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Compass, Inc. Reports First Quarter 2022 Results

Compass, Inc

Compass, Inc., a leading tech-enabled real estate brokerage, announces that revenue for the first quarter 2022 was $1.4 billion, an increase of 25% year-over-year.

The Compass technology and services platform contributed to year-over-year Total Transactions and Gross Transaction Value growth of 18% and 23%, respectively, for the first quarter. Market share increased to 5.8% over the last twelve months (“LTM”) up from 4.3% LTM in 2021 and increased to 6.1% in 1Q22, up from 5.6% in 4Q21.

We delivered $1.4 billion in revenue, a first quarter record for Compass,” said Robert Reffkin, Founder, Chairman, and CEO of Compass. “Compass agents have consistently demonstrated their ability to grow in a variety of market conditions and in the first quarter, they grew market share to 6.1%, our second highest market share quarter ever. This is even more impressive since the first quarter is typically our slowest volume quarter. Consistent with historical performance over the past four years, we expect to take even more share through the remainder of 2022.”

Reffkin continued, “The Compass platform has been a major factor in our ability to take share by attracting agents and helping them grow their business. We see the current macro uncertainty as an opportunity for us to extend our technology lead over the rest of the industry, creating an even wider moat. Most importantly, we have significant capacity to reduce spending as necessary, while continuing to grow our business, improve our cash position and drive positive free cash flow in 2023.”

As of the end of the first quarter, the Company had $476 million in cash and access to a $350 million revolver.

Net loss attributable to Compass was $188 million and Adjusted EBITDA loss was $97 million in the first quarter. A significant driver of the net loss was non-cash stock-based compensation expense of $64 million. The Company expects the first quarter to be its largest net loss quarter of the year, consistent with historical seasonality.

Additional information can be found in the Company’s 1Q 2022 Business Update and Supplementary Information Presentation on the Investor Relations section of the Compass website at https://investors.compass.com.

Outlook

2Q22 and FY22 Outlook:

2Q22:

  • 2Q22 Revenue expected to be $2.0 billion – $2.2 billion
  • 2Q22 Adjusted EBITDA of $0 to $40 million

FY22:

  • FY22 Revenue of $7.6 billion to $8.0 billion
  • FY22 Adjusted EBITDA of at least breakeven

2025 Targets:

  • FY25 Adjusted EBITDA Margin of 10% and minimum Adjusted EBITDA of $1.2 billion
  • FY25 Free Cash Flow Margin of at least 8-9% [^1]

We have not reconciled our guidance for Adjusted EBITDA to GAAP Net Loss because certain expenses excluded from GAAP Net Loss when calculating Adjusted EBITDA cannot be reasonably calculated or predicted at this time. Additionally, we have not reconciled our guidance for Free Cash Flow Margin because the components of free cash flow cannot be reasonably calculated or predicted at this time. Accordingly, reconciliations are not available without unreasonable effort.

1Q22 Financial Highlights:

  • Revenue increased by 25% year-over-year to a first quarter record of $1.4 billion as transactions increased 18%.
  • GAAP Net Loss attributable to Compass, Inc. was $188 million, compared to $212 million in 1Q21.
  • Adjusted EBITDA [^2] was $(97) million, compared to $(31) million in 1Q21.

1Q22 Operational Highlights:

Agents: Average Number of Principal Agents was 12,574, an increase of 398 from 4Q21.

Transactions: Compass agents closed a first quarter record 47,367 Total Transactions, up 18% year-over-year, compared to a (5)% decline in transactions for the residential real estate market [^3].

Gross Transaction Value (“GTV”) [^4]: GTV of $53.7 billion increased by 23% year-over-year. This was a first quarter record for Compass, reflecting strong transaction volume and higher average transaction value.

Markets: In 1Q22, Compass entered two new markets, bringing the total markets served to 71 at the end of the quarter. On a last twelve months’ basis, Compass national market share was 5.8% in 1Q22, up from 5.6% in 4Q21 and 4.3% in LTM 1Q21. In 1Q22 alone, Compass’ national market share was 6.1%, up from 5.2% in 1Q21.

1Q22 Operational Update:

Entire Transaction: In the near future, all Compass agents will be able to facilitate the entire real estate transaction — including offers, forms and e-signatures — on the Compass platform with no need to use third-party real estate software.

Title and Escrow: On May 11th, Compass acquired the Consumer’s Title Company of California. Licensed in every county in California, Consumer’s Title will dramatically expand Compass’ settlement services footprint across the state. Compass now offers Title and Escrow services in nine states plus Washington DC, with expanded coverage in California, covering nearly half of our Total Transaction volume, giving us opportunities to drive incremental revenue on each of our transactions. Compass’ Title & Escrow services were utilized on a mid-single digit percentage of our Total Transactions in 1Q22.

Mortgage: OriginPoint wrote its first mortgages in 4Q21 and expects to offer mortgage services across additional Compass markets by year-end 2022. OriginPoint has obtained required licenses in 26 states plus Washington DC and currently has over 30 loan officers operating in seven states plus Washington DC.

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