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Uncertainty in the housing market has failed to slow down Compass this year, with a new earnings report showing the brokerage’s revenue, transactions and agent count all made significant gains in the second quarter — results CEO Robert Reffkin described as a best-ever performance.
In an earnings report Wednesday, Compass revealed it brought in $1.7 billion in revenue between April and June. That’s a 14 percent increase compared to the second quarter of 2023. The company attributed the higher revenue to an 11.4 percent increase in transactions — a number the brokerage achieved even though, the report notes, “transactions declined by 3.3 percent for the entire residential real estate market.”
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The jump in revenue also helped Compass turn a profit of $20.7 million during Q2 — a turnaround from the $47.8 million net loss the company suffered during the same period a year earlier.
The new report also shows that at the end of the second quarter, Compass had a total of 16,997 principal agents. That’s up considerably from the 13,698 it had at the end of Q2 2023. The company noted in the report that it added “543 principal agents organically and approximately 2,375 principal agents from the acquisitions of Latter & Blum and Parks Real Estate in Q2 2024.”
Robert Reffkin
In a call with investors Wednesday afternoon, Reffkin described Q2 by saying “we had the best performance we ever had as a company.” In the report, he added that he was “particularly pleased” with the brokerage’s latest financial results.
“Capitalizing on the structural advantages created by our end-to-end proprietary technology platform, national scale, top agent network and exclusive inventory, we have positioned Compass for what we believe will be significant upside when the market begins to recover,” Reffkin said in the report.
In addition to revenue and transactions, the report further shows that Compass saw free cash flow of $40.4 million in the second quarter. That’s significant because Compass has a long-stated goal of becoming free cash flow positive. The company originally believed it would hit that target last year but, amid a tough market, ultimately missed. However, Q2 is the second consecutive quarter Compass has managed to have positive free cash flow, suggesting it may be on track to hit its goal this year.
During Wednesday’s investor call, Compass Chief Financial Officer Kalani Reelitz confirmed that the company expects to be free cash flow positive for all 2024. However, free cash flow will only be “slightly” positive in Q3 and is likely to be negative in Q4. Reelitz attributed these likely results to seasonality.
Heading into Wednesday’s earnings report, Compass shares were trading in the mid $4 range. That was down slightly for the day and up slightly for the week. But it was up significantly — about 24 percent — from where shares were at the beginning of the year.
Shares fluctuated but ultimately made significant gains in after-hours trading following the publication of Wednesday’s earnings report.
Credit: Google
Compass had a market cap of $2.17 billion as of Wednesday afternoon.
Compass last reported earnings in May. At the time, it revealed that it earned $1.05 billion in revenue between January and March. That number represented a 10 percent jump compared to the first quarter of 2023. In the May report, Compass attributed the higher Q1 revenue to a 7.1 percent increase in transactions.
Aside from financial numbers and agent counts, Wednesday’s report further states that Compass had a national market share of 5.13 percent in the second quarter of the year. The report describes that number as “an increase of 50 basis points compared to Q2 2023 and an increase of 37 basis points sequentially from Q1 2024.”
During his investor call, Reffkin said Compass wants to achieve 30 percent market share in its top 30 markets by 2026. The company calls this plan its “30-30 Vision” and, according to Reffkin, can achieve that objective thanks to various “structural advantages.” Those advantages include a unique tech platform, a national scale, a top agent network, and the “depth and breadth of our inventory,” according to Reffkin.
Reffkin also said Compass plans to make the company the “required destination for real estate,” with “more inventory than third-party websites.”
Compass’ website already includes a portal, which years ago caused some tension between the company and Redfin, which is also a portal-brokerage operator. However, in more recent years, Compass has largely been absent from the discussion of real estate portals and the so-called portal wars — which have become crowded thanks to the entrance of CoStar. Reffkin’s comments, however, suggest that Compass may have an appetite to vie for portal traffic after all.
Asked how close Compass is to achieving 30 percent market share in its top 30 markets, Reffkin said during the call that “we’re more than halfway there.”
Later during the investor call, Reffkin weighed in on antitrust commission lawsuits. Among other things, he said the settlements seem to have shown the benefits of working at a large real estate company, and that Compass is seeing increased interest from agents who want to join the brokerage.
Reffkin also said that since the National Association of Realtors agreed to settle multiple antitrust commission suits, there has not been a noticeable change in the number of sellers offering buyer agent commissions. Most sellers also continue to offer buyer agent commissions of 2 percent or more.
According to Reffkin, these findings suggest the commission suit settlements — and the August deadline for various new NAR rules — will not have a significant deleterious impact on real estate professionals, and that the biggest fears about the situation have “simply not materialized.”
“The data clearly shows,” Reffkin said, “that sellers continue to value incentivizing buyer agents.”
Update: This story was updated after publication with additional information from Compass’ earnings report, and with commentary from the company’s investor call.
