Compass Inc Q4 2024 Earnings Call Transcript

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

Question: Jason Helfstein - Oppenheimer & Co., Inc. - Analyst : Hey, thanks. First, Robert, really appreciate all the color around the initiatives in Exclusives and Coming Soon. Are you starting to see, in your metrics, more agents wanting to join Compass because of this factor or potentially lower attribution? You did talk about retention being quite high, but just is it actually -- are these products starting to attract more agents yet? And then just also, do you expect to grow the number of -- I guess, how do we think about growth in Christie's and properties agents in 2025? That's question one. And then Kalani, just from a housekeeping, I think you called out there would be nine points of positive acquisition impact in first quarter. Should we think about a similar impact for all of '25? Thanks.

Question: Jason Helfstein - Oppenheimer & Co., Inc. - Analyst : Sure. So I think you basically helped us understand that in the guidance for the first quarter, there's nine points of acquisition impact, 900 basis points. Should we think about a similar impact for the rest of 2025 as far as the tailwind from acquisitions?

Question: Jason Helfstein - Oppenheimer & Co., Inc. - Analyst : Thank you.

Question: Chris Kuntarich - UBS Securities - Analyst : Great. Thanks for taking the question. Can we just talk a bit about, really, the opportunity around Compass One and driving this three-phase marketing approach and doing it within the context of that 3% to 4% organic expense growth? How should we be thinking about your marketing expense and driving awareness around this to potentially accelerate agent growth? I have a follow-up after that. Thanks.

Question: Chris Kuntarich - UBS Securities - Analyst : Got it. That's helpful. And just on free cash flow, how should we be thinking about uses of it here? Could we potentially be thinking about share buybacks? Any sort of framework to be thinking about SBC as well for this year? Thanks.

Question: Chris Kuntarich - UBS Securities - Analyst : Got it. And anything off that run rate for full year SBC to be thinking about?

Question: Chris Kuntarich - UBS Securities - Analyst : Got it. Super helpful, Kalani. Thank you.

Question: Bernie McTernan - Needham & Company Inc. - Analyst : Great. Thanks for taking the questions. Maybe just to start, is there a difference for commissions to agents based on private listings or Coming Soon, or are they more likely to represent both sides of the transaction in areas that they're able to? And it just seems like from the anecdotes, they're more -- they're using it, they're leveraging it to win listings. Just any commentary on the economics of agents with private listings or Coming Soon.

Question: Bernie McTernan - Needham & Company Inc. - Analyst : Understood. Thanks, Robert. And for Kalani, with the acquisition just closed, there's $25 million of franchise revenue, $25 million of title. We're just wondering if we could get an update on what the expected total noncommissioned revenue could be, either percentage of total or just an aggregate number of what we're up to right now in terms of that non-commissioned revenue. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 18, 2025 / 10:00PM, COMP.N - Q4 2024 Compass Inc Earnings Call

Question: Bernie McTernan - Needham & Company Inc. - Analyst : Okay. Got it. Thanks, Kalani.

Question: Ryan McKeveny - Zelman & Associates - Analyst : Hey, thank you. Congrats on the results, and thanks, as always, for the commentary. I guess a two-part question around growth expectations. First, on the organic side, I guess using 4Q as an example, about 670 gross agent adds, dropping down to about 210 on a net basis. I guess I'm just curious, on an organic basis, what do you think is a reasonable run rate to think about going forward? Like was 4Q a decent proxy? I know you called out kind of managing out nonproducers, so presumably not the best proxy for future quarters, but any commentary around just your thoughts on agent additions on an organic basis going forward? And then secondly, on the inorganic side, following the app properties in Christie's deal, obviously, a large and important transaction. I guess I'm just curious, what about the pipeline of incremental M&A? Does the focus shift a bit to just the integration, drawing out synergies from that deal? Or could we expect to see further maybe smaller opportunities down the pike? And yeah, just generally your view on incremental M&A going forward post the deal. Thank you.

Question: Ryan McKeveny - Zelman & Associates - Analyst : Got it. Thank you very much. Appreciate it.

Question: Michael Ng - Goldman Sachs - Analyst : Hey, good afternoon. Thank you for the question. I just had one for Robert on the inventory strategy. I was wondering if you could just speak to -- if you look out to a couple of years, what does this look like in success for Compass? Is this about attracting more agents and gaining market share that way given Private Exclusives and Coming Soon is a tool that Compass is obviously doing very well in? Could you potentially get a license fee from cross-posting to real estate portals at some point down the road and perhaps charging for access while keeping the negative insights off those listings? Any thoughts there would be great. Thank you.

Question: Michael Ng - Goldman Sachs - Analyst : Great. Thank you for that color, Robert. I really appreciate it.