New York, NY - August 7, 2023 - Compass, Inc. (NYSE: COMP) (“Compass” or “the Company”), the largest residential real estate brokerage in the United States by transaction volume, announced its financial results for the second quarter ended June 30, 2023. 

“I am pleased to say we are free cash flow positive in the second quarter of 2023,” said Robert Reffkin, Founder and Chief Executive Officer of Compass. “Additionally, national market share in Q2 2023 was 4.6% which marks the third consecutive quarter of market share gains, increasing 45 basis points over the period”.

“Compass continued to enhance its proprietary end-to-end platform with the launch of new features like Performance Tracker, Compass GPT integration as well as 1-click Title & Escrow. The non-GAAP Commissions expense as a percentage of revenue improved by approximately 38 basis points from the second quarter of last year when excluding the impact of the Agent Equity Program on the year ago period. High levels of principal agent retention continued with over 90% annualized retention in Q2 2023. Every month in the first half of the year, the number of principal agents the Company lost was less than the month before,” said Reffkin. 

“We had operating cash flow of $53 million and free cash flow of $51 million in Q2 2023. We have made up most of the free cash flow deficit from Q1 2023 and we believe we are in position to achieve our goal of being free cash flow positive for 2023,” said Kalani Reelitz, Chief Financial Officer. “We ended the second quarter with $335 million in cash and cash equivalents including a $150 million draw from our revolving credit facility.  Given our conviction on being free cash flow positive, in July we repaid the entire $150 million balance outstanding on the facility.” 

In the last four quarters, Compass significantly improved its non-GAAP operating expenses with a reduction in the annualized run rate of more than $500 million. It expects to achieve its goal of a $900 million annualized operating expense run rate in Q4 2023. Compass remains committed to the path to maintain its operating expenses at $900 million in 2024 and is focused on maintaining that level through 2025.

 Q2 2023 Financial Highlights:

  • Revenue decreased by 26% year-over-year to $1.5 billion as transactions declined 19% driven by macroeconomic factors, combined with a decrease in the price of the average Compass transaction which was in part attributable to a shift in mix involving fewer sales in high-end markets like California.  

  • Q2 2023 GAAP Net loss was $48 million, an improvement of 53% from a Net loss of $101 million in Q2 2022. The Net loss for Q2 2023 includes non-cash stock-based compensation expenses of $39 million, depreciation and amortization of $22 million, and a $16 million restructuring charge related to continued efficiency improvements. 

  • Adjusted EBITDA (a non-GAAP measure) was $30 million in Q2 2023, compared to $4 million in Q2 2022. This is an improvement of $26 million while revenue declined by 26% due to macroeconomic factors. 

  • Operating Cash Flow / Free Cash Flow (a non-GAAP measure): During Q2 2023, we delivered operating cash flow of $53 million and free cash flow of $51 million when considering capital expenditures.

  • Cash and cash equivalents at the end of Q2 2023 was $335 million, which includes $150 million of cash resulting from a draw of our revolving credit facility in Q4 2022.  The $150 million draw was repaid in July 2023.  

Q2 2023 Operational Highlights:

  • Platform: The Compass end-to-end technology platform provides real estate agents with the ability to perform their primary workflows, from first contact to close, with a single log-in and without leaving the Compass platform. Compass continued the roll out of its title and escrow business integration into the technology platform in Southern California by expanding the offering to San Diego. We expect to complete our expansion of this integration in Philadelphia, Washington DC, Maryland and Virginia by the end of 2023, and eventually roll out this integration feature to all the markets where we offer title and escrow services. 

  • National market share in Q2 2023 was 4.6%, up 13 basis points sequentially from Q1 2023. This marks the third consecutive quarter of market share gains, increasing 45 basis points over the period.

  • Agents: Average Number of Principal Agents was 13,633 for Q2 2023, an increase of 429 principal agents from Q2 2022 and up sequentially from Q1 2023. Compass continued to experience high levels of retention of principal agents with over 90%+ annual retention rate. Every month in the first half of the year, the number of principal agents we lost was less than the month before. July, while not yet closed, looks to continue the trend. The number of NAR agents is down from its peak of 1.6 million in October 2022.

  • Transactions: Compass agents closed 54,207 Total Transactions in Q2 2023, a decline of 19% compared to Q2 2022. Transactions for the entire U.S. residential real estate market declined 21% for the same period.

About Compass
Compass is the largest residential real estate brokerage in the United States by sales volume. Founded in 2012 and based in New York City, Compass provides an end-to-end platform that empowers its residential real estate agents to deliver exceptional service to seller and buyer clients. The platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionality, all custom-built for the real estate industry. Compass agents utilize the platform to grow their business, save time and manage their business more effectively. For more information on how Compass empowers real estate agents, one of the largest groups of small business owners in the country, please visit www.compass.com.