Compass(US:COMP)2022-08-14 16:00Company Overview - As of June 30, 2022, Compass had over 28,000 agents on its platform, with an average of 12,979 principal agents, representing a 22.1% increase from the same period in 2021[156]. - The company completed its IPO on April 6, 2021, raising $438.7 million from the sale of 26.3 million shares at $18.00 per share[152]. - The ongoing COVID-19 pandemic has not adversely impacted Compass's business and financial results for the three and six months ended June 30, 2022[163]. Market Performance - During the three months ended June 30, 2022, Compass agents closed 66,846 total transactions, a 1.7% increase compared to the same period in 2021, while the gross transaction value remained flat at $76.8 billion[157]. - The gross transaction value for both the three months ended June 30, 2022, and 2021 represented 4.9% of residential real estate transacted in the U.S.[158]. - Macroeconomic conditions, including rising inflation and increasing mortgage interest rates, contributed to a slowdown in the U.S. residential real estate market during the first half of 2022[164]. - The residential real estate market is seasonal, with transaction volume typically highest in spring and summer, impacting Compass's revenue and operating expenses[159]. Financial Performance - Revenue for the three months ended June 30, 2022, was $2,020.1 million, an increase of $68.7 million or 3.5% compared to the same period in 2021[170]. - Revenue for the six months ended June 30, 2022, was $3,417.1 million, an increase of $351.8 million or 11.5% compared to the same period in 2021[170]. - Net loss for the three months ended June 30, 2022, was $(101.1) million, compared to $(7.1) million for the same period in 2021[170]. - Net loss attributable to Compass, Inc. for the three and six months ended June 30, 2022, was $(101.2) million and $(289.2) million, compared to $(7.1) million and $(219.5) million in the same periods of 2021[201]. - Adjusted EBITDA for the three and six months ended June 30, 2022, was $4.2 million and $(92.5) million, a significant decrease from $71.3 million and $40.7 million in the same periods of 2021[203]. Expenses - The company incurred $18.9 million in restructuring costs during the three months ended June 30, 2022, primarily due to severance and lease termination costs[151]. - Commissions and other related expenses for the three months ended June 30, 2022, were $1,652.9 million, an increase of $62.5 million or 3.9% compared to the same period in 2021[171]. - Sales and marketing expense increased to $154.9 million for the three months ended June 30, 2022, up $30.6 million or 24.6% year-over-year[174]. - Research and development expense reached $107.2 million for the three months ended June 30, 2022, up $33.7 million or 45.9% year-over-year[177]. - General and administrative expense decreased to $55.2 million for the three months ended June 30, 2022, down $4.2 million or 7.1% compared to the prior year[178]. Cash Flow and Financing - As of June 30, 2022, the company reported cash and cash equivalents of $430.5 million and an accumulated deficit of $1.9 billion[208]. - For the six months ended June 30, 2022, net cash used in operating activities was $120.3 million, primarily due to a net loss of $289.4 million adjusted for non-cash charges of $175.7 million[213]. - The company expects operating losses and negative cash flows to continue as it invests in business expansion, research and development, and sales and marketing activities[209]. - The company had a total outstanding balance of $30.4 million under its Concierge Facility and Revolving Credit Facility as of June 30, 2022[229]. - The company anticipates future capital requirements will depend on growth in the number of agents, geographic expansion, and investments in technology[210]. Restructuring and Liabilities - As of June 30, 2022, the remaining liability related to restructuring activities was $10.4 million, mainly for unpaid severance costs[151]. - The company is contingently liable for escrow and trust deposits totaling $259.0 million as of June 30, 2022[220]. Interest and Investment - Interest expense for the three and six months ended June 30, 2022, was $0.7 million and $1.4 million, representing a 16.7% and 27.3% increase compared to the same periods in 2021[183]. - Investment income, net was $0.3 million for the three months ended June 30, 2022, reflecting a 100% increase from the previous year[182]. - A 100-basis point increase or decrease in market interest rates would not result in a material change to the company's interest expense based on outstanding amounts[229].