Compass Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 05:31
Quarterly Report for Quarter Ending September 30, 2025 (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, 2024 included in the 2024 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 Factor" in this Quarterly Report and Part I, Item 1A, "Risk Factors" in our 2024 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.
OVERVIEW
Management's discussion and analysis of financial condition and results of operations, or MD&A, is provided as a supplement to the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report and is intended to provide an understanding of our results of operations, financial condition and changes in our results of operations and financial condition. Our MD&A is organized as follows:
•Introduction.This section provides a general description of our company and its business, recent developments affecting our company, operational highlights and discussions of how seasonal factors and macroeconomic conditions may impact our results.
•Results of Operations.This section provides our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis.
•Key Business Metrics and Non-GAAP Financial Measures.This section provides a discussion of key business metrics and non-GAAP financial measures we use to evaluate our business and measure our performance, in addition to the measures presented in our condensed consolidated financial statements.
•Liquidity and Capital Resources.This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of September 30, 2025.
•Critical Accounting Estimates and Policies.This section discusses those accounting policies that are considered important to the evaluation and reporting of our financial condition and results of operations, and whose application requires us to exercise subjective and often complex judgments in making estimates and assumptions.
•Recent Accounting Pronouncements.This section provides a summary of the most recent authoritative accounting standards and guidance that have either been recently adopted by our company or may be adopted in the future.
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.
Our Business and Business Model
We are a leading tech-enabled real estate services company that includes the largest residential real estate brokerage in the United States by sales volume, which primarily operates under the Compass brand operating in 39 states and Washington DC, with approximately 38,400 agents. We also provide integrated services to real estate agents and their clients, including title, escrow and mortgage. In January 2025, we acquired a company with the exclusive, worldwide right to operate, franchise and license the Christie's International Real Estate brand. We refer to the independently operated brokerages that license the Christie's International Real Estate brand name as "affiliates". Christie's International Real Estate is among the
world's premier global luxury real estate brands with over 100 independently operated brokerages in over 50 countries and territories.
Our business model is directly aligned with the success of our agents. Our agents are independent contractors that associate their real estate license with us and choose to operate their businesses on our platform and under our brands. We currently generate substantially all of our revenue from the gross sales commissions that the agents 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. Integrated services and our affiliate business comprise a small portion of our revenue and earnings. We believe we are well-positioned to grow our integrated services and affiliate business and expect revenue and earnings for these businesses to grow as a portion of our overall revenue and earnings over the long-term.
Our technology offerings provide a strong foundation for agents and empower them to deliver exceptional service to their clients. Agents utilize our technology offerings to grow their businesses, save time and manage their businesses more effectively.
Our end-to-end proprietary technology platform (the "Compass platform") allows real estate agents to perform their primary workflows, from first contact to close, with a single log-in and without leaving the platform. The Compass 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. The Compass platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients. Additionally, title and escrow and mortgage services are integrated and are available on the Compass platform.
Compass One, an all-in-one client dashboard, launched in February 2025, provides a client-facing version of the Compass platform to consumers, allowing agents' clients to have a differentiated experience where they can access the tools, services and advantages Compass offers to manage their homeownership journey.
Operational Highlights for the Three Months Ended September 30, 2025
We continue to attract and retain the most talented agents to our platform, which is critical to our long-term success. We grow our revenue by attracting high-performing agents looking to grow their business and increasing the productivity of our agents. We invest in our proprietary, integrated platform designed for real estate agents, to enable them to grow their business and save them time and money. This value proposition allows us to recruit more agents, help them grow their business and retain them on our platform at industry leading retention rates.
We had approximately 38,400 agents on our platform as of September 30, 2025. A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform.
As of September 30, 2025, the Number of Principal Agents was 21,5501, an increase of 4,008, or 22.8%, from September 30, 2024. The principal agent additions primarily relate to our recent acquisitions of various residential real estate brokerages and organic recruitment efforts.
During the three months ended September 30, 2025, our agents closed 67,886 Total Transactions, an increase of 21.5% when compared to the three months ended September 30, 2024. For the three months ended September 30, 2025, the increase in total transactions was primarily attributable to the residential real estate brokerages acquires since the prior-year period and organic recruitment efforts.
Our Gross Transaction Value for the three months ended September 30, 2025 was $70.7 billion, an increase of 22.5% when compared to the three months ended September 30, 2024. Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as the residential real estate brokerages acquired since the same period a year ago.
For the three months ended September 30, 2025, our Gross Transaction Value represented 5.63% of residential real estate transacted in the U.S., compared to 4.80% for the three months ended September 30, 2024. We calculate our market share
1The Number of Principal Agents metric excludes approximately 900 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S. existing home sales as reported by the National Association of Realtors ("NAR"). Gross Transaction Value includes a de minimis number of new development and commercial brokerage transactions.
For the definitions of Number of Principal Agents, Total Transactions and Gross Transaction Value, please refer to the section entitled "Key Business Metrics" included elsewhere in this Quarterly Report.
Seasonality and Cyclicality
The residential real estate market is seasonal, which directly impacts our agents' 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.
Proposed Merger With Anywhere Real Estate Inc.
On September 22, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Anywhere Real Estate Inc., a Delaware corporation ("Anywhere"), and Velocity Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary ("Merger Sub"). Under the Merger Agreement, and subject to its terms and conditions, Merger Sub will merge with and into Anywhere (the "Merger"), with Anywhere continuing as our wholly owned subsidiary.
Under the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger, each share of common stock of Anywhere issued and outstanding will be converted into the right to receive 1.436 fully paid and nonassessable shares of our Class A common stock. All outstanding equity awards of Anywhere will be converted into Compass equity awards under the 1.436 exchange ratio.
In connection with our entry into the Merger Agreement, on September 22, 2025, we entered into a debt financing commitment letter and related fee letters with Morgan Stanley Senior Funding, Inc. ("MSSF"), pursuant to which MSSF has committed to provide us with debt financing in an aggregate principal amount of up to $750 million in the form of a 364-day senior secured bridge loan facility, subject to customary conditions and entry into definitive financing and ancillary documentation as set forth therein. We expect that the existing senior notes of Anywhere and its subsidiaries will remain in place following the closing. The net proceeds of the debt financing are expected to be used to refinance certain existing indebtedness of Anywhere and its subsidiaries and to pay fees, costs and expenses related thereto.
The Merger is expected to close in the second half of 2026, subject to approval by both our and Anywhere's shareholders, and satisfaction of customary closing conditions, including receipt of regulatory approvals. As of the date of this filing, we have submitted our notification and report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR") with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice and expect to file our preliminary proxy statement/prospectus on Form S-4 with the SEC in November 2025.
Upon termination of the Merger Agreement under certain specified circumstances, a termination fee of $200 million will be payable by Compass or Anywhere, as applicable. In addition, upon termination of the Merger Agreement because certain required regulatory clearances are not obtained before the Outside Date (as defined in the Merger Agreement) or if the Merger is permanently enjoined, we will be required to pay Anywhere a termination fee of $350 million.
Impact of the Macroeconomic Conditions and Recent Industry Practice Changes on the U.S. Residential Real Estate Market and Our Business
A number of macroeconomic conditions, including high interest rates and the Federal Reserve Board's policies, have contributed to the slowdown in the U.S. residential real estate market, impacting our business and financial results.
Specifically, these conditions resulted in slowed consumer demand, declining home affordability and low inventory. While the Federal Reserve Board has begun to ease interest rates and the U.S. residential real estate market has experienced slight improvements, lack of further improvements, any slowdown or additional challenging conditions could have a significant impact on our business and financial results during the remainder of 2025 and beyond.
Additionally, as part of its nationwide class action settlement of the antitrust claims, NAR agreed to implement certain industry-wide practice changes, including, but not limited to, prohibiting buyer brokers' offers of compensation from being included in listings on Multiple Listing Services and requiring a buyer to enter into a written agreement with their agent that would set forth the buyer broker's fee before showing the buyer a property. These changes went into effect in August of 2024. Early in the spring of 2024, we entered into our own class action antitrust settlement and agreed to implement certain other practice changes. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. Further, we believe the Department of Justice is continuing to focus on the real estate industry, including the practice changes resulting from the NAR settlement, which could result in additional practice-wide changes.
While we continue to assess the effects of the ongoing slowdown and the industry-wide changes on our business and financial results, the ultimate impact will depend on future developments, which are highly uncertain and difficult to predict, as well as the actions that we have taken, or will take, to minimize any current and future impact on our revenue, profitability, or liquidity. In the meantime, the significant cost reduction actions that we have taken since 2022 and our continued cost discipline reduced our operating expense levels to the point that we are able to consistently generate positive operating cash flow, aside from a limited number of seasonally slower transaction volume months during the year.
RESULTS OF OPERATIONS
The following table sets forth our consolidated statements of operations data for the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,846.0 | 100.0 | % | $ | 1,494.0 | 100.0 | % | $ | 5,261.8 | 100.0 | % | $ | 4,248.7 | 100.0 | % | |||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
|
Commissions and other related expense (1)
|
1,503.4 | 81.4 | 1,227.7 | 82.2 | 4,295.2 | 81.6 | 3,495.3 | 82.3 | |||||||||||||||||||||||||||||||||||||||
|
Sales and marketing (1)
|
93.8 | 5.1 | 88.2 | 5.9 | 281.9 | 5.4 | 276.5 | 6.5 | |||||||||||||||||||||||||||||||||||||||
|
Operations and support (1)
|
111.1 | 6.0 | 84.4 | 5.6 | 317.1 | 6.0 | 246.5 | 5.8 | |||||||||||||||||||||||||||||||||||||||
|
Research and development (1)
|
67.4 | 3.7 | 47.5 | 3.2 | 180.7 | 3.4 | 141.9 | 3.3 | |||||||||||||||||||||||||||||||||||||||
|
General and administrative (1)
|
40.1 | 2.2 | 27.4 | 1.8 | 100.9 | 1.9 | 132.5 | 3.1 | |||||||||||||||||||||||||||||||||||||||
| Anywhere merger transaction and integration expenses | 7.5 | 0.4 | - | - | 7.5 | 0.1 | - | - | |||||||||||||||||||||||||||||||||||||||
| Restructuring costs | 2.3 | 0.1 | 1.7 | 0.1 | 14.2 | 0.3 | 7.5 | 0.2 | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 27.6 | 1.5 | 20.5 | 1.4 | 85.8 | 1.6 | 62.7 | 1.5 | |||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 1,853.2 | 100.4 | 1,497.4 | 100.2 | 5,283.3 | 100.4 | 4,362.9 | 102.7 | |||||||||||||||||||||||||||||||||||||||
| Loss from operations | (7.2) | (0.4) | (3.4) | (0.2) | (21.5) | (0.4) | (114.2) | (2.7) | |||||||||||||||||||||||||||||||||||||||
| Investment income, net | 1.5 | 0.1 | 2.2 | 0.1 | 3.6 | 0.1 | 4.7 | 0.1 | |||||||||||||||||||||||||||||||||||||||
| Interest expense | (2.1) | (0.1) | (1.5) | (0.1) | (7.1) | (0.1) | (4.6) | (0.1) | |||||||||||||||||||||||||||||||||||||||
| Loss before income taxes and equity in income (loss) of unconsolidated entities | (7.8) | (0.4) | (2.7) | (0.2) | (25.0) | (0.5) | (114.1) | (2.7) | |||||||||||||||||||||||||||||||||||||||
| Income tax benefit | 0.2 | - | 0.3 | - | 3.3 | 0.1 | 0.7 | - | |||||||||||||||||||||||||||||||||||||||
| Equity in income (loss) of unconsolidated entities | 3.0 | 0.2 | 0.5 | - | 5.5 | 0.1 | (0.7) | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | (4.6) | (0.2) | (1.9) | (0.1) | (16.2) | (0.3) | (114.1) | (2.7) | |||||||||||||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interests | - | - | 0.2 | - | 0.3 | - | 0.2 | - | |||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Compass, Inc. | $ | (4.6) | (0.2 | %) | $ | (1.7) | (0.1 | %) | $ | (15.9) | (0.3 | %) | $ | (113.9) | (2.7 | %) | |||||||||||||||||||||||||||||||
(1)Includes stock-based compensation expense as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Commissions and other related expense | $ | 0.4 | $ | - | $ | 0.4 | $ | - | |||||||||||||||
| Sales and marketing | 9.0 | 7.8 | 24.6 | 24.0 | |||||||||||||||||||
| Operations and support | 11.4 | 4.2 | 25.8 | 12.3 | |||||||||||||||||||
| Research and development | 27.7 | 14.6 | 66.0 | 44.7 | |||||||||||||||||||
| General and administrative | 11.1 | 5.9 | 28.4 | 15.3 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 59.6 | $ | 32.5 | $ | 145.2 | $ | 96.3 | |||||||||||||||
Comparison of the Three and Nine Months Ended September 30, 2025 and 2024
Revenue
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,846.0 | $ | 1,494.0 | $ | 352.0 | 23.6 | % | $ | 5,261.8 | $ | 4,248.7 | $ | 1,013.1 | 23.8 | % | |||||||||||||||||||||||||||||||
Revenue was $1,846.0 million and $5,261.8 million during the three and nine months ended September 30, 2025, an increase of $352.0 million, or 23.6%, and $1,013.1 million, or 23.8%, compared to the prior-year periods, respectively. The increase for the three and nine months ended September 30, 2025 was primarily driven by an increase in the number of agents that joined our platform during 2024 and 2025, including those agents attributable to businesses acquired since October 2024. The Number of Principal Agents as of September 30, 2025 grew to 21,550, an increase of 22.8% from the year ago period.
Operating Expenses
Commissions and other related expense
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Commissions and other related expense | $ | 1,503.4 | $ | 1,227.7 | $ | 275.7 | 22.5 | % | $ | 4,295.2 | $ | 3,495.3 | $ | 799.9 | 22.9 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 81.4 | % | 82.2 | % | 81.6 | % | 82.3 | % | |||||||||||||||||||||||||||||||||||||||
Commissions and other related expense was $1,503.4 million and $4,295.2 million during the three and nine months ended September 30, 2025, an increase of $275.7 million, or 22.5%, and $799.9 million, or 22.9%, compared to the prior-year periods, respectively. The increase in absolute dollars of Commission and other related expense for the three and nine months ended September 30, 2025 when compared to the prior-year periods was primarily driven by increased revenue. The decrease as a percentage of revenue was driven by the impact of recent acquisitions which operate with more favorable average agent commissions splits compared to our core brokerage.
Sales and marketing
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Sales and marketing | $ | 93.8 | $ | 88.2 | $ | 5.6 | 6.3 | % | $ | 281.9 | $ | 276.5 | $ | 5.4 | 2.0 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 5.1 | % | 5.9 | % | 5.4 | % | 6.5 | % | |||||||||||||||||||||||||||||||||||||||
Sales and marketing expense was $93.8 million and $281.9 million during the three and nine months ended September 30, 2025, an increase of $5.6 million, or 6.3%, and $5.4 million, or 2.0%, compared to the prior-year periods, respectively. Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $9.0 million and $24.6 million for the three and nine months ended September 30, 2025 and $7.8 million and $24.0 million for the three and nine months ended September 30, 2024, respectively. Sales and marketing expense excluding stock-based compensation expense, was $84.8 million, or 4.6% of revenue, and $257.3 million, or 4.9% of revenue, for the three and nine months ended September 30, 2025 and $80.4 million, or 5.4% of revenue, and $252.5 million, or 5.9% of revenue, for the three and nine months ended September 30, 2024, respectively. The increase in Sales and marketing expense in absolute dollars, excluding stock-based compensation expense, during the three and nine months ended September 30, 2025 as compared to the prior-year periods was primarily due to increased occupancy and personnel-related costs resulting from recent acquisitions, partially offset by lower agent marketing costs and reduced cash-based incentives for agents. The decrease in Sales and marketing expense as a percentage of revenue, excluding stock-based compensation expense, during the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 was primarily driven by the increases in revenue outpacing the year-over-year increases in Sales and marketing expense.
Operations and support
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Operations and support | $ | 111.1 | $ | 84.4 | $ | 26.7 | 31.6 | % | $ | 317.1 | $ | 246.5 | $ | 70.6 | 28.6 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 6.0 | % | 5.6 | % | 6.0 | % | 5.8 | % | |||||||||||||||||||||||||||||||||||||||
Operations and support expense was $111.1 million and $317.1 million during the three and nine months ended September 30, 2025, an increase of $26.7 million, or 31.6%, and $70.6 million, or 28.6%, compared to the prior-year periods, respectively. Included in Operations and support expense were non-cash expenses related to stock-based compensation of $11.4 million and $25.8 million for the three and nine months ended September 30, 2025 and $4.2 million and $12.3 million for the three and nine months ended September 30, 2024, respectively. Operations and support expense, excluding stock-based compensation expense, was $99.7 million, or 5.4% of revenue, and $291.3 million, or 5.5% of revenue, for the three and nine months ended September 30, 2025 and $80.2 million, or 5.4% of revenue, and $234.2 million, or 5.5% of revenue, for the three and nine months ended September 30, 2024, respectively. Excluding stock-based compensation, the increase in Operations and support expense was primarily due to higher personnel costs from recent acquisitions. As a percentage of revenue, Operations and support expense remained generally consistent compared to the prior-year periods.
Research and development
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 67.4 | $ | 47.5 | $ | 19.9 | 41.9 | % | $ | 180.7 | $ | 141.9 | $ | 38.8 | 27.3 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 3.7 | % | 3.2 | % | 3.4 | % | 3.3 | % | |||||||||||||||||||||||||||||||||||||||
Research and development expense was $67.4 million and $180.7 million during the three and nine months ended September 30, 2025, an increase of $19.9 million, or 41.9%, and $38.8 million, or 27.3%, compared to the prior-year periods, respectively. Included in Research and development expense were non-cash expenses related to stock-based compensation of $27.7 million and $66.0 million for the three and nine months ended September 30, 2025 and $14.6 million and $44.7 million for the three and nine months ended September 30, 2024, respectively. Research and development expense, excluding stock-based compensation expense, was $39.7 million, or 2.2% of revenue, and $114.7 million, or 2.2% of revenue, for the three and nine months ended September 30, 2025 and $32.9 million, or 2.2% of revenue, and $97.2 million, or 2.3% of revenue, for the three and nine months ended September 30, 2024, respectively. The increase in Research and development expense, excluding stock-based compensation expense, in absolute dollars was primarily driven by an increase in personnel and outside contractor costs. Research and development expense, excluding stock-based compensation, remained generally consistent as a percentage of revenue compared to the same periods in the prior year.
General and administrative
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | 40.1 | $ | 27.4 | $ | 12.7 | 46.4 | % | $ | 100.9 | $ | 132.5 | $ | (31.6) | (23.8 | %) | |||||||||||||||||||||||||||||||
| Percentage of revenue | 2.2 | % | 1.8 | % | 1.9 | % | 3.1 | % | |||||||||||||||||||||||||||||||||||||||
General and administrative expense was $40.1 million and $100.9 million during the three and nine months ended September 30, 2025, an increase of $12.7 million, or 46.4%, and a decrease of $31.6 million, or 23.8%, compared to the prior-year periods, respectively. General and administrative expense includes a charge of $57.5 million for the nine months ended September 30, 2024 in connection with the Antitrust Lawsuits, which is discussed in Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report. Also included in General and administrative expense were non-cash expenses related to stock-based compensation of $11.1 million and $28.4 million for the three and nine months ended September 30, 2025 and $5.9 million and $15.3 million for the three and nine months ended September 30, 2024, respectively. General and administrative expense excluding stock-based compensation
expense and the aforementioned litigation charge, was $29.0 million, or 1.6% of revenue, and $72.5 million, or 1.4% of revenue, for the three and nine months ended September 30, 2025 and $21.5 million, or 1.4% of revenue, and $59.7 million, or 1.4% of revenue, for the three and nine months ended September 30, 2024, respectively. Excluding stock-based compensation expense and the litigation charge, General and administrative expense increased due to increased legal fees, transaction expenses incurred in connection with the closing of the acquisition of Christie's International Real Estate and other general and administrative costs assumed from our acquired businesses. As a percentage of revenue, General and administrative expense, excluding stock-based compensation expense and the litigation charge, remained generally consistent compared to the prior-year periods.
Anywhere merger transaction and integration expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Anywhere merger transaction and integration expenses | $ | 7.5 | $ | - | $ | 7.5 | 100.0 | % | $ | 7.5 | $ | - | $ | 7.5 | 100.0 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 0.4 | % | - | % | 0.1 | % | - | % | |||||||||||||||||||||||||||||||||||||||
Anywhere merger transaction and integration expenses during the three and nine months ended September 30, 2025 represents transaction expenses incurred in connection with our signing of the Agreement and Plan of Merger with Anywhere Real Estate Inc. These expenses primarily consist of investment banking and legal fees. Additional information regarding the proposed merger is provided in Note 13 - "Proposed Merger With Anywhere Real Estate Inc." to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Restructuring costs
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | $ | 2.3 | $ | 1.7 | $ | 0.6 | 35.3 | % | $ | 14.2 | $ | 7.5 | $ | 6.7 | 89.3 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 0.1 | % | 0.1 | % | 0.3 | % | 0.2 | % | |||||||||||||||||||||||||||||||||||||||
Restructuring costs during the three months ended September 30, 2025 were relatively consistent with the same period in the prior year, as both periods primarily reflected costs associated with lease terminations. The increase in restructuring costs for the nine months ended September 30, 2025, compared to the prior year period, was primarily driven by expenses related to severance and other employee termination benefits, in addition to lease termination costs incurred in both the current and prior periods.
Depreciation and amortization
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 27.6 | $ | 20.5 | $ | 7.1 | 34.6 | % | $ | 85.8 | $ | 62.7 | $ | 23.1 | 36.8 | % | |||||||||||||||||||||||||||||||
| Percentage of revenue | 1.5 | % | 1.4 | % | 1.6 | % | 1.5 | % | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense increased $7.1 million, or 34.6%, for the three months ending September 30, 2025 compared to the three months ended September 30, 2024 and increased $23.1 million, or 36.8%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase for the three and nine months ended September 30, 2025 was primarily due to higher amortization of intangible assets from acquisitions completed since the prior year.
Investment income, net
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment income, net | $ | 1.5 | $ | 2.2 | $ | (0.7) | (31.8 | %) | $ | 3.6 | $ | 4.7 | $ | (1.1) | (23.4 | %) | |||||||||||||||||||||||||||||||
Investment income, net decreased during the three and nine months ended September 30, 2025 primarily as a result of a decrease in our average short-term interest-bearing investments as compared to the year ago periods.
Interest expense
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | $ | 2.1 | $ | 1.5 | $ | 0.6 | 40.0 | % | $ | 7.1 | $ | 4.6 | $ | 2.5 | 54.3 | % | |||||||||||||||||||||||||||||||
Interest expense was $2.1 million and $7.1 million for the three and nine months ended September 30, 2025. The increase from the prior-year periods was primarily driven by the interest expense incurred on our Revolving Credit Facility as a result of balances outstanding during the three and nine months ended September 30, 2025 with no comparable balances outstanding in the prior year. As of September 30, 2025, no balance was outstanding under the Revolving Credit Facility.
Income tax benefit
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Income tax benefit | $ | 0.2 | $ | 0.3 | $ | (0.1) | (33.3 | %) | $ | 3.3 | $ | 0.7 | $ | 2.6 | 371.4 | % | |||||||||||||||||||||||||||||||
For the three and nine months ended September 30, 2025, Income tax benefit decreased by $0.1 million and increased by $2.6 million when compared to the three and nine months ended September 30, 2024, respectively. The benefit during the nine months ended September 30, 2025 primarily resulted from income tax benefit recognized from acquisitions netted with international and state income tax expense. The benefit during the three months ended September 30, 2025 primarily related to adjustments to India deferred taxes netted with current taxes in United Kingdom and India and state income tax expense.
Equity in income (loss) of unconsolidated entities
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity in income (loss) of unconsolidated entities | $ | 3.0 | $ | 0.5 | $ | 2.5 | (500.0 | %) | $ | 5.5 | $ | (0.7) | $ | 6.2 | 885.7 | % | |||||||||||||||||||||||||||||||
During the three and nine months ended September 30, 2025, Equity in income (loss) of unconsolidated entities was income of $3.0 million and $5.5 million, respectively. This income was primarily driven by our share of earnings from its mortgage joint venture with Guaranteed Rate, Inc., as well as income from other unconsolidated entities acquired since the prior year.
KEY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES
In addition to the measures presented in our condensed consolidated financial statements, we use the following key business metrics and non-GAAP financial measures to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total Transactions | 67,886 | 55,872 | 190,032 | 154,711 | |||||||||||||||||||
| Gross Transaction Value (in billions) | $ | 70.7 | $ | 57.7 | $ | 201.4 | $ | 162.8 | |||||||||||||||
|
Number of Principal Agents (1)
|
21,550 | 17,542 | 21,550 | 17,542 | |||||||||||||||||||
| Net loss attributable to Compass, Inc. (in millions) | $ | (4.6) | $ | (1.7) | $ | (15.9) | $ | (113.9) | |||||||||||||||
| Net loss attributable to Compass, Inc. margin | (0.2%) | (0.1%) | (0.3%) | (2.7%) | |||||||||||||||||||
|
Adjusted EBITDA (2)(in millions)
|
$ | 93.6 | $ | 52.0 | $ | 235.1 | $ | 109.3 | |||||||||||||||
|
Adjusted EBITDA margin (2)
|
5.1% | 3.5% | 4.5% | 2.6% | |||||||||||||||||||
(1)Excludes approximately 900 principal agents located in Texas who joined Compass during the second quarter of 2024 as part of the Latter & Blum Holdings, LLC acquisition. These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model.
(2)Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For more information regarding our use of these measures and a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA, see the section titled "-Non-GAAP Financial Measures" below.
Key Business Metrics
Total Transactions
Total Transactions is a key measure of the scale of our platform, which drives our financial performance. We define Total Transactions as the sum of all transactions closed on our platform in which our agent represented the buyer or seller in the purchase or sale of a home. We include a single transaction twice when one or more of our agents represent both the buyer and seller in any given transaction. This metric excludes rental transactions.
Total Transactions increased to 67,886 for the three months ended September 30, 2025, representing a 21.5% increase compared to the same period in the prior year. For the nine months ended September 30, 2025, Total Transactions rose to 190,032, an increase of 22.8% year-over-year. The majority of this growth was driven by brokerages acquired since October 2024.
Gross Transaction Value
Gross Transaction Value is a key measure of the scale of our platform and success of our agents, which ultimately impacts revenue. Gross Transaction Value is the sum of all closing sale prices for homes transacted by agents on our platform. We include the value of a single transaction twice when our agents serve both the home buyer and home seller in the transaction. This metric excludes rental transactions.
Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as seasonality and macroeconomic factors.
Our Gross Transaction Value for the three and nine months ended September 30, 2025 was $70.7 billion and $201.4 billion, representing an increase of 22.5% and 23.7% from the prior-year periods, respectively. The increase for the three and nine months ended September 30, 2025 was primarily driven by an increase in the number of agents on our platform.
Number of Principal Agents
The Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform. The Number of Principal Agents is an indicator of the potential future growth
of our business, as well as the size and strength of our platform. We use the Number of Principal Agents, in combination with our other key metrics such as Total Transactions and Gross Transaction Value, as a measure of agent productivity.
Our Number of Principal Agents as of September 30, 2025 was 21,550, representing an increase of 22.8% from the year ago period. The increase in the Number of Principal Agents was primarily driven by the agents from businesses acquired since October 2024. Our principal agents generate revenue across a diverse set of real estate markets in the U.S.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is a non-GAAP financial measure that represents our Net loss attributable to Compass, Inc. adjusted for depreciation and amortization, investment income, net, interest expense, stock-based compensation expense, benefit from income tax and other items. During the periods presented, other items included (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 our signing of the Agreement and Plan of Merger with Anywhere Real Estate Inc. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue.
We use Adjusted EBITDA and Adjusted EBITDA margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA and Adjusted EBITDA margin are also helpful to investors, analysts and other interested parties because these measures can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, however, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial performance measures, including Net loss attributable to Compass, Inc. and our other GAAP results. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA and Adjusted EBITDA margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry.
The following table provides a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net loss attributable to Compass, Inc. | $ | (4.6) | $ | (1.7) | $ | (15.9) | $ | (113.9) | |||||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||||||||
| Depreciation and amortization | 27.6 | 20.5 | 85.8 | 62.7 | |||||||||||||||||||
| Investment income, net | (1.5) | (2.2) | (3.6) | (4.7) | |||||||||||||||||||
| Interest expense | 2.1 | 1.5 | 7.1 | 4.6 | |||||||||||||||||||
| Stock-based compensation | 59.6 | 32.5 | 145.2 | 96.3 | |||||||||||||||||||
| Income tax benefit | (0.2) | (0.3) | (3.3) | (0.7) | |||||||||||||||||||
|
Anywhere merger transaction and integration expenses (1)
|
7.5 | - | 7.5 | - | |||||||||||||||||||
| Restructuring costs | 2.3 | 1.7 | 14.2 | 7.5 | |||||||||||||||||||
|
Other acquisition-related expenses (2)
|
0.8 | - | (1.9) | - | |||||||||||||||||||
|
Litigation charge (3)
|
- | - | - | 57.5 | |||||||||||||||||||
| Adjusted EBITDA | $ | 93.6 | $ | 52.0 | $ | 235.1 | $ | 109.3 | |||||||||||||||
| Net loss attributable to Compass, Inc. margin | (0.2 | %) | (0.1 | %) | (0.3 | %) | (2.7 | %) | |||||||||||||||
| Adjusted EBITDA margin | 5.1 | % | 3.5 | % | 4.5 | % | 2.6 | % | |||||||||||||||
(1)Represents transaction expenses incurred in connection with our signing of the Agreement and Plan of Merger with Anywhere Real Estate Inc. During the three months ended September 30, 2025, these expenses consist of investment banking and legal fees.
Additional information regarding the proposed merger is provided in Note 13 - "Proposed Merger With Anywhere Real Estate Inc." to our 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. See Note 3 - "Acquisitions" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
(3)Represents a charge of $57.5 million incurred during the three months ended March 31, 2024 in connection with the Antitrust Lawsuits. See Note 6 - "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information.
Adjusted EBITDA was $93.6 million and $52.0 million during the three months September 30, 2025 and 2024. Adjusted EBITDA was $235.1 million and $109.3 million during the nine months ended September 30, 2025 and 2024, respectively. The improvement in Adjusted EBITDA during the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024 was primarily driven by higher revenue resulting from an increased number of agents on our platform.
The following tables provide supplemental information to the Reconciliation of Net 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, 2025 | |||||||||||||||||||||||
| Sales and marketing | Operations and support | Research and development | General and administrative | ||||||||||||||||||||
| GAAP Basis | $ | 93.8 | $ | 111.1 | $ | 67.4 | $ | 40.1 | |||||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||||||||
| Stock-based compensation | (9.0) | (11.4) | (27.7) | (11.1) | |||||||||||||||||||
| Acquisition-related expenses | - | (0.8) | - | - | |||||||||||||||||||
| Non-GAAP Basis | $ | 84.8 | $ | 98.9 | $ | 39.7 | $ | 29.0 | |||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||
| Sales and marketing | Operations and support | Research and development | General and administrative | ||||||||||||||||||||
| GAAP Basis | $ | 88.2 | $ | 84.4 | $ | 47.5 | $ | 27.4 | |||||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||||||||
| Stock-based compensation | (7.8) | (4.2) | (14.6) | (5.9) | |||||||||||||||||||
| Non-GAAP Basis | $ | 80.4 | $ | 80.2 | $ | 32.9 | $ | 21.5 | |||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Sales and marketing | Operations and support | Research and development | General and administrative | ||||||||||||||||||||
| GAAP Basis | $ | 281.9 | $ | 317.1 | $ | 180.7 | $ | 100.9 | |||||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||||||||
| Stock-based compensation | (24.6) | (25.8) | (66.0) | (28.4) | |||||||||||||||||||
| Other acquisition-related expenses | - | 1.9 | - | - | |||||||||||||||||||
| Non-GAAP Basis | $ | 257.3 | $ | 293.2 | $ | 114.7 | $ | 72.5 | |||||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||
| Sales and marketing | Operations and support | Research and development | General and administrative | ||||||||||||||||||||
| GAAP Basis | $ | 276.5 | $ | 246.5 | $ | 141.9 | $ | 132.5 | |||||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||||||||
| Stock-based compensation | (24.0) | (12.3) | (44.7) | (15.3) | |||||||||||||||||||
| Litigation charge | - | - | - | (57.5) | |||||||||||||||||||
| Non-GAAP Basis | $ | 252.5 | $ | 234.2 | $ | 97.2 | $ | 59.7 | |||||||||||||||
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity and capital resources are cash flows from operations and our Revolving Credit Facility. Our cash requirements consist principally of working capital, general corporate needs, and mergers and acquisitions. We continue to invest in expanding our operations, including enhancements to our technology platform and growth of our market footprint, using available operating cash flows.
As of September 30, 2025, we had cash and cash equivalents of $170.3 million and an accumulated deficit of $2.7 billion. We generated $121.5 million and $171.4 million in cash flows from operations for the year ended December 31, 2024 and the nine months ended September 30, 2025, respectively. Additionally, we have a Revolving Credit Facility that matures in March 2026, which we can draw upon provided we maintain continued compliance with certain financial and non-financial covenants. See Note 5 - "Debt" to our condensed consolidated financial statements included elsewhere in this Quarterly Report for further details. As of September 30, 2025, we had no balance outstanding and $322.3 million available to be drawn under the Revolving Credit Facility. Further, we were in compliance with each of the financial and non-financial covenants. While our operating cash flows vary depending on the seasonality of the real estate business, we believe that the Company will have sufficient liquidity from cash on hand, its Revolving Credit Facility and future operations to sustain its business operations for the next twelve months and beyond.
Financial Obligations
See Note 5 - "Debt" in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for information on our indebtedness as of September 30, 2025.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in millions):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by operating activities | $ | 171.4 | $ | 91.0 | |||||||
| Net cash used in investing activities | (189.0) | (32.8) | |||||||||
| Net cash used in financing activities | (35.9) | (13.9) | |||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (53.5) | $ | 44.3 | |||||||
Operating Activities
For the nine months ended September 30, 2025, net cash provided by operating activities was $171.4 million. The inflow was primarily due to a $16.2 million Net loss adjusted for $225.3 million of non-cash charges partially offset by cash outflows due to changes in operating assets and liabilities of $37.7 million.
For the nine months ended September 30, 2024, net cash provided by operating activities was $91.0 million. The inflow was primarily due to a $114.1 million Net loss adjusted for $161.4 million of non-cash charges and cash inflows due to changes in operating assets and liabilities of $43.7 million.
Investing Activities
During the nine months ended September 30, 2025, net cash used in investing activities was $189.0 million consisting of $174.8 million in payments for acquisitions, net of cash acquired, $10.3 million of capital expenditures and $3.9 million of investments in unconsolidated entities.
During the nine months ended September 30, 2024, net cash used in investing activities was $32.8 million consisting of $18.9 million in payments for acquisitions, net of cash acquired, $11.9 million of capital expenditures and $2.0 million of investments in unconsolidated entities.
Financing Activities
During the nine months ended September 30, 2025, net cash used in financing activities was $35.9 million primarily consisting of $47.2 million in taxes paid related to the net share settlement of equity awards and $7.1 million in payments related to acquisitions, including contingent consideration payments, partially offset by $10.8 million in proceeds from the exercise of stock options, $5.2 million in net proceeds from drawdowns and repayments on the Concierge Facility and $2.9 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
During the nine months ended September 30, 2024, net cash used in financing activities was $13.9 million primarily consisting of $21.8 million in taxes paid related to the net share settlement of equity awards and $2.9 million in payments related to acquisitions, including contingent consideration payments, partially offset by $5.9 million in proceeds from the exercise of stock options, $2.7 million in net proceeds from drawdowns and repayments on the Concierge Facility and $2.2 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Off-Balance Sheet Arrangements
We administer escrow and trust deposits which represent undistributed amounts for the settlement of real estate transactions. We are contingently liable for these escrow and trust deposits totaling $350.2 million and $147.1 million as of September 30, 2025 and December 31, 2024, respectively. We did not have any other off-balance sheet arrangements as of or during the periods presented.
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 2024 Form 10-K. For additional information about our critical accounting policies and estimates, see the disclosure included in our 2024 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 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 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 11:32 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]