Compass at JPMorgan Conference: Tech-Driven Growth Strategy

On Wednesday, 14 May 2025, Compass Inc (NYSE:COMP) presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference, showcasing a record first quarter with notable gains in EBITDA and free cash flow. CEO Robert Rufkin emphasized the company’s commitment to empowering real estate agents through its advanced technology platform, while addressing challenges in the housing market. Despite a 1.86% drop in stock price, Compass’s strategy remains focused on growth and innovation.

Key Takeaways

• Compass achieved record EBITDA and free cash flow in Q1.
• The company reported a 7% organic transaction growth, outperforming the market’s 2% decline.
• Agent retention remains high at 97%, driven by the technology platform.
• Compass aims for a 30% market share in the top 30 cities through organic growth and M&A.
• The company emphasizes cost discipline with a target of 3% to 4% organic OpEx growth.

Financial Results

• Record Achievements:

- Record EBITDA and free cash flow in Q1.

- Market share reached the highest levels for a Q1 period.

• Transaction Growth:

- 7% organic transaction growth, while the market declined by 2%.

- Total transaction growth of 28% year-over-year.

• M&A Activity:

- Focus on accretive acquisitions at four to six times EBITDA multiples.

• Title and Escrow:

- Increased attach rate by 700 basis points, leveraging the platform.

Operational Updates

• Agent Growth and Retention:

- 700 principal agents hired last quarter.

- 97% agent retention rate.

• Technology Platform:

- Consolidates multiple tools into one, increasing agent reliance.

• Marketing Strategy:

- Nearly 50% of listings used a three-phase marketing strategy, leading to higher prices and faster sales.

Future Outlook

• Market Recovery:

- Anticipates a return to 5.4 to 5.6 million home sales, a 35% increase from current levels.

• Growth Strategy:

- Aims for 30% market share in the top 30 cities.

• Cost Management:

- Committed to maintaining organic OpEx growth at 3% to 4%.

• Expansion Opportunities:

- Focused on title and escrow and Christie’s franchise affiliate revenue expansion.

Q&A Highlights

• Technology Advantage:

- Competitors struggle to replicate Compass’s platform due to a lack of resources.

• Clear Cooperation Policy:

- Allows for private listings, which Compass effectively manages.

• Zillow’s Listing Standards:

- Compass can coexist and operate effectively within these standards.

• Cost Discipline:

- A permanent strategy to support growth within a 3% to 4% OpEx framework.

For further details, readers are encouraged to refer to the full transcript.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Let’s get started. I’m Dae Lee, JPMorgan’s internet and online real estate analyst. And today, we’re pleased to have with us Robert Rufkin, founder and CEO of Compass. Robert founded Compass in 2012, and by empowering agents with technology and creating a strong culture, grew Compass to be one of the largest real estate brokerages in The United States.

With that, we can we’ll we’ll get started. Welcome, Robert.

Robert Rufkin, Founder and CEO, Compass: Thank you. Glad to be here.

Dae Lee, JPMorgan Analyst, JPMorgan: Alright. Awesome. Robert, thank you for being here today. So just maybe to kick it off for investors that are not as familiar with your story or your company, can you please provide an overview on Compass, your platform, and the industry in which you operate in?

Robert Rufkin, Founder and CEO, Compass: Yeah. So at Compass, we’re the largest independent brokerage firm in the country for four years in a row by sold volume. We our clients are agents. We exist to help agents grow their business, to give them an advantage, to give them an edge with their buyers and their sellers. Everything that we do is in the spirit of helping agents.

My mom is an agent, has been nearly my entire life. I’ve been driven to help make them succeed. She’s still an agent today actually at Compass. Agents in the country generate $100,000,000,000 of commissions, and then they split a percentage of that with brokerage firms. And so we take a percentage of what they make based off the value that we provide them.

In addition to the brokerage commission, is also agents are the center of what I would call the referral economy, mortgage title, home insurance, home security, home warranty. They’re either directly or indirectly referring the majority of those other services that are either required to make the transaction happen or optional after the transaction happens. So on title and escrow alone, there’s another $80,000,000,000 of volume that agents from the commission that agents generate. So that’s the title officer, loan officer. And we have title and loan as well.

In total, have six percent market share in the country, and we have 37,000 agents. We’ve invested $1,700,000,000 into the technology platform over the last twelve years. And the platform for an agent, the average agent uses 11 different tools to do their job, and with the Compass platform they can use one. So it helps them grow their business and save time and lower their operating costs when they have to pay less of these entities. And instead of having to have two assistants, could have one because they’re more efficient.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. That’s great. With that as an overview and before we dig into your business, let’s talk about your first quarter results. You guys reported it last week. It was a record first quarter.

So could you provide us with a quick recap of what happened, what happened through 1Q and what you’re seeing so far in 2Q?

Robert Rufkin, Founder and CEO, Compass: Yeah. So we had record revenue I’m sorry, record EBITDA, record free cash flow. We had our market share grew to the highest levels we’ve had in Q1 period. We had our transactions increase organically at 7% when the market was down 2%, so it grew 9% faster than the market on an organic basis. Inorganic overall, including inorganic was 28% increase year over year versus market down 2%, so 30% higher.

That inorganic comes from accretive M and A. We target four to six times EBITDA multiples. We had our attach of title and escrow increased 700 basis points. Two data points. One, we created one click title and so in the platform you can order your title and escrow.

And for people that use one click title, they use our title two times as much as those that don’t. So platform driven attach is proven to create more attach. And then also for Compass private exclusives, they have they use our in house title more than those that don’t.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Let’s touch on your overall transaction growth. It was very strong in 1Q. So was curious to hear the details of how you’re able to deliver that growth and how you plan on achieving the similar high levels of growth going forward.

Robert Rufkin, Founder and CEO, Compass: So in terms of the pillars of growth, you have one, just the overall market. So right now, unfortunately, we’ve had two years of 4,000,000 existing home sales. That

Dae Lee, JPMorgan Analyst, JPMorgan: in

Robert Rufkin, Founder and CEO, Compass: the last thirty years in terms of units, this is the lowest it’s been. Last year was the lowest it had been since in twenty nine years, even though the population is more than 20% larger. So that reflects a lot of pent up demand. Mid cycle has around 5.4 to 5,600,000 homes. So just getting from where we are right now to mid cycle increases 35% of the units.

So that’s one. Two, in addition to that, we’re not just waiting for the market to return, we’re also growing organically. So we hired 700 agents, principal agents last quarter. A principal agent often has team members on their team, but we count them as principals. That’s the person that we enter the economic relationship with.

The 700 people that we brought on produce on average two and a half times more than the people that left. So we’re bringing on more top producers relative to the people that are leaving. Three, we are helping them grow their business when they’re here, and so they’re gaining market share. Again, would think about the organic basis, the 7% organic growth relative to the 2% down market. So when they come here, they’re growing market share.

And lastly, accretive M and A where we target four to six times EBITDA multiples. We have in the last twelve months we acquired two companies that were number one in their markets. Actually three companies, but two were number one and just in those markets. And then also we acquired Chrissy’s International Real Estate which was number one in one market and affiliate revenue across many, many markets.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Let’s stay on the topic of agents since it’s so core to Compass. Compass, right? You did see impressive agent growth and high retention in 2024 and so far in 2025, and again in a depressed market. So curious, what’s bringing or attracting agents to your platform?

And how does Compass maintain its agent value proposition and retention rate, and particularly among the high producing agents?

Robert Rufkin, Founder and CEO, Compass: Yeah. There are studies out there that show that the average brokerage firm loses 30% of their agents a year or only retains 70% agents a year. At Compass, we had 97% agent retention last quarter. We’re very proud of that. The reason people come and stay at Compass, the number one reason is the platform.

Every agent that comes to Compass, we ask them what are their number one, two and three reasons why you come. Number one is the platform. It will help you save time. What they say is it will help me save time and lower my operating costs and help me grow my business with a CRM and it’s an end to end platform from first contact to cash for your buy side workflows and your sell side workflows. And so what that would include are on the sell side, a listing presentation platform, value we call CMA evaluation, the digital ads to market the property, marketing center to create all the different marketing assets whether it’s social or organic or print.

You could do it through the platform with tens of thousands of different templates. All the transaction management software, open house app, mobile app, commerce through face marketing strategy, reverse prospecting and much more all the way to cash. On the buy side, it’s the classic search you would understand. We call it collections where you have a collaborative search in your platform back and forth Whenever there’s a status change or a comment you get notified. Then you have your compass tours where every tour that you create for your agent, for your client, it lives in one place with all the comments.

You can take photos of the different listings. It all lives there with the comments and all the different tours that you’ve had over time with all the different directions. And then transaction management, offer management all the way through close. It all lives in what we’ve launched called Compass One where it’s the first for a consumer. So we started building for agents, but now we build for consumers.

Now we’ve helped them with their clients. At first, it was the end to end transaction for the agent. Now with Compass One, an agent can go to you and say, We can give you 20 fourseven transparency into every step of the process before, during, or after the transaction, the entire transaction timeline all in one place. And so now we give that to the client. So the number one reason why agents come to Compass is indisputably the platform.

If you look in the last five years, every year that’s gone by, the amount of minutes per month, minutes per week, minutes per year that agents spend on our platform has increased. And so what gives us a very strong advantage is I think the traditional brokerage firm model that does not have technology I think is struggling to give enough value to agents for agents to feel like the value is worth what they’re paying. A different way to say it is a traditional brokerage firm that hires, let’s say a marketing person, a marketing person can only make one agent happy at a time for that fixed cost, while technology can make 37,000 agents happy at the exact same time. And so this thing that we invested in that no one else invested nearly a fraction in in the brokerage space, it is it is creating sustainable and scalable happiness with our agents, our clients in a way that other traditional brokerage firms have not been able to replicate.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. I guess just to follow-up on that. I mean, I don’t think it’s a secret that technology and the platform is your moat and your advantage. So why is it so hard for legacy platforms to replicate what you guys do?

Robert Rufkin, Founder and CEO, Compass: I think at this point, they don’t I think many, not all, but many traditional brokerage firms did not have the DNA, the capital, or the vision to to build the platform. My co founder, Ori Alone, he sold one company to Twitter, another company to Google. I worked at McKinsey, Goldman Sachs, worked in the White House as a White House fellow. We came together to invest in this space. And when we thought about investing in this space, the question that was asked two questions kind of led to our current model.

One is, Ori asked, if you’re he said, if we’ve raised at the time as the largest seed financing round in the country. He said, if you can take this capital and we hired a lot people from companies like Google, Twitter, McKinsey, Goldman. He said, We take the financial and human capital and we help agents grow their business. If we help them make money, if we can make them successful, will we be successful? If we help them grow, will we grow?

I said yes, because we have share in the revenue. Then the second question he asked is if you’re being chased by a bear, you need to be faster than the second person. If we go this route, who’s the second person? And I said, look I think it would be a traditional brokerage firm like X. I don’t want to mention the name out of respect, but think of a top four brand that’s a brokerage in your market.

And he said, that would be great because traditional brokerage firms like X don’t move very fast. And so what we did is we hired agents and we said, what do you want us to build that would help you grow your business? And we did that over twelve years, and with our in house software engineering team. So now we’re at a point where I think maybe fifteen years ago the traditional brokerage firms could have done this. They had the capital, they had the margin, But now we’re at a place where they don’t.

And it’s like truly impossible. And we’ve already invested in this. We don’t need to invest as much as we have in the past. Quite frankly, we can invest. Yeah, we don’t need to invest as much as we’ve had in the past.

Dae Lee, JPMorgan Analyst, JPMorgan: Yeah. So it’s in your DNA. Alright. So let’s talk about

Robert Rufkin, Founder and CEO, Compass: And I think when I say like DNA, vision, and capital, I think the view fifteen years ago was we don’t need to invest in that thing called technology. The view we had was the year after Andreessen Horowitz, I forget which one it was, wrote software is eating the world. Remember the whole Wall Street Journal op ed? I’m sure many people here remember it. He walked through all these different industries where software was eating everyone’s lunch.

And at the time, I was chief of staff to Gary Cohn at Goldman, and we were traveling around the world. Lloyd covered half the country, Gary covered the other half, and just meeting with all these CEOs. The most common theme was how software how some company in software was disrupting their space. So reading that article, seeing that firsthand, seeing Ori sell the company to Google and Twitter, within effectively a year of creating it, it was very clear to me that software is going to transform obviously every industry, but it’s going to help professionals across every industry accomplish more. This huge industry of $100,000,000,000 of commissions, where it’s directly, and then indirectly another $80,000,000,000 just of mortgage entitlement, so much more when you take the other integrated services, that these agents are the center of this entire transaction, and no company was focused on helping to empower them.

You could even see with quote unquote the disruptors. All the disruptors that came in space, you could think of the names, they started trying to replace agents. Now the agents are the center of their transaction. Right? It’s just a matter of like how they try to move in.

And we’re just coming from the other end.

Dae Lee, JPMorgan Analyst, JPMorgan: Got it. Okay. Let’s talk about another area where you’re trying to disrupt the market. So your three phase marketing strategy.

Robert Rufkin, Founder and CEO, Compass: Improve the market.

Dae Lee, JPMorgan Analyst, JPMorgan: Improve the market. Yeah. Okay. You said almost half of your clients in 1Q went through the three phase marketing strategy. And it is a relatively new strategy for you guys.

So to inform the audience, can you first explain what that is and how you’ve been able to find success so quickly as you’ve only been at it since last year?

Robert Rufkin, Founder and CEO, Compass: Yes. So we launched the Compass three phase marketing strategy in November. And in Q1, just two months later, we saw in Q1 almost 50% of all of our listings go through the three phase marketing strategy. And what the three phase marketing strategy is, if you’re a seller, I’d come to you and say as an agent, hey great news now that I’m at Compass, we can market it’s up to you, it’s your choice, but we can market first as a private exclusive, then as a compass coming soon, and then we’ll go to the MLS and the portal sites. How would you do that and why?

Well, as a private exclusive, you can test an aspirational price without the risk of price drops or days on market. You think your house is worth $4,000,000 Great. The comps say 3.8 or 3.6. If you go straight to the MLS and portals and you’re wrong, then you’ll look like damaged goods. You’ll have a price drop in long days on market.

But we in your market, have 25% market share. We can test privately that aspirational price without the risk. Sometimes you’ll find in this stage a buyer that will pay a premium to not have competition. He’ll pay a premium to have certainty. Here’s an example.

Luxury property, 15,000,000 penthouse, Four Seasons, billionaire buyer flies in offers 14.2 to one of our agents, Aaron Krueger. Aaron Krueger says, I’m sorry, my client will take nothing less than full ask 15,000,000. Anything less than that in the next twenty four hours and I’ll put it in the MLS and you can compete against everybody else. That’s marketing exclusivity, scarcity, tension. There’s a reason why Chanel doesn’t put their bags on Amazon.

There’s a reason why developers and home builders sold over 300,000 homes off the MLS last year. Phase two, we’re going put on Compass coming soon where it’s available to all agents and buyers on the internet. You can do it under the clear cooperation policy for up to one business day. And then after that we’ll put it on the MLS and the portals.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. And so you just mentioned clear cooperation policy. So let’s talk about that real quick. It is it’s something that the NAR updated last March late March. But there still seems to be a lot of confusion and misconception around what CCP is.

So can you explain to the audience what CCP is and what it means for your private exclusives?

Robert Rufkin, Founder and CEO, Compass: Yeah. So clear cooperation policy is a rule to prevent public marketing outside of the MLS. It allows Compass and all agents to have private listings for as long as they want. But if you want to publicly market outside of the MLS listing system for more than one day, that’s not okay. Why is that?

Because in states like Arizona, ninety seven percent of agents are paying members of NAR because in all but four states there’s the NAR three way agreement that says if you want to access your every agent needs to do to do their job, you have to pay your national, state, and local association, NAR state and local. So the reason NAR created the clear cooperation is so that or at least this is what a judge said, that it precludes competition from new listing services, judge Florence’s plan. If every agent in the country could get their listings and give listings to a national listing system, not one of 500, how many of them wouldn’t pay NAR? Well, it wouldn’t be 97%. There is no other large trade association with 97% people being members.

Average trade association is 15%. And so, what you have is people entities organized real estate creating rules so they can monetize the people that are selling homes and the people doing the work, whether it’s through agent dues or through leads off of their listings. There are 1,600,000 agents that are in NAR. Last year 71 of them did not do one transaction. The only transaction they did was pay NAR and pay them less.

This year, the best agents are gaining more market share, so far this year, four at least as of last month, 94% of agents hadn’t done one transaction.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. And then just to be clear, your three phase marketing strategy operates within the rule of

Robert Rufkin, Founder and CEO, Compass: Oh absolutely. Yes. See, cooperation is a rule that creates more private listings because it doesn’t let you publicly market off the MLS. You could only market privately. So clear cooperation and any rule that enforces clear cooperation just creates more private listings.

The example I would give you is if you have a house in Florida. Let’s say it’s been on the market for one hundred days. If I’m your agent, I may talk to you, Hey, June, July, August, buyers aren’t buying that often in June, July, August. How about we take it off the MLS? So you don’t have days on market unnecessarily.

If it wasn’t for a CCP, we could put that on our public site. I could have it on social media. Everyone could see it. It could be my personal website. I can email it everywhere.

But with CCP and those that enforce CCP, now it has to be a Compass private exclusive at Compass. So Clear Conversation is a rule that creates more private listings. And so for anyone who thinks private listings help companies that are big or that do private listings, CCP is helping those companies.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Then another area of confusion that I have to ask since I covered Zillow. So Zillow has taken a public stance on this with their listing standards. How does their decision affect you guys?

Robert Rufkin, Founder and CEO, Compass: First of all, Zillow and Compass, we have coexisted. We will continue to coexist. The world that they are enforcing is the world of CCP, and we just walk through in CCP. You still have Compass private exclusives. You still have Compass coming soon before it goes to portals.

And so the Compass three phase marketing strategy continues to work within the Zillow listing standards.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. That’s good to hear. Alright. Those are a of details, a lot of industry dynamics that’s a bit confusing to work through. According to all of that noise, so like how does all of this benefit your agents and ultimately compass at the end of the day?

And you’ve been very vocal about private exclusives. So like why is this something worth fighting for?

Robert Rufkin, Founder and CEO, Compass: Yeah. So the word private exclusive is the product. But what I’m vocal about is choice. All private exclusive is just a choice. Choice versus control.

I believe the moral and the financial coincide. I believe when you offer more choice I don’t know a seller who wants less choice. I don’t a who more choice. I don’t know a seller who wants less options. I know they want more options.

And I know for certain as the company that probably has more private exclusives than anyone else, I know that helps agents get more listings. And we’ve shared publicly that our listings that go through the Compass three phase marketing strategy are associated with 2.9% higher prices, that they sell 20% faster go into contract, and they have price drops 30% less of the time. Again it’s associated with higher attach of title and mortgage. And we see a lot of other benefits to it as well. But we see you can’t have benefits to a company if you don’t have benefits to the agent.

That’s very important to appreciate. Compass only exists to give agents advantage. I want all the best agents to want to work at Compass and I want them to say Compass helps them be better. Anything that helps Compass has to help agents. Anything that helps agents helps Compass.

We’re a % aligned. And so I’ve been vocal on this because homeowners want it. If homeowners didn’t the fact that almost 50% of homeowners elected to go through the three years marketing strategy, it makes it clear that the demand is clear. It’s not Compass asking for it. Nothing Compass has ever created has been from Compass, or very little.

We do a great job of looking and asking our agents, saying, are you doing in your market and how can we bring that idea to life in this company? Compass Concierge, Compass Collections, Compass three based marketing strategy, Compass coming soon, Compass private exclusives, the Compass platform, Compass One, Compass referral network, our luxury events, our top 100 events, our national Compass retreat. Everything we observed is amazing industry real estate and said, this thing here helps agents, let’s do it in a national way.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. So you’re listening to the sellers and agents and giving them what they want. And this is driving agents to your platform, right, three phase marketing? It is part of your agent growth driver?

Robert Rufkin, Founder and CEO, Compass: Yeah. Agents find incredible value in being able to go to their sellers and offer the three phase marketing strategy. If you’re a room of 100 agents and I ask you how much and I travel generally call it two to three days a week, meet a lot of agents in big rooms like this. If I asked a group of 100 agents, how many of you would say not that the Compass three based marketing strategy helped you? No, that the Compass three based marketing strategy that because of it you were able to get a listing that you probably wouldn’t have gotten otherwise.

90% of them will raise their hand.

Dae Lee, JPMorgan Analyst, JPMorgan: Alright. Exclusivity. Okay. It’s options.

Robert Rufkin, Founder and CEO, Compass: I’m an agent at Compass and you’re an agent at some other company and your marketing plan is, hey, my name is Jack or Jane and I’m going to put it in MLS. That’s my marketing plan. And then Compass comes by and says, we’re going have the Compass three phase marketing strategy. The second that we sign the listing agreement, We’re going to be able to start marking the property. We’re going to build a buyer interest list while the photos are developing.

I’m going to have private showings from top agents across the country and across the market, and we’re going to test price. We’re going to be able to see how they think that the home is positioned, and then we’re going to be able to bring it to the market with whatever the best price is. While someone else just puts in the MLS weeks after the listing agreement is signed, why would you not want that additional marketing? There’s no downside. The worst thing that can happen to you as a seller is you get an offer and you have an opportunity to say, No, I don’t want this offer.

Want to go to the public market. There is no other downside. It’s just you’re marketing it earlier and longer before you go to the public market. And this was learned from the developers. Developers don’t just put their listing in the MLS, They pre market it in countless different ways with their agents and with their different platforms.

And we just took that strategy and we did it. We put it into Compass.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Alright. Let’s bring it in a little bit. Talk about the housing market right now. It’s depressed.

And like you said, it’s been depressed for two years. Twenty twenty five seems to be the same. So, like, what’s your pulse on the housing market for the remainder of 2025? How does it look like?

Robert Rufkin, Founder and CEO, Compass: So I think we’re in a good place relative to what could have happened a month ago or a month and half ago. Last week, we saw purchase mortgage applications increase 13% year over year. That’s not what it was looking like a month and a half ago. This week, we saw purchase mortgage applications increase 19% year over year, so it’s expanding. We all see pending contracts increase year over year.

And so I think May, April, already know April, but May and June I think will be up for sure. It’ll be up year over year.

Dae Lee, JPMorgan Analyst, JPMorgan: Got it. So is 2025 up here?

Robert Rufkin, Founder and CEO, Compass: If you can tell me there’s some stability in the macroeconomic landscape or just stay where it is right now, yes.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Alright. Okay. And let’s talk about stability then. Longer term, and this is a cyclical industry, so we know things are gonna get back to normal.

And when macro get back to a normal level and housing market returns to that 5,000,000 to $6,000,000 transactions, like what does your earnings power look like in that kind of environment? Well,

Robert Rufkin, Founder and CEO, Compass: in the worst of markets, I mean you know where our consensus is in EBITDA, and so that’s in a $4,000,000 seasonally adjusted home sale market of our current OpEx. And so obviously when you bring 35% more revenue on top of that, our OpEx growth we’re going to maintain at 3% to 4% organic increase in OpEx, and in Q1 it was less than 3%. And so we seek to outperform there on organic OpEx. But the framework I would think of as an investor is you have organic 3% to 4%, you have the market recovery going from $4,000,000 to 5,400,000.0 5 point 5 million dollars 5 point 6 million dollars hopefully knock on wood home sales that would bring it up another 35% to 40%. You have accretive M and A.

We have title and escrow expansion at 30% EBITDA margins, same with mortgage. And then you have Christie’s franchise affiliate revenue at 30 to 35% EBITDA margins as we expand that side of the business. What Christie’s allows us to do is expand not just by hiring agents, and we exist to help an agent grow their business, but Krissy’s lets us expand with a broker owner who doesn’t want to sell the company, wants to continue being the CEO and owner of the company. They can become a franchise affiliate and pay the franchise affiliate fee. But it lets us serve that growth as well.

So it gives us more channels to grow, and we’re making our platform more flexible so that we can bring on more different types of brokerages with different types of brands, empower them. I guess in the same way that Citadel helps support many different types of investors. You know we seek to do the same for many different types of agents.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. And where does M and A sit in all of this?

Robert Rufkin, Founder and CEO, Compass: M and A, so we have a goal of 30% market share in the top 30 cities. And we outlined that over the summer within a specific time frame. I think if the next two years look like the last year, we will hit that goal. And M and A is probably the biggest bucket of it and not the only bucket. There’s still organic ads.

They’re still helping your existing agent base grow their business through the productivity platform. But M and A is definitely the biggest bucket.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. And then just lastly, cost discipline. I think you guys publicly say you’re maniacally focused on cost discipline. So like how important is managing cost for you? And yeah.

Mean, how do you think about the balance between growth and

Robert Rufkin, Founder and CEO, Compass: Yeah. So it’s our cost discipline is not temporary. It’s a permanent part of our strategy. One of the benefits of going through the cycle that we’ve gone through is we feel confident that should be the permanent part of our strategy. And we can still grow within the context of three to 4% opex.

So, for example, we invest over $100,000,000 in R and D a year, and so we’re still investing, and that’s just in R and D. We are bringing down our costs in other areas. So the cost to serve a transaction, it went down around 50% in the last two years and it’s going down another 20% this year. So we’re using technology to bring down our costs as well. And the more scale you have, the more technology can be used to bring down your costs.

Dae Lee, JPMorgan Analyst, JPMorgan: Okay. Alright. That’s

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