The real estate brokerage also managed to trim losses and achieved positive free cash flow for the first time ever in a first quarter, according to an earnings call Wednesday.
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Despite a sluggish and uncertain housing market, Compass revealed Monday that it experienced a strong first quarter of 2024, with key metrics such as revenue and agent count ticking up, while losses went down.
In total, the brokerage pulled in $1.05 billion in revenue between January and March, according to a new earnings report. That’s a 10 percent jump compared to the first quarter of 2023. In the report, Compass attributed the higher revenue to a 7.1 percent increase in transactions. The company achieved the revenue and transaction bumps even as the broader market saw transactions fall by 3.5 percent, the report further points out.
The company also managed to have positive free cash flow — in this case, $5.9 million — for the first time ever in a first quarter. That number is key because CEO Robert Reffkin has long been vocal about his goal of achieving positive free cash flow for a full year. The company originally believed it would hit that target last year but, amid a tough market, ultimately missed. However, achieving positive free cash flow in Q1 for the first time suggests the company could be on track to hit its goal this year.
Aside from free cash flow and revenue, Compass lost $132.9 million in the first quarter of 2024. That’s an improvement over the $150.2 million it lost one year prior. This year’s Q1 loss includes the full $57.5 million that Compass has agreed to pay as part of its settlement in multiple commission lawsuits.
Total principal agent count also rose 7.3 percent year over year in the first quarter, to 14,591. Agent count is also a key metric for brokerages because the total number of Realtors in the U.S. has lately been dropping thanks to the cooler market. That in turn has intensified competition among brokerages for top talent.
Robert Reffkin
In the report, Reffkin said that the company “exceeded our expectations for the quarter.” He also celebrated achieving positive free cash flow during “the industry’s slowest quarter of the year and in a historically challenging market.” Additionally, Reffkin touted the recent acquisition of Latter and Blum — which is not included in the Q1 agent count numbers — and added that Compass will be looking for future growth opportunities as well.
“We continue to look for accretive M&A transactions and to attract new agents organically as we successfully position Compass for what we believe will be significant upside when the market begins to recover,” Reffkin said.
Heading into Wednesday’s earnings report, shares in Compass were trading for around $3.28. That was down for the day and compared to the beginning of the year, when shares were fetching around $3.50.
Shares surged in after-hours trading Wednesday following the publication of Compass’ earnings report.
Credit: Google
Compass had a market cap of about $1.6 billion when markets closed Wednesday afternoon.
Compass last reported earnings in February, at which time it revealed that it brought in $1.1 billion in revenue between October and December of 2023. That represented a 1 percent year-over-year dip. The company also lost $83.7 million in Q4 2023, which was a 47 percent improvement over the loss of $158.1 million one year earlier.
During a call with analysts Wednesday afternoon, Reffkin discussed the fallout from the recent National Association of Realtors’ commission lawsuit settlement. Among other things, Reffkin argued that despite the settlement and “sensational” new headlines, his company’s research shows that consumers are still using agents and that most listings are still offering compensation to buyers’ brokers.
Reffkin added that he isn’t hearing from Compass agents in the field that commissions are falling or that sellers are generally shying away from offering compensation to buyers’ agents.
The takeaway, Reffkin argued, is that the settlement’s impacts may not be as disruptive as some have suggested. Reffkin ultimately argued that agents aren’t going away and that around 90 percent of consumers will continue to seek out professionals to handle their home transactions. He also noted that discounters of various flavors have existed for decades but have remained niche offerings with relatively small market share.
“Despite all of these attempts to disrupt the real estate agent, buyers and sellers are using agents more than ever before,” Reffkin argued.
Reffkin also said Compass’ agents are comparatively more productive than other agents and that Compass should be able to thrive in a post-settlement world.
“I see this for sure more as an opportunity than as a challenge,” he said, adding later that the settlement could be a boon for brokerages because agents can tout their services in soon-to-be-common buyer presentations. “Brokerages will be more valuable to agents going forward because we’ll need them for the buyer conversation, not just the seller conversation.”
Also during Wednesday’s call, Reffkin discussed the market, saying that “I still believe 2024 will be better than 2023, and 2025 will be better than 2024.” He added that increased inventory should improve market conditions in the near future. Additionally, the number of mortgage holders with rates under 4 percent is also falling, meaning fewer homeowners are locked into their current residences.
“We believe when rates come down,” Reffkin said, “it will create a massive surge in transactions. The longer it lasts, the stronger the market bounce back will be.”
Update: This story was updated after publication with additional details from Compass’ earnings report and with commentary the company held Wednesday afternoon with analysts.
The iBuyer lost $17.5 million between January and March, according to an earnings call Monday afternoon. However, that represents a 71 percent improvement compared to a year earlier.
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IBuyer Offerpad revealed on Monday its revenue cratered in the first quarter of 2024 compared to a year earlier, but it also managed to trim losses and increase the number of homes it acquired.
In total, Offerpad brought in $285.4 million in revenue between January and March, according to a newly released earnings report. That’s down 53 percent compared to the $609.6 million in revenue it earned in the first quarter of 2023. However, lower revenue notwithstanding, Offerpad also reduced its Q1 loss to just $17.5 million — a 71 percent improvement over the $59.4 million it lost a year earlier.
The company also ramped up acquisitions in the quarter, buying a total of 806 homes. That’s up from just 364 homes in Q1 of 2023. Meanwhile, Offerpad sold 847 homes in Q1 of 2024, down from 1,609 in Q1 of 2023
One year ago, rates were still on an upward trajectory and the housing market was in the midst of a slowdown. By contrast, the Q1 2024 increase in home acquisitions — a strategy rival Opendoor is also employing — could be interpreted as a bet that the market doldrums of the last two years will clear in the coming months.
Several of Monday’s numbers also represent an improvement over the previous quarter, when Offerpad brought in $240.5 million in revenue. The company’s Q1 2024 revenue was 19 percent higher compared to the previous three-month period. Homes acquired and sold were both up 19 percent in Q1 relative to the previous quarter as well.
Alternatively, losses ticked up quarter over quarter by 13 percent.
Brian Bair
In Monday’s report, Offerpad CEO Brian Bair said that in the first quarter of this year his company “continued the positive trajectory we experienced exiting 2023.”
“While the macro is still volatile, the first quarter was one of increasing stability, and we believe this trend will continue through 2024,” Bair said in the report. “We are making steady progress against our key strategic imperatives. We are focused on expanding our asset-light platform services, particularly Renovate, which grew 78 percent in the quarter; increasing our buy box; growing our partner ecosystem; and achieving adjusted EBITDA profitability.”
Heading into Monday’s earnings report, shares in Offerpad were trading in the mid-$7 range. That was down for the day and compared to the beginning of the year, when shares were fetching more than $9. Nearly a year ago, Offerpad executed a 1-for-15 reverse stock split to avoid being delisted from the New York Stock Exchange.
Shares fell in after-hours trading Monday following the publication of Offerpad’s Q1 earnings report.
Credit: Google
Offerpad had a market cap of about $198.1 million as of Monday afternoon.
During a call with analysts Monday, Bair said that Offerpad has “made progress on navigating the entire environment of the last year and a half.” Among other things, he said the company should be able to achieve positive adjusted EBITDA in 2024, and Offerpad is successfully growing asset-light services on its platform.
Regarding the cash offer business, Bair said that the company is still “being very cautious.”
“We’re focused right now on the performance of each home that we buy,” he added while on the call. “I don’t think it’s really time to start jumping in 100 percent there yet.”
Asked on the call about potentially expanding to new markets, Bair said that “there’s still a lot of wood to chop” in Offerpad’s existing markets — meaning there’s room to expand share in the areas where the company already operates.
Overall, though, Bair was optimistic about the future.
“Despite the ongoing macro challenges,” Bair told analysts, “our focus remains on the factors within our control.”
Update: This story was updated after publication with additional details from Offerpad’s earnings report and with commentary from a call the company held with analysts.
The massive trade organization promised in March to make various policy changes as part of a landmark settlement. The rules will now roll out slightly later than expected.
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The National Association of Realtors on Friday outlined the various policy changes that will stem from its landmark commission lawsuit settlement, and revealed that those changes will go into effect in August.
NAR broke down all the policy changes in a 57-page document posted to its website. Significantly, the document begins with an executive summary revealing that the changes “were approved by the NAR Leadership Team and will be effective on Aug. 17.”
The August date may surprise some observers; after NAR agreed in March to settle various homeseller-led commission lawsuits, the resulting policy changes the organization promised to make were expected to officially roll out in July.
The new date pushes the deadline back. It’s also the first date that a class notice can go out following preliminary approval of the settlement, which happened on April 24. A hearing to grant the settlement final approval is currently scheduled for November.
NAR’s new document also outlines the specific policy changes that will go into effect. Among other things, those changes prohibit listing agents from making offers of compensation in the MLS to buyers’ agents. The document further notes that MLSs also will have to eliminate the fields in their technology platforms where such offers were made, and states that MLSs also can’t create other mechanisms for their members to make such offers.
The document additionally explains that the new rules “prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives.” Such a rule presumably means a consumer-facing portal, for example, cannot step in and fill the role MLSs once had by displaying offers of buyer agent compensation from sellers or their brokers. Doing so will “result with the MLS terminating the participant’s access to any MLS data and data feeds,” the document adds.
The document also defines the word “cooperation” as it pertains to MLS participation, notes that compensation disclosures will be required between consumers and their agents, and reiterates that buyers will need to have signed agreements with their agents before touring homes.
Though various policy changes stemming from the settlement were already announced and clarified, the new document shows specifically how and where NAR’s governing language has been updated to reflect the changes. Because the document is lengthy, Inman will continue to analyze it and report on additional details in the coming days.
In the meantime, some uncertainty remains. Though NAR has expressed confidence in its settlement — which will also see it pay $418 million — the U.S. Department of Justice has also indicated it wants to see even bigger changes. The DOJ consequently serves right now as something of a wildcard that could, ultimately, mean different or bigger policy changes lie ahead as well.
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A rough real estate market appears to have taken a toll on Opendoor this year, with the iBuyer experiencing a revenue dip and a rise in losses in the first quarter — though there were still some positive signs of hope.
In total, the company brought in $1.2 billion in revenue between January and March, according to a newly published earnings report. That’s down 62 percent compared to the same period in 2023. Net losses also mounted, with the company burning through $109 million in the quarter — up from $101 million in Q1 of 2023.
The falling numbers were driven by fewer transactions, with the report showing that Opendoor sold 3,078 homes in the first three months of 2024. That’s down 63 percent year over year.
The numbers reflect a punishing real estate market, with high rates leaving many consumers reluctant to either buy or sell homes.
However, Thursday’s report wasn’t all bad news for Opendoor. Though revenue was down year over year, the Q1 numbers were actually up 36 percent compared to revenue in the final three months of 2023.
In a similar vein, the total number of homes sold in Q1 was 30 percent higher than in Q4 2023. Such numbers suggest that while Opendoor still faces marketplace headwinds, it could be reaching a turning point.
Perhaps even more notably, the number of homes Opendoor purchased also spiked 98 percent year over year in the first quarter to 3,458 — though that number is down 6 percent from the final three months of 2023. In total, the company had an inventory of 5,706 homes at the end of the quarter.
Carrie Wheeler | Opendoor CEO
In the report, CEO Carrie Wheeler celebrated the results, saying that “our product continues to resonate with customers, as we more than doubled our market share year-over-year.”
“We entered the second quarter with strong momentum, and we are meaningfully ramping acquisitions in 2024,” Wheeler continued. “Led by our operating principles of focus, execution and results, we remain on track to durably rescale the business in 2024 while delivering Contribution Margin within our target annual range.”
The company’s shareholder letter added that market share also increased in Q1 relative to Q4 2023.
During a call with investors Thursday afternoon, Wheeler added that the company plans to increase home acquisitions each quarter in 2024.
Wheeler spoke to Inman later Thursday evening, noting that the big takeaways from the quarter are “double the acquisitions, double the market share” and “a massive win vs where we were a year ago.” She added that Opendoor has made “massive progress on regrowing the business.”
Opendoor stock inched higher Thursday in the lead up to the company’s earnings report, with shares trading for around $2 as markets closed. However, that is less than half of what shares were fetching at the beginning of 2024.
Shares fluctuated, but trended higher, in after-hours trading Thursday following the earnings report’s publication.
Credit: Google
The iBuyer had a market cap of about 1.4 billion as of Thursday afternoon.
Opendoor previously reported earnings in February. At that time, the company revealed that it brought in $870 million in revenue during the fourth quarter of 2023. That was a year-over-year dip of 70 percent. Despite the lower revenue, however, the company improved its net loss from $399 million in Q4 of 2022 to $91 million in the final three months of last year.
While speaking with Inman Thursday, Wheeler noted that among other things, the company is focused on increasing brand awareness, top-of-funnel expansion and growing partnership channels.
“With spreads coming down, we can afford to invest marketing dollars in a more efficient way,” she added. “Spreads” refers to a metric the company uses to calculate the profit it makes on the homes it renovates and sells.
Asked about mortgage rates, Wheeler said the company is taking a “market-neutral outcome; we’re not embedding luck into our planning.”
Aside from financial numbers, Wheeler spoke out in Thursday’s report about the National Association of Realtors’ recent commission lawsuit settlement. If approved, the settlement would see NAR pay $418 million and make various policy changes. For her part, Wheeler framed the situation in the report as potentially beneficial to Opendoor, which she described as “shaping the future of real estate.”
During her investor call, Wheeler also described the NAR settlement as “positive” and said that over the long term, it should “drive lower transaction costs.”
“We think this is net positive for consumers,” Wheeler said. “Anything that’s good for consumers is good for Opendoor.”
She also said it could result in “more transactions as commissions decrease.”
Speaking to Inman, Wheeler said she doesn’t envision a future in which buyers’ agents largely disappear. She went on to say that Opendoor’s priority is transparency and more consumer choice, which could increase in a post-settlement world.
“The proposed NAR settlement underscores a growing consumer preference for an alternative approach to the traditional home selling and buying process — one that gives them more control,” Wheeler added in the report. “As the largest digital platform for residential real estate transactions, Opendoor was built for this moment, and we remain steadfast in our mission to power life’s progress, one move at a time.”
Update: This story was updated after publication with additional details from Opendoor’s earnings report and with commentary from the company’s investor call.
The company earned $943 million in revenue between January and March of this year. However, by the end of the quarter, agent count was down to 85,780.
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Virtual juggernaut eXp World Holdings reported earnings Wednesday, sharing news of revenue and profit for the first three months of 2024.
But one number from the report stands out more than any other: agent count.
In total, the company revealed in its report that it had 85,780 agents on its platform as of the end of March. That number represents a 2 percent drop relative to one year ago. Notably, it’s also a dip compared to Q4 of 2023, the previous three-month period, when eXp had 87,515 agents.
The Q4 number was itself down from 89,156 agents in the preceding three-month period and gave eXp its first-ever quarter-over-quarter headcount dip.
These dips are significant because for years the company was among the fastest growing in real estate and because it has been open about its ambition to add hundreds of thousands more agents in the coming years.
Wednesday’s earnings report was consequently the first chance to see if the Q4 2023 agent count dip was a fluke or if it was the beginning of a trend. It appears to be the latter. The report says the headcount dips are generally being “driven by the exiting of non-productive agents.”
Glenn Sanford
CEO Glenn Sanford added in an investor call Wednesday afternoon that many of the agents who left were “behind on their fees and MLS dues and other things that are obligations and they weren’t selling any homes, so it was just natural that there was some attrition.”
In the report, Sanford also said the company continues “to provide our agents with the industry’s best platform for growth and the resources they need to navigate today’s dynamic real estate market.”
Perhaps not coincidentally, hours before eXp published earnings Wednesday it also announced new changes to its revenue-share program. The changes include a new bonus for agents who recruit peers, the ability to instantly withdraw revenue share proceeds, and modifications that are meant to accelerate agent earnings.
Presumably, the changes are meant to kickstart the company’s agent count growth amid significant headwinds — headwinds which have also impacted the wider industry and led to an overall drop in the number of U.S. Realtors.
During Wednesday’s investor call, Sanford said he believes the changes are “going to be helpful on the growth side.”
Also on the call, Leo Pareja — who just took over as CEO of subsidiary eXp Realty — said non-productive agents were “offboarded” late last year and early this year. He also said the company’s investments in agents should allow the brokerage to “capture growth as the market turns.”
Leo Pareja
“We’re really focused on building our agent base with the highest quality agents in the industry,” Pareja also said.
Aside from agent count numbers, eXp also revealed Wednesday that revenue in Q1 rose 11 percent year over year to $943 million. Wednesday’s earnings report attributes the improved performance to rising home prices and increased agent productivity, among other things.
Nevertheless, the company suffered a net loss of $15.6 million, a reversal from the $1.5 million in profit it earned in the first quarter of last year. The report notes that the Q1 loss included a $16 million “antitrust litigation contingency provision.”
Sales volume in Q1 was up 12 percent year over year, hitting $37 billion.
Sanford was ultimately optimistic in the report about the future, saying that under the leadership of Pareja, the company “will extend its leadership position in the coming years and continue to redefine what it means to be the most agent-centric real estate brokerage on the planet.”
Shares in eXp climbed slightly in the lead-up to Wednesday’s earnings report and were trading in the low $10 range in the late afternoon. That was up compared to a week ago, but down relative to the $16 shares were fetching at the beginning of the year.
Following the report’s publication Wednesday, shares fluctuated in after-hours trading but generally trended up.
Credit: Google
The company had a market cap of about $1.54 billion as of Wednesday afternoon.
EXp last reported earnings in February. At the time, the company revealed that its revenue climbed from $933 million during the final quarter of 2022 to $983 million during the last three months of 2023. However, revenue for all of 2023 was down 7 percent relative to 2022.
During Wednesday’s investor call, Sanford also weighed in on the many commission lawsuits that allege major companies and the National Association of Realtors have engaged in a conspiracy to keep prices high. NAR and other major companies have filed proposed settlements in the cases, but eXp, which Sanford said is named in about 10 different suits, has not. He also said eXp may be the “last of the large brokerages that haven’t settled yet and are presently not in a settlement discussion at the moment.”
Sanford went on to say that it could take years for eXp’s cases to make it to trial and that the company has “good arguments” in its favor. However, he also suggested the company would be open to a potential settlement.
“If there’s an opportunity,” Sanford said, “to settle for a number that makes sense for us we’ll take that opportunity.”
Update: This story was updated after publication with additional details from eXp’s earnings report, and with commentary from its investor call.
