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    COMP
    Earnings call· Jun 2026(Q2 FY26)

    Compass Q2 FY26 earnings call COMP

    Aug 4, 2026 Source

    Executive summary

    Compass Q2 FY26 — Record Revenue & Adjusted EBITDA, Accelerated Cost Synergies, and Strong Agent Outperformance

    Compass delivered a record second quarter, driven by strong revenue and adjusted EBITDA, significantly outperforming the broader real estate market. The company accelerated its cost synergy realization and made substantial progress on debt reduction. Strategic initiatives, including the rollout of its unified technology platform and the Rocket-Redfin partnership, are infusing competition into the real estate ecosystem and enhancing agent productivity, positioning Compass for continued growth and market share gains.

    Highlights

    5

    • Record Q2 revenue of $4.3 billion, up 14% year-over-year.

    • Record Q2 adjusted EBITDA of $363 million, almost triple prior year (stand-alone basis).

    • Brokerage business transactions up 7.4% year-over-year, outperforming the market (up 3.5%) for 21 consecutive quarters.

    • Net debt to adjusted EBITDA lowered by roughly one turn to 3.3x (from 4.2x in Q1 FY26).

    • Actioned $300 million in net cost synergies 5 months ahead of plan, now targeting $330 million for year 1.

    Concerns

    3

    • Commissions and other related expenses as a percentage of Brokerage segment revenue increased by 43 basis points to 82.2% (from 81.7% pro forma YoY) due to mix.

    • Gross agent adds in the quarter were 2,816, down from 3,503 in Q1, reflecting a shift in recruiting practices.

    • Q3 FY26 revenue guidance of $3.85 billion to $4.05 billion is lower than Q2 FY26 actual revenue of $4.3 billion.

    Guidance & targets

    20
    CategoryTargetConfidence
    Q3 FY26 Consolidated Revenue
    $3.85 billion to $4.05 billion
    high materiality
    High
    Q3 FY26 Consolidated Adjusted EBITDA
    $275 million to $305 million
    high materiality
    High
    Full-year 2026 Non-GAAP Operating Expenses
    $2.75 billion to $2.80 billion
    medium materiality
    High
    Full-year 2026 In-year realized net cost synergies
    $220 million
    high materiality
    High
    Full-year 2026 In-year realized OpEx synergies
    $150 million
    high materiality
    High
    Full-year 2026 In-year realized CapEx synergies
    $70 million
    medium materiality
    High
    Total actioned net synergy target (Year 1)
    $330 million
    high materiality
    High
    Total actioned net synergy target (long-term)
    More than $500 million
    high materiality
    Medium
    Q3 FY26 Basic weighted average share count
    767 million to 769 million shares
    low materiality
    High
    Q3 FY26 Free cash flow
    Positive
    medium materiality
    High
    Debt redemption of 9.75% notes
    $500 million
    high materiality
    High
    Net debt to adjusted EBITDA ratio
    Move into the 2s
    high materiality
    High
    Long-term Adjusted EBITDA (4.1M existing home sales)
    ~$1 billion
    high materiality
    Medium
    Long-term Unlevered Free Cash Flow (4.1M existing home sales)
    ~$750 million
    high materiality
    Medium
    Long-term Adjusted EBITDA (4.8M existing home sales)
    ~$1.5 billion
    high materiality
    Medium
    Long-term Unlevered Free Cash Flow (4.8M existing home sales)
    ~$1 billion
    high materiality
    Medium
    Long-term Adjusted EBITDA (5.5M existing home sales)
    $2 billion
    high materiality
    Medium
    Long-term Unlevered Free Cash Flow (5.5M existing home sales)
    $1.5 billion
    high materiality
    Medium
    Long-term Adjusted EBITDA (6M existing home sales)
    $2.5 billion
    high materiality
    Medium
    Long-term Unlevered Free Cash Flow (6M existing home sales)
    $2 billion
    high materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Brokerage
    Outperformed market GTV by 1000 bps. Revenue growth supported by AI boom in Northern California. Commissions and other related expenses as a percentage of Brokerage segment revenue increased by 43 basis points YoY pro forma due to mix.
    Gross transaction value: $155.2 billionTransactions growth: 7%Average selling price appreciation: 8% to just over $1 millionMarket GTV growth: 6%Agent retention: 95.5%Agent retention (excl. $0 GCI): 97.7%Agent retention (excl. <$20k GCI): 98.7%Commissions and other related expenses as % of revenue: 82.2%Compass stand-alone commission metric: flat YoYGross agent adds: 2,816
    		$3.96 billion15%—$377 million
    Franchise
    Outperformed market GTV by 570 bps, led by luxury brands Sotheby's International Realty and Corcoran.
    GTV growth: 11.7%Market GTV growth: 6%
    		$135 million7.6%—$87 million
    Integrated Services
    Driven by strong performance in title and escrow. Focus on unifying T&E operations to Compass's platform for efficiencies.
    Title and escrow transactions growth: 7.6%Purchase transactions growth: 6%Refi transactions growth: 25%Cartus new clients secured: 15
    		$211 million7.7%—$52 million

    Operational metrics

    26
    Cash on hand
    $694 millionup $210 million QoQ
    Q2 FY26 end
    Net debt to adjusted EBITDA
    3.3xdown from 4.2x in Q1 FY26
    Q2 FY26
    Non-GAAP Operating Expenses
    $699 millionflat year-over-year on a pro forma basis
    Q2 FY26

    Reflects full quarterly run rate of combined operations and modest increase in variable compensation accruals.

    Unallocated corporate expenses
    $153 million
    Q2 FY26

    Relate to corporate entity or shared across multiple operating segments (technology, finance, legal, HR, executive functions).

    GAAP Net Income
    $92 millionup from $39 million in Q2 FY25
    Q2 FY26

    Significant improvement despite increased depreciation and amortization, merger and integration expenses, and interest expense.

    Basic weighted average share count
    758 million
    Q2 FY26

    Within guidance range of 755 million to 760 million shares. Reflects full quarter weighting of Anywhere transaction shares.

    Net Operating Losses (NOLs)
    $1.8 billion
    future

    Will shield from federal and state taxes as taxable income is generated.

    Combined tax rate
    26%
    current
    Potential cash taxes avoided by NOLs
    $470 million
    future

    Based on $1.8 billion NOLs at a 26% combined tax rate.

    Cost to serve per transaction
    record low
    Q2 FY26

    Opportunity to continue lowering through greater utilization of AI and deploying best practices as back-office systems consolidate.

    AI savings and cost avoidance identified
    ~$8 million
    Q2 FY26

    Identified by FDEs (forward-deployed engineers) within business functions like transaction management, legal, and growth.

    New code produced by AI
    50% to 60%
    Q2 FY26

    Helping ship code faster and more efficiently.

    Home platform CSAT score
    82%
    Q2 FY26

    Received since rollout in pilot beta, considered strong in software industry.

    Rocket-Redfin leads received by agents
    >60,000
    since late Q1

    From Rocket-Redfin partnership.

    Rocket-Redfin "Coming Soon" listings delivered
    >20,000
    since late Q1

    To Redfin from Compass.

    Compass.com sessions growth
    111%YoY
    YoY

    Outpacing average sessions growth of 34% YoY on Compass.com, driven by high "Coming Soon" adoption.

    MLS rules allowing "Coming Soon" / "Private Exclusive"
    >90%
    by end of year

    Expected to allow sellers to market properties as they see fit.

    3-phase marketing strategy adoption
    approaching 57%
    most recent week

    Continuing to see an increase in adoption across the Compass brand.

    Franchise network Redfin "Coming Soon" preview participation
    65%
    late June
    Franchise agents opted into Redfin Direct listing tool
    40,000
    late June
    Agents with ability to create "Coming Soons"
    >180,000
    by end of Q3
    Mortgage JV profitability
    more than doubledYoY
    Q2 year-over-year

    Primarily due to strong volume growth and disciplined expense management.

    Short-term treasury yields
    mid-3%
    current

    On cash investments.

    Net debt
    $2.45 billion
    June 30
    2026 consensus adjusted EBITDA estimates
    ~$850 million
    FY26
    Anywhere NAR class action settlement liability
    $54 million
    Q2 FY26

    Remaining cash liability, not paid during Q2, expected to be paid later in 2026.

    Deals & partnerships

    2
    Rocket-RedfinStrategic partnership to integrate "Coming Soon" listings on Redfin's platform.

    Launched "Coming Soons" on Redfin in late Q1. Led to increased consumer traffic on Compass.com in markets with high adoption.

    AnywhereAcquisition of brokerage brands (Coldwell Banker, Corcoran, Sotheby's International Realty) and other assets.

    Acquisition completed in January. Integration of entities is progressing quickly, leading to combined operations.

    Capital programs

    1
    Cost Synergy Programunderway$500 million
    Period spend: $330 million
    Spent to date: $300 million
    Start: January 2026

    Benefit: $420 million expected through P&L, $80 million expected as CapEx synergies

    Achieved Year 1 target of $300 million 5 months ahead of plan. Now targeting $330 million for Year 1. Expect to achieve $500 million in less than 3 years and more than $500 million in 3 years.

    Risks & headwinds

    3
    Anti-competitive MLS rules and dominant portal practicesOngoing

    MLS fines up to $5,000 for marketing outside MLS.

    Mitigation: Robert Reffkin is actively working to infuse competition into MLS and portal ecosystems, supporting MLSs that compete and advocating for seller choice. Partnership with Rocket-Redfin is an example of driving competition.

    Market mix shift impacting brokerage segment marginsQ2 FY26

    Commissions and other related expenses as a percentage of Brokerage segment revenue increased by 43 basis points to 82.2% from 81.7% on a pro forma basis YoY.

    Mitigation: Due to mix (revenue growth in lower-margin markets or agents on higher split schedules); Compass stand-alone brand commission metric was flat YoY.

    Debt call provisions limiting early debt reductionUntil Q2 2027

    $500 million of 9.75% notes have no call provision until April 2027; 7% notes have a 1.75% call premium until April 2027.

    Mitigation: Company plans to continue building cash position and invest in short-term treasuries (mid-3% yields) until call provisions expire, then redeem debt. Net debt levels are reducing due to growing cash.

    What to watch in Q3 FY26

    5

    "Coming Soon" adoption for Compass Brokerage listings

    By end of Q3 FY26
    CurrentApproaching 57% of new listings (most recent week)
    Target80% of new listings

    Why it matters

    Indicates the success of the 3-phase marketing strategy and its potential to drive traffic and leads, impacting agent productivity and market share.

    By the end of the third quarter, I would expect 80% of Compass Brokerage listings to launch as a coming soon on Compass.com and Redfin and the total number of Coming Soons to build from there as we expand the offering to all of our brands.

    Q&A highlights

    5

    Update on "Coming Soon" adoption, especially after the Redfin partnership, and how network effects are materializing.

    Robert stated that "Coming Soon" adoption for new Compass Brokerage listings approached 57% in July, with an expectation to reach 80% by end of Q3. He highlighted Chicago's 111% YoY increase in Compass.com sessions due to "Coming Soon" inventory, outpacing the average 34% growth. He emphasized the "no downside" for agents and sellers using "Coming Soon" and "Private Exclusive" as price testing tools.

    “For all new listings, 57% of them start off as coming soon, where we believe that we're on a path to have 80% of all new Compass Brokerage listings start off as coming soon in August and September.”

    asked by Elizabeth Langan · answered by Robert Reffkin

    2 min read5 chapters

    Detailed Narrative

    01

    Record Q2 Performance and Market Outperformance

    Compass reported record Q2 FY26 revenue of $4.3 billion, a 14% year-over-year increase, and record adjusted EBITDA of $363 million, nearly tripling the prior year's stand-alone figure. The brokerage business significantly outperformed the market, with transactions up 7.4% year-over-year compared to the market's 3.5%, marking 21 consecutive quarters of outperformance for the Compass stand-alone brand. Gross transaction volumes (GTV) for brokerage were up 16% year-over-year, reflecting a 1000 basis point outperformance against the market's 6% growth.

    02

    Accelerated Cost Synergies and Integration

    The company achieved its entire Year 1 target of $300 million in net cost synergies five months ahead of schedule, now expecting to action $330 million by year-end. Realized in-year net cost synergies are projected to be $220 million, with $150 million impacting OpEx and $70 million reducing CapEx. The integration of Anywhere businesses is progressing rapidly, with a unified home platform technology now available to over 4,000 agents in pilot beta, receiving an 82% CSAT score.

    03

    Infusing Competition in Real Estate

    Robert Reffkin emphasized Compass's role in driving competition within the real estate industry, particularly against Multiple Listing Services (MLSs) and dominant portals. He highlighted the Rocket-Redfin partnership, which has generated over 60,000 leads for Compass agents and led to a 111% year-over-year increase in Compass.com sessions in Chicago, a market with high "Coming Soon" adoption. The company advocates for seller choice in marketing properties, noting that 90% of MLSs are expected to allow "Coming Soon" and "Private Exclusive" listings by year-end.

    04

    AI Strategy for Efficiency and Productivity

    Compass is leveraging AI to both reduce operating expenses and enhance agent productivity. AI is being deployed within business functions, identifying $8 million in savings and cost avoidance opportunities. Additionally, 50% to 60% of new code in the technology organization is now AI-produced. An AI assistant, integrated into the platform, helps agents orchestrate over 90 tools using natural language prompts, with early feedback indicating significant time savings and lead generation capabilities.

    05

    Financial Strength and Long-Term Potential

    Cash on hand increased by $210 million to $694 million, reducing net debt to adjusted EBITDA to 3.3x from 4.2x in Q1 FY26. The company expects to move into the 2s by year-end and plans to redeem $500 million of high-cost debt in Q2 2027. Robert Reffkin reiterated long-term earnings potential, projecting $1.5 billion in adjusted EBITDA and $1 billion in unlevered free cash flow at 4.8 million existing home sales, and up to $2.5 billion in adjusted EBITDA and $2 billion in unlevered free cash flow at 6 million home sales.

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