Compass, Inc.
For the period ended Mar 31, 2025. Filed May 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
COMP$10.21+10.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0001563190-24-000178
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001563190-25-000095
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 113 current paragraphs.
62 unchanged; 40 reworded; 11 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
We are a leading tech-enabled real estate services company that includes the largest real estate brokerage in the United States by sales volume, which primarily operates under the Compass brand operating in 38 states and Washington DC, with over 37,000 agents. We also provide integrated services to real estate agents and their clients, including title, escrow and mortgage. In January 2025, we acquired a company with the exclusive, worldwide right to operate, franchise and license the Christie’s International Real Estate brand. We refer to the independently operated brokerages that license the Christie's International Real Estate brand name as "affiliates." Christie’s International Real Estate is among the world’s premier global luxury real estate brands with over 100 independently operated brokerages in over 50 countries and territories.
Current report
Our technology offerings provide a strong foundation for agents and empower them to deliver exceptional service to their clients. Agents utilize our technology offerings to grow their businesses, save time and manage their businesses more effectively.
Current report
Compass One, an all-in-one client dashboard, launched in February 2025, provides a client-facing version of the Compass platform to consumers, allowing agents’ clients to have a differentiated experience where they can access the tools, services and advantages Compass offers to manage their homeownership journey.
Current report
Operating Expenses
Current report
Operations and support expense was $96.7 million during the three months ended March 31, 2025, an increase of $17.7 million, or 22.4%, compared to the prior year period. Included in Operations and support expense were non-cash expenses related to stock-based compensation of $4.7 million for the three months ended March 31, 2025 and $3.7 million for the three months ended March 31, 2024. Operations and support expense, excluding such non-cash stock-based compensation expense, was $92.0 million, or 6.8% of revenue, for the three months ended March 31, 2025 and $75.3 million, or 7.1% of revenue, for the three months ended March 31, 2024. The increase in absolute dollars, excluding such non-cash stock-based compensation expense, was primarily driven by an increase in personnel-related costs resulting from the Company's recent acquisitions. The decrease of Operations and support expense, excluding such non-cash stock-based compensation expense, as a percentage of revenue was primarily related to the year over year increase in revenue outpacing the increase in expense.
Current report
Research and development expense was $49.9 million during the three months ended March 31, 2025, an increase of $2.9 million, or 6.2%, compared to the prior year period. Included in Research and development expense were non-cash expenses related to stock-based compensation of $12.9 million for the three months ended March 31, 2025 and $14.9 million for the three months ended March 31, 2024. Research and development expense, excluding such non-cash stock-based compensation expense, was $37.0 million, or 2.7% of revenue, for the three months ended March 31, 2025 and $32.1 million, or 3.0% of revenue, for the three months ended March 31, 2024. The increase in Research and development expense, excluding non-cash stock-based compensation expense, in absolute dollars was primarily driven by an increase in personnel and outside contractor costs. The decrease in Research and development expense, excluding non-cash stock-based compensation expense, as a percentage of revenue was primarily related to the year over year increase in revenue outpacing the increase in expense.
Current report
Depreciation and amortization expense increased $8.0 million, or 38.5%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 was primarily driven by an increase in the amortization of intangible assets related to the impact of acquisitions completed since the year ago period.
Current report
Our primary sources of liquidity and capital resources are cash flows from operations and our Revolving Credit Facility. Our cash requirements consist principally of working capital, general corporate needs, and mergers and acquisitions. We continue to invest in expanding our operations, including enhancements to our technology platform and growth of our market footprint, using available operating cash flows.
Current report
As of March 31, 2025, we had cash and cash equivalents of $127.0 million and an accumulated deficit of $2.7 billion. We generated $121.5 million and $23.1 million in cash flows from operations for the year ended December 31, 2024 and the three months ended March 31, 2025, respectively. Additionally, we have a Revolving Credit Facility that matures in March 2026, which we can draw upon provided we maintain continued compliance with certain financial and non-financial covenants. See Note 5 - "Debt" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for further details. As of March 31, 2025, we had $50.0 million outstanding and $257.7 million available to be drawn under the Revolving Credit Facility. Further, we were in compliance with each of the financial and non-financial covenants. While our operating cash flows vary depending on the seasonality of the real estate business, we believe that the Company will have sufficient liquidity from cash on hand, its Revolving Credit Facility and future operations to sustain its business operations for the next twelve months and beyond.
Current report
Business Combinations
Current report
Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred.
Removed paragraphs (9)
Previous report
1 During the first quarter of 2024, the Company began to report its agent statistics as of the period end. The Company's Number of Principal Agents and year over year growth reported in this Form 10-Q is based on the quarter end count.
Previous report
Operations and support expense was $84.4 million and $246.5 million during the three and nine months ended September 30, 2024, an increase of $1.2 million, or 1.4%, and a decrease of $0.8 million, or 0.3%, compared to the prior year periods, respectively. Included in Operations and support expense were non-cash expenses related to stock-based compensation of $4.2 million and $12.3 million for the three and nine months ended September 30, 2024 and $4.5 million and $11.6 million for the three and nine months ended September 30, 2023, respectively. Operations and support expense, excluding such non-cash stock-based compensation expense, was $80.2 million, or 5.4% of revenue, and $234.2 million, or 5.5% of revenue, for the three and nine months ended September 30, 2024 and $78.7 million, or 5.9% of revenue, and $235.7 million, or 6.2% of revenue, for the three and nine months ended September 30, 2023, respectively. The fluctuation in absolute dollars, excluding such non-cash stock-based compensation expense, during the three and nine months ended September 30, 2024 remained relatively flat. The decrease as a percentage of revenue, excluding such non-cash stock-based compensation expense, during the three and nine months ended September 30, 2024 was primarily related to the increase in revenue compared to the prior year period.
Previous report
Research and development expense was $47.5 million and $141.9 million during the three and nine months ended September 30, 2024, an increase of $1.7 million, or 3.7%, and $1.8 million, or 1.3%, compared to the prior year periods, respectively. Included in Research and development expense were non-cash expenses related to stock-based compensation of $14.6 million and $44.7 million for the three and nine months ended September 30, 2024 and $11.4 million and $34.4 million for the three and nine months ended September 30, 2023, respectively. The increase in stock-based compensation expense for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by forfeitures incurred due to the workforce reductions taken in connection with our restructuring activities in the prior year with no comparable activity in the current year. Research and development expense, excluding such non-cash stock-based compensation expense, was $32.9 million, or 2.2% of revenue, and $97.2 million, or 2.3% of revenue, for the three and nine months ended September 30, 2024 and $34.4 million, or 2.6% of revenue, and $105.7 million, or 2.8% of revenue, for the three and nine months ended September 30, 2023, respectively. The decrease in Research and development expense, excluding non-cash stock-based compensation expense, in absolute dollars and as a percentage of revenue during the three and nine months ended September 30, 2024 was primarily driven by lower research and development related expense resulting from our cost reduction initiatives.
Previous report
Depreciation and amortization expense decreased $0.8 million, or 3.8%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 and decreased $5.8 million, or 8.5%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, depreciation and amortization expenses remained relatively flat. The decrease for the nine months ended September 30, 2024 was primarily driven by $5.3 million in accelerated depreciation for fixed assets, including leasehold improvements, furniture and fixtures related to office leases we exited during the nine months ended September 30, 2023 compared to $1.9 million in the current period. See Note 12 - "Restructuring Activities" in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.
Previous report
(1)During the first quarter of 2024, the Company began to report its agent statistics as of the period end. The Company's Number of Principal Agents and year over year growth reported in this Form 10-Q is based on the quarter end count.
Previous report
(1)Includes adjustments related to the change in fair value of contingent consideration and other adjustments related to acquisition consideration. See Note 3 - "Acquisitions" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Previous report
Since inception, we have generated negative cash flows from operations and have primarily financed our operations from net proceeds from the sale of convertible preferred stock and common stock. As of September 30, 2024, we had cash and cash equivalents of $211.2 million and an accumulated deficit of $2.6 billion.
Previous report
We expect that operating losses and negative cash flows from operations may continue in certain periods in the foreseeable future as a result of the current slowdown in the U.S. residential real estate market as described in more detail under the section entitled “—Impact of the Macroeconomic Conditions and Recent Industry Practice Changes on the U.S. Residential Real Estate Market and Our Business”. We believe our existing cash and cash equivalents, the Concierge Facility (which, as disclosed in the footnotes to the condensed consolidated financial statements, may be used to support our Compass Concierge Program) and the Revolving Credit Facility will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months and beyond.
Previous report
Our future capital requirements will depend on many factors, including, but not limited to, growth in the number of our agents and the associated costs to attract, support and retain them, our decision to resume expansion into new geographic markets, continued investment in integrated services and other new revenue streams, future acquisitions, the timing of investments in technology and personnel to support the overall growth in our business and the extent and duration of the current and any future slowdown in the U.S. residential real estate market. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. In the event that additional financing is required from outside sources, we may not be able to negotiate terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition and results of operations could be adversely affected. See the sections entitled “Risk Factors—Risks Related to Ownership of Our Class A Common Stock—We may need to raise additional capital to continue to grow our business and we may not be able to raise additional capital on terms acceptable to us, or at all” and “Risk Factors—Risks Related to Our Business and Operations—Covenants in our debt agreements may restrict our borrowing capacity or operating activities and adversely affect our financial condition” included in the 2023 Form 10-K.
Reworded paragraphs (40)
Previous wording
Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors of the Company approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc. The Company has been based in New York City since its incorporation.
Current wording
Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. The Company has been based in New York City since its incorporation.
Previous wording
Our business model is directly aligned with the success of our agents. We attract agents to our brokerage and partner with them as independent contractors that affiliate their real estate licenses with us, operating their businesses on our platform and under our brand. We currently generate substantially all of our revenue from commissions paid to us by our agents' clients at the time that a home is transacted on our platform. While integrated services comprise a small portion of our revenue to date, we believe we are well-positioned to capture meaningful revenue from integrated services as we continue to diversify our offerings within the real estate ecosystem.
Current wording
Our business model is directly aligned with the success of our agents. Our agents are independent contractors that associate their real estate license with us and choose to operate their businesses on our platform and under our brands. We currently generate substantially all of our revenue from the gross sales commissions that the agents earn from home sales and certain other fees, such as flat transaction commission fees. Gross sales commissions are typically based on a percentage of the home sale price. Integrated services and our affiliate business comprise a small portion of our revenue and earnings. We believe we are well-positioned to grow our integrated services and affiliate business and expect revenue and earnings for these businesses to grow as a portion of our overall revenue and earnings over the long-term.
Previous wording
We provide an end-to-end platform that empowers our residential real estate agents to deliver exceptional service to seller and buyer clients. Our platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. Our platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients. Additionally, we provide integrated services, such as title and escrow and mortgage, both of which are available on our platform. Compass agents utilize the platform to grow their businesses, save time and manage their businesses more effectively.
Current wording
Our end-to-end proprietary technology platform (the "Compass platform") allows real estate agents to perform their primary workflows, from first contact to close, with a single log-in and without leaving the platform. The Compass platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. The Compass platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients. Additionally, title and escrow and mortgage services are integrated and are available on the Compass platform.
Previous wording
We had over 33,000 agents on our platform as of September 30, 2024. A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform.
Current wording
We had over 37,000 agents on our platform as of March 31, 2025. A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform.
Previous wording
As of September 30, 2024, the Number of Principal Agents 1 was 17,5422, an increase of 2,927, or 20.0%, from September 30, 2023. The principal agent additions primarily relate to the Company's recent acquisitions of various residential real estate brokerages.
Current wording
As of March 31, 2025, the Number of Principal Agents was 20,6561, an increase of 6,065, or 41.6%, from March 31, 2024. The principal agent additions primarily relate to the Company's recent acquisitions of various residential real estate brokerages.
Previous wording
During the three months ended September 30, 2024, our agents closed 55,872 Total Transactions, an increase of 16.1% when compared to the three months ended September 30, 2023. For the three months ended September 30, 2024, the increase in total transactions was primarily attributable to the residential real estate brokerages acquired since the same period a year ago.
Current wording
During the three months ended March 31, 2025, our agents closed 49,121 Total Transactions, an increase of 27.8% when compared to the three months ended March 31, 2024. For the three months ended March 31, 2025, the increase in total transactions was primarily attributable to the residential real estate brokerages acquired since the same period a year ago.
Previous wording
Our Gross Transaction Value for the three months ended September 30, 2024 was $57.7 billion, an increase of 13.4% when compared to the three months ended September 30, 2023. Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as seasonality.
Current wording
Our Gross Transaction Value for the three months ended March 31, 2025 was $52.4 billion, an increase of 30.7% when compared to the three months ended March 31, 2024. Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as the residential real estate brokerages acquired since the same period a year ago.
Previous wording
For the three months ended September 30, 2024, our Gross Transaction Value represented 4.8% of residential real estate transacted in the U.S., compared to 4.3% for the three months ended September 30, 2023. We calculate our market share by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S. existing home sales as reported by the National Association of Realtors ("NAR"). Gross Transaction Value includes a de minimis number of new development and commercial brokerage transactions.
Current wording
For the three months ended March 31, 2025, our Gross Transaction Value represented 6.0% of residential real estate transacted in the U.S., compared to 4.8% for the three months ended March 31, 2024. We calculate our market share by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S. existing home sales as reported by the National Association of Realtors ("NAR"). Gross Transaction Value includes a de minimis number of new development and commercial brokerage transactions.
Previous wording
2 The Number of Principal Agents metric excludes approximately 1,200 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
Current wording
1 The Number of Principal Agents metric excludes approximately 1,000 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
Previous wording
A number of macroeconomic conditions, including high interest rates and the Federal Reserve Board policies, continue to contribute to the slowdown in the U.S. residential real estate market, impacting our business and financial results. Specifically, these conditions resulted in slowed consumer demand, declining home affordability and low inventory. Any further slowdown, additional challenging conditions or lack of improvement in the U.S. residential real estate market could have a significant impact on our business and financial results during the remainder of 2024 and beyond.
Current wording
A number of macroeconomic conditions, including high interest rates and the Federal Reserve Board's policies, have contributed to the slowdown in the U.S. residential real estate market, impacting our business and financial results. Specifically, these conditions resulted in slowed consumer demand, declining home affordability and low inventory. While the Federal Reserve Board began to ease interest rates during 2024 and the beginning signs of a housing market recovery emerged, any further slowdown, additional challenging conditions or lack of further improvement in the U.S. residential real estate market could have a significant impact on our business and financial results during the remainder of 2025 and beyond.
Previous wording
Additionally, as part of its nationwide class action settlement of the antitrust claims, NAR agreed to implement certain industry-wide practice changes, including, but not limited to, prohibiting buyer brokers' offers of compensation from being included in listings on Multiple Listing Services and requiring a buyer to enter into a written agreement with their agent that would set forth the buyer broker's fee before showing the buyer a property. These changes went into effect in mid-August. Early in the Spring, the Company entered into a class action settlement of similar antitrust claims and agreed to implement certain other practice changes. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Further, we believe the Department of Justice is continuing to focus on the industry, including the practice changes resulting from the NAR settlement.
Current wording
Additionally, as part of its nationwide class action settlement of the antitrust claims, NAR agreed to implement certain industry-wide practice changes, including, but not limited to, prohibiting buyer brokers' offers of compensation from being included in listings on Multiple Listing Services and requiring a buyer to enter into a written agreement with their agent that would set forth the buyer broker's fee before showing the buyer a property. These changes went into effect in August of 2024. Early in the spring of 2024, the Company entered into its own class action antitrust settlement and agreed to implement certain other practice changes. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Further, we believe the Department of Justice is continuing to focus on the real estate industry, including the practice changes resulting from the NAR settlement, which could result in additional practice-wide changes.
Previous wording
While we continue to assess the effects of the ongoing slowdown and the recent industry-wide changes on our business and financial results, the ultimate impact will depend on future developments, which are highly uncertain and difficult to predict, as well as the actions that we have taken, or will take, to minimize any current and future impact on our revenue, profitability, or liquidity.
Current wording
While we continue to assess the effects of the ongoing slowdown and the recent industry-wide changes on our business and financial results, the ultimate impact will depend on future developments, which are highly uncertain and difficult to predict, as well as the actions that we have taken, or will take, to minimize any current and future impact on our revenue, profitability, or liquidity. In the meantime, the significant cost reduction actions that we have taken since 2022 have reduced our operating expense levels to the point that we are able to consistently generate positive operating cash flow, aside from a limited number of seasonally slower transaction volume months during the year.
Previous wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Current wording
Comparison of the Three Months Ended March 31, 2025 and 2024
Previous wording
Revenue was $1,494.0 million and $4,248.7 million during the three and nine months ended September 30, 2024, an increase of $156.6 million, or 11.7%, and $460.1 million, or 12.1%, compared to the prior year periods, respectively. The increase for the three and nine months ended September 30, 2024 was primarily driven by an increase in the number of agents on our platform during 2023 and 2024 and a higher volume of transactions. The Number of Principal Agents as of September 30, 2024 grew to 17,542, an increase of 20.0% from the year ago period. For the three and nine months ended September 30, 2024, 6.4% and 5.1% of the revenue increases, respectively, were attributable to businesses recently acquired with no comparable revenue in the prior periods.
Current wording
Revenue was $1,356.2 million during the three months ended March 31, 2025, an increase of $302.1 million, or 28.7%, compared to the prior year period. The increase for the three months ended March 31, 2025 was primarily driven by an increase in the number of agents that joined our platform during 2024 and 2025, including those agents attributable to businesses acquired since April 2024. The Number of Principal Agents as of March 31, 2025 grew to 20,656, an increase of 41.6% from the year ago period.
Previous wording
Commissions and other related expense was $1,227.7 million and $3,495.3 million during the three and nine months ended September 30, 2024, an increase of $131.5 million, or 12.0%, and $384.2 million, or 12.3%, compared to the prior year periods, respectively. Included in Commissions and other related expense were non-cash expenses related to stock-based compensation of $11.6 million for the nine months ended September 30, 2023. The decline in stock-based compensation expense for the nine months ended September 30, 2024 when compared to the prior year period was due to the discontinuation of the Agent Equity Program in 2023. Commissions and other related expense excluding such non-cash stock-based compensation expense was $1,227.7 million, or 82.2% of revenue, and $3,495.3 million, or 82.3% of revenue, for the three and nine months ended September 30, 2024 and $1,096.2 million, or 82.0% of revenue, and $3,099.5 million, or 81.8% of revenue, for the three and nine months ended September 30, 2023, respectively. The increase in absolute dollars and as a percentage of revenue of Commission and other related expense, excluding non-cash stock-based compensation, for the three and nine months ended September 30, 2024 when compared to the prior year periods was primarily driven by increased revenue and the impact of recent acquisitions, which operate in markets with higher average commissions rates compared to our core brokerage.
Current wording
Commissions and other related expense was $1,106.1 million during the three months ended March 31, 2025, an increase of $243.8 million, or 28.3%, compared to the prior year period. The increase in absolute dollars of Commission and other related expense for the three months ended March 31, 2025 when compared to the prior year period was primarily driven by increased revenue. The decrease as a percentage of revenue was primarily driven by the impact of recent acquisitions which operate with more favorable average agent commissions splits compared to our core brokerage.
Previous wording
Sales and marketing expense was $88.2 million and $276.5 million during the three and nine months ended September 30, 2024, a decrease of $15.7 million, or 15.1%, and $56.0 million, or 16.8%, compared to the prior year periods, respectively. Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $7.8 million and $24.0 million for the three and nine months ended September 30, 2024 and $8.8 million and $26.4 million for the three and nine months ended September 30, 2023, respectively. Sales and marketing expense, excluding non-cash stock-based compensation expense, was $80.4 million, or 5.4% of revenue, and $252.5 million, or 5.9% of revenue, for the three and nine months ended September 30, 2024 and $95.1 million, or 7.1% of revenue, and $306.1 million, or 8.1% of revenue, for the three and nine months ended September 30, 2023, respectively. The decrease in absolute dollars and as a percentage of revenue, excluding non-cash stock-based compensation expense, during the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily due to a decrease in agent marketing costs and agent incentives.
Current wording
Sales and marketing expense was $91.7 million during the three months ended March 31, 2025, a decrease of $1.7 million, or 1.8%, compared to the prior year period. Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $6.8 million for the three months ended March 31, 2025 and $7.9 million for the three months ended March 31, 2024. Sales and marketing expense excluding such non-cash stock-based compensation expense, was $84.9 million, or 6.3% of revenue, for the three months ended March 31, 2025 and $85.5 million, or 8.1% of revenue, for the three months ended March 31, 2024. The decrease in Sales and marketing expense in absolute dollars, excluding non-cash stock-based compensation expense, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to a decrease in agent marketing costs and a reduction in cash-based agent incentives. The decrease in Sales and marketing expense as a percentage of revenue, excluding non-cash stock-based compensation expense, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by an increase in revenue with Sales and marketing expense remaining relatively flat for the three months ended March 31, 2025 as compared to the year ago period.
Previous wording
General and administrative expense was $27.4 million and $132.5 million during the three and nine months ended September 30, 2024, an increase of $3.2 million, or 13.2%, and $39.2 million, or 42.0%, compared to the prior year periods, respectively. General and administrative expense includes a charge of $57.5 million for the nine months ended September 30, 2024 in connection with the Antitrust Lawsuits, which is discussed in Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report. Also included in General and administrative expense were non-cash expenses related to stock-based compensation of $5.9 million and $15.3 million for the three and nine months ended September 30, 2024 and $13.3 million and $37.9 million for the three and nine months ended September 30, 2023, respectively. The decrease in stock-based compensation expense for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by the modification of the Company's Chief Executive Officer's performance-based RSUs at the end of 2023. General and administrative expense, excluding such non-cash stock-based compensation expense and the aforementioned litigation charge, was $21.5 million, or 1.4% of revenue, and $59.7 million, or 1.4% of revenue, for the three and nine months ended September 30, 2024 and $10.9 million, or 0.8% of revenue, and $55.4 million, or 1.5% of revenue, for the three and nine months ended September 30, 2023, respectively. The increase in absolute dollars and as a percentage of revenue, excluding such non-cash stock-based compensation expense and the litigation charge, during the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by a benefit incurred during the three months ended September 30, 2023 of $7.2 million for tax refunds resulting from a change in estimates for certain state taxes paid in prior years.
Current wording
General and administrative expense was $27.5 million during the three months ended March 31, 2025, a decrease of $54.7 million, or 66.5%, compared to the prior year period. General and administrative expense includes a charge of $57.5 million for the three months ended March 31, 2024 in connection with the Antitrust Lawsuits, which is discussed in Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report. Also included in General and administrative expense were non-cash expenses related to stock-based compensation of $6.0 million for the three months ended March 31, 2025 and $6.4 million for the three months ended March 31, 2024. General and administrative expense excluding non-cash stock-based compensation expense and the aforementioned litigation charge, was $21.5 million, or 1.6% of revenue, for the three months ended March 31, 2025 and $18.3 million, or 1.7% of revenue, for the three months ended March 31, 2024. The increase in absolute dollars excluding such non-cash stock-based compensation expense and the litigation charge, was primarily due to the fact that during the three months ended March 31, 2025, General and administrative expense included transaction expenses incurred in connection with recent acquisitions and other general and administrative costs incurred by the acquired businesses. On a percentage of revenue basis, excluding non-cash stock-based compensation expense and the litigation charge, General and administrative expense remained relatively flat as compared to the prior year period.
Previous wording
Restructuring costs in the three and nine months ended September 30, 2024 primarily consisted of costs associated with continued lease terminations. Restructuring costs in the three and nine months ended September 30, 2023 primarily consisted of costs associated with workforce reduction actions and lease terminations. See Note 12 - "Restructuring Activities" in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for more information.
Current wording
Restructuring costs during the three months ended March 31, 2025 primarily consisted of severance and other termination benefits for employees whose roles were eliminated and costs associated with lease terminations. Restructuring costs during the three months ended March 31, 2024 consisted solely of lease terminations costs. See Note 12 - "Restructuring Activities" in our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Previous wording
Investment income, net increased during the three months ended September 30, 2024 primarily as a result of an increase in our average short-term interest-bearing investments as compared to the three months ended September 30, 2023. Investment income, net decreased during the nine months ended September 30, 2024 as a result of a decrease in our average short-term interest-bearing investments as compared to the year ago period.
Current wording
Investment income, net decreased during the three months ended March 31, 2025 primarily as a result of a decrease in our average short-term interest-bearing investments as compared to the three months ended March 31, 2024.
Previous wording
Interest expense was $1.5 million and $4.6 million for the three and nine months ended September 30, 2024, respectively. The decrease from the prior year periods was primarily driven by the interest expense incurred on our Revolving Credit Facility as a result of balances outstanding in the prior year on the credit facility with no comparable balance outstanding during the three and nine months ended September 30, 2024.
Current wording
Interest expense was $2.3 million for the three months ended March 31, 2025. The increase from the prior year period was primarily driven by the interest expense incurred on our Revolving Credit Facility as a result of balances outstanding during the three months ended March 31, 2025 with no comparable balance outstanding in the prior year.
Previous wording
For the three and nine months ended September 30, 2024, Income tax benefit decreased by $0.2 million and increased by $0.2 million when compared to the three and nine months ended September 30, 2023, respectively. The changes primarily resulted from a decrease in acquisition activity and the recognition of deferred tax assets in India netted with state income tax expense, respectively.
Current wording
For the three months ended March 31, 2025, Income tax benefit increased by $3.1 million when compared to the three months ended March 31, 2024. The change primarily resulted from income tax benefit recognized in connection with the acquisition of Christie’s International Real Estate partially offset by international and state income tax expense.
Previous wording
Equity in income (loss) of unconsolidated entity
Current wording
Equity in income (loss) of unconsolidated entities
Previous wording
During the three and nine months ended September 30, 2024, Equity in income (loss) of unconsolidated entity was income of $0.5 million and a loss of $0.7 million, respectively, primarily from our mortgage joint venture, which was formed in July 2021.
Current wording
During the three months ended March 31, 2025, Equity in income (loss) of unconsolidated entities was income of $0.8 million, primarily from our mortgage joint ventures with Guaranteed Rate, Inc.
Previous wording
(2)Excludes approximately 1,200 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
Current wording
(1)Excludes approximately 1,000 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
Previous wording
(3)Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA, see the section titled “—Non-GAAP Financial Measures” below.
Current wording
(2)Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA, see the section titled “—Non-GAAP Financial Measures” below.
Previous wording
Our Total Transactions increased for the three months ended September 30, 2024 to 55,872, or 16.1%, and for the nine months ended September 30, 2024 to 154,711, or 11.9%, from the year ago periods. For the three and nine months ended September 30, 2024, the majority of the increase in total transactions was attributable to the brokerages acquired since the same periods a year ago.
Current wording
Our Total Transactions increased for the three months ended March 31, 2025 to 49,121, or 27.8%, from the year ago period. For the three months ended March 31, 2025, the majority of the increase in total transactions was attributable to the brokerages acquired since April 2024.
Previous wording
Our Gross Transaction Value for the three and nine months ended September 30, 2024 was $57.7 billion and $162.8 billion, representing an increase of 13.4% and 12.8% from the year ago periods, respectively. The increase for the three and nine months ended September 30, 2024 were primarily driven by an increase in the number of agents on our platform.
Current wording
Our Gross Transaction Value for the three months ended March 31, 2025 was $52.4 billion, representing an increase of 30.7% from the year ago period. The increase for the three months ended March 31, 2025 was primarily driven by an increase in the number of agents on our platform.
Previous wording
The Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform at the end of a given period. The Number of Principal Agents is an indicator of the potential future growth of our business, as well as the size and strength of our platform. We use the Number of Principal Agents, in combination with our other key metrics such as Total Transactions and Gross Transaction Value, as a measure of agent productivity.
Current wording
The Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform. The Number of Principal Agents is an indicator of the potential future growth of our business, as well as the size and strength of our platform. We use the Number of Principal Agents, in combination with our other key metrics such as Total Transactions and Gross Transaction Value, as a measure of agent productivity.
Previous wording
Our Number of Principal Agents for the three and nine months ended September 30, 2024 was 17,542, representing an increase of 20.0% from the year ago period primarily driven by the agents we acquired in 2024 from Latter & Blum Holdings, LLC and Parks Village Nashville, LLC. Our principal agents generate revenue across a diverse set of real estate markets in the U.S.
Current wording
Our Number of Principal Agents as of March 31, 2025 was 20,656, representing an increase of 41.6% from the year ago period primarily driven by the agents from businesses acquired since April 2024. Our principal agents generate revenue across a diverse set of real estate markets in the U.S.
Previous wording
Adjusted EBITDA is a non-GAAP financial measure that represents our Net loss attributable to Compass, Inc. adjusted for depreciation and amortization, investment income, net, interest expense, stock-based compensation expense, income tax (expense) benefit and other items. During the periods presented, other items included (i) restructuring charges associated with lease termination and severance costs, (ii) acquisition-related expenses related to adjustments to the fair value of contingent consideration and other forms of acquisition consideration and (iii) a litigation charge in connection with the Antitrust Lawsuits. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
Current wording
Adjusted EBITDA is a non-GAAP financial measure that represents our Net loss attributable to Compass, Inc. adjusted for depreciation and amortization, investment income, net, interest expense, stock-based compensation expense, benefit from income tax and other items. During the periods presented, other items included (i) restructuring charges associated with lease termination and severance costs and (ii) litigation charges in connection with the Antitrust Lawsuits. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
Previous wording
(2)Represent a charge of $57.5 million incurred during the three months ended March 31, 2024 in connection with the Antitrust Lawsuits. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Current wording
(1)Represents a charge of $57.5 million incurred during the three months ended March 31, 2024 in connection with the Antitrust Lawsuits. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Previous wording
Adjusted EBITDA was income of $52.0 million and $21.8 million during the three months ended September 30, 2024 and 2023, respectively. Adjusted EBITDA was income of $109.3 million and a loss of $15.2 million during the nine months ended September 30, 2024 and 2023, respectively. The improvement in Adjusted EBITDA during the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily a result of the impact of our cost reduction initiatives and an increase in revenue which was driven by an increase in the number of agents on our platform during 2023 and 2024.
Current wording
Adjusted EBITDA was income of $15.6 million and a loss of $20.1 million during the three months ended March 31, 2025 and 2024, respectively. The improvement in Adjusted EBITDA during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily driven by higher revenue resulting from an increased number of agents on our platform.
Previous wording
The following tables provide supplemental information to the Reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA presented above. These tables identify how certain Operating expenses related financial statement line items contained within the condensed consolidated statements of operations elsewhere in this Quarterly Report are impacted by the items excluded from Adjusted EBITDA (in millions):
Current wording
The following tables provide supplemental information to the Reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA presented above. These tables identify how each of the Operating expenses related financial statement line items contained within the condensed consolidated statements of operations elsewhere in this Quarterly Report are impacted by the items excluded from Adjusted EBITDA (in millions):
Previous wording
For the nine months ended September 30, 2024, net cash provided by operating activities was $91.0 million. The inflow was primarily due to a $114.1 million Net loss adjusted for $161.4 million of non-cash charges and cash inflows due to changes in assets and liabilities of $43.7 million.
Current wording
For the three months ended March 31, 2025, net cash provided by operating activities was $23.1 million. The inflow was primarily due to a $50.8 million Net loss adjusted for $59.6 million of non-cash charges and cash inflows due to changes in operating assets and liabilities of $14.3 million.
Previous wording
For the nine months ended September 30, 2023, net cash provided by operating activities was $12.8 million. The inflow was primarily due to a $236.3 million Net loss adjusted for $199.3 million of non-cash charges and cash inflows due to changes in assets and liabilities of $49.8 million.
Current wording
For the three months ended March 31, 2024, net cash provided by operating activities was $8.6 million. The inflow was primarily due to a $133.0 million Net loss adjusted for $55.9 million of non-cash charges and cash inflows due to changes in operating assets and liabilities of $85.7 million.
Previous wording
During the nine months ended September 30, 2023, net cash used in investing activities was $8.2 million consisting of $8.9 million in capital expenditures partially offset by $0.7 million of cash acquired, net of payments for acquisitions.
Current wording
During the three months ended March 31, 2025, net cash used in investing activities was $164.5 million consisting of $160.9 million in payments for acquisitions, net of cash acquired and $3.6 million of capital expenditures.
Previous wording
During the nine months ended September 30, 2024, net cash used in investing activities was $32.8 million consisting of $18.9 million in payments for acquisitions, net of cash acquired, $11.9 million of capital expenditures and $2.0 million for investments in an unconsolidated entity.
Current wording
During the three months ended March 31, 2024, net cash used in investing activities was $3.5 million consisting of $2.7 million in capital expenditures and $1.2 million for an investment in an unconsolidated entity partially offset by $0.4 million of cash acquired, net of payments for acquisitions.
Previous wording
During the nine months ended September 30, 2023, net cash used in financing activities was $146.5 million, primarily consisting of $150.0 million in net repayments of drawdowns on the Revolving Credit Facility, $17.9 million in taxes paid related to net share settlement of equity awards, $12.1 million in payments related to acquisitions, including contingent consideration and $4.0 million in net outflows from drawdowns and repayments on the Concierge Facility partially offset by $32.3 million in proceeds from the issuance of common stock in connection with the Strategic Transaction, $4.2 million in proceeds from the exercise of stock options and $2.5 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Current wording
During the three months ended March 31, 2025, net cash provided by financing activities was $44.6 million primarily consisting of $50.0 million in proceeds from a drawdown on the Revolving Credit Facility, $6.1 million in proceeds from the exercise of stock options, $1.8 million in net proceeds from drawdowns and repayments on the Concierge Facility and $1.3 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan, partially offset by $14.4 million in taxes paid related to the net share settlement of equity awards and $0.2 million in payments related to acquisitions, including contingent consideration payments.
Previous wording
During the nine months ended September 30, 2024, net cash used in financing activities was $13.9 million primarily consisting of $21.8 million in taxes paid related to the net share settlement of equity awards and $2.9 million in payments related to acquisitions, including contingent consideration payments, partially offset by $5.9 million in proceeds from the exercise of stock options, $2.7 million in net proceeds from drawdowns and repayments on the Concierge Facility and $2.2 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Current wording
During the three months ended March 31, 2024, net cash used in financing activities was $6.1 million, primarily consisting of $7.4 million in taxes paid related to the net share settlement of equity awards, $1.9 million in payments related to acquisitions, including contingent consideration payments, and $1.3 million in net repayments on the Concierge Facility, partially offset by $3.4 million in proceeds from the exercise of stock options and $1.1 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Previous wording
We administer escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. We are contingently liable for these escrow and trust deposits totaling $246.1 million and $120.0 million as of September 30, 2024 and December 31, 2023, respectively. We did not have any other off-balance sheet arrangements as of or during the periods presented.
Current wording
We administer escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. We are contingently liable for these escrow and trust deposits totaling $358.0 million and $147.1 million as of March 31, 2025 and December 31, 2024, respectively. We did not have any other off-balance sheet arrangements as of or during the periods presented.