Compass, Inc. Q2 FY2025 Earnings Call

Ladies and gentlemen, thank you for joining us and welcome to the Compass Second Quarter 2025 Earnings Call. I will now hand the conference over to Soham Bhonsle, Head of Investor Relations. Please go ahead.

Thank you very much, operator, and good afternoon, everybody, and thank you for joining the Compass Second Quarter 2025 Earnings Call. Joining us today will be Robert Reffkin, our Founder and CEO; and Kalani Reelitz, 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 second quarter 2025 earnings release posted on our Investor Relations website. Any discussion regarding organic revenue, organic transactions or organic GTV excludes any activity from businesses we acquired since April 1, 2024. 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 third 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, uncertainties, and other factors that could affect our results in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q 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, July 30. We expressly disclaim any obligation to update this information. I will now turn the call over to Robert Reffkin. Robert?

Thank you for joining us today for our second quarter conference call. In what remains a trough level housing market, I am pleased to share that the Compass team produced the strongest quarterly results in our history with 10 quarterly records. In Q2, Compass delivered all-time high revenue, delivered all-time high adjusted EBITDA, delivered record adjusted EBITDA margins, delivered all-time high GAAP net income, delivered all-time high free cash flow, increased market share to an all-time high, delivered the best organic principal agent recruiting quarter in the company's history, grew our title and escrow revenue to an all-time high, grew our title and escrow attach to an all-time high. And lastly, the Compass platform hit a record 24 average weekly sessions per agent in Q2, representing 37% growth compared to Q2 of last year. Revenue in the second quarter increased by 21.1% year-over-year. Total transactions increased by 20.9% and organic transactions were up 6.3% year-over-year, respectively, as compared to the overall market where transactions decreased by 0.9%. So, this means Compass' total transaction count growth outpaced the market's growth by close to 22% and Compass' organic transaction count growth outpaced the market growth by 7%. For 17 consecutive quarters, spanning our entire history as a public company, Compass has outperformed the market on an organic basis. There has never been a quarter since we started measuring this metric where Compass hasn't grown faster than the market. In Q2 2025, we generated adjusted EBITDA of $126 million, up 63% from the $77 million in the year-ago quarter. Quarterly principal agent retention improved by 20 basis points year-over-year to a solid 97.5% in Q2. In the quarter, we also successfully recruited 832 gross principal agents organically to Compass, which is up 53% year-over-year and again, represents our best recruiting quarter in the company's history. The consistent new theme we are hearing from agents that joined this quarter is that they want to be at a company that stands up for agents and stands up for their clients. No agent wants to be told by a portal or an MLS how they must work. And none of their clients want to be limited in when, where and how they market their home. The reality is the intention of the portal and MLS listing policies is control. The purpose of control is to get the homeowners listings from agents for free and to monetize those listings on their platforms. And the mechanism for control is banning and finding agents that market off their platforms. And so, when there is a company that's advocating for agents and their clients to have choice and to not be controlled by these third-party platforms that want to make money off their listings, that is and will continue to be the winning recruiting strategy. I continue to be amazed by the silence amongst brokered CEOs who have acquiesced to the portals and MLSs that are dictating how their agents work and how homeowners market properties. I hope more brokered CEOs see our results as a signal that they will attract more agents if they fight for them and not simply acquiesce to portals and MLSs that ban and find agents for marketing listings outside their platforms. Now beyond our record agent recruiting quarter, our M&A pipeline, which consists of term sheets, both signed and actually negotiated, is also larger than it has ever been. As we said previously, a slowing housing market, or a move higher in rates will likely hurt our competitors more than Compass as they don't have the capital, the technology or the operational resources to scale, and this is exactly what we are seeing play out today. So, taking a step back, what do our record recruiting results and M&A pipeline show? They show that the demand for Compass is stronger than it has ever been, and we are particularly pleased to be delivering these results in one of the toughest housing markets in history. Moving to the T&E business. As I shared earlier, we posted record quarterly revenue and attach in Q2, and our attach rate was up close to 700 basis points year-over-year. In some of our largest and most mature markets, our attach rates today are consistently in the 40% range. And for users of our One-Click Title function that goes through our platform, we are seeing attach rates closer to 75%. This gives us confidence that over the long term, we can attach T&E at a 50% plus rate in most of our markets. Given the mounting evidence that our efforts in T&E are bearing fruit, we continue to invest in our T&E business and are excited to share that last week, we entered one of our largest markets, New York. By year-end, we expect our T&E business to have a presence in 70% of our markets and expect contribution from this business to increase meaningfully over the coming years. The Christie's International Real Estate business also continues to grow with 3 new affiliates joining the network in the quarter and 6 affiliates in the pipeline. Additionally, I am pleased to report that our financial results for the business are moving ahead of plan and integration efforts are on track with plan. In Q2, we also added Gavin Swartzman to the Christie's International Real Estate leadership team as President to help grow our affiliate network. Gavin previously led Peerage Realty Partners, the 10th largest real estate company in the U.S. for T3 Sixty, which is also the largest global franchise in the Sotheby's International Realty network. We continue to believe that we can more than 5x 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. Revenue less commissions and other related expenses as a percentage of revenue in the second quarter was 18.2%, which is 80 basis points above the 17.4% reported in the year-ago quarter. Non-GAAP OpEx was $250 million in Q2, which now includes a full quarter from the Christie's International Real Estate acquisition. OpEx discipline in driving savings and efficiencies has become a strategic advantage for Compass in the current environment. With over $600 million in OpEx savings delivered over the last 3 years and our disciplined OpEx growth of 3% to 4%, we have proven our ability to deliver on stated goals even as revenue grows at a much faster rate than our OpEx. Kalani will share more in his prepared remarks, but I'm excited to share that we now have a new program underway that will drive $50 million to $75 million of incremental adjusted EBITDA with at least $50 million of adjusted EBITDA improvement in 2026. We will achieve these results through continued focus on cost efficiencies and opportunities to offset the inflationary increases we have seen recently. So, as you can see from our results, we are not standing still at Compass. Regardless of where the housing market goes, we will continue to execute against our long-term strategy, which consists of: one, managing our OpEx prudently; two, recruiting and retaining agents at high levels; three, building a platform that empowers agents to be more productive and gain market share; four, pursuing accretive M&A and five, growing our high-margin T&E and affiliate businesses. By sticking to this core strategy alone, we believe we can generate a level of adjusted EBITDA and free cash flow that will significantly reward our shareholders over time. Now, I would like to close with an update on the next iteration of the Compass platform and why we are so excited about the future. Ever since we started our journey to build the Compass platform 13 years ago, the goal was always to provide agents with the best-in-class workflow platform to run their business on. And in many ways, we've now achieved that goal, just ask our agents. But as we think about the next iteration of the Compass platform, we envision a platform that is made more seamless as we leverage AI to be the connective tissue for all the wonderful tools we've created for agents so far. What is particularly exciting about the direction we are going in is, one, we don't need a big team or increased investment to harness the power of AI. We have the team we need. Two, there are clear benefits from AI that extend even beyond the productivity benefits we drive for agents as it will make our software engineers and our broker support operations more efficient. And three, we believe we are the only broker today with a platform that is truly end-to-end, which is what's required to harness Agent AI. And we believe that most of our competitors' agents are on third-party software platforms that do not allow them to connect all the various parts of an agent's workflow. This ultimately will take value away from these brokerages while increasing the value of brokerages like ours in the eyes of the agents, because we'll be able to help them save even more time and make even more money. Last month, I demoed the next iteration of Compass AI at our all-company gathering. There was a 2-minute standing ovation from our agents, thousands of them were present. It was great to demonstrate the potential of AI to our agents, which we're going to improve over time. And this fall, we will be beta testing Compass AI 2.0, which will initially be focused on improving agent productivity, but over time, be deployed across the organization to make us more efficient. Before I hand it over, I want to take a moment to thank Kalani Reelitz, who has informed us of his decision to pursue a new and exciting opportunity for him and his family. We are fully supportive of his decision to take this new opportunity outside of our industry and are grateful for all of his contributions over these last 3 years. Kalani has been an incredible partner and leader in helping strengthen our financial foundation, driving our operational rigor and positioning the company for long-term success. I'm also pleased to share that we will be promoting Scott Wahlers, our Chief Accounting Officer to CFO. Many of you are familiar with Scott, who joined Compass 7 years ago as Chief Accounting Officer and has also been leading our FP&A function for the past 2 years. Importantly, he has been Kalani's partner in executing our OpEx initiatives over the past three years, which he will continue to do in his new role. Scott brings deep institutional knowledge, outstanding execution and strong alignment with our strategy. Kalani will remain on through the end of August to ensure a smooth handoff, and we're confident in our continued momentum moving forward.

Thanks for the kind words, Robert. As Robert mentioned, I've made the personal decision to pursue a new opportunity outside of the brokerage industry that I am excited about. I'm incredibly proud of what we've accomplished together over the last 3 years and continue to be excited for Compass' future. I am leaving Compass in a position of strength with a winning strategy and zero concerns with our financial and accounting operations, internal controls, and business operations. I am proud of the work we've done here at Compass, and I'm especially confident knowing that Scott Wahlers, who has been my partner since I've arrived here, will be stepping into the CFO role. With that, let me walk you through the financial results for the quarter. As Robert stated earlier, our Q2 results were the strongest quarterly results in Compass' history and set a series of new records, both financially and operationally. Our second quarter revenue was $2.06 billion, an increase of 21.1% from the year-ago period and an all-time quarterly record for Compass. While M&A contributed to the year-over-year growth in revenue, even excluding M&A, revenue increased 8.7% on an organic basis. Transactions for the quarter increased 20.9% or 6.3% on an organic basis, which compares very favorably to the overall market where transactions declined by 0.9%. This outperformance to the industry is also reflected in our market share, which was 6.09% in the quarter, an increase of 96 basis points from the year-ago period and an 8 basis point increase from Q1. Gross transaction value was $78.3 billion in the second quarter, an increase of 20.3% from a year ago, reflecting the 20.9% increase in total transactions, combined with a slight decrease in average selling price of about 1%. Our average selling price was higher by about 3% on an organic basis. However, our acquisitions over the past year have lower average selling prices compared to our overall ASP, which reduced the overall increase in average selling price. Our commissions and other related expenses as a percent of revenue was 81.84% an improvement of 80 basis points compared to Q2 of last year at 82.64%. Consistent with our comments last quarter, we expected the acquisition of Christie's International Real Estate to favorably impact this metric, which is reflected in the results. Excluding M&A, our commissions and other related expenses as a percent of revenue were flat with the prior year quarter as some modest growth in T&E revenue was offset with some of the highest producing agents and therefore, higher split agents taking more of the market share gains. This is consistent with our comments last quarter, and we are okay with this trade-off today given that our highest producing agents are also taking share in the current environment. Over the long term, we remain focused on recruiting the up-and-coming agents that come at a much better split than our highest producing agents. Our total non-GAAP operating expenses were $250 million in Q2, an increase from $217 million of OpEx in the year-ago period, which was driven by M&A, including the OpEx we assumed from the January 13, 2025 acquisition of Christie's International Real Estate, the Washington Fine Properties acquisition in February 2025, and the acquisition of Ladder & Bloom and Parks Real Estate in the second quarter of 2024. Adjusted EBITDA was $125.9 million, a strong improvement of 63% versus adjusted EBITDA of $77 million a year ago, and also represents a new all-time record for quarterly adjusted EBITDA. GAAP net income was $39.4 million in Q2 compared to the GAAP net income of $20.7 million a year ago, an improvement of 90%, and also represents a new all-time record for quarterly GAAP net income. As for cash, we generated $68 million in free cash flow in the second quarter, which was not only an improvement over the $40.4 million of cash flow from Q2 2024, but also a new record level of quarterly free cash flow. Last quarter, I mentioned that in both Q4 of 2024 and Q1 of 2025, our free cash flow exceeded adjusted EBITDA levels, and therefore, we expected to give back some of that favorable timing of working capital changes in Q2. We also paid for the second and final installment of our class action settlement payment in Q2 in the amount of $28.75 million, which negatively impacted free cash flow. We ended the second quarter with $177 million of cash and cash equivalents on our balance sheet and $50 million outstanding on our revolver. As we discussed last quarter, the $50 million balance on the revolver was drawn to fulfill the cash portion of the purchase price for Christie's International Real Estate. Our basic weighted average share count for the first quarter was 560.3 million, which was in line with our guidance. Additionally, because we reported GAAP net income, we are required to present a fully diluted share count, which was 591.4 million shares. Turning now to financial guidance. For Q3 of 2025, we expect revenue in the range of $1.725 billion to $1.85 billion and expect adjusted EBITDA to be in the range of $60 million to $80 million. We expect our weighted average share count for the third quarter to be between 566 million to 569 million shares. We expect our stock-based compensation expense to be in the $55 million to $60 million range for the third quarter, which is a slight increase from the $55 million level for Q2. We expect the Q3 level of stock-based compensation expense to be the high point, and you'll see decreases sequentially into Q4 and 2026. As you can see from our results, we remain maniacally focused on OpEx, efficiency improvements, and driving profitable growth. Additionally, we have also been making good progress on the integration of our 2024 and 2025 acquisitions. As a result of these efforts, we are now pacing ahead of the OpEx range we previously laid out for 2025. Specifically, last quarter, we announced that our OpEx for 2025 would be in the range of $1.017 billion to $1.042 billion, but we now expect OpEx to be in the range of $1.01 billion to $1.02 billion, which reflects a reduction of $25 million off the high end of the range when considering the incremental OpEx from the 2 small brokerage acquisitions announced this month. Finally, as Robert mentioned earlier, we have a new program underway that improves our profitability incrementally starting in 2026 by $50 million to $75 million. We intend to keep the majority of the 2025 OpEx favorability permanent going into next year, and we'll see even further benefit from areas, including process efficiencies in our end-to-end transaction flows, continued support optimization that lowers costs while improving agent service levels and increasing efficiencies from a reduction in costs driven by the use of AI across various areas of our technology and operational functions. Additionally, we believe there are opportunities to directly offset some of the inflationary pressures we have experienced, including opportunities to leverage learnings from our recent acquisitions. We believe these actions will drive $50 million to $75 million in incremental adjusted EBITDA with at least $50 million of direct adjusted EBITDA benefit in 2026. In my 3 years here at Compass, I am proud of the DNA and discipline we've built. We have developed a proven track record of stating our intent and delivering on our goals. I am confident we will achieve at least our stated goal of $50 million to $75 million as we deploy the same teams and processes that we have been successful with in the past And finally, as I close out my final earnings call here at Compass, I want to thank Robert, the management team, and the Compass Board for the opportunity they gave me 3 years ago. As I depart, Compass has never been stronger. We are well positioned financially, strategically, and operationally to continue to lead the industry. Scott is the right leader for our next chapter, and I'm excited to see him partner with Robert. For the last 10 quarters, I've had the honor of presenting the record-breaking outcomes that are created by the incredible work of our agents and our employees. At Compass, our agents are our customers, and it's been a true honor to work for and serve our roughly 38,000 agents. I'll end by sending a mahalo to our Compass leadership team that I've been able to work side-by-side with every day and a giant mahalo to all of our team members, who work every day to make Compass a special place. Thank you for all that you do for Compass. With that, I'll turn over the call to the operator for Q&A.

Your first question comes from the line of Bernie McTernan with Needham & Company.

Great. Just first, Kalani, thanks for all the help over the last couple of years. It's been great working with you, but I know we're in capable hands with Scott. And maybe it's fitting to ask this question then Kalani. Just on the $50 million for benefit for next year, I appreciate all the color and detail. But should we think about that more as a run rate savings that you're going to be achieving by the year-end or an actual $50 million benefit to OpEx. So therefore, we could actually see OpEx fall year-over-year? And then I have a follow-up.

Yes, thank you for the kind words. I'm really excited about Scott partnering with you. The way we see it is in relation to our forecasted expectations in our long-range plan, we consider this a benefit. We believe we can reduce overall costs by $50 million and ultimately improve EBITDA by the same amount. We are confident that this is sustainable. Moreover, there's a direct positive impact on our EBITDA, and the initiatives we're implementing will enable us to scale further as the market rebounds. Efforts such as leveraging AI and process improvements are expected to help us maintain a growth rate of 3% to 4%, even with your revenue projected at a 15% to 20% CAGR as the market recovers.

Understood. Robert, I have a broader question for you. The industry has experienced significant changes over the last two years. From your perspective, I'd like to know how close we are to understanding the operational rules for the industry and what you anticipate the next 5 to 10 years will look like.

There is currently a dynamic occurring in the industry that is centered on the balance between choice and control. The question is whether sellers should have the freedom to decide when, where, and how their homes are marketed, and if that decision should be made collaboratively between the seller and their agent, who holds a fiduciary responsibility. Alternatively, should platforms such as MLSs and portals have the authority to dictate which agents can be found, especially since some are now prohibiting agents who do not share their listings? Unlike these platforms, individual sellers bear the fiduciary responsibility. In markets globally, sellers generally have the freedom of choice. For example, in Australia, major sites do not even display days on market or price drop histories as they are designed for sellers' benefit. The global trend indicates that sellers ought to have greater choice. It's worth mentioning that every professional seller in the real estate space—builders and developers—already engages in practices like premarketing and price testing without facing penalties. They can list from an MLS or a portal and have the flexibility to remove their listings whenever they wish. Unfortunately, it's only the individual American homeowner who faces restrictions. In response to your question, while it may take time, there is a growing awareness of these issues. Organized real estate, including MLSs and portals as well as the NAR, primarily seeks listings in order to monetize them, alter them, and sell the data to third parties and financial institutions. Therefore, it's evident that some matters must be resolved through legal proceedings, and I believe court settlements are inevitable.

Your next question comes from the line of Jason Helfstein with Oppenheimer & Company.

So first, Kalani, it's been a pleasure and good luck on your next chapter. Robert, I want to delve deeper. Given some of the actions in the industry over the past several months, has there been any change in the execution of the 3-phase marketing, or has it been business as usual while waiting to see what happens next? Also, have you had to make any field changes due to actions taken by others? Additionally, can you discuss your interest in making more acquisitions between now and the end of the year, and do you feel you have the necessary capital to pursue the acquisitions you're considering?

In response to the first question, the results show that the Compass private exclusives have remained stable over the past few months. Demand continues to be strong, as sellers naturally prefer more options. If a Compass agent approaches a seller, they can suggest testing a price privately without the usual risks associated with the open market, such as price drops. This agent can create interest lists and coordinate tours that gauge both demand and scarcity effectively. In contrast, if a seller is approached by an agent from another company following directives to only use MLS listings, the Compass agent's ability to provide more options will likely lead the seller to choose them. This principle of offering more choices extends to other areas of our ecosystem, like mortgages, where options and solutions are key to winning clients. Overall, demand remains strong, and our agents recognize their competitive advantage. We appreciate the broker CEOs encouraging their agents to offer fewer options since this works in our favor. Regarding mergers and acquisitions, the current market dynamics have resulted in increased interest from CEOs wishing to join Compass. The pressure from portals and MLS rules is prompting brokerages to seek protection against external control. This trend is facilitating discussions that may not have occurred otherwise. As for our financial situation, we are confident in our capital readiness for future opportunities.

Yes. Robert, I'd like to add to Jason's question that we've done an excellent job of integrating partners from previous acquisitions. We're effectively utilizing them to ensure that the CEOs Robert mentioned feel confident in coming to Compass and sharing their success stories. As Robert noted, our teams are busier than ever. Our capital structure has proven to be quite flexible, allowing us to pursue deals that make economic sense for both us and our partners. We've experienced success, and I believe this is a crucial moment given the unique circumstances.

Yes. I'm glad you mentioned that, Kalani. The broker CEOs out there know who they are, and we are having conversations with them. Everyone wants to be successful, including us and the agents. We are all entrepreneurs, and when our entrepreneurial potential is limited by portals and MLSs, it brings us together. I appreciate boutiques and the fact that our industry has many brokerage firms, but MLSs and portals benefit more from this because boutiques struggle to defend and protect themselves from control. I believe this sentiment has been noted by others publicly, indicating that these industry rules are fostering discussions around mergers and acquisitions.

Your next question comes from Chris Kuntarich with UBS. We will now move on to the next questioner, Nick McAndrew from Zelman & Associates.

Kalani, congratulations on the new chapter. It's been great working with you. And Scott, looking forward to working with you as well. Robert, maybe just one for you to start. It's pretty encouraging to see platform engagement hitting an all-time high. And I'm just wondering if you have any early feedback to share from either top producers or their customers on the Compass One dashboard. And I'm curious to see if there are any early signals that you're seeing on if this is helping just increase the stickiness of the platform in general for both agents and consumers.

Thank you for your question. The number we've shared refers to total agents, and many of them are engaged in various activities. Our principal agents, in particular, are experiencing even more sessions per agent, which is encouraging. Regarding Compass One, we've received strong feedback. While we've concentrated on our 3-phase market strategy this spring rather than solely on adoption, we see good adoption rates, though there's room for improvement. This presents an opportunity. For those using Compass One, it is transforming how they work with clients, providing 24/7 transparency throughout the entire transaction process. Everything is centralized, and we're continuously adding new features. Recently, we launched listing insights to track how much traffic each listing receives. For instance, if a listing sees a decline in views, the agent can recognize it might not be visible in search alerts anymore. A price drop can help revitalize visibility in these alerts. We've improved the e-signature feature in Compass One, making it easily accessible in the timeline. Additionally, all open house feedback and tours are now included. Our goal is to foster harmony and simplicity within the real estate processes, all in one platform. We're pleased with our investment and plan to enhance it further over time, making it a key focus in our fall adoption initiatives with agents.

Great. That's very helpful. And then just a follow-up, too. I think there was a comment made that agents using One-Click T&E are attaching title at pretty much double the rate. And from your perspective, what's driving the better attach? Is it just the simplicity of what One-Click Title & Escrow? And can you also just remind us, if there's an opportunity for something similar on the mortgage side with Origin Point as well to grow just mortgage attach over time?

Yes, absolutely. The higher attachment rate of One-Click Title is driven by the time savings for agents. In the real estate business, time is crucial, and while regulations prevent financial incentives for agents, One-Click Title simplifies the process. Instead of drafting an email, compiling information, and waiting for a response—often lost in clutter or spam—everything is integrated within the system. This efficiency not only saves time but also alleviates stress, a common concern for agents managing multiple transactions. As a result, it leads to a higher attachment rate because it improves the agent's efficiency and reduces anxiety. By expediting the transaction process with clients, it lessens the chances of complications that could jeopardize the deal. We aim to achieve similar improvements in the mortgage sector, but that initiative is likely to be planned for 2026.

Your next question comes from the line of Alec Brondolo with Wells Fargo.

I really appreciate it. To start, I'd like to ask about the 832 agent gross addition number. Robert, do you believe your promotion of the private exclusive strategy had a significant impact on the agent gross additions this quarter? Were there other factors that contributed to the strong results? That's the first question. The second question is, do you have any updates or insights regarding the macroeconomic situation in July? The industry seems to agree that the second quarter was slow, but Anywhere Real Estate and Realogy mentioned improved trends in July during their earnings calls. Any thoughts on that would be helpful as well.

We are consistently improving across all areas of our operations. While advocacy is important, the most significant change this past quarter compared to last year is clearly in technology, with tech adoption up by 37%. This improvement is noticeable. However, when it comes to recruitment, potential hires may not immediately recognize this. They can get insights from their agents or friends, which definitely helps with referrals. There are differing opinions on what is right, and people have strong personal views. Most top agents prefer having options. One of our top agents, Gretchen Cole in Raleigh, pointed out that she’s been noticing comments from individuals who argue against marketing outside of MLS. She realizes that many of these commenters do not actually sell real estate. These comments often come from agents with no business or individuals involved in organized real estate associations or MLS systems. In contrast, top agents genuinely care for their clients, often prioritizing their needs over their own. When clients reach out, they are usually quick to respond because their success hinges on their dedication to their clients. The idea that an MLS or portal could penalize them for providing choices to sellers is concerning, especially when top agents act in the best interest of their clients, giving them the same options that developers have. These skilled agents are aware of the current landscape and feel let down by organized real estate. Not everyone shares this sentiment, as some believe in the notion that maximum exposure leads to maximum price, which sounds appealing. But if that were the case, everything would be available on Amazon, and it's not. Likewise, a luxury brand like LVMH wouldn’t be able to sell a product worth $200 for $20,000. The idea of maximum price is not entirely accurate. Nevertheless, top agents understand this reality and seek someone to advocate for them, which is our role. This commitment is reflected in our retention rates, which stand at 97.5%, significantly higher than a year ago, as shown by the data.

Your next question will come from Chris Kuntarich with UBS. All right. We will move on to the next question. Chris, are you there?

You hear me now?

Yes, I can.

All right. Congratulations, Kalani. I can't let you go after making you wait this long without asking about our full year non-GAAP OpEx guide. Can you provide insight on what factors might push it toward the lower end of the range compared to the midpoint and how your visibility now compares to this time last year? Additionally, I had a question for Robert regarding One-Click T&E. Last quarter, it was mentioned that you were rolling this out to iOS devices with the goal of reaching about 70% of markets. Could you discuss how much of this rollout includes Android? Is this being implemented on a market-by-market basis? What is the technical lift versus operational execution for this initiative?

I'm really excited about the program that Robert and I discussed, as it is expected to improve everyone's expectations by at least $50 million. Regarding inflation, we've partnered with some excellent M&A teams over the past two years, who have acted like regional test areas for us and have been doing innovative work to counter inflation. Inflation is affecting us from various angles, including procurement and technology costs, but we believe we have opportunities to manage these impacts. We're still navigating this issue, as each market presents unique challenges for optimization. Our Christie's International Real Estate team excels in enhancing agent service and economics, and we will be exploring ways to implement some of their successful strategies.

Your last question comes from the line of Benjamin Black.

This is Jeff on for Ben. I just wanted to follow up on the M&A that was discussed. You mentioned that industry rules are bringing additional M&A opportunities. Do you also think that maybe a weaker housing market has actually accelerated the pace of the M&A that you've done? Or do you think as we head into next year, if we were to see a reduction in rates and the housing market improve, do you think that, that would actually give you guys an opportunity to accelerate the number of acquisitions that you might be able to do as valuations come up?

Yes. In addition to the challenges posed by industry regulations for broker CEOs in charting their own course, the current market conditions have made it tough for them to achieve their desired profits. Technology has also undergone a significant transformation. Ten years ago, many agents were hesitant to embrace technology, but now it is widely accepted as essential, with clients expecting it as well. Interestingly, brokerages previously relied on MLSs and third-party tools for their technology needs instead of developing their own. However, many brokerages currently lack the resources to build what's required. Compass stands out as the only brokerage that has created a comprehensive platform, investing $1.8 billion over 13 years. I am particularly excited about our ability to distinguish ourselves from competitors and the value we provide to our agents. As we do this, we attract more agents and create a more collaborative environment for brokerage CEOs. This effort is about enhancing the overall experience for agents and ensuring we offer the best resources in one place. When these noteworthy companies with strong leadership work together, we can not only provide an excellent culture and management but also a nationwide company equipped with technology, our end-to-end platform, Compass Concierge, and a robust marketing strategy. This effectively shapes the discussions we are having today.

There are no further questions at this time. I will now turn the call back to Robert Reffkin for closing remarks.

Great. Well, thank you, everyone, for joining our call today. I want to end by thanking all of our employees and all of our agents for all their hard work. Together, we delivered the best quarter in our company's history. We have a long runway for growth, and I look forward to updating everyone on our progress. Thank you, and have a great rest of your day.

This concludes today's call. Thank you for attending. You may now disconnect.