Compass(COMP) - 2025 Q3 - Quarterly Results

Financial Performance - Revenue in Q3 2025 increased by 23.6% year-over-year to $1.85 billion, meeting the high-end of guidance[1] - Adjusted EBITDA was $93.6 million, an increase of 80% from $52 million in Q3 2024, marking the highest Adjusted EBITDA for any Q3 period[4] - Operating cash flow grew 102% year-over-year to $75.5 million, with free cash flow increasing 124% year-over-year to $73.6 million[1] - Revenue for Q3 2025 was $1,846.0 million, a 23.5% increase from $1,494.0 million in Q3 2024[25] - Total operating expenses for Q3 2025 were $1,853.2 million, up from $1,497.4 million in Q3 2024, reflecting a 23.8% increase[25] - Net loss attributable to Compass, Inc. for Q3 2025 was $4.6 million, compared to a net loss of $1.7 million in Q3 2024[29] - Adjusted EBITDA for Q3 2025 was $93.6 million, representing an increase from $52.0 million in Q3 2024, with an adjusted EBITDA margin of 5.1%[29] - Free cash flow for Q3 2025 was $73.6 million, significantly higher than $32.8 million in Q3 2024[31] Agent and Transaction Growth - A record 851 gross principal agents joined Compass in Q3 2025, contributing to a total of 21,550 agents, a 22.8% increase year-over-year[8] - Total transactions closed by Compass agents increased by 21.5% year-over-year to 67,886, while organic transactions grew by 6.6%[8] - Quarterly market share rose to 5.63%, an increase of 83 basis points year-over-year, with organic market share growing by 32 basis points[8] - Gross Transaction Value (GTV) reached $70.7 billion, up 22.5% from $57.7 billion in Q3 2024[8] - Compass maintained a strong principal agent retention rate of 97.3% in Q3 2025[8] Assets and Liabilities - Total assets increased to $1,553.5 million as of September 30, 2025, compared to $1,178.0 million on December 31, 2024, reflecting a growth of approximately 32%[23] - Cash and cash equivalents decreased to $170.3 million from $223.8 million, a decline of about 24%[23] - Goodwill rose significantly to $479.4 million from $233.6 million, indicating an increase of approximately 105%[23] - Total liabilities increased slightly to $775.1 million from $765.6 million, showing a marginal growth of about 1.9%[23] - Stockholders' equity improved to $778.4 million from $412.4 million, representing an increase of approximately 88%[23] Operational Strategy - Adjusted EBITDA, non-GAAP OPEX, free cash flow, and organic revenue are utilized to assess performance alongside GAAP measures, providing a more consistent overview of operations[19] - The company continues to focus on integrating machine learning and artificial intelligence into its platform to enhance service delivery[23] - The company aims to expand operations and offer additional integrated services to create value for agents[23] - The company is actively pursuing acquisitions to enhance its existing operations and market position[23] - The company emphasizes the importance of maintaining relationships with third-party service providers to ensure operational reliability[23] Expenses and Compensation - Stock-based compensation expense for Q3 2025 totaled $59.6 million, compared to $32.5 million in Q3 2024[29] - GAAP sales and marketing expenses for Q3 2025 were $93.8 million, up from $88.2 million in Q3 2024, representing a 6.4% increase[33] - Non-GAAP operations and support expenses for Q3 2025 were $98.9 million, compared to $80.2 million in Q3 2024, reflecting a 23.7% increase[33] - GAAP research and development expenses increased to $67.4 million in Q3 2025 from $47.5 million in Q3 2024, a rise of 41.9%[33] - Non-GAAP general and administrative expenses for Q3 2025 were $29.0 million, up from $21.5 million in Q3 2024, indicating a 35.1% increase[33] - Total non-GAAP operating expenses excluding commissions for Q3 2025 reached $252.4 million, compared to $211.2 million in Q1 2024, marking a 19.6% increase[34] - Non-GAAP research and development expenses for the nine months ended September 30, 2025, were $114.7 million, up from $97.2 million in 2024, reflecting a 18.0% increase[33] - The company reported a significant increase in GAAP general and administrative expenses for the nine months ended September 30, 2025, totaling $100.9 million, down from $132.5 million in the same period of 2024, a decrease of 24.0%[33]