Thank you for standing by. And at this time, I would like to welcome everyone to today's Compass Incorporated Q4 and Full Year 2024 Financial Results Conference Call. I would now like to turn the conference over to Sohan Bonslay, Head of Investor Relations. You may begin.

Thank you very much, Operator, and good afternoon, everybody. And thank you for joining the Compass fourth quarter and full year 2024 earnings call. Joining us today will be Robert Refkin, our founder and CEO, and Kalani Rilitz, our chief financial officer. In discussing our company's performance, we will refer to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter 2024 earnings release posted on our investor relations website. We will make forward-looking statements that are based on our current expectations, forecasts, and assumptions, and involve risks and uncertainties. These statements include our guidance for the first quarter of 2025 and full year 2025, including comments related to our expected financial results, operating expenses, and free cash flow, as well as our expectations for operational achievements. Our actual results may differ materially from these statements. You can find more information about risks and uncertainties and other factors that could affect our results in our most recent annual report on Form 10-K and quarterly reports on Form 10Q filed with the SEC and available on our Investor Relations website. You should not place undue reliance on any forward-looking statements. All information in this presentation is as of today's date, February 18th. We expressly disclaim any obligation to update this information. I will now turn the call over to Robert Refkin. Robert?

Thank you for joining us today for our fourth quarter conference call. Before we dive into our results, I want to take a moment to recognize all of the hard work from the entire Compass team over the past three years. This team has worked tirelessly to put Compass in the position it is in today, and I am excited to showcase the true earnings potential of our platform as the market makes its way back to mid-cycle transaction levels of 5.4 million to 5.6 million existing home sales. I'm pleased to share that in the fourth quarter, we continued to widen the gap between Compass and the industry as we increased revenue and adjusted EBITDA, accelerated our market share gains, grew agent count, expanded title and escrow attach rates, continued to retain agents at industry-leading levels, exceeded our OPEX targets, extended our unique inventory advantage, achieved our 2024 goal of keeping stock comps below $130 million and generated another quarter of positive free cash flow. These results are clear evidence that our playbook is working. As a reminder, our playbook consists of, first and foremost, controlling our organic OPEX at 3% to 4% annual growth. Second, growing market share by adding agents organically, executing accretive M&A, and using the Compass platform to enhance agent productivity. And lastly, expanding margin by increasing attach of mortgage and title, while also incorporating our new higher-margin Christie's International Real Estate Affiliate Business. By sticking to this playbook, we believe we can generate hundreds and hundreds of millions in adjusted EBITDA and free cash flow for our shareholders as the market recovers. In Q4 2024, we generated adjusted EBITDA of $16.7 million, which includes $4.2 million in M&A transaction costs, primarily related to the Christie's International Real Estate Acquisition. Excluding these transaction costs, Q4 2024 adjusted EBITDA would have been $20.9 million. Revenue in the fourth quarter increased by 25.9% year-over-year. Total transactions and organic transactions increased by 24.1% and 15.5% year-over-year, respectively. As compared to the overall market, where transactions increased by 6.8%. So this means growth income's total transaction count was 3.5 times faster than the market, and growth income's organic transaction count was 2.3 times faster than the market. In the quarter, we successfully recruited 669 principal agents organically to Compass, and quarterly principal agent retention remained at a strong 96.9%. For the full year 2024, we grew our net principal agent count by 3,069 agents, or by 21% compared to year-end 2023. Our title and escrow business continues to gain momentum. We finished Q4 with another record quarter of T&E attached. Over the past four quarters, we've improved our attach rate by more than 800 base points, and we have nearly quadrupled our profitability in the business year over year. In 2025, we expect to drive a similar level of improvement in our T&E attach rate, which should help us to more than double adjusted EBITDA in this business year over year. Revenue, less commissions, and other related expenses, as a percentage of revenue in the fourth quarter was 17.47%, Had the Christie's international real estate transaction been consolidated into our P&L for Q4, we would have expected this metric to be approximately 18.2%, and we believe this metric will be higher than 18.2% in the full year 2025. Over the long term, we can expand our margins for a few reasons. First, we will continue to get credit from our agents on the increasing value we provide to them and their clients through the Compass platform. We will also continue to hire up-and-coming agents who are productive but also have better economics than the top-producing agents. As we stated in early 2022, agents producing below $150,000 of annual revenue generated approximately 900 base points more margin for Compass than million-dollar-plus agents. Second, we continue to increase margin from our ongoing expansion of high-margin integrated services like title and escrow. And lastly, with Christie's international real estate acquisition closed as of January 13th, we now plan to expand the high-margin affiliate business and believe we have a long runway for growth in this business. When compared to the current leader in the luxury real estate franchise business, we believe that we can more than five times the number of domestic Christie's international real estate affiliates over time. And as a reminder, this is a 30% to 35% adjusted EBITDA margin business for us. Now, moving on to our view of 2025 and beyond. On the last call, I shared that whether you have a bearish or bullish view on the housing market, we are building a company that succeeds in any scenario. In Q4, we grew quarterly market share by 65 base points year-over-year, reflecting an increase from 4.41% to 5.06%, and our highest year-over-year increase in quarterly market share in the past 12 quarters. Furthermore, our Q1 Revenue Guide, excluding Christie's International Real Estate, equates to more than 25% growth year-over-year at the midpoint and implies transaction growth of more than 20% year-over-year versus a pending home sales index that is down 5.5% in December 2024 or NAR and January single-family pending home sales that are down 5% on average year-over-year for Alta's research. This is evident that the gap between Compass and the industry is widening. I view our outperformance to the market in Q4 and expected outperformance in Q1 to be a reflection that despite higher mortgage rates and a volatile environment, the company's structural advantages and initiatives around OpEx containment are working. As we look to 2025 and beyond, the gap between Compass and the industry will only accelerate, driven by what I see is the beginning of a structural change in the brokerage industry that will favor Compass. The structural change is driven by the fact that NAR will no longer be able to have anti-competitive roles that prevent large brokerages and top agents from competing freely and gaining market share. Specifically, NAR's revenue model is based on the number of agents in the industry paying dues. I believe they don't want large brokerages and top agents to gain market share because it would result in less agents in the industry and less revenue from agent dues. NARS rules artificially prompt up the least experienced agents and the smallest brokerages, resulting in the number of agents in the U.S. increasing nearly 100% since the year 2000, while during the same time period, the U.S. population grew only 20%, and the number of annual home sales declined by 20%. However, post-NARS settlement, as of August 17th, with the MLSs no longer requiring listing agents to pay buyer agents, and NARS clear cooperation policy no longer being enforced in nearly half of our markets, as MLS CEOs increasingly realize the liability they face from enforcing this anti-competitive policy. The artificial market restraints that limited market share gains for the best agents and the best brokerages are now gone. As a result, the cream will rise to the top faster than ever before in our industry, which should disproportionately benefit Compass because we have the best agents in the industry. Let me share some data that illustrates this point. As reported recently by RIS Media, the gap in income between an agent with less than three years of experience and 10-plus years of experience is 20% larger post the MLS rule change. Per this study, before August 17th, the commission delta between an agent with less than three years of experience and an agent with 10-plus years of experience was relatively flat at just 12 basis points. But post the settlement, it has now moved to 85 basis points. This makes sense. Just think about other professional advisory businesses, like law, for example. Lawyers with one year of experience don't get paid the same as lawyers with 10 years of experience, and lawyers at small law firms don't get paid the same as lawyers at big national law firms. To highlight this point in a different way, before August 17th, an agent with one year of experience at a small brokerage firm could go to a buyer and say, quote, let me take you out to see properties. You don't need to sign anything. You don't need to pay me anything because the listing agent who tends to work at a large brokerage firm has negotiated my compensation, and I can show you the same properties as everyone else. This is the reason why new agents almost always work with buyers over sellers, because buyers, unlike sellers, didn't have to sign anything and weren't asked to pay their agents anything directly. But post-August 17th, that same inexperienced agent now must say to the buyer, quote, you need to sign a buyer representation agreement before I can show you properties. We need to agree on my compensation up front. And if asked, they would have to tell their client that they don't have access to the same properties as the larger brokerages that have access to a larger pool of listings. As a result of this, and with experienced agents disproportionately working at the larger brokerages, as opposed to the over 60,000 small brokerages, I expect the market share of large brokerages to increase going forward. In the future, the free market will reward the best agents and the best brokerages with the highest pay just like it does with the best lawyers and law firms. The best agents are going to thrive in the new future. They're going to gain more market share and earn more money which is ultimately best for the consumer because unlike NAR which gets paid per agent the consumer doesn't want an industry of over 1.5 million agents. The consumer just wants to work with the best agents. This is good. This is right. This is not unfair. Letting agents and brokerages compete freely is ultimately in the best interest of the consumer. Now, moving on to our structural advantages. As discussed in the past, Compass has invested in four structural advantages, and these advantages play to the broader changes that are occurring in the industry, which position us to accelerate share gains in the years to come. These structural advantages include, one, our end-to-end platform, where we recently launched tools like Reverse Prospecting, Make Me Sell, and Compass One, the industry's first all-in-one client dashboard that gives 24-7 transparency into every step of the transaction for buyers and sellers. two, our national scale, three, our network of top agents, and four, our depth of inventory in local markets. Given how important inventory is to our strategy going forward, I want to close with a few minutes on this last advantage. First, it's important to understand that depth of inventory, not breadth, is what's critical as we create unique inventory through programs such as the Compass three-phase marketing strategy that benefits our agents and their clients. Second, by growing our unique inventory and marrying that with our end-to-end platform, which has agent-level search and consumer search at a level that no other brokerage firm in the industry has, we believe more and more buyers will search compass.com and use Compass agents, as it will be known that Compass has more inventory than any other website or brokerage. as an early proof point that consumers are seeing value in the compass three-phase marketing strategy here are a few data points to consider as of february 16th 2025 homeowners are marking more than 7 500 listings as a compass private exclusive or a compass coming soon which are only available by working with a compass agent or by searching compass.com roughly half of the compass private Exclusives and Compass Coming Soon listings were above a $1 million list price with the other half being below the $1 million list price. This shows that this strategy is resonating with homeowners across all price points. Of Compass's 22,138 listings, approximately 35% currently are Compass private exclusive or compass coming soon and we have several markets where this is above 50 percent moreover we are seeing rapid adoption of the compass three-phase marketing strategy with 55 of new listings so far this month of february starting off as a compass private exclusive or a compass coming soon the 35 we cited is consistent with other data points because even without marketing the benefits of off-MLS listings today. Third-party studies show strong homeowner demand for starting off-MLS. For instance, the largest private listing network in the country is actually MRED, the MLS of Illinois. And 21% of all their closed listings between 2022 and 2024 started in their private listing network, largely to test price privately. Furthermore, a recent study from Zillow showed that 31% of respondents initially said they would prefer to have their property listed on a private listing network if they were selling a home. And lastly, another recent study from research firm 1000 Watt showed that 35% of prospective to sellers who were offered a choice between listing directly on the MLS or initially listing off the MLS, said they would choose to list their property off MLS. We believe the Compass three-phase marketing strategy delivers better outcomes for homeowners, including fewer days on market and fewer price drops once on the MLS and available on the Portal website. To test this thesis, we looked at all closed Compass sell-side residential transactions that were ultimately marketed on the mls from january 1 2024 through the end of december 2024 and we compared compass listings that were pre-marketed as compass private exclusives or compass coming soon to compass listings that were not pre-marketed what we saw was that for closed sell-side residential transactions across all price points and all property types nationally properties where the homeowner chose to pre-market as a compass private exclusive or compass coming soon before going active on the MLS, received an accepted offer 20% faster on average or eight days faster on average once active on the MLS than Compass listings without pre-marketing. And it created value for homeowners as only 13% of Compass listings on average that were pre-marketed had a price drop compared to 19% for Compass listings without pre-marketing, which means And approximately 30% fewer listings took a price drop once active on the MLS. I want to emphasize that these trends also held at lower price points, as we saw consistent improvements when looking at closed prices below $1 million as well. While these findings are encouraging, Compass's team of data scientists, which is led by Dave Crosby, a 20-year Microsoft veteran, also completed a study to better understand the relationship between closed price and pre-marketing as a Compass private exclusive and or Compass coming soon before going active on the MLS. This analysis examined all Compass residential closed sell-side transactions in 2024 nationally and for all residential property types. What we found was that homes pre-marketed as Compass private exclusives and or Compass coming soon before going to the MLS were associated with a 2.9% higher average close price compared to Cumbass sold properties that were not pre-marketed in 2024. This means that homeowners who chose to pre-market their home with a Cumbass agent at Cumbass's average price point of roughly $1 million were likely to have realized a $29,000 premium in the sale of what is often the most valuable asset in people's lives compared to those who listed directly on the MLS. We believe this is a strong proof point that homeowners who choose to market with a Compass three-phase marketing strategy see better results. These results are not a surprise to us, as the Compass three-phase marketing strategy is based on what home builders and residential developers do every day, and they are the most sophisticated and profit-driven sellers of homes in the industry. The reason home builders list off the MLS is to protect their listings from days on market and public price drop history and to ensure that all buyer inquiries are directed to the listing agent that they hired. Compass Coming Soon and Compass Private Exclusives provide these same advantages to homeowners as well. So it's not a surprise that home listings that were protected from having negative insights on them, like days on market and price drop history, sell for more than homes that have negative insights on them. And it's also not a surprise that listings that are able to direct buyer inquiries to the listing agent who knows the home the best sell for more than listings that direct buyer inquiries to the highest bidder. In fact, sell the leads to the highest bidder. an agent who doesn't know the property as well, and who may redirect that buyer to another home. Homebuilders and developers sold hundreds of thousands of homes off the MLS last year to ensure that negative insights aren't on their listings and ensure all buyer inquiries go to listing agents, neither of which happens when the homeowners list on the portals. You're going to hear all of these stakeholders say that homes sell for more on the MLS. How is it possible that homes could sell for more on the MLS if home builders and developers are selling hundreds of thousands of homes off the MLS? Again, they are the smartest, most sophisticated, most profit-driven people in real estate. As a reminder, NAR's clear cooperation policy carves out home builders and developers from having to comply so they can market their properties off the MLS freely as they see pit what we are doing with the compass three-phase marketing strategy is simply giving individual homeowners the same marketing playbook of the home builders and developers and giving additional support to agents to act in the best interest of their clients given the improvement in price we have observed from pre-marketing we believe this puts more pressure on nar and mls to avoid liability by ending clear cooperation immediately. NAR's clear cooperation policy harms homeowner value by taking away homeowner choice to publicly pre-market their homes off the MLS with their agent. In the United States of America, a trade group should not be allowed to force every homeowner in the country to sell their most valuable asset at a discount. This fact pattern gives the active DOJ investigation into clear cooperation even more merit. Consumer protection requires consumer choice, and clear cooperation takes away consumer Over the coming months, as we continue to activate the Compass three-phase marketing strategy more broadly across our markets, we expect to be able to show the ability to create positive outcomes for homeowners as well as better agent retention higher agent productivity more agent growth from recruiting and more traffic to compass's website ultimately our north star is to use our depth of inventory to create better outcomes for sellers buyers and our agents which should translate to better outcomes for compass and our shareholders now let me hand it over to kalani to go through our financials in more detail.

Thank you, Robert. Summarizing our financial results for the quarter, our fourth quarter revenue was $1.38 billion, an increase of 25.9% from the year-ago period, which exceeded the high end of our original guidance range of $1.225 billion to $1.325 billion, and just above the midpoint of the updated guidance we issued on January 15th. 20.9% of this revenue growth was attributed to organic growth, while 5% came from M&A. The gross transaction value was $54 billion in the fourth quarter, an increase of 29.2% reflecting the 24.1% increase in total transactions combined with a 4% increase in our average selling price. Our commissions and other related expenses as a percent of revenue was 82.53%, an increase of 82 basis points compared to Q4 of last year at 81.71%. In-year, M&A drove about a quarter of this change, and the balance came from geographic product and agent mix. In the last year, we have seen M&A of lower margin brokerages impact our margin, but we are happy to see this trend reverse with Christie's International Real Estate, which has higher margins than companies. It's important to note that total agent economics on a per-agent level improved in 2024 and were flat in Q4 year-over-year. However, higher producing agents are gaining market share in the current environment, and since they are on the better end of the split schedules, we may see some split degradation in that cohort offset by integrated services and affiliate revenue. However, the split is only the percentage. The net dollar amount we retain after paying out commissions will be higher as we take more share. Turning to OPEX, our total non-GAAP operating expenses were $224.4 million in Q4, a slight increase of $800,000 from $223.6 million of OPEX from the year-ago period. While a slight increase, keep in mind that the current year amount of OPEX is after considering added expenses we assume from the M&A completed since the year-ago period. Additionally, we incurred about $4 million of M&A transaction expenses in Q4. So adjusting for these two items, our Q4 OPEX was actually lower than Q4 a year ago by around $12 million, or 5%, reflecting continued strong cost discipline. For the full year, I am pleased to share that we not only met, but exceeded our original OPEX guidance range, with our full year OPEX coming in $8 million below the low end of our guidance range of $876 to $896 million. and $56 million lower year-over-year. Notably, the year-over-year improvement in our full-year 2024 OPEX was achieved in a period where we grew transactions by 14.7% year-over-year. Principal agent count grew 21% year-over-year. For 2025, we remain steadfast in our focus around OPEX and are guiding to 3% to 4% OPEX growth, excluding M&A, consistent with our stated goals last year. Consistent with my comments last quarter, it's worth a reminder that we've used some of the room created from our overperformance on OpEx reductions to invest in our key growth areas of technology and title and escrow entities. Our adjusted EBITDA for the fourth quarter was $16.7 million, which was above the high end of our original guidance range and at the midpoint of the updated range we issued on January 15th and a strong improvement from a loss of $23.7 million a year ago. GAAP net loss was $40.5 million in Q4 compared to the GAAP net loss of $83.7 million a year ago. This improvement was driven by the increase in adjusted EBITDA, but also lower stock-based compensation expense, which was $31 million in the quarter compared to $36 million in Q4 of last year. As a reminder, the non-GAAP operating expenses we refer to omit certain expenses that we exclude from the calculations of adjusted EBITDA including stock-based compensation and depreciation and amortization and as always we've included tables on pages 13 and 15 in our q4 investor deck that reconcile these amounts to our gap operating expenses because of our opex discipline which as we've said previously is permanent not temporary we delivered free cash flow in every single quarter in 2024 and have now been free cash flow positive for six of the last seven quarters during a period of time that reflect a trough-level transaction environment of $4 million annual existing home sales. We generated $26.7 million in free cash flow in the fourth quarter, and importantly, we are guiding to another year of solidly positive free cash flow in 2025. Our free cash flow during the fourth quarter was extremely strong compared to the negative free cash flow of $41 million last year. We did not expect to deliver positive free cash flow in the fourth quarter due to seasonally weaker periods. However, as a result of the overperformance of revenue and adjusted EBITDA, combined with some favorable timing of working capital changes in the quarter, we converted 160% of our adjusted EBITDA to free cash flow. I'm pleased with this performance, although we generally consider 70% to 80% to be the normal free cash flow conversion range after considering CapEx and some other items. Since it's the fourth quarter, I'll summarize a few of our full-year financial data points before moving into Q1 guidance. Revenue for the full year of 2024 was $5.6 billion, an increase of 15%. That's an additional $740 million of revenue in what has been a very challenging market. Adjusted EBITDA for the full year of 2024 was $126 million, which is a new compass record for this metric, and an improvement of $165 million over negative adjusted EBITDA of $39 million in And finally, free cash flow was $106 million for the full year, which is not only an all-time high for free cash flow, but importantly, this March, the first year, encompasses history where we delivered positive free cash flow for the full year. Free cash flow, excluding our NARS settlement this year, would have been $100 million. We ended the fourth quarter with $234 million of cash and cash equivalents on our balance sheet and as of December 31st, we had no outstanding draws on our revolving line of credit. During January, we did draw $50 million off of our revolver and used $100 million of our balance sheet to fund the $150 million cash portion of the Christie's International Real Estate Purchase Price, turning now to financial guidance. For Q1 of 2025, we expect revenue in the range of $1.35 billion to $1.475 billion, which includes the incremental revenue from Christie's International Real Estate Acquisition that closed on January 13th. As a reminder, when we announced this transaction, we expected to see about $500 million of annual revenue contribution from this transaction on a run rate basis, and we expect that revenue to follow a similar quarterly distribution to Compass's base business, where Q1 is the seasonally weakest quarter and Q2 is the seasonally strongest. For Christie's International Real Estate business, the revenue less commissions and other related expenses as a percent of revenue line is higher compared to our base business. We expect this to improve our consolidated results as we incorporate the acquisition. For Q1 of 2025, we expect adjusted EBITDA to be in the range of $11 to $25 million. We remain focused on limiting OPEX to a range of 3% to 4% organically. As a reminder, our OPEX formula is our base OPEX plus M&A. As a result, we are targeting a range of $1.005 billion to $1.03 billion in total OPEX for 2025, which has our base OPEX growing 3% to 4%, plus $10 million of wraparound OPEX from 2024 acquisitions, and the addition of $105 million of OPEX from the January 2025 acquisition. A few thoughts on free cash flow for 2025. For the avoidance of doubt, we will be free cash flow positive for the full year 2025. As we've commented previously, we generally expect to convert about 70% to 80% of adjusted even at a free cash flow over the long term. However, this percentage will fluctuate quarter to quarter and even year to year as a result of timing of working capital, seasonality, and other items such as the second NAR-related settlement payment of $29 million we'll make in the second quarter of 2025. Excluding the impact of our NAR-related settlement payments in 2024, we converted 107% of adjusted EBITDA's free cash flow for the full year of 2024 and 160% in the fourth quarter. This higher-than-average conversion was due to several working capital timing items which removed in our favor during 2024, but which will likely reverse in 2025. So, in modeling cash flow, you should consider a two-year stack to adjust for these. As a last point of guidance, we expect our weighted average share count for the first quarter to be between 549 to 552 million shares. This reflects an increase of 38 million shares in January related to the minimum equity portion of the Christie's International Real Estate Purchase Price. Additionally, we expect incremental share count related to the settlement of employee equity awards to average about 1% of our outstanding shares each quarter. Stock-based compensation for Q1 is expected to be in line with Q4 at about $31 million. As I wrap up my prepared remarks, I'd like to once again extend a sincere thank you to our agents and employees for their hard work and dedication that resulted in another great quarter of results where year over year, we meaningfully grew market share, agent count, attach, and at the same time, we closed out the full year of 2024 with a record level of adjusted EBITDA and free cash flow. We look forward to continuing our momentum in 2025 with our recent acquisitions that adds brokerage operations in Chicago and Atlanta, a new title operations in Chicago, and for the first time, a franchise operations through Christie's International Real Estate. I would now like to turn the call over to the operator to begin Q&A.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, simply press the star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star 1 again. And your first question comes from the line of Jason Helstein with Oppenheimer. Please go ahead.

Hey, thanks. First, Robert, I really appreciate all the color around the initiatives, exclusives, and coming soon. Are you starting to see in your metrics more agents wanting to join Compass because of this factor or potentially lower attribution? You did talk about retention being quite high, but just is it actually – are these products starting to attract more agents yet? And then just also, do you expect to grow the number of, I guess, how do we think about growth in Christie's and AppProperty's agents in 2025? That's question one. And then Kalani, just from housekeeping, I think you called out there would be nine points of positive acquisition impact in first quarter. Should we think about a similar impact for all of 2025?

Yeah, of course, Jason. It's good to speak with you. Thanks for the question. And on private exclusives and coming soons and impact on agents, I would say that their clients, for buyers, if a developer works with an agent and a home builder, they often will say, can you show me what's off the MLS? They're the most sophisticated buyers and sellers in the industry. And so whether it's with a buyer that's a developer or an individual buyer who will say things like, please don't show me what everyone else can see. Show me what's something that's unique. And so agents are always looking for an edge because they want to give their clients an edge. And so, yes, coming soon and private exclusives give an edge for agents to give to their buyers, as well as an edge for their sellers. The edge for their sellers, we've talked a lot about it, protects them from the negative insights, such as days in marketing price drop history. It allows all the buyer increase to go to the listing agent they hired, not sold off as a third-party lead to the highest bidder, again, just like the developers do. So you're giving that edge that developers use for themselves to their seller. And so, yes, because Compass is able to give an edge to our buyer agents and seller agents, which they can pass on to their clients, we are finding this as now a top reason why agents want to come to Compass. I believe this year, Compass will be known as the company that protected homeowner value by giving the playbook that home builders give themselves to the individual seller of homes. And that's something that really resonates with listing agents because they have a fiduciary duty to do it from the best interest to their sellers. And that fiduciary duty is being compromised by rules like clear cooperation that forces them to a one-size-fits-all approach as opposed to a one-size-fits-one approach. On Christie's International Real Estate, when you look at the largest luxury brokerage in the affiliate space, they're five times our size. We aren't giving guidance on how fast it's going to grow, but I can tell you that we already launched two new international markets, and we have signed up a new domestic market, which is already signed and should be announced. in the next i think next month in march and we're close to signing another and so we feel that the momentum is moving in such a path that it's it's meeting if not exceeding our initial expectations can you repeat the question sure so i think you you basically helped us understand that in the

guidance for the first quarter there's nine points of acquisition impact not under basis points Should we think about a similar impact for the rest of 2025 as far as the tailwind from acquisitions?

Okay, thank you. And then I think we had mentioned there the gating of that to be with Q1 being the weakest.

Thank you.

And your next question comes from the line of Chris Kontarek with UBS Securities. Please go ahead.

Thanks for taking the question. Can we just talk a bit about really the opportunity around Compass One and driving this three-phase marketing approach and doing it within the context of that 3% to 4% organic expense growth? How should we be thinking about your marketing expense and driving awareness around this to potentially accelerate agent growth? I have a follow-up after that.

At Compass, we don't have corporate marketing. Because we have 30-plus thousand agents with, on average, 3,000 people in their contacts, so 100 million people, our agents are a natural way to market the message of Conviz directly with their clients. So we have, again, over 100 million people or contacts that they have in their combined database. And our platform allows them, with a click of the button, to send digital newsletters. I'm sure you've probably seen some of them. social media posts organic or or paid social posts again through the platform as well as postcards mailers brochures and much more even video and so we put in compass one we marketing material through the platform and we're we're in the positive up leveling our compass three-phase marketing material and the numbers that we outlined today about the about the um uh 2.9 percent as well as uh the reduction in days on market as well as the reduction in price drops um the we were we're gonna we're adding that content in over the next week so the agents can then share that with their clients in their sphere of influence now we do see value of doing something potentially at the corporate level that we're exploring but first we want to we want to maximize the full value of doing it in a free way that aligns us with our agents where they can they can build their client relationship got it that's helpful and just on free cash flow how should we be thinking about uh uses of it here could we potentially be thinking about um share buybacks any sort of framework to be thinking about sbc as well for this year thanks yeah hey chris um and

deepening our inventory in our key mark c continued free cash as we think about free cash flow this year it'll be focused got it and any anything off that run rate for full year sbc to be thinking about.

Got it, super helpful Kalani, thank you.

And your next question comes from the line of Bernie McTernan with Ned Needham and company, please go ahead.

Great, thanks for taking questions. Maybe just to start, is there a difference for commissions to agents based on private listings or coming soon or are they more likely to represent both sides of the transaction in areas that they're able to and certainly just seems like from the anecdotes they're using it, they're leveraging to win listings. Just any commentary on the economics to agents with private listings are coming soon.

And I think you're right on the last point that it seems like you're hearing as well. Agents are saying that the Compass three-phase marketing strategy is helping them win listings. And yeah, there are many people Let's say it's one of the best listing tools that they've ever had because it meets, obviously, the seller demand. In terms of commissions, there's no different commission structure for a private-exclusive risk-coming scene versus an active listing. and uh and and and so we we don't and i personally don't even know how much more we how much more listings are sold in-house or not that is not the reason why we do this the reason why we do things is because we want to give our agents an edge and so how do you give your agents an edge you give them tools that their clients want and this is just this is one of the one of the greatest tools that you can give. And what's great about this tool as well is it doesn't cost more money. An agent can go to their clients and walk through the three-phase marketing strategy. They're going to sound more sophisticated. They're going to sound like they have a plan. They're going to sound professional. And it's not, hey, I'm going to spend more money on an ad or on marketing dollars. And so their clients want someone who has a plan. This is a plan that is free. And it works uniquely within Compass because of our network of 33,000 top agents where you can effectively axe millions of buyers without the risk of portal sites and MLS exposure.

Understood. Thanks, Robert. And for Kalani, with the acquisition that just closed, there's $25 million of franchise revenue, $25 million of title. I was just wondering if we could get an update on what the expected total non-commission revenue could be either a percentage of total or just an aggregate number of what we're up to right now in terms of that non-commissioned revenue.

Yeah. We don't think those pieces we gave out that you just mentioned are going to – I think you can add.

Okay. Got it. Thanks, Lonnie.

And your next question – one moment, please. Your next – your next question comes from the line up. Brian McKeveney with Selma and Associate. Please go ahead.

Hey, thank you. Congrats on the results and thanks as always for the commentary. I guess a two-part question around growth expectations. First on the organic side, I guess using 4Q as an example, you know, about 670 gross agent ads dropping down to about 210 on a net basis. I guess I'm just curious on an organic basis. You know, what do you think is a reasonable run rate to think about going forward? Like, was 4Q a decent proxy? I know you called out kind of managing out non-producers, so presumably not the best proxy for future quarters, but any commentary around just, you know, your thoughts on agent additions on an organic basis going forward. And then secondly, on the inorganic side, you know, following the app properties and Christie's deal, obviously a large and important transaction. I guess I'm curious, what about the pipeline of incremental M&A? Does the focus shift a bit to just the integration, drawing out synergies from that deal? Or could we expect to see further, maybe smaller opportunities down the pike? And yeah, just generally your view on incremental M&A going forward post the deal. Thank you.

We are targeting industry-leading retention at 90% annualized or something. As we mentioned, Q4 on producing agents that we cleaned up, so the 210 is probably a little understated, is my guess. But I think you can use the gross as a proxy. I think we're seeing a ton of momentum. Agents are really, we'll see that momentum getting stronger with the team. And I do see, I think you can use Q3 for the cleanup that we did for that. And then I will, you know, on the M&A, I think we'll continue to focus on that, But the pipeline remains the inventory advantage that we're building. And so we'll continue to see the opportunities there within our framework.

Got it. Thank you very much. Appreciate it.

And once again, if you would like to ask a question, please press a stormwind. Your next question comes from the line of Michael Inc. with Goldman Sachs. Please go ahead.

Hey, good afternoon. Thank you for the question. I just had one for Robert on the inventory strategy. i was wondering if you could just speak to if you if you look out to a couple of years what does this look like in success for compass is this about attracting more agents and gaining market share that way given private exclusives and coming soon is a tool that compass is obviously doing very well in could you potentially get a license fee from cross-posting to real estate portals at some point down the road and perhaps charging for access while keeping the negative insights off those listings. Any thoughts there would be great. Thank you.

Yeah, look, Michael, any of the questions well said coming from you, my all-in-law and my alum, Goldman Sachs, which for many years was known as the bank that you would go to if you wanted to sell a company and get maximum dollar because you ran the best process and the best people and tools to do so. So where's this look in the long run? In the long run, hopefully not too many years from now, every homeowner in the country knows if you want to sell your most valuable asset on the average person's life, that this company called Compass can help you maximize that value. That's what this is all about. And if we do that, of course, you can imagine all the wonderful, beautiful things that come with it um because you can't buy what's not for sale and you know that would of course it would allow to more transactions helping more more not just sellers remember every time you have a seller you're also helping a buyer um and uh you become a place if we are the place that's known to maximize the value of a home sale clearly the best real estate professionals would want to be be there as well and you're giving them an edge and so you're a place that agents want to come to they want to stay stay at more it allows you to then you know take that success and reinvest it back in the platform so you're investing more in the future of your business than than the market um and uh you know the i i would i would like to see this as a place where um where where we have you know we have we have we've had an impact on the industry such the agents are no longer being forced by a trade group and being told by a trade group that how to market their clients' properties. I just don't think that's right. And we talked about it on the call, but the trade groups business is a volume business. It's how do I make as much money from volume per agent dues? My estimate is the trade groups plus the MLS associations generate over $2 billion of agent dues a year. There's real money there. A lot of people, 600 MLSs, a lot of people that are making money off the agent. And I'm the one who these agents come to and say, why is it that the pain are? Why is it I can't watermark my own photos than the MLS watermark said? Why is it that I can't put in a listing description, I'm the listing agent? So a buyer sees it on the portal that they know they can actually reach out to me, the listing agent. And look, ultimately, I just close your question saying, I want the future of this industry not to be created by companies that are trying to devalue, discount, and displace and control the agent. Instead, to be created by the agent and the person who's at the center of the transaction, who is talking with the client every single day, the buyer and seller, and saying, what are your needs? How can I meet them? They should be the ones that are creating the future of this industry, and Compass is the company that will listen to them better than any company, and then build their ideas into reality.

Great. Thank you for all that color, Robert. Really appreciate it.

And your next question comes from the line of Ben Black with Deutsche Bank.

Hi, this is Jeff on for Ben. Thanks for taking my question. I was just wondering if you could give a little bit of color on how commission rate is trended for agents. I mean, you talked about kind of the difference between the underperforming and the high performing agents, which seems like it might imply that you're seeing some more commission compression on the lower end side of the agents. Is there anything you can tell us just on how that's trended and maybe, you know, different mix or different geographies or where you're seeing more or less of an impact? Thank you.

We haven't looked at this in detail. However, what I can see anecdotally and from what I read, the top agents are outperforming the, not just in gaining market share, but also on commission, than the inexperienced agents. And it's similar to what I said on the call. Like, you know, why is it, you know, that in this industry, buyer agents, regardless of their experience, were getting paid the same from the listing agent commission paid to the buyer agent. Well, in another industry, would it be like that? Lawyers one year in the business don't get paid. Lawyers the same as lawyers 10 years in the business. So I think that the structural change, and that's why I know I spent some time on the call, I really believe that's the biggest thing happening right now. this industry of large brokerages and top agents has been held back by rules that you know would be claimed as leveling the playing field the really movement is how do we get as many agents as possible how do you have an industry of almost 1.6 million agents where 70 of them didn't do one transaction last year because that's how that's how all those stakeholders can make as much money being the nar the associations and the mls and so with these rules being pulled out i just think these top agents are going to thrive it's going to be incredible for them as well as large brokerages Cumbas as well as others. Look, Cumbas invested $1.7 billion in tech platform, hundreds of millions of dollars in other stuff. So I think we will thrive more because we invested more. But it's a great thing for top agents, large brokerages, and ultimately the consumer, because the consumer wants an industry where more people are investing in their behalf, not an industry where there's no incentive to invest on their behalf. But yeah, long story short is we're not seeing a change for the top agents. Got it. Thank you.

Thank you. And I'm showing no further questions at this time. I would like to turn it back to our founder and CEO, Robert Repkin, to close this out. Robert?

Well, thank you, everyone, for joining our call today. I just want to express my gratitude to all our agents, all of our employees, as well as to all of our shareholders. Your commitment to Compass has driven our success so far and has positioned us to outperform the market in 2025 and beyond. With that, thank you and have a great rest of your day.

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now.