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The call communicated strong operational and financial momentum from the Anywhere acquisition: pro forma revenue growth (+7% YoY), record Q1 adjusted EBITDA ($61M, +280% YoY), accelerated and increased cost-synergy targets with >$250M already actioned, robust franchise and integrated services growth, and productive strategic partnerships (Rocket/Redfin). At the same time, Q1 results reflect meaningful one-time and integration-related costs (transaction/integration expenses of $183M, elevated OpEx and noncash D&A), negative free cash flow in the quarter (–$168M), and several nonrecurring accounting benefits (e.g., $401M deferred tax benefit) that temper GAAP comparability. Management provided constructive forward guidance (Q2 revenue $4.0B–$4.2B, adjusted EBITDA $310M–$350M), expects FCF positivity in H2 and prioritized deleveraging, but execution risk remains around synergy realization timing, legal/settlement cash outflows, and integration complexity. Overall the positives—accelerated synergies, revenue and EBITDA beats, and strategic partnerships—outweigh the near-term integration and cash-flow headwinds.
Management guided Q2 consolidated revenue of $4.0–$4.2 billion and consolidated adjusted EBITDA of $310–$350 million, with a Q2 weighted average share count of 755–760 million; for the full year they expect non‑GAAP operating expenses of $2.7–$2.75 billion (including 3–4% OpEx inflation and roughly $130 million of P&L synergies). They reiterated updated cost‑synergy targets of $300 million actioned by the end of year 1 and $500 million net over 3 years (approximately $420M P&L / $80M CapEx), noted they have actioned >$250 million as of April 1, and raised 2026 in‑year realized synergies from ~ $100M to ~$200M (about $130M P&L and $70M CapEx) with roughly $10M of P&L synergies realized in Q1. They reported Q1 free cash flow was negative $168 million but expect to be free‑cash‑flow positive for the balance of the year (Q2 may be near breakeven or slightly negative with strong FCF expected in Q3–Q4), ended Q1 with $484 million cash and no revolver borrowings, and presented scenario analyses showing adjusted EBITDA / unlevered free cash flow of roughly $1.0B / $750M at 4.1M home sales; $1.5B / $1.0B at 4.8M; $2.0B / $1.5B at 5.5M; and $2.5B / ~$2.0B at 6.0M.
Increased year-1 cost synergy target from $250M to $300M and 3-year net cost synergy target from $400M to $500M (expected $420M P&L, $80M CapEx). Over $250M of cost synergies actioned as of April 1 (82 days post-close). 2026 in-year realized cost synergies guidance increased from ~$100M to ~$200M (now expecting ~$130M P&L/OpEx and ~$70M CapEx).
Q1 pro forma revenue $2.76B, up 7% year-over-year. Adjusted EBITDA was $61M (record for any Q1), exceeding guidance high end and up 280% from $16M a year ago.
Pro forma brokerage transactions up 2.6% YoY while the market was flat; pro forma brokerage GTV up 7.3% YoY vs. market up 1.5%. This marks 20 consecutive quarters of organic outperformance.
Pro forma franchise GTV +4.6% YoY (vs. housing market +1.5%). Pro forma integrated services revenue +11% YoY, driven primarily by title & escrow; refinance transactions +100% YoY and purchase transactions +4% YoY (market purchase +0.2%).
Notable luxury sales (Sotheby's $350M world record; Coldwell Banker $170M Miami‑Dade record). Corcoran Sunshine $1.5B new-development contracts (strongest in 10+ years). Multiple brands executed largest franchise/M&A transactions in years; Christie's IRE added 8 franchises in the quarter.
Rocket and Redfin partnerships embedded: compass.com fastest-growing real estate website in Q1 with +38% YoY monthly average users; ~3,000 buyer inquiries sent to listing agents from Compass 'coming soon' on Redfin to date; minimum 1.2M leads from Rocket/Redfin over next 3 years with 24,000+ leads already delivered.
AI training initiatives freed an estimated $2M of resources in Q1 and identified potential annualized efficiencies of ~$23M. Estimated 30–40% of new code is produced by AI, accelerating product development velocity by ~20%. Data consolidation underway (6,000 legacy reports reduced to target ~100 high-fidelity reports).
Ended Q1 with $484M cash (increase of $285M YTD), $880M net proceeds from convertible debt. No outstanding revolver borrowings at quarter end and remain compliant with leverage covenant. S&P initiated B+ and Moody's B2 corporate ratings, each with positive outlooks; bond ratings upgraded 2–3 notches.
Ladies and gentlemen, thank you for joining us, and welcome to Compass, Inc. 2026 Q1 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soham Bhonsle, Head of Investor Relations. Please go ahead.
Thank you very much, operator, and good afternoon, everybody, and thank you for joining the Compass First Quarter 2026 Earnings Call. Joining us today will be Robert Reffkin, our Founder and CEO; and Scott Wahlers, our Chief Financial Officer. In discussing our company's performance, we will refer to some non-GAAP measures. You can find a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our first quarter 2026 earnings release posted on our Investor Relations website. Additionally, note that since the financial results from the Anywhere transaction are not included in the prior year period or the first 8 days of Q1 2026, the current year and prior year results are not comparable. We have provided supplemental information included in the Form 8-K filed today that presents our revenue and commissions expenses and key business metrics on a pro forma basis as though the businesses were combined from the beginning of 2025. We believe this additional information will be useful to investors to assist in comparing the periods prior and subsequent to the closing of the Anywhere transaction. We will also be making forward-looking statements that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties.
These statements include our guidance for the second quarter of 2026 and full...