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Uncertainty in the real estate market this year has failed to slow down Compass, with a new earnings report showing the brokerage’s revenue, transactions and agent count all grew significantly in the second quarter – CEO Robert Robert Reffkin called the results the best ever.
Compass revealed in its earnings report Wednesday that it generated $1.7 billion in revenue between April and June. Compared with the second quarter of 2023, this is an increase of 14%. achieved this number.
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The revenue growth also helped Compass achieve a profit of $20.7 million in the second quarter, reversing the company’s net loss of $47.8 million in the same period last year.
The new report also shows that as of the end of the second quarter, Compass had 16,997 primary agents. This is a significant increase from 13,698 at the end of the second quarter of 2023. Approximately 2,375 principal agents.
Robert Revkin
“We had our best results as a company,” Reifkin said in describing the second quarter during a conference call with investors Wednesday afternoon. He added in the report that he had updated the brokerage’s financials. The performance is “extremely satisfactory”.
“Leveraging the structural advantages created by our end-to-end proprietary technology platform, national scale, top-tier dealer network and exclusive inventory, we position Compass in a position that we believe will have significant leverage when the market begins to recover,” said Refkin. Products with upside potential.
In addition to revenue and transactions, the report further revealed that Compass had free cash flow of $40.4 million in the second quarter. This is important because Compass’ long-term goal is to be free cash flow positive. The company originally thought it would be able to achieve this goal last year, but ultimately failed to do so due to tough market conditions. However, the second quarter was Compass’ second consecutive quarter of positive free cash flow, suggesting it may be on track to hit its target for the year.
During a conference call with investors on Wednesday, Compass Chief Financial Officer Kalani Reelitz confirmed that the company expects to be free cash flow positive in 2024. Quarter may be negative. Rilitz attributes these possible outcomes to seasonality.
Compass shares were trading in the mid-$4 range when the company released its earnings report Wednesday. It dropped slightly on the day and rose slightly this week. But its stock price is up about 24% compared to where it was at the beginning of the year.
Shares were volatile following Wednesday’s earnings report, but ended up sharply higher in after-hours trading.
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As of Wednesday afternoon, Compass had a market capitalization of $2.17 billion.
Compass last reported earnings in May. At the time, the company revealed revenue of $1.05 billion between January and March. Compared with the first quarter of 2023, this number has grown by 10%.
In addition to financial data and agent numbers, Wednesday’s report further noted that Compass had a national market share of 5.13% in the second quarter of this year. The report described the figure as “a 50 basis point increase compared to the second quarter of 2023 and a sequential increase of 37 basis points compared to the first quarter of 2024.”
On an investor call, Refkin said Compass hopes to achieve 30% market share in its top 30 markets by 2026. , the company can achieve this goal thanks to various “structural reforms.” Those advantages include a unique technology platform, a nationwide, top-tier agent network and “the depth and breadth of our inventory,” Revkin said.
Refkin also said Compass plans to make the company a “desired destination for real estate” with “more inventory than third-party sites.”
Compass’s website already includes a portal that a few years ago caused some tension between the company and Redfin, also a portal broker-operator. In recent years, however, Compass has been largely absent from discussions of real estate portals and the so-called portal wars — discussions that have become more crowded with the addition of CoStar. However, Refkin’s comments suggest that Compass may be interested in competing for portal traffic.
Asked how close Compass is to gaining 30% market share in the top 30 markets, Refkin said on the call, “We’re more than halfway there.”
Later on a conference call with investors, Revkin weighed in on the antitrust commission’s lawsuit. Beyond that, he said, the settlement appears to show the benefits of working for a large real estate firm, and Compass is seeing growing interest from agents who want to join the brokerage.
Refkin also said there has been no significant change in the number of sellers offering buyer’s agent commissions since the National Association of Realtors agreed to settle multiple antitrust commission lawsuits. Most sellers also continue to offer buyer’s agents commissions of 2% or higher.
Revkin said the findings suggest that the August deadline for the commission lawsuit settlement and various new NAR rules will not have a significant detrimental impact on real estate professionals and that the biggest fears about the situation “simply have not materialized.” .
“The data clearly shows,” Refkin said, “that sellers still value incentivizing buyer representation.”
Update: This article was updated after publication to add additional information from Compass’ earnings report and comments from the company’s investor call.
Email Jim Dalrymple II
