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    COMP
    Earnings call· Mar 2026(Q1 FY26)

    Compass Q1 FY26 earnings call COMP

    May 5, 2026 Source

    Executive summary

    Compass Q1 FY26 — Synergy Targets Raised, Strong Q1 Outperformance, and AI Integration

    Compass delivered strong Q1 FY26 results, outperforming guidance on revenue and Adjusted EBITDA, driven by accelerated cost synergy realization and market share gains. The company is actively integrating the Anywhere transaction, focusing on agent productivity through technology and AI, and navigating market dynamics while prioritizing deleveraging the balance sheet.

    Highlights

    5

    • Increased cost synergy target to $500 million over 3 years, with $250 million already actioned by April 1.

    • Q1 pro forma revenue of $2.76 billion, up 7% year-over-year, exceeding the midpoint of guidance.

    • Q1 Adjusted EBITDA of $61 million, exceeding the high end of guidance ($15 million-$35 million).

    • Brokerage business outperformed the market for 20 consecutive quarters, with pro forma transactions up 2.6% YoY vs. market flat.

    • Compass.com monthly average users grew 38% YoY, becoming the 6th largest audience in real estate.

    Concerns

    3

    • Free cash flow was negative at $168 million in Q1 due to Anywhere transaction and integration costs.

    • Q2 free cash flow expected to be near breakeven or slightly negative due to timing of severance, interest payments, and legal settlements.

    • Average selling price decreased by 8% YoY to $978,000 due to Anywhere's lower ASPs.

    Guidance & targets

    11
    CategoryTargetConfidence
    Cost synergies to be actioned
    $300 million
    high materiality
    High
    Net cost synergies
    $500 million
    high materiality
    High
    In-year realized cost synergies
    $200 million
    high materiality
    High
    Consolidated revenue
    $4 billion to $4.2 billion
    high materiality
    High
    Consolidated Adjusted EBITDA
    $310 million to $350 million
    high materiality
    High
    Non-GAAP operating expenses
    $2.7 billion to $2.75 billion
    high materiality
    High
    Free cash flow
    positive
    high materiality
    Medium
    Weighted average share count
    755 million to 760 million shares
    medium materiality
    High
    Stock-based compensation
    not exceed $50 million
    medium materiality
    High
    Repayment of 9.75% notes
    full tranche
    high materiality
    High
    Q1 FY26 Revenue Guidance Range
    $2.55 billion to $2.75 billion
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Brokerage
    Pro forma GTV growth of 7.3% YoY compared to market up 1.5%. Average selling price decreased 8% YoY due to Anywhere's lower ASPs.
    Gross transaction value: $97.3 billionGross transaction value growth YoY: 7.3% pro formaAverage selling price: $978,000Commissions and other related expense as % of revenue: 81.4%Commissions and other related expense as % of revenue (Q1 FY25): 83.2%Commissions and other related expense as % of revenue (pro forma): 81.3%Commissions and other related expense as % of revenue (pro forma Q1 FY25): 81.0%
    		$2.467 billion7.1% pro forma——
    Franchise
    Outperformed housing market volume (up 1.5%) by 310 basis points. Sotheby's International Realty and Corcoran brands outperformed company average.
    Gross transaction value growth YoY: 4.6% pro formaOutperformance vs. housing market volume: 310 bps
    		—4.6% pro forma GTV——
    Integrated Services
    Title and escrow revenue was the primary driver. Purchase transaction growth outperformed overall housing market growth (0.2% YoY).
    Equity method income from mortgage JVs: 49% ownedRefinance transactions growth YoY: 100% pro formaPurchase transactions growth YoY: 4% pro forma
    		—11% pro forma revenue——

    Operational metrics

    58
    Cost synergies actioned (Year 1)
    $250 million82 days since transaction close
    as of April 1, 2026

    Previously the full year 1 target.

    Net cost synergies (3-year)
    $500 million
    3 years

    Increased from prior target of $400 million.

    In-year realized cost synergies (FY26)
    $200 million
    FY26

    Increased from prior expectation of $100 million.

    Increase in in-year realized OpEx synergy expectations
    $90 million
    FY26

    Compared to prior expectations.

    Increase in in-year realized CapEx synergy expectations
    $10 million
    FY26

    Compared to prior expectations.

    Adjusted EBITDA
    $61 millionup 280% YoY
    Q1 FY26

    Exceeded high end of $15M-$35M guidance range. $42M excluding $19M LTIP benefit.

    Adjusted EBITDA (Q1 FY25)
    $16 million
    Q1 FY25
    LTIP benefit to Adjusted EBITDA
    $19 million
    Q1 FY26

    Due to decrease in Compass' stock price.

    Transaction and integration expenses
    $183 million
    Q1 FY26

    Includes investment banking, legal fees, severance costs.

    Noncash depreciation and amortization expense
    $163 millionup from $29 million YoY
    Q1 FY26

    Driven by additional intangible and fixed assets from Anywhere transaction.

    Stock-based compensation expense (excluding one-time charge)
    $47 million
    Q1 FY26
    Deferred tax benefit
    $401 million
    Q1 FY26

    One-time noncash benefit related to reversal of valuation allowances on deferred tax assets.

    GAAP net income
    $22 millionvs GAAP net loss of $51 million YoY
    Q1 FY26
    Basic weighted average share count
    734 million shares
    Q1 FY26

    Slightly above guidance range of 720M-730M shares.

    Cash on balance sheet
    $484 millionup $285 million from year-end
    end of Q1 FY26
    Net proceeds from convertible debt offering
    $880 million
    Q1 FY26
    Cash used in Anywhere transaction
    $345 million
    Q1 FY26

    For payoff of revolver, net of cash acquired.

    Revolver capacity
    $500 million
    Q1 FY26

    No outstanding borrowings.

    P&L synergy realized in Q1
    $10 million
    Q1 FY26
    Remaining P&L synergy for Q2-Q4
    $120 million
    Q2-Q4 FY26

    Expected to be realized.

    OpEx inflation (typical)
    3% to 4%
    annual
    Interest cost savings from debt prepayment
    $50 million
    annual

    From prepaying 9.75% notes.

    Cash cost of debt redemption premium
    $25 million
    one-time

    For 9.75% notes, 4.78% over par.

    Pro forma revenue
    $2.76 billionup 7% YoY
    Q1 FY26
    Pro forma revenue (Q1 FY25)
    $2.58 billion
    Q1 FY25
    Organic revenue growth (excluding Anywhere)
    10.9%YoY
    Q1 FY26
    Organic revenue growth (Compass stand-alone)
    14.6%YoY vs Q1 FY24
    Q1 FY25
    Pro forma transactions growth
    2.6%YoY
    Q1 FY26

    Market was flat YoY.

    Pro forma GTV growth
    7.3%YoY
    Q1 FY26

    Market was up 1.5% YoY.

    Pro forma total agent adds (gross)
    3,503
    Q1 FY26

    Higher than Q4 2025 levels.

    Pro forma total agent retention
    94%flat QoQ
    Q1 FY26
    Pro forma agent retention (excluding 0 GCI agents)
    97%
    Q1 FY26
    Pro forma agent retention (excluding <$20k GCI agents)
    98%
    Q1 FY26
    Compass.com monthly average users growth
    38%YoY
    Q1 FY26

    Now 6th largest audience in real estate.

    Coming soon listings (Chicago metro)
    1,000
    since partnership launch
    Buyer inquiries from Redfin partnership
    3,000
    to date

    Sent back to listing agents, no referral fee.

    Leads from Rocket and Redfin
    1.2 million
    next 3 years

    Over 24,000 leads already given to agents.

    Most expensive home sold (Sotheby's International Realty)
    $350 million
    Q1 FY26

    Most expensive home in history of the world.

    Most expensive home sold (Coldwell Banker)
    $170 million
    Q1 FY26

    Most expensive home in history of Miami-Dade County.

    Corcoran Sunshine contract volume
    $1.5 billion
    Q1 FY26

    Strongest contract volume quarter in over 10 years.

    Coldwell Banker GCI retention rate (top 2 quartile agents)
    94.6%10-year high
    Q1 FY26

    Representing 82% of total GCI over trailing 12 months.

    Agent utilization (home sellers)
    91%
    2025

    Highest level in recorded history.

    Agent utilization (home buyers)
    88%
    2025

    Highest level in recorded history.

    Agent utilization (home sellers)
    90%
    2024
    Agent utilization (home buyers)
    88%
    2024
    Agent utilization (home sellers)
    85%
    2005
    Agent utilization (home buyers)
    77%
    2005
    For sale by owner listings
    5%
    2025

    Lowest level in recorded history.

    AI-driven OpEx savings (Q1)
    $2 million
    Q1 FY26

    From targeted AI workflow automations.

    AI-driven OpEx savings (annualized potential)
    $23 million
    annualized

    Part of overall cost synergy goal.

    New code produced by AI
    30% to 40%
    current

    Accelerating product development velocity by 20%.

    Anywhere Q1 revenue contribution
    $1.2 billion
    Q1 FY26
    Anywhere Q1 operating expenses (first 8 days excluded)
    $40 million
    Q1 FY26
    Anywhere capitalized employee/contract labor (historically)
    $80 million
    2025
    Existing home sales (trough scenario)
    4.1 million
    annual

    Scenario analysis, not guidance.

    Existing home sales (recovery scenario)
    4.8 million
    annual

    Scenario analysis, not guidance.

    Existing home sales (mid-cycle scenario)
    5.5 million
    annual

    Scenario analysis, not guidance.

    Existing home sales (upside scenario)
    6 million
    annual

    Scenario analysis, not guidance.

    Industry KPIs

    1
    MetricValueDetails
    Mortgage origination loan servicinghighest attach rate ever, highest attach quarter in 2.5 yearsN/A

    Orderbook & backlog

    1
    Coming soon listings (expected)80% of listingsfuture

    from mid-30s

    Expected to increase significantly in months ahead, similar to pre-Clear Cooperation levels.

    Deals & partnerships

    4
    AnywhereAcquisition of Anywhere's brokerage and franchise businesses

    Closed on January 9, 2026. Led to reclassification of operating segments and significant integration efforts.

    Rocket MortgageDigital mortgage partnership

    Rocket's prequalification experience embedded across all listings on compass.com.

    Redfin3-Phased Marketing option with 'coming soon' listings on Redfin

    Allows listing agents to do showings and open houses, unlike other options. Inquiries sent directly to listing agent.

    PeerageAcquisition of 51% common ownership interest in Peerage, a Sotheby's International Realty franchise

    Peerage was overlevered due to M&A prior to mortgage rate spikes. Transaction allowed financial restructuring.

    Risks & headwinds

    5
    Negative free cash flow in Q1Q1 FY26

    $168 million

    Mitigation: Expected to be FCF positive for balance of year, strong FCF in Q3/Q4.

    Potential negative free cash flow in Q2Q2 FY26

    close to breakeven or slightly negative

    Mitigation: Due to timing of severance, interest payments, and legal settlements (e.g., $54M NAR settlement).

    MLS fines for not following restrictive rulesongoing

    fined $5,000 and can lose access

    Mitigation: Advocating for seller choice and challenging MLS rules that override fiduciary duty.

    Elevated noncash depreciation and amortization expenseQ1 FY26 and future

    $163 million

    Mitigation: N/A (accounting impact from Anywhere acquisition)

    Agent attrition of non-productive agentsQ1 FY26, potentially near-term choppiness

    56% of shed agents had 0 production, 21% had <$20k GCI

    Mitigation: Strategic focus on productive agents; no meaningful impact on business production.

    What to watch in Q2 FY26

    5

    Anywhere agents' access to Compass technology

    Q2 FY26 / Q3 FY26
    CurrentRollout starting June 2026 for owned brokerage.
    TargetContinued rollout for owned brokerage agents, aiming for completion by early September.

    Why it matters

    Successful integration and adoption of Compass's technology platform by Anywhere agents is crucial for realizing synergy benefits and improving agent productivity across the combined entity.

    The Anywhere owned brokerage will get the technology starting next month and then more in each month following with everybody getting it by the first week of September, if not earlier.

    Q&A highlights

    10

    When will Anywhere agents get Compass tech and what's the expected uptake?

    Anywhere-owned brokerage agents will get access starting next month (June 2026) through September 2026. Franchise affiliates will start in January 2027, rolled out over 2 months.

    “The Anywhere owned brokerage will get the technology starting next month and then more in each month following with everybody getting it by the first week of September, if not earlier.”

    asked by Jason Helfstein · answered by Robert Reffkin

    2 min read7 chapters

    Detailed Narrative

    01

    Accelerated Synergy Realization

    Compass significantly accelerated its cost synergy targets post-Anywhere acquisition, increasing the 3-year target to $500 million and actioning $250 million within 82 days. This rapid progress is attributed to strong collaboration between management teams and is expected to drive $200 million in realized synergies in FY26, with $130 million impacting OpEx. The increase in synergy targets from $225 million at announcement to $500 million reflects growing confidence as more time elapsed and detailed work was completed.

    02

    Strategic Partnerships and Agent Leads

    The company's partnerships with Rocket Mortgage and Redfin are gaining traction, particularly with the 3-Phased Marketing option. In Chicago, approximately 1,000 'coming soon' listings have been launched, generating 3,000 buyer inquiries for agents without referral fees. These partnerships are also providing over 1.2 million leads to real estate professionals over 3 years, with 24,000 leads already delivered, contributing to recruiting momentum.

    03

    AI Strategy for Efficiency and Productivity

    Compass is leveraging AI both defensively and offensively. Defensively, AI is used to reduce OpEx, freeing up $2 million in Q1 and identifying $23 million in annualized efficiencies. Offensively, AI coding assistance accelerates product development by 20%, and Compass AI 2.0 is being integrated into agent workflows to streamline tasks, unearth business opportunities, and improve attach rates for title and mortgage services through predictive analytics.

    04

    Market Outperformance and Agent Focus

    The brokerage business has consistently outperformed the market for 20 consecutive quarters, with pro forma transactions up 2.6% YoY compared to a flat market. The company is strategically focusing on productive agents, with Q1 retention at 97% excluding agents with zero GCI and over 98% excluding agents with less than $20,000 GCI. This focus aims to drive healthy agent adds, improved retention, and productivity growth.

    05

    Anywhere Integration and Segment Reporting

    The Anywhere transaction, closed on January 9, was transformational. Compass is rapidly integrating the entities and has reclassified its operating segments into Brokerage, Franchise, and Integrated Services for clearer reporting. The integration includes consolidating title operations onto a single tech platform and scaling Compass's recruiting strategies across all brands. The company will not generally break out separate results for acquired Anywhere businesses going forward⏳.

    06

    Luxury Market Strength and Franchise Expansion

    The combined company demonstrated strong performance in the luxury segment, with Sotheby's International Realty selling a $350 million home and Coldwell Banker a $170 million home. The franchise segment is also expanding, with Christie's International Real Estate signing 8 new franchise agreements in Q1, marking its largest quarterly expansion. ERA and Better Homes and Gardens also executed their largest franchise sale and M&A transactions, respectively.

    07

    Agent Utilization and Market Dynamics

    Despite advancements in AI, agent utilization remains at historically high levels, with 91% of home sellers and 88% of homebuyers using a real estate professional in 2025. This compares to 85% of sellers and 77% of buyers in 2005, indicating that increased information availability drives demand for professional advice in complex, high-stakes transactions. For sale by owner listings are at a record low of 5%.

    AI-generated summary of the company’s earnings call. Not investment advice.