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Compass, Inc. Reports Fourth Quarter and Full Year 2023 Results

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Grows Agent Count and Market Share year-over-year and quarter-over-quarter in Q4

Expects to Be Free Cash Flow Positive for Full Year 2024

NEW YORK, Feb. 27, 2024 /PRNewswire/ — Compass, Inc. (NYSE: COMP) (“Compass” or “the Company”), the largest residential real estate brokerage in the United States by transaction volume1, announced its financial results for the fourth quarter and full year ended December 31, 2023.

“Over the past two years, we have successfully navigated the worst residential real estate market in decades and significantly reset our operating expense levels, positioning Compass for what we believe will be significant upside when the market begins to recover,” said Robert Reffkin, Founder and Chief Executive Officer of Compass. “As we reduced operating expenses, we continued to invest in growth, our agents and our technology platform, the industry’s only proprietary first-contact to close platform. We recruited more than 2,000 principal agents without cash or equity sign-on incentives since eliminating those incentives in August 2022 and we increased the number of principal agents 7.7% in Q4 2023 compared to Q4 2022. We grew quarterly market share both year-over-year and quarter-over-quarter2 in Q4 2023 and we continued the trend of strong agent retention, achieving 97% principal agent retention in Q4 2023. In 2023, we continued to build our technology advantage as we added 103 features to our platform including Performance Tracker, Compass AI enhancements and ‘1 Click Title & Escrow.'”

Kalani Reelitz, Chief Financial Officer of Compass said, “In January 2023, we announced our 2023 target range of $850 million to $950 million of annualized non-GAAP operating expenses, or OPEX3. We expected to be below the midpoint of that range in Q4 of 2023. One year later, I’m pleased to announce we ended the year below the midpoint goal and expect to further reduce our full year 2024 non-GAAP OPEX to $865 million. We expect non-GAAP OPEX will grow thereafter at a nominal rate of 3-4% per year excluding M&A over the next few years. We have built an operating structure that has set us up for margin expansion when market conditions improve. These reduced non-GAAP OPEX levels have allowed us to significantly improve our cash flow. For the full year of 2023 compared to the full year of 2022, we have been able to achieve a $266 million improvement in our operating cash flow and a $325 million improvement in free cash flow even as revenue declined by $1.1 billion.”

 Q4 2023 and Full Year Financial Highlights:

Revenue in Q4 2023 decreased by 1% year-over-year to $1.1 billion as transactions declined 4.9% driven by macroeconomic factors. For the full year, 2023 revenue was $4.9 billion compared to $6.0 billion in 2022, a decrease of 19%.GAAP Net loss in Q4 2023 was $83.7 million, an improvement of $74.4 million or 47% from a Net loss of $158.1 million in Q4 2022. The Net loss for Q4 2023 includes non-cash stock-based compensation expenses of $36.3 million and depreciation and amortization of $21.5 million. For 2023, Net loss was $321.3 million compared to $601.5 million in 2022, a reduction of $280.2 million or 47%. Adjusted EBITDA4 (a non-GAAP measure) was ($23.7) million in Q4 2023, compared to ($75.3) million in Q4 2022. This is an improvement of $51.6 million or 69%. In 2023, Adjusted EBITDA was ($38.9) million compared to ($210.0) million in 2022, an improvement of $171 million or 81%.Operating Cash Flow / Free Cash Flow4 (a non-GAAP measure): during Q4 2023, operating cash flow was ($38.7) million and free cash flow was ($41.0) million, the difference being the treatment of capital expenditures. For 2023, Operating cash flow was ($25.9) million compared to ($291.7) million in 2022, an improvement of $265.8 million or 91%. Free Cash Flow for the full year 2023 was ($37.1) million compared to ($361.8) million in 2022, an improvement of $324.7 million.Cash and cash equivalents at the end of Q4 2023 was $166.9 million, with no draw of our revolving credit facility. Compared to year-end 2022 of $361.9 million, the cash balance declined $195 million primarily driven by net repayments of drawdowns on the revolving credit facility of $150 million.

Q4 2023 Operational Highlights:

Platform: the Compass end-to-end technology platform provides real estate agents with the ability to perform their primary workflows, from first contact to close, with a single log-in and without leaving the Compass platform.In 2023, we continued to enhance the platform with 103 features, including Performance Tracker, Compass AI, and ‘1-Click Title & Escrow’.We continued the roll out of our title and escrow business integration into the technology platform in Philadelphia, Washington DC, Maryland and Virginia and plan to roll out this integration feature to all the markets where we currently offer title and escrow services in Q3 2024, including in our newest title & escrow market – Florida.National market share in Q4 2023 was 4.41%, an increase of 9 basis points in Q4 2023 compared to Q4 2022 and 10 basis points in Q4 2023 compared to Q3 20235.Agents: Average Number of Principal Agents was 14,689 for Q4 2023, a 7.7% increase of 1,046 principal agents from Q4 2022 and a 4.5% increase sequentially of 634 from Q3 2023.6 Compass continued to experience high levels of principal agent retention with 97% agent retention in Q4 2023. In the fourth quarter, we managed out approximately 50 principal agents and 400 total agents with an average gross commission income of less than $10,000, which had the additional benefit of freeing up resources for the rest of our producing agents.Transactions: Compass agents closed 40,621 Total Transactions in Q4 2023, a decline of 4.9% compared to Q4 2022 (42,719). Transactions for the entire U.S. residential real estate market declined 9.2% for the same period.7 For the full year of 2023, transactions were 178,848 compared to 211,538 in 2022, a decline of 15.5% compared to a decline of 18.7% for the entire U.S. residential market. Gross Transaction Value (“GTV”)8 was $41.8 billion in Q4 2023, a decline of 1.6% compared to Q4 2022 GTV of $42.5 billion, while national market GTV was down 3.7% for the same period. For the full year 2023, GTV was $186.1 billion compared to $230.3 billion in 2022, a decline of 19.2% compared to a national market GTV decline of 17.3%.

Additional information can be found in the Company’s Q4 2023 Earnings Presentation, which can be found in the Investor Relations section of the Compass website at https://investors.compass.com.

Outlook

Q1 2024 Outlook:

Revenue of $975 million to $1,075 millionAdjusted EBITDA of negative $22 million to negative $40 million

FY 2024 Outlook:

Non-GAAP OPEX of $855 million – $875 million9Expects to be free cash flow positive for full year 2024

We have not reconciled our guidance for Adjusted EBITDA to GAAP Net loss because certain expenses excluded from GAAP Net loss when calculating Adjusted EBITDA cannot be reasonably calculated or predicted at this time. Additionally, we have not reconciled our guidance for non-GAAP OPEX to GAAP OPEX because certain expenses excluded from GAAP OPEX cannot be reasonably calculated or predicted at this time. Accordingly, reconciliations are not available without unreasonable effort.

For a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures on a historical basis, see “Reconciliation of Net Loss Attributable to Compass, Inc. to Adjusted EBITDA”, “Reconciliation of GAAP OPEX to non-GAAP OPEX” and “Reconciliation of GAAP Operating Cash Flow to Free Cash Flow” in the financial statement tables included within this press release.

Conference Call Information

Management will conduct a conference call to discuss the fourth quarter and full year 2023 results as well as outlook at 5:00 p.m. ET on Tuesday, February 27, 2024. The conference call will be accessible via the Internet on the Compass Investor Relations website https://investors.compass.com. You can also access the audio webcast via the following link: Compass, Inc. 4Q23 Earnings Conference Call.

An audio recording of the conference call will be available for replay shortly after the call’s completion. To access the replay, visit the Events and Presentations section on the Compass Investor Relations website at https://investors.compass.com.

Disclosure Channels

Compass uses its Investor Relations website, https://investors.compass.com, as a means of disclosing information which may be of interest or material to its investors and for complying with disclosure obligations under Regulation FD. We intend to announce material information to the public through filings with the Securities and Exchange Commission, or the SEC, the investor relations page on our website (www.compass.com), press releases, public conference calls, public webcasts, our X (formerly Twitter) feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s X (formerly Twitter) feed (@RobReffkin) and Instagram account (@robreffkin). Accordingly, investors should monitor each of these disclosure channels.

Safe Harbor Statement

This press release includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding our future performance, including expected financial results for the first quarter of 2024, planned non-GAAP OPEX and free cash flow expectations for the full year of 2024, and our expectations for operational achievements. Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date of this press release, and are subject to risks and uncertainties, including but not limited to: general economic conditions, economic and industry downturns, the health of the U.S. real estate industry, and risks generally incident to the ownership of residential real estate; the effect of monetary policies of the federal government and it’s agencies; rising interest rates; ongoing industry antitrust class action litigation (including lawsuits filed against us) or any related regulatory activities; any decreases in our gross commission income or the percentage of commissions that we collect; declining home inventory levels; our ability to carefully manage our expense structure; adverse economic, real estate or business conditions in geographic areas where our business is concentrated and/or impacting high-end markets; our ability to continuously innovate, improve and expand our platform, including tools and features integrating machine learning and artificial intelligence; our ability to expand our operations and to offer additional integrated services; our ability to realize expected benefits from our joint ventures; our ability to compete successfully; our ability to attract and retain highly qualified personnel and to recruit agents; our ability to re-accelerate our business growth given our current expense structure; fluctuation in our quarterly results and other operating metrics; the loss of one or more key personnel; actions by our agents or employees that could adversely affect our reputation and subject us to liability; our ability to pursue acquisitions that are successful and can be integrated into our existing operations; changes in mortgage underwriting standards; our ability to maintain or establish relationships with third-party service providers; the impact of cybersecurity incidents and the potential loss of critical and confidential information; the reliability of our fraud detection processes and information security systems; depository banks not honoring our escrow and trust deposits; adoption of alternatives to full-service agents by consumers; our ability to develop and maintain an effective system of disclosure controls and internal control over financial reporting; covenants in our debt agreements that may restrict our borrowing capacity or operating activities; our abilities to use net operating losses and other tax attributes; changes in, and our reliance on, accounting standards, assumptions, estimates and business data; the dependability of our platform and software; our ability to maintain our company culture; our ability to obtain or maintain adequate insurance coverage; processing, storage, and use of personal information and other data, and compliance with privacy laws and regulations; natural disasters and catastrophic events; the effect of the claims, lawsuits, government investigations and other proceedings; changes in federal or state laws that would require our agents to be classified as employees; our ability to protect our intellectual property rights and our reliance on the intellectual property rights of third parties; the impact of having a multi-class structure of common stock; and other risks set forth in our annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant. Accordingly, actual results could differ materially from those predicted or implied or such uncertainties could cause adverse effects on our results. Reported results should not be considered as an indication of future performance. 

More information about factors that could adversely affect our business, financial condition and results of operations, or that could cause actual results to differ from those expressed or implied in our forward-looking statements is included under the captions “Risk Factors,” “Legal Proceedings” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q, copies of which are available on the Investor Relations page of our website at https://investors.compass.com/ and on the SEC website at www.sec.gov. All information herein speaks as of the date hereof and all forward-looking statements contained herein are based on information available to us as of the date hereof, and we do not assume any obligation to update these statements as a result of new information or future events. Undue reliance should not be placed on the forward-looking statements in this press release.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present Adjusted EBITDA, non-GAAP OPEX, and Free Cash Flow, which are non-GAAP financial measures, in this press release. We use Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow have limitations as analytical tools. Therefore, you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow alongside other financial performance measures, including net loss attributable to Compass, Inc., GAAP OPEX, operating cash flows and our other GAAP measures. In evaluating Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this press release. Our presentation of Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow should not be construed to imply that our future results will be unaffected by the types of items excluded from these calculations of Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow. Adjusted EBITDA, non-GAAP OPEX and Free Cash Flow are not presented in accordance with GAAP and the use of these terms vary from others in our industry. Reconciliations of these non-GAAP measures have been provided in the financial statement tables included within this press release, and investors are encouraged to review these reconciliations.

About Compass

Compass is the largest residential real estate brokerage in the United States by transaction volume. Founded in 2012 and based in New York City, Compass provides an end-to-end platform that empowers its residential real estate agents to deliver exceptional service to seller and buyer clients. The platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionality, all custom-built for the real estate industry. Compass agents utilize the platform to grow their business, save time and manage their business more effectively. For more information on how Compass empowers real estate agents, one of the largest groups of small business owners in the country, please visit www.compass.com.

1 Compass was ranked number one in sales volume for 2022 by RealTrends in March 2023 for the second year in a row.

2 Q3 2023 national market share has been updated to 4.31%.

3 Non-GAAP OPEX excludes Commissions and other related expenses, Depreciation and amortization, Stock-based compensation and other expenses excluded from the Company’s calculation of Adjusted EBITDA. We calculate non-GAAP OPEX annualized run rate by taking the sum of the quarter’s non-GAAP sales and marketing, operations and support, research and development, and general and administration expenses and multiplying it by four.

4 A reconciliation of GAAP to Non-GAAP measures can be found within the financial statement tables included within this press release.

5 Q3 2023 national market share has been updated to 4.31%.

6 During the first quarter of 2023, we began to utilize an updated methodology for tracking and reporting our agent statistics. The Average Number of Principal Agents and year over year growth reported in this press release is based on the updated methodology.

7 We calculate Total Transactions by taking the sum of all transactions closed on the Compass platform in which our agent represents the buyer or seller in the purchase or sale of a home (excluding rental transactions). We include a single transaction twice when one or more Compass agents represent both the buyer and seller in any given transaction.

8 Gross Transaction Value includes a de minimis number of new development and commercial brokerage transactions.

9 Non-GAAP OPEX excludes Commissions and other related expenses, Depreciation and amortization, Stock-based compensation and other expenses excluded from the Company’s calculation of Adjusted EBITDA. We calculate non-GAAP OPEX annualized run rate by taking the sum of the quarter’s non-GAAP sales and marketing, operations and support, research and development, and general and administration expenses and multiplying it by four. For a reconciliation of GAAP OPEX to non-GAAP OPEX see the financial statement tables included within this press release.

 

 

Compass, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

December 31, 2023

December 31, 2022

Assets

Current assets

Cash and cash equivalents

$                     166.9

$                     361.9

Accounts receivable, net of allowance

36.6

36.6

Compass Concierge receivables, net of allowance

24.0

42.9

Other current assets

54.5

76.5

Total current assets

282.0

517.9

Property and equipment, net

151.7

192.5

Operating lease right-of-use assets

408.5

483.2

Intangible assets, net

77.6

99.3

Goodwill

209.8

198.4

Other non-current assets

30.7

41.8

Total assets

$                  1,160.3

$                  1,533.1

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$                       18.4

$                       28.1

Commissions payable

59.6

48.0

Accrued expenses and other current liabilities

90.8

164.9

Current lease liabilities

98.9

94.6

Concierge credit facility

24.8

31.9

Revolving credit facility

—

150.0

Total current liabilities

292.5

517.5

Non-current lease liabilities

410.2

486.5

Other non-current liabilities

25.6

8.4

Total liabilities

728.3

1,012.4

Stockholders’ equity

Common stock

—

—

Additional paid-in capital

2,946.5

2,713.6

Accumulated deficit

(2,517.8)

(2,196.5)

Total Compass, Inc. stockholders’ equity

428.7

517.1

Non-controlling interest

3.3

3.6

Total stockholders’ equity

432.0

520.7

Total liabilities and stockholders’ equity

$                  1,160.3

$                  1,533.1

 

Compass, Inc.

Condensed Consolidated Statements of Operations

(In millions, except share and per share data, unaudited)

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Revenue

$     1,096.4

$     1,107.2

$     4,885.0

$     6,018.0

Operating expenses:

Commissions and other related expense (1)

895.9

918.8

4,007.0

4,936.1

Sales and marketing (1)

102.9

130.8

435.4

575.1

Operations and support (1)

79.6

83.5

326.9

392.4

Research and development (1)

44.4

63.4

184.5

360.3

General and administrative (1)

32.4

41.1

125.7

208.1

Restructuring costs

2.7

1.2

30.4

49.1

Depreciation and amortization

21.5

21.2

90.0

86.3

        Total operating expenses

1,179.4

1,260.0

5,199.9

6,607.4

Loss from operations

(83.0)

(152.8)

(314.9)

(589.4)

Investment income, net

1.6

1.3

8.5

2.8

Interest expense

(1.6)

(1.3)

(10.8)

(3.6)

Loss before income taxes and equity in loss of unconsolidated entity

(83.0)

(152.8)

(317.2)

(590.2)

Income tax (expense) benefit

(0.1)

(0.5)

0.4

0.9

Equity in loss of unconsolidated entity

(0.7)

(4.7)

(3.3)

(12.2)

Net loss

(83.8)

(158.0)

(320.1)

(601.5)

Net loss (income) attributable to non-controlling interests

0.1

(0.1)

(1.2)

–

Net loss attributable to Compass, Inc.

$         (83.7)

$       (158.1)

$       (321.3)

$       (601.5)

Net loss per share attributable to Compass, Inc., basic and diluted

$         (0.17)

$         (0.36)

$         (0.69)

$         (1.40)

Weighted-average shares used in computing net loss per share
attributable to Compass, Inc., basic and diluted

483,710,540

436,568,882

466,522,935

428,169,180

(1)

Total stock-based compensation expense included in the condensed consolidated statements of operations is as follows (in millions):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Commissions and other related expense

$             —

$          22.9

$          11.6

$          59.0

Sales and marketing

8.6

9.3

35.0

42.0

Operations and support

4.5

3.3

16.1

15.6

Research and development

11.3

12.3

45.7

57.5

General and administrative

11.9

13.6

49.8

60.4

Total stock-based compensation expense

$          36.3

$          61.4

$        158.2

$        234.5

 

Compass, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions, unaudited)

Year Ended December 31,

2023

2022

Operating Activities

Net loss

$(320.1)

$(601.5)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

90.0

86.3

Stock-based compensation

158.2

234.5

Equity in loss of unconsolidated entity

3.3

12.2

Change in acquisition related contingent consideration

2.6

(2.2)

Bad debt expense

4.4

7.3

Amortization of debt issuance costs

0.7

0.9

Changes in operating assets and liabilities:

Accounts receivable

(3.5)

6.5

Compass Concierge receivables

18.0

(11.7)

Other current assets

21.4

17.6

Other non-current assets

9.1

9.8

Operating lease right-of-use assets and operating lease liabilities

(1.2)

5.8

Accounts payable

(9.8)

(4.8)

Commissions payable

11.6

(15.9)

Accrued expenses and other liabilities

(10.6)

(36.5)

Net cash used in operating activities

(25.9)

(291.7)

Investing Activities

Investment in unconsolidated entity

(1.2)

(15.0)

Capital expenditures

(11.2)

(70.1)

Payments for acquisitions, net of cash acquired

0.7

(15.0)

Net cash used in investing activities

(11.7)

(100.1)

Financing Activities

Proceeds from exercise of stock options

4.5

9.0

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

2.5

2.3

Taxes paid related to net share settlement of equity awards

(23.5)

(23.5)

Proceeds from drawdowns on Concierge credit facility

55.4

59.0

Repayments of drawdowns on Concierge credit facility

(62.5)

(43.3)

Proceeds from drawdowns on Revolving credit facility

75.0

150.0

Repayments of drawdowns on Revolving credit facility

(225.0)

—

Proceeds from issuance of common stock in connection with the Strategic Transaction

32.3

—

Payments related to acquisitions, including contingent consideration

(14.6)

(17.5)

Other

(1.5)

(0.6)

Net cash (used in) provided by financing activities

(157.4)

135.4

Net decrease in cash and cash equivalents

(195.0)

(256.4)

Cash and cash equivalents at beginning of period

361.9

618.3

Cash and cash equivalents at end of period

$  166.9

$  361.9

 

Compass, Inc.

Reconciliation of Net Loss Attributable to Compass, Inc. to Adjusted EBITDA

(In millions, unaudited)

Three Months Ended
December 31,  

Year Ended December 31,

2023

2022

2023

2022

Net loss attributable to Compass, Inc.

$(83.7)

$(158.1)

$(321.3)

$(601.5)

Adjusted to exclude the following:

Depreciation and amortization

21.5

21.2

90.0

86.3

Investment income, net

(1.6)

(1.3)

(8.5)

(2.8)

Interest expense

1.6

1.3

10.8

3.6

Stock-based compensation

36.3

61.4

158.2

234.5

Income tax expense (benefit)

0.1

0.5

(0.4)

(0.9)

Restructuring costs

2.7

1.2

30.4

49.1

Acquisition-related expenses(1)

(0.6)

(1.5)

1.9

11.2

Litigation charges(2)

—

—

—

10.5

Adjusted EBITDA

$  (23.7)

$  (75.3)

$  (38.9)

$(210.0)

(1) For the three months ended December 31, 2023 and 2022, acquisition-related expenses includes a $0.9 million loss and a $0.3 million gain, respectively, as a result of changes in the fair value of contingent consideration and gains of $1.5 million and $1.2 million, respectively, related to acquisition consideration treated as compensation expense over the underlying retention periods. For the years ended December 31, 2023 and 2022, acquisition-related expenses includes a $1.3 million loss and a $2.2 million gain, respectively, as a result of changes in the fair value of contingent consideration and expense of $0.6 million and $13.4 million, respectively, related to acquisition consideration treated as compensation expense over the underlying retention periods.

(2) Represents a charge of $10.5 million incurred during the year ended December 31, 2022 in connection with the Realogy Holdings Corp. matter.

 

Compass, Inc.

Reconciliation of Operating Cash Flows to Free Cash Flow

(In millions, unaudited)

Three Months Ended
December 31,

Year Ended December 31,

2023

2022

2023

2022

Net cash used in operating activities

$(38.7)

$(117.8)

$(25.9)

$(291.7)

Less:

Capital expenditures

(2.3)

(13.2)

(11.2)

(70.1)

Free cash flow

$ (41.0)

$(131.0)

$(37.1)

$(361.8)

 

Compass, Inc.

Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses

(In millions, unaudited)

Three Months Ended
December 31,

Year Ended December 31,

2023

2022

2023

2022

GAAP Commissions and other related expense

$895.9

$918.8

$4,007.0

$4,936.1

Adjusted to exclude the following:

Stock-based compensation

—

(22.9)

(11.6)

(59.0)

Non-GAAP Commissions and other related expense

$895.9

$895.9

$3,995.4

$4,877.1

GAAP Sales and marketing

$102.9

$130.8

$   435.4

$   575.1

Adjusted to exclude the following:

Stock-based compensation

(8.6)

(9.3)

(35.0)

(42.0)

Non-GAAP Sales and marketing

$  94.3

$121.5

$   400.4

$   533.1

GAAP Operations and support

$  79.6

$  83.5

$   326.9

$   392.4

Adjusted to exclude the following:

Stock-based compensation

(4.5)

(3.3)

(16.1)

(15.6)

Acquisition-related expenses

0.6

1.5

(1.9)

(11.2)

Non-GAAP Operations and support

$  75.7

$  81.7

$   308.9

$   365.6

GAAP Research and development

$  44.4

$  63.4

$   184.5

$   360.3

Adjusted to exclude the following:

Stock-based compensation

(11.3)

(12.3)

(45.7)

(57.5)

Non-GAAP Research and development

$  33.1

$  51.1

$   138.8

$   302.8

GAAP General and administrative

$  32.4

$  41.1

$   125.7

$   208.1

Adjusted to exclude the following:

Stock-based compensation

(11.9)

(13.6)

(49.8)

(60.4)

Litigation charge

—

—

—

(10.5)

Non-GAAP General and administrative

$  20.5

$  27.5

$     75.9

$   137.2

 

Compass, Inc.

Non-GAAP Operating Expenses Excluding Commissions and Other Related Expense

(In millions, unaudited)

Three Months Ended

March 31,
2022

June 30,
2022

September 30,
2022

December 31,
2022

March 31,
2023

June 30,
2023

September 30,
2023

December 31,
2023

Sales and marketing

$                134.3

$              143.7

$                 133.6

121.5

$                 106.7

$              104.3

$                   95.1

$                   94.3

Operations and support

96.5

97.8

89.6

81.7

75.0

79.8

78.4

75.7

Research and development

91.3

88.3

72.1

51.1

38.5

32.8

34.4

33.1

General and administrative

40.4

36.6

32.7

27.5

23.1

21.4

10.9

20.5

Total non-GAAP operating expenses excluding 
commissions and other related expense

$                362.5

$              366.4

$                 328.0

$                 281.8

$                 243.3

$              238.3

$                 218.8

$                 223.6

 

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Warhound Launches with $200 Million to Rebuild America’s Military Working Dog Supply, Using Advanced Genetics and Defense Technology

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Company will produce genetically enhanced working dogs that leverage cybernetics technology to improve health and performance while ending reliance on foreign suppliers

DALLAS and COSTA MESA, Calif., Oct. 23, 2026 /PRNewswire/ — Warhound, a new defense technology company conceived by American technology entrepreneurs Ben Lamm and Palmer Luckey emerged from stealth with a $200 million seed round. Warhound will rebuild America’s domestic supply of elite working dogs for U.S. military forces, law-enforcement, emergency first response teams—a critical national security resource that the U.S. has long relied on foreign countries to provide. Led by CEO David Spirk, the company will reduce dependence on a shrinking European supply chain and strengthen America’s ability to protect its own people, infrastructure, and national security interests.

Warhound is modernizing America’s working-dog program by delivering a vertically integrated program, combining Colossal’s enhanced genetics platform and secure biobanking capabilities of America’s top-performing dog arsenal, controlled delivery through cloning with best-in-class training and animal care. Through a partnership, all dogs will be equipped by Anduril’s advanced cybernetic Augments, software, and battlefield situational awareness. The company is backed by In-Q-Tel, Sequoia Capital, ARK Invest, Franklin Templeton, 8VC, USIT, Bob Nelsen, Breyer Capital, CAZ Investments, Neogenesis, Builders VC, and Lux Capital among others. Based in Texas, Warhound will operate under the guidance of the American Humane Society which will certify its training programs and support the reunification of retired military working dogs with their former handlers and adoption protocols.

“Palmer, Ben and the Warhound team are exceptional. Sequoia is proud to back them,” said Shaun Maguire, Partner at Sequoia Capital.

Warhound is bringing together Colossal’s breakthroughs in genetics, cloning, and animal biology with Anduril’s advanced defense technology to fundamentally change how America produces, trains, and protects its military working dogs. Colossal’s science will help produce healthier dogs with characteristics suited to demanding missions, while Anduril’s technology will give dogs and their handlers greater awareness and protection in the field.

“Every day, we ask dogs to put their lives on the line to protect ours. They detect explosives, protect our troops, and run toward dangers that most people are trained to run away from. Yet we’re still relying on outdated approaches to breeding and training these extraordinary animals, with too many never making it through the process. We have an opportunity to fundamentally change that. Colossal has spent years pioneering breakthroughs in genetics, cloning, and animal biology, and now we’re applying that science to give these dogs the best possible chance at a long, healthy life and a successful mission. If we’re going to ask man’s best friend to protect America, we owe it to them to use every tool at our disposal to protect them, too,” said Ben Lamm.

Since the Army established the K-9 Corps in 1942, military working dogs have served alongside America’s armed forces for more than 84 years—detecting threats, protecting service members and supporting missions worldwide. That program has evolved in The United States Department of War’s (DOW) Military Working Dog Program, which currently includes 2,200+ working dog teams that are operationally critical for detection and patrol work, and a critical part of the defense infrastructure of the country. More than 80% of U.S. military working dogs are currently acquired from Europe, creating a critical interdependency on foreign nations for an asset the Pentagon itself calls irreplaceable. That dependency is compounding: after a rigorous, roughly three-year acquisition-and-training pipeline, less than half of the dogs procured are ultimately deemed fit for service, meaning the U.S. must source and train roughly 200 dogs today to field 100 working animals tomorrow.

“Man’s best friend deserves man’s best tech,” said Palmer Luckey. 

David Spirk has been named the CEO of Warhound. As a veteran of the United States Marine Corps, he worked as an intelligence specialist with multiple deployments and ultimately served as the Deputy Associate Director of National Intelligence for Afghanistan and Pakistan at the Office of the Director of National Intelligence representing the Intelligence Community at the White House and on Capital Hill. He has an extensive background in the U.S. military, intelligence community, and federal data governance, specifically focused on scaling algorithmic warfare and creating data driven advantages. More recently, he was a Senior Counselor at Palantir Technologies where he focused on expanding the company’s software footprints across the U.S. government, allied international partners, and commercial sectors. Previously, he was appointed the First Chief Data Officer (CDO) for the Department of War, where he worked on accelerating the military’s data-driven capabilities and was the first CDO for the U.S. Special Operations Command (USSOCOM).

“Our long-term goal is simple: healthier dogs, better-prepared teams, and more service members and first responders coming home safely. Leading Warhound, and strengthening America’s working-dog capabilities, is an opportunity to apply my experience to a mission I care deeply about: protecting people and helping the animals who support them,” said David Spirk. “My focus is building a team that can turn scientific advances into capabilities that work in the field.”

Building Healthier, More Capable Working Dogs to Protect Both Dogs and People
The concept of Warhound was conceived years ago by Palmer and Ben after a discussion at Peter Diamandis’ Moonshots Summit. Military working-dog programs face a costly challenge: more than half of candidate dogs fail to complete training, while reliance on overseas breeders leaves the United States dependent on a constrained foreign supply chain. Warhound was created to improve that system—producing fewer dogs with a greater likelihood of remaining healthy, completing training, and succeeding in their missions.

Warhound dog-and-handler teams will also connect Anduril’s integrated capabilities—including eye and ear protection and Eagle Eye technology—will help safeguard working dogs, their handlers and the wider unit while supporting safer, more effective missions.

“For millennia, people have selectively bred dogs to be companions and helpmates. Modern biotechnology gives us a more precise way to shape some of their traits, thus improving both the work dogs do and their own health and well-being,” said Alta Charo, Warren P. Knowles Professor Emerita of Law and Bioethics at the University of Wisconsin–Madison. “The Warhound project offers the possibility of improving working dogs’ health and welfare while supporting the lifesaving work they do. But we still must look carefully at who benefits, what risks the animals bear, and how concern for animal welfare translates into practice through careful evaluation of the evidence, meaningful oversight, and responsibility for the dogs throughout their lives, including retirement. The American Humane Society brings valuable experience through its military working dog reunification efforts and Pups4Patriots program. That experience provides a foundation, but public trust has to be earned through the care we provide and the commitments we keep.”

Animal welfare is central to the program. By improving health, durability, and training success, Warhound will significantly reduce washouts, limit the number of dogs unnecessarily entering intensive training and enable safer, more effective missions. Technologies and therapeutics developed through the program will also be made available to all dogs and ultimately improve the health of all dogs, not only those serving alongside America’s service men and women. Together, these capabilities will establish a secure domestic supply of military working dogs while giving American service members healthier, more capable canine partners.

“Working dogs are extraordinary animals whose courage and loyalty save lives,” said Dr. Robin Ganzert, President and CEO of American Humane Society. “We owe these dogs a commitment to their well-being that matches their service to us. What excites me about Warhound is the opportunity to make health, welfare, and exceptional care fundamental to a working-dog program from the very beginning. Success means helping these dogs thrive throughout their lives—from training and active service to the loving, dignified retirement every canine hero deserves.”

Warhound is built to take today’s level of performance and make it better: using cutting edge engineering and technology, on American soil, from American companies, without the wait times, price volatility, or geopolitical exposure of a foreign supply chain.

About Warhound
Warhound is a Texas-based defense technology company building a secure domestic supply of healthier, more capable working dogs for the U.S. military, law enforcement and emergency responders. Conceived by Palmer Luckey and Ben Lamm, Warhound combines biotechnology licensed from Colossal Biosciences with advanced training and Anduril’s cybernetic augments and software. The company aims to reduce reliance on foreign suppliers, improve canine health and performance, and enhance safety for dogs and their handlers. Animal welfare is central to Warhound’s mission, with a commitment to lifelong care from birth through training, service and retirement. To follow along, please visit: warhound.com.

About Anduril
Anduril Industries is a defense technology company that builds autonomous systems and a common operating layer to give the United States and its allies a persistent advantage in sensing, decision-making, and force projection.

About the American Humane Society
The American Humane Society is the country’s first national humane organization and a global leader in animal welfare. Founded in 1877, American Humane has been at the forefront of protecting animals, rescuing them from cruelty, abuse, and natural disasters, and setting the gold standard in science-based welfare certifications. The organization oversees prominent programs including the iconic “No Animals Were Harmed®” film and television certification, the American Humane Certified™ farm and zoo standards, military working dog reunifications, and the Pups4Patriots™ service dog program. Learn more at americanhumane.org. 

About Colossal Biosciences
Colossal was founded by emerging technology and software entrepreneur Ben Lamm and world-renowned geneticist and serial biotech entrepreneur George Church, Ph.D., and is the first to apply CRISPR technology for the purposes of species de-extinction. Colossal creates innovative technologies for species restoration, critically endangered species protection and the repopulation of critical ecosystems that support the continuation of life on Earth. Colossal is accepting humanity’s duty to restore Earth to a healthier state, while also solving for the future economies and biological necessities of the human condition through cutting-edge science and technologies. To follow along, please visit: www.colossal.com.

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Best Version Media Names Chris Laurence Next CEO; Kevin O’Brien Transitions to CRO

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Leadership investment strengthens companywide execution and sharpens focus on Publisher success and revenue growth

BROOKFIELD, Wis., Oct. 23, 2026 /PRNewswire/ — Best Version Media (BVM), a local media and marketing company serving more than 1,300 communities across the United States and Canada, today announced that Chris Laurence has joined the company as Chief Executive Officer. Kevin O’Brien, who previously served as CEO, will transition to Chief Revenue Officer, focusing on leading BVM’s sales field and accelerating revenue growth.

The appointments reflect BVM’s investment in leadership to support its next stage of growth. By establishing dedicated executive leadership for the broader organization and the sales field, BVM is strengthening its ability to execute across the business while supporting its independent Publishers and the local businesses they serve.

“Our growth has brought us to a point where leading the overall company and leading our sales field each deserve a dedicated focus,” said O’Brien. “This transition allows me to concentrate on working with our sales leaders and Publishers, strengthening the field, and helping more local businesses connect with their communities. I’m excited to partner with Chris as we build on BVM’s momentum.”

Laurence brings experience as CEO, CFO, and COO of public, private, and private equity-backed companies, where he has led growth, operational improvement, and technology transformation. Before moving into operating roles, he was a general partner at Brentwood Associates, a Los Angeles-based private equity firm.

“BVM has built a powerful combination of community storytelling, local relationships, and marketing solutions for small businesses,” said Laurence. “I look forward to working with Kevin and the entire team to build on that foundation, strengthen how we operate, and support the success of our Publishers and clients.”

As CEO, Laurence will lead BVM’s overall strategy and operations, working with the team to scale operations and support the success of our Publishers and the local businesses they serve. As CRO, O’Brien will focus on sales leadership, Publisher growth, and revenue generation. Together, they will help advance BVM’s print and digital offerings and position the company for continued growth.

About Best Version Media

Founded in 2007, Best Version Media (BVM) connects local businesses with customers through community magazines, targeted digital advertising, and online presence management tools. Serving more than 1,300 communities across the United States and Canada, BVM’s network of independent Publishers builds relationships with local businesses and brings community stories to life. BVM is a portfolio company of H.I.G. Capital. To learn more, visit www.bestversionmedia.com.

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SOURCE Best Version Media, LLC

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Dow and Small Caps Climb Weekly While Nasdaq Slips on Megacap Earnings Charges

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VANCOUVER, BC, Oct. 23, 2026 /PRNewswire/ — Stock Preachers News Commentary – Stocks closed a volatile earnings week with a split verdict: the Dow gained 0.64% and the Russell 2000 jumped 2.07%, while the Nasdaq Composite fell 0.45% and the S&P 500 slipped 0.22%. The VIX rose to 19.40 and the VXN climbed to 28.13 as traders weighed a wave of third-quarter results. Gold dropped 3.47% and silver fell 4.90% on the week, while WTI crude rose 3.74% on Thursday alone. The 10-year Treasury yield eased 11 basis points to 4.99%. Active Companies from around the markets with current developments this week include: Meta Platforms, Inc. (Nasdaq: META), Texas Instruments Incorporated (Nasdaq: TXN), RTX (NYSE: RTX), IBM (NYSE: IBM), and First Citizens BancShares, Inc. (Nasdaq: FCNCA).

Large-cap benchmarks diverged sharply this week. The Dow closed at 52,337.54, up 0.64% for the week despite a 1% drop on Friday, while the S&P 500 ended at 7,642.22, down 0.22% weekly after touching a week high of 7,770.40. The Nasdaq Composite settled at 26,022.45, down 0.45% on the week, dragged by a rough stretch for megacap tech following a batch of earnings reports.

The Russell 2000 was the standout, closing at 2,777.63 for a 2.07% weekly gain, outperforming its large-cap peers as investors rotated toward smaller names. RSI readings show the Nasdaq at 38.9 and the S&P 500 at 43.5, both in cooler territory, while the Dow’s RSI of 54.1 reflects its relative strength this week.

Volatility ticked higher into the weekend, with the VIX up 0.96 points for the week to 19.40 and the VXN up a full point to 28.13. In commodities, natural gas spiked 8.66% on Thursday alone even as it remained down 0.65% for the week, while copper rose 2.44% daily. The dollar firmed slightly against the euro, with EUR/USD down 0.24% on the week to 1.12.

The full report also breaks down key support and resistance levels for each index, additional earnings movers, and sentiment heading into next week’s sessions.

CONTINUED… Read this and more news for Meta Platforms, Inc. (Nasdaq: META), Texas Instruments Incorporated (Nasdaq: TXN), RTX (NYSE: RTX), IBM (NYSE: IBM), and First Citizens BancShares, Inc. (Nasdaq: FCNCA) at: https://stockpreachers.com/articles/small-caps-lead-big-tech-lags-as-earnings-season-shakes-the-tape/

In other industry developments and happenings in the market this week include:

Meta Platforms, Inc. (Nasdaq: META) Meta reported third-quarter revenue of $64.60 billion, up 26% year over year, but net income of $9.86 billion reflected a $9.89 billion charge tied to an agreement with 52 state attorneys general over teen mental health and social media litigation. Diluted EPS was $3.83, up 265% year over year; excluding the litigation charge, EPS would have been $7.40.

Operating margin fell to 20% from 40% a year earlier, while costs and expenses rose 68% to $51.61 billion. Capital expenditures, including finance lease payments, totaled $34.91 billion, and free cash flow was negative $2.12 billion for the quarter.

“We hit major milestones this quarter toward delivering personal superintelligence for everyone – including launching Muse and Muse Wonder, our first frontier model,” said Mark Zuckerberg, Meta founder and CEO. “Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.” The company guided fourth-quarter revenue to a range of $73-76 billion and raised full-year 2026 total expense guidance to $175-179 billion. Read the release.

Texas Instruments Incorporated (Nasdaq: TXN) Texas Instruments reported third-quarter revenue of $6.06 billion, up 28% from a year earlier, with net income of $2.43 billion and earnings per share of $2.62. Operating profit rose 73% to $2.87 billion, and revenue increased 11% sequentially.

“Revenue increased 11% sequentially and 28% from the same quarter a year ago with continued broad growth in industrial, automotive and data center,” said Haviv Ilan, TI’s chairman, president and CEO. Trailing 12-month cash flow from operations was $9.9 billion, with free cash flow of $8.4 billion.

The company returned $5.8 billion to shareholders over the trailing 12 months and guided fourth-quarter revenue to a range of $5.80 billion to $6.30 billion, with earnings per share expected between $2.45 and $2.79. Read the release.

RTX (NYSE: RTX) RTX reported third-quarter sales of $25.0 billion, up 11% versus the prior year and 12% organically, with adjusted EPS of $2.26, up 33% from a year earlier. GAAP EPS was $1.89. Operating cash flow was $2.9 billion and free cash flow was $2.1 billion, with results including $0.25 of IEEPA cost recovery per share.

The company’s backlog reached a record $340 billion, including $176 billion commercial and $164 billion defense, after over $81 billion of new awards including Tomahawk and AMRAAM multi-year production contracts.

“Our strong execution and operational focus in the third quarter enabled RTX to deliver double-digit organic sales growth across commercial aerospace and defense,” said RTX Chairman and CEO Chris Calio. The company raised its full-year adjusted EPS outlook to $7.65-$7.75 and adjusted sales guidance to $97.0-$97.5 billion. Read the release.

IBM (NYSE: IBM) IBM reported third-quarter revenue of $17.1 billion, up 5% as reported and 6% at constant currency, with Software revenue up 8% and Infrastructure revenue up 4%. GAAP diluted earnings per share were $2.31, up 26% year over year, while operating (non-GAAP) EPS was $2.95, up 11%.

The company generated $4.0 billion in net cash from operating activities in the quarter and $3.0 billion in free cash flow, up $0.7 billion year over year. Year to date, free cash flow reached $7.8 billion.

“Disciplined execution throughout the quarter drove accelerated revenue growth and strong free cash flow,” said Arvind Krishna, IBM chairman, president and chief executive officer. IBM now expects full-year free cash flow to increase by more than $1 billion year over year, while continuing to guide constant currency revenue growth of four to five percent. Read the release.

First Citizens BancShares, Inc. (Nasdaq: FCNCA) First Citizens BancShares reported third-quarter net income of $606 million, down from $672 million in the linked quarter. Net income available to common stockholders was $577 million, or $51.23 per common share, a $63 million decrease from the prior quarter’s $640 million.

Net interest income rose to $1.70 billion, up $43 million from the linked quarter, while net interest margin declined 3 basis points to 3.07%. The company completed its BMO Branch Acquisition on September 4, 2026, assuming approximately $4.9 billion in deposits and acquiring approximately $650 million in loans.

“We returned $600 million to our stockholders through share repurchases and further optimized our balance sheet by repaying another $8.0 billion of the Purchase Money Note,” said Chairman and CEO Frank B. Holding, Jr. The board approved a new repurchase plan authorizing up to $1.2 billion of Class A common shares through 2027. Read the release.

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