Compass flexes private inventory, market share as revenue soars 

Compass closed out 2024 with some notable wins: In the fourth quarter, the brokerage posted a 21% year-over-year increase in principal agents and huge revenue gains that exceeded the high end of the firm's updated guidance.

Revenue came in at $1.4 billion for Q4, up nearly 26% from the same period a year ago, while transactions increased by more than 24%. Compass also ended the year with more cash on hand compared to the prior quarter, though it remains in the red following its $444 million acquisition of @properties Christie's International Real Estate, which was finalized in January. 

During the earnings call on Feb. 18, Reffkin told investors that Compass will leverage Christie's as a franchise operation as the brand "has higher margins than Compass overall," and he spent considerable time discussing Compass' competitive advantages and aggressive push for private listings, highlighting its ongoing 3-phase marketing strategy and the launch of its Compass One client dashboard.

What Compass had to say

On expanding inventory and private listings: Reffkin said that as of February 16, roughly 35% of Compass' more than 22,000 total listings are in its Private Exclusives or Coming Soon channels, and about half of those properties are listed for over $1 million. 

"Depth of inventory, not breadth" is what will set Compass apart from its competitors, Reffkin explained.

"By growing our unique inventory and marrying that with our end-to-end platform, which has agent-level search and consumer search at a level that no other brokerage firm in the industry has, we believe that more and more buyers will search Compass.com and use Compass agents, as it will be known that Compass has more inventory than any other website or brokerage."

On NAR and Clear Cooperation: Reffkin also highlighted concerns about NAR's model and its Clear Cooperation Policy. 

"NAR's revenue model is based on the number of agents in the industry paying dues, and I believe they don't want large brokerages and top agents to gain market share, because it would result in less agents in the industry and less revenue from agent dues," Reffkin said.

Following the Aug. 17 practice changes, MLSs "in nearly half of our markets" are not enforcing the CCP, Reffkin noted. "As MLS CEOs increasingly realize the liability they face from enforcing this anti-competitive policy, the artificial market restraints that limited market share gains for the best agents and the best brokerages are now gone."

On competition with other brokerages: Reffkin said the NAR settlement and rule changes presented a "structural change in the brokerage industry that will favor Compass."

"As we look to 2025 and beyond, the gap between Compass and the industry will only accelerate," Reffkin said. 

"In the future, the free market will reward the best agents and the best brokerages with the highest pay, just like it does with the best lawyers and law firms. The best agents are going to thrive in the new future — they're going to gain more market share and earn more money, which is ultimately best for the consumer." 

Key numbers

Revenue: $1.4 billion in Q4, an increase of 25.9% year-over-year but slightly below the $1.5 billion reported for the third quarter.

Cash and cash equivalents: $223.8 million at the end of Q4, representing an increase from $211.2 million in Q3 and more than the $166.9 million for Q4 2023. 

Net income/loss: A net loss of $40.5 million in Q4, a significant improvement over the $83.7 million net loss reported in Q4 2023, but well above the net loss of $1.7 million reported in the third quarter of 2024.

Adjusted EBITDA: $16.7 million in Q4 2024, a turnaround from a loss of $23.7 million during the same period a year prior.

Transactions: Compass agents closed 50,411 total transactions in Q4 2024, up 24.1% compared to Q4 2023.

Agent count: The brokerage ended the year with 17,752 principal agents vs. 14,683 at the end of 2023, a 20.9% increase.

Q1 2025 outlook: The company expects revenue of between $1.350 billion to $1.475 billion, with an adjusted EBITDA of $11 million to $25 million.