[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]

Group 1 - The stock of Compass, Inc. (COMP) is experiencing significant attention due to high implied volatility in the options market, particularly the Aug 15, 2025 $03.00 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in the stock's price, potentially due to an upcoming event [2] - Currently, Compass holds a Zacks Rank of 4 (Sell) in the Internet - Software industry, with no analysts increasing their earnings estimates for the current quarter, and three analysts revising their estimates downwards, leading to a consensus estimate drop from 12 cents to 8 cents per share [3] Group 2 - The high implied volatility surrounding Compass may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Core Insights - The Christie's International Real Estate 2025 Summit emphasized optimizing business and leveraging relationships as key themes [1] - The event gathered broker-owners and agents from 34 countries to network and celebrate successes [2] - The conference highlighted the luxury real estate network's expansion into nearly two dozen new markets in 2024 [3] Company Developments - Christie's International Real Estate co-CEOs discussed the network's accomplishments and future plans, including a partnership with Compass following its acquisition [3][4] - The partnership aims to enhance technology, marketing, and international referral opportunities while maintaining brand distinction [4] Awards and Recognition - Christie's International Real Estate Dubai and Park City received the 2025 Affiliate of the Year award for exceptional growth and innovation [7] - The Gavel of Greatness awards recognized affiliates and agents for excellence in various categories, including marketing and community leadership [8][9] Notable Speakers - The conference featured speakers from diverse backgrounds, including former Delta Airlines Chief People Officer and a renowned portrait photographer [5] Brand Positioning - Christie's International Real Estate operates as a distinct luxury brand under Compass, which is the largest residential real estate brokerage in the U.S. by sales volume [10]

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].

Core Viewpoint - Compass, Inc. reported a quarterly loss of $0.05 per share, which was better than the Zacks Consensus Estimate of a loss of $0.06, showing an earnings surprise of 16.67% [1] Financial Performance - The company posted revenues of $1.36 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.16%, compared to $1.05 billion in the same quarter last year [2] - Over the last four quarters, Compass has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - Compass shares have increased approximately 30.8% since the beginning of the year, while the S&P 500 has declined by 4.3% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $2.1 billion, and for the current fiscal year, it is $0.09 on revenues of $7.02 billion [7] - The estimate revisions trend for Compass is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Internet - Software industry, to which Compass belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]