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Compass Raises Fourth Quarter and Full-Year 2024 Outlook

Compass, Inc. (NYSE: COMP), recognized as the leading residential real estate brokerage in the United States based on sales volume, has unveiled an optimistic forecast for the fourth quarter and entire year of 2024. This announcement comes just before the company participates in the Needham Growth Conference.

Impressive Growth Amid Market Challenges
In a year where the real estate sector has faced significant headwinds, particularly with resale transactions potentially hitting a 29-year low, Compass has managed to maintain a trajectory of impressive financial performance. As highlighted by CEO Robert Reffkin, despite these challenges, the company expects record Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and free cash flow for the year. This positivity is further underscored by the recruitment of over 650 principal agents in Q4, marking a remarkable 50% increase compared to the previous year. Reffkin emphasizes that these results reflect Compass' ability to outperform market trends while remaining diligent about operating expenses.

Financial Outlook Revised Upwards
Kalani Reelitz, the Chief Financial Officer, provided additional details on the fourth quarter performance. The efficiency and execution of the teams have facilitated a revision upwards for both Q4 and full-year projections. The company has set its expected Q4 revenue between $1.36 billion to $1.39 billion, exceeding previous estimates—which were between $1.225 billion and $1.325 billion.

For the entire year, Compass anticipates revenues between $5.61 billion to $5.64 billion, also an increase from earlier forecasts. Furthermore, the anticipated Adjusted EBITDA has been adjusted to a range of $15 million to $18 million for Q4 and $124 million to $127 million for the year, reflecting a significant potential for profit, even during a traditionally challenging fourth quarter.

Operational Discipline and Cash Flow
In addition to its revenue forecasts, Compass shared its expectations regarding operating expenses (OPEX). While predicting that the total 2024 non-GAAP OPEX will trend slightly below previous estimates, the company remains confident about achieving positive free cash flow each quarter of this year, including the fourth quarter—traditionally a period of negative cash flow for them.

Looking Ahead
As Compass continues to navigate the complex landscape of the real estate market, its revised outlook signifies resilience and strategic acuity. The executive team stresses that, while they are optimistic, the ability to predict future financial measures such as Adjusted EBITDA to GAAP net loss might still be hindered due to uncertainties surrounding future expenses. Nevertheless, they emphasize the importance of maintaining transparency and accuracy in financial reporting.

With growing momentum and a clear plan for financial success, Compass is well-positioned to adapt to the challenges of the housing market and achieve significant growth in the coming year. This positive outlook not only paints a promising picture for Compass but also highlights its strong capability to navigate through one of the toughest years in the real estate sector. The upcoming presentations at investor conferences are expected to underscore this proactive approach and further build investor confidence in the company’s strategic direction.

For more insights and the latest updates on Compass, stakeholders are encouraged to monitor the company’s investor relations channels, including their website and various social media platforms.