Achieves Positive Free Cash Flow In Third
Quarter
NEW
YORK, Nov. 6, 2023 /PRNewswire/ -- Compass, Inc.
(NYSE: COMP) ("Compass" or "the Company"), the largest residential
real estate brokerage in the United
States by transaction volume1, announced its
financial results for the third quarter ended September 30, 2023.
"In the third quarter, for the second quarter in a row, Compass
is free cash flow positive as we continue to execute our plan to
drive operating expenses down while continuing to grow our agent
count and expanding the features on our technology platform, the
industry's only proprietary first-contact to close platform," said
Robert Reffkin, Founder and Chief
Executive Officer of Compass. "Additionally, at a time when many
agents are leaving the industry, Compass reached its second highest
quarterly retention rate since going public and our national market
share was up 26 basis points year-over-year."
Reffkin continued. "We expect to achieve our $900 million annualized non-GAAP operating
expense2 run rate in Q4 2023. For 2024, we continue
to identify efficiencies in the business and are targeting
$850 million annualized non-GAAP
operating expense, the bottom of our previously stated range of
$850 million to $950 million. At these reduced levels, we believe
we will still be able to continue to grow agent count and invest in
building upon our technology advantage. Although the market is
worse now than a year ago, Compass is a much stronger company with
a lower cost base, better agent retention, revitalized post
pandemic culture, enhanced technology platform, and a larger
agent-to-agent client referral network. As we enter 2024, we
believe we have positioned Compass for significant upside when the
market recovers in the future."
"In the first nine months of 2023 compared to the same period in
2022, we have been able to achieve a $187
million improvement in our operating cash flow and a
$235 million improvement in free cash
flow even as revenue declined by $1.1
billion," said Kalani
Reelitz, Chief Financial Officer. "Since the second quarter
of 2022, we have significantly reduced our non-GAAP operating
expense and we plan to achieve a reduction in the annualized run
rate of nearly $550 million by Q4
2023 as we expect to exit 2023 achieving our target $900 million run rate2. We generated
operating cash flow of $15 million
and positive free cash flow of $12
million in the third quarter in the midst of lower
transaction volumes for the U.S. residential market due to mortgage
rates reaching 8%. We had a cash balance of $220 million at the end of the third quarter in
addition to our revolving credit facility."
Q3 2023 Financial Highlights:
- Revenue decreased by 10% year-over-year to $1.34 billion as transactions declined 12% driven
by macroeconomic factors.
- Q3 2023 GAAP Net loss was $39
million, an improvement of 74% from a Net loss of
$154 million in Q3 2022. The Net loss
for Q3 2023 includes non-cash stock-based compensation expenses of
$38 million, and depreciation and
amortization of $21 million.
- Adjusted EBITDA3 (a non-GAAP measure)
was $22 million in Q3 2023, compared
to $(42) million in Q3 2022. This is
an improvement of $64 million while
revenue declined by 10% due to macroeconomic factors.
- Operating Cash Flow / Free Cash Flow3
(a non-GAAP measure): During Q3 2023, we delivered operating
cash flow of $15 million, and free
cash flow of $12 million when
considering capital expenditures.
- Cash and cash equivalents at the end of Q3 2023 was
$220 million, with no draw of our
revolving credit facility.
Q3 2023 Operational Highlights:
- Platform: The Compass end-to-end technology platform
provides real estate agents with the ability to perform their
primary workflows, from first contact to close, with a single
log-in and without leaving the Compass platform.
- The Compass platform has deployed artificial intelligence and
machine learning for several years. Recently, we integrated the
ChatGPT API. By drawing on our vast database of proprietary data,
Compass AI further enhances the agent experience and their ability
to quickly perform tasks such as creating listing brochures and
descriptions, marketing materials, and even their agent profiles on
our website.
- Compass continued the roll out of its title and escrow business
integration into the technology platform in Southern California by expanding the offering
to San Diego. We expect to
complete our expansion of this integration in Philadelphia, Washington DC, Maryland and Virginia by the end of 2023, and roll out this
integration feature to all the markets where we currently offer
title and escrow services in early 2024.
- National market share in Q3 2023 was 4.4%, an increase
of 26 basis points year-over-year.
- Agents: Average Number of Principal Agents was 14,055
for Q3 2023, a 4% increase of 511 principal agents from Q3
2022 and a 3% increase sequentially of 422 from Q2
2023.4 Compass continued to experience high levels of
agent retention with our second highest agent retention quarter as
a public company.
- Transactions: Compass agents closed 48,134 Total
Transactions in Q3 2023, a decline of 12% compared to Q3 2022.
Transactions for the entire U.S. residential real estate market
declined 20% for the same period.5
- Gross Transaction Value ("GTV")6 was
$50.9 billion in Q3 2023, a decline
of 11% compared to Q3 2022, while national market GTV was down
16.5% for the same period.
Additional information can be found in the Company's Q3 2023
Earnings Presentation, which can be found in the Investor Relations
section of the Compass website at
https://investors.compass.com.
Outlook
Q4 2023 Outlook:
- Revenue of $1.1 billion to
$1.2 billion
- Adjusted EBITDA of negative $35
million to negative $20
million
FY 2023 Outlook:
- Non-GAAP Operating expense range of $850-$950
million7
We have not reconciled our guidance for Adjusted EBITDA to GAAP
Net loss because certain expenses excluded from GAAP Net loss when
calculating Adjusted EBITDA cannot be reasonably calculated or
predicted at this time. Additionally, we have not reconciled our
guidance for Non-GAAP Operating expense after commissions and other
related expenses to GAAP Operating expenses because certain
expenses excluded from GAAP Operating expenses cannot be reasonably
calculated or predicted at this time. Accordingly, reconciliations
are not available without unreasonable effort.
For a reconciliation of non-GAAP financial measures to the most
directly comparable GAAP measures on a historical basis, see
"Reconciliation of Net Loss Attributable to Compass, Inc. to
Adjusted EBITDA", "Reconciliation of GAAP Operating Expenses to
Non-GAAP Operating Expenses" and "Reconciliation of GAAP Operating
Cash Flow to Free Cash Flow" in the financial statement tables
included within this press release.
Conference Call Information
Management will conduct a
conference call to discuss the third quarter 2023 results as well
as outlook at 5:00 p.m. ET on Monday,
November 6, 2023. The conference call will be accessible via
the Internet on the Compass Investor Relations website
https://investors.compass.com. You can also access the audio
webcast via the following link: Compass, Inc. 3Q23 Earnings
Conference Call.
An audio recording of the conference call will be available for
replay shortly after the call's completion. To access the replay,
visit the Events and Presentations section on the Compass Investor
Relations website at https://investors.compass.com.
Disclosure Channels
Compass uses its Investor
Relations website, https://investors.compass.com, as a means of
disclosing information which may be of interest or material to its
investors and for complying with disclosure obligations under
Regulation FD. We intend to announce material information to the
public through filings with the Securities and Exchange Commission,
or the SEC, the investor relations page on our website
(www.compass.com), press releases, public conference calls, public
webcasts, our X (formerlyTwitter) feed (@Compass), our Facebook
page, our LinkedIn page, our Instagram account, our YouTube
channel, and Robert Reffkin's X
(formerly Twitter) feed (@RobReffkin) and Instagram account
(@robreffkin). Accordingly, investors should monitor each of these
disclosure channels.
Safe Harbor Statement
This press release includes
forward-looking statements, which are statements other than
statements of historical facts, and statements in the future tense.
These statements include, but are not limited to, statements
regarding our future performance, including expected financial
results for the fourth quarter and full year of 2023, planned
operating expense for the full year of 2023 and 2024, and our
expectations for operational achievements. Forward-looking
statements are based upon various estimates and assumptions, as
well as information known to us as of the date of this press
release, and are subject to risks and uncertainties, including but
not limited to: general macroeconomic conditions in the U.S. and
globally (e.g., inflation), economic and industry downturns, the
health of the U.S. real estate industry, and risks generally
incident to the ownership of residential real estate, including
seasonal and cyclical trends (e.g., increases in mortgage interest
rates, continued limited inventory, slowed consumer demand, reduced
home affordability and declines in price appreciation and home
prices); current interest rates and changes in prevailing interest
rates; our ability to continuously innovate, improve and expand our
platform, including tools and features integrating machine learning
and artificial intelligence; the dependability of our platform and
software; our ability to attract new agents and retain current
agents or increase agents' utilization of our platform; our ability
to expand our brokerage and adjacent services businesses; our
ability to grow revenue from adjacent services at our anticipated
rate; our ability to achieve expected benefits from our mortgage
and title and escrow businesses, including our joint ventures; our
rapid growth and rate of growth; our ability to carefully manage
our expense structure; our net losses and ability to achieve or
sustain profitability in the future; covenants in our debt
agreements that may restrict our borrowing capacity or operating
activities; our ability to compete successfully in the markets in
which we operate; the effect of monetary policies of the federal
government and its agencies; ongoing regulatory and/or private
plaintiff litigation activities related to antitrust matters; any
decreases in our gross commission income or the percentage of
commissions that we collect; fluctuation of our quarterly results
and other operating metrics; our ability to successfully pursue
acquisitions and integrate target companies; the loss of key
personnel; our ability to attract and retain highly qualified
personnel and to recruit agents; reliability of our information
security systems; the impact of cybersecurity incidents and the
potential loss of critical and confidential information;
identification of material weaknesses in our internal control over
financial reporting and our ability to remediate such material
weaknesses; compliance with privacy laws; the effect of the claims,
lawsuits, government investigations and other proceedings that we
are subject to from time to time; our ability to protect our
intellectual property rights; impact of having a multi-class
structure of common stock; natural disasters and catastrophic
events; and other general market, political, economic, and business
conditions. Significant variation from the assumptions underlying
our forward-looking statements could cause our actual results to
vary, and the impact could be significant. Accordingly, actual
results could differ materially from those predicted or implied or
such uncertainties could cause adverse effects on our results.
Reported results should not be considered as an indication of
future performance.
More information about factors that could adversely affect our
results of operations, financial condition and prospects, or that
could cause actual results to differ from those expressed or
implied in our forward-looking statements is included under the
captions "Risk Factors," "Legal Proceedings" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in our most recent annual report on Form 10-K and our
subsequent quarterly reports on Form 10-Q, copies of which are
available on the Investor Relations page of our website at
https://investors.compass.com/ and on the SEC website at
www.sec.gov. All information herein speaks as of the date
hereof and all forward-looking statements contained herein are
based on information available to us as of the date hereof, and we
do not assume any obligation to update these statements as a result
of new information or future events. Undue reliance should not be
placed on the forward-looking statements in this press release.
Non-GAAP Financial Measures
To supplement our
condensed consolidated financial statements, which are prepared in
accordance with GAAP, we present Adjusted EBITDA, Non-GAAP
Operating expenses, and Free Cash Flow, which are non-GAAP
financial measures, in this press release. We use Adjusted EBITDA,
Non-GAAP Operating expenses and Free Cash Flow 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,
Non-GAAP Operating expenses and Free Cash Flow are also helpful to
investors, analysts and other interested parties because they can
assist in providing a more consistent and comparable overview of
our operations across our historical financial periods. Adjusted
EBITDA, Non-GAAP Operating expenses and Free Cash Flow have
limitations as analytical tools. Therefore, you should not consider
them in isolation or as a substitute for analysis of our results as
reported under GAAP. Because of these limitations, you should
consider Adjusted EBITDA, Non-GAAP Operating expenses and Free Cash
Flow alongside other financial performance measures, including net
loss attributable to Compass, Inc., GAAP Operating expenses,
operating cash flows and our other GAAP measures. In evaluating
Adjusted EBITDA, Non-GAAP Operating expenses and Free Cash Flow,
you should be aware that in the future we may incur expenses that
are the same as or similar to some of the adjustments reflected in
this press release. Our presentation of Adjusted EBITDA, Non-GAAP
Operating expenses and Free Cash Flow should not be construed to
imply that our future results will be unaffected by the types of
items excluded from these calculations of Adjusted EBITDA, Non-GAAP
Operating expenses and Free Cash Flow. Adjusted EBITDA, Non-GAAP
Operating expenses and Free Cash Flow are not presented in
accordance with GAAP and the use of these terms vary from others in
our industry. Reconciliations of these non-GAAP measures have been
provided in the financial statement tables included within this
press release, and investors are encouraged to review these
reconciliations.
About Compass
Compass is the largest residential real
estate brokerage in the United
States by transaction volume. Founded in 2012 and based in
New York City, Compass provides an
end-to-end platform that empowers its residential real estate
agents to deliver exceptional service to seller and buyer clients.
The platform includes an integrated suite of cloud-based software
for customer relationship management, marketing, client service,
brokerage services and other critical functionality, all
custom-built for the real estate industry. Compass agents utilize
the platform to grow their business, save time and manage their
business more effectively. For more information on how Compass
empowers real estate agents, one of the largest groups of small
business owners in the country, please visit www.compass.com.
_________________________________
1 Compass
was ranked number one in sales volume for 2022 by Real Trends in
March 2023 for the second year in a row.
|
2 Excluding
the impact of the additional $4 million of operating expense we
expect in Q4 from our two Adjusted EBITDA positive brokerage
acquisitions completed at the end of September 2023.
|
3 A
reconciliation of GAAP to Non-GAAP measures can be found within the
financial statement tables included within this press
release.
|
4 During the
first quarter of 2023, we began to utilize an updated methodology
for tracking and reporting our agent statistics. The Average Number
of Principal Agents and year over year growth reported in this
press release is based on the updated methodology.
|
5 We
calculate Total Transactions by taking the sum of all transactions
closed on the Compass platform in which our agent represents the
buyer or seller in the purchase or sale of a home (excluding rental
transactions). We include a single transaction twice when one or
more Compass agents represent both the buyer and seller in any
given transaction.
|
6 Gross
Transaction Value includes a de minimis number of new development
and commercial brokerage transactions.
|
7 Non-GAAP
Operating expenses exclude Commissions and other related expenses,
Depreciation and amortization, Stock-based compensation and other
expenses excluded from the Company's calculation of Adjusted
EBITDA. We calculate non-GAAP Operating expense annualized run rate
by taking the sum of the quarter's non-GAAP sales and marketing,
operations and support, research and development, and general and
administration expenses and multiplying it by four.
|
Compass,
Inc.
|
Condensed
Consolidated Balance Sheets
|
(In millions,
unaudited)
|
|
|
|
|
|
September 30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
220.0
|
|
$
361.9
|
Accounts receivable,
net of allowance
|
41.0
|
|
36.6
|
Compass Concierge
receivables, net of allowance
|
34.3
|
|
42.9
|
Other current
assets
|
62.5
|
|
76.5
|
Total current
assets
|
357.8
|
|
517.9
|
Property and equipment,
net
|
161.7
|
|
192.5
|
Operating lease
right-of-use assets
|
421.4
|
|
483.2
|
Intangible assets,
net
|
86.1
|
|
99.3
|
Goodwill
|
208.8
|
|
198.4
|
Other non-current
assets
|
27.8
|
|
41.8
|
Total assets
|
$
1,263.6
|
|
$
1,533.1
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
22.6
|
|
$
28.1
|
Commissions
payable
|
77.1
|
|
48.0
|
Accrued expenses and
other current liabilities
|
105.8
|
|
164.9
|
Current lease
liabilities
|
104.2
|
|
94.6
|
Concierge credit
facility
|
27.9
|
|
31.9
|
Revolving credit
facility
|
—
|
|
150.0
|
Total current
liabilities
|
337.6
|
|
517.5
|
Non-current lease
liabilities
|
426.1
|
|
486.5
|
Other non-current
liabilities
|
22.5
|
|
8.4
|
Total
liabilities
|
786.2
|
|
1,012.4
|
Stockholders'
equity
|
|
|
|
Common stock
|
—
|
|
—
|
Additional paid-in
capital
|
2,908.1
|
|
2,713.6
|
Accumulated
deficit
|
(2,434.1)
|
|
(2,196.5)
|
Total Compass, Inc.
stockholders' equity
|
474.0
|
|
517.1
|
Non-controlling
interest
|
3.4
|
|
3.6
|
Total stockholders'
equity
|
477.4
|
|
520.7
|
Total liabilities and
stockholders' equity
|
$
1,263.6
|
|
$
1,533.1
|
Compass,
Inc.
|
Condensed
Consolidated Statements of Operations
|
(In millions,
except share and per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
$
1,337.4
|
|
$
1,493.7
|
|
$
3,788.6
|
|
$
4,910.8
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Commissions and other
related expense (1)
|
1,096.2
|
|
1,218.0
|
|
3,111.1
|
|
4,017.3
|
|
Sales and
marketing (1)
|
103.9
|
|
144.4
|
|
332.5
|
|
444.3
|
|
Operations and
support (1)
|
83.2
|
|
95.1
|
|
247.3
|
|
308.9
|
|
Research and
development (1)
|
45.8
|
|
81.5
|
|
140.1
|
|
296.9
|
|
General and
administrative (1)
|
24.2
|
|
56.5
|
|
93.3
|
|
167.0
|
|
Restructuring
costs
|
1.7
|
|
29.0
|
|
27.7
|
|
47.9
|
|
Depreciation and
amortization
|
21.3
|
|
21.0
|
|
68.5
|
|
65.1
|
|
Total
operating expenses
|
1,376.3
|
|
1,645.5
|
|
4,020.5
|
|
5,347.4
|
Loss from
operations
|
(38.9)
|
|
(151.8)
|
|
(231.9)
|
|
(436.6)
|
Investment income,
net
|
1.5
|
|
1.1
|
|
6.9
|
|
1.5
|
Interest
expense
|
(1.9)
|
|
(0.9)
|
|
(9.2)
|
|
(2.3)
|
Loss before income
taxes and equity in loss of unconsolidated
entity
|
(39.3)
|
|
(151.6)
|
|
(234.2)
|
|
(437.4)
|
Income tax
benefit
|
0.5
|
|
—
|
|
0.5
|
|
1.4
|
Equity in loss of
unconsolidated entity
|
(0.4)
|
|
(2.5)
|
|
(2.6)
|
|
(7.5)
|
Net loss
|
(39.2)
|
|
(154.1)
|
|
(236.3)
|
|
(443.5)
|
Net (income) loss
attributable to non-controlling interests
|
(0.2)
|
|
(0.1)
|
|
(1.3)
|
|
0.1
|
Net loss attributable
to Compass, Inc.
|
$
(39.4)
|
|
$
(154.2)
|
|
$
(237.6)
|
|
$
(443.4)
|
Net loss per share
attributable to Compass, Inc., basic and diluted
|
$
(0.08)
|
|
$
(0.36)
|
|
$
(0.52)
|
|
$
(1.04)
|
Weighted-average shares
used in computing net loss per share
attributable to Compass, Inc., basic and diluted
|
470,945,736
|
|
432,459,739
|
|
460,730,792
|
|
425,338,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Total stock-based
compensation expense included in the condensed consolidated
statements of operations is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Commissions and other
related expense
|
$
—
|
|
$
12.7
|
|
$
11.6
|
|
$
36.1
|
|
Sales and
marketing
|
8.8
|
|
10.8
|
|
26.4
|
|
32.7
|
|
Operations and
support
|
4.5
|
|
3.9
|
|
11.6
|
|
12.3
|
|
Research and
development
|
11.4
|
|
9.4
|
|
34.4
|
|
45.2
|
|
General and
administrative
|
13.3
|
|
13.3
|
|
37.9
|
|
46.8
|
|
Total stock-based
compensation expense
|
$
38.0
|
|
$
50.1
|
|
$
121.9
|
|
$
173.1
|
Compass,
Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
(In millions,
unaudited)
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
Operating
Activities
|
|
|
|
Net loss
|
$
(236.3)
|
|
$
(443.5)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization
|
68.5
|
|
65.1
|
Stock-based
compensation
|
121.9
|
|
173.1
|
Equity in loss of
unconsolidated entity
|
2.6
|
|
7.5
|
Change in acquisition
related contingent consideration
|
1.1
|
|
(1.9)
|
Bad debt
expense
|
4.6
|
|
5.2
|
Amortization of debt
issuance costs
|
0.6
|
|
0.7
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(8.3)
|
|
11.1
|
Compass Concierge
receivables
|
7.9
|
|
(29.1)
|
Other current
assets
|
13.6
|
|
1.8
|
Other non-current
assets
|
11.5
|
|
1.9
|
Operating lease
right-of-use assets and operating lease liabilities
|
7.6
|
|
5.8
|
Accounts
payable
|
(5.8)
|
|
5.9
|
Commissions
payable
|
29.0
|
|
2.2
|
Accrued expenses and
other liabilities
|
(5.7)
|
|
20.3
|
Net cash provided by
(used in) operating activities
|
12.8
|
|
(173.9)
|
|
|
|
|
Investing
Activities
|
|
|
|
Investment in
unconsolidated entity
|
—
|
|
(15.0)
|
Capital
expenditures
|
(8.9)
|
|
(56.9)
|
Cash acquired, net of
payments for acquisitions
|
0.7
|
|
(15.0)
|
Net cash used in
investing activities
|
(8.2)
|
|
(86.9)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from exercise
of stock options
|
4.2
|
|
8.6
|
Proceeds from issuance
of common stock under Employee Stock Purchase Plan
|
2.5
|
|
2.3
|
Taxes paid related to
net share settlement of equity awards
|
(17.9)
|
|
(19.5)
|
Proceeds from drawdowns
on Concierge credit facility
|
44.7
|
|
47.0
|
Repayments of drawdowns
on Concierge credit facility
|
(48.7)
|
|
(26.7)
|
Proceeds from drawdowns
on Revolving credit facility
|
75.0
|
|
—
|
Repayments of drawdowns
on Revolving credit facility
|
(225.0)
|
|
—
|
Proceeds from issuance
of common stock in connection with the Strategic
Transaction
|
32.3
|
|
—
|
Payments related to
acquisitions, including contingent consideration
|
(12.1)
|
|
(13.9)
|
Other
|
(1.5)
|
|
(0.4)
|
Net cash used in
financing activities
|
(146.5)
|
|
(2.6)
|
Net decrease in cash
and cash equivalents
|
(141.9)
|
|
(263.4)
|
Cash and cash
equivalents at beginning of period
|
361.9
|
|
618.3
|
Cash and cash
equivalents at end of period
|
$
220.0
|
|
$
354.9
|
Compass,
Inc.
|
Reconciliation of
Net Loss Attributable to Compass, Inc. to Adjusted
EBITDA
|
(In millions,
unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net loss attributable
to Compass, Inc.
|
$
(39.4)
|
|
$
(154.2)
|
|
$
(237.6)
|
|
$
(443.4)
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
21.3
|
|
21.0
|
|
68.5
|
|
65.1
|
Investment income,
net
|
(1.5)
|
|
(1.1)
|
|
(6.9)
|
|
(1.5)
|
Interest
expense
|
1.9
|
|
0.9
|
|
9.2
|
|
2.3
|
Stock-based
compensation
|
38.0
|
|
50.1
|
|
121.9
|
|
173.1
|
Income tax
benefit
|
(0.5)
|
|
—
|
|
(0.5)
|
|
(1.4)
|
Restructuring
costs
|
1.7
|
|
29.0
|
|
27.7
|
|
47.9
|
Acquisition-related
expenses(1)
|
0.3
|
|
1.6
|
|
2.5
|
|
12.7
|
Litigation
charge(2)
|
—
|
|
10.5
|
|
—
|
|
10.5
|
Adjusted
EBITDA
|
$
21.8
|
|
$
(42.2)
|
|
$
(15.2)
|
|
$
(134.7)
|
|
(1) For the three
months ended September 30, 2023 and 2022, acquisition-related
expenses includes a $0.2 million loss and a $1.6 million
gain, respectively, as a result of changes in the fair value of
contingent consideration and an expense of $0.1 million and $3.2
million,
respectively, related to acquisition consideration treated as
compensation expense over the underlying retention periods. For the
nine
months ended September 30, 2023 and 2022, acquisition-related
expenses includes a $0.4 million loss and a $1.9 million gain,
respectively,
as a result of changes in the fair value of contingent
consideration and expense of $2.1 million and $14.6 million,
respectively, related to
acquisition consideration treated as compensation expense over the
underlying retention periods.
|
|
(2) Represents a charge
of $10.5 million incurred during the three and nine months ended
September 30, 2022 in connection with the
Realogy Holdings Corp.
matter.
|
Compass,
Inc.
|
Reconciliation of
Operating Cash Flows to Free Cash Flow
|
(In millions,
unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash provided by
(used in) operating activities
|
$
15.0
|
|
$
(53.6)
|
|
$
12.8
|
|
$
(173.9)
|
Less:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(2.8)
|
|
(15.5)
|
|
(8.9)
|
|
(56.9)
|
Free cash
flow
|
$
12.2
|
|
$
(69.1)
|
|
$
3.9
|
|
$
(230.8)
|
Compass,
Inc.
|
Reconciliation of
GAAP Operating Expenses to Non-GAAP Operating
Expenses
|
(In millions,
unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
GAAP Commissions and
other related expense
|
$
1,096.2
|
|
$
1,218.0
|
|
$
3,111.1
|
|
$
4,017.3
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
—
|
|
(12.7)
|
|
(11.6)
|
|
(36.1)
|
Non-GAAP Commissions
and other related expense
|
$
1,096.2
|
|
$
1,205.3
|
|
$
3,099.5
|
|
$
3,981.2
|
|
|
|
|
|
|
|
|
GAAP Sales and
marketing
|
$
103.9
|
|
$
144.4
|
|
$
332.5
|
|
$
444.3
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(8.8)
|
|
(10.8)
|
|
(26.4)
|
|
(32.7)
|
Non-GAAP Sales and
marketing
|
$
95.1
|
|
$
133.6
|
|
$
306.1
|
|
$
411.6
|
|
|
|
|
|
|
|
|
GAAP Operations and
support
|
$
83.2
|
|
$
95.1
|
|
$
247.3
|
|
$
308.9
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(4.5)
|
|
(3.9)
|
|
(11.6)
|
|
(12.3)
|
Acquisition-related
expenses
|
(0.3)
|
|
(1.6)
|
|
(2.5)
|
|
(12.7)
|
Non-GAAP Operations and
support
|
$
78.4
|
|
$
89.6
|
|
$
233.2
|
|
$
283.9
|
|
|
|
|
|
|
|
|
GAAP Research and
development
|
$
45.8
|
|
$
81.5
|
|
$
140.1
|
|
$
296.9
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(11.4)
|
|
(9.4)
|
|
(34.4)
|
|
(45.2)
|
Non-GAAP Research and
development
|
$
34.4
|
|
$
72.1
|
|
$
105.7
|
|
$
251.7
|
|
|
|
|
|
|
|
|
GAAP General and
administrative
|
$
24.2
|
|
$
56.5
|
|
$
93.3
|
|
$
167.0
|
Adjusted to exclude the
following:
|
|
|
|
|
|
|
|
Stock-based
compensation
|
(13.3)
|
|
(13.3)
|
|
(37.9)
|
|
(46.8)
|
Litigation
Charge
|
—
|
|
(10.5)
|
|
—
|
|
(10.5)
|
Non-GAAP General and
administrative
|
$
10.9
|
|
$
32.7
|
|
$
55.4
|
|
$
109.7
|
Compass,
Inc.
|
Non-GAAP Operating
Expenses Excluding Commissions and Other Related
Expense
|
(In millions,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
2022
|
|
June 30,
2022
|
|
September
30,
2022
|
|
December 31,
2022
|
|
March 31,
2023
|
|
June 30,
2023
|
|
September
30,
2023
|
Sales and
marketing
|
$
134.3
|
|
$
143.7
|
|
$
133.6
|
|
$
121.5
|
|
$
106.7
|
|
$
104.3
|
|
$
95.1
|
Operations and
support
|
96.5
|
|
97.8
|
|
89.6
|
|
81.7
|
|
75.0
|
|
79.8
|
|
78.4
|
Research and
development
|
91.3
|
|
88.3
|
|
72.1
|
|
51.1
|
|
38.5
|
|
32.8
|
|
34.4
|
General and
administrative
|
40.4
|
|
36.6
|
|
32.7
|
|
27.5
|
|
23.1
|
|
21.4
|
|
10.9
|
Total non-GAAP
operating expenses excluding
commissions and other related expense
|
$
362.5
|
|
$
366.4
|
|
$
328.0
|
|
$
281.8
|
|
$
243.3
|
|
$
238.3
|
|
$
218.8
|
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SOURCE Compass