Compass gave investors some positive news on Wednesday, raising its fourth-quarter and full-year forecasts.
After the news was announced, its stock price rose by more than 20%, reversing more than a month's decline. Earlier this week, Compass also announced the completion of a $444 million deal for @properties and Christie's International Real Estate.
The company raised its full-year revenue forecast to $5.61 billion from $5.47 billion on the low end and to $5.64 billion on the high end from $5.57 billion. Its full-year adjusted EBITDA forecast increased to $124 million to $127 million from $109 million to $119 million.
Compass also expects full-year operating expenses to be below the low-end forecast of $876 million.
Chief Financial Officer Kalani Reelitz said in a release that the improved numbers mean Compass expects to generate positive free cash flow in the fourth quarter, which has historically been a negative quarter for the company.
Compass also added more than 650 prime agents in the fourth quarter, a 50% increase from the same period last year.
The announcement came hours before CEO Robert Reffkin took the stage at an investor conference.
Last week, Compass hired "Million Dollar Listing" star Tracy Tutor and her 18-person team from Douglas Elliman, the latest agent to jump from one firm to another. compass previously told the real deal Last year, the company added 55 agents from Elliman.
Refkin attributes the company's outperformance in part to its less rate-sensitive customers.
"They're not using a mortgage, they're getting interest income. They're not the payer of the interest," Refkin said. "This rate environment puts us at an advantage relative to many of our competitors."
According to The Agency, the average price of a Compass transaction exceeded $1 million in the third quarter of this year, and while overall home sales fell 13%, first-half sales in the category were up more than 5% during the same time period.
Compass shares have lulled recently despite rising 70% in 2024, buoyed by strong earnings and activity in the M&A market. The stock ended the year down more than 17% after surging to a yearly high of $7.09 in late November after announcing deals to acquire @properties and Christie's.
As of press time, its stock price was as high as $6.80.
Refkin also said Compass is making progress toward its goal of capturing 30% market share in the top 30 cities, saying the company is already in the 20% range in those markets.
These metrics are part of a larger strategy by Compass to uncover as many listings as possible.
“The person who owns the inventory is where all the transactions come from,” Refkin said. “Lists lead to more lists.”
Compass hopes to include these listings in its "three-phase marketing strategy," which involves only listing on the MLS during the final phase of marketing — which is a given, given the National Association of Realtors' explicit cooperative policy that requires listings to be listed. A challenge can be played in Major League Soccer (MLS) within a day of being made public.
Revkin said he believed the policy could be struck down as early as next month after the Supreme Court ruled that the Justice Department could continue its investigation of the trade group.
Refkin also expressed the concerns of many in the industry - without CCP, it will be harder for smaller brokerages to compete with larger brokerages.
“I believe agents at smaller brokerages will be more interested in the value proposition of larger brokerages,” he said.
This article originally appeared in The Real Deal. Click here to read the full article.