Compass, Inc. Q3 FY2024 earnings call

• Compass grew market share, agent count, and Title & Escrow attach. Adjusted EBITDA in Q3 was $52 million, up 139% from Q3 2023.
• Recruited over 750 principal agents organically in Q3, highest since 2021. Agent retention was 97.8% in Q3, the strongest in 4 quarters.
• Title & Escrow business saw record attach rates, with 7 wholly-owned operations integrated. Plan to launch title operations in key markets over 18 months.
• Invested $100 million in technology platform in 2024, with tools like Reverse Prospecting and client dashboard launched.
• Structural advantages include end-to-end platform, national scale, network of top agents, and depth of inventory in local markets.

In Q3 2024, Compass' revenue was $1.5 billion, up 11.7% year-over-year. Transactions increased by 16.1% to 55,872, outpacing the overall market decline of 1.9%. Market share was 4.8%, up 49 basis points year-over-year. Principal agent count grew by 2,927 (20%) year-over-year, with 785 organic recruitments in Q3. Title & Escrow business had record attach rates, with 7 wholly-owned T&E operations integrated into the platform. OriginPoint, the joint venture mortgage affiliate, had Q3 as the best quarter with nearly 90% year-over-year increase in refi volume.

• Q4 2024 revenue expected to be $1.225 billion to $1.325 billion, adjusted EBITDA zero to $10 million.
• Full year 2024 revenue range $5.47 billion to $5.57 billion, adjusted EBITDA range $109 million to $119 million.
• OpEx range for 2024 remains $876 million to $896 million, expected to trend towards lower end.
• Expect free cash flow positive for full year 2024, but negative in Q4 due to seasonality.

• Market volatility affecting existing home sales. Impact of clear cooperation policy on marketing and homeowner choice. Potential challenges in integrating acquisitions and achieving growth targets.

Q: On commission rate topic, any change in transactions at lower commission rates?

A: No meaningful change to business since August 17 announcement. Anecdotally, some top agents charging stronger rates. Trends driving worst agents out of business, favoring Compass' professional agents.

Q: On clear cooperation policy, what fills the void if it goes away?

A: Compass will be known as defender of homeowner value and choice. Agents and homeowners will want to come to Compass for protection from mass exposure. Platform will help agents and homeowners market homes in ways that maximize value.

Q: On principal agent growth, what's driving strength?

A: Strong culture, technology advantage, training and support provided, and improved brand stability. Expect 700+ organic principal agent additions quarterly.

Q: On 30 for 30 program, when to achieve 30% market share?

A: Believe to achieve average 30% market share in top 30 cities exiting 2026, working to accelerate progress.