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The year has been rough for the real estate industry, but it hasn’t slowed down Compass, with the brokerage revealing Wednesday it saw metrics including revenue and agent count improve in the third quarter of 2024.
The company published the numbers in its Q3 earnings report. During the quarter, the New York-based brokerage earned $1.5 billion in revenue — an 11.7 percent improvement over the same period in 2023 — according to the report, which covers July, August and September of this year.
The company also revealed that transactions rose 16.1 percent year over year during the quarter, to 55,872, which happened even as “transactions declined by 1.9 percent for the entire residential real estate market,” the report notes.
Other improving metrics for the company included principal agent count, which rose 20 percent year over year to 17,542. The report states that retention among principal agents stood at 97.8 percent in Q3.
The quarter also saw Compass bring in $32.8 million in positive free cash flow. It was the third consecutive quarter the company managed to see positive free cash flow. The metric is significant because Compass has in previous quarters made it a goal to achieve positive free cash flow, which is a measure of how much money is coming into the business versus how much is going out.
Compass did still lose money in the quarter, suffering a net loss of $1.7 million. However, that, too, represents a year-over-year improvement compared to the $39.4 million net loss the company suffered in the third quarter of 2023.
Robert Reffkin
In the report, Compass CEO Robert Reffkin noted that despite a “challenging environment” for the housing business, Compass continues “to grow faster than the market.” He also predicted even stronger numbers in the near future.
“When the market recovers,” Reffkin continued, “we believe the combination of our cost discipline and structural advantages, which include our end-to-end proprietary technology platform, national scale, network of top agents and depth of inventory, positions Compass to capture significant upside at attractive unit economics.”
Compass has in recent days projected a bullish attitude about its market position. The same day that the company reported earnings, for example, Inman published an interview with Rory Golod, the company’s president of growth and communications. In the interview, Golod said that the company is seeing strong recruiting numbers and indicated the company is well-positioned to deal with an array of challenges.
The Q3 numbers the company reported Wednesday suggest that such sentiments are founded in reality. The recruiting numbers, in particular, are noteworthy because the slow market of the past few years has intensified competition for top talent — and because not every brokerage has managed to significantly grow its headcount of late.
During an investor call Wednesday evening, Reffkin said that Compass specifically saw organic principal agent count growth of 750 in Q3 – the best the company has done since 2021.
Also on the call, Reffkin argued that the worst of the market “is behind us,” but added that he believes Compass can pull ahead even if current conditions drag on.
Heading into Wednesday’s earnings report, shares in Compass were trading in the mid-$5 range. That was up slightly for the day but a significant improvement compared to six months ago, when shares were trading in the low-$3 range.
Compass shares surged in after-hours trading following the publication of the Q3 earnings report.
Credit: Google
Compass had a market cap of about $2.8 billion as of Wednesday afternoon.
The brokerage last reported earnings in July. At the time, Compass posted what it described as a best-ever performance. Revenue in Q2 came in at $1.7 billion — a 14 percent increase compared to the same period in 2023. The company attributed the higher second-quarter revenue to an 11.4 percent increase in transactions, with the report noting that the uptick happened despite a decline in the overall market.
During his investor call, Reffkin concluded his prepared remarks by discussing Clear Cooperation, a National Association of Realtors rule requiring agents to put their listings in their NAR-affiliated MLS within a day that they start marketing those properties. Reffkin — who has been an outspoken critic of the rule — said on the call that Clear Cooperation infringes on the rights of homesellers and disadvantages their listings.
During a question and answer portion of the call, Reffkin added that agents “are infuriated across the country” about the rule.
Compass has been aggressive in pushing NAR to abandon the rule. So far, NAR hasn’t taken action beyond discussing the situation. But Reffkin said during Wednesday’s call that “if not removed by NAR, we believe Clear Cooperation will be removed through the courts.”
Update: This story was updated after publication with additional information from Compass’ earnings report, further context on recent trends, and commentary from the company’s Wednesday evening investor call.
