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What changed in Compass, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Compass, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+441 added−444 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-28)

Top changes in Compass, Inc.'s 2024 10-K

441 paragraphs added · 444 removed · 343 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

63 edited+42 added−27 removed24 unchanged
Biggest changeOur Business and Business Model We provide an end-to-end platform that empowers our residential real estate agents to deliver exceptional service to seller and buyer clients. Our platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry.
Biggest changeThe Compass platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. The Compass platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients.
From time to time, we intend to announce material information to the public also through the investor relations page on our website, press releases, public conference calls, public webcasts, and our X (formerly Twitter) feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s X feed (@RobReffkin) and Instagram account (@robreffkin).
From time to time, we also intend to announce material information to the public through the investor relations page on our website, press releases, public conference calls, public webcasts, and our X (formerly Twitter) feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s X feed (@RobReffkin) and Instagram account (@robreffkin).
RESPA is a federal law intended to provide consumers with improved disclosures of settlement costs and to reduce the costs of settlement services (e.g., real estate brokerage services, mortgage loan origination, title insurance, escrow and closing services, etc.) by eliminating referral fees and kickbacks. It applies to real estate brokerage services among other real estate settlement services.
RESPA is a federal law intended to provide consumers with improved disclosures of settlement costs and to reduce the costs of settlement services (e.g., real estate brokerage services, mortgage loan origination, title insurance, escrow and closing services) by eliminating referral fees and kickbacks. It applies to real estate brokerage services among other real estate settlement services.
Some of these competitors provide similar services or products to us, including: • brokering transactions for home buyers and sellers; • providing tools to agents associated with real estate data aggregation; and • providing integrated services products associated with residential real estate transactions, such as title and escrow and mortgage origination.
Some of these competitors provide similar services or products to us, including: • brokering transactions for home buyers and sellers; • providing tools to agents associated with real estate data aggregation; and • providing integrated services products associated with residential real estate transactions, such as title and escrow/settlement and mortgage origination.
Powered by AI, our CMA enhances our agents’ market expertise by making recommendations and synthesizing complex data so Compass agents can help their clients build the optimal pricing strategy for their homes based on comparable properties. • AI-Driven Client Prospecting Recommendations.
Powered by AI, our CMA enhances agents’ market expertise by making recommendations and synthesizing complex data so agents can help their clients build the optimal pricing strategy for their homes based on comparable properties. • AI-Driven Client Prospecting Recommendations.
Several federal laws and regulations govern the real estate brokerage business, including federal Fair Housing Act and the Real Estate Settlement Procedures Act (“RESPA”). The Fair Housing Act prohibits discrimination in the purchase or sale of homes and applies to real estate brokers and agents, among others.
Federal Regulation. Several federal laws and regulations govern the real estate brokerage business, including the federal Fair Housing Act and the Real Estate Settlement Procedures Act (“RESPA”). The Fair Housing Act prohibits discrimination in the purchase or sale of homes and applies to real estate brokers and agents, among others.
Human Capital Management At Compass, we believe that our long-term success is based on attracting, developing and retaining a diverse group of employees who espouse our entrepreneurship principles which define our culture: dream big; move fast; learn from reality; 6 Table of Contents be solutions-driven; obsess about opportunity; collaborate without ego; maximize your strengths; and bounce back with passion.
Human Capital Management 7 Table of Contents At Compass, we believe that our long-term success is based on attracting, developing and retaining a diverse group of employees who espouse our entrepreneurship principles which define our culture: dream big; move fast; learn from reality; be solutions-driven; obsess about opportunity; collaborate without ego; maximize your strengths; and bounce back with passion.
Compass Insights personalized dashboard contains all the key data points an agent needs to craft a winning marketing strategy around audience and traffic information, uncover new lead-generation opportunities, and invest accordingly in the positioning of a listing. • Transaction Management. There are many burdensome steps involved in the closing of a transaction.
Compass Insights is a personalized dashboard that contains all the key data points an agent needs to craft a winning marketing strategy around audience and traffic information, uncover new lead-generation opportunities, and invest accordingly in the positioning of a listing. • Transaction Management. There are many burdensome steps involved in the closing of a transaction.
We have made significant investments in research and development to improve and maintain our platform and to support our technology infrastructure. As we look forward, we will continue to scale our technological innovation through the lens of cash flow positivity.
We have made significant investments in research and development to improve and maintain our technology offerings and to support our technology infrastructure. As we look forward, we will continue to scale our technological innovation through the lens of cash flow positivity.
Regulation of the Mortgage Industry The mortgage industry is a heavily regulated industry and private mortgage lenders operating in the U.S. are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which mortgage companies, including our mortgage joint venture, OriginPoint, can operate their loan origination and servicing businesses, the fees such companies may charge, and the collection, use, retention, protection, disclosure, transfer and other processing of personal information.
Regulation of the Mortgage Industry The mortgage industry is a heavily regulated industry and private mortgage lenders operating in the U.S. are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which mortgage companies, including our mortgage business, can operate their loan origination and servicing businesses, the fees such companies may charge, and the collection, use, retention, protection, disclosure, transfer and other processing of personal information.
We also had 27 trademark registrations and applications in certain foreign jurisdictions. Additionally, we are the registered holder of a number of domain names, including “compass.com.” We continually review our development efforts to assess the existence and patentability of new intellectual property.
We also had 5 unique trademark registrations and applications in certain foreign jurisdictions. Additionally, we are the registered holder of a number of domain names, including “compass.com.” We continually review our development efforts to assess the existence and patentability of new intellectual property.
Generally, as members of these organizations, we are subject to their policies, bylaws, codes of ethics, and fees and rules, which govern our dealings with other members, the public, and clients as well as the manner in which we use and display the organization’s brand and services.
Generally, as members of these organizations, we are subject to their policies, bylaws, codes of ethics, and fees and rules, which govern our dealings with other members, 10 Table of Contents the public, and clients as well as the manner in which we use and display the organization’s brand and services.
Our employees use our principles to help guide their work experience and align with our mission of helping everyone find their place in the world. As of December 31, 2023, we had 2,549 employees across the U.S. and internationally. None of our employees are represented by a labor organization or are party to a collective bargaining arrangement.
Our employees use our principles to help guide their work experience and align with our mission of helping everyone find their place in the world. As of December 31, 2024, we had 2,566 employees across the U.S. and internationally. None of our employees are represented by a labor organization or are party to a collective bargaining arrangement.
In addition, OriginPoint must comply with a number of federal, state and local consumer protection laws including, among others, the Truth in Lending Act (“TILA”), RESPA, the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act (“FCRA”), the Fair Housing Act, the Gramm-Leach-Bliley Act (“GLBA”), the Electronic Fund Transfer Act, and the Homeowners Protection Act.
In addition, our mortgage business must comply with a number of federal, state and local consumer protection laws including, among others, the Truth in Lending Act (“TILA”), RESPA, the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act (“FCRA”), the Fair Housing Act, the Gramm-Leach-Bliley Act (“GLBA”), the Electronic Fund Transfer Act, and the Homeowners Protection Act.
We generally enter into confidentiality agreements and invention or work product assignment agreements with our officers, employees, agents, contractors, and business partners to control access to, and clarify ownership of, our proprietary information. As of December 31, 2023, we had more than 42 trademark registrations and applications in the United States, including registrations for “Compass” and the Compass logo.
We generally enter into confidentiality agreements and invention or work product assignment agreements with our officers, employees, agents, contractors, and business partners to control access to, and clarify ownership of, our proprietary information. As of December 31, 2024, we had more than 30 unique trademark registrations and applications in the United States, including registrations for “Compass” and the Compass logo.
Two such examples are Team Collaboration, which allows agents to collaborate with any member of their team on any of their transactions, and Checklists, which enable agents to configure a set of tasks that get automatically applied to every transaction and can be assigned to specific members of their team. 4 Table of Contents • Marketing Content Creation and Management.
Two such examples are Team Collaboration, which allows agents to collaborate with any member of their team on any of their transactions, and Checklists, which enable agents to configure a set of tasks that get automatically applied to every transaction and can be assigned to specific members of their team, or their clients. • Marketing Content Creation and Management.
RESPA and similar state laws generally require timely disclosure to consumers of certain relationships and financial interests with providers of real estate settlement services. Pursuant to The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Consumer Financial Protection Bureau (the “CFPB”) administers RESPA. State authorities also have certain RESPA enforcement rights.
These laws generally require timely disclosure to consumers of certain relationships and financial interests in providers of real estate settlement services. Pursuant to The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Consumer Financial Protection Bureau (the “CFPB”) administers RESPA, but state authorities also have certain RESPA enforcement rights.
The comprehensive body of federal, state, and local laws to which OriginPoint is subject is continually evolving and developing, including laws on advertising and privacy described in more detail in the section entitled “ – Cybersecurity and Data Privacy Regulations” below.
The comprehensive body of federal, state, and local laws to which our mortgage business is subject is continually evolving and developing, including laws on advertising and privacy described in more detail in the section entitled “ – Cybersecurity and Data Privacy Regulations” below.
In each of the jurisdictions where our business operates, we have designated a properly licensed broker as the broker of record and, where required, we also hold a corporate real estate broker’s license. 7 Table of Contents Federal Regulation.
In each of the jurisdictions where our business operates, we have designated a properly licensed broker as the broker of record and, where required, we also hold a corporate real estate 8 Table of Contents broker’s license.
OriginPoint is required to be licensed in all relevant jurisdictions in which it operates and to comply with the respective laws and regulations of each such jurisdiction, as well as with applicable judicial and administrative decisions.
Our mortgage business is required to be licensed in all relevant jurisdictions in which it operates and to comply with the respective laws and regulations of each such jurisdiction, as well as with applicable judicial and administrative decisions.
Our benefits package includes base pay, bonus programs for selected roles, long-term equity grants, health, dental and vision insurance plans, fertility benefits, life and disability insurance benefits, paid time off (including vacation, a community service day, and paid parental leave), as well as other benefits, such as access to mental health resources, an employee stock purchase plan and the ability to participate in a broad-base 401K plan.
Our benefits package includes base pay, bonus programs for selected roles, long-term equity grants, health, dental and vision insurance plans, fertility benefits, life and disability insurance benefits, paid time off (including unlimited flexible time off, a community service day, and paid parental leave), as well as other benefits, such as access to mental health resources, an employee stock purchase plan and the ability to participate in a broad-base 401(k) plan with a company match.
We (and independent sales agents affiliated with us) are also required to comply with state and local laws related to dual agency (such as where the same brokerage represents both the buyer and seller of a home) and increased regulation of dual agency representation may restrict or reduce the ability of impacted brokerages to participate in certain real estate transactions.
We (and agents at our owned-brokerage and our affiliates) are also required to comply with state and local laws related to dual agency (such as where the same brokerage represents both the buyer and seller of a home) and increased regulation of dual agency representation may restrict or reduce the ability of impacted brokerages to participate in certain real estate transactions.
Title and Escrow Services Our title and escrow businesses provide full-service title and escrow/settlement services to real estate agents’ clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans.
Title, Escrow and Settlement Services Our title, escrow and settlement businesses provide full-service title, escrow and settlement services to the clients of our agents at our owned-brokerage, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans.
Some examples of the regulations we are required to comply with include without limitation, the California Consumer Privacy Act (“CCPA”), amended by the California Privacy Rights Act (“CPRA”), as well as the Virginia Consumer Data Protection Act ("VCDPA"), both of which took effect January 1, 2023, and other similar state regulations, portions of the GLBA, namely the Safeguards rule, which governs the disclosure and safeguarding of consumer financial information, and the Telephone Consumer Protection Act (“TCPA”), which restricts certain types of telemarketing calls and the use of auto-dialing systems and prerecorded messages and establishes a national Do-Not-Call registry.
Some examples of the regulations we are required to comply with include without limitation, the California Consumer Privacy Act (“CCPA”), amended by the California Privacy Rights Act (“CPRA”), and other similar state regulations, portions of the GLBA, namely the Safeguards rule, which governs the disclosure and safeguarding of consumer financial information, and the Telephone Consumer Protection Act (“TCPA”), which restricts certain types of telemarketing calls and the use of auto-dialing systems and prerecorded messages and establishes a national Do-Not-Call registry.
RESPA compliance is of significant importance to us and our affiliated businesses. Regulation of the Title & Escrow Industry Title insurance and escrow/closing services typically require licensure and are heavily regulated, often through a state’s insurance regulator or other regulatory body.
RESPA compliance is of significant importance to us and our integrated services business. Regulation of the Title & Escrow Industry Title insurance and escrow/settlement services typically require licensure and are heavily regulated, often through a state’s insurance regulator or other regulatory body.
According to NAR’s 2023 Profile of Home Buyers and Sellers, 89% of home sellers and 89% of home buyers used a real estate agent or broker - levels that have remained consistent since our inception, with 2012 levels at 88% and 89%, respectively.
According to NAR’s 2025 Profile of Home Buyers and Sellers, 90% of home sellers and 88% of home buyers used a real 4 Table of Contents estate agent or broker - levels that have remained consistent since our inception, with 2012 levels at 88% and 89%, respectively.
We therefore encourage investors and others interested in our Company to review the information that we make available on our website.
We therefore encourage investors and 11 Table of Contents others interested in our Company to review the information that we make available on our website.
We believe we compete favorably based on multiple factors, including the strength and quality of our business, and our ability to retain our agents, our integrated suite of differentiated software and product solutions that empowers agents, our platform functionality and innovative product and service offerings that facilitate real estate transactions for both buyers and sellers, our growing scale, and our premier brand.
We believe we compete favorably based on multiple factors, including the strength and quality of our business, and our ability to retain our agents, our integrated suite of differentiated technology offerings that empower agents, our platform functionality and innovative product and service offerings that facilitate real estate transactions for both buyers and sellers, our growing scale, and our luxury brands.
Since inception and through December 31, 2023, we had partnered with our agents and sellers on Compass Concierge projects totaling approximately $1.14 billion, with an average project size of approximately $28,800.
Since inception and through December 31, 2024, we partnered with our agents and sellers on Compass Concierge projects totaling approximately $1.29 billion, with an average project size of approximately $28,900.
It enables agents to organize and manage their active leads, buyers, renters and listings, as well as view potential revenue at each stage of the transaction.
Business Tracker provides agents with a centralized view of their entire business. It enables agents to organize and manage their active leads, buyers, renters and listings, as well as view potential revenue at each stage of the transaction.
We rely upon a combination of trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, licenses, domain names, and other legal rights to establish and protect our intellectual property.
Intellectual Property The protection of our technology and intellectual property is an important aspect of our business. We rely upon a combination of trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, licenses, domain names, and other legal rights to establish and protect our intellectual property.
By drawing on our vast database of proprietary data, AI further enhances the agent experience and their ability to quickly perform tasks, such as creating listing brochures and descriptions, marketing materials, and even their agent profiles on our website. • Listing Search and Saved Search Notifications.
AI further enhances the agent experience and their ability to quickly perform tasks, such as creating copy for listing brochures and descriptions, marketing materials, and even their agent profiles on our website. • Listing Search and Saved Search Notifications.
Other states have “controlled business” statutes which generally require that a title agent seek or obtain business from unaffiliated brokerages.
Additionally, some states have “controlled business” statutes which generally require that a title agent seek or obtain a certain amount of business from unaffiliated brokerages.
Competition The residential real estate and technology industries are highly competitive and fragmented. We compete to attract and retain top talent across the agent community, engineers, and employees in all other functions in order to build the best real estate transaction platform in fulfillment of our mission.
Competition The residential real estate and technology industries are highly competitive and fragmented. We compete to attract and retain top talent across the agent community, engineers and employees in all other functions in order to build the best tech-enabled real estate services company.
We intend to continue to evaluate the benefit of patent protection with respect to our technology, and will file additional applications when we believe it will be beneficial. 9 Table of Contents Available Information We make available free of charge on our investor relations page on our website, www.compass.com, filings we make with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.
Available Information We make available free of charge on our investor relations page on our website, www.compass.com, filings we make with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.
The penalties for violating antitrust and competition laws can be severe. These laws and regulations generally prohibit competitors from fixing prices, boycotting competitors, dividing markets, or engaging in other conduct that unreasonably restrains competition.
These laws and regulations generally prohibit competitors from fixing prices, boycotting competitors, dividing markets, or engaging in other conduct that unreasonably restrains competition.
Item 1. Business. Our Company Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors of the Company approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc. The Company has been based in New York City since its incorporation.
Item 1. Business. Our Company Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. The Company has been based in New York City since its incorporation.
Video Generator allows agents to create short, customized, professional videos with added music and text using existing listing photos in seconds simply by entering an address that can be shared on the listing page or social media. • Digital Ad Campaigns.
Video Generator allows agents to create short, customized, professional videos with added music and text using existing listing photos in seconds, simply by entering an address that can be shared on the listing page or social media. • AI-Driven Content. We recently integrated the OpenAI application programming interface into our Compass platform.
In many markets, clients typically look to their agents to refer them to the highest quality providers of these types of services after the purchase contract is signed. We provide title and escrow/closing services under a multitude of local brands.
In many markets, clients typically look to either their attorneys or agents to refer them to the highest quality providers of these types of services after the purchase contract is signed. As of January 31, 2025, we provided title, escrow and settlement services under a multitude of local brands in eleven states and Washington D.C.
Agents can easily build, book, target and run digital ads all in one place with a simple yet powerful suite of content creation solutions. • Home Valuation Analysis. Pricing a home is a complex and nuanced exercise.
Agents can easily build, book, target and run digital ads all in one place with a simple yet powerful suite of content creation solutions. 5 Table of Contents • Collections.
Antitrust litigation has been brought against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report) and other brokerages and real estate associations regarding the requirement to offer set buy-side commissions.
Antitrust litigation has been brought on behalf of homebuyers and homesellers against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report) and other brokerages and real estate associations regarding the requirement to offer cooperating commissions, which already led to certain industry-wide changes and could lead to additional changes in the future.
The ability to create great client experiences drives continued business for agents with repeat and referral 5 Table of Contents clients. This ultimately generates more revenue for the agent, and in turn, for Compass, which enables us to invest more into enhancing the platform. These investments further empower agents to grow their businesses efficiently and effectively.
This ultimately generates more revenue for the agents, and in turn, for us, which enables us to invest more into enhancing 6 Table of Contents the Compass platform, as well as other technology offerings. These investments further empower agents to grow their businesses efficiently and effectively.
The CFPB has issued myriad rules, including TILA-RESPA Integrated Disclosure rules, which impose significant obligations on OriginPoint. 8 Table of Contents Antitrust and Competition Laws Our business is subject to antitrust and competition laws in the various jurisdictions where we operate, including the Sherman Antitrust Act, the Federal Trade Commission Act and the Clayton Act and related federal and state antitrust and competition laws in the U.S.
The CFPB has issued myriad rules, including TILA-RESPA Integrated Disclosure rules, which impose significant obligations on our mortgage business. 9 Table of Contents Regulation of Our Affiliate Business We operate our affiliate business in the U.S. as a franchise and are subject to franchise state and federal laws.
Our proprietary search algorithm and database simplifies and enhances the ability for Compass agents to find homes best suited for their clients’ needs. Agents can set up very precise saved search alerts for their clients to notify them of new listings that match their criteria in near real-time in the mobile app and in email. • Agent-Client Collaborative Home Search.
Agents can set up very precise saved search alerts for their clients to notify them of new listings that match their criteria in near real-time in the mobile app and in email. • Listing Tour Scheduling and Coordination.
Compass Collections is a curated visual workspace allowing Compass agents and clients to collaborate in real time, easily organize homes, centralize discussions, and monitor the market by receiving immediate status and price updates. • Listing Tour Scheduling and Coordination.
A curated visual workspace that allows agents and their clients to collaborate in real time, with the ability to easily organize homes, centralize discussions and monitor the market by receiving immediate status and price updates. • Comparative Market Analysis ("CMA"). Pricing a home is a complex and nuanced exercise.
Given the unique nature of each property, location, buyer, seller, 3 Table of Contents negotiation, title and financing, a real estate agent’s role as the driver of the majority of the workflow is indispensable.
Selling and buying a home is one of the most significant, and often one of the most complex, time consuming, and consequential financial events in an individual’s life. Given the unique nature of each property, location, buyer, seller, negotiation, title and financing, a real estate agent’s role as the driver of the majority of the workflow is indispensable.
Additionally, certain of our Glide tools, which include completion of various real estate forms and offer preparation as well as eSignature and collaboration capabilities, are offered to non-Compass agents and their clients. We are simplifying today’s complex, paper-driven, antiquated workflow to empower real estate agents to deliver an exceptional experience to every buyer and seller.
Additionally, certain of our Glide tools, which include completion of various real estate forms and offer preparation as well as eSignature and collaboration capabilities, are offered to non-Compass agents and their clients. We refer to the Compass platform, the CIRE platform and all other technology products and services that we offer as our "technology offerings".
It is built on the premise that integration and ease of use are foundational to enabling Compass agents to more effectively run their businesses and serve their clients. Our platform is a proprietary cloud-native software service with mobile apps that allow agents to manage their business anytime and anywhere.
Our Compass Platform Capabilities Our Compass platform aims to digitize, integrate and simplify all real estate workflows for agents and their clients. It is built on the premise that integration and ease of use are foundational to enabling agents to more effectively run their businesses and serve their clients.
We build beautifully designed consumer-grade user interfaces, automated and simplified workflows for agent-client interactions, and insight-rich dashboards and reports backed by AI, machine learning and integrated data assets. We empower our agents with capabilities such as: • Customer Relationship Management.
Our Compass platform is a proprietary end-to-end cloud-native software service with mobile applications that allow agents to manage their business anytime and anywhere. We build beautifully designed consumer-grade user interfaces and simplified workflows for agent-client interactions, and insight-rich dashboards and reports backed by AI, machine learning and integrated data assets.
Environmental Regulation Our technology platform operates in a cloud-based model, which gives us an insignificant physical geographical footprint. While we have hundreds of physical offices, we locate them in population centers and they are no larger than needed to service our agents’ clients' needs. Due to this, we are not materially impacted by any environmental regulations.
While we have hundreds of physical offices, we locate them in population centers and they are no larger than needed to service our agents’ clients' needs.
We provide agents with transaction closing and post-closing support to reduce the complexity for clients and efficiently advise through a transaction’s lifecycle. As Compass agents and their clients use the Compass platform to consolidate their activities for buying, selling, marketing and transacting real estate, they demonstrate high engagement with our platform.
As agents and their clients use the Compass platform to consolidate their activities for buying, selling, marketing and transacting real estate, they demonstrate high engagement with the platform. As we continue to build everything agents need in a single, integrated platform, we believe more high-performing agents will continue to come to Compass.
It also leverages AI to provide recommendations and insights, and integrates with other parts of our platform such as Marketing Center to create engaging content. • Business Tracker. Business Tracker provides agents with a centralized view of their entire business.
Our CRM provides agents with an easy-to-use interface that is both powerful and automated, enabling agents to cultivate their sphere, nurture and grow relationships and close more sales. It also leverages AI to provide recommendations and insights, and integrates with other aspects of the Compass platform such as Marketing Center to create engaging content. • Business Tracker.
As we continue to build everything agents need in a single, integrated platform, we believe more high-performing agents will continue to come to Compass. As more high-performing agents join us, we believe our platform will help them provide great experiences to more of their buyer and seller clients.
As more high-performing agents join us, we believe the Compass platform will help them provide great experiences to more of their clients. The ability to create great client experiences drives continued business for agents with repeat and referral clients.
Compass agents utilize the platform to grow their businesses, save time and manage their businesses more effectively. Our business model is directly aligned with the success of our agents. We attract agents to our brokerage and partner with them as independent contractors that affiliate their real estate licenses with us, operating their businesses on our platform and under our brand.
Our business model is directly aligned with the success of the agents at our owned-brokerage and affiliates. Agents at our owned-brokerage business are independent contractors that associate their real estate license with us and choose to operate their businesses on our platform.
Our platform is tailored to the real estate industry and combines integrated software with, in certain markets, value-added services, such as title and escrow and mortgage. We designed our platform for simplicity and flexibility.
We are simplifying today’s complex, paper-driven, antiquated workflow to empower real estate agents to deliver an exceptional experience to every buyer and seller. Our technology offerings are tailored to the real estate industry and in certain of our markets, combine integrated software with value-added services, such as title, escrow and settlement. We design our technology offerings for simplicity and flexibility.
As of December 31, 2023, we provided title and escrow services in 7 states and Washington D.C. Additionally, OriginPoint is fully operational in 30 states and Washington D.C. and licensed in 6 other states. The synergies between these integrated services and our brokerage business increase transparency and deliver a more integrated closing process for agents and their clients.
Integrated Services Our integrated services, spanning title, escrow and mortgage, support the needs of home buyers and sellers, as well as homeowners seeking refinancing. The synergies between these integrated services and our brokerage business increase transparency and deliver a more integrated closing process for agents and their clients.
We have a dedicated team that works with a variety of stakeholders, including our brokers of record, to help manage and comply with these rules and policies. Intellectual Property The protection of our technology and intellectual property is an important aspect of our business.
We have a dedicated team that works with a variety of stakeholders, including our brokers of record, to help manage and comply with these rules and policies. We are also actively engaged in voicing our concerns with certain aspects of these trade organization rules and are working hard to change them to benefit our agents and their clients.
Given the high percentage of repeat and referral business done by our agents, their future transaction pipeline exists within their sphere of influence. Our CRM provides agents with an easy-to-use interface that is both powerful and automated, enabling agents to cultivate their sphere, nurture and grow relationships and close more sales.
We empower agents with capabilities such as: • Customer Relationship Management ("CRM"). Given the high percentage of repeat and referral business done by agents, their future transaction pipeline exists within their sphere of influence.
Our Platform We have built an integrated software platform that helps agents operate with the sophisticated capabilities of a modern technology company and the personal attention and service of a dedicated advisor. Using proprietary data, analytics, AI and machine learning, our platform delivers a broad set of industry-specific capabilities for Compass agents and their clients.
Using proprietary data, analytics, AI and machine learning, our platform delivers a broad set of industry-specific capabilities. We also acquired the CIRE platform as part of the Christie’s International Real Estate acquisition that we offer to our affiliates and their agents. Our affiliates and their agents do not currently have access to the Compass platform.
With a simple interface, our agents can quickly schedule, coordinate and create routes for home tours, saving agents significant time. • Virtual Tours. The platform’s easy-to-use virtual tour feature combines home photo and video assets alongside a large multimedia repository to help agents conduct tours online. • AI-Driven Renovation Visualization.
With a simple interface, agents can quickly schedule, coordinate and create routes for home tours, saving agents significant time. • Open House Management.
We continue to innovate and enhance our platform with the goal of digitizing and automating all real estate workflows that empower agents to acquire and serve their clients. In 2023, we enhanced our platform by adding 103 features, including Performance Tracker, Compass AI and '1-Click Title & Escrow'.
The efficiencies that agents at our owned-brokerage and our affiliates gain from adoption of our technology offerings give them the opportunity to spend more time with their clients. We continue to innovate and enhance our technology offerings with the goal of digitizing and streamlining all real estate workflows that empower agents to acquire and serve their clients.
While integrated services comprise a small portion of our revenue to date, we believe we are well-positioned to capture meaningful revenue from integrated services as we continue to diversify our offerings within the real estate ecosystem. Our platform provides a strong foundation for agents to create and foster client relationships.
Integrated services and our affiliate business comprise a small portion of our revenue and earnings. We believe we are well-positioned to grow our integrated services and affiliate business and expect revenue and earnings for these businesses to grow as a portion of our overall revenue and earnings over the long-term.
For example, Compass Concierge, which provides home sellers access to capital to front the cost of home improvement services, is designed to increase the sale value of the home and decrease the time on market.
We do not exercise control over our affiliates and their agents and affiliates operate their brokerage businesses independently. Compass Concierge Compass Concierge is a program in which we provide home sellers access to capital to front the cost of home improvement services.
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Our platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients. Additionally, we provide integrated services, such as title and escrow and mortgage, both of which are available on our platform.
Added
Overview and Our Business Model We are a leading tech-enabled real estate services company that includes the largest real estate brokerage in the United States by sales volume. We also provide integrated services to real estate agents and their clients, including title, escrow and mortgage.
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We currently generate substantially all of our revenue from commissions paid to us by our agents' clients at the time that a home is transacted on our platform.
Added
In January 2025, we acquired a company with the exclusive, worldwide right to operate, franchise and license the Christie’s International Real Estate brand. This acquisition marked our entry into a new business line, allowing us to partner with independently operated brokerages.
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Our powerful customer relationship management, or CRM, tool enables agents to develop automated yet customizable “drip campaigns” to stay in touch with their contacts at key moments over time.
Added
We refer to this new business line as “our affiliate business” and to the independently operated brokerages as “our affiliates”. We currently operate two primary brands: Compass and Christie’s International Real Estate. Compass is a top luxury real estate brand serving 35 states and Washington DC, with over 33,000 agents.
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Through our Marketing Center, agents can market their own personal brands by creating marketing collateral – digital ads, videos, listing presentations, email newsletters, print advertising and signage – as well as execute marketing campaigns, with mere minutes of effort. Our platform also enables agents to sell more homes in less time for a better price.
Added
Christie’s International Real Estate is the world’s premier global luxury real estate brand with over 100 independently operated brokerages in over 50 countries and territories. We operate our owned-brokerage business primarily under the Compass brand and our affiliate business under the Christie’s International Real Estate brand.
Removed
We believe we provide agents with the solutions and data they need to effectively list and market properties and run the sale process more efficiently utilizing our tools.
Added
We primarily generate revenue from our owned-brokerage business when we collect a share of the gross sales commissions that the agents earn from home sales and certain other fees, such as flat transaction commission fees. Gross sales commissions are typically based on a percentage of the home sale price.
Removed
Marketing Center provides agents a powerful suite of tools they can use to easily create tailored marketing materials and execute marketing campaigns for any listing, seamlessly connecting to a multimedia repository containing a listing description, photos and floor plan, across digital, social, email, video and print channels, helping them attract buyers.
Added
Additionally, beginning in January 2025, we attract independently operated brokerages that affiliate with us as a franchisee or a licensee under a long-term franchise or license agreement.
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Our AI-powered comparative market analysis, or CMA tool enables agents to optimize pricing strategies for clients, leveraging data on past sales and current listings to suggest representative comparable properties. Agents can also use our platform to conduct virtual tours and livestream open houses through our Open House app to ensure listings receive ample attention.
Added
We generate revenue from our affiliate business when we collect royalties from our affiliates, which are based on the percentage of the affiliate’s gross sales commissions, as well as certain other fees, such as marketing and technology fees. We currently generate substantially all of our revenue and earnings from our owned-brokerage business.
Removed
When advising a seller, our services to the agent extend beyond the sale of the home. In preparing for and closing the transaction, our agents can, with one click, use our platform to recommend integrated services to clients such as title and escrow and mortgage in certain markets and referrals to service providers post-closing.
Added
Our technology offerings provide a strong foundation for agents at our owned-brokerage, as well as our affiliates and their agents, and empower them to deliver exceptional service to their clients. Agents at our owned-brokerage and our affiliates utilize our technology offerings to grow their businesses, save time and manage their businesses more effectively.
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Our platform also enables agents to locate desirable properties at attractive prices for buyers. Our agents provide clients with access to comprehensive inventory, including private listings, help them understand local market dynamics, tour properties, prepare and close offers, and better manage the overall home buying process.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

140 edited+25 added−17 removed200 unchanged
Biggest changeOur platform, its features, and technology offerings may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from providing our products and services. We cannot guarantee that our internally developed or acquired systems, technologies and content do not and will not infringe the intellectual property rights of others.
Biggest changeWhile currently, our affiliate business represents a small portion of our revenue and the loss of the license is unlikely to have a material adverse effect on our business and results of operations, as we expand that line of business in the future, any early termination of the License Agreement may have a material adverse effect on our business and results of operations. 29 Table of Contents Our platform, its features, and technology offerings may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from providing our products and services .
We make a large number of wire transfers in connection with loan and real estate closings and process sensitive personal data in connection with these transactions.
We make a large number of wire transfers in connection with loan and real estate closings and process sensitive personal data in connection with these transactions.
If we identify material weaknesses in our internal control over financial reporting in the future, are unable to comply with the requirements of Section 404 in a timely manner, or assert that our internal control over financial reporting is ineffective, or if our independent registered public accounting firm expresses an opinion that our internal control over financial reporting is ineffective, investors may lose confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we could become subject to investigations by the SEC, or other regulatory authorities, which could require additional management attention and which could adversely affect our business.
If we identify material weaknesses in our internal control over financial reporting in the future, are unable to comply with the requirements of Section 404 in a timely manner, or assert that our internal control over financial reporting is ineffective, or if our independent registered public accounting firm expresses an opinion that our internal control over financial reporting is ineffective, investors may lose confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we could become subject to litigation or investigations by the SEC, or other regulatory authorities, which could require additional management attention and which could adversely affect our business.
Accordingly, the trading price of our Class A common stock may fluctuate substantially, due to factors including: loss of investor confidence in, or significant volatility in the market price and trading volume of, technology companies in general and of companies in the real estate technology industry in particular; changes in mortgage interest rates; variations in the housing market, including seasonal trends and fluctuations; announcements of new solutions, commercial relationships, acquisitions, or other events by us or our competitors; price and volume fluctuations in the overall stock market; changes in how agents perceive the benefits of our platform and future offerings; the public’s reaction to our press releases, other public announcements, and filings with the SEC, or those of other companies in the industries in which we compete; fluctuations in the trading volume of our shares or the size of our public float; sales of large blocks of our common stock; sales, or the anticipated sale, of a substantial amount of our Class A common stock, particularly sales by our directors, executive officers, or principal stockholders; fluctuations in our results of operations or financial projections; changes in actual or future expectations of investors or securities analysts; litigation involving us, our industry, or both; governmental or regulatory actions or audits; regulatory developments applicable to our business; real estate market conditions; general economic conditions and trends; major catastrophic events; and departures of key employees.
Accordingly, the trading price of our Class A common stock has historically and may in the future fluctuate substantially, due to factors including: loss of investor confidence in, or significant volatility in the market price and trading volume of, technology companies in general and of companies in the real estate technology industry in particular; changes in mortgage interest rates; variations in the housing market, including seasonal trends and fluctuations; announcements of new solutions, commercial relationships, acquisitions, or other events by us or our competitors; price and volume fluctuations in the overall stock market; changes in how agents perceive the benefits of our platform and future offerings; the public’s reaction to our press releases, other public announcements, and filings with the SEC, or those of other companies in the industries in which we compete; fluctuations in the trading volume of our shares or the size of our public float; sales of large blocks of our common stock; sales, or the anticipated sale, of a substantial amount of our Class A common stock, particularly sales by our directors, executive officers, or principal stockholders; fluctuations in our results of operations or financial projections; changes in actual or future expectations of investors or securities analysts; litigation involving us, our industry, or both; governmental or regulatory actions or audits; regulatory developments applicable to our business; real estate market conditions; general economic conditions and trends; major catastrophic events; and departures of key employees.
Our success is impacted, directly and indirectly, by a number of factors related to general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, many of which are beyond our control, including: adverse changes in local, regional, or national economic conditions, including periods of slow economic growth or recessionary conditions; volatility in the residential real estate industry; seasonal and cyclical trends in the residential real estate industry; changes in real estate market conditions; insufficient or excessive home inventory levels; increasing mortgage rates and down payment requirements or constraints on the availability of mortgage financing; low levels of consumer confidence in the economy or the residential real estate market; weak credit markets; instability of financial institutions; legislative or regulatory changes; high levels of foreclosure activity; the inability or unwillingness of consumers to enter into sale transactions; a decrease in the affordability of homes including the impact of rising mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation; and decreasing home ownership rates, declining demand for real estate and changing social attitudes toward home ownership.
Our success is impacted, directly and indirectly, by a number of factors related to general economic conditions, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate, many of which are beyond our control, including: adverse changes in local, regional, or national economic conditions, including periods of slow economic growth or recessionary conditions; volatility in the residential real estate industry; seasonal and cyclical trends in the residential real estate industry; changes in real estate market conditions; insufficient or excessive home inventory levels; high mortgage rates and down payment requirements or constraints on the availability of mortgage financing; low levels of consumer confidence in the economy or the residential real estate market; weak credit markets; instability of financial institutions; legislative, regulatory or industry changes; high levels of foreclosure activity; the inability or unwillingness of consumers to enter into sale transactions; a decrease in the affordability of homes including the impact of high mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation; and decreasing home ownership rates, declining demand for real estate and changing social attitudes toward home ownership.
We face growing risks and costs related to cybersecurity threats to our operations and our data (including agent and client data) including: • the failure or significant disruption of our operations from various causes, such as human error, computer malware, ransomware, insecure software and systems, zero-day vulnerabilities, threats to or disruption of third-party service providers who provide critical services, or other events related to our critical information technologies and systems; • the increasing level and sophistication of cybersecurity attacks, such as distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering (including phishing attempts or the creation of copycat websites), or other unlawful tactics aimed at compromising the systems and data of our agents and our agents’ clients (including through systems not directly controlled by us, such as those maintained by our agents and third-party service providers); and • the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our agents and our agents’ clients), the transmission of computer malware, or the diversion of sale transaction closing funds.
We face growing risks and costs related to cybersecurity threats to our operations and our data (including agent and client data) including: ◦ the failure or significant disruption of our operations from various causes, such as human error, computer malware, ransomware, insecure software and systems, zero-day vulnerabilities, threats to or disruption of third-party service providers who provide critical services, or other events related to our critical information technologies and systems; ◦ the increasing level and sophistication of cybersecurity attacks, such as distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering (including phishing attempts or the creation of copycat websites), or other unlawful tactics aimed at compromising the systems and data of our agents and their clients (including through systems not directly controlled by us, such as those maintained by our agents and third-party service providers); and ◦ the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our agents and their clients), the transmission of computer malware, or the diversion of sale transaction closing funds.
Machine learning and AI technology present various operational, compliance and reputational risks and if any such risks were to materialize, our business and results of operations may be adversely affected. We have integrated machine learning and AI in a number of tools and features available on our platform that our agents use in their daily activities.
Machine learning and AI technology present various operational, compliance and reputational risks and if any such risks were to materialize, our business and results of operations may be adversely affected . We have integrated machine learning and AI in a number of tools and features available on our platform that our agents and affiliates use in their daily activities.
AI algorithms are currently known to sometimes produce unexpected results and behave in unpredictable ways (e.g., “hallucinatory behavior”) that can generate irrelevant, nonsensical, deficient or factually incorrect content and results, which may result in reputational harm to us and our agents and be damaging to our “Compass” brand.
AI algorithms are currently known to sometimes produce unexpected results and behave in unpredictable ways (e.g., “hallucinatory behavior”) that can generate irrelevant, nonsensical, deficient or factually incorrect content and results, which may result in reputational harm to us and our agents and be damaging to our brand.
We may also be subject to claims that these contractors are employees of Compass, subjecting us to corporate tax and other liabilities. We are subject to a variety of federal and state laws, many of which are unsettled and still developing, and certain of our businesses are highly regulated.
We may also be subject to claims that these contractors are employees of Compass, subjecting us to corporate tax and other liabilities. We are subject to a variety of federal, state and international laws, many of which are unsettled and still developing, and certain of our businesses are highly regulated.
We use cash to satisfy payroll tax withholding obligations that arise in connection with the monthly net settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity.
We currently use cash to satisfy payroll tax withholding obligations that arise in connection with the monthly net settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity.
We may be subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls. If we expand our brokerage business to international markets, our platform may become subject to U.S. export controls, including the U.S. Export Administration Regulations.
We may be subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls . If we further expand our brokerage business to international markets, our platform may become subject to U.S. export controls, including the U.S. Export Administration Regulations.
The secure processing, maintenance, and transmission of this information are critical to our operations and, with respect to information collected and stored by our third-party service providers, we are reliant upon their security procedures, controls, and adherence to our agreements.
The secure processing, maintenance, and transmission of this information is critical to our operations and, with respect to information collected and stored by our third-party service providers, we are reliant upon their security procedures, controls, and adherence to our agreements.
At times, we may also look to acquisitions to provide us with additional technology to further enhance our platform and accelerate our ability to offer new products or to expand our integrated services offerings.
At times, we may also look to acquisitions to provide us with additional technology to further enhance our technology offerings and accelerate our ability to offer new products or to expand our integrated services offerings.
Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition, or other change in control of our company that the stockholders may consider favorable, including provisions that: classify the board of directors into three classes with staggered three-year terms; permit the board of directors to establish the number of directors and to fill any vacancies and newly-created directorships; require super-majority voting to amend some provisions in our charter documents; authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; allow only our chief executive officer, chairperson of our board of directors, or a majority of our board of directors are authorized to call a special meeting of stockholders; prohibit cumulative voting; permit the removal of directors only “for cause” and only with the approval of the holders of at least two-thirds of the voting power of the then outstanding capital stock; prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a meeting of our stockholders; expressly authorize the 29 Table of Contents board of directors to make, alter, or repeal our bylaws; and establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition, or other change in control of our company that the stockholders may consider favorable, including provisions that: classify the board of directors into three classes with staggered three-year terms; permit the board of directors to establish the number of directors and to fill any vacancies and newly-created directorships; require super-majority voting to amend some provisions in our charter documents; authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; allow only our chief executive officer, chairperson of our board of directors, or a majority of our board of directors to call a special meeting of stockholders; prohibit cumulative voting; permit the removal of directors only “for cause” and only with the approval of the holders of at least two-thirds of the voting power of the then outstanding capital stock; prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a meeting of our stockholders; expressly authorize the board of directors to make, alter, or repeal our bylaws; and establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
The Concierge Facility, which is secured by, and can be used to borrow against, eligible receivables and cash related to part of our Compass Concierge Program, and our Revolving Credit Facility, which is secured by substantially all the assets of us and our subsidiary guarantors, contains customary representations, warranties, affirmative covenants, such as financial statement reporting requirements, negative covenants, and financial covenants applicable to us and our restricted subsidiaries.
The Concierge Facility, which is secured by, and can be used to borrow against, eligible receivables and cash related to part of our Compass Concierge Program, and our Revolving Credit Facility, which is secured by substantially all of our assets and our subsidiary guarantors, contain customary representations, warranties, affirmative covenants, such as financial statement reporting requirements, negative covenants, and financial covenants applicable to us and our restricted subsidiaries.
More stringent mortgage underwriting standards could adversely affect the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes in order to purchase new homes, which may decrease the number of real estate transactions that our agents execute and that our title and escrow businesses close, and may decrease the number of mortgages that OriginPoint originates.
More stringent mortgage underwriting standards could adversely affect the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes in order to purchase new homes, which may decrease the number of real estate transactions that our agents execute and that our title and escrow businesses close, and may decrease the number of mortgages that our mortgage business originates.
As a result, we have invested significant resources, and plan to continue to invest, though to a lesser degree, additional resources, in research and development to improve and maintain our platform and support our technology infrastructure, which allows us to provide an expanded suite of technology offerings that we believe differentiate us from our competitors.
As a result, we have invested significant resources, and plan to continue to invest, though to a lesser degree, additional resources, in research and development to improve and maintain our technology offerings, including our proprietary technology platform, and support our technology infrastructure, which allows us to provide an expanded suite of technology offerings that we believe differentiate us from our competitors.
We have been, and may be, subject to claims that we have infringed the copyrights, trademarks, or other intellectual property rights of a third party. Any intellectual property-related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and divert management resources and attention.
We have been, and may be, subject to claims that we or our agents have infringed the copyrights, trademarks, or other intellectual property rights of a third party. Any intellectual property-related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and divert management resources and attention.
Ongoing industry antitrust class action litigation (including the Antitrust Lawsuits filed against us) or any related regulatory activities, could result in meaningful industry-wide changes and could have a materially adverse effect on our business, operations, financial condition, and results of operations.
Ongoing industry antitrust class action litigation (including the Antitrust Lawsuits filed against us) or any related regulatory activities could result in additional meaningful industry-wide changes and the recent changes and/or any additional meaningful changes could have a materially adverse effect on our business, operations, financial condition and results of operations .
Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, may be applicable to our business, such as the TCPA (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, and similar state consumer protection laws.
Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, may be applicable to our business, such as the TCPA (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, GLBA, GDPR and similar state consumer protection laws.
However, there can be no assurance that our enhanced security measures, which are also partially dependent upon the security practices of our agents, our agents’ clients, and participants will timely detect or prevent other cyber-attacks in the future.
However, there can be no assurance that our enhanced security measures, which are also partially dependent upon the security practices of our agents and their clients, and participants will timely detect or prevent other cyber-attacks in the future.
Natural disasters or other catastrophic events, such as fires, hurricanes, earthquakes, windstorms, tornados, floods, power loss, telecommunications failure, cyber-attacks, war, civil unrest, terrorist attacks, or pandemics or epidemics may cause damage or disruption to our operations, real estate commerce, and the global economy, and thus, could adversely affect our business, financial condition and results of operations.
Natural disasters or other catastrophic events, such as fires, hurricanes, earthquakes, windstorms, tornados, floods, power loss, telecommunications failure, cyber-attacks, war, civil unrest, terrorist attacks, or pandemics or epidemics may cause damage or disruption to our operations, real estate commerce, and the global economy, and thus, could adversely affect our 25 Table of Contents business, financial condition and results of operations.
In addition, our measure of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results of operations may not be comparable to our competitors.
In addition, our measure of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results of operations may not be comparable or compare favorably to our competitors.
The ongoing industry antitrust class action litigation, as well as the Antitrust Lawsuits filed against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report (including any injunctive relief, appeals or settlements), either alone or in combination with related regulatory or governmental actions, or any resulting changes to competitive dynamics or consumer preferences, could result in meaningful industry-wide changes, including changes to the broker commission structure and meaningful decreases in the average broker commission rate (including the average buy-side commission rate).
The ongoing industry antitrust class action litigation, as well as the Antitrust Lawsuits filed against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report (including any injunctive relief, appeals or settlements), either alone or in combination with related regulatory or governmental actions, or any resulting changes to competitive dynamics or consumer preferences, has resulted in certain industry-wide changes and could result in additional meaningful industry-wide changes, including changes to the broker commission structure and meaningful decreases in the average broker commission rate (including the average buy-side commission rate).
We may be subject to claims, lawsuits, arbitration proceedings, government investigations, and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability, consumer complaints, personal injury, wrongful death, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions), securities laws, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, integrated services business lines, securities issuances or business practices.
We may be subject to claims, lawsuits, arbitration proceedings, government investigations, and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability, consumer complaints, personal injury, wrongful death, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer brokers' offers of commissions and other listing and marketing practices), securities laws, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, integrated services business lines, securities issuances or business practices.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we were to achieve profitability. 20 Table of Contents We rely on assumptions, estimates, and business data to calculate our key performance indicators and other business metrics, and real or perceived inaccuracies in these metrics may harm our reputation and negatively affect our business.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we were to achieve profitability. We rely on assumptions, estimates, and business data to calculate our key performance indicators and other business metrics, and real or perceived inaccuracies in these metrics may harm our reputation and negatively affect our business .
In addition, we work with international staffing organizations that hire contractors in various jurisdictions who are subject to various local laws, including labor and employment laws, that differ from those in the United States. We may be subject 24 Table of Contents to claims as a result of the staffing agencies’ practices, which are outside our control or direction.
In addition, we work with international staffing organizations that hire contractors in various jurisdictions who are subject to various local laws, including labor and employment laws, that differ from those in the United States. We may be subject to claims as a result of the staffing agencies’ practices, which are outside our control or direction.
Any future determination to pay dividends will be at the discretion of our board of directors, and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant. Item 1B. Unresolved Staff Comments. None.
Any future determination to pay dividends will be at the discretion of our board of directors, and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our board of directors deems relevant. 32 Table of Contents Item 1B. Unresolved Staff Comments. None.
The loss of our existing relationships with these parties, changes to our rights to use listing data, or an inability to continue to add new listing providers may cause our listing data to omit information important to our agents or our agents’ clients.
The loss of our existing relationships with these parties, changes to our rights to use listing data, or an inability to continue to add new listing providers may cause our listing data to omit information important to our agents or their clients.
The Federal Reserve Board took aggressive actions aimed at controlling inflation in 2022 and 2023, including raising the interest rate and reducing its holdings of mortgage-backed securities. Rising interest rates in 2022 and 2023 have contributed to rising mortgage interest rates, which in turn contributed to a decline in residential real estate home sale transaction volume and inventory constraints.
The Federal Reserve Board took aggressive actions aimed at controlling inflation in 2022 and 2023, including raising the federal funds rate and reducing its holdings of mortgage-backed securities. Rising interest rates in 2022 and 2023 contributed to higher mortgage interest rates, which in turn contributed to a decline in residential real estate home sale transaction volume and inventory constraints.
In addition, if our agents make fraudulent claims about properties they show, their transactions lead to allegations of errors or omissions, they violate certain regulations, including employment laws applicable to the management of their own employees, or they engage in self-dealing or do not disclose conflicts of interest to our agents’ clients, we could be subject to litigation and regulatory claims which, if adversely determined, could adversely affect our business, financial condition and results of operations.
In addition, if agents at our owned-brokerage make fraudulent claims about properties they show, their transactions lead to allegations of errors or omissions, they violate certain regulations, including employment laws applicable to the management of their own employees, or they engage in self-dealing or do not disclose conflicts of interest to their clients, we could be subject to litigation and regulatory claims which, if adversely determined, could adversely affect our business, financial condition and results of operations.
As of December 31, 2023, Robert Reffkin, our founder, Chairman, and Chief Executive Officer, together with his financial planning vehicles and affiliated trusts (for purposes of this risk factor discussion, “Mr.
As of December 31, 2024, Robert Reffkin, our founder, Chairman, and Chief Executive Officer, together with his financial planning vehicles and affiliated trusts (for purposes of this risk factor discussion, “Mr.
If we are unable to maintain or enhance agent awareness of our business, or if our reputation is damaged in a given market or nationally, our business, financial condition, and results of operations could be adversely affected. We have experienced rapid growth in the past, which may not be indicative of our future growth.
If we are unable to maintain or enhance agent awareness of our business, or if our reputation and/or brands' quality is damaged in a given market, nationally or internationally, our business, financial condition, and results of operations could be adversely affected. We have experienced rapid growth in the past, which may not be indicative of our future growth.
Any of these impacts would adversely affect our business, financial condition, and results of operations. We may not be able to maintain or establish relationships with MLSs and third-party listing providers, which could limit the information we are able to provide to our agents and our agents’ clients.
Any of these impacts would adversely affect our business, financial condition, and results of operations. 18 Table of Contents We may not be able to maintain or establish relationships with MLSs and third-party listing providers, which could limit the information we are able to provide to our agents and our agents’ clients .
The continued proliferation of privacy laws in the jurisdictions in which we operate is likely to result in a disparate array of privacy rules with unaligned or conflicting provisions, accountability requirements, individual rights, and enforcement powers, which may require us to further modify our data processing practices and policies, and may subject us to increased regulatory scrutiny and business costs, and lead to unintended confusion among our agents’ and our agent’s clients.
The continued proliferation of privacy laws in the jurisdictions in which we operate is likely to result in a disparate array of privacy rules with unaligned or conflicting provisions, accountability requirements, individual rights, and enforcement powers, which may require us to further modify our data processing 24 Table of Contents practices and policies, and may subject us to increased regulatory scrutiny and business costs, and lead to unintended confusion among our agents’ and our agents’ clients.
A significant adoption by consumers of alternatives to full-service agents could have an adverse effect on our business, financial condition, and results of operations. 18 Table of Contents A significant change in consumer sales that eliminates or minimizes the role of the agent in the real estate transaction process could have an adverse effect on our business, financial condition, and results of operations.
A significant adoption by consumers of alternatives to full-service agents could have an adverse effect on our business, financial condition, and results of operations . A significant change in consumer sales that eliminates or minimizes the role of the agent in the real estate transaction process could have an adverse effect on our business, financial condition, and results of operations.
We face competition nationally and in each of our markets from traditional real estate brokerage firms, some of which operate nationally and others that are limited to a specific region or regions, from real estate technology companies, including a growing number of Internet-based brokerages and others who operate with a variety of business models, and from new entrants, particularly smaller companies offering point solutions.
We face competition nationally, in select international markets and in each of our regional markets from traditional real estate brokerage firms, some of which operate nationally and others that are limited to a specific domestic or international region or regions; from real estate technology companies, including a growing number of Internet-based brokerages and others who operate with a variety of business models; and from new entrants, particularly smaller companies offering point solutions.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, 23 Table of Contents and successfully execute on those plans in the event of a disaster or emergency, our business could be adversely affected and our reputation could be harmed.
If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business could be adversely affected and our reputation could be harmed.
Reffkin is able to determine and may significantly influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our restated certificate of incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction.
Reffkin is able to influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our restated certificate of incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction.
We must carefully manage our expense structure and a failure to do so could have a material adverse effect on our business. The real estate market has experienced an increase in interest rates followed by a material decrease in the number of real estate transactions.
We must carefully manage our expense structure and a failure to do so could have a material adverse effect on our business . The real estate market has experienced high interest rates followed by a material decrease in the number of real estate transactions.
In the ordinary course of our business, we and our third-party service providers, our employees, agents, and agent’s clients may collect, store, and transmit sensitive data, including our proprietary business information and intellectual property and that of our agents and our agents’ clients as well as personal information, sensitive financial information, and other confidential information.
In the ordinary course of our business, we and our third-party service providers, our employees, agents, affiliates and our agents’ clients may collect, store, and transmit sensitive data, including our proprietary business information and intellectual property and that of our agents and their clients as well as personal information, sensitive financial information, and other confidential information.
There can be no guarantee that we can continue to launch new products and services in a timely manner, or at all, and even if we do, they might not be utilized by our agents at the rate we expect.
There can be no guarantee that we can continue to launch new products and services in a timely manner, or at all, and even if we do, they might not be utilized by agents at our owned-brokerage or our affiliates at the rate we expect.
Rising interest rates have contributed to a decline in residential real estate home sale transaction volume and title and escrow and mortgage activity, which has had an adverse effect on our business, financial condition and results of operations.
High mortgage rates have contributed to a decline in residential real estate home sale transaction volume and title and escrow and mortgage activity, which has had an adverse effect on our business, financial condition and results of operations .
Some of our competitors could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and access to additional capital, more product and service offerings, and higher risk tolerances or different risk assessments.
Some of our competitors 15 Table of Contents could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and access to additional capital, more product and service offerings, and higher risk tolerances or different risk assessments.
Although our agents are independent contractors, if they were to provide lower quality services to our agents’ clients, our image and reputation could be adversely affected.
Although our agents are independent contractors, if they were to provide lower quality services to their clients, our image and reputation could be adversely affected.
To protect our proprietary information and technology, we rely in part on agreements with our employees, investors, 26 Table of Contents independent contractors, vendors and other third parties that place restrictions on the use and disclosure of this intellectual property.
To protect our proprietary information and technology, we rely in part on agreements with our employees, investors, independent contractors, vendors and other third parties that place restrictions on the use and disclosure of this intellectual property.
We may also make other decisions, such as more conservatively managing our expense structure, that could further slow our growth. In the future, we may not be able to grow as fast as we had in the past or at all.
We may continue to make decisions, such as more conservatively managing our expense structure, that could further slow our growth. In the future, we may not be able to grow as fast as we had in the past or at all.
Our failure to successfully integrate the companies we acquire and address risks or other problems encountered in connection with our past or future strategic acquisitions could cause us to fail to realize the anticipated benefits of such strategic acquisitions, incur unanticipated liabilities, and harm our business, financial condition, and results of operations.
Our failure to successfully integrate the companies we acquire and address risks or other problems encountered in connection with our past or future strategic acquisitions could cause us to fail to realize the anticipated benefits of such strategic acquisitions, including anticipated synergies and cost savings, incur unanticipated liabilities, and harm our business, financial condition, and results of operations.
Similarly, if our agents do not recommend our integrated services to our agents’ clients, then our revenue from integrated services will not grow as quickly as we expect.
Similarly, if our agents do not recommend our integrated services to their clients, then our revenue from integrated services will not grow as quickly as we expect.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or 25 Table of Contents indirectly, improper payments or benefits to recipients in the public or private sector.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
Moreover, since we were founded, we have incurred net losses and have had an accumulated deficit, and may continue to do so, for a number of reasons, including: declines in U.S. residential real estate transaction volumes; changes in general economic conditions; changes in real estate market conditions; expansion into new markets for which we typically incur more significant losses immediately following entry; increased competition; increased costs to attract and retain agents, to hire additional personnel to support our overall growth, for research and development, and for sales and marketing; changes in our fee structure or rates; inefficiencies in our technology and business model; failure to execute our growth strategies; and unforeseen expenses, difficulties, complications and delays.
Moreover, since we were founded, we have incurred net losses and have had an accumulated deficit, and may continue to do so, for a number of reasons, including: declines in U.S. residential real estate transaction volumes; changes in general economic conditions; changes in real estate market conditions; expansion into new markets for which we typically incur significant losses immediately following entry; increased competition; increased costs to attract and retain agents at our owned-brokerage; increased costs related to the expansion of our affiliate business; increased costs to hire additional personnel to support our overall growth, for research and development, and for sales and marketing; changes to the customary commission rates; changes in our fee structure or rates; inefficiencies in our technology and business model; failure to execute our growth strategies; and unforeseen expenses, difficulties, complications and delays.
As our revenue is primarily driven by sales commissions and transaction fees, any slowdown or decrease in the total number of residential real estate sale transactions executed by our agents could adversely affect our business, financial condition and results of operations.
As our revenue is primarily driven by sales commissions and transaction fees, any slowdown or decrease in the total number of residential real estate sale transactions executed by agents at our owned-brokerage and our affiliates could adversely affect our business, financial condition and results of operations.
We face claims from time to time alleging misclassification of status and it could be determined that the independent contractor classification is inapplicable to some or any of our agents.
We face claims from time to time alleging misclassification of status and it could be determined 26 Table of Contents that the independent contractor classification is inapplicable to some or any of our agents.
Additionally, due to the interoperative nature of the software and the systems underlying our platform, modifications to certain parts of our code, including changes to our mobile application, website, systems, or third-party application programming interfaces on which our platform rely, could have an unintended impact on other sections of our software or system, which may result in errors, bugs, or vulnerabilities to our platform.
Additionally, due to the interoperative nature of the software and the systems underlying our platform, modifications to certain parts of our code, including changes to our mobile application, website, systems, or third-party application programming interfaces on which our platform rely, or resulting from integration of acquired technologies, could have an unintended impact on other sections of our software or system, which may result in errors, bugs, or vulnerabilities to our platform.
Factors that can influence our results of operations, include: changes in real estate market conditions; our ability to attract and retain agents; our ability to continuously innovate, improve, and expand our platform; changes in interest rates or mortgage underwriting standards; the actions of our competitors; costs and expenses related to the strategic acquisitions, partnerships, and joint ventures; increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; changes in the legislative or regulatory environment; system failures or outages; actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; adverse judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; the overall tax rate for our business; the impact of any changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; the application of new or changing financial accounting standards or practices; and changes in regional or national business or macroeconomic conditions.
Factors that can influence our results of operations, include: changes in real estate market conditions; our ability to attract and retain agents at our owned-brokerage; our ability to expand our affiliate business; our ability to continuously innovate, improve, and expand our technology offerings, including our proprietary platform; high mortgage rates; changes in mortgage underwriting standards; the actions of our competitors; costs and expenses related to the strategic acquisitions, partnerships, and joint ventures; increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; changes in the legislative, regulatory and industry environment; system failures or outages; actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; adverse judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; the overall tax rate for our business; the impact of any changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; the application of new or changing financial accounting standards or practices; and changes in regional, national or international business or macroeconomic conditions.
Risks Related to Our Intellectual Property Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand. Our trade secrets, trademarks, copyrights and other intellectual property rights are important assets, and litigation to defend intellectual property can be expensive and lengthy.
Risks Related to Our Intellectual Property Our intellectual property rights are valuable to us, and any inability to protect them could reduce the value of our products, services, and brand . 28 Table of Contents Our trade secrets, trademarks, copyrights and other intellectual property rights are important assets to us, and litigation to defend intellectual property can be expensive and lengthy.
Although we took deliberate actions to provide impacted employees with equitable separation packages and transition services, there can be no assurance that these actions will not adversely affect employee morale, 21 Table of Contents our culture, and our ability to attract and retain employees.
Although we took deliberate actions to provide impacted employees with equitable separation packages and transition services, there can be no assurance that these actions will not adversely affect employee morale, our culture, and our ability to attract and retain employees.
While we plan to continue to expand our brokerage and integrated services businesses to other offerings, there is no guarantee that we will do so or be successful, and even if we do, the expansions might be at a slower pace than we anticipate. We may not realize the expected benefits from our mortgage joint venture.
While we plan to continue to expand our integrated services to other offerings, there is no guarantee that we will do so or be successful, and even if we do, the expansions might be at a slower pace than we anticipate. We may not realize the expected benefits from our mortgage business .
If we invest substantial time and resources to establish international operations and are unable to do so successfully or in a timely manner, our business, financial condition, and results of operations may be adversely impacted. 19 Table of Contents Our management team is required to evaluate the effectiveness of our internal control over financial reporting.
If we invest substantial time and resources to grow our international operations and are unable to do so successfully or in a timely manner, our business, financial condition, and results of operations may be adversely impacted. Our management team is required to evaluate the effectiveness of our internal control over financial reporting.
We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes.
We have not performed an analysis to determine whether our past issuances of stock 22 Table of Contents and other changes in our stock ownership may have resulted in one or more ownership changes.
Reffkin held approximately 46.5% of the voting power of our outstanding capital stock. As a result, Mr.
Reffkin held approximately 33.5% of the voting power of our outstanding capital stock. As a result, Mr.
Additionally, if the MLSs cease to be the 16 Table of Contents predominant source of listing data, we might not be able to provide comprehensive listing data to our agents and their clients.
Additionally, if the MLSs cease to be the predominant source of listing data, we might not be able to provide comprehensive listing data to our agents and their clients.
Rising interest rates have contributed to a decline in residential real estate home sale transaction volume, which has had an adverse effect on our business, financial condition and results of operations.
High mortgage rates have contributed to a decline in residential real estate home sale transaction volume, which has had an adverse effect on our business, financial condition and results of operations.
For example, we may need to establish relationships with new partners or acquire businesses in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute on our expansion plans.
For example, we have established relationships with new partners, and may need to establish additional relationships with third parties or acquire businesses in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute on our expansion plans.
While overall the U.S. real estate market could be performing well, a downturn in a geographic area where we have a material presence could result in a decline in our gross commission income and could have a material adverse effect on our operating results. Additionally, a material portion of our real estate transactions take place in high-end markets.
While overall the U.S. real estate market could be performing well, a downturn in a geographic area where we have a material presence could result in a decline in our revenue and could have a material adverse effect on our operating results. Additionally, a material portion of our real estate transactions takes place in high-end markets.
However, as we grow, we may face challenges that may affect our ability to sustain our culture, including: failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission; increasing size and geographic diversity of our workforce; inability to achieve consistent adherence to our internal policies and core values; the continued challenges of a rapidly-evolving industry; the increasing need to develop expertise in new areas of business that affect us; negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and the integration of new personnel and businesses from acquisitions.
However, as we grow, we may face challenges that may affect our ability to sustain our culture, including: failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission; increasing size and geographic diversity of our workforce; inability to achieve consistent adherence to our internal policies and core values; the continued challenges of a rapidly-evolving industry; the increasing need to develop expertise in new areas of business that affect us; negative perception of our treatment of employees or our response to employee sentiment related to political or social causes or actions of management; and the integration of new personnel and businesses from acquisitions. 23 Table of Contents In addition, many of our employees continue to work remotely, which may adversely affect our efficiency and morale.
Our title companies issue title insurance policies on behalf of title insurance underwriters. These policies provide coverage for real property to lenders and buyers. The title underwriter is typically liable for the payment of claims under title policies, but we may be subject to liability and losses if we are negligent.
Our title companies issue title insurance policies on behalf of title insurance underwriters. These policies provide coverage for real property to lenders and buyers. The title underwriter is typically liable for the payment of claims under title policies, but we may be subject to liability and losses if there are errors or omissions on our part.
We regularly release or update software code, which may result in more frequent introduction of errors, bugs, or vulnerabilities into the software underlying our platform, potentially impacting the agent’s and their client’s experience on our platform.
We regularly release or update software code, which may result in more frequent introduction of errors, bugs, or vulnerabilities into the software underlying our platform, potentially impacting agents' and their clients' experience on the Compass platform.
If we experience rapid growth again, given our recent focus on our expense structure and cost savings efforts, we may not be able to scale our business as quickly as we need to in order to take advantage of all the growth opportunities available to us and meet all of the demands of our new agents and their clients.
If we experience rapid growth again, given our recent focus on our expense structure and cost savings efforts, we may not be able to scale our business as quickly as we need to in order to take advantage of all the growth opportunities available to us and meet all of the demands of agents at our owned-brokerage and our affiliates.
Any of the foregoing could have an adverse impact on OriginPoint’s results of operations and financial condition, which could result in us not being able to realize the expected benefits from the joint venture. We operate in highly competitive markets and we may be unable to compete successfully against competitors.
Any of the foregoing could have an adverse impact on the results of operations and financial condition of our mortgage business, which could result in us not being able to realize the expected benefits from this business. We operate in highly competitive markets and we may be unable to compete successfully against competitors .
We may not realize the expected benefits from OriginPoint, our mortgage joint venture, which will depend, in part, on the successful partnership between us and Guaranteed Rate and the successful day-to-day operation of the business by OriginPoint’s management. The services which Guaranteed Rate is engaged to provide to OriginPoint may deteriorate and cause OriginPoint to make alternative arrangements.
We may not realize the expected benefits from our mortgage business, which will depend, in part, on the successful partnership between us and our joint venture partner and the successful day-to-day operation of the business. The services which our joint venture partner is engaged to provide to the mortgage business may deteriorate and cause us to make alternative arrangements.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors.
Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
We cannot predict whether our multi-class structure will result in a lower or more volatile market price of our Class A common stock, adverse publicity, or other adverse consequences.
We cannot predict the effect our multi-class structure may have on the market price of our Class A common stock . We cannot predict whether our multi-class structure will result in a lower or more volatile market price of our Class A common stock, adverse publicity, or other adverse consequences.
Our ability to attract agents to our platform and to appeal to our agents’ clients depends upon providing a robust number of listings. To provide these listings in our services, in addition to the information provided by our agents, we maintain relationships with MLSs and other third-party listing providers.
Our ability to attract agents at our owned-brokerage and to appeal to their clients depends upon our ability to provide a robust number of listings. To provide these listings in our services, in addition to the information provided by our agents, we maintain relationships with MLSs and other third-party listing providers.
Any downturn in high-end markets could result in a decline in our gross commission income and could have a material adverse effect on our operating results.
Any downturn in high-end markets could result in a decline in our revenue and could have a material adverse effect on our operating results.
Reffkin”) (and including his shares of Class A common stock subject to outstanding RSUs for which the service condition has been satisfied or would be satisfied within 60 days of December 31, 2023), held 8,928,686 shares of Class A common stock and all of the issued and outstanding shares of Class C common stock. As of December 31, 2023, Mr.
Reffkin”) (and including his shares of Class A common stock subject to outstanding RSUs for which the service condition has been satisfied or would be satisfied within 60 days of December 31, 2024), held 10,828,116 shares of Class A common stock and all of the issued and outstanding shares of Class C common stock. As of December 31, 2024, Mr.
Such threats may be beyond our control as our employees and agents and our agents’ clients and other third-party service providers may use e-mail, computers, smartphones, and other devices and systems that are outside of our security control environment.
Such threats may be beyond our control as our employees and agents at our owned-brokerage and their clients, as well as our affiliates and their agents, and other third-party service providers may use e-mail, computers, smartphones, and other devices and systems that are outside of our security control environment.
Our reputation may be harmed due to adverse media coverage related to our actions, the actions of our agents, or other events, which may cause our ability to attract and retain agents to suffer.
Our reputation may be harmed due to adverse media coverage related to our actions, the actions of agents at our owned-brokerage and our affiliates, or other events, which may cause our ability to attract and retain agents and expand our network of affiliates to suffer.
Changes in the Federal Reserve Board’s policies are beyond our control and are difficult to predict and could negatively impact the residential real estate market, which in turn could have a material adverse effect on our business, financial condition and results of operations.
Changes in the Federal Reserve Board’s policies and other macroeconomic factors affecting mortgage rates are beyond our control, difficult to predict, and 12 Table of Contents could negatively impact the residential real estate market, which in turn could have a material adverse effect on our business, financial condition and results of operations.
We believe that our ability to compete depends upon many factors, including: our ability to attract and retain agents; the timing and market acceptance of products and services offered by us or our competitors; the attractiveness of our integrated services for agents 13 Table of Contents and our agents’ clients; our ability to attract top talent to support our business model; and our brand strength relative to our competitors.
We believe that our ability to compete depends upon many factors, including: our ability to attract and retain agents at our owned-brokerage; our ability to expand our affiliate business; the timing and market acceptance of products and services offered by us or our competitors; the attractiveness of our integrated services for agents and their clients; our ability to attract top talent to support our business model; and our brand strength relative to our competitors.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Information Security team is segmented into six subteams and includes a dedicated Governance, Risk and Compliance subteam that is responsible for risk assessment, risk mitigation strategies, regulatory compliance, audits, internal governance and policy enforcement. We have also established a Security and Privacy Committee (“Committee”), co-chaired by our Senior Vice President, Head of Engineering and General Counsel, that meets monthly.
Biggest changeWe have also established a Security and Privacy Committee (“Committee”), co-chaired by our Senior Vice President, Head of Engineering, Chief Information Security Officer (“CISO”) and General Counsel, that meets monthly. This Committee is responsible for setting cybersecurity policies, strategies, and priorities, as well as ensuring that cybersecurity initiatives are aligned with the Company’s objectives.
As part of 31 Table of Contents that report, our Virtual CISO is expected to cover topics such as (i) an overview of our overall cybersecurity strategy and posture, (ii) results and recommendations from cybersecurity risk assessments and audits, (iii) vulnerabilities in our information systems, (iv) progress towards pre-determined risk-mitigation goals, (v) identified and potential cybersecurity risks and threats, (vi) cybersecurity incidents of certain impact in accordance with the Company’s cybersecurity policies, and (vii) programs related to mitigation of cybersecurity risks and potential threats, among other things.
As part of that report, our CISO covers topics such as (i) an overview of our overall cybersecurity strategy and posture, (ii) results and recommendations from cybersecurity risk assessments and audits, (iii) vulnerabilities in our information systems, (iv) progress towards pre-determined risk-mitigation goals, (v) identified and potential cybersecurity risks and threats, (vi) cybersecurity incidents of certain impact in accordance with the Company’s cybersecurity policies, and (vii) programs related to mitigation of cybersecurity risks and potential threats, among other things.
In conjunction with the Company’s in-house legal team, this team is principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity threats and incidents.
In conjunction with the Company’s in-house legal team, this team is principally responsible for managing our cybersecurity risk management program, our security controls, and our response to cybersecurity threats, and incidents.
The Virtual CISO reports to our Senior Vice President and Head of Engineering. Our Virtual CISO will report quarterly to the Audit Committee of the Board of Directors (“the “Audit Committee”), which is responsible for overseeing the Company’s cybersecurity risk management program and cybersecurity risks.
Our CISO reports quarterly to the Audit Committee of our board of directors (the “Audit Committee”), which is responsible for overseeing the Company’s cybersecurity risk management program and cybersecurity risks.
In addition to the monthly communications at the Committee level, our Information Security team collaborates with senior leadership across our organization on a regular basis as part of the Company’s overall enterprise risk management program. Our Chief Information Security Officer (“CISO”) recently left the Company and we are in the process of recruiting a new, permanent CISO.
In addition to the monthly communications at the Committee level, our Information Security team collaborates with senior leadership across our organization on a regular basis as part of the Company’s overall enterprise risk management program. In 2024, we hired a new Chief Information Security Officer to oversee the cybersecurity program and lead the Information Security team.
Our third party services providers have been also subject to a number of cybersecurity threats and incidents but to date, none of those threats and incidents have had a materially adverse effect on our business, financial condition or results of operations. Cybersecurity Governance Our Information Security team oversees our cybersecurity risk management program, which is described in more detail above.
Our third-party service providers have also been subject to a number of cybersecurity threats and incidents, but to date, none of those threats and incidents have had a materially adverse effect on our business, financial condition, or results of operations.
As part of our cybersecurity risk management program, we undertake various activities, including, but not limited to, detective, preventative, and automated controls; user access controls; a centralized security information and management system; periodic assessments, including penetration testing; periodic trainings and simulations; and policies for the handling of personally identifiable information.
As part of our cybersecurity program, we undertake various activities and programs, including, but not limited to: detective, preventative, corrective, and technical controls; identity and access management systems; periodic risk assessments, including penetration testing; periodic end-user training and simulations; incident response; vulnerability management; infrastructure and application security; corporate security; and policies for the handling of personally identifiable information and other restricted data.
We leverage results from these simulations to take corrective action or otherwise augment our abilities to defend and protect our information systems. While we have been subject to a number of cybersecurity threats and experienced non-material incidents in the past, they have not had a material adverse effect on our business, financial condition or results of operations.
Cybersecurity Risks Associated With Cybersecurity Threats While we have been subject to a number of cybersecurity threats and experienced non-material incidents in the past, as of the date of this Annual Report, they have not had a material adverse effect on our business, financial condition or results of operations.
Further, our cybersecurity risk management program includes processes that address cybersecurity risks associated with our use of third-party services providers that have access to our information systems and/or employee, agent or agent client confidential information. For example, we perform certain due diligence before engaging third-party service providers and consider potential cybersecurity risks and exposures in our choice among providers.
Further, our cybersecurity risk management program includes a third-party risk management program to assess and manage cybersecurity risks associated with our use of third-party services providers that have access to our information systems and/or employee, agent or agent client confidential information.
For example, we report, review and consider results and findings from external and internal security and privacy assessments as part of our overall risk assessment process, and we analyze how cybersecurity risks interplay with operational, financial, compliance and reputational risks.
Our cybersecurity risk management program is integrated with our overall enterprise risk management program and is a crucial component of our risk assessment process. For instance, we report on, review, and consider the results and findings from external and internal security and privacy assessments as part of our risk program.
This Committee is responsible for setting cybersecurity policies, strategies, and priorities, as well as ensuring that cybersecurity initiatives are aligned with the Company’s objectives. Members of the Committee may, from time to time, include representatives from security and compliance, internal audit, legal, product, engineering, finance, operations, strategy and people and culture functions.
Members of the Committee may, from time to time, include representatives from information security, internal audit, legal, product, engineering, finance, operations, strategy and people and culture functions.
We also carry customary cybersecurity risk insurance. 30 Table of Contents In addition, we use third party service providers, when appropriate, to assess, test or otherwise assist with certain aspects of our cybersecurity risk management program. For example, we leverage external assessors such as security researchers and penetration testers to identify vulnerabilities in our information systems.
Additionally, we analyze how cybersecurity risks interact with operational, financial, compliance, and reputational risks. When appropriate, we also engage third-party service providers to evaluate, test, or assist with specific elements of our cybersecurity risk management program. For instance, we utilize external assessors, including security researchers and penetration testers, to identify and report vulnerabilities in our information systems.
We closely monitor the privacy and cybersecurity laws and regulations and conduct related reviews of our policies. We have implemented incident response plans providing for response, containment, reporting and disclosure and recovery, including providing training and remediation steps for internal threats.
We closely monitor privacy and cybersecurity laws and regulations and conduct related reviews of our policies. We have implemented incident response plans that provide for the response, containment, eradication, reporting, and disclosure of security incidents. We also carry customary cybersecurity risk insurance and have a retainer in place for third-party incident response and forensics resources.
The Audit Committee reports to the full Board of Directors regarding its activities, including reports that it receives from our CISO. Once hired, we expect our permanent CISO to continue strengthening our information security posture, assist with incident response and any remediation plans, and provide quarterly reports to the Audit Committee, as we transition from using a Virtual CISO.
The Audit Committee reports to the full board of directors regarding its activities, including reports that it receives from our CISO.
Item 1C. Cybersecurity. Overview of Cybersecurity Risk Management Program Cybersecurity is an ongoing priority, and we remain focused on our obligation to assess, identify and manage risks from cybersecurity threats and cybersecurity incidents. We have developed and implemented a cybersecurity risk management program that employs a multitude of measures and processes that aid in these efforts.
Cybersecurity Risk Management Program Cybersecurity is an ongoing priority, and we have developed and implemented a cybersecurity risk management program designed to identify, assess, prioritize, and mitigate cybersecurity risks to ensure our compliance with applicable privacy and cybersecurity laws.
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This program is designed to protect our information systems, detect cybersecurity threats and ensure our compliance with applicable privacy and cybersecurity laws. Our cybersecurity risk management program is integrated into our overall enterprise risk management program and is considered an integral part of our overall risk assessment process.
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Item 1C. Cybersecurity. Overview of the Cybersecurity Program Compass operates a cybersecurity program designed to identify, assess, and mitigate cybersecurity risks to protect our information assets, ensure business continuity, and maintain stakeholder trust.
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Cybersecurity Risk Management Program Assessments and Risks Associated With Cybersecurity Threats While we have assessed our cybersecurity risk management program periodically in the past, in the second half of 2023, we started to utilize a leading industry cybersecurity framework in our assessments.
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Guided by industry best practices, including the National Institute of Standards and Technology's Cybersecurity Framework ("NIST CSF") and the Center for Internet Security ("CIS") Critical Controls, we focus on continuous improvement to address emerging threats and vulnerabilities. We recognize the evolving nature of cybersecurity threats and regularly enhance our security controls, processes, and policies to adapt to these risks.
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Specifically, we use this framework to assess our cybersecurity controls against industry best practices in the areas of: identify and protect assets, detect and respond to suspicious activity, as well as recover from cybersecurity incidents. Based on the results of our initial assessment, we have developed a multi-year plan that allows us to focus on the highest priorities.
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For example, we perform certain due diligence before engaging third-party service providers and consider potential cybersecurity risks and exposures in our choice among providers.
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Under the plan, we are required to make additional investments to enhance our processes and practices over a period of time. Additionally, as part of our continuous overall cybersecurity posture assessment, we conduct incident simulations based on recent public cybersecurity incidents, incorporating the tactics, techniques and procedures threat actors have used when targeting organizations.
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Please refer to the “Risk Factors” section of this Annual Report for additional information related to the cybersecurity risks that could potentially impact our business. Cybersecurity Governance 33 Table of Contents Our Information Security team oversees our cybersecurity program, which is described in more detail above.
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We have engaged a temporary third-party CISO (sometimes referred to as a “Virtual CISO”) to oversee the cybersecurity risk management program and assist the Information Security team. Our Virtual CISO has over 20 years of experience working in the Information Security field, and is a Certified Information Systems Security Professional.
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Our CISO has over 17 years of experience building security teams and driving security initiatives for public, high-growth, and regulated companies. He is a Certified Information Systems Security Professional and reports to our Senior Vice President and Head of Engineering.
Removed
Specifically, she has experience managing and administering enterprise infrastructure, network communications, and information security. Our Virtual CISO receives regular reports from the Information Security team and will provide advice to the team with incident responses, execute any remediation plans, assist with drafting policy, and perform industry standard simulations and security assessments.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeThe information relating to legal proceedings contained in Note 11 to the consolidated financial statements included in Part II, Item 8 of this Annual Report is incorporated herein by this reference. Item 4. Mine Safety Disclosures. None. 32 Table of Contents PART II
Biggest changeThe information relating to legal proceedings contained in Note 11 to the consolidated financial statements included in Part II, Item 8 of this Annual Report is incorporated herein by this reference. Item 4. Mine Safety Disclosures. None. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−2 removed5 unchanged
Biggest changeYear 4/1/21 12/31/21 12/31/22 12/31/23 COMP $ 100 $ 45.11 $ 11.56 $ 18.66 S&P 500 Index (1) $ 100 $ 118.57 $ 95.51 $ 118.66 Peer Group Index (2) $ 100 $ 67.17 $ 23.05 $ 35.64 ____________ (1) S&P 500 Index is a capitalization-weighted index of domestic equities of the largest companies traded on the NYSE and NASDAQ.
Biggest changeYear 4/1/21 12/31/21 12/31/22 12/31/23 12/31/24 COMP $ 100.00 $ 45.11 $ 11.56 $ 18.66 $ 29.03 S&P 500 Index (1) $ 100.00 $ 118.57 $ 95.51 $ 118.66 $ 146.31 Peer Group Index (2) $ 100.00 $ 67.17 $ 23.05 $ 35.64 $ 20.99 ____________ (1) S&P 500 Index is a capitalization-weighted index of domestic equities of the largest companies traded on the NYSE and NASDAQ.
Stock Performance Graph The stock performance graph set forth below shall not be deemed “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of, the Exchange Act and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing. 33 Table of Contents The following graph compares the performance of our common stock to the Standard & Poor’s (“S&P”) 500 Index and Peer Group Index by assuming $100 was invested in each investment option as of April 1, 2021, which represents the day our common stock began trading on the NYSE.
Stock Performance Graph The stock performance graph set forth below shall not be deemed “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under, or to the liabilities of Section 18 of the Exchange Act and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing. 35 Table of Contents The following graph compares the performance of our common stock to the Standard & Poor’s (“S&P”) 500 Index and Peer Group Index by assuming $100 was invested in each investment option as of April 1, 2021, which represents the day our common stock began trading on the NYSE.
The recipients of the securities in each of these transactions 34 Table of Contents represented their intentions to acquire the securities for investment only and not with the view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. Issuer Purchases of Equity Securities None. Item 6.
The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with the view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. Issuer Purchases of Equity Securities None. Item 6. Reserved.
Stockholders As of February 23, 2024, there were 208 holders of record of our common stock. The actual number of stockholders is greater than this number of holders of record, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Stockholders As of February 20, 2025, there were 205 holders of record of our common stock. The actual number of stockholders is greater than this number of holders of record, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Removed
Sales of Unregistered Securities From October 1, 2023 through December 31, 2023, we offered, sold and issued the following unregistered securities: (1) as previously disclosed in Form 4s filed with the SEC, Robert Reffkin, our founder and Chief Executive Officer, exchanged an aggregate of 240,592 shares of Class A common stock for an equivalent number of shares of Class C common stock pursuant to an Equity Exchange Right Agreement on October 3, 2023, November 3, 2023, and December 5, 2023; (2) as discussed in more detail in Note 3 to our consolidated financial statements included elsewhere in this Annual Report and disclosed in a Form D filed with the SEC, 2,231,941 shares of Class A common stock were issued on October 6, 2023 in connection with an acquisition, in the amount of $6.5 million; and (3) as previously disclosed in Form D filed with the SEC, an aggregate of 289,509 shares of Class A common stock were issued on October 16, 2023 in connection with an earnout payment related to a prior acquisition, in the amount of $0.8 million.
Added
Sales of Unregistered Securities From October 1, 2024 through February 25, 2025, we offered, sold and issued the following unregistered securities: (1) As previously disclosed in Form 4s filed with the SEC, Robert Reffkin, our founder and Chief Executive Officer, exchanged an aggregate of 5,636,354 shares of Class C common stock for an equivalent number of shares of Class A common stock pursuant to an Equity Exchange Right Agreement on November 6, 2024, December 18, 2024 and February 19, 2025; and (2) As previously disclosed in Form 8-K filed with the SEC, we entered into an agreement to issue 44,136,191 shares of Class A common stock (the "Share Consideration") related to an acquisition that closed on January 13, 2025 (the "Closing Date"); the Share Consideration is subject to further adjustment (the “Share Consideration Adjustment”) if the value of the Share Consideration on the 366th day following the Closing Date, determined using the price per share equal to the volume-weighted average price of the Company’s Class A common stock for the 10-trading day period ending on the 366th day following the Closing Date (the “Post-Closing Share Price”), is (i) greater than $344 million, in which case the Share Consideration will be reduced by a number of shares in an aggregate amount of up to $50 million (determined using the Post-Closing Share Price), up to a maximum of 5.6 million shares or (ii) less than $344 million, in which case the Share Consideration will be increased by a number of shares in an aggregate amount of up to $50 million (determined using the greater of $6.6612 and the Post-Closing Share Price), up to a maximum of 7.5 million shares. 36 Table of Contents The offer, sale and issuance of the securities described above were exempt from registration under the Securities Act in reliance upon Section 3(a)(9) and Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering.
Removed
The offer, sale and issuance of the securities described above were exempt from registration under the Securities Act in reliance upon Section 3(a)(9) and Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+25 added−48 removed57 unchanged
Biggest changeEquity in Loss of Unconsolidated Entity Equity in loss of unconsolidated entity includes the results of our share of losses from our mortgage joint venture with Guaranteed Rate, Inc., which was formed in July 2021. 39 Table of Contents RESULTS OF OPERATIONS The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended December 31, 2023 2022 2021 (in millions, except percentages) Revenue $ 4,885.0 100.0 % $ 6,018.0 100.0 % $ 6,421.0 100.0 % Operating expenses: Commissions and other related expense (1) 4,007.0 82.0 4,936.1 82.0 5,310.5 82.7 Sales and marketing (1) 435.4 8.9 575.1 9.6 510.4 7.9 Operations and support (1) 326.9 6.7 392.4 6.5 374.9 5.8 Research and development (1) 184.5 3.8 360.3 6.0 365.3 5.7 General and administrative (1) 125.7 2.6 208.1 3.5 288.5 4.5 Restructuring costs 30.4 0.6 49.1 0.8 — — Depreciation and amortization 90.0 1.8 86.3 1.4 64.4 1.0 Total operating expenses 5,199.9 106.4 6,607.4 109.8 6,914.0 107.7 Loss from operations (314.9) (6.4) (589.4) (9.8) (493.0) (7.7) Investment income, net 8.5 0.2 2.8 — 0.1 — Interest expense (10.8) (0.2) (3.6) (0.1) (2.4) — Loss before income taxes and equity in loss of unconsolidated entity (317.2) (6.5) (590.2) (9.8) (495.3) (7.7) Benefit from income taxes 0.4 — 0.9 — 2.5 — Equity in loss of unconsolidated entity (3.3) (0.1) (12.2) (0.2) (1.3) — Net loss (320.1) (6.6) (601.5) (10.0) (494.1) (7.7) Net income attributable to non-controlling interests (1.2) — — — — — Net loss attributable to Compass, Inc. $ (321.3) (6.6 %) $ (601.5) (10.0 %) $ (494.1) (7.7 %) (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2023 2022 2021 Commissions and other related expense $ 11.6 $ 59.0 $ 128.7 Sales and marketing 35.0 42.0 38.4 Operations and support 16.1 15.6 16.9 Research and development 45.7 57.5 92.7 General and administrative 49.8 60.4 109.6 Total stock-based compensation expense $ 158.2 $ 234.5 $ 386.3 Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Revenue $ 4,885.0 $ 6,018.0 $ (1,133.0) (18.8 %) Revenue decreased by $1,133.0 million, or 18.8%, for 2023 compared to 2022.
Biggest changeEquity in Loss of Unconsolidated Entity Equity in loss of unconsolidated entity includes the results of our share of losses from our mortgage joint venture with Guaranteed Rate, Inc. 41 Table of Contents RESULTS OF OPERATIONS The following table sets forth our consolidated statements of operations data for the periods indicated: Year Ended December 31, 2024 2023 2022 (in millions, except percentages) Revenue $ 5,629.1 100.0 % $ 4,885.0 100.0 % $ 6,018.0 100.0 % Operating expenses: Commissions and other related expense (1) 4,634.6 82.3 4,007.0 82.0 4,936.1 82.0 Sales and marketing (1) 368.7 6.5 435.4 8.9 575.1 9.6 Operations and support (1) 334.5 5.9 326.9 6.7 392.4 6.5 Research and development (1) 188.8 3.4 184.5 3.8 360.3 6.0 General and administrative (1) 165.2 2.9 125.7 2.6 208.1 3.5 Restructuring costs 9.7 0.2 30.4 0.6 49.1 0.8 Depreciation and amortization 82.4 1.5 90.0 1.8 86.3 1.4 Total operating expenses 5,783.9 102.7 5,199.9 106.4 6,607.4 109.8 Loss from operations (154.8) (2.7) (314.9) (6.4) (589.4) (9.8) Investment income, net 6.8 0.1 8.5 0.2 2.8 — Interest expense (6.4) (0.1) (10.8) (0.2) (3.6) (0.1) Loss before income taxes and equity in loss of unconsolidated entity (154.4) (2.7) (317.2) (6.5) (590.2) (9.8) Benefit from income taxes 0.5 — 0.4 — 0.9 — Equity in loss of unconsolidated entity (0.6) — (3.3) (0.1) (12.2) (0.2) Net loss (154.5) (2.7) (320.1) (6.6) (601.5) (10.0) Net loss (income) attributable to non-controlling interests 0.1 — (1.2) — — — Net loss attributable to Compass, Inc. $ (154.4) (2.7 %) $ (321.3) (6.6 %) $ (601.5) (10.0 %) (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 2022 Commissions and other related expense $ — $ 11.6 $ 59.0 Sales and marketing 31.5 35.0 42.0 Operations and support 16.5 16.1 15.6 Research and development 58.0 45.7 57.5 General and administrative 21.5 49.8 60.4 Total stock-based compensation expense $ 127.5 $ 158.2 $ 234.5 Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Revenue $ 5,629.1 $ 4,885.0 $ 744.1 15.2 % Revenue increased by $744.1 million, or 15.2%, for 2024 compared to 2023.
We maintain a full valuation allowance against our deferred tax assets for U.S. income tax purposes because we have concluded that it is more likely than not that the deferred tax assets will not be realized.
We maintain a full valuation allowance against our U.S. deferred tax assets for income tax purposes because we have concluded that it is more likely than not that the deferred tax assets will not be realized.
Financing Activities During 2023, net cash used in financing activities was $157.4 million, primarily consisting of $150.0 million in net repayments of drawdowns on the Revolving Credit Facility, $23.5 million in taxes paid related to net share settlement of equity awards, $14.6 million in payments related to acquisitions, including payments of contingent consideration, and $7.1 million in net payments on drawdowns and repayments on the Concierge Facility, partially offset by $32.3 million in proceeds from the issuance of common stock in connection with the Strategic Transaction (see Note 12 to our consolidated financial statements included elsewhere in this Annual Report for more information ) , $4.5 million in proceeds from the exercise of stock options and $2.5 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
During 2023, net cash used in financing activities was $157.4 million, primarily consisting of $150.0 million in net repayments of drawdowns on the Revolving Credit Facility, $23.5 million in taxes paid related to net share settlement of equity awards, $14.6 million in payments related to acquisitions, including payments of contingent consideration, and $7.1 million in net payments on drawdowns and repayments on the Concierge Facility, partially offset by $32.3 million in proceeds from the issuance of common stock in connection with the Strategic Transaction (see Note 12 - "Preferred Stock and Common Stock" to our consolidated financial statements included elsewhere in this Annual Report for more information ) , $4.5 million in proceeds from the exercise of stock options and $2.5 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
Our platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. Our platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients.
Our Compass platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry. The Compass platform also uses proprietary data, analytics, AI, and machine learning to simplify workflows of agents and deliver high-value recommendations and outcomes for both agents and their clients.
The stock-based compensation expense was recorded as a liability throughout the service period and was reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs were issued. On a limited basis, we have issued stock options and RSUs that contain service, performance and market-based vesting conditions.
The stock-based compensation expense was recorded as a liability throughout the service periods and was reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs were issued. On a limited basis, we have issued stock options and RSUs that contain service, performance and market-based vesting conditions.
In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this presentation.
In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.
An analysis of the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis for the year ended December 31, 2022 compared to the year ended December 31, 2021 is included in our Form 10-K for the year ended December 31, 2022. • Key Business Metrics and Non-GAAP Financial Measures.
An analysis of the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis for the year ended December 31, 2023 compared to the year ended December 31, 2022 is included in our Form 10-K for the year ended December 31, 2023. • Key Business Metrics and Non-GAAP Financial Measures.
In addition, we do not capitalize commissions paid to agents as incremental contract costs as there are no future benefits associated with the expenses. 51 Table of Contents Stock-Based Compensation We measure compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant.
In addition, we do not capitalize commissions paid to agents as incremental contract costs as there are no future benefits associated with the expenses. 53 Table of Contents Stock-Based Compensation We measure compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant.
This section provides our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This section provides our analysis and outlook for the significant line items on our statements of operations, as well as other information that we deem meaningful to understand our results of operations on a consolidated basis for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The principal amount, if any, is payable in full in March 2026, unless earlier terminated or extended. For additional information, see the section titled “—Liquidity and Capital Resources—Revolving Credit and Guaranty Agreement.” We have irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities.
The principal amount, if 52 Table of Contents any, is payable in full in March 2026, unless earlier terminated or extended. For additional information, see the section titled “—Liquidity and Capital Resources—Revolving Credit and Guaranty Agreement.” We have irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities.
We are also obligated to pay other customary fees for a credit facility of this type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 50 Table of Contents 0.175% per annum, fees associated with letters of credit and administrative and arrangement fee.
We are also obligated to pay other customary fees for a credit facility of this type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175% per annum, fees associated with letters of credit and administrative and arrangement fee.
Additionally, we provide integrated services, 35 Table of Contents such as title and escrow and mortgage, both of which are available on our platform. Compass agents utilize the platform to grow their businesses, save time and manage their businesses more effectively. Our business model is directly aligned with the success of our agents.
Additionally, we provide integrated services, such as title and escrow and mortgage, both of which are available on the Compass platform. Compass agents utilize the platform to grow their businesses, save time and manage their businesses more effectively. Our business model is directly aligned with the success of agents.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, therefore you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, however, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of December 31, 2023. • Critical Accounting Estimates and Policies.
This section provides an analysis of our liquidity and cash flows, as well as a discussion of our commitments that existed as of December 31, 2024. • Critical Accounting Estimates and Policies.
In addition to commission revenue, we generate revenue through integrated services related to the home transaction such as title and escrow services which comprised an immaterial amount of the consolidated revenue for the years ended December 31, 2023, 2022 and 2021. Our management evaluated and determined that no disaggregation of revenue is necessary or appropriate.
In addition to commission revenue, we generate revenue through integrated services related to the home transaction such as title and escrow services which comprised an insignificant amount of the consolidated revenue for the years ended December 31, 2024, 2023 and 2022. Our management evaluated and determined that no disaggregation of revenue is necessary or appropriate.
We believe Adjusted EBITDA and Adjusted EBITDA margin are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods.
We believe Adjusted EBITDA and Adjusted EBITDA margin are also helpful to investors, analysts and other interested parties because these measures can assist in providing a more consistent and comparable overview of our operations across our historical financial periods.
Concierge Facility In July 2020, we entered into a Revolving Credit and Security Agreement, or the Concierge Facility, with Barclays Bank PLC, as administrative agent, and the several lenders party thereto, which was subsequently amended on July 29, 2021, 47 Table of Contents August 5, 2022 and August 4, 2023.
Concierge Facility In July 2020, we entered into a Revolving Credit and Security Agreement, or the Concierge Facility, with Barclays Bank PLC, as administrative agent, and the several lenders party thereto, which was subsequently amended on July 29, 2021, August 5, 2022 and August 4, 2023.
Included in Commissions and other related expense were non-cash expenses related to stock-based compensation of $11.6 million for the year ended December 31, 2023 and $59.0 million for the year ended December 31, 2022. The decline in stock-based compensation expense in 2023 as compared to 2022 was due to the discontinuation of the Agent Equity Program in 2023.
Included in Commissions and other related expense were non-cash expenses related to stock-based compensation of $11.6 million for the year ended December 31, 2023. The decline in stock-based compensation expense in 2024 as compared to 2023 was due to the discontinuation of the Agent Equity Program in 2023.
Additionally, in the event that we fail to comply with certain financial covenants that require us to meet certain liquidity-based measures, the commitments under the Concierge Facility will automatically be reduced to zero and we will be required to repay any outstanding loans under the Concierge Facility.
Additionally, in the event that we fail to comply with certain financial covenants that require us to meet certain liquidity- 49 Table of Contents based measures, the commitments under the Concierge Facility will automatically be reduced to zero and we will be required to repay any outstanding loans under the Concierge Facility.
For additional information, see the section titled “—Liquidity and Capital Resources—Concierge Facility.” As of December 31, 2023, we had no outstanding borrowings under our Revolving Credit Facility and outstanding letters of credit totaled approximately $43.8 million.
For additional information, see the section titled “—Liquidity and Capital Resources—Concierge Facility.” As of December 31, 2024, we had no outstanding borrowings under our Revolving Credit Facility and outstanding letters of credit totaled approximately $53.8 million.
Pursuant to the Concierge Facility, the principal amount, if any, is payable in full in January 2026, unless earlier terminated or extended. As of December 31, 2023 and 2022, there were $24.8 million and $31.9 million, respectively, in borrowings outstanding under the Concierge Facility.
Pursuant to the Concierge Facility, the principal amount, if any, is payable in full in January 2026, unless earlier terminated or extended. As of December 31, 2024 and 2023, there were $23.6 million and $24.8 million, respectively, in borrowings outstanding under the Concierge Facility.
As of December 31, 2023, we were in compliance with the covenants under the Concierge Facility.
As of December 31, 2024, we were in compliance with the covenants under the Concierge Facility.
Adjusted EBITDA and Adjusted EBITDA margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry. 45 Table of Contents The following table provides a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA (in millions, except percentages): Year Ended December 31, 2023 2022 2021 Net loss attributable to Compass, Inc. $ (321.3) $ (601.5) $ (494.1) Adjusted to exclude the following: Depreciation and amortization 90.0 86.3 64.4 Investment income, net (8.5) (2.8) (0.1) Interest expense 10.8 3.6 2.4 Stock-based compensation 158.2 234.5 386.3 Benefit from income taxes (0.4) (0.9) (2.5) Restructuring costs 30.4 49.1 — Acquisition-related expenses (1) 1.9 11.2 23.9 Litigation charges (2) — 10.5 21.3 Adjusted EBITDA $ (38.9) $ (210.0) $ 1.6 Net loss attributable to Compass, Inc. margin (6.6) % (10.0) % (7.7) % Adjusted EBITDA margin (0.8) % (3.5) % — % (1) Includes adjustments related to the change in fair value of contingent consideration and adjustments related to acquisition consideration treated as compensation expense over the underlying retention periods.
Adjusted EBITDA and Adjusted EBITDA margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry. 47 Table of Contents The following table provides a reconciliation of Net loss attributable to Compass, Inc. to Adjusted EBITDA (in millions, except percentages): Year Ended December 31, 2024 2023 2022 Net loss attributable to Compass, Inc. $ (154.4) $ (321.3) $ (601.5) Adjusted to exclude the following: Depreciation and amortization 82.4 90.0 86.3 Investment income, net (6.8) (8.5) (2.8) Interest expense 6.4 10.8 3.6 Stock-based compensation 127.5 158.2 234.5 Benefit from income taxes (0.5) (0.4) (0.9) Restructuring costs 9.7 30.4 49.1 Acquisition-related expenses (1) 4.2 1.9 11.2 Litigation charges (2) 57.5 — 10.5 Adjusted EBITDA $ 126.0 $ (38.9) $ (210.0) Net loss attributable to Compass, Inc. margin (2.7) % (6.6) % (10.0) % Adjusted EBITDA margin 2.2 % (0.8) % (3.5) % (1) Includes adjustments related to the change in fair value of contingent consideration and adjustments related to acquisition consideration treated as compensation expense over the underlying retention periods.
In addition, borrowings under the Concierge Facility bear interest at the term SOFR rate plus a margin of 2.75%. The effective interest rate was 8.93% as of December 31, 2023. The principal amount, if any, is payable in full in January 2026, unless earlier terminated or extended.
In addition, borrowings under the Concierge Facility bear interest at the term SOFR rate plus a margin of 2.75%. The effective interest rate was 7.49% as of December 31, 2024. The principal amount, if any, is payable in full in January 2026, unless earlier terminated or extended.
Included in Operations and support expense were non-cash expenses related to stock-based compensation of $16.1 million for the year ended December 31, 2023 and $15.6 million for the year ended December 31, 2022, which remained relatively flat.
Included in Operations and support expense were non-cash expenses related to stock-based compensation of $16.5 million for the year ended December 31, 2024 and $16.1 million for the year ended December 31, 2023, which remained relatively flat.
See Note 11 to our consolidated financial statements included in the 2022 and 2021 Form 10-K for more information. Adjusted EBITDA was a loss of $38.9 million compared to a loss of $210.0 million during the years ended December 31, 2023 and 2022, respectively.
See Note 11 to the consolidated financial statements included in the 2022 Form 10-K for more information. Adjusted EBITDA was income of $126.0 million compared to a loss of $38.9 million during the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, there were $24.8 million in borrowings outstanding under the Concierge Facility. We are required to pay an annual commitment fee of 0.35% if the Concierge Facility is utilized greater than 50% and 0.50%, if the Concierge Facility is utilized less than 50%.
As of December 31, 2024, there were $23.6 million in borrowings outstanding under the Concierge Facility. We are required to pay an annual commitment fee of 0.35% if the Concierge Facility is utilized greater than 50% and 0.50%, if the Concierge Facility is utilized less than 50%.
The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility. 48 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 2021 (in millions) Net cash used in operating activities $ (25.9) $ (291.7) $ (28.6) Net cash used in investing activities (11.7) (100.1) (192.5) Net cash (used in) provided by financing activities (157.4) 135.4 399.3 Net (decrease) increase in cash and cash equivalents $ (195.0) $ (256.4) $ 178.2 Operating Activities For 2023, net cash used in operating activities was $25.9 million.
The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility. 50 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 2022 (in millions) Net cash provided by (used in) operating activities $ 121.5 $ (25.9) $ (291.7) Net cash used in investing activities (36.6) (11.7) (100.1) Net cash (used in) provided by financing activities (28.0) (157.4) 135.4 Net increase (decrease) in cash and cash equivalents $ 56.9 $ (195.0) $ (256.4) Operating Activities For 2024, net cash provided by operating activities was $121.5 million.
As of December 31, 2023, we had no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $43.8 million.
As of December 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $53.8 million.
While we continue to assess the effects of the current slowdown on our business and financial results, the ultimate impact will depend on future developments, which are highly uncertain and difficult to predict, as well as the actions that we have taken, or will take, to minimize any current and future impact.
While we continue to assess the effects of the ongoing slowdown and the recent industry-wide changes on our business and financial results, the ultimate impact will depend on future developments, which are highly uncertain and difficult to predict, as well as the actions that we have taken, or will take, to minimize any current and future impact on our revenue, profitability, or liquidity.
Investing Activities During 2023, net cash used by investing activities was $11.7 million, consisting of $11.2 million in capital expenditures and $1.2 million for investment in an unconsolidated entity, partially offset by $0.7 million in net cash acquired from acquisitions.
During 2023, net cash used by investing activities was $11.7 million, consisting of $11.2 million in capital expenditures and $1.2 million for investment in an unconsolidated entity, partially offset by $0.7 million in net cash acquired from acquisitions. 51 Table of Contents During 2022, net cash used by investing activities was $100.1 million, consisting of $70.1 million in capital expenditures, $15.0 million in payments for acquisitions, net of cash acquired, and $15.0 million for investment in an unconsolidated entity.
For the year ended December 31, 2023, our Gross Transaction Value represented 4.5% of residential real estate transacted in the United States, compared to 4.6% for the year ended December 31, 2022.
For the year ended December 31, 2024, our Gross Transaction Value represented 4.95% of residential real estate transacted in the United States, compared to 4.46% for the year ended December 31, 2023.
Operations and support Operations and support expense consists primarily of compensation and other personnel-related costs for employees supporting agents, third-party consulting and professional services costs, fair value adjustments to contingent consideration for our acquisitions and other acquisition related expenses.
Operations and support Operations and support expense consists primarily of compensation and other personnel-related costs for employees supporting agents, third-party consulting and professional services costs, fair value adjustments to contingent consideration for our acquisitions and other acquisition related expenses. We expect operations and support expense to vary from period-to-period as a percentage of revenue.
Depreciation and amortization Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Depreciation and amortization $ 90.0 $ 86.3 $ 3.7 4.3 % Percentage of revenue 1.8 % 1.4 % Depreciation and amortization expense increased by $3.7 million, or 4.3%, for 2023 compared to 2022.
Depreciation and amortization Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Depreciation and amortization $ 82.4 $ 90.0 $ (7.6) (8.4 %) Percentage of revenue 1.5 % 1.8 % Depreciation and amortization expense decreased by $7.6 million, or 8.4%, for 2024 compared to 2023.
Investment income, net Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Investment income, net $ 8.5 $ 2.8 $ 5.7 203.6 % During the year ended December 31, 2023, investment income was $8.5 million and during year ended December 31, 2022, investment income was $2.8 million.
Investment income, net Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Investment income, net $ 6.8 $ 8.5 $ (1.7) (20.0 %) During the year ended December 31, 2024, investment income was $6.8 million and during year ended December 31, 2023, investment income was $8.5 million.
Advertising expense primarily includes the cost of marketing activities such as print advertising, online advertising and promotional items, which are expensed as incurred. Compensation and other personnel-related costs include salaries, benefits, bonuses and stock-based compensation expense.
Advertising expense primarily includes the cost of marketing activities such as print advertising, online advertising and promotional items, which are expensed as incurred. Compensation and other personnel-related costs include salaries, benefits, bonuses and stock-based compensation expense. We expect sales and marketing expense to vary from period-to-period as a percentage of revenue.
Sales and marketing Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Sales and marketing $ 435.4 $ 575.1 $ (139.7) (24.3 %) Percentage of revenue 8.9 % 9.6 % Sales and marketing expense decreased by $139.7 million, or 24.3%, for 2023 compared to 2022.
Sales and marketing Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Sales and marketing $ 368.7 $ 435.4 $ (66.7) (15.3 %) Percentage of revenue 6.5 % 8.9 % Sales and marketing expense decreased by $66.7 million, or 15.3%, for 2024 compared to 2023.
Commissions and other related expense excluding such non-cash stock-based compensation expense was $3,995.4 million, or 81.8% of revenue for 2023 and $4,877.1 million, or 81.0% for 2022.
Commissions and other related expense excluding such non-cash stock-based compensation expense was $4,634.6 million, or 82.3% of revenue for 2024, and $3,995.4 million, or 81.8% for 2023.
General and administrative Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) General and administrative $ 125.7 $ 208.1 $ (82.4) (39.6 %) Percentage of revenue 2.6 % 3.5 % General and administrative expense decreased by $82.4 million, or 39.6%, for 2023 compared to 2022.
General and administrative Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) General and administrative $ 165.2 $ 125.7 $ 39.5 31.4 % Percentage of revenue 2.9 % 2.6 % General and administrative expense increased by $39.5 million, or 31.4%, for 2024 compared to 2023.
Equity in loss of unconsolidated entity Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Equity in loss of unconsolidated entity $ 3.3 $ 12.2 $ (8.9) (73.0 %) During the year ended December 31, 2023, equity in loss of unconsolidated entity was $3.3 million, and during the year ended December 31, 2022, equity in loss of unconsolidated entity was $12.2 million.
Equity in loss of unconsolidated entity Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Equity in loss of unconsolidated entity $ 0.6 $ 3.3 $ (2.7) (81.8 %) During the year ended December 31, 2024, equity in loss of unconsolidated entity was $0.6 million, and during the year ended December 31, 2023, equity in loss of unconsolidated entity was $3.3 million.
The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance, in part, our Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. The interest rate on the Concierge Facility was 8.93% as of December 31, 2023.
The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance a portion of our Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. The interest rate on the drawn down portion of the Concierge Facility was 7.49% as of December 31, 2024.
Sales and marketing expense excluding such non-cash stock-based compensation expense was $400.4 million, or 8.2% of revenue for 2023 and $533.1 million, or 8.9% for 2022, respectively.
Sales and marketing expense excluding such non-cash stock-based compensation expense was $337.2 million, or 6.0% of revenue for 2024, and $400.4 million, or 8.2% for 2023, respectively.
These tables identify how each of the Operating expenses related financial statement line items contained within the accompanying consolidated statements of operations elsewhere in this Annual Report are impacted by the items excluded from Adjusted EBITDA (in millions): Year Ended December 31, 2023 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 4,007.0 $ 435.4 $ 326.9 $ 184.5 $ 125.7 Adjusted to exclude the following: Stock-based compensation (11.6) (35.0) (16.1) (45.7) (49.8) Acquisition-related expenses — — (1.9) — — Non-GAAP Basis $ 3,995.4 $ 400.4 $ 308.9 $ 138.8 $ 75.9 46 Table of Contents Year Ended December 31, 2022 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 4,936.1 $ 575.1 $ 392.4 $ 360.3 $ 208.1 Adjusted to exclude the following: Stock-based compensation (59.0) (42.0) (15.6) (57.5) (60.4) Acquisition-related expenses — — (11.2) — — Litigation charge — — — — (10.5) Non-GAAP Basis $ 4,877.1 $ 533.1 $ 365.6 $ 302.8 $ 137.2 Year Ended December 31, 2021 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 5,310.5 $ 510.4 $ 374.9 $ 365.3 $ 288.5 Adjusted to exclude the following: Stock-based compensation (128.7) (38.4) (16.9) (92.7) (109.6) Acquisition-related expenses — — (23.9) — — Litigation charge — — — — (21.3) Non-GAAP Basis $ 5,181.8 $ 472.0 $ 334.1 $ 272.6 $ 157.6 LIQUIDITY AND CAPITAL RESOURCES Since inception, we have generated negative cash flows from operations and have primarily financed our operations from net proceeds from the sale of convertible preferred stock and common stock.
These tables identify how each of the Operating expenses related financial statement line items contained within the accompanying consolidated statements of operations elsewhere in this Annual Report are impacted by the items excluded from Adjusted EBITDA (in millions): Year Ended December 31, 2024 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 4,634.6 $ 368.7 $ 334.5 $ 188.8 $ 165.2 Adjusted to exclude the following: Stock-based compensation — (31.5) (16.5) (58.0) (21.5) Acquisition-related expenses — — (4.2) — — Litigation charge — — — — (57.5) Non-GAAP Basis $ 4,634.6 $ 337.2 $ 313.8 $ 130.8 $ 86.2 48 Table of Contents Year Ended December 31, 2023 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 4,007.0 $ 435.4 $ 326.9 $ 184.5 $ 125.7 Adjusted to exclude the following: Stock-based compensation (11.6) (35.0) (16.1) (45.7) (49.8) Acquisition-related expenses — — (1.9) — — Non-GAAP Basis $ 3,995.4 $ 400.4 $ 308.9 $ 138.8 $ 75.9 Year Ended December 31, 2022 Commissions and other related expense Sales and marketing Operations and support Research and development General and administrative GAAP Basis $ 4,936.1 $ 575.1 $ 392.4 $ 360.3 $ 208.1 Adjusted to exclude the following: Stock-based compensation (59.0) (42.0) (15.6) (57.5) (60.4) Acquisition-related expenses — — (11.2) — — Litigation charge — — — — (10.5) Non-GAAP Basis $ 4,877.1 $ 533.1 $ 365.6 $ 302.8 $ 137.2 LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity and capital resources are cash flows from operations and the net proceeds from the sale of common stock in connection with our initial public offering.
Investment Income, net Investment income, net consists primarily of interest, dividends and realized gains and losses earned on our cash and cash equivalents. Interest Expense Interest expense consists primarily of expense related to the interest expenses, including commitment fees for available borrowing capacities, and amortization of debt issuance costs associated with our Concierge Facility and Revolving Credit Facility.
Interest Expense Interest expense consists primarily of expense related to the interest expenses, including commitment fees for available borrowing capacities, and amortization of debt issuance costs associated with our Concierge Facility and Revolving Credit Facility.
Research and development expense excluding such non-cash stock-based compensation expense was $138.8 million, or 2.8% of revenue for 2023 and $302.8 million, or 5.0% for 2022.
Research and development expense excluding non-cash stock-based compensation expense was $130.8 million, or 2.3% of revenue for 2024, and $138.8 million, or 2.8% for 2023.
Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as seasonality and macroeconomic factors. Our Gross Transaction Value for the year ended December 31, 2023 was $186.1 billion, a decrease of 19.2% from the year ended December 31, 2022.
Gross Transaction Value is primarily driven by home values in the markets we serve and by changes in the number of our agents in those markets, as well as seasonality and macroeconomic factors. Our Gross Transaction Value for the year ended December 31, 2024 was $216.8 billion, an increase of 16.5% from the year ended December 31, 2023.
The Agent Equity Program offered affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs.
In addition to the issuance of RSUs to agents as equity compensation for the provision of services, we previously offered RSUs to affiliated agents through the Agent Equity Program. The Agent Equity Program offered affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs.
During the periods presented, other items included (i) restructuring charges associated with lease termination and severance costs, (ii) acquisition-related expenses related to adjustments to the fair value of contingent consideration and acquisition consideration treated as compensation expense over underlying retention periods and (iii) litigation charge in connection with the Litigation Matter.
During the periods presented, other items included (i) restructuring charges associated with lease termination and severance costs, (ii) acquisition-related expenses related to adjustments to the fair value of contingent consideration and other forms of acquisition consideration and (iii) litigation charges in connection with the Antitrust Lawsuits and the Realogy Holdings Corp. matter.
Research and development Research and development expense consists primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, data licenses and other related expenses.
Research and development Research and development expense consists primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, data licenses and other related expenses. We expect that our research and development expense will vary from period-to-period as a percentage of revenue.
Research and development Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Research and development $ 184.5 $ 360.3 $ (175.8) (48.8 %) Percentage of revenue 3.8 % 6.0 % Research and development expense decreased by $175.8 million, or 48.8%, for 2023 compared to 2022.
Research and development Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Research and development $ 188.8 $ 184.5 $ 4.3 2.3 % Percentage of revenue 3.4 % 3.8 % Research and development expense increased by $4.3 million, or 2.3%, for 2024 compared to 2023.
We concluded that our brokerage revenue contains a single performance obligation that is satisfied upon the closing of a real estate services transaction, at which point the entire transaction price is earned.
As principal, we recognize revenue in the gross amount of consideration to which we receive in exchange for those services. We concluded that our brokerage revenue contains a single performance obligation that is satisfied upon the closing of a real estate services transaction, at which point the entire transaction price is earned.
K EY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES In addition to the measures presented in our consolidated financial statements, we use the following key business metrics and non-GAAP financial measures to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.
These losses are from our mortgage joint venture with Guaranteed Rate, Inc. KEY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES In addition to the measures presented in our consolidated financial statements, we use the following key business metrics and non-GAAP financial measures to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.
Operating Expenses Commissions and other related expense Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Commissions and other related expense $ 4,007.0 $ 4,936.1 $ (929.1) (18.8 %) Percentage of revenue 82.0 % 82.0 % Commissions and other related expense decreased by $929.1 million, or 18.8%, for 2023 compared to 2022.
Operating Expenses Commissions and other related expense Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Commissions and other related expense $ 4,634.6 $ 4,007.0 $ 627.6 15.7 % Percentage of revenue 82.3 % 82.0 % Commissions and other related expense increased by $627.6 million, or 15.7%, for 2024 compared to 2023.
A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform. For the years ended December 31, 2023, 2022 and 2021, the Average Number of Principal Agents 1,2 was 13,973, 13,296 and 11,180, respectively.
A subset of our agents are considered principal agents, which we define as either agents who are leaders of their respective agent teams or individual agents operating independently on our platform. 38 Table of Contents As of December 31, 2024, 2023 and 2022, the Number of Principal Agents 1,2,3 was 17,752, 14,683 and 13,649, respectively.
Average Number of Principal Agents The Average Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform during a given period.
The period-over-period increase was primarily driven by the increase in the number of agents on our platform. Number of Principal Agents The Number of Principal Agents represents the number of agents who are leaders of their respective agent teams or individual agents operating independently on our platform.
Gross Transaction Value is the sum of all closing sale prices for homes transacted by agents on our platform. We include the value of a single transaction twice when our agents serve both the home buyer and home seller in the transaction. This metric excludes rental transactions.
We include the value of a single transaction twice when our agents serve both the home buyer and home seller in the transaction. This metric excludes rental transactions.
We hold the real estate brokerage license that is necessary under relevant state laws and regulations to provide brokerage services and therefore controls those services that are necessary to legally transfer real estate between home sellers and buyers. Although our agents are independent contractors, they cannot execute a real estate transaction without a brokerage license, which the Company possesses.
We hold the real estate brokerage license that is necessary under relevant state laws and regulations to provide brokerage services and therefore we control those services that are necessary to legally transfer real estate between home sellers and buyers.
Year Ended December 31, 2023 2022 2021 Total Transactions 178,848 211,538 225,272 Gross Transaction Value (in billions) $ 186.1 $ 230.3 $ 254.2 Average Number of Principal Agents (1) 13,973 13,296 11,180 Net loss attributable to Compass, Inc.
Year Ended December 31, 2024 2023 2022 Total Transactions 205,122 178,848 211,538 Gross Transaction Value (in billions) $ 216.8 $ 186.1 $ 230.3 Number of Principal Agents (1)(2) 17,752 14,683 13,649 Net loss attributable to Compass, Inc.
Due to this change, these state taxes will now be included in the Income tax benefit line of our consolidated statements of operations.
These state taxes are now included in the Benefit from income taxes line of our consolidated statements of operations.
Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. We recognize forfeitures as they occur.
Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements. We recognize forfeitures as they occur. We issue RSUs to employees, and to affiliated agents and in certain cases in connection with business combinations.
Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $35.0 million for the year ended December 31, 2023 and $42.0 million for the year ended December 31, 2022. The decrease in stock-based compensation expense for 2023 as compared to 2022 was due to lower headcount resulting from the aforementioned workforce reductions.
Included in Sales and marketing expense were non-cash expenses related to stock-based compensation of $31.5 million for the year ended December 31, 2024 and $35.0 million for the year ended December 31, 2023. The decrease in stock-based compensation expense for 2024 as compared to 2023 was primarily due to the Company ceasing to offer share-based awards as incentives for agents.
Interest expense Year Ended December 31, 2023 2022 $ Change % Change (in millions, except percentages) Interest expense $ 10.8 $ 3.6 $ 7.2 200.0 % 43 Table of Contents Interest expense increased by $7.2 million, or 200.0%, for 2023 compared to 2022.
Interest expense Year Ended December 31, 2024 2023 $ Change % Change (in millions, except percentages) Interest expense $ 6.4 $ 10.8 $ (4.4) (40.7 %) Interest expense decreased by $4.4 million, or 40.7%, for 2024 compared to 2023.
We expect that our research and development expense will vary from period-to-period as a percentage of revenue for the foreseeable future and decrease as a percentage of revenue. 38 Table of Contents General and administrative General and administrative expense consists primarily of compensation and other personnel-related costs for our executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for our New York headquarters and other offices supporting our administrative functions, professional services fees for legal and finance, insurance expenses and talent acquisition expenses.
General and administrative General and administrative expense primarily consists of compensation costs for executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for our New York headquarters and other offices supporting administrative functions, litigation charges, professional services fees, insurance expenses and talent acquisition expenses.
Restructuring Costs Restructuring costs consists primarily of severance and other termination benefits for employees whose roles are being eliminated, lease terminations costs as a result of the accelerated amortization of various right-of-use assets and other restructuring costs, including those costs related to the wind-down of Modus.
Restructuring Costs Restructuring costs consists primarily of severance and other termination benefits for employees whose roles are being eliminated, lease terminations costs as a result of the accelerated amortization of various right-of-use assets and other restructuring costs. 40 Table of Contents Depreciation and amortization Depreciation and amortization expense consists primarily of depreciation and amortization of our property and equipment, capitalized software and acquired intangible assets.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2023: Payments Due by Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years (in millions) Operating lease obligations (1) $ 589.2 $ 121.2 $ 200.0 $ 148.0 $ 120.0 Other acquisition related compensation 2.9 1.0 1.3 0.6 — Estimated undiscounted contingent consideration payments 31.8 4.5 4.6 14.6 8.1 Acquisition related payables 1.1 0.7 0.4 — — Purchase obligations 88.0 48.5 39.1 0.4 — Total $ 713.0 $ 175.9 $ 245.4 $ 163.6 $ 128.1 __________ (1) As of December 31, 2023, the Company has additional operating leases for real estate that have not yet commenced of $10.0 million payable through 2033, which have been excluded from above.
Contractual Obligations and Commitments The following table summarizes our contractual obligations and commitments as of December 31, 2024: Payments Due by Period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years (in millions) Operating lease obligations (1) $ 560.9 $ 117.7 $ 197.1 $ 145.0 $ 101.1 Estimated undiscounted contingent consideration payments 35.4 3.3 20.4 7.9 3.8 Acquisition related payables 3.0 3.0 — — — Purchase obligations 70.2 36.9 26.3 7.0 — Total $ 669.5 $ 160.9 $ 243.8 $ 159.9 $ 104.9 _________ (1) As of December 31, 2024, we have additional operating leases for real estate that have not yet commenced of $15.3 million payable through 2035, which have been excluded from above.
Investment income, net increased during the year ended December 31, 2023 as a result of increased average interest rates on our short-term interest-bearing investments.
Investment income, net decreased during the year ended December 31, 2024 as a result of the Company holding less short-term interest-bearing investments throughout the year.
As a percentage of revenue, Operations and support expense, excluding such non-cash stock-based compensation expense, was relatively flat when compared to 2022.
The decrease of Operations and support expense, excluding such non-cash stock-based compensation expense, as a percentage of revenue was primarily related to the increase in revenue compared to the prior year period.
We attract agents to our brokerage and partner with them as independent contractors that affiliate their real estate licenses with us, operating their businesses on our platform and under our brand. We currently generate substantially all of our revenue from commissions paid to us by our agents' clients at the time that a home is transacted on our platform.
We attract agents to our brokerage and partner with them as independent contractors that affiliate their real estate licenses with us, operating their businesses on the Compass platform and under our brand.
A thorough understanding of our critical accounting policies is essential when reviewing our consolidated financial statements. We believe that the critical accounting policies listed below are the most difficult management decisions as they involve the use of significant estimates and assumptions as described above.
We believe that the critical accounting policies listed below are the most difficult management decisions as they involve the use of significant estimates and assumptions as described above. See Note 2 - " Summary of Significant Accounting Policies" to our consolidated financial statements included elsewhere in this Annual Report for more information.
(in millions) $ (321.3) $ (601.5) $ (494.1) Net loss attributable to Compass, Inc. margin (6.6) % (10.0) % (7.7) % Adjusted EBITDA (2) (in millions) $ (38.9) $ (210.0) $ 1.6 Adjusted EBITDA margin (2) (0.8) % (3.5) % — % (1) During the first quarter of 2023, the Company began to utilize an updated methodology for tracking and reporting its agent statistics.
(in millions) $ (154.4) $ (321.3) $ (601.5) Net loss attributable to Compass, Inc. margin (2.7) % (6.6) % (10.0) % Adjusted EBITDA (3) (in millions) $ 126.0 $ (38.9) $ (210.0) Adjusted EBITDA margin (3) 2.2 % (0.8) % (3.5) % (1) During the year ended December 31, 2024, the Company began to report its agent statistics as of the period end.
Restructuring costs during the year ended December 31, 2022 primarily consisted of costs associated with workforce reduction actions and the wind-down of Modus. See Note 17 - "Restructuring Activities" in our consolidated financial statements included elsewhere in this Annual Report, for information.
Restructuring costs during the year ended December 31, 2023 primarily consisted of lease terminations costs and severance and other termination benefits for employees whose roles were eliminated. See Note 17 - "Restructuring Activities" in our consolidated financial statements included elsewhere in this Annual Report, for information.
In addition, during the year ended December 31, 2023, General and administrative expense includes a benefit of $7.2 million for tax refunds resulting from a change in 42 Table of Contents estimates for certain state taxes paid in prior years.
The increase in absolute dollars excluding such non-cash stock-based compensation expense and the litigation charge, was primarily due to the fact that during the year ended December 31, 2023, General and administrative expense included a benefit of $7.2 million for tax refunds resulting from a change in estimates for certain state taxes paid in prior years.
During 2021, net cash provided by financing activities was $399.3 million, primarily consisting of $439.6 million in net proceeds from the issuance of common stock upon initial public offering, $26.9 million in proceeds from the exercise and early exercise of stock options and $7.8 million in proceeds from drawdowns on the Concierge Facility, partially offset by $62.4 million in taxes paid related to net share settlement of equity awards, $10.7 million in payments of contingent consideration related to acquisitions and $1.9 million in paid deferred debt issuance costs for credit facilities.
Financing Activities During 2024, net cash used in financing activities was $28.0 million, primarily consisting of $35.0 million in taxes paid related to net share settlement of equity awards, $3.4 million in payments related to acquisitions, including payments of contingent consideration, and $1.2 million in net payments on drawdowns and repayments on the Concierge Facility, partially offset by $9.5 million in proceeds from the exercise of stock options and $2.2 million in proceeds from the issuance of common stock under the Employee Stock Purchase Plan.
The principal agent additions came in both new and existing markets. During the years ended December 31, 2023, 2022 and 2021, our agents closed 178,848, 211,538 and 225,272 Total Transactions 1 , respectively. The decline was primarily driven by the macroeconomic conditions that contributed to the slowdown in the U.S. residential real estate market.
The principal agent additions came in both new and existing markets. During the years ended December 31, 2024, 2023 and 2022, our agents closed 205,122, 178,848 and 211,538 Total Transactions 1 , respectively.
Operating Expenses Commissions and other related expense Commissions and other related expense primarily consists of commissions paid to our agents, who are independent contractors, upon the closing of a real estate transaction as well as stock-based compensation expense related to our Agent Equity Program, which was discontinued following the completion of the 2022 Agent Equity Program, and fees paid to external brokerages for client referrals, which are recognized and paid upon the closing of a real estate transaction.
These agents operate with a flat fee / transaction fee based model, which is different from the Company's standard commission model. 39 Table of Contents Operating Expenses Commissions and other related expense Commissions and other related expense primarily consists of commissions paid to our agents, who are independent contractors, upon the closing of a real estate transaction and fees paid to external brokerages for client referrals, which are recognized and paid upon the closing of a real estate transaction.
Operations and support expense excluding such non-cash stock-based compensation expense was $310.8 million, or 6.4% of revenue for 2023 and $376.8 million, or 6.3% for 2022. The decrease in absolute dollars, excluding such non-cash stock-based compensation expense, was primarily driven by a decrease in compensation and other personnel-related costs due to decreased headcount.
Operations and support expense excluding such non-cash stock-based compensation expense was $318.0 million, or 5.6% of revenue for 2024, and $310.8 million, or 6.4% for 2023. The increase in absolute dollars, excluding such non-cash stock-based compensation expense, was primarily driven by an increase in personnel costs resulting from the Company's recent 43 Table of Contents acquisitions.
Benefit from Income Taxes Benefit from income taxes consists of a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions. The benefit from income taxes is reduced by current taxes in India that are not offset with future alternative minimum tax credits, and state income tax expense.
Benefit from Income Taxes Benefit from income taxes consists of a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions netted with the recognition of deferred tax assets in India. Additionally, the Company incurred current income tax expense from states and its operations in India.
Included in Research and development expense were non-cash expenses related to stock-based compensation of $45.7 million for the year ended December 31, 2023 and $57.5 million for the year ended December 31, 2022. The decrease in stock-based compensation expense for 2023 as compared to 2022 was primarily driven by workforce reductions taken in connection with our restructuring activities.
Included in Research and development expense were non-cash expenses related to stock-based compensation of $58.0 million for the year ended December 31, 2024 and $45.7 million for the year ended December 31, 2023.
Depreciation and amortization Depreciation and amortization expense consists primarily of depreciation and amortization of our property and equipment, capitalized software and acquired intangible assets. We expect depreciation and amortization expense will vary from period-to-period as a percentage of revenue for the foreseeable future.
We expect depreciation and amortization expense will vary from period-to-period as a percentage of revenue for the foreseeable future. Investment Income, net Investment income, net consists primarily of interest, dividends and realized gains and losses earned on our cash and cash equivalents.
This value proposition allows us to recruit more agents, help them grow their business and retain them on our platform at industry leading retention rates. We had over 29,000 agents on our platform as of December 31, 2023.
We invest in our proprietary, integrated platform designed for real estate agents, to enable them to grow their business and save them time and money. This value proposition allows us to recruit more agents, help them grow their business and retain them on our platform at industry leading retention rates.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur market risk exposure is primarily a result of exposure resulting from potential changes in interest rates or inflation. 52 Table of Contents Interest Rate Risk Our cash and cash equivalents as of December 31, 2023 consisted of $166.9 million. Certain of our cash and cash equivalents are interest-earning instruments that carry a degree of interest rate risk.
Biggest changeInterest Rate Risk Our cash and cash equivalents as of December 31, 2024 consisted of $223.8 million. Certain of our cash and cash equivalents are interest-earning instruments that carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation.
As of December 31, 2023, we had a total outstanding balance of $24.8 million under the Concierge Facility. Our Revolving Credit Facility bears interest equal to SOFR plus a margin of 1.50%. As of December 31, 2023, we had no borrowings outstanding under the Revolving Credit Facility.
As of December 31, 2024, we had a total outstanding balance of $23.6 million under the Concierge Facility. Our Revolving Credit Facility bears interest equal to SOFR plus a margin of 1.50%. As of December 31, 2024, we had no borrowings outstanding under the Revolving Credit Facility.
The goals of our investment policy are liquidity and capital preservation. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Market risk represents the risk of loss that may impact our financial position because of adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of exposure resulting from potential changes in interest rates or inflation.
Foreign Currency Exchange Risk As our operations in India have been limited and we do not maintain a significant balance of foreign currency, we do not currently face significant risk with respect to foreign currency exchange rates. 53 Table of Contents
Based on the amounts outstanding, a 100-basis point increase or decrease in market interest rates over a twelve-month period would not result in a material change to our interest expense. 54 Table of Contents Foreign Currency Exchange Risk As our operations in India have been limited and we do not maintain a significant balance of foreign currency, we do not currently face significant risk with respect to foreign currency exchange rates. 55 Table of Contents
Removed
Based on the amounts outstanding, a 100-basis point increase or decrease in market interest rates over a twelve-month period would not result in a material change to our interest expense.

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