Q2 2026 Compass Inc Earnings Call

August 4, 2026

Speaker #1: Good day, everyone. Welcome to the Compass, Inc., 2026 Q2 earnings call conference call. All participants will be in the listen-only mode until the question-and-answer session begins.

Operator: Good day, everyone. Welcome to the Compass Incorporated 2026 Q2 Earnings Call conference call. All participants will be in the listen-only mode until the question and answer session begins. Following the presentation, we will conduct a question and answer session. This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn our call over to Soham Bhonsle, Head of Investor Relations. Please go ahead.

Speaker #1: Following the presentation, we will conduct a question-and-answer session. This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn our call over to Soham Bhonsle, Head of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you very much, operator, and good afternoon, everybody. And thank you for joining the Compass Q2 2026 earnings call. Joining us today will be Robert Reffkin, our founder and CEO, and Scott Wahlers, our Chief Financial Officer.

Soham Bhonsle: Thank you very much, operator, good afternoon, everybody, and thank you for joining the Compass Q2 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 and discuss some metrics on a non-GAAP pro forma basis. You can find the reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and supplemental non-GAAP pro forma information for prior quarters in our Q2 2026 earnings release posted on our investor relations website. We will also make forward-looking statements that are based on our current expectations, forecasts, and assumptions and involve risks and uncertainties. These statements include our guidance for the Q3 2026 and full year 2026, and comments related to our expectations for realizing cost synergies and operational achievements.

Speaker #2: In discussing our company's performance, we will refer to some non-GAAP measures and discuss some metrics on a non-GAAP performer basis. You can find the reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and supplemental non-GAAP pro forma information for prior quarters in our Q2 2026 earnings release posted on our investor relations website.

Speaker #2: We will also make forward-looking statements that are based on our current expectations forecasts and assumptions and involve risks and uncertainties. These statements include our guidance for the third quarter of 2026 and full year 2026, and comments related to our expectations for realizing cost synergies and operational achievements.

Speaker #2: Our actual results may differ materially from these statements. For more information, see our most recent annual report on Form 10-K and our recent Form 10-Q.

Soham Bhonsle: Our actual results may differ materially from these statements. For more information, see our most recent annual report on Form 10-K and our recent Form 10-Q. You should not place undue reliance on any forward-looking statements. I will now turn the call over to Robert Reffkin. Robert.

Speaker #2: You should not place undue reliance on any. Forward-looking statements. I will now turn the call over to Robert Reffkin, Robert.

Speaker #3: Good afternoon, and thank you for joining us for our Q2 conference call. On today's call, I will be discussing five topics. First, I will provide a quick recap of our record Q2 results. Second, I will share an update on our cost synergy targets and our technology rollout. Next, I'll touch on our partnership with Rocket Redfin, and how we are infusing competition in residential real estate. Fourth, I'll discuss how we are moving on the offense with AI. And finally, I'll end by revisiting the long-term earnings potential of our business.

Robert Reffkin: Good afternoon, and thank you for joining us for our Q2 conference call. On today's call, I will be discussing five topics. First, I will provide a quick recap of our record Q2 results. Second, I will share an update on our cost synergy targets and our technology rollout. Next, I'll touch on our partnership with Rocket Redfin, and how we are infusing competition in residential real estate. Fourth, I'll discuss how we are moving on the offense with AI. I'll end by revisiting the long-term earnings potential of our business. Starting with our record Q2 results, where all my year-over-year and quarter-over-quarter comments will be against pro forma figures. In Q2, Compass delivered record revenue and record adjusted EBITDA above the high end of our guide.

Speaker #3: Starting with our record Q2 results, we're all my year-over-year and quarter-over-quarter comments will be against pro forma figures. In Q2, Compass delivered record revenue and record-adjusted EBITDA above the high end of our guide.

Speaker #3: Revenue of $4.3 billion was up 14% year over year, compared to pro forma revenue of $3.8 billion a year ago, while adjusted EBITDA was $363 million.

Robert Reffkin: Revenue of $4.3 billion was up 14% year over year compared to pro forma revenue of $3.8 billion a year ago, while adjusted EBITDA was $363 million. Cash on hand increased by $210 million quarter over quarter to $694 million, which drove net debt to adjusted EBITDA on a trailing 12-month and pro forma basis to 3.3 times, compared to the 4.2 times in Q1 of 2026. This means over the past quarter, we have already lowered our net leverage ratio by roughly one turn.

Speaker #3: Cash on hand increased by $210 million quarter over quarter to $694 million, which drove net debt to adjusted EBITDA on a trailing 12-month and pro forma basis to $3.3 times compared to the $4.2 times in Q1 of 2026.

Speaker #3: So this means over the past quarter, we have already lowered our net leverage ratio by roughly one turn. Assuming current 2026 consensus adjusted EBITDA estimates, in our Q2 ending cash balance of $694 million, which would be conservative as we expect to generate free cash flow in the second half of the year, our net debt to adjusted EBITDA ratio would move into the twos by the end of the year, illustrating the progress we continue to make on reducing our net leverage ratio, even as we are at the bottom of the cycle.

Robert Reffkin: Assuming current 2026 consensus adjusted EBITDA estimates and our Q2 ending cash balance of $694 million, which would be conservative as we expect to generate free cash flow in H2 of the year, our net debt to adjusted EBITDA ratio would move into the twos by the end of the year, illustrating the progress we continue to make on reducing our net leverage ratio, even as we are at the bottom of the cycle. In our brokerage business, which includes the Coldwell Banker, Compass, The Corcoran Group, and Sotheby's International Realty brands, transactions were up 7.4% year over year compared to the market, which was up 3.5% year over year. As a result, for 21 consecutive quarters spanning our entire history as a public company, our brokerage business has outperformed the market on an organic basis for the Compass standalone brand.

Speaker #3: In our brokerage business, which includes the Caldwell Banker, Compass, Corcoran, and Sotheby's International Realty brands, transactions were up 7.4% year over year, compared to the market, which was up 3.5% year over year.

Speaker #3: As a result, for 21 consecutive quarters—spanning our entire history as a public company—our brokerage business has outperformed the market on an organic basis for the Compass standalone brand.

Speaker #3: And for the second consecutive quarter, including the anywhere transaction, we have now outperformed the market as well. Additionally, brokerage gross transaction volumes or GTV was up approximately 16% year over year, compared to the market that was up 6%.

Robert Reffkin: For the second consecutive quarter, including the Anywhere transaction, we have now outperformed the market as well. Additionally, brokerage gross transaction volumes, or GTV, was up approximately 16% year over year compared to the market that was up 6%. This reflects roughly 1,000 basis points of outperformance compared to the market. Which is an acceleration compared to the roughly 600 basis points of outperformance we delivered in Q1 2026. We believe this outperformance is a reflection of the quality of our agents and exposure to the higher end of the market, which tends to be less rate sensitive. We believe the wealth effect created by a record stock market and a growing US economy has been a driver of demand for our business and is helping offset the rise in interest rates.

Speaker #3: This reflects roughly 1,000 basis points of outperformance, compared to the market, which is an acceleration compared to the roughly 600 basis points of outperformance we delivered in Q1 2026.

Speaker #3: We believe this outperformance is a reflection of the quality of our agents and exposure to the higher end of the market, which tends to be less rate sensitive.

Speaker #3: We believe the wealth effect created by a record stock market and a growing U.S. economy has been a driver of demand for our business and is helping offset the rise in interest rates.

Speaker #3: Recently, there has been much discussion regarding the Bay Area real estate boom. Driven by the SpaceX IPO, the upcoming SpaceX lockup, and the potential IPOs for Anthropic and OpenAI, so we thought it would be helpful to provide some color on what we are seeing there, given our presence in that market.

Robert Reffkin: Recently, there has been much discussion regarding the Bay Area real estate boom driven by the SpaceX IPO, the upcoming SpaceX lockup, and the potential IPOs for Anthropic and OpenAI. We thought it would be helpful to provide some color on what we are seeing there, given our presence in that market. On a year-over-year basis in the Compass standalone brand, we are seeing revenue in the Bay Area up 19% year-over-year in both July and August on a business day adjusted basis. Which is relatively consistent to the up 20% we observed in June. This suggests the momentum coming out of June in the Bay Area is continuing. In franchise, GTV was up 11.7% year-over-year compared to the housing market volumes that were up 6%, reflecting 570 basis points of outperformance.

Speaker #3: On a year-over-year basis, in the Compass standalone brand, we are seeing revenue in the Bay Area up 19% year over year, in both July and August, on a business day adjusted basis.

Speaker #3: Which is relatively consistent with the up 20% we observed in June. This suggests the momentum coming out of June in the Bay Area is continuing.

Speaker #3: In franchise, GTV was up 11.7% year over year, compared to the housing market volumes that were up 6%, reflecting 570 basis points of outperformance.

Speaker #3: Our high-end brands, including the Corcoran and Sotheby's International Realty brands, continue to significantly outperform the company average. Integrated services revenue grew 7.7% year over year, with title and escrow revenue being the primary driver.

Robert Reffkin: Our high-end brands, including The Corcoran Group and Sotheby's International Realty brands, continue to significantly outperform the company average. Integrated services revenue grew 7.7% year-over-year, with title and escrow revenue being the primary driver. Total T&E transactions grew by 7.6% year-over-year, with purchase transactions growing by 6% and refi transactions growing by 25% year-over-year. Our focus in 2026 into 2027 is to unify our T&E operations by migrating all T&E operations to the Compass title production platform. Transitioning to one title production platform is expected to unlock additional efficiencies and expand incremental margins in the future. While we are making this transition, however, we will continue to optimize our attach efforts by scaling best practices from both organizations, and expect our attach efforts to accelerate in 2027 as we deploy tools such as OneClick Title across our footprint.

Speaker #3: Total T&E transactions grew by 7.6% year over year, with purchase transactions growing by 6% and refi transactions growing by 25% year over year. Our focus in 2026 into 2027 is to unify our T&E operations by migrating all T&E operations to the Compass's title production platform.

Speaker #3: Transitioning to one title production platform is expected to unlock additional efficiencies and expand incremental margins in the future. While we are making this transition, however, we will continue to optimize our attached efforts by scaling best practices from both organizations.

Speaker #3: And expect our attached efforts to accelerate in 2027 as we deploy tools such as one-click title, across our footprint. In mortgage, our JVs more than doubled profitability in the Q2 year-over-year period, primarily due to strong volume growth and disciplined expense management.

Robert Reffkin: In mortgage, our JVs more than doubled profitability in the Q2 year-over-year period, primarily due to strong volume growth and disciplined expense management. Our focus in 2026 in mortgage is to drive operational efficiencies within our JV entities while also making progress on attach by continuing to attract the best loan officers to the business. An update on our cost synergy and integration efforts, starting with our cost synergies. As of July, we actioned our entire year one target of $300 million in net cost synergies 5 months ahead of plan. As such, we are now pacing above our $300 million target and expect our action net cost synergies to be $330 million by the end of year one. With our 2026 in-year realized net cost synergies to be $220 million compared to the $200 million that we previously stated.

Speaker #3: Our focus in 2026 in mortgage is to drive operational efficiencies within our JV entities, while also making progress on attached by continuing to attract the best loan officers to the business.

Speaker #3: Now, an update on our cost synergy and integration efforts. Starting with our cost synergies, as of July, we actioned our entire year-one target of $300 million in net cost synergies five months ahead of plan.

Speaker #3: As such, we are now facing above our $300 million target and expect our action net cost synergies to be $330 million by the end of year one.

Speaker #3: With our 2026 in-year realized net cost synergies, to be $220 million compared to the $200 million that we previously stated. We expect to realize about $150 million of the $220 million through the P&L, compared to $130 million previously stated.

Robert Reffkin: We expect to realize about $150 million of the $220 million through the P&L, compared to $130 million previously stated. We continue to expect the remaining $70 million to be realized as CapEx synergies later this year. Regarding our total action net synergy target of $500 million. We are not changing our total target at this time, given the accelerated pace at which we have been moving, it would be fair to assume that we will achieve the $500 million in cost synergies in less than 3 years, and that we will achieve more than $500 million in cost synergies in 3 years. A reminder, approximately $420 million of the $500 million is expected to be realized through the P&L, and $80 million is expected to be realized as CapEx synergies. On to our technology rollout.

Speaker #3: And we continue to expect the remaining $70 million to be realized as capex synergies later this year. Lastly, regarding our total action net synergy target, of $500 million.

Speaker #3: While we are not changing our total target at this time, given the accelerated pace at which we have been moving, it would be fair to assume that we will achieve the $500 million in cost synergies in less than three years, and that we will achieve more than $500 million in cost synergies in three years.

Speaker #3: As a reminder, approximately $420 million of the $500 million is expected to be realized through the P&L, and $80 million is expected to be realized as capex synergies.

Speaker #3: Next, onto our technology rollout. In July, we achieved a significant milestone as we made our newly branded home platform technology available to over 4,000 agents at Caldwell Banker, Corcoran, and Sotheby's International Realty in the pilot beta.

Robert Reffkin: In July, we achieved a significant milestone as we made our newly branded Home Platform technology available to over 4,000 agents at Coldwell Banker, The Corcoran Group, and Sotheby's International Realty in the pilot beta. Feedback since the rollout has been positive, with agents noting the ease of use on both mobile and desktop, the network effect benefits of the platform, particularly in the private exclusive phase, and the highly integrated nature of the platform. The platform has received an 82% CSAT, or customer satisfaction score, which is generally considered to be a strong score in the software industry. By the end of September, nearly 50,000 new agents in the owned brokerage brands will have access to the platform, reflecting over 80,000 agents on the platform, including the Compass brokerage brand. All agents will have access to our private exclusives and Coming Soons inventory.

Speaker #3: Feedback since the rollout has been positive, with agents noting the ease of use on both mobile and desktop, the network effect benefits of the platform, particularly in the private exclusive phase, and the highly integrated nature of the platform.

Speaker #3: So far, the platform has received an 82% CSAT, or customer satisfaction score, which is generally considered to be a strong score in the software industry.

Speaker #3: By the end of September, nearly 50,000 new agents in the owned brokerage brands will have access to the platform, reflecting over 80,000 agents on the platform, including the Compass brokerage brand.

Speaker #3: All agents will have access to our private exclusives and coming soon inventory. Our 128,000 domestic franchise agents will begin to onboard in Q1 2027.

Robert Reffkin: Our 128,000 domestic franchise agents will begin to onboard in Q1 2027. I want to give a special thanks to our product and engineering team, our marketing team, and our coaching teams for the monumental effort in getting us to this point in record time. I cannot overstate the relentless execution and tireless commitment the team put into this to make sure that the agents have access to the platform ahead of the fall market. I am incredibly proud of the team. In all my years at the company, I have never seen the team come together to realize such a big and audacious goal. Thank you. Now, let me provide a few thoughts on our partnership with Rocket Redfin and how we are infusing competition in residential real estate. Starting with our Rocket Redfin partnership.

Speaker #3: I want to give a special thanks to our product and engineering team, our marketing team, and our coaching teams for the monumental effort in getting us to the point in record time.

Speaker #3: I cannot overstate the relentless execution and tireless commitment the team put into this to make sure that the agents have access to the platform ahead of the fall market.

Speaker #3: I am incredibly proud of the team, and in all my years at the company, I have never seen the team come together to realize such a big and audacious goal.

Speaker #3: Thank you. Now, let me provide a few thoughts on our partnership with Rocket Redfin and how we are infusing competition in residential real estate.

Speaker #3: Starting with our Rocket Redfin partnership. Since launching coming soons on Redfin in late Q1, our agents have received more than 60,000 leads from Rocket Redfin, encompass has delivered more than 20,000 coming soon listings to Redfin.

Robert Reffkin: Since launching Coming Soons on Redfin in late Q1, our agents have received more than 60,000 leads from Rocket Redfin, and Compass has delivered more than 20,000 Coming Soon listings to Redfin. Moreover, we want to share our first data point highlighting the impact to consumer traffic resulting from the Coming Soon inventory on compass.com. In Chicago, where we have the most Coming Soons of any market, the number of sessions on compass.com in Chicago were up 111% year over year, outpacing the average sessions growth of 34% year over year on compass.com, or by 77 percentage points. This reflects what happens when MLS rules let clients and their agents choose to market properties how they see fit, which in this case is through the local MLS, MRED.

Speaker #3: Moreover, we want to share our first data points highlighting the impact to consumer traffic resulting from the coming soon inventory on compass.com. In Chicago, where we have the most coming soons of any market, the number of sessions on compass.com in Chicago were up 111% year over year, outpacing the average sessions growth of 34% year over year on compass.com, or by 77 percentage points.

Speaker #3: This reflects what happens when MLS rules let clients and their agents choose to market properties how they see fit. Which, in this case, is through the local MLS, MRED.

Speaker #3: We expect more than 90% of MLSs to have rules that allow sellers to market both private exclusives and coming soons by the end of the year.

Robert Reffkin: We expect more than 90% of MLSs to have rules that allow sellers to market both private exclusives and Coming Soons by the end of the year. The trend for seller choice is moving quickly. Moving on to how we are infusing competition in real estate. I believe in competition. Not only does the law require companies to compete, but competition is the bedrock of our economy. Competition is the engine that produces the most value and options for consumers. However, today, the most powerful entity in real estate, the multiple listing services, or MLS, they do not compete. Instead, many abuse their power by creating mandatory rules, and they enforce with MLS fines up to $5,000 that every real estate professional and their sellers are expected to follow. Real estate professionals have no ability to push back because they need access to the MLS to do their job.

Speaker #3: The trend for seller choice is moving quickly. Moving on to how we are infusing competition in real estate. I believe in competition. Not only does the law require companies to compete, but competition is the bedrock of our economy.

Speaker #3: Competition is the engine that produces the most value and options for consumers. However, today, the most powerful entity in real estate, the multi-listing services, or MLS, they do not compete.

Speaker #3: Instead, many abuse their power by creating mandatory rules. They enforce, with MLS fines up to $5,000, that every real estate professional and their sellers are expected to follow.

Speaker #3: Real estate professionals have no ability to push back because they need access to the MLS to do their job. That is because, over the past 100 years, all real estate professionals have been conditioned to use the MLS to market a listing to other real estate professionals.

Robert Reffkin: That is because over the past 100 years, all real estate professionals have been conditioned to use the MLS to market a listing to other real estate professionals. Without access to MLS, you can't access the listing data for your buyers. In almost all markets, agents have only one choice for multiple listing services, making that single MLS in that market a monopoly that agents need to use to do their jobs. It is that market power that has empowered MLSs to fine agents up to $5,000 for marketing outside the MLS, even though the MLS is not the government, it's just a private entity. What other private business can fine and punish other private businesses? The untold secret in real estate is that the MLS is controlled by a collection of our competitors that tell us how we can and cannot compete.

Speaker #3: So without access to the MLS, you can't access the listing data for your buyers. In almost all markets, agents have only one choice. For multi-listing services.

Speaker #3: Making that single MLS in that market a monopoly that agents need to use to do their jobs. It is that market power that is empowered MLSs to find agents up to $5,000 for marketing outside the MLS, even though the MLS is not the government.

Speaker #3: It's just a private entity. What other private business can find and punish other private businesses? The untold secret in real estate is that the MLS is controlled by a collection of our competitors that tell us how we can and cannot compete.

Speaker #3: The MLS is controlled by a collection of our competitors who are running the board, and they are telling us how we can and cannot compete.

Robert Reffkin: The MLS is controlled by a collection of our competitors who are running the board, and they are telling us how we can and cannot compete. What other private business is told how to compete by a collection of their competitors? This is why the MLS system has been investigated or sued by the United States government over 100 times in the last 50 years. The MLS has been weaponized against the very customer that pays to get access to that service utility, namely the real estate agent and the real estate brokerages those agents associate with. Let me say that again. Real estate agents pay the MLSs money. Real estate agents give the MLS the result of their hard work and their intellectual property. In exchange, the MLS tells the real estate agent how to compete and fines and punishes the agent if they compete too hard.

Speaker #3: What other private company is competed by a collection of their competitors? This is why the MLS system has been investigated or sued by the United States government over 100 times in the last 50 years.

Speaker #3: The MLS has been weaponized against the very customer that pays to get access to that service utility—namely, the real estate agent and the real estate brokerages.

Speaker #3: Those agents associated with—let me say that again. Real estate agents pay the MLSs money. Real estate agents give the MLS the results of their hard work.

Speaker #3: And their intellectual property in exchange the MLS tells the real estate agent how to compete and finds and punishes the agent if they compete too hard.

Speaker #3: This is anti-competitive. This is anti-consumer and it's illegal. Multiple listing services should have to compete for our business just as brokerages have to compete for agents and agents have to compete for their clients.

Robert Reffkin: This is anti-competitive. This is anti-consumer, and it's illegal. Multiple listing services should have to compete for our business just as brokerages have to compete for agents and agents have to compete for their clients. Today, our agents compete relentlessly for every client. They compete at every kitchen table across the US every single day. Brokerages also compete fiercely on compensation, on technology, on coaching, on culture to attract and retain the industry's top professionals. Over the years, Compass has invested over $2 billion in technology to compete, to provide competitive technology offerings. Because of competition, our real estate professionals cannot fine or punish other agents or tell them how to compete, and because of competition, we cannot fine or punish brokerages and agents or tell them how to compete. Most MLSs can, and most MLSs do because they have no competition.

Speaker #3: Today, our agents compete relentlessly for every client. They compete at every kitchen table across the U.S. every single day. Brokerages also compete fiercely on compensation, on technology, on coaching, and on culture to attract and retain the industry's top professionals.

Speaker #3: Over the years, Compass has invested over $2 billion in technology to provide competitive technology offerings. Because of competition, our real estate professionals cannot fine or punish other agents or tell them how to compete.

Speaker #3: And because of competition, we cannot find or punish brokerages and agents or tell them how to compete. But most MLSs can. And most MLSs do because they have no competition.

Speaker #3: I am working to change that and bring competition to the MLSs so that they can compete for real estate professionals and succeed in those MLSs that do not compete fail.

Robert Reffkin: I am working to change that and bring competition to the MLSs so that they can compete for real estate professionals and succeed, and those MLSs that do not compete fail. Similarly, the dominant portal once competed for the attention of the consumer, competed for listings, but over the past 20 years, it gained dominant market power, and with it, adopted restrictive rules that punish brokers and agents who are competing for those same consumers. Like MLSs, the dominant portal takes the hard work and intellectual property created by brokerages and agents without our permission and for free, takes it from the MLS and use it for lead diversion to make money on it time and time again.

Speaker #3: Similarly, the dominant portal once competed for the attention of the consumer. Competed for listings. But over the past 20 years, it gained dominant market power and with it adopted restrictive rules that punish brokers and agents who are competing for those same consumers.

Speaker #3: Like MLSs, the dominant portal takes the hard work and intellectual property created by brokerages and agents without our permission and forge free. Takes it from the MLS and use it for lead diversion to make money on it time and time again.

Speaker #3: But if the dominant portal had to actually compete to get our listings, compete on price, compete on features, compete on value, they would have to completely change their business model.

Robert Reffkin: If the dominant portal had to actually compete to get our listings, compete on price, compete on features, compete on value, they would have to completely change their business model or fail. If the dominant portal no longer got listings for free from the MLS, they would need to compete for those listings, resulting in listing agents getting their buyer inquiries and their name and brand back on their listings. Everything Compass has done in the past, and everything it is doing today is designed to infuse competition into MLS and portals in real estate. Why? Because if multiple listing services and the dominant portal have to compete like real estate professionals and brokers have to compete every day, consumers and the agents that represent them win. If they have to compete for brokerages win.

Speaker #3: Or fail. If the dominant portal no longer got listings for free, from the MLS, they would need to compete for those listings resulting in listing agents getting their buyer inquiries and their name and brand back on their listings.

Speaker #3: So everything Compass has done in the past and everything it is doing today is designed to infuse competition into MLS and portals in real estate.

Speaker #3: Why? Because if multiple listing services and the dominant portal have to compete like real estate professionals and brokerages have to compete every day, consumers and the agents that represent them win.

Speaker #3: If they have to compete for brokerages, brokerages win. This is why I am supporting multiple listing services and portals that compete for our real estate professionals and I am working to inject competition in the MLS and portal ecosystem.

Robert Reffkin: This is why I am supporting multiple listing services and portals that compete for our real estate professionals, and I am working to inject competition in the MLS and portal ecosystem. A good example of how competition can create change is the Rocket and Redfin partnership that was announced earlier this year. Less than a month after we announced the partnership, the dominant portal discontinued the restrictive ban on Coming Soons marketed outside of their platform and launched a Coming Soon product for agents and sellers on their own platform. Competition resulted in more choices for agents and more choices for the consumer. Another example is our recent announcement with several multiple listing services across the country that supports those that actually compete for real estate professionals.

Speaker #3: A good example of how competition can create change is the Rocket Redfin partnership that was announced earlier this year. Less than a month after we announced the partnership, the dominant portal discontinued the restrictive ban on coming soons marketed outside of their platform and launched a coming soon product for agents and sellers on their own platform.

Speaker #3: Competition resulted in more choices for agents and more choices for the consumer. Another example is our recent announcement with several multiple listing services across the country that supports those that actually compete for real estate professionals.

Speaker #3: As a result, we have seen some of the largest MLSs in the country, including those in Chicago, Washington, DC, Philadelphia, Southern California, Florida, Nashville, they have begun to compete including by offering more flexible rules that let home sellers and their agents determine where and how to market their own properties.

Robert Reffkin: As a result, we have seen some of the largest MLSs in the country, including those in Chicago, Washington, DC, Philadelphia, Southern California, Florida, and to Nashville. They have begun to compete, including by offering more flexible rules that let home sellers and their agents determine where and how to market their own properties. MLSs that are expanding recognize that if they want to get agents in new markets to sign up to their MLS, they can't expand with more restrictive rules and times. Instead, they need to compete with more marketing options and more marketing flexibility that helps listing agents and their sellers, as opposed to helping the dominant portal.

Speaker #3: MLSs that are expanding recognize that if they want to get agents in new markets to sign up to their MLS, they can't expand with more restrictive rules and fines instead they need to compete with more marketing options and more marketing flexibility that helps listing agents and their sellers as opposed to helping the dominant portal.

Speaker #3: If MLSs and portals had to compete just like we compete with over 80,000 brokerages in the country, or how agents compete with the 1.5 million agents in the country, I am confident that our company will be able to create an incredible amount of value for all stakeholders.

Robert Reffkin: If MLSs and portals had to compete, just like we compete with over 80,000 brokerages in the country, or how agents compete with the 1.5 million agents in the country, I am confident that our company will be able to create an incredible amount of value for all stakeholders, including our real estate professionals, their clients, our employees, and our shareholders. Every month, we are seeing more and more MLSs competing in ways that help our clients, our agents, and our company. Competition will empower the best agents and the best brokerages. Competition will naturally eliminate restrictive rules and empower the three-phase marketing strategy. Competition will unlock the full potential of the Compass business model, competition is coming. Finally, we are also seeing several states encode into law a seller's right to market property how they see fit through seller opt-outs.

Speaker #3: Including our real estate professionals, their clients, our employees, and our shareholders. Every month, we are seeing more and more MLSs competing in ways that help our clients, our agents, and our company.

Speaker #3: Competition will empower the best agents and the best brokerages. Competition will naturally eliminate restrictive rules and empower the three-phase marketing strategy. Competition will unlock the full potential of the Compass business model.

Speaker #3: And competition is coming. Finally, we are also seeing several states encode into law a seller's right to market property how they see fit through a seller opt-outs.

Speaker #3: Connecticut, New York, and Wisconsin now allow sellers to market their homes privately with seller opt-outs. Over the past year, our three-phase marketing strategy has required similar seller disclosure that states are now putting in place, so we only see this as a big positive.

Robert Reffkin: Connecticut, New York, and Wisconsin now allow sellers to market their home privately with seller opt-outs. Over the past year, our three-phase marketing strategy has required similar seller disclosure that states are now putting in place, we only see this as a big positive. Furthermore, Washington State has adopted laws that allow home sellers to publicly market their homes however they want, so long as the home is concurrently marketed to the general public and all other brokers. Our private exclusives and Coming Soons are marketed to the general public through our website. As you can see, the trend at the state level is also one where the law is emphasizing that homeowners, the people who actually own the property for sale, get to choose how to market their properties, not multiple listing services or the dominant portal.

Speaker #3: Furthermore, Washington State has adopted laws that allow home sellers to publicly market their homes however they want, so long as the home is concurrently marketed to the general public and all other brokers.

Speaker #3: And our private exclusives and coming soons are marketed to the general public through our website. So as you can see, the trend that the state level is also one where the law is emphasizing that homeowners, the people who actually own the property for sale, get to choose how to market their properties.

Speaker #3: Not multiple listing services or the dominant portal. Overall, all of these changes are well aligned with our three-phase marketing strategy, which continues to see an increase in adoption across the Compass brand, with adoption in the most recent week approaching 57% of all new Compass listings.

Robert Reffkin: Overall, all of these changes are well-aligned with our three-phase marketing strategy, which continues to see an increase in adoption across the Compass brands, with adoption in the most recent week approaching 57% of all new Compass listings. By the end of Q3, I would expect 80% of Compass brokerage listings to launch as a Coming Soon on compass.com and Redfin, and the total number of Coming Soons to build from there as we expand the offering to all of our brands. Of note, 65% of our franchise network participated in a Redfin Coming Soon preview session in late June, with 40,000 of those agents already opting in to the Redfin direct listing tool. By the end of Q3, we expect over 180,000 agents of our franchise and brokerage agents to have the ability to create Coming Soons.

Speaker #3: By the end of the third quarter, I would expect 80% of Compass brokerage listings to launch as a coming soon on compass.com and redfin.

Speaker #3: And the total number of coming soons to build from there. As we expand, the offering to all of our brands of note, 65% of our franchise network participated in a redfin coming soon previous session in late June with 40,000 of those agents already opting in to the redfin direct listing tool.

Speaker #3: And by the end of Q3, we expect over 180,000 agents of our franchise and brokerage agents to have the ability to create coming soons.

Speaker #3: Now, shifting to our AI strategy, where we are moving on offense in two ways. One, reducing opex, and two, increasing agent productivity. First, we are using AI to reduce opex, as you would expect.

Robert Reffkin: Now, shifting to our AI strategy, where we are moving on offense in two ways. One, reducing OpEx, and two, increasing agent productivity. First, we are using AI to reduce OpEx, as you would expect. In Q2, we began deploying FDEs or forward-deployed engineers within business functions, including transaction management, legal, and growth, to build automated AI workflows directly into day-to-day operations. To date, the team has identified a mix of roughly $8 million in savings and cost avoidance opportunities. Additionally, across the technology organization, 50% to 60% of all new code is now produced by AI, which is helping us ship code faster and more efficiently. 50% to 60%. Second, on agent productivity, we are rolling out tools to make our real estate professionals more efficient.

Speaker #3: In Q2, we began deploying FDEs or forward deployed engineers within business functions including transaction management, legal, and growth to build automated AI workflows directly into day-to-day operations.

Speaker #3: To date, the team has identified a mix of roughly $8 million in savings and cost avoidance opportunities. Additionally, across the technology organization, 50% to 60% of all new code is now produced by AI.

Speaker #3: Which is helping us ship code faster and more efficiently—50% to 60%. Second, on agent productivity, we are rolling out tools to make our real estate professionals more efficient.

Speaker #3: In July, we demoed our AI assistant more broadly which is an integrated assistant that helps agents orchestrate more than 90 of our platform tools.

Robert Reffkin: In July, we demoed our AI assistant more broadly, which is an integrated assistant that helps agents orchestrate more than 90 of our platform tools simply through natural language prompts. Our earnings deck this quarter includes several direct testimonials from agents, and as you will see, early feedback is incredibly positive. Agents are citing the amount of time the AI assistant is saving them on everyday tasks such as client outreach and importantly, helping them unearth proprietary leads. User data indicates deeper engagement with the platform, with the number of tools called per agent and number of conversations per agent up almost two times since our demo day. I want to end by revisiting the long-term earnings potential of our business as we discussed last quarter.

Speaker #3: Simply through natural language prompts. Our earnings deck this quarter includes several direct testimonials from agents. And as you will see, early feedback is incredibly positive.

Speaker #3: Agents are citing the amount of time the AI assistant is saving them on everyday tasks such as client outreach and importantly, helping them unearth proprietary leads.

Speaker #3: User data indicates deeper engagement with the platform with a number of tools called per agent and number of conversations per agent up almost two times since our demo day.

Speaker #3: I want to end by revisiting the long-term earnings potential of our business as we discussed last quarter. As a reminder, our scenario analysis is not meant to be guidance and assumes no agent ads, no organic share take, no margin improvement, no improvement on T&E or mortgage attached or any contribution from leads or other ancillary revenue.

Robert Reffkin: As a reminder, our scenario analysis is not meant to be guidance and assumes no agent adds, no organic share take, no margin improvement, no improvement on T&E or mortgage attach, or any contribution from leads or other ancillary revenue. These are all incremental growth levers in our business beyond a housing recovery, and levers that we are beginning to pull, as you can see from our Q2 results. Assuming the housing market remains flat at 4.1 million existing home sales, we would generate roughly $1 billion in adjusted EBITDA and $750 million in unlevered free cash flow. In the next scenario, which we've assumed as 4.8 million existing home sales for this analysis, we would generate $1.5 billion in adjusted EBITDA and $1 billion in unlevered free cash flow.

Speaker #3: These are all incremental growth levers in our business beyond the housing recovery. And levers that we are beginning to pull as you can see from our Q2 results.

Speaker #3: Assuming the housing market remains flat at 4.1 million existing home sales, we would generate roughly $1 billion in adjusted EBITDA and $750 million in unlevered free cash flow.

Speaker #3: In the next scenario, which we've assumed as 4.8 million existing home sales, for this analysis we would generate $1.5 billion in adjusted EBITDA and $1 billion in unlevered free cash flow.

Speaker #3: At mid-cycle levels of 5.5 million home sales, we would generate $2 billion in adjusted EBITDA and $1.5 billion in unlevered free cash flow. And lastly, we also provided an upside scenario of 6.6 million home sales.

Robert Reffkin: At mid-cycle levels of 5.5 million home sales, we would generate $2 billion in adjusted EBITDA and $1.5 billion in unlevered free cash flow. Lastly, we also provided an upside scenario of 6 million home sales, and at that level, we would generate $2.5 billion in adjusted EBITDA and roughly $2 billion in unlevered free cash flow. With that said, I will now hand it over to our CFO, Scott.

Speaker #3: And at that level, we would generate $2.5 billion in adjusted EBITDA and roughly $2 billion in unlevered free cash flow. With that said, I will now hand it over to our CFO, Scott.

Speaker #2: Thank you, Robert. Consistent with our prepared comments from last quarter, I’ll provide some information about the contribution to our consolidated results from the acquired Anywhere businesses where possible.

Scott Wahlers: Thank you, Robert. Consistent with our prepared comments from last quarter, I'll provide some information about the contribution to our consolidated results from the acquired Anywhere businesses where possible. However, we're integrating the entities quickly and therefore do not generally expect to break out separate results going forward. You'll find financial information included on our investor relations website from last quarter that provides additional supplemental information on a pro forma basis as though the Anywhere business was combined with Compass for the full year of 2025. Where applicable, this prior year pro forma information will be referenced in my prepared comments today. Moving into the financial details. Revenue in Q2 reached $4.3 billion, which exceeded the high end of our revenue guidance range of $4 billion to $4.2 billion. On a pro forma basis, consolidated revenue was up 14.3% from the year ago period.

Speaker #2: However, we're integrating the entities quickly and therefore do not generally expect to break out separate results going forward. You'll find financial information included on our investor relations website from last quarter that provides additional supplemental information on a pro forma basis as though the anywhere business was combined with Compass for the full year of 2025.

Speaker #2: Where applicable, this prior year pro forma information will be referenced in my prepared comments today. Now, moving into the financial details. Revenue in Q2 reached $4.3 billion, which exceeded the high end of our revenue guidance range of $4.0 billion to $4.2 billion.

Speaker #2: On a pro forma basis, consolidated revenue was up 14.3% from the year ago period. We saw year-over-year revenue increases in each of our three operating segments during the quarter but the owned brokerage segment was a standout with 3.96 billion of revenue and a 15% increase on a pro forma basis compared to the year ago period.

Scott Wahlers: We saw year-over-year revenue increases in each of our three operating segments during the quarter, the owned brokerage segment was a standout with $3.96 billion of revenue and a 15% increase on a pro forma basis compared to the year ago period. Wealth being created by the AI boom in the Northern California market supported some of this revenue growth. Our Chief Economist, Mike Simonsen, highlighted that during the first 6 months of the year, 140 transactions in San Francisco closed at least $1 million above the asking price, with 44 of those transactions falling in June alone, compared to just eight homes closing $1 million above asking price in the H1 of last year.

Speaker #2: Wealth being created by the AI boom in the northern California market supported some of this revenue growth. Our chief economist, Mike Simonson, highlighted that during the first six months of the year, $140 transactions in San Francisco closed at least $1 million above the asking price with 44 of those transactions falling in June alone.

Speaker #2: Compared to just eight homes closing $1 million above asking price in the first half of last year. Gross transaction value for the brokerage segment was $155.2 billion in the second quarter, up 16% year-over-year on a pro forma basis, which reflects a 7% increase in transactions and average selling price appreciation of 8%, to an average price of just over $1 million.

Scott Wahlers: Gross transaction value for the brokerage segment was $155.2 billion in the Q2, up 16% year-over-year on a pro forma basis, which reflects a 7% increase in transactions, an average selling price appreciation of 8% to an average price of just over $1 million. As Robert commented earlier, the increase in our gross transaction value during the quarter of 16% on a pro forma basis compares very favorably to the overall market that was up 6% on volume. Gross agent adds in the quarter were 2,816, down from 3,503 in Q1. As we mentioned last quarter, we are shifting recruiting practices of the brands acquired in the Anywhere transaction towards more productive agents.

Speaker #2: Our talented real estate professionals and our presence in the luxury markets allowed us to capitalize on this market growth. As Robert commented earlier, the increase in our gross transaction value during the quarter of 16% on a pro forma basis compares very favorably to the overall market, which was up 6% on volume.

Speaker #2: Gross agent adds in the quarter were $2,816, down from $3,503 in Q1. As we mentioned last quarter, we are shifting recruiting practices at the brands acquired in the Anywhere transaction towards more productive agents.

Speaker #2: And while the total number of agents recruited is lower this quarter, productivity per agent continues to increase meaningfully and is clearly not impacting our ability to grow.

Scott Wahlers: While the total number of agents recruited is lower this quarter, productivity per agent continues to increase meaningfully and is clearly not impacting our ability to grow. Going forward, all the owned brokerage brands acquired in the Anywhere transaction will begin leveraging our enterprise sales team to recruit agents. Once this partnership model is fully set in motion by early 2027, we expect it to lead to a healthy level of agent adds and better productivity per agent. Importantly, total agent retention in our brokerage business was 95.5%, which was largely flat compared to Q2 2025 on a pro forma basis, and up 140 basis points compared to Q1 2026, where it was 94.1%. Consistent with last quarter, 72% of total agent separations in the quarter had no production or very low production in the trailing 12-month period.

Speaker #2: Going forward, all the owned brokerage brands acquired in the anywhere transaction will begin leveraging our enterprise sales team to recruit agents. Once this partnership model is fully set in motion by early 2027, we expect it to lead to a healthy level of agent ads and better productivity per agent.

Speaker #2: Importantly, total agent retention in our brokerage business was 95.5%, which was largely flat compared to Q2 of 2025 on a pro forma basis and up 140 basis points compared to Q1 of 2026, where it was 94.1%.

Speaker #2: Consistent with last quarter, 72% of total agent separations in the quarter had no production or very low production in the trailing 12-month period. As a result, excluding agents with zero GCI in the last 12 months, agent retention would have been 97.7% in Q2 and excluding agents with 20,000 or less in GCI in the last 12 months, which on average equals less than two transactions at our price points, agent retention would have been 98.7% in Q2.

Scott Wahlers: As a result, excluding agents with zero GCI in the last 12 months, agent retention would have been 97.7% in Q2. Excluding agents with 20,000 or less in GCI in the last 12 months, which on average equals less than two transactions at our price points, agent retention would have been 98.7% in Q2. Commissions and other related expenses as a percentage of brokerage segment revenue increased by 43 basis points to 82.2%, from 81.7% on a pro forma basis a year ago. This is largely due to mix, whereby the majority of the revenue growth was in markets with lower overall margins or closed by real estate professionals that are on the higher end of the split schedule. For the Compass standalone brand, this commission metric was flat year-over-year.

Speaker #2: Commissions and other related expenses as percentage of brokerage segment revenue increased by 43 basis points to 82.2% from 81.7% on a pro forma basis a year ago.

Speaker #2: This is largely due to mix, whereby the majority of the revenue growth was in markets with lower overall margins, or closed by real estate professionals that are on the higher end of the split schedule.

Speaker #2: For the Compass standalone brand, this commission metric was flat year-over-year. Franchise segment revenue was $135 million in the quarter up 7.6% on a pro forma basis and GTV was up 11.7% year-over-year on a pro forma basis compared to housing market volumes that were up 6% which reflected outperformance led by our luxury brands Sotheby's International Realty and Corcoran.

Scott Wahlers: Franchise Segment revenue was $135 million in the quarter, up 7.6% on a pro forma basis, and GTV was up 11.7% year-over-year on a pro forma basis compared to housing market volumes that were up 6%, which reflected outperformance led by our luxury brands, Sotheby's International Realty and Corcoran. Integrated Services revenue reached $211 million in Q2, up 7.7% year-over-year on a pro forma basis, driven by strong performance across title and escrow. Our Cartus relocation business, which is also included in the Integrated Services Segment, secured 15 new clients and expanded numerous existing client relationships during the quarter. We believe Cartus is well-positioned over other relocation management companies as we integrate into the brokerage operations and our brokerage and franchise operations benefit from the lead flow generated by the relocation side of the business. Our total non-GAAP operating expenses were $699 million in Q2.

Speaker #2: Integrated services revenue reached $211 million in the second quarter up 7.7% year-over-year on a pro forma basis driven by strong performance across title and escrow.

Speaker #2: Our CARTIS relocation business, which is also included in the integrated services segment, secured $15 new clients and expanded numerous existing client relationships during the quarter.

Speaker #2: We believe CARTIS is well positioned over other relocation management companies as we integrate into the brokerage operations and our brokerage and franchise operations benefit from the lead flow generated by the relocation side of the business.

Speaker #2: Our total non-gap operating expenses were $699 million in Q2. As a reminder, our Q1 non-gap operating expenses of $641 million excluded opex from the anywhere business for the first eight days before the January 9th acquisition date.

Scott Wahlers: As a reminder, our Q1 non-GAAP operating expenses of $641 million excluded OpEx from the Anywhere business for the first eight days before the 9 January acquisition date. The increase in Q2 reflects a full quarterly run rate of our combined operations and some modest increase in variable compensation accruals as a result of our year-to-date outperformance, as well as growth in the Integrated Services Segment. Recall that compensation for our title and escrow officers in the Integrated Services Segment is included in the operations and support line, and therefore, revenue growth in this business will have some corresponding growth in the OpEx line. Of course, that's coupled with accretive adjusted EBITDA. As Robert touched on earlier, we have continued to make strong early progress on cost synergies.

Speaker #2: So, the increase in Q2 reflects a full quarterly run rate of our combined operations and some modest increase in variable compensation accruals as a result of our year-to-date outperformance, as well as growth in the Integrated Services segment.

Speaker #2: Recall that compensation for our title and escrow officers in the Integrated Services segment is included in the operations and support line, and therefore revenue growth in this business will have some corresponding growth in the opex line. But of course, that's coupled with accretive adjusted EBITDA.

Speaker #2: As Robert touched on earlier, we have continued to execute on cost synergies. This quarter, we pulled forward some additional synergy actions, and we've now actioned $300 million of our cost synergy target, which was our revised full-year target for 2026.

Scott Wahlers: This quarter, we pulled forward some additional synergy actions. We've now actioned $300 million of our cost synergy target, which was our revised full-year target for 2026. As we committed, when we hit our synergy targets, we won't stop looking for opportunities. We now expect to action as much as $330 million during 2026. Last quarter, we updated our expectations to realize about $200 million of the action synergies in our financials in 2026. We said about two-thirds of this amount, or $130 million, will be reflected as reduced operating expenses in 2026, benefiting adjusted EBITDA and cash flow. The remaining one-third, or about $70 million, will be reflected as lower CapEx, which won't directly benefit adjusted EBITDA, but will benefit free cash flow.

Speaker #2: As we committed, when we hit our synergy targets, we won't stop looking for opportunities. We now expect to action as much as $330 million during 2026.

Speaker #2: Last quarter, we updated our expectations to realize about $200 million of the action synergies in our financials in 2026. We said about two-thirds of this amount or $130 million will be reflected as reduced operating expenses in 2026 benefiting adjusted EBITDA and cash flow and the remaining one-third or about $70 million will be reflected as lower capex which won't directly benefit adjusted EBITDA but will benefit free cash flow.

Speaker #2: As a result of pulling through some additional action synergies this quarter, and a higher expected level of action synergies for the full year of 2026, we now expect approximately $150 million to be realized in opex which reflects an increase of about $20 million from our prior expectations but note that about 50% of this additional $20 million has already been realized in Q2.

Scott Wahlers: As a result of pulling through some additional action synergies this quarter and a higher expected level of action synergies for the full year of 2026, we now expect approximately $150 million to be realized in OpEx, which reflects an increase of about $20 million from our prior expectations. Note that about 50% of this additional $20 million has already been realized in Q2. OpEx was essentially flat year-over-year on a pro forma basis, and one of the drivers of that is our cost to serve per transaction, which hit a record low within the Compass brand in Q2. However, as we consolidate our back office systems with our other brands over the next year, we see opportunity to continue lowering the cost to serve per transaction through greater utilization of AI and deploying other best practices.

Speaker #2: Opex was essentially flat year-over-year on a pro forma basis, and one of the drivers of that is our cost to serve per transaction, which hit a record low within the Compass brand in Q2.

Speaker #2: However, as we consolidate our back office systems whether other brands over the next year, we see opportunity to continue lowering the cost to serve per transaction through greater utilization of AI and deploying other best practices.

Speaker #2: Adjusted EBITDA for Q2 was $363 million, a record performance for any second quarter and almost triple the amount of adjusted EBITDA Compass generated a year ago on a standalone basis.

Scott Wahlers: Adjusted EBITDA for Q2 was $363 million, a record performance for any Q2, and almost triple the amount of adjusted EBITDA Compass generated a year ago on a standalone basis. As an interesting data point, the $363 million of adjusted EBITDA in the quarter reflects more adjusted EBITDA in one quarter than for the full annual period of 2025 or any other annual period in Compass's history, an early proof point of the earnings potential of the combined business. Adjusted EBITDA in the quarter includes segment adjusted EBITDA of $377 million from Brokerage, $87 million from Franchise, and $52 million from Integrated Services, each reflecting improvements from Q1, both in terms of total dollar value and as a percentage of their respective segment revenues.

Speaker #2: As an interesting data point, the $363 million of adjusted EBITDA in the quarter reflects more adjusted EBITDA in one quarter than for the full annual period of 2025 or any other annual period encompasses history.

Speaker #2: An early proof point of the earnings potential of the combined business. Adjusted EBITDA in the quarter includes segment adjusted EBITDA of $377 million from brokerage $87 million from franchise and $52 million from integrated services each reflecting improvements from Q1 both in terms of total dollar value and as a percentage of their respective segment revenues.

Speaker #2: As a reminder, while certain direct expenses are allocated to each of the three operating segments, there are additional expenses that are not allocated to any of the operating segments because they relate to more of the corporate entity or because they're shared across multiple or all of the operating segments.

Scott Wahlers: As a reminder, while certain direct expenses are allocated to each of the three operating segments, there are additional expenses that are not allocated to any of the operating segments because they relate to more of the corporate entity or because they're shared across multiple or all of the operating segments. These include expenses related to our technology, finance, legal, human resources, and executive functions. Therefore, the total adjusted EBITDA of the consolidated company will be equal to the total of the segment adjusted EBITDA for our three operating segments, less the unallocated corporate expenses of $153 million to equal the total adjusted EBITDA of $363 million for Q2.

Speaker #2: These include expenses related to our technology, finance, legal, human resources, and executive functions. Therefore, the total adjusted EBITDA of the consolidated company will be equal to the total of the segment adjusted EBITDA for our three operating segments, less the unallocated corporate expenses of $153 million, to equal the total adjusted EBITDA of $363 million for the second quarter.

Speaker #2: We achieved gap net income of $92 million this quarter a significant improvement from gap net income of $39 million in the prior year despite the increase in depreciation and amortization expense merger and integration expenses and interest expense resulting from the anywhere transaction earlier this year.

Scott Wahlers: We achieved GAAP net income of $92 million this quarter, a significant improvement from GAAP net income of $39 million in the prior year, despite the increase in depreciation and amortization expense, merger and integration expenses, and interest expense resulting from the Anywhere transaction earlier this year. Our basic weighted average share count for Q2 was 758 million shares, which was within our guidance range of 755 to 760 million shares. As a reminder, the share count for Q2 reflects an anticipated step-up from Q1, as the shares issued for the Anywhere transaction were only weighted during Q1 for the period post the 9 January closing date, but they have a full quarter weighting in Q2.

Speaker #2: Our basic weighted average share count for the second quarter was 758 million shares, which was within our guidance range of 755 to 760 million shares. As a reminder, this share count for Q2 reflects an anticipated step-up from Q1, as the shares issued for the Anywhere transaction were only weighted during Q1 for the period post the January 9th closing date, but they have a full-quarter weighting in Q2.

Speaker #2: Free cash flow was very strong at $180 million for the quarter, resulting in $694 million of cash on our balance sheet as of June 30th, and no outstanding borrowings on our $500 million revolver.

Scott Wahlers: Free cash flow was very strong at $180 million for the quarter, resulting in $694 million of cash on our balance sheet as of 30 June, and no outstanding borrowings on our $500 million revolver. The strong cash flow during the quarter was driven by the over-performance on adjusted EBITDA, as well as some favorable timing on working capital items. In particular, our remaining cash liability from Anywhere's NAR class action settlement of $54 million was not paid during the quarter and is now expected to be paid later in 2026. Last quarter, I commented we would redeem the $500 million of our 9.75% notes in Q2 of 2027. The strong cash position as of quarter end, plus additional positive free cash flow anticipated for H2 of the year underscores our ability to achieve this commitment.

Speaker #2: The strong cash flow during the quarter was driven by the overperformance on adjusted EBITDA as well as some favorable timing on working capital items.

Speaker #2: In particular, our remaining cash liability from Anywhere's NAR class action settlement of $54 million was not paid during the quarter and is now expected to be paid later in 2026.

Speaker #2: Last quarter, I commented we would redeem the $500 million of our 9.75% notes in Q2 of 2027. The strong cash position as of quarter-end, plus additional positive free cash flow anticipated for the second half of the year, underscores our ability to achieve this commitment.

Speaker #2: We also stated that you should not expect to see any changes in our debt levels for the balance of the year or into Q1 of next year.

Scott Wahlers: We also stated that you should not expect to see any changes in our debt levels for the balance of the year or into Q1 of next year. That's because the highest cost tranche of our debt has a no-call provision until April 2027, and our 7% notes have a 1.75% call premium associated with them as well that drops away on the same date in April 2027. We plan to continue to build our cash position through that date, and in the meantime, we have our cash invested in short-term treasuries with yields in the mid 3% range. It's worth reiterating some of Robert's earlier commentary on our net leverage ratio. Once again, we won't start reducing our gross debt levels until Q2 of next year due to the call provisions of the debt.

Speaker #2: That's because the highest-cost tranche of our debt has a no-call provision until April 2027, and our 7% notes have a 1.75% call premium associated with them as well, which drops away on the same date in April 2027.

Speaker #2: So we plan to continue to build our cash position through that date, and in the meantime, we have our cash invested in short-term Treasuries with yields in the mid-3% range.

Speaker #2: It's worth reiterating some of Robert's earlier commentary on our net leverage ratio. Once again, we won't start reducing our gross debt levels until Q2 of next year due to the call provisions of the debt. However, our net debt levels are reducing when you consider our growing cash position.

Scott Wahlers: However, our net debt levels are reducing when you consider our growing cash position. When you combine this with our growing levels of trailing annual adjusted EBITDA, our net leverage ratio is improving. As Robert just touched on, if you take our net debt as of 30 June, which is $2.45 billion, and divide that by 2026 consensus adjusted EBITDA estimates of approximately $850 million, that yields a net leverage ratio of just under three times. Since we expect to generate additional cash flow in H2 of 2026, the actual ratio as of year-end will be even lower. Turning to financial guidance for Q3. For Q3 of 2026, we expect consolidated revenue in the range of $3.85 billion to $4.05 billion. We expect Q3 consolidated adjusted EBITDA to be in the range of $275 million to $305 million.

Speaker #2: And when you combine this with our growing levels of trailing annual adjusted EBITDA our net leverage ratio is improving. As Robert just touched on, if you take our net debt as of June 30th which is 2.45 billion and divide that by 2026 consensus adjusted EBITDA estimates of approximately $850 million that yields a net leverage ratio of just under three times.

Speaker #2: But since we expect to generate additional cash flow in the second half of 2026, the actual ratio as of year-end will be even lower.

Speaker #2: Turning to financial guidance for Q3, for the third quarter of 2026, we expect consolidated revenue in the range of $3.85 billion to $4.05 billion.

Speaker #2: We expect third quarter consolidated adjusted EBITDA to be in the range of $275 million to $305 million, and for the full year, we expect non-GAAP operating expenses in the range of $2.75 to $2.80 billion, which is an increase of $50 million from the guidance provided last quarter.

Scott Wahlers: For the full year, we expect non-GAAP OpEx in the range of $2.75 to $2.80 billion, which is an increase of $50 million from the guidance provided last quarter. The increase is primarily driven by $35 million of OpEx assumed from a recent brokerage acquisition we completed in early July, and secondly, some additional compensation expenses related to our recent over-performance. We expect basic weighted average share count for Q3 to be between 767 to 769 million shares, and we expect to generate positive free cash flow in Q3. Our cash flow in future years will be supported by the use of our NOLs. It is worth a reminder that we have $1.8 billion of NOLs that will shield us from federal and state taxes as we generate taxable income.

Speaker #2: The increases primarily driven by $35 million of opex assumed from a recent brokerage acquisition we completed in early July and secondly some additional compensation expenses related to our recent overperformance.

Speaker #2: We expect basic weighted average share count for the third quarter to be between 767 to 769 million shares and we expect to generate positive free cash flow in Q3.

Speaker #2: Our cash flow and future years will be supported by the use of our net operating losses it's worth a reminder that we have $1.8 billion of NOLs that will shield us from federal and state taxes as we generate taxable income.

Speaker #2: At our current combined tax rate of about 26% which is a federal corporate tax rate of 21% plus about 5% of a blended state tax rate that's about $470 million of potential cash taxes that will be avoided due to the utilization of the NOLs in the future.

Scott Wahlers: At our current combined tax rate of about 26%, which is a federal corporate tax rate of 21% plus about 5% of a blended state tax rate, that is about $470 million of potential cash taxes that will be avoided due to the utilization of the NOLs in the future. As we turn to Q&A, I want to say thank you to our entire team for the exceptional efforts and collaboration. We have all been working very hard for these past six months following our transformational merger with Anywhere in January, and it is great to see those efforts embedded in the outstanding results we are sharing today. Finally, we will be participating in the Barclays Industrial Select Conference on 12 August in New York City, the Oppenheimer Technology, Internet & Communications Conference on 13 August, and the Zelman Housing Summit on 17 September. We hope to see you at one of those events.

Speaker #2: As we turn to Q&A, I want to say thank you to our entire team for the exceptional efforts and collaboration. We've all been working very hard these past six months following our transformational merger with Anywhere in January.

Speaker #2: And it's great to see those efforts embedded in the outstanding results we're sharing today. And finally, we'll be participating in the Barclays Industrials Conference on August 12 in New York City.

Speaker #2: The Oppenheimer Tech Conference on August 13th and the Zoman Housing Summit on September 17th. We hope to see you at one of those events.

Speaker #2: Operator, you can now begin Q&A.

Scott Wahlers: Operator, you can now begin Q&A.

Speaker #1: We will now open the line for Q&A. If you would like to ask a question and you have joined via the webinar, please click on the 'raise hand' icon.

Operator: We will now open the line for Q&A. If you would like to ask a question and you have joined via the webinar, please click on the raise hand icon. If you have joined via the phone line, please dial star five to raise your hand. In the interest of time, please limit yourself to one question and one follow-up today. When you hear your name called, you will be prompted to unmute your line and ask your question. We will now take a moment to allow the queue to form. Our first question will come from Matthew Bouley with Barclays. You may now unmute and ask your question.

Speaker #1: If you have joined via the phone line, please dial star five to raise your hand. In the interest of time, please limit yourself to one question and one follow-up today.

Speaker #1: When you hear your name called, you'll be prompted to unmute your line and ask your question. We will now take a moment to allow the queue to form.

Speaker #1: Our first question will come from Matthew Booley with Barclays. You may now unmute and ask your question.

Speaker #3: Hi, you have Elizabeth Langen on for Matt today. Thank you guys for taking the questions. I just wanted to start off by asking for an update on your three-phase marketing strategy.

Elizabeth Langan: Hi. You have Elizabeth Langan for Matt today. Thank you guys for taking the questions. I just wanted to start off by asking for an update on your three-phase marketing strategy. It sounds like you've had a lot of traction on the Redfin partnership. I know last quarter you had said that the Coming Soons had moved up towards the mid-30% range of your listings last quarter. How are you tracking against that? Maybe if you could give a little more detail on how the broader network effects are materializing.

Speaker #3: It sounds like you've had a lot of traction on the Redfin partnership, and I know last quarter you had said that the Coming Soon had moved up towards the mid-30% range of your listings last quarter.

Speaker #3: How are you tracking against that, and maybe if you could give a little more detail on how the broader network affects your materializing?

Speaker #2: Great. So, on the Compass brokerage side, the coming soons in July approached 57%, so for all new listings, 57% of them started off as coming soon.

Robert Reffkin: Great. On the Compass brokerage side, the Coming Soons in July approached 57%. For all new listings, 57% of them start off as Coming Soon, where we believe that we're on a path to have 80% of all new Compass brokerage listings start off as Coming Soons in August and September. For the other brands, they are now onboarding to the platform. I would expect the same trend line over time there as well. Really, there's no downside. There's no reason not to. There's no days on market, no price drop history. The worst thing that can happen is you get an offer, and you can say, "No, I don't want the offer. I'm going to go to every site, not just the 60 million people that are buying off of Redfin.com and our brokerage sites." Remember, only 4 million people buy a year.

Speaker #2: We believe that we’re on a path to have 80% of all new Compass brokerage listings start off as 'Coming Soons' in August and September.

Speaker #2: For the other brands, they are now onboarding to the platform and so now they're I would expect the same trend line over time there as well.

Speaker #2: Really, there's no downside. There's no reason not to. There's no days on market, no price drop history. The worst thing that can happen is you get an offer.

Speaker #2: And you can say, "No, I don't want the offer. I'm going to go to every site, not just the $60 million people that are buying off of Redfin.com in our brokerage sites." And remember, only 4 million people buy a year.

Speaker #2: So how many tens of millions of people do you need to see your property? And so that's why we're getting so much traction. We're seeing a lot of demand for the private exclusives as well as the new brands coming on, because the same message is there for sellers.

Robert Reffkin: How many tens of millions of people do you need to see your property? That's why we're getting so much traction, and we're seeing a lot of demand for the private exclusives as well as the new brands come on, because the same message is there for sellers. There's no downside. The worst thing that happens is you can go Coming Soon and go to the public markets, but with the benefit of price discovery as a private exclusive. At the core, what that tool is, it has many different benefits and many ways to use it. At the core, it is a price testing tool. In the exact same way that roadshows let companies going public test price, the private listing is the exact same thing for people that are taking their property public and selling their property.

Speaker #2: There's no downside. The worst thing that happens is you can go 'coming soon' and go to the public markets, but with the benefit of price discovery as a private exclusive.

Speaker #2: At the core what that tool is, it's has many different benefits and many ways to use it but at the core it is a price testing tool and the exact same way that roadshows let companies going public test price as the private listing is the exact same thing for people that are taking their property public and selling their property.

Robert Reffkin: What seller wouldn't want a price testing tool? The only entity that wouldn't want a price testing tool are people whose business models can't make money off of it.

Speaker #2: And so the only people that—what seller wouldn't want a price testing tool? The only entity that wouldn't want a price testing tool are people whose business models can't make money off of it.

Elizabeth Langan: Yeah, that makes a lot of sense. Secondly, I wanted to ask if you could touch on cost synergies. You obviously spoke to you're not raising the $500 target right now, but as you've made progress and you're actioning a higher level than you were initially with the $330 million, how are you thinking about the upside there, and how should we be thinking about the pace in 2027 versus your prior expectations?

Speaker #3: Yeah, that makes a lot of sense. And secondly, I wanted to ask if you could touch on cost synergies. You obviously spoke to you're not raising the $500 target right now but as you've made progress and you're actioning a higher level than you were initially with the $330 million how are you thinking about the upside there and how should we be thinking about the pace in 2027 versus your prior expectations?

Speaker #2: Yeah, thanks for the question. I think we're really happy with the progress made to date—six months in. We've made really strong progress on cost synergies.

Scott Wahlers: Yeah. Thanks for the question. I think we're really happy with the progress made to date. In six months, we've made really strong progress on cost synergies. We're really happy with that. I think as you consider the pace over time, we're getting into some of the deeper operational synergy areas, some of the system integrations. Some of these things are going to take longer time, so you'll definitely see the pace slow compared to how quickly we came out of the gate for the first six months. I think in terms of what we can achieve overall, I'd put you back to what we did in 2022 when interest rates started to spike with the mortgage rates. We made a commitment to take costs out of the business. We exceeded our initial goals on that.

Speaker #2: We're really happy with that. I think as you consider the pace over time, we're getting into some of the deeper operational synergy areas, some of the system integrations, some of these things are going to take longer time.

Speaker #2: And so you'll definitely see the pace slow compared to how quickly we came out of the gate for the first six months. But I think, in terms of what we can achieve overall, I'd point you back to what we did in 2022 when interest rates started to spike with the mortgage rates.

Speaker #2: We made a commitment to take costs out of the business. We exceeded our initial goals on that. Then we exceeded the goals we put again on top of that.

Scott Wahlers: We exceeded the goals we put, again, on top of that. The point being is that we're not going to stop looking for opportunities once we get to the $500 million goal. I think it's safe to assume, or reasonable to assume that based on the pace that we've come out in the first six months, that we will hit our goals over time and potentially exceed them. We're not going to go into detail as far as 2027 at this point in time.

Speaker #2: And so the point being is that we're not going to stop looking for opportunities once we get to the $500 million goal. And so I think it's safe to assume a reasonable to assume that based on the pace that we've come out in the first six months that we will hit our goals over time and potentially exceed them.

Speaker #2: But we're not going to go into details for us 2027 at this point in time.

Speaker #1: Your next question will come from Jason Helfstein with Oppenheimer.

Operator: Your next question will come from Jason Helfstein with Oppenheimer.

Jason Helfstein: Thanks. Taking the question to Robert. The lead stats in Chicago with Redfin are quite impressive. While Chicago has some uniqueness, talk about your ability to replicate this in other markets. When we think about transactions per agent, obviously we can do the math on Q1 and Q2. How much upside do we see in transactions per agent if we get back to kind of a normal market versus the current level? What do you think peak upside is there? Thank you.

Speaker #4: Thanks for taking the question. To Robert, the lead stats in Chicago with Redfin are quite impressive. I think, while Chicago has some uniqueness, if you could just talk about your ability to replicate this in other markets, and then just when we think about transactions per agent—obviously, we can do the math on Q1 to Q2.

Speaker #4: Just how much upside do we see in transactions per agent if we get back to kind of a normal market versus the current level?

Speaker #4: So where do you think the peak upside is there? Thank you.

Robert Reffkin: I'll address Chicago and the broader opportunity. I'll pass it on to Scott for transactions per agent. On Chicago, really happy to see that. Also, it shows what happens in a free market without restrictions, without fines, without bans. What it shows you is, why wouldn't an agent put it on their sites first? What's the downside? What seller doesn't want the agent to get their own buyer, the buyer inquiries, and to deal with them directly? To see our traffic up over 100% year over year to 77 basis points over the rest of the regions, it's giving us even more confidence and more conviction, and it's also making our real estate professionals even more excited to continue to make progress here, as we will. I don't think Chicago is that unique. To be clear, it is becoming the norm.

Speaker #2: I'll address Chicago in the broad opportunity, and then I'll pass it on to Scott for transactions per agent. So, on Chicago, we're really happy to see that.

Speaker #2: Also, it kind of shows what happens in a free market—without restrictions, without fines, without bans. What it shows you is: why wouldn't an agent put it on their sites first?

Speaker #2: What's the downside? Why wouldn't you want—why does the seller not want the agent to get their own buyer, and the buyer increase, and then deal with them directly?

Speaker #2: And to see our traffic up over 100% year over year, 77 basis points over the rest of the regions, it's giving us even more confidence and more conviction.

Speaker #2: And it's also making our real estate professionals even more excited to continue to make progress here. As we will. I don't think Chicago is that unique.

Speaker #2: To be clear, it is becoming the norm. MLSs have statuses that allow agents to share their listings with all agents across all brokerage firms and decide where it is publicly on their site.

Robert Reffkin: MLSs have statuses that allow agents to share their listings with all agents across all brokerage firms and decide where it is publicly on their site. What I mean by that specifically is now 60% of our markets, but it's now in the 60s, will allow agents to decide to have it on their site, and as long as they're sharing it within the MLS across all brokerage firms. We think this is going to become more and more the norm as agents see the value in it for their sellers.

Speaker #2: And so, what I mean by that specifically is, now 60% of our markets—but it's now in the 60s—they will allow agents to decide to have it on their site, as long as they're sharing it within the MLS across all brokerage firms.

Speaker #2: And so, we think this is going to become more and more the norm, as agents see the value in it for their sellers.

Speaker #5: Yeah, and Jason, just to touch on the question of transactions per agent—tough question to answer as far as the specific data point, but as a trend, I think you'll see the number continue to go up, just as you did this quarter.

Scott Wahlers: Jason, to touch on the question on transactions per agent. Tough question to answer as far as a specific data point. As a trend, you'll see the number continue to go up just as you did this quarter. The reason for that is that we're churning out of the business some of the unproductive agents. In fact, we cited stats today that are similar to the stats we cited last quarter, where 49% of the agents that left the business in the quarter had zero GCI in the trailing 12 months. Naturally, that's going to increase transactions per agent. There's a lot of mix in there, too, because remember, we're now disclosing total agent counts, not just principal agent counts.

Speaker #5: And the reason for that is that we're turning out or trading out of the business some of the unproductive agents. In fact, we cited stats today that are similar to the stats we cited last quarter where 49% of the agents that left the business in the quarter had zero GCI in the trailing 12 months.

Speaker #5: So naturally, it's just going to increase transactions per agent. There's a lot of mix in there too because remember we're now disclosing total agent counts, not just principal agent counts.

Speaker #5: And the total recruiting number each quarter and the total attrition number is really not 100% in our control; it's also in the control of the principal agent, right?

Scott Wahlers: The total recruiting number each quarter and the total attrition number is really not 100% in Compass's control. It's also in control of the principal agent, right? The principal agent is who decides to add team members to its team. It's who decides to attrit team members from the team. That goes into that churn as well. I think directionally speaking, you'll see that number go up as we, by definition, are only recruiting productive agents to the company. As a result of the data you saw in the last two quarters, we're churning out, on average, the lower-performing agents.

Speaker #5: The principal agent is who decides to add team members to its team. It's who decides to attrit team members from its team. So that goes into that churn as well.

Speaker #5: But I think, directionally speaking, you'll see that number go up as we, by definition, are only recruiting productive agents to the company. And as a result of the data you saw in the last two quarters, we're trading out, on average, the lower-performing agents.

Speaker #1: Your next question will come from Canal Mazakar with Deutsche Bank.

Operator: Your next question will come from Kunal Madhukar with Deutsche Bank.

Speaker #6: Hi, thank you for taking the question. A quick one on the outlook that you provided. Given the K-shaped market recovery or the economy that we are seeing right now, as the market recovers, what is your assumption on market share, and especially around the recovery part?

Kunal Madhukar: Hi, thank you for taking the question. A quick one on the outlook that you provided. Given the K-sided or K-shaped market recovery or the economy that we are seeing right now, as the market recovers, what is your assumption on market share, and especially around the recovery part? If the market recovers from the current 4 million to, let's say, 5 million or five and a half million, if you're assuming the same market share going up in that environment, given your bent towards higher-priced properties and more luxury properties, would that assumption be correct?

Speaker #6: So, if the market recovers from the current 4 million to, let's say, 5 million or 5 and a half million, if you're assuming the same market share going up in that environment, is that, given your bend towards higher-priced properties and more luxury properties, would that assumption be correct?

Speaker #2: Yeah, look, we don't really think about it.

Scott Wahlers: Yeah, look, we don't really think about guidance in terms of market share. We really haven't changed our philosophy on guidance, and the way we do it is really consistent with how we've always done it for that upcoming quarter. It's really based on what we're seeing in our systems at this point in time, right? As we sit here today, early August, we have good visibility into July. As a reminder too, for this current quarter, July, it's the largest month of the 3 months in this quarter, directionally 40% of the volume in July. We take a look at what we see in July. We have some data for August, right? We're able to extrapolate that into a guide for the month of August. September is a little bit of our wild card.

Speaker #5: Guidance in terms of market share— I mean, we really haven't changed our philosophy on guidance. The way we do it is really consistent with how we've always done it for that upcoming quarter.

Speaker #5: It's really based on what we're seeing in our systems at this point in time, right? So as we sit here today, early August, we have good visibility into July.

Speaker #5: As a reminder too, for this current quarter, July represents—it's the largest month of the three months in this quarter, directionally about 40% of the volume in July.

Speaker #5: And so we take a look at what we see in July. We have some data for August, right? So we're able to extrapolate that into a guide for the month of August.

Speaker #5: And then September is a little bit of our wild card. It's the third month out in the quarter, and so we're taking educated guesstimates on that based on trending information.

Scott Wahlers: It's the third month out in the quarter, so we're taking educated guess-ments on that based on trending information. That's kind of how we do the guide for the upcoming quarter, and we really haven't changed that.

Speaker #5: But that's kind of how we do the guide for the upcoming quarter. We really haven't changed that.

Speaker #6: Got it. And with regard to agent growth, how should we think of agent growth for the third and the fourth quarters?

Kunal Madhukar: Got it. With regard to agent growth, how should we think of agent growth for Q3 and Q4?

Speaker #5: Yeah, look, in terms of agent growth, I think the point here is that we're going to continue recruiting productive agents into the environment. I mean, as we talked about a little bit in our prepared comments, we had consistent, good growth on the Compass side.

Scott Wahlers: Yeah, look, in terms of agent growth, I think the point here is that we're going to continue recruiting productive agents into the environment. As we talked a little bit in our prepared comments, we had consistent good growth on the Compass side. Our enterprise sales team has been in a good motion over years now of perfecting that sales motion, and we are rolling that recruiting team out to the other owned brands in the Anywhere side that we just acquired in January. We're looking forward to ramping that up, and that should be full scale come January of next year. Over the next couple of quarters, I think you'll still see steady growth. Really looking forward to getting that full recruiting motion heading into 2027. The point being on agent count, though, is it's less of a number, right?

Speaker #5: Our enterprise sales team has been in a good motion over the years now of perfecting that sales motion. And we are rolling that recruiting team out to the other owned brands in the Anywhere side that we just acquired in January.

Speaker #5: And so we're looking forward to ramping that up, and that should be full scale come January of next year. So over the next couple of quarters, I think you'll still see steady growth, but we're really looking forward to getting that full recruiting motion heading into 2027.

Speaker #5: The point about agent count, though, is that it's less about the specific number, right? Because you'll see it's more of a directional indicator. And there have been limitations in putting out a total agent count.

Scott Wahlers: You'll see it's a directional indicator, and there's been limitations in putting a total agent count out. There's been limitations in putting a principal agent count number out there. As I've said before, you can have one principal agent that has dozens of team members that does a ton of production. You can also have a principal agent that's an individual contributor. The same is true for the disparity of individual agents on a total count perspective. Not all agents are created equal in terms of their production. A number is kind of hard to peg a result on. We provide that number in terms of direction, but it's not the only factor, and it doesn't impact growth, is what it comes down to.

Speaker #5: There's been limitations in putting a principal agent count number out there. As I've said before, you can have one principal agent that has dozens of team members that does a ton of production.

Speaker #5: You can also have a principal agent that's an individual contributor. The same is true for the disparity of individual agents from a total count perspective.

Speaker #5: Not all agents are created equal in terms of their production, so a number is kind of hard to peg a result on. We're kind of like, we provide that number in terms of direction.

Speaker #5: But it's not the only factor, and it doesn't impact growth—is what it comes down to.

Speaker #1: Your next question will come from Ryan McEvenie with Zelman.

Operator: Your next question will come from Ryan McKeveny with Zelman.

Speaker #4: Hey, thanks a lot, guys, and nice job with the results. So, one quick follow-up on the comment you were just talking about with the enterprise sales operations.

Ryan McKeveny: Hey, thanks a lot, guys, and nice job with the results. One quick follow-up on the comment you were just talking about with the enterprise sales operations. I guess over a longer period of time, should we expect that system or the operations there to also be applicable on the franchise side of things for franchise owners and within the franchise brands? The other question I have is on just the cost side of things. Obviously, good work on the synergies, and I may have missed it, but I know in the past, Scott, you've talked to this idea of 3% to 4% OpEx inflation as kind of the expectation. You also called out this quarter the variable expense side of the integrated services.

Speaker #4: I guess, over a longer period of time, should we expect that system or the operations there to also be applicable on the franchise side of things for franchise owners and within the franchise brands?

Speaker #4: And then the other question I have is on just the cost side of things. So, obviously, good work on the synergies. I may have missed it, but I know in the past, Scott, you've talked to this idea of 3% to 4% OPEX inflation as kind of the expectation.

Speaker #4: You also called out this quarter the variable expense side of the integrated services. So, curious—when we step aside from the synergies for a moment, is that 3% to 4% still what you're thinking about?

Ryan McKeveny: Curious, when we step aside from the synergies for a moment, is that 3% to 4% still what you're thinking about and More generally on that, and sorry for the long-winded question, to the extent we either do have a significant recovery in existing home sales or they go meaningfully lower, I guess, how do you think about the OpEx cost structure between, let's call it an upside and downside case? Does a 3% to 4% stay intact in an upside scenario, or do you have to flex expenses higher? Likewise, on the downside, presumably, you'd be looking for cost to remove. Yeah, if you can speak to those, that would be great, and sorry again for the long question. Thank you.

Speaker #4: And more generally on that—and sorry for the long-winded question—to the extent we either do have a significant recovery in existing home sales, or they go meaningfully lower, I guess how do you think about the OPEX cost structure between, let's call it, an upside and downside case?

Speaker #4: Does the three to four percent stay intact in an upside scenario, or do you have to flex expenses higher? And likewise, in the downside, presumably you'd be looking for costs to remove.

Speaker #4: But yeah, if you can speak to those, that would be great. And sorry again for the long question. Thank you.

Speaker #2: Right. Yeah. So, on the enterprise sales team, we're effectively thinking that six months after the home platform launch, we launch the enterprise sales team. And so, for the own brokerage, we started this summer.

Robert Reffkin: Great. Yeah. On the enterprise sales team, we're effectively thinking six months after the Home Platform launch, we launched the enterprise sales team. For the own brokerage, we started this summer, and so in winter, I think we should be fully complete with the enterprise sales team. In Q1 of next year, we'll start the Home Platform launch for our franchise affiliate brands. I would say, six months later, you'll see the same benefits and structure and offering that we provide the owned brands from an enterprise sales team perspective, we will provide to our franchise broker owners. Now, just keep in mind, for them, they always have the option to or not to use them. They're completely different independent companies. We believe that our enterprise solution will be of value to them.

Speaker #2: And so, in winter, I think we should be fully complete with the enterprise sales team. In Q1 of next year, we'll start the Home Platform launch for our franchise affiliate brands.

Speaker #2: And I would say, six months later, you will see the same benefits and structure in offering that we provide to our own brands from an Enterprise sales team perspective.

Speaker #2: We will provide this to our franchise broker owners. Now, just keep in mind for them, they always have the option to use something or not.

Speaker #2: They're completely different, independent companies. But we believe that our enterprise solution will be of value to them.

Speaker #5: Yeah, Ryan, on your second question—look, I think the 3% to 4% framework is definitely the right way to think about it over time.

Scott Wahlers: Yeah, Ryan, on your second question, look, I think the 3% to 4% framework is definitely the right way to think about it over time. We historically had everything in one segment, so kind of all the costs for these different business units were all in one OpEx line. Now that we have three-segment presentation, you can see the OpEx broken out between integrated services and the franchise side. I just called out some of those comments that you will see some uptick as we do better on the integrated services side of things, but it's really kind of muted overall. I think the biggest component of the business, biggest component of the cost structure is on the brokerage side.

Speaker #5: We historically had everything in one segment—so all the costs for these different business units were in one OPEX line. Now that we have a three-segment presentation, you can see the OPEX broken out between Integrated Services and the Franchise side.

Speaker #5: And so I just kind of called out some of those comments that you will see some uptick as we do better on the franchise side, on the integrated services side of things. But it's really kind of muted overall.

Speaker #5: I mean, I think the biggest component of the business, biggest component of the cost structure is on the brokerage side. And as we said about before, as you grow that revenue, you just don't have a lot of fixed costs that grow with it or variable costs, I should say, that grow with it.

Scott Wahlers: As we've said about before, as you grow that revenue, you just don't have a lot of fixed costs that grow with it, or variable costs, I should say, that grow with it. A lot of those costs are somewhat fixed in nature. Of course, there are some costs that will grow in a variable nature with revenue, but they're really kind of on the small end of the spectrum, we still feel good about that rate over time. I think the cost synergies obviously will lower that growth. You will have additional increases in cost, but inflation will always exist, we'll continue to be looking for ways to offset that with efficiencies and some of the cost synergy work. We'll lower that down, we feel we can stay within that percentage over time.

Speaker #5: A lot of those costs are somewhat fixed in nature. Of course, there are some costs that will grow in a variable nature with revenue, but they're really kind of on the small end of the spectrum.

Speaker #5: And so we still feel good about that rate over time. And I think the cost synergies obviously will lower that growth, right? You will have additional increases in cost, but inflation will always exist. But we'll continue to be looking for ways to offset that with efficiencies and some of the cost synergy work.

Speaker #5: We'll lower that down, so we feel we can stay within that percentage over time.

Speaker #1: Your next question will come from Alec Brondola with Wells Fargo.

Operator: Your next question will come from Alec Brondolo with Wells Fargo.

Speaker #3: Yeah. Hey, thanks so much. I appreciate the question. So, interesting data points on Compass coming-soon penetration of new listings: 57% in recent weeks.

Alec Brondolo: Yeah. Hey, thanks so much. Appreciate the question. Interesting data points on kind of Compass Coming Soon penetration of new listings, 57% in recent weeks. I think you said 80% by the end of Q3. We started to see some Coldwell Banker Coming Soons on the websites and on the portals, clearly some progress being made on selling the Coming Soon listing modality into the new brands. How long do you anticipate it'll take to get the Anywhere brands up to the level of Coming Soon penetration that you've been able to achieve at Compass? Thanks.

Speaker #3: Like you said, 80% by the end of the third quarter. We've started to see some Coldwell Banker 'coming soons' on the websites and on the portals.

Speaker #3: And so, clearly some progress is being made on selling the Coming Soon listing modality into the new brands. How long do you anticipate it will take to get the Anywhere brands up to the level of Coming Soon penetration that you've been able to achieve?

Speaker #3: At compass, thanks.

Speaker #2: I think this spring market—i.e., the period before the spring market, January, February, March—I would expect the Anywhere brands to be at the same level as the Compass brands.

Robert Reffkin: I think this spring market, i.e., the period before the spring market, January, February, March, I would expect the Anywhere brands to be at the same level as the Compass brands.

Speaker #3: Yeah, got it. That's helpful. And I guess maybe a follow-up question. I think your Compass Coming Soon is like 5% of Chicago listings—more if you just look at listings that have been on the market for less than 30 days.

Alec Brondolo: Yep. Got it. That's helpful. I guess maybe a follow-up question. I think your Compass Coming Soon is like 5% of Chicago listings, more if you just look at listings that have been on the market for less than 30 days. The traffic data point was interesting to me. I think you said that in Chicago, your web traffic was up 100% or something to the portal. Does this success in leveraging the Coming Soon listings to drive traffic to compass.com change your thoughts at all around the portal strategy? I think, clearly, you have the Redfin partnership. You've indicated a proclivity to partner. Does having more success driving direct traffic change your thoughts about wanting to compete more directly in the portal business as opposed to partner? Thanks.

Speaker #3: And the traffic data point was interesting to me. I think you said that in Chicago, your web traffic was up 100% or something to the portal.

Speaker #3: Does this success in leveraging the Coming Soon listings to drive traffic to Compass.com change your thoughts at all around the portal strategy? I think, clearly, you have the Redfin partnership.

Speaker #3: You've indicated a proclivity to partner. Does having more success driving direct traffic change your thoughts about wanting to compete more directly in the portal business, as opposed to partnering? Thanks.

Speaker #2: I think we've been consistent for the entire time. We want—let me ask you the question this way. Is it unreasonable to expect that the company that has the most listings in the United States is the number one place people search in the United States?

Robert Reffkin: I think we've been consistent for the entire time. Let me ask the question this way. Is it unreasonable to expect that the company that has the most listings in the United States is the number one place people search in the United States? I don't think so. I think the only reason that is not the case is because there are mandatory rules that are forcing listing agents to give up their data and their clients' data, give up their content, to third-party platforms. As these rules go away, because we believe they are beyond anti-competitive, they are illegal, that the MLSs are a collection of our competitors who are telling us how we can and cannot compete. Again, I can't overstate that enough. They are a collection of our competitors.

Speaker #2: I don't think so. I think the only reason that is not the case is because there are mandatory rules that are forcing listing agents to give up their data and their clients' data—give up their content—to third-party platforms.

Speaker #2: And so, as these rules go away—because we believe they are beyond anti-competitive, they're illegal—the MLSs are a collection of our competitors who are telling us how we can and cannot compete.

Speaker #2: Again, I can't overstate that enough. They are a collection of our competitors. That's the MLS board that runs the MLS, that tells us how we can and cannot compete in marketing services.

Robert Reffkin: That's the MLS board that runs the MLS, that tells us how we can and cannot compete in marketing services. As those go down and down and down every month and year, as they will, agents will just put them on our sites, and then people will search where the inventory is. We've done the research. Like, what does it take to make a buyer want to search another site? They just need to know there's one listing in the exact market where they are looking, and if they believe there's one other listing, they will search that site. Now, in terms of Redfin, they are a great partner in more ways than one. I think there's room for, of course, many different portals. We're thankful that they provided competition to the dominant portal. Again, they are a great partner.

Speaker #2: As those go down and down and down every month and year—if they will—agents will just put them on our sites. And then people will search where the inventory is.

Speaker #2: We've done the research. What does it take to make a buyer want to search another site? They just need to know there's one listing in the exact market where they are looking, and if they believe there's even one other listing, they will search that site.

Speaker #2: Now, in terms of Redfin, they are a great, great partner in more ways than one. And I think that—yeah, I think there's room for, of course, many different portals.

Speaker #2: And we believe, and we're thankful, that they provided competition to the dominant portal. And again, they're a great partner.

Speaker #1: This concludes our Q&A session. I will now turn the call back to Robert Reffkin for closing remarks.

Operator: This concludes our Q&A session. I will now turn the call back to Robert Reffkin for closing remarks.

Speaker #2: Well, thank you, everyone, for joining our call today. I want to end by thanking all of our employees and all of our real estate professionals for their hard work together.

Robert Reffkin: Well, thank you, everyone, for joining our call today. I want to end by thanking all of our employees and all of our real estate professionals for their hard work. Together, we delivered a record Q2. I look forward to continuing our strong momentum in the H2 of this year with you all. Thank you, to everyone, have a great rest of your day.

Speaker #2: We delivered a record second quarter, and I look forward to continuing our strong momentum in the second half of this year with you all.

Speaker #2: Thank you, and to everyone, have a great rest of your day.

Operator: This concludes today's call. Thank you for joining. You may now disconnect.

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