Compass, Inc. (NYSE:COMP) announces its consolidated financial & operational results for the Second quarter of 2021
Compass, Inc. (NYSE: COMP) announced its consolidated financial and operational results for the three months ended June 30, 2021. The company posted a record quarter, nearly doubled its market share year-over-year, and now expects to achieve Adjusted EBITDA profitability in full-year 2022, a year sooner than previously expected.
Complete results can be found in the company’s 2Q21 Shareholder Letter on the Investor Relations section of Compass’ website .
“This past quarter Compass agents strongly outperformed their peers in one of the most competitive real estate markets in recent memory, delivering nearly $2 billion of revenue and $71 million of Adjusted EBITDA as the Compass platform continued to drive growth in agent productivity,” said Robert Reffkin, Founder, Chairman, and CEO of Compass, Inc. “Compass has nearly doubled its share of the national residential real estate market over the past year, and this record quarter validates our vision that agents, when powered by the Compass technology platform, are significantly more successful.”
2Q21 Financial Highlights:
- Revenue increased by 186% year-over-year to a record $1.95 billion, as our agents nearly doubled Compass’ market share from 3.3% to 6.2% over the last year.
- GAAP Net Loss was $(7) million, compared to $(84) million in 2Q20.
- GAAP Net Loss margin was (0.4%), compared to (12.3%) in 2Q20.
- Over the past four quarters, GAAP Net Loss totaled $(273) million, which included a one-time non-cash stock-based compensation charge of $149 million related to our IPO.
- Adjusted EBITDA was a record $71 million, compared to $(56) million in 2Q20.
- Adjusted EBITDA margin was 3.7% in 2Q21, compared to (8.3%) in 2Q20, an improvement of 12 percentage points.
- Over the past four quarters, Adjusted EBITDA totaled $44 million, demonstrating Compass’ ability to achieve Adjusted EBITDA profitability as the business gains scale and we continue to improve our operational efficiency.
2Q21 Operational Highlights:
- Agents: Average Number of Principal Agents was 10,629, an increase of 817 from 1Q21 and 2,095 from 2Q20. The increase in average principal agents was 25% compared to 8,534 principal agents in 2Q20.
- Transactions: Compass agents closed a record 65,743 Total Transactions, up 140% year-over-year, significantly faster than the 32% transaction growth for the residential real estate market. Each of our Principal Agents generated on average 6.2 transactions on our platform in the quarter, an increase of 93% year-over-year.
- Gross Transaction Value (“GTV”): GTV of $77.0 billion increased by 186% year-over-year. This was a quarterly record for Compass, reflecting strong transaction volume, higher average transaction values, and higher productivity per average principal agent. GTV per average principal agent was $7.2 million, up 130% year-over-year.
- Markets: In 2Q21, Compass entered 15 new markets, bringing the total markets served to 62 at the end of the quarter. Compass’ national market share was 6.2% in 2Q21, up from 3.3% in 2Q20 and 5.2% in 1Q21.
2Q21 Platform Highlights:
- Compass provides an end-to-end technology platform that empowers agents to deliver exceptional outcomes to their clients. It makes our agents more productive, allowing them to drive increased transaction volume by using technology to accelerate, automate, and simplify many of the routine tasks an agent performs on a daily basis.
- Total sessions on the platform grew by 104% year-over-year.
- 85% of our agent teams used our proprietary technology platform weekly, up from 81% in the prior year period.
- Ratio of daily active users to weekly active users (“DAU/WAU”) was 74%, up from 69% in the prior year period.
- On July 13, 2021, Compass and Guaranteed Rate, a top retail mortgage company, announced the formation of a joint venture, OriginPoint, a new mortgage origination company. We believe the combined expertise of our agents, the integration into the Compass platform, and the experience of Guaranteed Rate could drive mortgage attach rates on eligible transactions to, or even above, industry averages in 3 to 5 years with profitability for the JV on an Adjusted EBITDA basis expected in FY2022.
- In Title and Escrow, Compass now serves portions of California, Florida, Washington State, Maryland, Virginia and Washington D.C. We are in the early phases of rolling out T&E services in markets that comprise roughly 30% of our total transactions. We expect to similarly cover markets that comprise roughly half of our total transactions by the end of 2021.
Guidance for 3Q21 and FY2021:
- 3Q21 Revenue of $1.65 billion to $1.75 billion.
- 3Q21 Adjusted EBITDA of $(20) million to $0 million.
- FY2021 Revenue of $6.15 billion to $6.35 billion, compared to prior guidance of $5.35 billion to $5.55 billion.
- FY2021 Adjusted EBITDA of $(85) million to $(45) million, compared to prior guidance of $(245) million to $(225) million.
- Year-to date results, in conjunction with our revised guidance, demonstrate our confidence in achieving Adjusted EBITDA profitability in 2022.
We have not reconciled our guidance for Adjusted EBITDA to GAAP Net Loss because stock-based compensation expense cannot be reasonably calculated or predicted at this time. Accordingly, a reconciliation is not available without unreasonable effort.
Conference Call Information
Management will conduct a conference call to discuss the second quarter results and outlook for 2021 at 4:30 PM ET on August 9, 2021. The conference call will be accessible via the Internet on the Compass Investor Relations website .
An audio recording of the conference call will be available for replay shortly after the call’s completion. To access the replay, visit the Events and Presentations section on the Compass Investor Relations website .
Safe Harbor Statement
This press release includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding the future performance of Compass and its market opportunity, including expected financial results for the third quarter and full year of 2021, expectations regarding the impact of the COVID-19 pandemic on our business and industry, expectations regarding our mortgage business and our joint venture with Guaranteed Rate, and expectations for our future investment in our business. Accordingly, actual results could differ materially or such uncertainties could cause adverse effects on our results. Forward-looking statements are based upon various estimates and assumptions, as well as information known to Compass as of the date of this press release, and are subject to risks and uncertainties, including but not limited to: general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, including seasonal and cyclical trends; our ability to achieve expected benefits from our mortgage business and our joint venture with Guaranteed Rate; our ability to attract new agents and retain current agents or increase agents’ utilization of our platform; our rapid growth and rate of growth; our net losses and ability to achieve or sustain profitability in the future; our ability to innovate and continuously improve and expand our platform; the impact of the COVID-19 pandemic on our business; our ability to compete successful in the markets in which we operate; the effect of monetary policies of the federal government and its agencies; any decreases in our gross commission income or the percentage of commissions that we collect; our ability to expand our business and offer additional adjacent services, including with respect to any joint ventures; fluctuation of our quarterly results and other operating metrics; our ability to successfully complete acquisitions and integrate target companies; the effect of the claims, lawsuits, government investigations and other proceedings that we are subject to from time to time; our ability to protect our intellectual property rights; and other general market, political, economic, and business conditions. Actual results could differ materially from those predicted or implied, and reported results should not be considered as an indication of future performance. Additionally, these forward-looking statements, particularly our guidance, involve risks, uncertainties and assumptions, including those related to the impacts of COVID-19 on our clients’ spending decisions. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant.
Additional risks and uncertainties that could affect our financial results are included under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 13, 2021, which is available on the Investor Relations page of our website and on the SEC website . Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 when filed. All forward-looking statements contained herein are based on information available to us as of the date hereof, and we do not assume any obligation to update these statements as a result of new information or future events.
Undue reliance should not be placed on the forward-looking statements in this press release. These statements are based on information available to Compass on the date hereof, and Compass assumes no obligation to update such statements.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures, in this press release. Our use of non-GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP.
Compass uses Adjusted EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA and Adjusted EBITDA margin are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, therefore you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including net loss and our other GAAP results. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this press release. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry.
Reconciliations of these non-GAAP measures have been provided in the financial statement tables included in this press release and investors are encouraged to review these reconciliations.