Sign in
CI

Compass, Inc. (COMP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue grew 28.7% YoY to $1.36B but landed near the low end of guidance; GAAP EPS improved to $(0.09) and Adjusted EBITDA reached a record positive Q1 at $15.6M, with free cash flow of $19.5M .
  • Versus S&P Global consensus, Compass delivered a small EPS beat but a revenue miss: EPS $(0.0246) vs $(0.0587)* and revenue $1.356B vs $1.424B*; management cited late-March macro/tariff volatility as the driver of revenue near the low end of guide .
  • Q2 2025 guidance: revenue $2.0–$2.15B and Adjusted EBITDA $115–$135M; FY 2025 non‑GAAP OPEX raised to $1.017–$1.042B to include recent M&A, while reiterating full‑year positive FCF .
  • Strategic execution continues: market share hit 6.0% (+125 bps YoY), organic share +82 bps, 700 organic principal agent adds in Q1, and early Christie's IRE integration tracking ahead of plan—key potential stock catalysts alongside strong Q2 guide and sustained FCF generation .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q1 Adjusted EBITDA and FCF; “first time we’ve ever achieved positive adjusted EBITDA in the first quarter” ($15.6M; FCF $19.5M) .
    • Share gains and recruiting momentum: market share 6.0% (+125 bps YoY), 700 organic principal agent adds, 96.6% quarterly retention; title/escrow attach up 695 bps YoY .
    • Christie's IRE integration and synergy progress ahead of plan, supporting margin mix and platform strategy .

  • What Went Wrong

    • Revenue near the low end of guidance; late‑March volatility tied to tariff discussions and lowest March existing home sales since 2009 pressured the exit of the quarter .
    • Excluding M&A, commissions as a percent of revenue increased 38 bps (mix impact from higher‑producing agents taking share), offset by favorable mix from Christie's IRE overall .
    • Q2 stock‑based compensation expected to step up to ~$55M (accounting method timing), and cash was used for Christie's ($150M cash plus $50M revolver), reducing Q1-end cash to $127M .

Financial Results

P&L and Cash Flow (oldest → newest)

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,054.1 $1,380.4 $1,356.2
GAAP Net Loss ($USD Millions)$(132.9) $(40.5) $(50.7)
GAAP EPS (Basic & Diluted)$(0.27) $(0.08) $(0.09)
Adjusted EBITDA ($USD Millions)$(20.1) $16.7 $15.6
Operating Cash Flow ($USD Millions)$8.6 $30.5 $23.1
Free Cash Flow ($USD Millions)$5.9 $26.7 $19.5

Expense Ratios, OPEX and Balance Sheet

MetricQ1 2024Q4 2024Q1 2025
Commissions & Other Related Expense (% of Revenue)81.8% 82.53% 81.6%
Non‑GAAP OPEX ex. Commissions ($USD Millions)$211.2 $224.4 $235.4
Cash & Cash Equivalents ($USD Millions)—$223.8 $127.0

Note: Adjusted EBITDA margin in Q1 2025 is approximately 1.2% (= $15.6M / $1,356.2M) based on cited figures .

Key KPIs – YoY (Q1)

KPIQ1 2024Q1 2025
Total Transactions (units)38,449 49,121
Gross Transaction Value ($USD Billions)40.1 52.4
Quarterly Market Share (%)4.75–4.8 approx. (context from 2024 progression) —6.0
Principal Agents (period‑end)14,591 20,656

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD Billions)$1.424*$1.356
EPS ($)$(0.0587)*$(0.0246)*

*Values retrieved from S&P Global.

Management commentary links the revenue shortfall to late‑March volatility (tariff discourse, lowest March existing home sales since 2009); despite this, EPS outperformed consensus .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025—$2.0B–$2.15B New
Adjusted EBITDAQ2 2025—$115M–$135M New
Non‑GAAP OPEXFY 2025$1.005B–$1.030B (incl. +3–4% vs 2024, +$10M 2024 wraparound, +$105M Christie's) $1.017B–$1.042B (adds ~$12M from Washington Fine Properties & TX title) Raised (reflects added M&A)
Free Cash FlowFY 2025Positive Positive Maintained
Stock‑Based CompensationQ2 2025—~ $55M expected (accounting timing; dilution unchanged) New
Weighted Avg. SharesQ2 2025—560–563M expected New

Earnings Call Themes & Trends

TopicQ3 2024 (Prev‑2)Q4 2024 (Prev‑1)Q1 2025 (Current)Trend
Macro/TariffsOutperforming market; cost discipline; attach improvements Guidance raised for 2024 EBITDA; resilient cash generation Late‑March volatility and tariff headlines pressured revenue to low end of guide Near‑term volatility acknowledged; still outgrowing market
NAR/Policy & “3‑Phase” MarketingReverse Prospecting launched; Compass One in development Compass One national launch targeted for early Q1’25 Strong defense of homeowner choice; 48.2% listings used 3‑phase; 19,393 homeowners; policy still allows office exclusives Adoption rising; narrative solidifies
Technology & PlatformT&E fully integrated; client dashboard in beta; Reverse Prospecting roll‑out Continued platform emphasis; cost and productivity focus Compass One national launch; One‑Click T&E on iOS; Make‑Me‑Sell traction Expanding features, higher attach
Title & Escrow Attach+700 bps over prior 3 quarters Continuous attach momentum Attach up ~695 bps YoY; One‑Click T&E adoption Rising attach; enhances unit economics
M&A/Christie’s IRE—Christie's acquisition announced/closing framework Closed Jan 13; integration ahead of plan; improving commission mix Accretive mix; ahead of plan
OPEX DisciplineOPEX down YoY; below guide; platform leverage Beat OPEX guide; reinvest selectively Organic OPEX growth still 3–4%; FY OPEX range raised for M&A Structural discipline maintained

Management Commentary

  • “Record Q1 free cash flow, record Q1 Adjusted EBITDA and revenue up 28.7% YoY…we continued to widen the gap against the industry” — CEO Robert Reffkin .
  • “Revenue was near the low end of our guidance…due to slowdown in the latter half of March…existing home sales in March were the lowest since 2009” — CFO Kalani Reelitz .
  • “First time we’ve ever achieved positive adjusted EBITDA in the first quarter…$15.6M…free cash flow $19.5M” — CFO Kalani Reelitz .
  • “Quarterly market share was 6.0%, +125 bps YoY…700 gross principal agents organically…attach rates up 695 bps YoY” — CEO Robert Reffkin .
  • “Christie’s integration is tracking ahead of our stated synergy goals” — CFO Kalani Reelitz .

Q&A Highlights

  • Macro/tariff timing: Management saw March volatility (and April tariffs) cause temporary deferrals; April tracked to expectations and Q2 guide embeds some volatility .
  • NAR/clear cooperation: Company emphasized homeowner choice; 3‑phase strategy remains compliant; most private exclusives ultimately reach MLS/portals (94%) and are often co‑brokered .
  • OPEX cadence: Expect seasonal step‑up in Q2 to be a good proxy for run‑rate; organic OPEX growth still targeted at 3–4% .
  • Recruiting: 700 organic principal agent adds in Q1; value proposition resonating amid competitor cost cuts .
  • Capitalization: Q1 cash $127M with $50M revolver draw largely tied to Christie's cash consideration; SBC expected to step up in Q2 due to accounting timing, not higher dilution .

Estimates Context

  • Q1 2025: Revenue $1.356B vs $1.424B consensus* (miss); EPS $(0.0246) vs $(0.0587) consensus* (beat). Management tied the revenue shortfall to late‑March macro/tariff volatility; EPS benefitted from OPEX control and mix .
  • Implications: Near‑term estimate revisions likely lower for revenue (timing) but Q2 guide ($2.0–$2.15B; $115–$135M Adjusted EBITDA) may support upward revisions to Q2 profitability and FY FCF resilience if execution persists .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution remains strong: record Q1 Adjusted EBITDA/FCF, sustained share gains, and robust recruiting/retention despite macro choppiness .
  • Q2 guide is constructive (revenue $2.0–$2.15B; Adjusted EBITDA $115–$135M), positioning the company for continued outperformance vs a flat-to-down market backdrop .
  • Mix tailwinds from Christie's IRE and integrated services (T&E attach up ~695 bps YoY) support margin potential over time, even as top-producer mix can pressure splits near term .
  • Organic OPEX discipline persists (3–4% growth target), though FY OPEX range increased to include recent M&A; the FCF‑positive FY outlook is maintained .
  • The 3‑phase marketing strategy and new platform features (Compass One, One‑Click T&E, Make‑Me‑Sell) deepen differentiation and may drive future lead conversion and attach .
  • Watch items: macro/tariff headwinds, Q2 SBC step‑up (accounting timing), and continued cash deployment/integration from M&A (Christie’s IRE) .
  • Near‑term trading: revenue miss vs consensus may cap near‑term upside, but strong Q2 guide, accelerating platform attach, and ahead‑of‑plan integration are potential positive catalysts into the next print .

Appendix: Additional Data Points

  • Balance sheet snapshot: Cash & cash equivalents $127M at 3/31/25; revolver $50M; total assets $1.54B; stockholders’ equity $637.9M .
  • Non‑GAAP OPEX walk: Q1 2025 non‑GAAP OPEX ex. commissions $235.4M vs $211.2M in Q1 2024; Q4 2024 was $224.4M .
  • Q1 2025 commission ratio: 81.6% vs 81.8% in Q1 2024 (improved 24 bps), with ex‑M&A +38 bps due to high‑producer mix; Christie's IRE favored mix .

Notes: Company “Segment” reporting not applicable; brokerage is the core revenue stream with growing contribution from integrated services (title & escrow). All non‑GAAP reconciliations are provided in the press release/8‑K exhibits .