Rise in transactions, agents drives strong Q3 for Compass
Revenue was also up, and CEO Robert Reffkin said top agents have been able to increase commissions “since they are now able to negotiate for themselves again.”
While the real estate market was decidedly lackluster this summer, Compass still managed to produce some solid earnings numbers.
The company reported revenue of $1.5 billion in the third quarter, up 11.7% year-over-year, as market share increased from 4.3% to 4.8%. Agent count also continued to climb, increasing 20% in the past year to 17,542.
Founder and CEO Robert Reffkin expressed optimism about where the company is headed, saying the brokerage is equipped to weather a continued slowdown, or take advantage of a recovery.
"Whether you have a bearish or bullish view on the housing market, we believe we are building a company that succeeds in any scenario," Reffkin told investors during the earnings call.
What Compass had to say
Asked why Compass is outperforming the market and adding agents, Reffkin said having technology and training already in place has allowed them to be more adaptable. Agents from smaller brokerages have been attracted to Compass, Reffkin said, because they haven't been getting the training they need during this period of change.
Industry rules may have changed, but so far, Reffkin said he's not seeing "any meaningful change" in commissions, which are still in line with historical Compass averages.
"We're hearing a number of top agents, for example, saying that they're now charging a stronger commission rate, more in their favor, since they are now able to negotiate for themselves again," Reffkin said, adding that policy changes are driving less skilled, part-time agents out of the business.
"It's much harder for agents without a lot of experience to compete," Reffkin said.
He also spent some time criticizing NAR's Clear Cooperation Policy, a topic he has been vocal about: "I'd love to be able to only go on Netflix and be able to see any TV show I want, but that's not the world. In a free and fair world, there's something called competition, and different companies come in and create different offerings," Reffkin said to investors about his opposition to the policy.
Shares of Compass stock jumped in after hours trading, rising from $5.56 to nearly $6.20 per share in the first two hours.
Key numbers
Revenue: $1.5 billion in the third quarter, an 11.7% increase year-over-year as transactions increased 16.1%.
Cash and cash equivalents: $211.2 million, with no draw from revolving credit.
Net income/loss: A net loss of $1.7 million in the third quarter, which is an improvement compared to the company's $39.4 million loss for the same period in 2023.
Adjusted EBITDA: $52 million in the third quarter, up from $21.8 million in Q3 2023.
Transactions: Compass agents closed 55,872 transactions in the third quarter, up from 48,134 for the same period a year ago.
Agent count: Average number of principal agents was 17,542 in the third quarter, a gain of nearly 3,000 from a year earlier.
Fourth-quarter outlook: The company expects revenue of between $1.225 billion to $1.325 billion, with an adjusted EBITDA of between zero and $10 million.
Notable moves
Earlier this month, the brokerage named Soham Bhonsle as head of investor relations. Bhonsle comes to Compass after working as a senior analyst for the financial services firm BTIG. He has also previously worked at Morgan Stanley and the Susquehanna International Group.
Compass also completed the platform integrations for its title & escrow businesses, and announced two product updates:
The launch of its reverse prospecting tool, which provides home sellers with insights into interested buyers.
In the first quarter of 2025, the launch of its Make-Me-Sell tool, designed to convert more of contacts in the "willing-to-sell" inventory category currently available to Compass agents.