New York, NY - October 30, 2024 - Compass, Inc. (NYSE: COMP) (“Compass” or “the Company”), the largest residential real estate brokerage in the United States by sales volume for the third year in a row, announced its financial results for the third quarter ended September 30, 2024. 

“In what remains a challenging environment for the real estate market, we grew Adjusted EBITDA significantly year-over-year and delivered a substantial improvement in free cash flow. Our results this quarter put Compass in a position to deliver meaningful Adjusted EBITDA for 2024 and to be free cash flow positive for the full year despite a multi-decade low for existing home sales, demonstrating our ability to generate significant free cash flow as the market makes its way to mid-cycle levels,” said Robert Reffkin, Founder and Chief Executive Officer of Compass. “We continue to grow faster than the market – third quarter transactions increased 16.1% year-over-year versus a market that declined 1.9% as we grew our Number of Principal Agents 20% year-over-year and increased our quarterly market share to 4.80% in Q3 2024 from 4.31% in Q3 2023. The third quarter was also our strongest quarter in the last four quarters for quarterly principal agent retention at 97.8%.”

Reffkin continued, “When the market recovers, we believe the combination of our cost discipline and structural advantages, which include our end-to-end proprietary technology platform, national scale, network of top agents and depth of inventory, positions Compass to capture significant upside at attractive unit economics.” 

Kalani Reelitz, Chief Financial Officer of Compass said, “We continue to fortify our balance sheet and ended the quarter with a cash balance of $211.2 million. In Q3 2024, we generated positive operating cash flow of $37.4 million and free cash flow of $32.8 million. We reduced OPEX in the third quarter to $215.0 million, an improvement of $3.8 million from Q3 2023 OPEX of $218.8 million. Excluding the impact from M&A of $9.6 million, year-over-year OPEX reduced by $13.4 million. OPEX was also down sequentially Q3 2024 to Q2 2024 by $2.4 million even with Parks and Latter & Blum fully loaded into our operating costs. These results exhibit our commitment to control costs as we continue to outpace market growth.” 

Q3 2024 Highlights:

• Revenue in Q3 2024 increased by 11.7% year-over-year to $1.5 billion as transactions increased 16.1%, while transactions declined by 1.9% for the entire residential real estate market in the third quarter, as reported by the National Association of Realtors (“NAR”). Year-over-year organic revenue growth was 5.3%, while revenue growth attributable to M&A was 6.4%.  

• GAAP Net loss in Q3 2024 was $1.7 million, an improvement of $37.7 million from a net loss of $39.4 million in Q3 2023. The net loss for Q3 2024 includes non-cash stock-based compensation expense of $32.5 million, and depreciation and amortization of $20.5 million. 

• Adjusted EBITDA (a non-GAAP measure) was $52.0 million in Q3 2024 compared to $21.8 million in Q3 2023, an improvement of $30.2 million. 

• Operating Cash Flow / Free Cash Flow (a non-GAAP measure): During Q3 2024, operating cash flow was $37.4 million and free cash flow was $32.8 million. 

• Cash and cash equivalents at the end of Q3 2024 was $211.2 million, and there were no outstanding draws on our revolving credit facility.  

Q3 2024 Operational Highlights:

• National market share: In Q3 2024, quarterly market share was 4.80%, an increase of 49 basis points compared to Q3 2023 and a decrease of 33 basis points sequentially from Q2 2024, consistent with prior years’ Q2 to Q3 trend due to geographic mix. 

• Principal Agents : At the end of Q3 2024, the number of principal agents was 17,542 compared to 14,615 in Q3 2023, an increase of 2,927 or 20.0% year-over-year. Sequentially, when comparing Q3 2024 to Q2 2024, we had an increase of 545 principal agents or 3.2% (net of principal agent separations). We continued the trend of strong agent retention with 97.8% quarterly principal agent retention in Q3 2024, our best in four quarters. 

• Transactions: Compass agents closed 55,872 Total Transactions in Q3 2024, an increase of 16.1% compared to Q3 2023 (48,134). Transactions for the entire U.S. residential real estate market declined 1.9% for the same period, according to NAR. 

• Gross Transaction Value (“GTV”): GTV was $57.7 billion in Q3 2024, an increase of 13.4% compared to Q3 2023 GTV of $50.9 billion, while the entire U.S. residential real estate market GTV increased 1.9% for the same period, according to NAR.

• Platform: The Compass end-to-end proprietary technology platform allows real estate agents to perform their primary workflows, from first contact to close, with a single log-in and without leaving the Compass platform. Highlights from Q3 2024 include: 

  • Completed all platform integrations for our wholly-owned Title & Escrow businesses, helping to support our 700 basis point increase in attach rates over the past three quarters; 

  • Development of the client dashboard (to be branded ‘Compass One’) to facilitate collaboration between Compass agents and their clients in the course of a transaction (launched beta version in October 2024, with national launch expected in early Q1 2025);

  • Launched Compass Reverse Prospecting, which provides homesellers with exclusive insights into interested buyers looking at their listings among the 33,000+ Compass agents across the country and the millions of clients they represent. It tracks real-time updates on how often agents and their clients are looking at the listing, commenting, favoriting it, or sharing it; and

  • Driving adoption for Phase 1 of the Compass Make-Me-Sell tool with the full launch expected in late Q1 2025 – we believe this will help convert a portion of our 100+ million CRM contacts into passive ‘willing-to-sell’ inventory that will only be available to Compass agents.

Additional information can be found in the Company’s Q3 2024 Earnings Presentation, which can be found in the Investor Relations section of the Compass website at https://investors.compass.com. 

Q4 2024 and Full Year 2024 Outlook: 

• Revenue of $1.225 billion to $1.325 billion for Q4, or $5.47 billion to $5.57 billion for the full year.

• Adjusted EBITDA of $0 to $10 million for Q4, or $109 million to $119 million for the full year.

Full Year 2024 Outlook:

• Non-GAAP OPEX of $876 million to $896 million. Consistent with the prior quarter, the midpoint of this range equates to $850 million for the Company’s “core” OPEX plus $15 million for 2023 accretive M&A, plus $21 million for 2024 accretive M&A.

Expects to be free cash flow positive for the full year 2024.