Compass, Inc. (COMP) Earnings & Analysis

Latest quarter

Compass reported Q2 FY2026 revenue of $4.3 billion, above the $4.1 billion consensus, while adjusted earnings per share of $0.11 matched the consensus. Revenue rose from $2.1 billion a year earlier, and diluted earnings per share increased to $0.11 from $0.07.

The filing attributed most of the revenue increase to the January acquisition of Anywhere. On a pro forma basis, which includes Anywhere in the comparison, Compass said quarterly revenue rose 14.3% as transaction counts and average home sale prices increased. The filing attributed growth in brokerage, franchise and integrated-services revenue primarily to the acquired businesses.

Compass reported an operating margin of 2.88%, compared with 1.89% a year earlier, and free cash flow of $180.0 million, up from $68.0 million. CFO Scott Wahlers said cash flow benefited from adjusted EBITDA and the timing of working-capital items. Compass reported revenue above its own Q2 guidance range; Wahlers said adjusted EBITDA of $363 million also exceeded the high end of its forecast.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Robert Reffkin said brokerage transactions rose 7.4% year over year on a pro forma basis, compared with a 3.5% increase in the market. He attributed the brokerage’s performance partly to its agents and exposure to higher-priced homes. CFO Scott Wahlers said brokerage gross transaction value rose 16% on a pro forma basis, reflecting more transactions and higher average selling prices.

Wahlers said Compass was shifting recruiting at the acquired Anywhere brands toward more productive agents. He reported that brokerage agent retention was 95.5% in Q2, largely flat year over year on a pro forma basis. He also said commissions and related expenses as a share of brokerage revenue increased because more growth came from lower-margin markets and agents receiving a higher share of commissions.

On integration, Reffkin said Compass had actioned its first-year target of $300 million in net cost synergies by July. Wahlers said the company saw further opportunities to lower the cost of serving each transaction as it consolidated back-office systems and used AI. Reffkin said the AI workflow team had identified roughly $8 million in savings and cost-avoidance opportunities.

Reffkin said the technology platform had entered a pilot with agents at acquired brands, and that franchise agents would begin onboarding in Q1 2027. He also argued that multiple listing service rules and fines restrict how agents market properties, while pointing to the Rocket-Redfin partnership as a source of buyer leads.

In the Q&A, Wahlers explained that the quarterly forecast uses activity visible in Compass’s systems: “we have good visibility into July,” while “September is a little bit of our wildcard.”

Guidance

Wahlers said Compass now expects 2026 non-GAAP operating expenses of $2.75 billion to $2.80 billion, an increase of $50 million from its previous guidance. He attributed the change mainly to expenses from a July brokerage acquisition and additional compensation costs.

Reffkin said Compass expects $220 million in realized net cost synergies in 2026, compared with its previous expectation of $200 million. He said approximately $150 million would flow through the income statement, versus $130 million previously expected, with the remaining $70 million expected as capital-expenditure synergies.