative | $18.3 | $19.9 | $21.5 | $26.5 | $21.5 | $22.0 | | Total non-GAAP operating expenses excluding commissions and other related expense | $211.2 | $217.4 | $215.0 | $224.4 | $235.4 | $249.9 |

Core Insights - Compass, Inc. reported record financial results for Q2 2025, achieving significant growth in key metrics including GAAP net income, operating cash flow, and market share [1][2][7] - The company added a record 832 principal agents in Q2, reflecting strong organic growth and a high retention rate of 97.5% [2][7] Financial Performance - GAAP net income increased by 90.3% year-over-year to $39.4 million, up from $20.7 million in Q2 2024 [1][7] - Revenue for Q2 2025 rose by 21.1% year-over-year to $2.06 billion, driven by a 20.9% increase in total transactions [7][24] - Adjusted EBITDA grew by 63% year-over-year to $125.9 million, compared to $77.4 million in Q2 2024 [2][27] Operational Highlights - Operating cash flow reached a record $72.8 million, while free cash flow was $68 million [2][7] - The company’s market share grew by 96 basis points year-over-year to 6.09%, marking the highest market share in its history [1][7] - Compass agents closed 73,025 total transactions in Q2 2025, a 20.9% increase from 60,390 transactions in Q2 2024 [7][24] Agent Growth and Retention - The number of principal agents increased to 20,965, a 23.3% year-over-year rise from 16,997 [7][24] - The company has consistently outperformed the market in organic transactions for 17 consecutive quarters, with organic transactions growing by 6.3% compared to a market decline of 0.9% [2][7] Technology and Platform Development - The Compass platform achieved an all-time high of 24 average weekly sessions per agent, reflecting a 37% year-over-year increase [7] - New features such as Compass Make-Me-Sell and One-Click Title & Escrow integration are driving engagement and transaction efficiency [7]

Core Insights - Ultra-high-net-worth individuals are increasingly investing in luxury real estate as a stable asset amidst global economic and geopolitical uncertainties [1][2] - The luxury real estate market is characterized by a demand for unique lifestyles, rare designs, and high-end amenities [2] Market Trends - The luxury real estate market remains strong at the top tier, even in areas where overall market activity has slowed [2] - Notable transactions in the first half of 2025 indicate a robust demand for ultra-prime properties globally [2] Significant Transactions - **Le Renzo, Monaco**: Sold for approximately $76.5 million, reflecting record prices in Monaco's luxury market, driven by the new Mareterra district [3] - **Woody Creek Ranch, Aspen, Colorado**: Sold for $58 million, marking Aspen's highest transaction of the year, highlighting demand for privacy and location [4] - **1140 South Ocean Boulevard, Manalapan, Florida**: Sold for $55.5 million, showcasing a shift in Manalapan's market towards ultra-luxury real estate [5] - **942 North Alpine Drive, Beverly Hills, California**: Sold for $51.75 million, indicating strong demand for high-end properties in Beverly Hills [6][7] - **Les Castelets, St. Barthélemy**: Sold for approximately $37.7 million, emphasizing the value of well-located land with approved building permits [8] - **Melanie Lane, Atherton, California**: Sold for $32.1 million, demonstrating resilience in the ultra-luxury segment despite market volatility [9] - **Princess Louisa Lodge, British Columbia**: Sold for approximately $22.9 million, offering a unique opportunity for a self-sustaining estate [10] - **Porsche Design Tower, Bangkok, Thailand**: Sold for approximately $19 million, setting a new benchmark in Bangkok's luxury residential market [11][12] - **110 Sheep Meadow Lane, Ketchum, Idaho**: Sold for $18.5 million, reflecting the ongoing popularity of the Sun Valley market among affluent buyers [13] - **960 17th Avenue South, Naples, Florida**: Sold for $18 million, highlighting the appeal of Southwest Florida's luxury market [14] Company Overview - Christie's International Real Estate has been a leader in marketing high-value real estate globally for over 30 years, operating through an invitation-only affiliate network [15]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Compass, Inc. due to higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected on July 30, with a consensus EPS estimate of $0.08, reflecting a +100% year-over-year change, and revenues projected at $2.05 billion, up 20.5% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 70.26% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading indicates a likely earnings beat, particularly when combined with a strong Zacks Rank [9][11]. Historical Performance - Compass has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +16.67% in the last reported quarter [12][13]. Overall Assessment - Despite a positive Earnings ESP of +28.55%, the stock's Zacks Rank of 4 complicates predictions of an earnings beat, suggesting that other factors should also be considered [11][16].

Group 1 - Compass, Inc. is the largest residential real estate brokerage in the United States by sales volume, as ranked by Real Trends for the fourth consecutive year in April 2025 [1][3] - The company will release its second quarter 2025 financial results after market close on July 30, 2025, followed by a conference call and webcast at 5:00 p.m. ET [1] - Compass provides a tech-enabled platform that supports residential real estate agents with cloud-based software for various functions, enhancing their efficiency and service delivery [1] Group 2 - The Compass network includes Christie's International Real Estate, which has over 100 independently owned brokerage affiliates in 50 countries and territories [1] - Investors are encouraged to monitor Compass' Investor Relations website for important disclosures and updates [2] - An audio recording of the upcoming conference call will be available for replay for 90 days after the event [3]