Compass Inc Q3 2024 Earnings Call Transcript

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

Question: Matthew Bouley - Barclays - Analyst : Thanks for taking the questions and for all the helpful color at the top. I wanted to ask on that commission rate topic. I think I heard you say, and correct me if I'm wrong, that excluding M&A, your commission rate was actually -- I think it was improved year-over-year. And again, correct me if I'm wrong. But yes, just obviously, given the change in the industry in August, I'm curious if you are starting to see any transactions occurring at lower commission rates than otherwise may have or just kind of how that's trending since then?

Question: Matthew Bouley - Barclays - Analyst : Got it. Okay, thank you for that, Robert. Very, very helpful. Secondly, I just wanted to touch on the overall housing market trends. It seems like every time we have interest rates starting to go in the right direction, and that kind of reverses course. So I'm just curious, maybe into October, if you can even quantify it a little bit. What are you seeing around inventory and transactions? Are your agents saying anything around election uncertainty playing into the market at all? Yes, just any kind of near-term market color there would be helpful.

Question: Matthew Cost - Morgan Stanley - Analyst : Sorry about that. So I wanted to follow up on the point about Clear Cooperation. Robert, I think you made a very compelling case for some of the drawbacks that it causes and why it might be going away. I guess in an environment where that policy does go away, what fills the void or what does the environment look like ultimately when there's no longer that requirement? Because obviously, being forced to place a listing on the MLS does provide some value, certainly to potential homebuyers and in terms of information being available in the market. So what changes? What fills that void? And what does it mean for Compass?

Question: Ryan McKeveny - Zelman & Associates - Analyst : Congrats on the results. Kalani, I wanted to dig in a little on the OpEx commentary. So really nice outperformance this quarter, but maintaining that full year target. I think it implies something like a $20 million to $40 million step-up in costs. And I heard you call out the additional T&E investments, is that the entirety of things? Was there anything timing related where 3Q may be benefited, but some expenses flow into 4Q? I'm just trying to understand that trajectory to expect for the fourth quarter.

Question: Ryan McKeveny - Zelman & Associates - Analyst : That's helpful. And then one, you called out OriginPoint a little bit in the prepared remarks. It looks like in addition to the growth you called out, it looks like that actually flipped -- the JV flipped from kind of modest losses to a modest gain this quarter. So maybe, Robert, maybe Kalani, but just taking a step back, maybe you can give us a bit of a status update where things stand in terms of just adding loan officers, expanding markets, maybe it's too soon to really talk to attach rates, but maybe just generally how you're thinking the path of OriginPoint expands in the coming years.

Question: Ryan McKeveny - Zelman & Associates - Analyst : That's very helpful. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 9:00PM, COMP.N - Q3 2024 Compass Inc Earnings Call

Question: Jason Helfstein - Oppenheimer & Co., Inc. - Analyst : Hey, how is it going? So I apologize if this was already answered. So when we think about like your reverse prospecting and Make Me Sell products they're about to launch, what other companies -- or I guess you won't say which, but how many other companies out there have the scale to offer something similar? And I guess second question, how should we think about your ability to continue doing tuck-in acquisitions, let's say, into '25, kind of what's the likelihood that we continue to see acquisitions?

Question: Jason Helfstein - Oppenheimer & Co., Inc. - Analyst : That's helpful. I appreciate the caller and looking forward to next year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 9:00PM, COMP.N - Q3 2024 Compass Inc Earnings Call

Question: Michael Ng - Goldman Sachs - Analyst : I wanted to ask about the strong principal agent net adds in the quarter. I know you mentioned the agent retention and the 750 organic net-adds. Could you talk a little bit more about what's been driving that agent net add strength? I think it was probably one of the stronger organic net add quarters that we've seen in some time. And if you could also discuss your outlook for net adds for the foreseeable future.

Question: Michael Ng - Goldman Sachs - Analyst : Thank you for all that color, Robert. And thank you, Kalani. Appreciate it.

Question: Chris Kuntarich - UBS Equities - Analyst : Maybe 2, if I can. First one for Robert. Just curious how you're thinking about the strategic roadmap and the implications for Clear Cooperation policy. This is maybe another way to put it, how much of your, call it, 18- to 24-month strategic roadmap hinges on changes around Clear Cooperation policy? And maybe how could we see that potentially change if there are not changes to be made?

Question: Chris Kuntarich - UBS Equities - Analyst : Got it. Very helpful. And Kalani, maybe just one quick follow-up on the 30 for 30 program. I think last call, you said you guys were a little more than halfway there. Can you just talk about kind of the range of market shares within that group of 30 markets? And then just should we be thinking about that 30% market share target being achieved? I think you said in '26, but I just want to clarify if that's the average of '26 or exiting '26.

Question: Chris Kuntarich - UBS Equities - Analyst : Got it. Very helpful. Thank you.