Compass delivered its strongest third quarter to date, with management attributing the outperformance to accelerated agent recruiting, increased transaction volumes, and robust performance in its title and escrow services. CEO Robert Reffkin highlighted the company's ability to outpace overall market growth in transaction counts, noting that Compass achieved record organic principal agent additions and improved operational efficiencies. Reffkin credited the integration of acquired businesses like Christie's International Real Estate for driving higher attach rates and margin gains, while also pointing to improved free cash flow as evidence of execution.
Is now the time to buy COMP? Find out in our full research report (it’s free for active Edge members).
Compass (COMP) Q3 CY2025 Highlights:
- Revenue: $1.85 billion vs analyst estimates of $1.79 billion (23.6% year-on-year growth, 3.2% beat)
- Adjusted EPS: $0.11 vs analyst estimates of $0.11 (in line)
- Adjusted EBITDA: $93.6 million vs analyst estimates of $69.37 million (5.1% margin, 34.9% beat)
- Revenue Guidance for Q4 CY2025 is $1.64 billion at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q4 CY2025 is $42 million at the midpoint, above analyst estimates of $29.68 million
- Operating Margin: -0.4%, in line with the same quarter last year
- Transactions: 67,886, up 12,014 year on year
- Market Capitalization: $4.50 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Compass’s Q3 Earnings Call
- Ryan McKeveny (Zelman & Associates) asked about the incremental EBITDA improvements and whether recent gains would carry into 2026. CFO Scott Wahlers clarified that the $50–$75 million EBITDA improvement is intended to set a new baseline for future profitability.
- Bernard McTernan (Needham & Company) questioned the nature of Compass’s integration with AI platforms like ChatGPT. CEO Robert Reffkin explained that while Compass AI 2.0 is integrated with OpenAI, referrals from ChatGPT are currently organic and driven by agent reputation.
- Christopher Kuntarich (UBS) inquired about the increase in expected agent additions. Reffkin attributed this to a strong pipeline of interested agents and the company’s reputation for supporting agent success amid changes in industry dynamics.
- Alec Brondolo (Wells Fargo) asked about the operational improvements possible in the franchise model versus owned operations. Reffkin stated that Compass’s platform is being adapted to serve franchise affiliates and will deliver similar efficiencies as in owned brokerages.
- Michael Ng (Goldman Sachs) sought clarity on operating expense management and legal costs. Wahlers said cost discipline is applied across the company, including leveraging offshore staffing and process automation, and legal expenses for ongoing litigation are included in guidance.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be monitoring (1) the rollout and adoption rate of Compass AI 2.0 across its agent base, (2) the integration progress and realized synergies from the Anywhere Real Estate merger, and (3) continued momentum in principal agent recruitment and retention. Successful execution in these areas will be critical for sustaining revenue growth and improving margins.
Compass currently trades at $8.82, up from $7.78 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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