Compass Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 06:13

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2025 included in the 2025 Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section entitled "Special Note Regarding Forward-Looking Statements." You should review the disclosure under the section entitled "Risk Factors" in Part II, Item 1A, "Risk Factors" in this Quarterly Report and Part I, Item 1A, "Risk Factors" in our 2025 Form 10-K for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
INTRODUCTION
Our Company
Compass, Inc. (the "Company") was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. The Company has been based in New York City since its incorporation.
On January 9, 2026, we completed the Merger contemplated by the Agreement and Plan of Merger (the "Anywhere Merger Agreement"), by and among the Company, Anywhere Real Estate Inc., a Delaware corporation ("Anywhere"), and Velocity Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary ("Merger Sub"). Pursuant to the terms of the Anywhere Merger Agreement, Merger Sub merged with and into Anywhere, with Anywhere surviving as our wholly owned subsidiary (the "Anywhere Merger" or the "Merger"). See "- Merger and Other Debt Transactions- Merger With Anywhere Real Estate Inc." for additional information about the Anywhere Merger.
Prior to the Anywhere Merger, we were a leading tech-enabled real estate services company that included the largest residential real estate brokerage in the United States by sales volume, which primarily operated under the Compass brand in 39 states and Washington D.C., with approximately 37,000 real estate professionals at our owned-brokerages. We also provided integrated services to real estate professionals and their clients, including title, escrow, and mortgage.
Following the Anywhere Merger, we expanded our service area to include a presence in every major U.S. city and approximately 120 countries and territories, and we operate a portfolio of some of the most recognized and iconic brands, including @properties, Better Homes and Gardens Real Estate, Century 21, Christie's International Real Estate, Coldwell Banker, Compass, Corcoran, ERA, and Sotheby's International Realty. Following the Anywhere Merger, we served a global network of more than 340,000 real estate professionals in our owned-brokerage and franchise businesses.
The Company reports its operations in three business segments: Brokerage, Franchise and Integrated Services. We refer to independent sales agents at our owned-brokerage and at our franchises collectively as "real estate professionals."
Brokerage
Following the Anywhere Merger, we operate our owned-brokerage business primarily under the @properties, Coldwell Banker, Compass, Corcoran, and Sotheby's International Realty brands.
Our business model is directly aligned with the success of real estate professionals. Real estate professionals at our owned-brokerage business are independent contractors that associate their real estate license with us and choose to operate their businesses on our platform and/or utilize our technology offerings. We primarily generate revenue from our owned-brokerage business when we collect a share of the gross sales commissions that these real estate professionals earn from home sales and certain other fees, such as flat transaction commission fees. Gross sales commissions are typically based on a percentage of the home sale price.
Franchise
In January 2025, we acquired a company with the exclusive, worldwide right to operate, franchise and license the Christie's International Real Estate brand. As a part of the Anywhere Merger, we also acquired a franchise portfolio of well-known, industry-leading franchise brokerage brands, including Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA and Sotheby's International Realty. We attract independently operated brokerages that affiliate with us as franchisees or licensees under long-term franchise or license agreements. We generate revenue from our franchise business when we collect royalties from our independently owned and operated franchisees, which are based on a percentage of the franchisee's gross sales commissions, as well as certain other fees, such as marketing and technology fees.
Integrated Services
We also provide non-brokerage services to real estate professionals and their clients, including title and escrow and, via minority-owned joint ventures, mortgage. The Anywhere Merger expanded these services and added additional services, including relocation, and title underwriting via a minority-owned joint venture. We refer to these services collectively as "Integrated Services."
As part of the Anywhere Merger, we acquired Cartus, a provider of global relocation services. Cartus offers a broad range of world-class employee relocation services designed to manage all aspects of an employee's move and allow our clients to outsource their entire relocation programs to us.
Our Technology Offerings
Our end-to-end proprietary technology platform, branded "Home Platform", allows real estate professionals to perform their primary workflows, from first contact to close, with a single log-in and without leaving the platform. Home Platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. Home Platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of real estate professionals and deliver high-value recommendations and outcomes for their clients. Additionally, certain title and escrow and mortgage services are integrated and are available on the platform. As of September 30, 2026, Home Platform is available to real estate professionals at our owned-brokerage operating under the Compass brand and substantially all real estate professionals operating under the @properties, Coldwell Banker, Corcoran, and Sotheby's International Realty brands, although certain functionality is still being deployed. We plan to release Home Platform to our franchise network in 2027.
Merger and Other Debt Transactions
Merger With Anywhere Real Estate Inc.
On January 9, 2026, we completed our Merger with Anywhere, acquiring all outstanding Anywhere common stock in a stock-for-stock transaction. Holders of Anywhere common stock received 1.436 shares of our Class A common stock for each Anywhere share, resulting in the issuance of 162.1 million shares. We also repaid $502 million of Anywhere's revolving credit facility at closing, as required under its change in control provisions, and issued replacement equity awards to Anywhere award holders.
During the three and nine months ended September 30, 2026, we incurred $28 million and $245 million of merger-related expenses. These included legal, investment banking and other transaction-related fees; severance and other personnel-related costs; and costs to integrate systems, technologies and other processes. These amounts are reported within the Anywhere Merger transaction and integration expenses line of the condensed consolidated statements of operations.
Secured and Unsecured Notes
Following the Anywhere Merger, the 9.75% Senior Secured Second Lien Notes and the 7.00% Senior Secured Second Lien Notes (together, the "Secured Notes") and the 5.75% Senior Notes and 5.25% Senior Notes (together, the "Unsecured Notes") continued as obligations of the Anywhere issuers. The Secured Notes and Unsecured Notes represent an aggregate of $2.1 billion in principal amount of debt assumed in the Anywhere Merger and are reflected in the Company's condensed consolidated financial statements as of September 30, 2026.
For additional discussion of the impact of the Anywhere Merger and related financing transactions, including the Convertible Notes, the Capped Call Transactions and the Secured Notes and Unsecured Notes on our liquidity, see "Liquidity and Capital Resources."
Convertible Notes
In anticipation of the Anywhere Merger, on January 9, 2026 we issued $1.0 billion in aggregate principal amount of 0.25% Convertible Senior Notes due 2031 (the "Convertible Notes"). The Convertible Notes will mature on April 15, 2031, unless earlier repurchased, converted or redeemed. The Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), at our option at any time, and from time to time, on or after April 20, 2029 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price. The initial conversion rate for the Convertible Notes is 62.5626 shares of Class A common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $15.98 per share of Class A common stock. The net proceeds were used to repay the revolving credit facility of Anywhere and its subsidiaries, pay related fees, costs and expenses related to the Anywhere Merger and fund the net cost of entering into the Capped Call Transactions (as defined below).
Capped Call Transactions
Additionally, we also entered into privately negotiated capped call transactions (the "Capped Call Transactions"). The Capped Call Transactions are expected generally to reduce potential dilution to the Class A common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions is $23.68 per share of Class A common stock, which represents a premium of 100% over the last reported sale price of the Class A common stock on January 7, 2026. We paid $97 million for the Capped Call Transactions, funded with proceeds from the Convertible Notes. The net cash proceeds we received from the offering of the Convertible Notes were approximately $880 million after considering the $97 million cost of the Capped Call Transaction and $23 million of debt issuance costs.
Seasonality and Cyclicality
The residential real estate market is seasonal, which directly impacts our real estate professionals' businesses. While individual markets may vary, transaction volume is typically highest in spring and summer, and then declines gradually in late fall and winter. We experience the most significant financial effect from this seasonality in the first and fourth quarters of each year, when our revenue is typically lower relative to the second and third quarters. The effect of this seasonality on our revenue has a larger effect on our results of operations as many of our operating expenses (excluding commissions) are somewhat fixed in nature and do not vary directly in line with our revenue. We believe that this seasonality has affected and will continue to affect our quarterly results.
The broader residential real estate industry is cyclical, and individual markets can have their own dynamics that diverge from broad market conditions. The real estate industry can be impacted by the strength or weakness of the economy, changes in interest rates or mortgage lending standards, or extreme economic or political conditions. Our revenue growth rate tends to increase as the real estate industry performs well and to decrease when the real estate industry performs poorly.
RESULTS OF OPERATIONS
The following discussion presents our results of operations on both a consolidated basis and by reportable segment for the three and nine months ended September 30, 2026 and 2025. Our results for the three and nine months ended September 30, 2026 include the operations of the combined company following the Anywhere Merger, which closed on January 9, 2026. Results for the three and nine months ended September 30, 2025 reflect the historical results of Compass, Inc. on a stand-alone basis.
Following the Anywhere Merger, the Company operates through three reportable segments: Brokerage, Franchise, and Integrated Services. These segments reflect the manner in which the Chief Operating Decision Maker ("CODM") reviews operating performance and allocates resources. Management's discussion of segment operating performance in this MD&A is based on the same segment structure and performance measures used by the CODM and disclosed in Note 17 - "Segment Information", to the condensed consolidated financial statements. Any changes to the Company's segment structure or the manner in which segment performance is evaluated would be reflected in both the segment footnote and MD&A.
The results below are presented on both a GAAP and non-GAAP basis, with reconciliations of non-GAAP measures to the most directly comparable GAAP measures provided where applicable.
The following table sets forth our condensed consolidated statements of operations data for the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(in millions, except percentages)
Revenue $ 3,897 100.0 % $ 1,846 100.0 % $ 10,907 100.0 % $ 5,262 100.0 %
Operating expenses:
Commissions and other related expenses (1)
2,921 75.0 1,502 81.4 8,183 75.0 4,293 81.6
Sales and marketing (1)
107 2.7 59 3.2 312 2.9 178 3.4
Operations and support (1)
426 10.9 146 7.9 1,253 11.5 423 8.0
Technology and development (1)
107 2.7 67 3.6 335 3.1 180 3.4
General and administrative (1)
72 1.8 40 2.2 246 2.3 101 1.9
Anywhere Merger transaction and integration expenses (1)
28 0.7 8 0.4 245 2.2 8 0.2
Restructuring costs 4 0.1 2 0.1 12 0.1 14 0.3
Depreciation and amortization 145 3.7 28 1.5 461 4.2 86 1.6
Total operating expenses 3,810 97.8 1,852 100.3 11,047 101.3 5,283 100.4
Income (loss) from operations 87 2.2 (6) (0.3) (140) (1.3) (21) (0.4)
Investment income 7 0.2 2 0.1 15 0.1 4 0.1
Interest expense (41) (1.1) (2) (0.1) (119) (1.1) (7) (0.1)
Income (loss) before income taxes and equity in income of unconsolidated entities 53 1.4 (6) (0.3) (244) (2.2) (24) (0.5)
Income tax benefit 4 0.1 - - 400 3.7 3 0.1
Equity in income of unconsolidated entities 6 0.2 2 0.1 21 0.2 5 0.1
Net income (loss) 63 1.6 (4) (0.2) 177 1.6 (16) (0.3)
Net income attributable to non-controlling interests (1) - - - (1) - - -
Net income (loss) attributable to Compass, Inc. $ 62 1.6 % $ (4) (0.2 %) $ 176 1.6 % $ (16) (0.3 %)
(1)Includes stock-based compensation expense as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Commissions and other related expenses $ 1 $ - $ 2 $ -
Sales and marketing 3 9 12 25
Operations and support 8 11 26 26
Technology and development 13 28 45 66
General and administrative 11 11 36 28
Anywhere Merger transaction and integration expenses - - 64 -
Total stock-based compensation expense $ 36 $ 59 $ 185 $ 145
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
The following section provides analysis of our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025.
Within the discussion of Revenue and of Commissions and other related expenses, we have included Supplemental Pro Forma Revenue and Commissions and other related expenses for the Company ("Compass") and Anywhere on a combined basis for the periods presented. These pro forma results are presented as if the Company's acquisition of Anywhere had occurred on January 1, 2025. For comparability, Anywhere's results have been included for the full period from January 1, 2025 through September 30, 2026, which incorporates the first eight days of January 2026 prior to the closing of the acquisition. This pro forma financial information has not been prepared in accordance with the requirements of Article 11 of Regulation S-X or Accounting Standards Codification 805, Business Combinations, and was prepared for illustrative and informational purposes only.
Additional discussion of financial metrics for the Company's reportable segments follows in the "Segment Operating Performance" section.
Revenue
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Revenue $ 3,897 $ 1,846 $ 2,051 111.1 % $ 10,907 $ 5,262 $ 5,645 107.3 %
Supplemental pro forma information:
Pro forma revenue $ 3,897 $ 3,493 $ 404 11.6 % $ 10,960 $ 9,837 $ 1,123 11.4 %
On a consolidated basis, revenue was $3.9 billion and $10.9 billion during the three and nine months ended September 30, 2026, respectively, an increase of $2.1 billion, or 111.1%, and an increase of $5.6 billion, or 107.3%, compared to the prior-year periods, respectively. These increases are primarily the result of the acquisition of Anywhere in January 2026.
On a pro forma basis, revenue was $3.9 billion and $11.0 billion during the three and nine months ended September 30, 2026, respectively, an increase of $404 million, or 11.6%, and an increase of $1,123 million, or 11.4%, compared to the prior-year periods. These increases are primarily a result of higher average sale prices across our various segments.
Operating Expenses
Commissions and other related expenses
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Commissions and other related expenses $ 2,921 $ 1,502 $ 1,419 94.5% $ 8,183 $ 4,293 $ 3,890 90.6%
Percentage of revenue 75.0 % 81.4 % 75.0 % 81.6 %
Supplemental pro forma information:
Pro forma commissions and other related expenses $ 2,921 $ 2,586 $ 335 13.0% $ 8,213 $ 7,297 $ 916 12.6%
Percentage of pro forma revenue 75.0 % 74.0 % 74.9 % 74.2 %
On a consolidated basis, commissions and other related expenses was $2.9 billion and $8.2 billion for the three and nine months ended September 30, 2026, respectively, an increase of $1.4 billion, or 94.5%, and $3.9 billion, or 90.6%, compared to the prior-year periods, respectively. These increases on an absolute dollar basis are primarily the result of the acquisition of Anywhere in January 2026. Including the impact of the Anywhere Merger, commissions and other related expenses as a percentage of revenue decreased to 75.0% from 81.4% for the three months ended September 30, 2026 and 2025, respectively, and to 75.0% from 81.6% for the nine months ended September 30, 2026 and 2025, respectively. These decreases were primarily attributable to Anywhere's franchise and integrated services businesses, which contributed meaningful revenue in 2026 but do not incur expenses classified within commissions and other related expenses.
On a pro forma basis, commissions and other related expenses was $2.9 billion and $8.2 billion during the three and nine months ended September 30, 2026, respectively, an increase of $335 million, or 13.0%, and an increase of $916 million, or 12.6%, compared to the prior-year periods, respectively. Year-over-year increases in absolute dollars were driven by higher gross commission income from our owned-brokerage business during the three months ended September 30, 2026. On a pro forma basis, commissions and other related expenses as a percentage of revenue increased slightly for the three and nine months ended September 30, 2026 when compared to the prior-year periods, reflecting changes in agent commission arrangements and geographic mix.
Sales and marketing
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Sales and marketing $ 107 $ 59 $ 48 81.4 % $ 312 $ 178 $ 134 75.3 %
Percentage of revenue 2.7 % 3.2 % 2.9 % 3.4 %
On a consolidated basis, sales and marketing expense was $107 million and $312 million during the three and nine months ended September 30, 2026, an increase of $48 million, or 81.4%, and an increase of $134 million, or 75.3%, compared to the prior-year periods, respectively. These increases were primarily driven by increased employee compensation for marketing staff, agent advertising, and marketing costs associated with the acquired Anywhere businesses.
Operations and support
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Operations and support $ 426 $ 146 $ 280 191.8 % $ 1,253 $ 423 $ 830 196.2 %
Percentage of revenue 10.9 % 7.9 % 11.5 % 8.0 %
On a consolidated basis, operations and support expense was $426 million and $1,253 million during the three and nine months ended September 30, 2026, an increase of $280 million, or 191.8%, and $830 million, or 196.2%, compared to the prior-year periods, respectively. The increases were primarily driven by the increased operating expenses related to employee compensation, occupancy, and other operating items as a result of the addition of Anywhere.
Technology and development
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Technology and development $ 107 $ 67 $ 40 59.7 % $ 335 $ 180 $ 155 86.1 %
Percentage of revenue 2.7 % 3.6 % 3.1 % 3.4 %
On a consolidated basis, technology and development expense was $107 million and $335 million during the three and nine months ended September 30, 2026, an increase of $40 million, or 59.7%, and $155 million, or 86.1%, compared to the prior-year periods, respectively. The increases were primarily driven by the addition of Anywhere's employee compensation, software, and information technology infrastructure costs. The improvement in technology and development expense as a percentage of revenue when comparing the three months ended September 30, 2026 to the nine months ended September 30, 2026 to the prior-year periods, respectively, is primarily driven by the benefit of realized cost synergies and continued cost management.
General and administrative
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
General and administrative $ 72 $ 40 $ 32 80.0 % $ 246 $ 101 $ 145 143.6 %
Percentage of revenue 1.8 % 2.2 % 2.3 % 1.9 %
On a consolidated basis, general and administrative expense was $72 million and $246 million during the three and nine months ended September 30, 2026, an increase of $32 million, or 80.0%, and $145 million, or 143.6%, compared to the prior-year periods, respectively. The increases were primarily driven by the addition of Anywhere's general and administrative functions.
Anywhere Merger transaction and integration expenses
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Anywhere Merger transaction and integration expenses $ 28 $ 8 $ 20 250.0 % $ 245 $ 8 $ 237 2,962.5 %
Percentage of revenue 0.7 % 0.4 % 2.2 % 0.2 %
Anywhere Merger transaction and integration expenses during the three and nine months ended September 30, 2026 and 2025, represents transaction and integration costs incurred in connection with the Anywhere Merger. These costs were comprised of legal, investment banking and other transaction-related costs, severance and other personnel-related costs, all of which were expensed as incurred. In addition, the Company incurred stock-based compensation expense of $64 million during the nine months ended September 30, 2026, primarily related to the acceleration of certain Anywhere equity awards. These awards were converted to Company equity awards in connection with the Anywhere Merger and subsequently accelerated upon the termination of certain employees.
Restructuring costs
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Restructuring costs $ 4 $ 2 $ 2 100.0 % $ 12 $ 14 $ (2) (14.3 %)
Percentage of revenue 0.1 % 0.1 % 0.1 % 0.3 %
Restructuring costs were $4 million and $12 million for three and nine months ended September 30, 2026, respectively. These costs primarily consisted of lease termination costs pertaining to restructuring programs initiated prior to the Anywhere Merger.
Depreciation and amortization
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Depreciation and amortization $ 145 $ 28 $ 117 417.9 % $ 461 $ 86 $ 375 436.0 %
Percentage of revenue 3.7 % 1.5 % 4.2 % 1.6 %
Depreciation and amortization expense increased $117 million, or 417.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, and increased $375 million, or 436.0%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase was primarily attributable to amortization of intangible assets and depreciation of fixed assets recognized in the Anywhere Merger, which contributed $123 million and $388 million for the three and nine months ended September 30, 2026, respectively.
Investment income
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Investment income $ 7 $ 2 $ 5 250.0 % $ 15 $ 4 $ 11 275.0 %
Investment income increased during the three and nine months ended September 30, 2026 primarily as a result of an increase in our average short-term interest-bearing investments as compared to the three and nine months ended September 30, 2025.
Interest expense
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Interest expense $ 41 $ 2 $ 39 1,950.0 % $ 119 $ 7 $ 112 1,600.0 %
Interest expense was $41 million and $119 million for the three and nine months ended September 30, 2026, an increase of $39 million and $112 million, respectively. The increased expense was primarily attributable to the Anywhere Merger, with assumed debt contributing $37 million and $108 million for the three and nine months ended September 30, 2026.
Income tax (expense) benefit
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Income tax benefit $ 4 $ - $ 4 100.0 % $ 400 $ 3 $ 397 13,233.3 %
For the three and nine months ended September 30, 2026, income tax benefit increased by $4 million and $397 million, respectively. Both increases were primarily driven by the reversal of valuation allowances on deferred tax assets following the establishment of deferred tax liabilities for the recognition of intangible assets that are non-deductible for tax purposes. These reversals were related to the Conversion of four Sotheby's International Realty franchisees to company-owned brokerage operations (the "Conversions") completed during the three months ended September 30, 2026 as disclosed in Note 3 - "Acquisitions" and the Anywhere Merger, respectively.
Equity in income of unconsolidated entities
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Equity in income of unconsolidated entities $ 6 $ 2 $ 4 200.0 % $ 21 $ 5 $ 16 320.0 %
During the three and nine months ended September 30, 2026, Equity in income of unconsolidated entities was income of $6 million and $21 million, respectively. The increase compared to the prior-year periods was primarily attributable to our two mortgage joint ventures, one of which was acquired in connection with the Anywhere Merger, as well as the other unconsolidated entities acquired in the Anywhere Merger.
Adjusted EBITDA and Adjusted EBITDA margin
The following section provides analysis of Adjusted EBITDA and Adjusted EBITDA margin on a consolidated basis for the three and nine months ended September 30, 2026 and 2025. References to "stand-alone Compass" refer to our consolidated results excluding the impact of the Anywhere Merger. Adjusted EBITDA is a non-GAAP financial measure that represents Net income (loss) attributable to Compass, Inc., adjusted for depreciation and amortization, investment income, interest expense, stock-based compensation expense, income taxes, and other items. For the periods presented, other items consisted of (i) restructuring charges associated with lease termination and severance costs, (ii) litigation charges in connection with the Antitrust Lawsuits, (iii) transaction and integration expenses associated with the Anywhere Merger, and (iv) other acquisition-related expenses. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue.
We use Adjusted EBITDA and Adjusted EBITDA margin, together 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 regarding our financial performance. We believe these measures are also useful to investors, analysts, and other interested parties because they provide a more consistent and comparable view of our operations across historical financial periods.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results reported under GAAP. Investors should consider these measures alongside other financial performance measures, including Net income (loss) attributable to Compass, Inc. and our other GAAP results. In the future, we may incur expenses similar to the adjustments reflected in these measures, and our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by the items excluded from their calculation. These measures are not presented in accordance with GAAP, and the use of these terms varies from others in our industry.
The following table provides a reconciliation of Net income (loss) attributable to Compass, Inc. to Adjusted EBITDA (in millions):
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Net income (loss) attributable to Compass, Inc. $ 62 $ (4) $ 176 $ (16)
Adjusted to exclude the following:
Depreciation and amortization 145 28 461 86
Investment income (7) (2) (15) (4)
Interest expense 41 2 119 7
Stock-based compensation 36 59 121 145
Income tax benefit (4) - (400) (3)
Anywhere Merger transaction and integration expenses (1)
28 8 245 8
Restructuring costs 4 2 12 14
Other acquisition-related expenses (2)
1 1 4 (2)
Litigation charge (3)
- - 7 -
Adjusted EBITDA $ 306 $ 94 $ 730 $ 235
Net income (loss) attributable to Compass, Inc. margin 1.6 % (0.2 %) 1.6 % (0.3) %
Adjusted EBITDA margin 7.9 % 5.1 % 6.7 % 4.5 %
(1)Represents transaction expenses incurred in connection with the closing of the Anywhere Merger and related integration activities. During the three and nine months ended September 30, 2026, these expenses consist of legal, investment banking and other transaction-related costs, severance and other personnel-related costs, all of which were expensed as incurred. Additional information regarding the Anywhere Merger is provided in Note 3 - "Acquisitions" to the condensed consolidated financial statements included elsewhere in this Quarterly Report.
(2)Includes adjustments related to the change in fair value of contingent consideration and other adjustments related to acquisition consideration.
(3)Represents a charge of $7 million incurred during the nine months ended September 30, 2026 in connection with the Antitrust Lawsuits. See Note 11 - "Commitments and Contingencies" to the condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Consolidated Adjusted EBITDA was $306 million and $94 million during the three months ended September 30, 2026 and 2025, respectively, and $730 million and $235 million during the nine months ended September 30, 2026 and 2025, respectively. The year-over-year improvements in Adjusted EBITDA were primarily driven by the inclusion of Anywhere, higher revenue at stand-alone Compass, and realized cost synergies and continued cost management.
The following tables provide supplemental information to the Reconciliation of Net income (loss) attributable to Compass, Inc. to Adjusted EBITDA presented above. These tables identify how each of the Operating expenses related financial statement line items contained within the condensed consolidated statements of operations elsewhere in this Quarterly Report are impacted by the items excluded from Adjusted EBITDA (in millions):
Three Months Ended September 30, 2026
Sales and marketing Operations and support Technology and development General and administrative
GAAP Basis $ 107 $ 426 $ 107 $ 72
Adjusted to exclude the following:
Stock-based compensation (3) (8) (13) (11)
Other acquisition-related expenses - (1) - -
Non-GAAP Basis $ 104 $ 417 $ 94 $ 61
Three Months Ended September 30, 2025
Sales and marketing Operations and support Technology and development General and administrative
GAAP Basis $ 59 $ 146 $ 67 $ 40
Adjusted to exclude the following:
Stock-based compensation (9) (11) (28) (11)
Other acquisition-related expenses - (1) - -
Non-GAAP Basis $ 50 $ 134 $ 39 $ 29
Nine Months Ended September 30, 2026
Sales and marketing Operations and support Technology and development General and administrative
GAAP Basis $ 312 $ 1,253 $ 335 $ 246
Adjusted to exclude the following:
Stock-based compensation (12) (26) (45) (36)
Other acquisition-related expenses - (4) - -
Litigation charge - - - (7)
Non-GAAP Basis $ 300 $ 1,223 $ 290 $ 203
Nine Months Ended September 30, 2025
Sales and marketing Operations and support Technology and development General and administrative
GAAP Basis $ 178 $ 423 $ 180 $ 101
Adjusted to exclude the following:
Stock-based compensation (25) (26) (66) (28)
Other acquisition-related expenses - 2 - -
Non-GAAP Basis $ 153 $ 399 $ 114 $ 73
Segment Operating Performance
Effective January 9, 2026, in connection with the Anywhere Merger, the Company realigned its operating segments to reflect how the Chief Operating Decision Maker ("CODM") allocates resources and assesses performance. The Company now operates through three reportable segments: Brokerage, Franchise, and Integrated Services, which includes relocation services (provided by Cartus).
The CODM evaluates segment performance and allocates resources based on Segment Revenue and Segment Adjusted EBITDA, a non-GAAP measure. Segment Adjusted EBITDA represents net income (loss) attributable to Compass, Inc. adjusted for depreciation and amortization, investment income, interest expense, stock-based compensation expense, income taxes, and other items. For the periods presented, other items consisted of (i) restructuring charges associated with lease termination and severance costs, (ii) litigation charges in connection with the Antitrust Lawsuits, and (iii) transaction and integration expenses associated with the Anywhere Merger. Segment Adjusted EBITDA margin is calculated by dividing Segment Adjusted EBITDA by segment revenue.
To reconcile total Segment Adjusted EBITDA to consolidated Adjusted EBITDA, unallocated corporate expenses are deducted from the sum of Segment Adjusted EBITDA for the three reportable segments, as presented in Note 17 - "Segment Information" to the condensed consolidated financial statements.
The segment information presented herein reflects the same reportable segments and performance measures reviewed by the CODM and is consistent with the segment information disclosed in Note 17 - "Segment Information" to the condensed consolidated financial statements.
Additionally, we have included Supplemental Pro Forma Revenue for the Company ("Compass") and Anywhere on a combined basis for the periods presented. These pro forma results are presented as if the Company's acquisition of Anywhere had
occurred on January 1, 2025. For comparability, Anywhere's results have been included for the full period from January 1, 2025 through September 30, 2026, which incorporates the first eight days of January 2026 prior to the closing of the acquisition. This pro forma financial information has not been prepared in accordance with the requirements of Article 11 of Regulation S-X or Accounting Standards Codification 805, Business Combinations, and was prepared for illustrative and informational purposes only.
For the Supplemental Pro Forma revenue information, certain amounts in Anywhere's historical financial statements have been reclassified to conform to the Company's segment presentation, which became effective for the three months ended March 31, 2026. These reclassifications (i) move Cartus relocation revenue into Integrated Services, which now includes relocation revenue along with title and escrow revenue, and (ii) eliminate intercompany royalty revenue earned by the Franchise segment from the Brokerage segment.
The following table summarizes revenue, Segment Adjusted EBITDA, Segment Adjusted EBITDA margin, and pro forma revenue by segment for the periods indicated, each of which is described below (in millions, except percentages):
Three Months Ended September 30,
Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(in millions, except percentages)
Revenue:
Brokerage $ 3,578 $ 1,802 $ 1,776 98.6 % $ 10,005 $ 5,143 $ 4,862 94.5 %
Franchise $ 122 $ 8 $ 114 1,425.0 % $ 347 $ 22 $ 325 1,477.3 %
Integrated Services $ 197 $ 36 $ 161 447.2 % $ 555 $ 97 $ 458 472.2 %
Segment Adjusted EBITDA:
Brokerage $ 320 $ 140 $ 180 128.6 % $ 844 $ 366 $ 478 130.6 %
Franchise $ 82 $ 3 $ 79 2,633.3 % $ 215 $ 8 $ 207 2,587.5 %
Integrated Services $ 40 $ 9 $ 31 344.4 % $ 105 $ 25 $ 80 320.0 %
Segment Adjusted EBITDA margin:
Brokerage 8.9 % 7.8 % 8.4 % 7.1 %
Franchise 67.2 % 37.5 % 62.0 % 36.4 %
Integrated Services 20.3 % 25.0 % 18.9 % 25.8 %
Supplemental pro forma information:
Pro forma revenue:
Brokerage $ 3,578 $ 3,171 $ 407 12.8% $ 10,045 $ 8,956 $ 1,089 12.2%
Franchise 122 131 (9) (6.9%) 352 354 (2) (0.6%)
Integrated Services 197 191 6 3.1% 563 527 36 6.8%
Total pro forma revenue $ 3,897 $ 3,493 $ 404 11.6% $ 10,960 $ 9,837 $ 1,123 11.4%
Brokerage
Brokerage revenue increased $1.8 billion, or 98.6% for the three months ended September 30, 2026 and $4.9 billion, or 94.5% for the nine months ended September 30, 2026, compared to the prior periods. The year-over-year increase was primarily driven by the inclusion of Anywhere. On a pro forma basis, Brokerage revenue increased 12.8% and 12.2% for the three months and nine months ended September 30, 2026, respectively, as compared to the prior year periods. These increases are primarily driven by higher average selling prices from our owned-brokerage real estate professionals.
Segment Adjusted EBITDA was $320 million for the three months ended September 30, 2026 and $844 million for the nine months ended September 30, 2026, representing an increase of $180 million, or 128.6% for the three months ended September 30, 2026, and $478 million, or 130.6%, for the nine months ended September 30, 2026, compared to the prior-year periods. The year-over-year increase was primarily driven by the addition of Anywhere and revenue growth outpacing the increase in operating costs. Segment Adjusted EBITDA margin increased to 8.9% for the three months ended September 30, 2026 and 8.4% for the nine months ended September 30, 2026 from 7.8% for the three months ended September 30, 2025 and 7.1% for the nine months ended September 30, 2025, reflecting the same dynamic.
Franchise
Franchise revenue increased $114 million and $325 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior-year periods. These increases are primarily driven by the addition of the Anywhere franchise business. On a pro forma basis, Franchise revenue decreased 6.9% and 0.6% for the three and nine months ended September 30, 2026, respectively, as compared to the prior-year periods. These decreases were primarily driven by lower royalty revenue following the Conversions.
Franchise Segment Adjusted EBITDA increased $79 million and $207 million for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods, substantially all of which was attributable to the Anywhere Merger. Segment Adjusted EBITDA margin was 67.2% and 62.0% for the three and nine months ended September 30, 2026, respectively, compared to 37.5% and 36.4% in the prior-year periods, respectively, reflecting the margin profile of the combined Franchise segment following the Anywhere Merger.
Integrated Services
Integrated Services revenue increased $161 million and $458 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior-year periods. These increases are primarily driven by the addition of the Anywhere integrated services business. On a pro forma basis, Integrated Services revenue increased 3.1% and 6.8% for the three and nine months ended September 30, 2026, respectively, as compared to the prior-year periods. These increases were primarily driven by higher title and escrow transaction counts.
Integrated Services Segment Adjusted EBITDA increased $31 million and $80 million for the three and nine months ended September 30, 2026, respectively, compared to the prior-year periods, substantially all of which was attributable to the Anywhere Merger. Because stand-alone Compass had smaller integrated services operations prior to the Merger, Anywhere's integrated services businesses account for substantially all of the current-period results. Segment Adjusted EBITDA margin was 20.3% and 18.9% for the three and nine months ended September 30, 2026, respectively, compared to 25.0% and 25.8% in the prior-year periods, respectively, reflecting the margin profile of the combined Integrated Services segment following the Anywhere Merger.
Unallocated Corporate Expenses
Unallocated corporate expenses consist of operating expenses that are not allocated to any of the three reportable segments. These expenses primarily relate to our centralized technology organization and corporate functions, including human resources, finance, legal, and our executive leadership.
For the three and nine months ended September 30, 2026, unallocated corporate expenses were $136 million and $434 million, respectively, compared to $58 million and $164 million in the prior-year periods, respectively, representing increases of $78 million, or 134.5%, and $270 million, or 164.6%, respectively. These annual increases are the result of the additional expenses incurred by the corporate functions acquired during the Anywhere Merger.
For further details on how unallocated corporate expenses are classified within our statements of operations refer to Note 17 - "Segment Information" to the condensed consolidated financial statements.
KEY BUSINESS METRICS
The following key business metrics provide insight into the operating activity underlying the Company's financial results for the three and nine months ended September 30, 2026 and 2025. These metrics reflect transaction volume, pricing trends, real estate professional and franchise activity, and title and escrow services associated with residential real estate transactions. Certain metrics are more relevant to specific reportable segments due to differences in operating models, and the discussion below is organized by reportable segment to reflect that context. These metrics are presented to explain operating trends and activity levels and are not intended to represent measures of segment financial performance.
In addition to actual results, the following discussion includes the Company's key business metrics on a pro forma basis. Pro forma metrics reflect the combined operations of Compass and Anywhere as if the acquisition had occurred on January 1, 2025, and therefore include Anywhere's results across all periods presented. Because the acquisition actually closed on January 9,
2026, the pro forma metrics for the nine months ended September 30, 2026 incorporate Anywhere's results for the first eight days of January 2026 prior to closing.
Brokerage Metrics
The following table summarizes the Brokerage segment's key business metrics on an actual and pro forma basis for the periods indicated, each of which is described below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Actuals:
Total Transactions
140,118 67,887 392,631 190,032
Gross Transaction Value (in billions)
$ 138.9 $ 70.7 $ 391.5 $ 201.4
Pro forma:
Total Transactions
140,118 136,660 394,274 377,746
Gross Transaction Value (in billions)
$ 138.9 $ 124.1 $ 392.9 $ 349.9
Total Transactions
Total Transactions represents the sum of all transactions closed by our Brokerage segment during the periods in which our real estate professional represented the buyer or seller in the purchase or sale of a home. A single transaction is counted twice when our real estate professionals represented both the buyer and the seller. This metric excludes rental transactions. We view Total Transactions as a key measure of the scale of our Brokerage operations, which drives our financial performance.
Total Transactions increased to 140,118 for the three months ended September 30, 2026 and 392,631 for the nine months ended September 30, 2026. On a pro forma basis, Total Transactions increased by 3,458, or 2.5%, for the three months ended September 30, 2026, and increased by 16,528, or 4.4% for the nine months ended September 30, 2026, compared to the prior year periods. The year-over-year increase in pro forma Total Transactions was driven mainly by growth in stand-alone Compass's owned brokerage businesses and by the conversion of four franchisees operating under the Sotheby's International Realty brand to company-owned brokerage operations during the three months ended September 30, 2026 (the "Conversions").
Gross Transaction Value
Gross Transaction Value represents the sum of all closing sale prices for homes transacted by real estate professionals within our Brokerage segment during the periods. The value of a single transaction is counted twice when our real estate professionals represented both the buyer and the seller. This metric excludes rental transactions. We view Gross Transaction Value as a key measure of the scale of our Brokerage operations and the success of our real estate professionals, both of which ultimately impact revenue.
Gross Transaction Value increased to $138.9 billion for the three months ended September 30, 2026, and $391.5 billion for the nine months ended September 30, 2026. On a pro forma basis, Gross Transaction Value increased by $14.8 billion, or 11.9%, for the three months ended September 30, 2026, and increased by $43.0 billion, or 12.3%, for the nine months ended September 30, 2026, compared to the prior year periods. The year-over-year increase in pro forma Gross Transaction Value was primarily driven by higher average sales price on transactions closed by our real estate professionals supporting the owned-brokerage business.
Franchise Metrics
The following table summarizes the Franchise segment's key business metrics on an actual and pro forma basis for the periods indicated, each of which is described below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Actuals:
Total Transactions
191,809 8,825 532,363 23,792
Gross Transaction Value (in billions) $ 108.9 $ 8.5 $ 305.8 $ 23.6
Net Royalty Per Side $ 486 $ 669 $ 481 $ 638
Pro forma:
Total Transactions
191,809 202,310 538,421 541,336
Gross Transaction Value (in billions) $ 108.9 $ 110.4 $ 309.5 $ 294.9
Net Royalty Per Side $ 486 $ 475 $ 480 $ 473
Total Transactions
Total Transactions represents the sum of all transactions closed by franchisees within our Franchise segment during the periods in which a franchisee real estate professional represented the buyer or seller in the purchase or sale of a home. A single transaction is counted twice when franchisee real estate professionals represented both the buyer and the seller. We view Total Transactions as a key measure of the scale of our Franchise segment, which drives our royalty revenue. This metric excludes any transactions from our international franchisees.
Total Transactions for the Franchise segment increased to 191,809 for the three months ended September 30, 2026 and 532,363 for the nine months ended September 30, 2026. On a pro forma basis, Total Transactions for the Franchise segment decreased by 10,501, or 5.2%, for the three months ended September 30, 2026, and decreased by 2,915, or 0.5% for the nine months ended September 30, 2026, compared to the prior year periods. The year-over-year decrease in pro forma transactions primarily reflects lower market activity in markets with lower average home price, as well as the Conversions. Transactions closed by these businesses after their respective date of conversion are reported in the Brokerage segment.
Gross Transaction Value
Gross Transaction Value represents the sum of all closing sale prices for homes transacted by franchisee real estate professionals within our Franchise segment during the periods presented. The value of a single transaction is counted twice when franchisee real estate professionals represented both the buyer and the seller. We view Gross Transaction Value as a key measure of the scale of our Franchise segment and the success of our franchisees, both of which ultimately impact royalty revenue. This metric excludes any transactions from our international franchisees.
Gross Transaction Value for the Franchise segment increased to $108.9 billion for the three months ended September 30, 2026, and $305.8 billion for the nine months ended September 30, 2026. On a pro forma basis, Gross Transaction Value for the Franchise segment decreased by $1.5 billion, or 1.4%, for the three months ended September 30, 2026, and increased by $14.6 billion, or 5.0%, for the nine months ended September 30, 2026, compared to the prior year periods. The quarterly decrease in pro forma Gross Transaction Value was driven mainly by the Conversions, since the Gross Transaction Value of those businesses is reported in the Brokerage segment after their conversion dates. The nine-month increase was driven mainly by higher average sales prices year-over-year.
When comparing the Brokerage and Franchise segment results, Franchise Total Transactions exceeds Brokerage Total Transactions, while Franchise Gross Transaction Value is lower than Brokerage Gross Transaction Value. This reflects differences in geographic mix and average home sale prices between the two segments rather than a change in the relative productivity of either. Our owned-brokerage operations are concentrated in major metropolitan markets, which carry higher average home prices, while our franchise network is more broadly distributed across the country, including markets with lower average home prices. As a result, a larger number of franchise transactions can generate lower aggregate transaction value relative to a smaller number of brokerage transactions.
Net Royalty Per Side
Net Royalty Per Side represents the average net royalty revenue earned by our Franchise segment per franchisee transaction side closed during the periods. Net royalty revenue reflects gross royalty revenue earned under our franchise agreements, net of volume incentives and other contractual reductions paid or credited to franchisees. We view Net Royalty Per Side as an indicator of the economic value our Franchise segment generates from each franchisee transaction and the effectiveness of our franchise pricing and incentive structure. This metric excludes any activity from our international franchisees.
Net Royalty Per Side was $486 for the three months ended September 30, 2026 and $481 for the nine months ended September 30, 2026. On a pro forma basis, Net Royalty Per Side was $486 and $480 for the three and nine months ended September 30, 2026, respectively, representing increases of 2.3% and 1.5% from the prior year periods. These increases were driven by higher average sale prices.
Integrated Services Metrics
The following table summarizes the Integrated Services segment's key business metrics on an actual and pro forma basis for the periods indicated, each of which is described below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Actuals:
Purchase title and escrow transactions
35,106 7,089 98,515 18,387
Refinancing title and escrow transactions
3,651 577 13,171 1,310
Average title and escrow revenue per transaction
$ 3,590 $ 4,659 $ 3,600 $ 4,891
Pro forma:
Purchase title and escrow transactions
35,106 34,577 99,683 96,053
Refinancing title and escrow transactions
3,651 3,546 13,380 9,664
Average title and escrow revenue per transaction
$ 3,590 $ 3,541 $ 3,593 $ 3,547
Purchase Title and Escrow Transactions
Purchase Title and Escrow Transactions represents the number of title insurance policies and escrow settlements completed by our Integrated Services segment during the periods in connection with home purchase transactions. We view Purchase Title and Escrow Transactions as an indicator of the scale of our title and escrow activity tied to residential home purchases and our ability to capture attach opportunities from real estate transactions.
Purchase Title and Escrow Transactions were 35,106 for the three months ended September 30, 2026 and 98,515 for the nine months ended September 30, 2026. On a pro forma basis, Title and Escrow Transactions increased by 529, or 1.5%, for the three months ended September 30, 2026 and increased by 3,630, or 3.8%, for the nine months ended September 30, 2026, compared to the prior year periods. The year-over-year increase in pro forma purchase transactions primarily reflects higher transaction volume from businesses acquired by Compass prior to the Anywhere Merger, as well as increased market activity in the geographies served by our integrated services businesses.
Refinancing Title and Escrow Transactions
Refinancing Title and Escrow Transactions represents the number of title insurance policies and escrow settlements completed by our Integrated Services segment during the periods in connection with mortgage refinancing transactions. We view Refinancing Title and Escrow Transactions as an indicator of refinancing activity in the markets we serve, which is influenced by prevailing mortgage interest rates.
Refinancing Title and Escrow Transactions for our Integrated Services segment were 3,651 for the three months ended September 30, 2026 and 13,171 for the nine months ended September 30, 2026. On a pro forma basis, Refinancing Title and Escrow Transactions increased by 105, or 3.0%, for the three months ended September 30, 2026 and increased by 3,716, or
38.5%, for the nine months ended September 30, 2026, compared to the prior year periods. The year-over-year increase in pro forma refinancing transactions primarily reflects lower prevailing mortgage rates year-over-year.
Average Title and Escrow Revenue Per Transaction
Average Title and Escrow Revenue Per Transaction represents the average revenue earned by our Integrated Services segment per title and escrow transaction completed during the periods, calculated as title and escrow revenue divided by the sum of purchasing and refinancing title and escrow transactions. We view Average Title and Escrow Revenue Per Transaction as an indicator of the revenue mix and pricing of our title and escrow services.
Average Title and Escrow Revenue Per Transaction for our Integrated Services segment was $3,590 for the three months ended September 30, 2026 and $3,600 for the nine months ended September 30, 2026. On a pro forma basis, Average Title and Escrow Revenue Per Transaction increased by $49, or 1.4%, for the three months ended September 30, 2026 and increased by $46, or 1.3%, for the nine months ended September 30, 2026, compared to the prior year periods. The increases in pro forma Average Title and Escrow Revenue Per Transaction primarily reflects a year-over-year shift of revenue to markets in which the Company demands a higher price per transaction.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity and capital resources are cash flows from operations, the proceeds from the $1.0 billion aggregate principal amount of Convertible Notes issued in connection with the Anywhere Merger, and our Revolving Credit Facility. Proceeds from the Convertible Notes were used to repay in full approximately $500 million of outstanding borrowings under the Anywhere revolving credit facility (eliminating these variable-rate borrowings), pay merger-related fees and expenses, and fund the Capped Call transactions, which were entered into to reduce potential dilution to Class A common stock and/or offset potential cash payments upon conversion of the Convertible Notes.
Our primary uses of liquidity include working capital and day-to-day operations, continued investment in our technology offerings, market footprint expansion, and strategic initiatives designed to simplify the real estate transaction experience. Additionally, we expect to fund merger and integration-related expenses from our available liquidity.
Liquidity is also used to service debt. In connection with the Anywhere Merger, substantially all of Anywhere's outstanding indebtedness was added to our balance sheet, resulting in a significant increase in the Company's consolidated debt balance starting in 2026. Debt service payments will include interest payments on the Convertible Notes and on the aggregate principal amount outstanding of $2.1 billion of the fixed-rate Secured Notes and Unsecured Notes. The Secured Notes and Unsecured Notes bear a weighted-average interest rate of 6.95% and mature in 2029 and 2030.
These debt maturities in 2029, 2030, and 2031 totaling approximately $3.1 billion represent a long-term liquidity consideration, which management will continue to evaluate as part of its capital planning. From time to time, we may seek to repay, refinance, or restructure all or a portion of our debt or to repurchase our outstanding debt through, as applicable, tender offers, exchange offers, open market purchases, privately negotiated transactions or otherwise. Such transactions, if any, will depend on a number of factors, including prevailing market conditions, our liquidity requirements and contractual requirements (including compliance with the terms of our debt agreements), among other factors.
As described under the header "Real Estate Commission Sell-Side Antitrust Litigation" in Note 11 - "Commitments and Contingencies" to the condensed consolidated financial statements included elsewhere in this Quarterly Report, $54 million in remaining settlement payments under the Burnett, Moehrl, and Nosalek cases will be due within 21 business days after all appellate rights are exhausted; the timing is uncertain, but we currently expect this to occur in the first quarter of 2027. Additionally, as described under the header "Real Estate Commission Buy-Side Antitrust Litigation" in Note 11, on February 23, 2026, we agreed to pay $10 million under the Anywhere Opt-In Settlement (and paid $1 million of this obligation in March 2026, following preliminary approval by the court), and in April 2026, we agreed to pay $7 million under the Compass Opt-In Settlement (and paid $1 million of this obligation in June 2026, following preliminary approval by the court). Assuming final court approval of each of the Anywhere and Compass Opt-In Settlements, we currently expect to pay the remaining settlement amounts no earlier than the fourth quarter of 2026 and more likely in 2027.
As of September 30, 2026, we had cash and cash equivalents of $841 million. We maintain a $500 million Revolving Credit, subject to compliance with a financial covenant and certain other covenants. As of September 30, 2026, there were no outstanding borrowings, and $452 million was available, after giving effect to $48 million of letters of credit. As of September 30, 2026, we were in compliance with the financial covenant under the Revolving Credit Facility. See Note 10 -
"Debt" to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.
In April 2026, we entered into a multi-party transaction with a company (the "Franchisee Parent") that owns certain franchisees operating under the Sotheby's International Realty and Century 21 brands to restructure financial obligations of the Franchisee Parent's predecessor (the "Transaction"). As part of the Transaction, the Company became a 51% holder of Franchisee Parent's common equity and entered into a 30-month installment payment plan pursuant to which certain outstanding indebtedness owed to the Company will be satisfied.
Additionally, our Company and certain funds managed or advised by Angelo, Gordon & Co., L.P. or its affiliates (collectively, "TPG") entered into an agreement (the "Put Agreement") under which TPG has the right, but not the obligation (the "Put Right"), to require us to purchase 100% of Franchisee Parent's senior preferred equity. TPG may exercise the put at any time from the valuation date through the 54-month redemption date, and accordingly the related payment could become due in any period through that date. The payment due on exercise is equal to the amount of TPG's initial investment in the Franchisee Parent plus a time-based accretion, less distributions received in cash, subject to a cap. We recorded a liability for the Put Right at estimated fair value (the "Put Right liability") and monitor the potential timing and magnitude of this obligation as part of our liquidity planning. Refer to Note 6 - "Fair Value of Financial Assets and Liabilities" to the condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on the determination of the Put Right liability's fair value.
We believe we will continue to meet our cash flow needs over the next twelve months through the sources outlined above. The issuance of the Convertible Notes supplements our cash flow from operations, providing additional liquidity to support seasonal working capital needs without reliance on our variable-rate Revolving Credit Facility.
For more information regarding our indebtedness as of September 30, 2026, see Note 10 - "Debt" in our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in millions):
Nine Months Ended September 30,
2026 2025
Net cash provided by operating activities $ 282 $ 171
Net cash used in investing activities (465) (189)
Net cash provided by (used in) financing activities 826 (36)
Net increase (decrease) in cash and cash equivalents $ 643 $ (54)
Operating Activities
For the nine months ended September 30, 2026, net cash provided by operating activities was $282 million. This inflow was primarily driven by net income of $177 million, adjusted for $233 million of net non-cash items, primarily $461 million of depreciation and amortization and $185 million of stock-based compensation, partially offset by a $408 million deferred income tax benefit. These items were partially offset by a $128 million outflow from changes in operating assets and liabilities, which included cash payments for Anywhere Merger transaction and integration expenses, as well as payments on liabilities assumed in the Anywhere Merger that became payable after the January 9, 2026 close date.
For the nine months ended September 30, 2025, net cash provided by operating activities was $171 million. The inflow was primarily due to a $16 million net loss adjusted for $222 million of non-cash charges, partially offset by cash outflows due to changes in operating assets and liabilities of $35 million.
Investing Activities
During the nine months ended September 30, 2026, net cash used in investing activities was $465 million primarily consisting of $443 million in payments for acquisitions, net of cash acquired, and $30 million of capital expenditures, partially offset by cash inflows due to distributions from equity method investments in excess of cumulative earnings of $8.0 million.
During the nine months ended September 30, 2025, net cash used in investing activities was $189 million consisting of $175 million in payments for business combinations, net of cash acquired, $10 million of capital expenditures, and $4 million of investments in unconsolidated entities.
Financing Activities
During the nine months ended September 30, 2026, net cash provided by financing activities was $826 million primarily consisting of $977 million in net proceeds from the issuance of the Convertible Notes partially offset by $97 million in cash payments to purchase the capped call transactions related to the Convertible Notes and $83 million in taxes paid related to the net share settlement of equity awards.
During the nine months ended September 30, 2025, net cash used in financing activities was $36 million, primarily consisting of $47 million in taxes paid related to the net share settlement of equity awards, partially offset by $14 million in proceeds from the exercise of stock options and $5 million in net proceeds from drawdowns and repayments on the Concierge Facility.
Contractual Obligations and Commitments
The following table summarizes the material changes to contractual obligations and commitments as of September 30, 2026 resulting from the addition of Anywhere as a result of the Merger in January 2026 (amounts in millions):
Payments Due by Period
Total
Remainder of 2026
2027 2028 2029 2030
Thereafter
9.75% Senior Secured Second Lien Notes
$ 500 $ - $ - $ - $ - $ 500 $ -
7.00% Senior Secured Second Lien Notes
640 - - - - 640 -
5.75% Senior Notes 559 - - - 559 - -
5.25% Senior Notes 449 - - - - 449 -
Interest payments on long-term debt 549 59 149 149 133 59 -
Apple Ridge Securitization
160 - 160 - - - -
Leases (including imputed interest) (1)
482 34 129 101 79 48 91
Purchase obligations (2)
299 24 51 30 13 7 174
Total
$ 3,638 $ 117 $ 489 $ 280 $ 784 $ 1,703 $ 265
(1)The lease amounts included in the above table are not discounted and do not include variable costs.
(2)Purchase commitments include a minimum licensing fee that the Company is required to pay to Sotheby's through 2054. The annual minimum licensing fee is approximately $2 million. Purchase commitments also include a minimum licensing fee to be paid through 2058 for the licensing of the Better Homes and Gardens Real Estate brand. The annual minimum fee is generally between $4 million and $5 million.
Excluding the impact of the contractual obligations and commitments assumed from Anywhere, the most significant change in our contractual obligations and commitments related to issuance of the Convertible Notes in early 2026. Please refer to Note 10 - "Debt" included elsewhere in this quarterly report for further details.
We administer escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. These deposits are not assets of the Company and therefore are excluded from the accompanying condensed consolidated balance sheets. However, the Company remains contingently liable for these escrow and trust deposits totaling approximately $1.1 billion and $300 million as of September 30, 2026 and December 31, 2025, respectively.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
Critical Accounting Estimates and Policies
Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our
estimates and assumptions on an ongoing basis. Actual results may differ from these estimates and therefore, if material, our future financial statements will be affected.
There have been no material changes to our critical accounting policies and estimates disclosed in our 2025 Form 10-K. For additional information about our critical accounting policies and estimates, see the disclosure included in our 2025 Form 10-K, as well as Note 1 and Note 2 to our condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report.
Business Combinations
Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes estimates and assumptions, especially with respect to intangible assets. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, we may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal, advisory and consulting fees, are expensed as incurred.
RECENT ACCOUNTING PRONOUNCEMENTS
For a description of our recently adopted accounting pronouncements and accounting pronouncements issued but not yet adopted, see Note 2 to our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report.
Compass Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 12:13 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]