Compass(US:COMP)2022-02-17 01:49Financial Data and Key Metrics Changes - For the full year 2021, revenue grew 73% year-over-year to $6.4 billion, with a three-year CAGR of 94% [33] - Adjusted EBITDA improved from a loss of $325 million in 2019 to a loss of $156 million in 2020, reaching positive adjusted EBITDA of $2 million in 2021 [33] - GAAP net loss for 2021 was $494 million, compared to a net loss of $270 million the previous year, primarily due to increased non-cash stock-based compensation [34] - Cash at the end of 2021 was $618 million, with an untapped $350 million revolver available [35] Business Line Data and Key Metrics Changes - The total number of agents grew from 7,400 in Q4 2018 to 26,300 in Q4 2021, a 3.5 times increase [17] - Commissions as a percentage of revenue improved by 130 basis points year-over-year [36] - Transactions grew by 20% in Q4 2021, aligning with expectations [36] Market Data and Key Metrics Changes - Market share increased to 5.6% in 2021, up from 1.1% three years ago, reflecting a 40% year-over-year increase [12] - The company expects to continue gaining market share, projecting a principal agent count increase of 2,600 to 2,800 in 2022 [42] Company Strategy and Development Direction - The company aims to achieve a 10% adjusted EBITDA margin by 2025, targeting over $1.2 billion in adjusted EBITDA [6][50] - Focus on integrating adjacent services into the transaction flow, with a market opportunity in adjacent services estimated at $140 billion annually [27] - The company plans to expand its Title & Escrow services and mortgage business, with expectations to offer mortgages in most markets by the end of 2022 [29] Management's Comments on Operating Environment and Future Outlook - Management anticipates strong market growth for 2022, despite tight inventories and potential moderation in market growth rates [10][38] - The company is committed to improving profitability and free cash flow, expecting to be free cash flow positive by 2023 [6][54] - Management expressed optimism about revenue growth, citing strong demand and favorable supply-demand dynamics in the housing market [10][14] Other Important Information - The company has a strong technology advantage, which is expected to drive agent productivity and operational efficiency [30] - The company is shifting its R&D focus towards lowering the cost to serve agents and enhancing adjacent services [26] Q&A Session Summary Question: Path of revenue less commission margin improvement - Management highlighted that agent cohort maturation and hiring agents with more attractive splits are key drivers for margin improvement [58] Question: Strong attach rates for Title in DC - Management noted that integrating KVS into the platform and leveraging agent referrals contributed to increased attach rates [61] Question: Market share goals and expansion opportunities - Management reported that market share has grown from less than 1% to 5.6%, exceeding original goals, with consistent gains across various markets [64] Question: Timeline for adjacent services and M&A - Management indicated that the launch of mortgage services has been accelerated, with plans to explore additional adjacent services [66] Question: Areas for improving execution - Management identified opportunities to automate processes and improve transaction management to enhance agent productivity [68] Question: 2025 guidance and capital deployment - Management expects attach rates for adjacent services to be in the 12% to 15% range, with ongoing capital deployment focused on market expansions and M&A opportunities [76][79]