Compass, Inc.

Good day and welcome to the Compass first quarter 2021 earnings conference call. My name is Sunidra and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a questions and answers session. Ben Barrett, Vice President of Investor Relations for Compass, you may begin your conference.

Good afternoon, and thank you to everyone for joining Compass's first-ever earnings call. Today's review of actual financials will address the continuing operations of Compass, and certain items are presented on a non-GAAP basis. The reconciliations between GAAP and non-GAAP measures for both our Q1 financials as well as our guidance are included at the back of the earnings release and shareholder letter. Please also see our disclosure on forward-looking statements which reflects Compass's current view of future financial performance, which may be materially different from our actual performance for reasons that we cite in our Form 10Q and other SEC filings, including uncertainties posed by the COVID-19 pandemic and the difficulty in predicting its future course and impact on the housing market and the global economy. Joining us today will be Robert Rapkin, Compass's founder, chairman, and chief executive officer, and Kristen Ankerbrink, Compass's chief financial officer. Robert will provide a brief introduction to Compass and discussion of our strategy, and then Kristen will cover the financial results and outlook in more detail. With that, I'd like to turn the call over to Robert.

Thank you, Ben, and thanks to everyone for joining the call. We're excited to be here today to share more about Compass and our outstanding first quarter results. But first, I wanted to provide some context on the housing market. Overall, the housing market is strong today, and we expect it to remain strong for some time. Consumer demand among homebuyers remains high, while interest rates remain at historic lows. After the experience of the last year, everyone wants more space that is better suited to their needs. People are looking for more indoor space, more outdoor space, more home office space, and the desire for second homes has never been stronger. In addition, more people are looking to buy as millennials are just now entering their home buying years. This has created a permanent shift in the demand curve that will take years to meet. At the same time, COVID has accelerated trends towards digital adoption that we had previously thought would take a decade to play out, creating an opportunity for technology-powered real estate agents to distinguish themselves and win share in this high demand environment. In the midst of these long-term fundamental shifts, we are focused on providing our nearly 21,000 agents with the tools they need to deliver best-in-class service to their clients. Our first quarter results were strong, both in terms of revenue and adjusted EBITDA. Revenue was $1.1 billion, up 80% from the prior year, and adjusted EBITDA improved by 70%. We grew our principal agent count by 20% compared to last year, and we now have nearly 10,000 principal agents operating their businesses on Compass. These agents closed over 40,000 transactions in the first quarter, up 67% from last year. This was the best first quarter for transactions in our history and our third largest quarter ever. These agents closed nearly $44 billion in gross transaction value, up 75% in another record for a first quarter. And we see this momentum continuing into the second quarter. Our platform is driving these outsized results and helps our agents to grow their business. This can be seen in our results as we grew faster than the market. While the real estate market grew transactions just 14% in Q1 year-over-year, we grew our transactions per principal agent by 39%, with our total transactions growing 67%. And this is supported by our increased platform usage. The ratio of daily active users to weekly active users was 69%, up 7 percentage points from the prior year period. In total sessions, we're also up 120%. Compass provides an end-to-end platform that empowers agents to deliver exceptional outcomes to their clients. It is an integrated suite of cloud-based software for CRM, marketing, client communications and other critical functionality, all custom built for the real estate industry. It also uses proprietary data and analytics to deliver high value recommendations and outcomes for compass agents. Agents are essential to the real estate transaction where they have never had a seamless, fully integrated end to end technology platform to help them serve more clients, grow their business and save time. The average agent logs into 13 different systems every day to do their job, and the average number of engineers employed by traditional brokerage firms is zero, even though this is one of the largest asset classes in the world. By combining the platform with our agents, we are seeing some amazing results. A 19% increase in transaction growth in year two compared to year one for our agents, and home selling quicker with 21% fewer days on market versus the peers. These results drive agent satisfaction with industry-leading agent retention rates of over 90%. We operate in 47 markets in the U.S. In Q1, we launched three new major markets and expanded into new cities within our existing markets. Some markets, which are extensions of our existing markets, allow us to expand efficiently by leveraging our existing infrastructure and agent network. Our share of the U.S. market is only 5%, so we have plenty of runway left to grow. In our three largest MLS markets, where we have operated the longest, we have 26% share. So we know how to grow share, and we're confident that we can continue to grow share cost efficiently by simply replicating our expansion playbook, including through our Compass Anywhere program. Our 850 plus person product and engineering team is constantly introducing new and updated products and features that drive agent productivity and efficiency. For example, in Q1 we launched Business Tracker, which allows agents to visualize their entire pipeline. leads buyers sellers renters landlords all from one place prior to business tracker most agents manage their pipeline on a piece of paper or on a whiteboard but now can do it within the platform they can now view details about each transaction from listing to contract to close this saves agents time and reduces the reliance on staff or other third-party software Another great example is our AI-powered likely-to-sell recommendation engine, which predicts which properties are most likely to sell. It incorporates data like property details, pricing history, and mortgage status to rate how likely a property is to sell in the next 12 months. Agents are then alerted to reach out to these contacts, helping them to win the listing before competing agents even though the property is in play. Likely to sell recommendations result in a 61% higher win rate for our agents. Comparing to properties we did not rate likely to sell. Our platform is proprietary and built in-house, but we look for opportunities to accelerate our product roadmap when there is an opportunity to acquire a technology that agents love. The acquisition of Glide, which closed last week, is a great example. Glide is a fast-growing software services platform that provides Compass and non-Compass agents with critical transaction management tools such as offer and transaction management, digitization of key forms, e-signature, and digital disclosures. Glide is used by tens of thousands of real estate agents in California, and we plan to expand its reach both within and outside of Compass to more states across the country. We also made progress in expanding our adjacent services business. Our extensive network of top-performing agents and their transactions creates an opportunity to capture more spend in the real estate ecosystem adjacent to the transaction. Today, we offer services in title and escrow and digital marketing, and we plan to provide mortgage and other adjacent services in the future. In February, we acquired KVS Title, a leading title company serving the Washington, D.C. area. Compass's closing services portfolio now operates in California, Florida, Washington State, Maryland, Virginia, and Washington, D.C. We plan to continue to scale our title and escrow business in existing geographies and new markets going forward. The first quarter of 2021 provides a strong start to our journey as a public company. The market is growing, but our revenue, transaction volume, and GTV are all growing much faster. Every day, more agents are joining Compass and using our platform to grow their business and improve their real estate experience for their buyers and sellers. And for those that are skeptical about the future role of the agent, agents are not going away. In fact, people are using them more over time, not less. According to the National Association of Realtors, 89% of home sellers and 88% of home buyers use an agent. And contrary to what some may have assumed, those rates have actually increased over time, rising from 83% in 2010 and even less than that in 2000. At Compass, our strategy is to replace today's overly complex, paper-driven, antiquated workflow with a seamless, all-digital end-to-end platform that empowers every real estate agent to provide exceptional experiences to their buyers and sellers. This will take time and continued investment, but the opportunity is enormous. And Compass is approaching the problem from a different angle than any other player. By empowering agents with a proprietary end-to-end platform, that drives growth in their business. Real estate agents are CEOs of their businesses, positioned at the center of a complex, multi-party transaction. And agents serve as a liaison between the client, the counterparty, and many other stakeholders, from pre-sale to post-close. As we continue to expand our platform to serve the real estate industry, we will continue to get closer to our vision of modernizing an archaic industry for the benefit of everyone, agents, clients, and shareholders. Now with that, I'll now turn the call over to Kristen to walk you through the details of our first quarter. Kristen, take it away.