0001563190-26-000101
SEC filingCompass revenue doubled to $2.7B driven by Anywhere Merger; net income turned positive on $401M tax benefit but operating loss widened.
For the three months ended March 31, 2026, Compass reported revenue of $2.704 billion, a 99.4% increase compared to $1.356 billion in the prior-year period. The surge was primarily driven by the Anywhere Merger, which closed on January 9, 2026, contributing $1.2 billion. Stand-alone Compass revenue grew 10.9% (or $148 million), driven by an increase in productive real estate professionals. Cost of revenue (commissions and other related expense) rose 81.7% to $2.008 billion but improved as a percentage of revenue to 74.3% from 81.5%, reflecting the addition of Anywhere's franchise and integrated services businesses which have no commission expense. Total operating expenses increased to $3.055 billion (113.0% of revenue) from $1.410 billion (104.0% of revenue), resulting in a loss from operations of $351 million compared to $54 million in the prior year. Net income attributable to Compass was $22 million compared to a net loss of $51 million, primarily due to a $401 million income tax benefit from deferred tax liabilities related to the Anywhere Merger. Adjusted EBITDA improved to $61 million from $16 million, with $21 million from Anywhere and $24 million from stand-alone Compass growth.
The post-merger company operates in three segments: Brokerage, Franchise, and Integrated Services. Brokerage revenue increased 85.8% to $2.467 billion, with $1.0 billion from Anywhere. Segment Adjusted EBITDA rose 133.3% to $147 million, and margin expanded to 6.0% from 4.7%, driven by revenue growth outpacing costs. Franchise revenue soared to $90 million (from $6 million) and Segment Adjusted EBITDA to $46 million (from $2 million), nearly all from Anywhere; margin improved to 51.1% from 33.3%. Integrated Services revenue grew to $147 million (from $22 million) and Segment Adjusted EBITDA to $13 million (from $2 million), with margin slightly declining to 8.8% from 9.1% due to mix. Unallocated corporate expenses increased to $145 million from $51 million, largely from Anywhere.
Management highlighted seasonality with higher revenue in Q2 and Q3. Liquidity is supported by $484 million cash and $449 million available under a $500 million revolving credit facility. The company expects to fund remaining settlement payments (approximately $93 million) in 2026-2027. Debt maturities of ~$3.1 billion in 2029-2031 are a long-term consideration. No formal revenue or earnings guidance was provided.
Cash and cash equivalents stood at $484M as of March 31, 2026, up from $199M at year-end 2025, following the Anywhere Merger and $977M net proceeds from the convertible note issuance. Total debt (including securitization obligations) reached $3,296M, primarily consisting of $3,140M in long-term debt (9.75% senior secured second lien $500M, 7.00% senior secured second lien $640M, 5.75% senior notes $559M, 5.25% senior notes $449M, and 0.25% convertible senior notes $1,000M) and $156M in securitization obligations. The company had no borrowings drawn on its $500M revolving credit facility, with $449M available.
No specific purchase commitments were disclosed in the notes. The company recorded $183M in Anywhere merger transaction and integration expenses, including $62M severance, $61M stock-based compensation, and $40M legal/advisory fees. Commitments related to litigation include $84M for the Anywhere antitrust settlement (with $54M due upon exhaustion of appeals) and $10M for the Anywhere Opt-In settlement. Deferred revenue from franchise area development fees totaled $51M, recognized over 25-year terms.
The company did not repurchase shares or pay dividends during the quarter. Capital allocation focused on financing the Anywhere Merger: $1B in 0.25% convertible senior notes were issued (net proceeds ~$880M after $97M capped call and $23M issuance costs). The capped call transactions cover potential dilution up to $23.68 per share. No other debt was repaid or issued beyond the assumed Anywhere obligations. Capital expenditures were $11M (from cash flow statement), but not separately disclosed in notes.
Effective January 9, 2026, the company operates in three segments: Brokerage (gross commission income), Franchise (royalties and marketing fees), and Integrated Services (title/escrow, relocation, and mortgage joint ventures). Segment revenue: Brokerage $2,467M, Franchise $90M, Integrated Services $147M. Segment Adjusted EBITDA: Brokerage $147M, Franchise $46M, Integrated Services $13M, totaling $206M. Unallocated corporate costs were $145M. All revenues are substantially U.S.-based. Segment EBITDA does not reflect stock-based compensation, depreciation, restructuring, merger expenses, or litigation charges.
Operating cash flow of -$157M contrasts with net income of $22M, indicating significant working capital outflows. Key non-cash adjustments: depreciation and amortization $163M, stock-based compensation $108M, and a large deferred tax benefit of $402M. The main working capital drag was a $63M decrease in accrued expenses and other liabilities, partially offset by a $36M increase in commissions payable. Capital expenditures were modest at $11M, implying low capex intensity. Free cash flow is not explicitly stated but would be negative ($-168M if computed as CFO minus capex). No share repurchases or dividends were paid. Financing provided $798M, primarily from $977M in convertible note issuance net of $97M capped call purchase. The prior year CFO was positive $23M, making the swing notable. Anomalies include the deferred tax benefit related to the Anywhere acquisition and the large convertible debt raise.