Compass Inc at Needham Technology & Media Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Great. So we are going to do a fireside chat. So, Robert, let me kick things off with sort of a high-level question on the minds of every investor in Compass and related names. What is the lay of the land in terms of the real estate market? You're coming off a quarter where you had a strong 1Q, where you did then caution for at least the near term in terms of some of the headwinds on the real estate market. So if you could maybe set the stage for us and give us some of the puts-and-takes that are impacting the real estate market, that would be helpful.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Robert, so two things. One is: do you believe you are more insulated relative to the other players in the market given where you play in terms of the upper end of that market? And secondly, was the weakness broad-based or sort of confined to select markets? Maybe if you could just break it down by segment including what you saw through the first quarter, then into the second quarter.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Great. That's helpful. And, Robert, maybe for people who are newer to the Compass story who are on the call today listening in, I thought it might be helpful to just give people a sense of what makes Compass different. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 6:15PM, COMP.N - Compass Inc at Needham Technology & Media Conference (Virtual) It's a pretty crowded market. I think Compass is now a well-known brand. But maybe it would be helpful to highlight your technology differentiation and why you're able to attract productive agents onto your platform and then retain them. And maybe any sort of metrics around that, I think, would also be helpful for investors listening in.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : That's a great color. So just given the flux in the market, Robert, is it easier or harder to attract agents to your platform? What are you seeing? What are some of the early signs? And having not been through a downcycle for quite some time, I'm curious if you have some historical perspective on that.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : That's a great color as well. Maybe for Kristen or Robert or both of you, I wanted to just sort of peel back the model a little bit in terms of what the underlying drivers are. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 6:15PM, COMP.N - Compass Inc at Needham Technology & Media Conference (Virtual) So we obviously know that agent growth is important, but could you talk about agent productivity, what you are seeing on that front, and how does that play out at least in 2022 given some of the dynamics in the market? And then just the average transaction value as well. What are you seeing trendline for the near term on that? So we can sort of frame the revenue for the full year.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : That's helpful, Kristen. And then maybe moving more to profitability since that is a big focal point of this market right now for investors. I wanted to better understand what are some of the, let's call it, factors that are maybe weighing on near-term profitability relative to your initial guidance for the year. And then as you look at the long-term partners which you maintained, maybe you could provide sort of a line of sight or the roadmap to get to those targets given that you are maybe off to a slightly slower start than you would have liked, I believe, for 2022. It's a multipronged question there on margins.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : That's a great segue into my next question, Robert and Kristen. So when you think of adjacent services, you've had good success on Thailand as far as you laid out in terms of cash rates. I think mortgage is still early days so we will see how that progresses. Does this in any way maybe delay your foray into other adjacent services that you highlighted previously? Or is that still on the table?

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Thank you for that, Robert and Kristen. (Conference Instructions) With that said, just to continue, Robert and Kristen, is there a way maybe to think about what the profitability is on the current adjacent services revenue? Is that generally higher margin revenue over time as it hits scale, especially the mortgage business? I think it's going to be a [counterpart] for a different way. So any help there would be, I think, constructive for investors as they think about the adjacent services contribution, both in revenue and to profits over time.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Kristen, I appreciate all the details. Very helpful information there for investors. Robert, I wanted to swing back to just the overall environment. What is the sweet spot for Compass? As you look at past cycles, where we are at right now, what is the right type of environment for you to flourish? Maybe it's more of a broad question on: what is an ideal scenario for Compass to operate in? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2022 / 6:15PM, COMP.N - Compass Inc at Needham Technology & Media Conference (Virtual)

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Great. Kristen, I hope I'm not putting you on the spot, but you did announce that you were going to be leaving later this year. So I think investors would -- I'm sure want to hear on your decision. And maybe to the same extent, Robert, would love to get your thoughts on just the overall management depth bench and potentially trying to fill Kristen's big shoes.

Question: Mayank Tandon - Needham & Company, LLC - Analyst : Great. That's, I think, a good place to maybe end here. I really appreciate, Robert and Kristen, for sharing your perspective and the Compass story with investors. Thank you so much for attending our conference.