Compass, Inc.

Ladies and gentlemen, thank you for joining us and welcome to Compass Inc. 2026 Q1 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw that question, press star one again. I would now like to turn the call over to Soham Bonsley, head of investor relations. Please go ahead.

Thank you very much, operator, and good afternoon, everybody. and thank you for joining the Compass First Quarter 2026 earnings call. Joining us today will be Robert Refkin, our founder and CEO, and Scott Wallers, our chief financial officer. In discussing our company's performance, we will refer to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our First Quarter 2026 earnings release posted on our investor relations website. Additionally, Note that since the financial results from the anywhere transaction are not included in the prior year period or the first eight days of Q1 2026, the current year and prior year results are not comparable. We have provided supplemental information included in the Form 8K filed today that presents our revenue and commissions expenses and key business metrics on a pro forma basis as though the businesses were combined from the beginning of 2025. We believe this additional information will be useful to investors to assist in comparing the periods prior and subsequent to the closing of the Anywhere transaction. We will also be making forward-looking statements that are based on our current expectations, forecasts, and assumptions and involve risks and uncertainties. These statements include our guidance for the second quarter of 2026 and full year 2026 and comments related to our expectations for realizing cost synergies and operational achievements. Our actual results may differ materially from these statements. You can find more information about risks, uncertainties, and other factors that could affect our results in our most recent annual report on Form 10-K, filed with the SEC and available on our investor relations website. You should not place undue reliance on any forward-looking statements. All information in this presentation is as of today's date, May 5th. We expressly disclaim any obligation to update this information. I will now turn the call over to Robert Refkin. Robert?

Good afternoon, and thank you for joining us for our first quarter conference call. Before I go over our strong Q1 results, I would like to provide an update on our cost synergy targets and highlight a few early wins since we closed the Anywhere transaction. First, on our cost synergies. On our Q4 earnings call in February, We shared our target of $250 million in cost synergies to be actioned by the end of year one and $400 million in net cost synergies over three years. I am very pleased to share that we are increasing our target to $300 million in cost synergies to be actioned by the end of year one. and $500 million in net cost synergies over three years, of which $420 million is expected to be realized through the P&L, and $80 million is expected to be realized as a CapEx synergy. Moreover, we have now actioned over $250 million in cost synergies as of April 1st, which is only 82 days since we closed the Anywhere transaction. The acceleration results indicate in an increase in our 2026 in-year realized cost synergies from approximately $100 million to $200 million. We previously expected $40 million of the $100 million of our cost synergies to be realized through the P&L as an OMPX synergy, with the remainder being realized as a CAPEX synergy. Based on the increased realization of the target, we now expect about $130 million to be realized through the P&L and $70 million expected to be realized as a CapEx synergy. This reflects a roughly $90 million increase in our in-year realized OpEx synergy expectations and a $10 million increase in in our in-year CapEx synergy expectations compared to our prior expectations due to the larger in-year realized target of $200 million. Shifting now to our early Q1 wins that represent the growth and success in our brokerage brands. Sotheby's International Realty sold the most expensive home in the history of the world at $350 million. while Coldwell Banker sold the most expensive home in the history of Miami-Dade County at $170 million. Both sales reinforced the combined company's authority in the luxury segment. Corcoran Sunshine, which is Corcoran's new development business, posted its strongest contract volume quarter in over 10 years with $1.5 billion in contracts signed in Q1. ERA executed its largest franchise sale transaction in 15 years. Better Homes and Gardens executed its largest franchise M&A transaction in the entire history of the brand. Christie's International Real Estate signed on eight new franchise agreements in the quarter, all for new markets, which reflects the largest quarterly expansion in the history of the brand. Century 21 recently executed its largest franchise sale transaction in 10 years, with our stance on home seller choice being a key reason for the broker owner, Greg Haig, choosing to join. In fact, Greg will be coaching our real estate professionals across our brands on home sales strategy, given his impressive track record, which includes building a home sales strategy consulting and training company that Inc. 5000 ranked among the top 250 fastest-growing privately held firms in America. Compass recruited more principal agents in Q1 than any prior Q1 in our history. We are now also scaling Compass's most effective recruiting strategies across all brands, starting with demand generation and brand-specific recruiting websites that outline how our technology platform helps agents grow their business. And finally, Coldwell Bankers' GCI retention rate in its top two quartile of agents, representing 82% of its total GCI over the trailing 12-month period, hit a 10-year high at 94.6% retention rate in Q1. In our title and escrow business, we are consolidating our operations onto a single technology platform, which we expect will unlock sizable long-term savings, through centralization once completed. In our mortgage business, GRA, which was anywhere's JV with guaranteed rate, achieved its highest attached quarter in two and a half years, while OriginPoint, which is Compass's JV, achieved its highest attached rate ever in Q1 and delivered its best quarter of profitability. Going forward, we see a significant opportunity to continue to improve both our attached rate and profitability in our mortgage JVs. Lastly, we are moving forward with our digital mortgage partnership with Rocket Mortgage. With Rocket's pre-qualification experience now embedded across all listings on compass.com. Our data and analytics team, led by Dave Crosby and supported by our chief economist, Mike Simonson, is executing a radical simplification of our significantly expanded data state. Since closing the Anywhere transaction, we've identified over 6,000 legacy reports and have already deprecated over half of them. We're on a disciplined path. to standardization across the entire company to get to approximately 100 high fidelity reports. By minimizing the number of reports, it will allow our data team to focus on critical integration tasks and the development of proprietary insights by Q4 of this year, which we believe will provide our real estate professionals, title agents, and mortgage officers the ability to win more business in the marketplace. Now turning to our Q1 2026 pro forma results, which for the purposes of my discussion include eight days of activity prior to the closing of the Anywhere transaction to allow for better comparability, except for adjusted EBITDA, which reflects adjusted EBITDA following the Anywhere transaction. All year over year comparisons are against Q1 2025 pro forma results that include the full quarter of activity for both Anywhere and Compass. In Q1 for Compass, we delivered pro forma revenue of $2.76 billion, up 7% year over year compared to pro forma revenue of $2.58 billion a year ago. We reported adjusted EBITDA of $61 million. Our Q1 revenue came in above the midpoint of our guide and adjusted EBITDA came in above the high end of our guide. In our brokerage business, which includes the Coldwell Banker, Compass, Corcoran, and Sotheby's International Realty brands, pro forma transactions were up 2.6% year over year compared to the market, which was flat year over year. This means for 20 consecutive quarters, our brokerage business has outperformed the market. Pro forma brokerage GTV was up 7.3% year over year compared to the market that was up 1.5%. Proforma total agent ads on a gross basis were 3,503, which was higher than Q4 2025 results. Proforma total agent retention in our brokerage business was 94%, flat compared to Q4 2025. Excluding agents with zero GCI in the last 12 months, Proforma agent retention would have been 97% in Q1. and excluding agents with $20,000 or less GCI in the last 12 months, which on average equates to less than two transactions at our price points. Pro forma agent retention would have been over 98% in Q1. Pro forma productivity per agent, which we measure as GTV per agent, was up nicely year over year. Going forward, our brokerage recruiting and retention strategy as a combined company will be focused on productive agents as well as up-and-coming agents. We expect this to lead to a healthy level of agent ads combined with improving agent retention and agent productivity growth. In franchise, pro forma GTV was up 4.6% year-over-year compared to housing market volumes that were up 1.5%, reflecting 310 base points of outperformance.

Ladies and gentlemen, we are experiencing technical difficulties. Please stand by as we resolve this issue. We are currently troubleshooting with our internal team. Thank you for your patience. We will get information out to you as soon as possible.

We got to do the video. We got to do the regular thing. They have to be able to restart it.

Robert, you're unmuted. Can you go on mute for a second, everybody? And we'll get back to you, everyone.