Compass Q1 2023 Earnings Recap & Analyst Coverage

Q1 2023 Earnings Recap & Analyst Coverage:

Revenue of $957 million in Q1 2023. Our revenue and Adjusted EBITDA were better than BOTH our guidance and consensus estimates provided by the analysts who cover Compass.
We are on schedule to achieve positive free cash flow in 2023, starting in Q2, and reaffirmed that guidance on the earnings call.
Our national market share in Q1 2023 was 4.5%, up 17 basis points sequentially from Q4 2022. This is the second quarter in a row our market share has increased. While the broader real estate market has slowed down, we continue to gain market share, which cements us as the company that is outperforming the industry.

We had a great response to our earnings call in which we provided company and market commentary, guidance for Q2, and commitment to free cash positive in Q2, Q3, Q4, and cumulatively for the full year. The hot start to the trading day continued throughout as we ended Wednesday at $3.79 up 35% for the day! Year to date, Compass is up 71% while Anywhere is down 14%, Douglas Elliman is down 30%, EXP is up 15% and Zillow is up 41%.

Whenever we have an earnings call, there is often a lot of speculation and misinformation that is circulated regarding Compass' financial performance. The great thing about being a public company though is that there are professional analysts who follow the company and provide research and perspective on the company's performance. These analysts come from some of the most reputable investment banks in the world. Looking at what the analysts say allows us to cut through the noise and get to the most reputable and knowledgeable voices. I often say that if you really want to get a sense of how a company is doing - read the analyst reports!

Analysts also issue ratings on the stock of the companies they cover. These ratings - such as buy, sell, hold, indicate to the market where they think the company's stock will go over the coming 12 months. I included below each of these analysts' ratings as well as quotes from their research. Each of them has either a Buy or Hold (do not sell) rating on the stock. This is the most clear indication of where investors believe the company is heading. Analysts don't suggest their clients buy or hold stock in a company they don't believe will be successful in the coming months and years. Should anyone ever speculate otherwise I encourage you to share this with them.

Oppenheimer:

Rating: Buy
"Positioned as a tech-centric business, Compass will continue to invest in platform functionality, effectively creating a technology "moat" vs. smaller traditional brokerage peers that cannot compete from an investment perspective".

Goldman Sachs

Rating: Buy
"Market share gains should enable the company to navigate through the downturn and return to growth when the environment improves".

Needham

Rating: Buy
"COMP went through a massive investment cycle, growing into a large brand covering roughly half of the US with a best-in-class tech platform. With difficult housing and equity market conditions, COMP is now increasingly focused on monetizing this investment".

Compass Point (no connection to us, happens to have a similar name)

Rating: Buy
"Recruiting & Retention still Strong despite zero-incentive implementation with retention rates stable at 96%"

Gordon Haskett

Rating: Buy
"We were impressed to see solid revenue and EBITDA upside, and management reiterate previous OpEx guidance. Looking ahead, we were encouraged to hear management note that (1) 2023 OpEx guidance should hold into 2024 and (2) adjacent services should continue to be rolled out throughout the year with T&E integration expected to be in all available markets by 1Q24".

Barclays