COMP

Compass, Inc. Q1 2026 10-Q Summary

Business Context and Reporting Period

This Quarterly Report covers the period ended March 31, 2026. The reporting period is defined by the completion of the Anywhere Merger on January 9, 2026, where Compass acquired Anywhere Real Estate Inc. in a stock-for-stock transaction. Post-merger, the Company operates three reportable segments: Brokerage, Franchise, and Integrated Services. The combined entity now serves a global network of over 340,000 real estate professionals across major U.S. cities and approximately 120 countries.

Key Financial Metrics

Note: Q1 2025 figures represent stand-alone Compass results prior to the Anywhere Merger.

Material Changes vs. Prior Period

• Revenue Surge: Revenue nearly doubled to $2.7 billion, driven primarily by the inclusion of Anywhere's operations ($1.2 billion contribution). Stand-alone Compass revenue grew 10.9% year-over-year.
• Profitability Shift: The Company reported a net income of $22 million compared to a net loss of $51 million in the prior year. This was largely due to a $401 million income tax benefit resulting from the establishment of deferred tax liabilities associated with non-deductible intangible assets acquired in the merger.
• Expense Structure: Total operating expenses increased to $3.055 billion. This includes $183 million in one-time merger transaction and integration expenses and a significant rise in depreciation and amortization ($163 million vs. $29 million) due to acquired intangible assets.
• Balance Sheet Expansion: Total assets grew from $1.54 billion to $8.12 billion. Long-term debt increased to $3.14 billion, reflecting the assumption of Anywhere's debt and the issuance of $1.0 billion in Convertible Senior Notes.

Guidance, Outlook, and Risks

Management Commentary: Management highlights the successful integration of the Anywhere Merger, expanding the brand portfolio to include Coldwell Banker, Sotheby's International Realty, and Century 21. The Company expects to fund merger integration expenses and working capital needs through existing liquidity and the proceeds from the Convertible Notes.

Risks and Contingencies:

• Antitrust Litigation: The Company is involved in significant antitrust class actions (e.g., Burnett, Moehrl, Gibson). Settlements totaling approximately $152 million are pending or in progress, with payments expected in 2026 and potentially 2027.
• Debt Obligations: The Company carries significant debt maturities in 2029, 2030, and 2031 totaling approximately $3.1 billion. Compliance with financial covenants, specifically the Total Net Leverage Ratio, is critical.
• Integration Risks: Risks include the ability to realize cost synergies, integrate Anywhere's systems, and manage the increased complexity of a global franchise network.
• Market Conditions: Exposure to high mortgage interest rates, low home inventory, and general economic downturns affecting the residential real estate market.

Investor Verification Checklist

• Merger Integration Progress: Verify the realization of projected cost synergies and the status of system integrations between Compass and Anywhere platforms.
• Antitrust Settlement Finality: Monitor court approvals and payment timelines for the Compass Settlement ($58 million) and Anywhere Settlement ($84 million), as well as the Tuccori buy-side settlements.
• Debt Covenant Compliance: Confirm ongoing compliance with the Total Net Leverage Ratio covenant (max 5.00:1.00) under the Revolving Credit Facility.
• Deferred Tax Asset Utilization: Assess the sustainability of the $401 million tax benefit and the Company's ability to utilize net operating losses in future periods.
• Franchise Royalty Trends: Review the "Net Royalty Per Transaction" metric, which decreased to $440 in Q1 2026 from $660 in Q1 2025, to understand the impact of the lower-margin franchise mix acquired from Anywhere.