Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Business and Basis of Presentation
Description of the Business
Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc.
On January 9, 2026, the Company completed its acquisition of Anywhere Real Estate Inc., a Delaware corporation (“Anywhere”), pursuant to the Agreement and Plan of Merger, dated as of September 22, 2025 (“Anywhere Merger Agreement”) by and among the Company, Anywhere, and Velocity Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”). Pursuant to the terms of the Anywhere Merger Agreement, Merger Sub merged with and into Anywhere, with Anywhere surviving the Merger as a wholly owned subsidiary of the Company (“Anywhere Merger” or the “Merger”). Refer to Note 3 — “Acquisitions” for more details.
Real estate professionals at the Company's owned-brokerage business are independent contractors who associate their real estate licenses with the Company and operate their businesses on the Company's platform and/or utilize the Company's technology offerings. The Company primarily generates revenue from its owned-brokerage business by assisting home sellers and buyers in listing, marketing, selling, and finding homes and collecting gross sales commissions on completed home sale transactions. Gross sales commissions are typically calculated as a percentage of the home sale price. Following the Anywhere Merger, the Company operates its owned-brokerage business primarily under the @properties, Coldwell Banker, Compass, Corcoran, and Sotheby's International Realty brands.
The Company also attracts independently operated brokerages that affiliate with the Company as franchisees or licensees under long-term franchise or license agreements. In addition, the Company provides non-brokerage services to real estate professionals and their clients, including title and escrow, and relocation services.
The Company provides an end-to-end platform that empowers its residential real estate professionals to deliver exceptional service to seller and buyer clients. The Company’s platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, and other critical functionality, all custom-built for the real estate industry, which enables the Company’s core brokerage services. The platform also uses proprietary data, analytics, artificial intelligence, and machine learning to deliver high value recommendations and outcomes for real estate professionals at the Company's owned-brokerage operating under the Compass brand and their clients. Other real estate professionals and franchisees affiliated with the Company currently utilize other technology offerings.
Effective January 9, 2026 with the Anywhere Merger, the Company changed its operating segments and reports its operations in the following three business segments: Brokerage, Franchise, and Integrated Services. See Note 17 — “Segment Information” for more details.
Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the assets, liabilities, revenues, and expenses of all controlled subsidiaries. The condensed consolidated statements of operations include the results of entities acquired from the date of each respective acquisition. Interests held by third parties in consolidated subsidiaries are presented as non-controlling interests, which represents the non-controlling stockholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries.
The unaudited interim condensed consolidated financial statements and related disclosures have been prepared by management on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair statement of the interim periods presented.
Certain prior period amounts for 2025 have been reclassified on the condensed consolidated balance sheet and condensed consolidated statements of operations to conform to the current period presentation. On the condensed consolidated balance sheet, Concierge receivables are now presented within Other current assets, as the balance is not material to the combined company. On the condensed consolidated statements of operations, for the three and nine months ended September 30,
2025, the Company reclassified $35 million and $104 million, respectively, of occupancy expenses from its brokerage and integrated services businesses out of Sales and marketing and into Operations and support. The purpose of these reclassifications was to consolidate occupancy expenses into a single line item following the Anywhere Merger. None of these reclassifications affected previously reported net loss, total revenue, or total operating expenses, and they have been applied to all prior periods presented.
Separately, the Company renamed “Research and development” to “Technology and development” on the statements of operations. This is a presentational change only, with no reclassification of prior period amounts.
The results of the interim periods presented are not necessarily indicative of the results expected for the full year. Certain information and notes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the SEC’s rules and regulations. Accordingly, the unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2025 included in the 2025 Form 10-K.
2. Summary of Significant Accounting Policies
Consolidation
The Company consolidates an entity if its ownership, direct or indirect, exceeds 50% of the outstanding voting shares of an entity and/or it has the ability to control the financial or operating policies through its voting rights, board representation or other similar rights. Interests held by third parties in consolidated subsidiaries are presented as non-controlling interests, which represents the non-controlling stockholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries. For entities where the Company does not have a controlling interest (financial or operating), the investments in such entities are accounted for using the equity method or at fair value with changes in fair value recognized in net income, as appropriate. The Company applies the equity method of accounting when it has the ability to exercise significant influence over operating and financial policies of an investee. The Company measures all other investments at fair value with changes in fair value recognized in net income or in the case that an equity investment does not have readily determinable fair values, at cost minus impairment (if any) plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the condensed consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) fair value of acquired intangible assets and goodwill, (ii) incremental borrowing rate used for the Company’s operating leases, (iii) useful lives of long-lived assets, (iv) impairment of intangible assets and goodwill, and (v) income taxes and certain deferred tax assets. The Company determines its estimates and judgments based on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.
Business Combinations
Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. Such adjustments may be material. After the measurement period, any
subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party investment banking, legal, consulting, and other advisory fees, are expensed as incurred.
Leases
The Company determines if an arrangement contains a lease at inception based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. The Company classifies leases as either finance or operating. Right-of-use (“ROU”) assets are recognized at the lease commencement date and represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the remaining lease term.
Present value of lease payments are discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate. Because the rate implicit in the lease generally cannot be readily determined, the Company estimates its incremental borrowing rate based on the information available at lease commencement date for collateralized borrowings with a similar term, an amount equal to the lease payments and in a similar economic environment where the leased asset is located. The collateralized borrowings were based on the Company’s estimated credit rating corroborated with market credit metrics like debt level and interest coverage.
The Company’s lease ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred, and (iii) lease incentives under the lease. Options to renew or terminate the lease are recognized as part of the Company’s ROU assets and lease liabilities when it is reasonably certain the options will be exercised. ROU assets are also assessed for impairments consistent with the Company’s long-lived asset policy. Furthermore, the Company recognizes impairment charges related to the exit and sublease of certain real estate operating leases.
Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term.
The Company does not allocate consideration between lease and non-lease components, such as maintenance costs, as the Company has elected to not separate lease and non-lease components for any leases within its existing classes of assets. Variable lease payments for real estate taxes, insurance, maintenance and utilities, which are generally based on the Company’s pro rata share of the total property, are not included in the measurement of the ROU assets or lease liabilities and are expensed as incurred.
Stock-Based Compensation
The Company measures compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense is generally recognized as expense on a straight-line basis over the service period based on the vesting requirements generally ranging from one to five years. The Company recognizes forfeitures as they occur.
On a limited basis, the Company has issued restricted stock units (“RSUs”) that contain service, performance and market-based vesting conditions. Such awards were valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.
New Accounting Pronouncements
The Company systematically reviews and evaluates the relevance and implications of all Accounting Standards Updates. While recently issued standards not expressly listed below were scrutinized, they were deemed either inapplicable or are anticipated to have minimal impact on the Company's consolidated financial position or results of operations.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This new guidance is designed to improve the disclosures of specific account categories, including employee compensation, depreciation, and amortization, and costs incurred related to inventory and manufacturing activities. The amendments in this update are
effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software. The new guidance eliminates project stages and requires capitalizing software costs to begin when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in this update are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The transition method may be prospective, retrospective or modified prospective. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.
3. Acquisitions
Anywhere Real Estate Inc.
On January 9, 2026 (the “Anywhere Closing Date”), the Company completed the Anywhere Merger contemplated by the Anywhere Merger Agreement with Anywhere and Merger Sub. Pursuant to the Anywhere Merger Agreement and subject to its terms and conditions, Merger Sub merged with and into Anywhere, with Anywhere surviving as a wholly owned subsidiary of the Company. In connection with the Anywhere Merger, the Company acquired all outstanding shares of Anywhere common stock in a stock-for-stock transaction. Holders of Anywhere common stock received 1.436 shares of Compass Class A common stock for each share of Anywhere common stock, and the Company issued 162.1 million shares of its Class A common stock (“Anywhere Share Consideration”).
The aggregate consideration (“Anywhere Purchase Consideration”) payable pursuant to the Anywhere Merger Agreement consisted of (i) $502 million for the repayment of the outstanding balance of Anywhere’s revolving credit facility, which contained a change in control provision and was required to be repaid upon the closing of the Anywhere Merger (the “Anywhere Cash Consideration”); (ii) the Anywhere Share Consideration; and (iii) the fair value of replacement awards of the Company granted to Anywhere award holders attributable to pre-combination vesting (the “Replacement of Equity Awards”).
The following table summarizes the individual elements within the calculation of total consideration transferred (in millions):
| | | | | |
| Amount |
| Cash consideration | $ | 502 | |
| Share consideration | 1,987 | |
| Replacement of equity awards | 80 | |
| Total consideration transferred | $ | 2,569 | |
The following table summarizes the preliminary allocation of consideration transferred to the estimated fair values of the net assets acquired by the Company as of the acquisition date (in millions):
| | | | | |
| Amount |
| Cash and cash equivalents | $ | 157 | |
| Accounts receivable | 121 | |
Relocation receivables | 157 | |
| Other current assets | 164 | |
| Property and equipment | 142 | |
| Operating lease right-of-use assets | 314 | |
| Intangible assets | 3,035 | |
| Goodwill | 2,081 | |
Other non-current assets | 431 | |
| Total assets | 6,602 | |
| Accounts payable | (89) | |
Accrued expenses and other current liabilities (1) | (597) | |
| Commissions payable | (36) | |
| Current lease liabilities | (79) | |
| Securitization obligations - current | (143) | |
| |
| Non-current lease liabilities | (256) | |
Other non-current liabilities (1) | (103) | |
Long-term debt (2) | (2,166) | |
Deferred income taxes | (561) | |
| Total liabilities | (4,030) | |
| Non-controlling interest | (3) | |
| Net assets | $ | 2,569 | |
(1)In connection with the Anywhere Merger, the Company assumed Anywhere's defined benefit pension plan, including an accumulated benefit obligation of $89 million and plan assets with a fair value of $80 million, resulting in an unfunded accumulated benefit obligation of $9 million, which was recorded in Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheet. The defined benefit pension plan was closed to new entrants as of July 1, 1997 and existing participants do not accrue any additional benefits. Expense related to this plan for the year ending December 31, 2026 is expected to be immaterial.
(2)Refer to Note 10 — “Debt” for details of the long-term debt acquired as part of the transaction.
The fair value of identified intangible assets and their respective useful lives as of the time of acquisition were as follows (in millions):
| | | | | | | | | | | |
| Amount | | Useful Life |
| Trademarks | $ | 649 | | | Indefinite |
Developed technology | 195 | | | 2-5 years |
Franchise agreements | 1,110 | | | 7 years |
| Customer relationships - Relocation | 30 | | | 5-7 years |
| Customer relationships - Agent network | 960 | | | 5 years |
Pending transactions and listings | 32 | | | 4-5 months |
| Title plants | 59 | | | Indefinite |
| Total intangible assets | $ | 3,035 | | | |
The intangible assets above were recorded at fair value in accordance with the acquisition method of accounting. The Company applied the multi-period excess earnings method to value the customer relationships, franchise agreements, and
agent network intangible assets, the relief from royalty method to value the trademarks, and title plants, and the replacement cost method to value the developed technology. These valuations required significant judgment, estimates, and assumptions, including discount rates, revenue growth rates, projected margins, customer retention rates, royalty rates, estimated reproduction costs, and obsolescence factors. Definite-lived intangible assets are amortized over their estimated useful lives using a pattern that reflects the timing of the economic benefits expected to be derived. Indefinite-lived intangible assets are initially recorded at fair value and are not amortized. They are tested for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable. The excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill, which is primarily attributable to expected monetization opportunities from the combined company's current and future offerings and the value of the assembled workforce.
The Company has recorded the preliminary purchase price allocation as of the acquisition date and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the condensed consolidated statements of operations.
None of the goodwill recorded for this acquisition is deductible for tax purposes.
Anywhere Merger Transaction and Integration Expenses
In connection with the Anywhere Merger, the Company incurred approximately $28 million and $245 million in merger and integration costs during the three and nine months ended September 30, 2026, respectively. These costs consisted of legal, investment banking, and other transaction-related costs, as well as severance and other personnel-related costs, and other integration costs related to the integration of systems, technologies, and other processes, all of which were expensed as incurred. Included in these amounts is $64 million in stock-based compensation for the nine months ended September 30, 2026, primarily related to the acceleration of certain Anywhere awards that were converted to equity awards of the Company in connection with the Anywhere Merger and subsequently accelerated upon the termination of certain employees. All such expenses are presented within the Anywhere Merger transaction and integration expenses line of the condensed consolidated statements of operations.
The following table summarizes the total costs incurred in connection with the Anywhere Merger during the three and nine months ended September 30, 2026 (in millions):
| | | | | | | | | | | |
| Three Months Ended September 30, 2026 | | Nine Months Ended September 30, 2026 |
| Legal, investment banking and other transaction-related expenses | $ | — | | | $ | 43 | |
Severance-related personnel costs (1) | 9 | | | 84 | |
| Stock-based compensation expense | — | | | 64 | |
| Integration-related costs | 19 | | | 54 | |
| Total Anywhere Merger transaction and integration expenses | $ | 28 | | | $ | 245 | |
(1)As of September 30, 2026, the Company had $28 million of unpaid severance costs related to the Anywhere Merger recorded within Accrued expenses and other current liabilities on its condensed consolidated balance sheet. The Company expects to recognize an additional $16 million of severance and retention charges related to previously actioned role eliminations over the remainder of the year ending December 31, 2026, reflecting certain employees' remaining required service periods.
The Company incurred $18 million of additional transaction-related expenses during the second half of 2025.
The results of operations of the Anywhere Merger have been included in the Company’s condensed consolidated financial statements since the acquisition date of January 9, 2026. For the period from the acquisition date through September 30, 2026, the acquired business contributed revenue of $4,876 million and a net loss of $297 million.
Christie’s International Real Estate
On January 13, 2025, the Company closed its acquisition of At World Properties Holdings, LLC, known as @properties Christie’s International Real Estate (“Christie’s International Real Estate” or “CIRE”) (the “CIRE Merger”). The Company
entered into this transaction to expand its existing brokerage and integrated services businesses in key domestic markets and to establish a presence in the high-margin franchise sector through the Christie’s International Real Estate brand.
The total consideration transferred was $403 million, which included $153 million in cash and $250 million in Company Class A common stock (the “CIRE Share Consideration”) based on its fair value at the acquisition date. In January 2026, the CIRE Share Consideration was finalized and the Company delivered 3.7 million shares and will deliver an additional total of 6.8 million shares in two equal installments in January 2027 and 2028 to certain sellers. These shares are incremental to 28.4 million shares that were issued as CIRE Share Consideration during the year ended December 31, 2025.
Refer to the Company's 2025 Form 10-K for a discussion of the allocation of purchase price, accounting policies and valuation methodologies applied to the intangible assets acquired in the CIRE Merger.
Of the total Goodwill recorded for this acquisition, $211 million is deductible for tax purposes.
Other Acquisitions
During the three months ended September 30, 2026, the Company acquired 100% of the equity interests in four Sotheby’s International Realty franchisees and converted them to company-owned brokerage operations (the “Conversions”). The Company has accounted for the Conversions as business combinations.
The total consideration for the Conversions completed during the three months ended September 30, 2026 was $238 million, primarily comprised of: (i) $98 million of cash paid at or near closing, net of $12 million of cash acquired; (ii) $55 million of the Company's Class A common stock issued at closing; (iii) an estimated $20 million of deferred purchase price consideration to be paid in cash or the Company's Class A common stock at a later date; and (iv) $43 million of amounts payable in cash or Class A common stock, contingent on the respective businesses achieving certain earnings-based targets through 2028. $18 million of deferred purchase price consideration and $20 million of contingent consideration was recorded within Accrued expenses and other current liabilities and $2 million of deferred purchase price and $23 million of contingent consideration was recorded within Other non-current liabilities on the condensed consolidated balance sheet. The range of undiscounted amounts the Company could pay related to contingent consideration is between zero and $57 million.
The fair value of the assets acquired and the liabilities assumed primarily resulted in the recognition of $76 million of goodwill, $64 million of ROU lease assets, $14 million of current lease liabilities, $50 million of non-current lease liabilities, and $156 million of intangible assets related to customer relationships, which are being amortized over the estimated useful life of approximately five years. Goodwill represents the expected synergies from combining the acquired assets and the operations of the Company and the value of the assembled workforce.
The Company has recorded preliminary purchase price allocations and expects to finalize them within each applicable one-year measurement period.
Approximately $16 million of the goodwill recorded during the three months ended September 30, 2026 is deductible for tax purposes. The amount of tax-deductible goodwill may increase in the future to approximately $54 million dependent on the payment of certain contingent consideration arrangements.
The converted entities' results have been included in the Company's consolidated financial statements from the respective conversion dates onward. For the three months ended September 30, 2026, the Conversions contributed an incremental $141 million in revenue and $4 million in net income.
Pro Forma Information
The below presents the Company’s pro forma results as if the Anywhere Merger and the Conversions had occurred on January 1, 2025 (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pro Forma |
| | Three Months Ended September 30, 2026 | | Three Months Ended September 30, 2025 | | Nine Months Ended September 30, 2026 | | Nine Months Ended September 30, 2025 |
| Revenue | | $ | 4,008 | | | $ | 3,721 | | | $ | 11,566 | | | $ | 10,486 | |
| Net income (loss) | | 50 | | | (35) | | | (243) | | | 100 | |
The unaudited pro forma results assume the Anywhere Merger and the Conversions occurred on January 1, 2025. The pro forma results include adjustments for debt extinguishment costs, compensation expense for accelerated awards, additional amortization of acquired finite-lived intangible assets, and the related tax effects. In addition, the $407 million income tax benefit from the release of valuation allowance on certain deferred tax assets, which resulted from deferred tax liabilities established in connection with the Anywhere Merger and the Conversions, is reflected in the first quarter of 2025, the period in which the transactions are assumed to have been completed. The pro forma information does not purport to represent what the Company’s actual results of operations would have been had the Anywhere Merger and the Conversions occurred on January 1, 2025, nor does it purport to predict the results of operations for future periods.
Other Acquisition-Related Arrangements
In connection with the Company’s past acquisitions, certain amounts paid or to be paid to selling shareholders are subject to clawback and forfeiture dependent on certain employees and real estate professionals providing continued service to the Company. These retention-based payments are accounted for as compensation for future services and the Company recognizes the expenses over the service period. For the three and nine months ended September 30, 2026, the Company recognized expense of $1 million and $3 million, respectively, within Operations and support in the condensed consolidated statements of operations related to these arrangements. For the three and nine months ended September 30, 2025, the Company recognized expense of $1 million within Operations and support in the condensed consolidated statements of operations related to these arrangements.
4. Revenue Recognition
Revenue is recognized upon the transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services in accordance with the revenue accounting standard. The Company's revenue disaggregated by major revenue categories and by reportable segment is presented in the tables below (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| Brokerage | | Franchise | | Integrated Services | | Total |
| 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 |
Gross commission income (1) | $ | 3,567 | | | $ | 1,795 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3,567 | | | $ | 1,795 | |
Service revenue (2) | — | | | — | | | — | | | — | | | 192 | | | 36 | | | 192 | | | 36 | |
Franchise fees (3) | — | | | — | | | 108 | | | 8 | | | — | | | — | | | 108 | | | 8 | |
Other (4) | 11 | | | 7 | | | 14 | | | — | | | 5 | | | — | | | 30 | | | 7 | |
| Total revenue | $ | 3,578 | | | $ | 1,802 | | | $ | 122 | | | $ | 8 | | | $ | 197 | | | $ | 36 | | | $ | 3,897 | | | $ | 1,846 | |
| | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| Brokerage | | Franchise | | Integrated Services | | Total |
| 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 |
Gross commission income (1) | $ | 9,967 | | | $ | 5,126 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 9,967 | | | $ | 5,126 | |
Service revenue (2) | — | | | — | | | — | | | — | | | 540 | | | 97 | | | 540 | | | 97 | |
Franchise fees (3) | — | | | — | | | 301 | | | 21 | | | — | | | — | | | 301 | | | 21 | |
Other (4) | 38 | | | 17 | | | 46 | | | 1 | | | 15 | | | — | | | 99 | | | 18 | |
| Total revenue | $ | 10,005 | | | $ | 5,143 | | | $ | 347 | | | $ | 22 | | | $ | 555 | | | $ | 97 | | | $ | 10,907 | | | $ | 5,262 | |
(1)Gross commission income within the Brokerage segment is recognized at a point in time upon the closing of a home sale transaction.
(2)Service revenue primarily consists of title and escrow fees earned by the Company's title and escrow businesses, which are recognized at a point in time upon the closing of a home sale transaction. Service revenue also includes relocation fees, which are recognized when the related performance obligation is satisfied depending on the type of service performed.
(3)Franchise fees earned by the Franchise segment primarily consist of domestic royalties, which are recognized at a point in time when the underlying franchisee revenue is earned upon the closing of a home sale transaction.
(4)Other revenue is comprised of brand marketing funds received from franchisees within the Franchise segment and other miscellaneous revenues across the Company's other business segments.
The Company's revenue streams are discussed further below by business segment.
Brokerage
Brokerage revenue is primarily comprised of gross commission income which contains a single performance obligation that is satisfied upon the closing of a real estate services transaction, at which point the entire transaction price is earned. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided.
Franchise
Domestic Franchisees
In the U.S., the Company employs a direct franchising model whereby it franchises its real estate brands to real estate brokerage businesses that are independently owned and operated. Franchise revenue principally consists of royalty and marketing fees from the Company’s franchisees. The royalty received is primarily based on a gross percentage of the franchisee’s gross commission income. Royalty fees are recorded as the underlying franchisee revenue is earned (upon close of the real estate transaction). Annual volume incentives given to certain franchisees on royalty fees are recorded as a reduction to revenue and are accrued for in relative proportion to the recognition of the underlying gross franchise revenue. Other sales incentives are generally recorded as a reduction to revenue ratably over the related performance period or from
the date of issuance through the remaining life of the related franchise agreement. Franchise revenue also includes domestic initial franchise fees and marketing fees. Initial franchise fees are generally non-refundable and recognized as revenue upon the execution or opening of a new franchisee office to cover the upfront costs of opening the franchisee for business under one of the Franchise segment's brands. Marketing fees earned from franchisees are utilized by the Company to fund marketing campaigns on their behalf.
International Franchisees
The Company utilizes a direct franchising model and master franchise model outside of the U.S. Under both the direct and master franchise models outside of the U.S., the Company enters into long-term franchise agreements (generally 25 years in duration) and receives an initial area development fee (“ADF”) and ongoing royalties. Ongoing royalties are generally a percentage of the royalties received by the master franchisor from its franchisees with which it contracts and are recorded once the funds are received by the master franchisor. Under the direct franchise model, a royalty fee is paid to the Company on transactions conducted by its franchisees in the applicable country or region. The ADFs that the Company collects are recorded as deferred revenue when received and are classified as current or non-current liabilities in the condensed consolidated balance sheets based on the expected timing of revenue recognition. ADFs are recognized into franchise revenue over the average 25-year life of the related franchise agreement as consideration for the right to access and benefit from the Company’s brands. In the event an ADF agreement is terminated prior to the end of its term, the unamortized deferred revenue balance will be recognized into revenue immediately upon termination.
In connection with the Anywhere Merger, the Company assumed $49 million of deferred revenue liabilities related to the acquired franchise business, primarily consisting of the ADFs that are recognized as franchise revenue over a 25-year period. During the nine months ended September 30, 2026, the Company recognized $69 million in additional deferred revenue partially offset by $64 million of revenue recognized from various sources including brand marketing fees. The Company earns the brand marketing fees from its franchisees and utilizes such fees to fund marketing campaigns on behalf of its franchisees. Brand marketing fees are recorded as deferred revenue when received and recognized into revenue as earned when these funds are spent on marketing activities. The outstanding balance for deferred revenue was $54 million as of September 30, 2026 related to the Anywhere franchise business.
Integrated Services
The Company provides incremental services related to a real estate transaction, including title and escrow and settlement services to consumers, real estate companies, corporations and financial institutions. These services relate to the closing of home purchases and refinancing of home loans and therefore, title revenues, title and escrow fees, and closing service fees are recorded at the time a real estate transaction or refinancing closes.
Additionally, the Company provides relocation services, through Cartus, to corporations managing employee transfers and earns referral fees for directing brokerage transactions to real estate professionals in its Brokerage and Franchise segments. Services include home sale assistance, policy counseling, group move management, expense processing, compensation and compliance support, visa and immigration support, and household goods moving. Revenue comes from fees paid by real estate brokers and moving companies, recognized when services are completed, and from outsourcing management fees charged to clients. Management fees are recorded as deferred revenue when billed (typically at the start of a relocation) and recognized over the move's duration, generally 3 to 6 months.
5. Equity Method Investments
The Company applies the equity method of accounting for investments in ventures when it possesses significant influence over operational and financial decisions but lacks controlling interests. The Company records its proportionate share of net earnings or losses from these equity method investments under the Equity in income of unconsolidated entities line in the condensed consolidated statements of operations. Investments not subject to the equity method are valued at fair market value with adjustments recognized in net income. If the fair value is not readily determinable, these investments are measured at cost minus impairment (if any), plus or minus changes reflecting observable price changes in orderly transactions for an identical or similar investment.
In April 2026, the Company entered into a multi-party transaction with a company (the “Franchisee Parent”) that owns certain franchisees operating under the Sotheby's International Realty and Century 21 brands to restructure financial
obligations of the Franchisee Parent's predecessor (the “Transaction”). As part of the Transaction, the Company became a 51% holder of Franchisee Parent's common equity and entered into a 30-month installment payment plan pursuant to which certain outstanding indebtedness owed to the Company will be satisfied.
Because certain substantive rights held by other shareholders party to the Transaction limit the Company's ability to direct Franchisee Parent's most significant activities, the Company does not control Franchisee Parent and accounts for its investment under the equity method. As of September 30, 2026, the carrying value of the equity method investment was $22 million.
Additionally, the Company and certain funds managed or advised by Angelo, Gordon & Co., L.P. or its affiliates (collectively, “TPG”) entered into an agreement (the “Put Agreement”) under which TPG has the right, but not the obligation (the “Put Right”), to require the Company to purchase 100% of Franchisee Parent's senior preferred equity at a price determined by a formula set forth in the Put Agreement. The Company recorded the Put Right as a liability at fair value, which was $22 million as of September 30, 2026 (the “Put Right liability”). Refer to Note 6 — “Fair Value of Financial Assets and Liabilities,” for further information on determination of the Put Right's fair value.
As of September 30, 2026, the Company had various equity method investments totaling $204 million recorded on the Other non-current assets line on the accompanying condensed consolidated balance sheet. Although the Company holds certain governance rights in these unconsolidated entities, it lacks controlling financial interests in these investments.
The Company's equity method investment balances at September 30, 2026 and December 31, 2025 were as follows (in millions):
| | | | | | | | | | | | | | | |
| | | September 30, 2026 | | December 31, 2025 |
Mortgage joint ventures (1) | | | | | $ | 75 | | | $ | 14 | |
Title insurance underwriter joint venture (2) | | | | | 66 | | | — | |
Brokerage equity method investments (3) | | | | | 55 | | | — | |
Other equity method investments (4) | | | | | 8 | | | 3 | |
Total equity method investments | | | | | $ | 204 | | | $ | 17 | |
(1)Represents the Company's equity method investments in OriginPoint, LLC and Guaranteed Rate Affinity, each of which is a 49.9% minority-owned mortgage origination joint venture with Guaranteed Rate, Inc. The Guaranteed Rate Affinity investment was acquired in connection with the Anywhere Merger. Both investments are held within the Integrated Services segment and originate and market mortgage lending services to the Company's owned-brokerage as well as other real estate brokerage companies across the country.
(2)Represents the Company's 22% equity interest in a title insurance underwriter joint venture, acquired in connection with the Anywhere Merger, and held within the Integrated Services segment.
(3)Includes the Company's various other equity method investments held within the Brokerage segment. These investments include the Company's 50% owned interest in an unconsolidated joint venture (Concierge Auctions) with Sotheby's, as well as the Company's 51% common equity interest in a company that owns certain franchisees operating under the Sotheby's International Realty and Century 21 brands.
(4)Includes the Company's various other equity method investments held within the Integrated Services segment.
During the nine months ended September 30, 2026 and 2025, the Company received distributions from equity method investments of $11 million and $3 million, respectively, classified as operating activities (return of earnings). During the nine months ended September 30, 2026, the Company also received $8 million of distributions classified as investing activities (return of investment). These distributions primarily relate to equity method investments acquired in the Anywhere Merger. Because the Company’s cumulative equity in earnings of these investments is measured from the Anywhere Closing Date, distributions received in excess of earnings recognized since the Merger are classified as returns of investment, even though they are paid from the investees’ earnings.
The Company recorded equity in income from its equity method investments as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Mortgage joint ventures | $ | 1 | | | $ | 2 | | | $ | 14 | | | $ | 3 | |
| Title insurance underwriter joint venture | 1 | | | — | | | (1) | | | — | |
| Brokerage equity method investments | 2 | | | — | | | 4 | | | — | |
Other equity method investments | 2 | | | — | | | 4 | | | 2 | |
| Equity in income of unconsolidated entities | $ | 6 | | | $ | 2 | | | $ | 21 | | | $ | 5 | |
6. Fair Value of Financial Assets and Liabilities
Level 1 Financial Instruments
The Company’s cash and cash equivalents of $841 million and $199 million as of September 30, 2026 and December 31, 2025, respectively, are held in cash, money market funds, and U.S. treasury bills with original maturities of three months or less at the date of purchase. Money market funds and U.S. treasury bills are classified as Level 1 within the fair value hierarchy because they are valued using quoted prices in active markets for identical assets. These are the Company's only Level 1 financial instruments.
Level 2 Financial Instruments
The following table summarizes the principal amount of the Company’s indebtedness compared to the estimated fair value, primarily determined by quoted market values, as of September 30, 2026 (in millions). These are the Company’s only Level 2 financial instruments.
| | | | | | | | | | | | | | | |
| September 30, 2026 | | |
| Principal Amount | | Estimated Fair Value (1) | | | | |
| | | | | | | |
9.75% Senior Secured Second Lien Notes | $ | 500 | | | $ | 525 | | | | | |
7.00% Senior Secured Second Lien Notes | 640 | | | 629 | | | | | |
5.75% Senior Notes | 559 | | | 538 | | | | | |
5.25% Senior Notes | 449 | | | 415 | | | | | |
| | | | | | | |
0.25% Convertible Senior Notes | 1,000 | | | 904 | | | | | |
(1)The fair value of the Company's indebtedness is categorized as Level 2.
Level 3 Financial Instruments
The Company’s Level 3 financial liabilities relate to acquisition-related contingent consideration arrangements and a Put Right liability.
Contingent consideration represents obligations of the Company to transfer cash or the Company’s common stock to the sellers of certain acquired entities in the event that certain targets and milestones are met. For certain contingent consideration liabilities, the Company estimated fair value using a Monte Carlo simulation, which is based on inputs such as forecasted future results of the acquired businesses, which are not observable in the market, discount rates and earnings volatility measures. For contingent consideration arrangements related to the Conversions completed during the three months ended September 30, 2026, the Company estimated fair value using a probability-weighted expected payment approach, which considers management’s assessment of the likelihood of achieving the applicable targets and milestones, discounted to present value.
The Put Right liability relates to the Company's investment in an entity that owns certain franchisees operating under the Sotheby's International Realty and Century 21 brands. The related transaction, including the Put Agreement, was entered into during the three months ended June 30, 2026, at which time the Put Right liability was initially recorded at $22 million. The fair value of this liability was determined using a lattice-based option pricing model, based on significant unobservable inputs, including estimated future cash flows of the investment and discount rates. Refer to Note 5 — “Equity Method Investments,” for further information on the related transaction.
The Company has not presented certain quantitative information regarding the unobservable inputs utilized to measure contingent consideration liabilities or the Put Right liability given changes in these assumptions have not and are not expected to materially impact the Company’s operating results during 2026 or in future periods. Changes in the fair value of Level 3 contingent consideration liabilities are included within Operations and support expense in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2026, there were no material changes in the fair value of the Put Right liability.
A reconciliation of the opening balances to closing balances of the Company's Level 3 financial liabilities is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Opening balance | $ | 53 | | | $ | 31 | | | $ | 31 | | | $ | 31 | |
| Contingent consideration | 43 | | | 2 | | | 44 | | | 6 | |
| Issuance of the Put Right liability | — | | | — | | | 22 | | | — | |
| Payments | (2) | | | (1) | | | (5) | | | (4) | |
| Changes in fair value included in net income (loss) | — | | | — | | | 2 | | | (1) | |
| Closing balance | $ | 94 | | | $ | 32 | | | $ | 94 | | | $ | 32 | |
The Company’s contingent consideration liabilities were $72 million and $31 million as of September 30, 2026 and December 31, 2025, respectively. The Company's Put Right liability was $22 million as of September 30, 2026. Balances of Level 3 financial liabilities as of September 30, 2026 and December 31, 2025 were presented within the condensed consolidated balance sheets as follows (in millions):
| | | | | | | | | | | |
| September 30, 2026 | | December 31, 2025 |
| Accrued expenses and other current liabilities | $ | 33 | | | $ | 7 | |
| Other non-current liabilities | 61 | | | 24 | |
| Total Level 3 financial instruments | $ | 94 | | | $ | 31 | |
There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.
7. Leases
The components of lease costs for operating leases, inclusive of leases assumed as a part of the Anywhere Merger, for the three and nine months ended September 30, 2026 and 2025 was as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Operating lease costs | $ | 55 | | | $ | 26 | | | $ | 160 | | | $ | 80 | |
| Short-term lease costs | 2 | | | 1 | | | 11 | | | 2 | |
| Sublease income | (4) | | | (1) | | | (6) | | | (4) | |
| Variable lease costs | 16 | | | 10 | | | 47 | | | 29 | |
| Total | $ | 69 | | | $ | 36 | | | $ | 212 | | | $ | 107 | |
The Company has a small population of subleases whereby it acts as a lessor and has recognized sublease income as noted in the table above. The impact of this portfolio is not material to the condensed consolidated financial statements.
For the three months ended September 30, 2026 and 2025, the Company recognized costs related to operating leases, net of sublease income, of $67 million and $35 million, respectively, in Operations and support and $2 million and $1 million, respectively, in General and administrative in the condensed consolidated statements of operations. For the nine months ended September 30, 2026 and 2025, the Company recognized costs related to operating leases, net of sublease income, of $206 million and $104 million, respectively, in Operations and support and $6 million and $3 million, respectively in General and administrative in the condensed consolidated statements of operations.
In connection with the Anywhere Merger, the Company acquired finance lease assets which represent equipment leases which primarily consist of furniture, computers and other office equipment. During the three and nine months ended September 30, 2026, the Company recognized $1 million and $9 million, respectively, of expense related to its finance lease assets.
Supplemental balance sheet information related to the Company's leases was as follows (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Lease Type | | Balance Sheet Classification | | September 30, 2026 | | December 31, 2025 |
| Assets: | | | | | | |
| Operating lease assets | | Operating lease right-of-use assets | | $ | 755 | | | $ | 381 |
| Finance lease assets | | Property and equipment, net | | 6 | | | — |
| Total lease assets, net | | $ | 761 | | | $ | 381 |
| Liabilities: | | | | | | |
| Current: | | | | | | |
| Operating lease liabilities | | Current lease liabilities | | $ | 195 | | $ | 99 |
| Finance lease liabilities | | Current lease liabilities | | 4 | | — |
| Non-current: | | | | | | |
| Operating lease liabilities | | Non-current lease liabilities | | 641 | | 354 |
| Finance lease liabilities | | Non-current lease liabilities | | 2 | | — |
| Total lease liabilities | | $ | 842 | | $ | 453 |
The following table represents the weighted-average remaining lease term and discount rate for the Company’s operating leases:
| | | | | | | | | | | |
| September 30, 2026 | | December 31, 2025 |
| Weighted average remaining lease term (years): | | | |
| Operating leases | 4.8 | | 5.1 |
| Finance leases | 2.1 | | 0.0 |
| Weighted average discount rate: | | | |
| Operating leases | 6.1% | | 6.1% |
| Finance leases | 5.5% | | —% |
Future undiscounted lease payments for the Company’s operating and finance lease liabilities are as follows as of September 30, 2026 (in millions):
| | | | | | | | | | | | | | | | | | | | |
| | Operating Leases | | Finance Leases | | Total |
Remaining 2026 | | $ | 63 | | | $ | 1 | | | $ | 64 | |
2027 | | 249 | | | 4 | | | 253 | |
| 2028 | | 211 | | | 1 | | | 212 | |
| 2029 | | 171 | | | — | | | 171 | |
| 2030 | | 113 | | | — | | | 113 | |
| Thereafter | | 183 | | | — | | | 183 | |
| Total future lease payments | | 990 | | | 6 | | | 996 | |
| Less: imputed interest | | 154 | | | — | | | 154 | |
| Present value of lease liabilities | | $ | 836 | | | $ | 6 | | | $ | 842 | |
Supplemental cash flow information related to leases was as follows (in millions):
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2026 | | 2025 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 179 | | | $ | 96 | |
| | | |
| Financing cash flows from finance leases | 4 | | | — | |
| | | |
| Supplemental non-cash information: | | | |
| Lease assets obtained in exchange for lease obligations: | | | |
| Operating leases | $ | 142 | | | $ | 54 | |
| Finance leases | 2 | | | — | |
As of September 30, 2026, the Company had additional operating leases that have not yet commenced with future undiscounted lease payments of approximately $56 million payable through 2038, which have been excluded from above.
8. Goodwill and Intangible Assets
Goodwill
In connection with the Anywhere Merger, the Company realigned its results to three reportable segments: Brokerage, Franchise, and Integrated Services. Refer to Note 17 — “Segment Information” for further information on the Company’s reportable segments. As a result of the change in segments, in accordance with ASC 350, Intangibles-Goodwill and Other, the Company reallocated goodwill of $479 million using a relative fair value approach on January 9, 2026 (the “Reorganization Date”).
Prior to the segment realignment, the Company performed a goodwill impairment assessment and determined that no impairment existed, as the fair value of the single reporting unit exceeded its carrying amount. In connection with the realignment, goodwill was reallocated to the newly identified reporting units using a relative fair value approach, which was determined by estimating fair value based on Segment Adjusted EBITDA multiples (see Note 17 — “Segment Information” for more information). Under this approach, the Company assigned goodwill based on the proportion of each reporting unit’s fair value relative to the total fair value of the original reporting unit immediately prior to the reorganization.
Following the reallocation, the Company assessed goodwill for impairment at each of the newly established reporting units using a qualitative approach. In performing this assessment, the Company considered, among other factors, its overall market capitalization relative to book value, the historical and projected operating performance of the underlying reporting
units, and implied valuation multiples, including EBITDA multiples, derived from both market data and internal analyses. Based on this assessment, the Company determined that no impairment existed.
In connection with the Anywhere Merger, the Company also allocated the acquired goodwill to the reporting units. During the nine months ended September 30, 2026, the Company continued to refine its purchase accounting for the Anywhere Merger, as permitted under the measurement period provided by ASC 805, Business Combinations. This included the refinement of how the acquired goodwill from the Anywhere Merger was allocated to the Company's reportable segments.
Changes in the carrying amount of Goodwill by reportable segment were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Brokerage | | Franchise | | Integrated Services | | Total |
| Reallocation of goodwill at the Reorganization Date | $ | 438 | | | $ | 11 | | | $ | 30 | | | $ | 479 | |
Goodwill acquired in Anywhere Merger | 1,102 | | | 893 | | | 73 | | | 2,068 | |
Measurement period adjustments related to the Anywhere Merger | 438 | | | (383) | | | (42) | | | 13 | |
Conversions completed during the three months ended September 30, 2026 (1) | 76 | | | — | | | — | | | 76 | |
| Balance at September 30, 2026 | $ | 2,054 | | | $ | 521 | | | $ | 61 | | | $ | 2,636 | |
(1)Refer to Note 3 — “Acquisitions” for more information.
Intangible Assets
The following tables summarize the carrying amounts and accumulated amortization of intangible assets (in millions, except weighted-average remaining useful life):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2026 |
| Useful Life | | Gross Carrying Amount | | Accumulated Amortization | | Net Value | | Weighted Average Remaining Useful Life (Years) |
| Finite-lived intangible assets: | | | | | | | | | |
| Franchise-related intangibles | 6-7 years | | $ | 1,164 | | | $ | (128) | | | $ | 1,036 | | | 6.2 |
Customer relationships (1) | 3-9 years | | 1,431 | | | (337) | | | 1,094 | | | 4.4 |
| Acquired technology | 2-5 years | | 230 | | | (64) | | | 166 | | | 3.9 |
| Trademarks | 2-9 years | | 39 | | | (24) | | | 15 | | | 3.0 |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Indefinite-lived intangible assets: | | | | | | | | | |
| Trademarks | | | 649 | | | — | | | 649 | | | |
| Title plants | | | 59 | | | — | | | 59 | | | |
| | | | | | | | | |
| Total | | | $ | 3,572 | | | $ | (553) | | | $ | 3,019 | | | |
(1)For more information on the increase of the gross carrying amount of customer relationships during the third quarter, refer to Note 3 — “Acquisitions”.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Useful Life | | Gross Carrying Amount | | Accumulated Amortization | | Net Value | | Weighted Average Remaining Useful Life (Years) |
| Finite-lived intangible assets: | | | | | | | | | |
| Franchise agreements | 6 years | | $ | 42 | | | $ | (7) | | | $ | 35 | | | 5.0 |
| Customer relationships | 3-9 years | | 285 | | | (164) | | | 121 | | | 4.7 |
| Acquired technology | 2-5 years | | 35 | | | (19) | | | 16 | | | 1.0 |
| Trademarks | 2-9 years | | 39 | | | (18) | | | 21 | | | 3.3 |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Total | | | $ | 401 | | | $ | (208) | | | $ | 193 | | | |
Amortization expense for the three and nine months ended September 30, 2026 and 2025 was $121 million and $377 million, respectively, and $19 million and $55 million, respectively.
The weighted average remaining useful life of all finite-lived intangible assets as of September 30, 2026 is 5.2 years. Estimated future amortization expense for finite-lived intangible assets as of September 30, 2026 is as follows (in millions):
| | | | | | | | |
| | Total |
| Remaining 2026 | | $ | 123 | |
| 2027 | | 472 | |
| 2028 | | 457 | |
| 2029 | | 448 | |
| 2030 | | 444 | |
| Thereafter | | 367 | |
| Total | | $ | 2,311 | |
9. Other Current Assets and Accrued Expenses and Other Current Liabilities
Other current assets consisted of (in millions):
| | | | | | | | | | | |
| |
| September 30, 2026 | | December 31, 2025 |
| Prepaid contracts and other prepaid expenses | $ | 103 | | | $ | 16 | |
| Prepaid agent incentives | 43 | | | 9 | |
| Concierge receivables | 37 | | | 25 | |
| Franchise incentives | 30 | | | 1 | |
| Other | 25 | | | 10 | |
| Total other current assets | $ | 238 | | | $ | 61 | |
Accrued expenses and other current liabilities consisted of (in millions):
| | | | | | | | | | | |
| September 30, 2026 | | December 31, 2025 |
Accrued payroll and related employee costs | $ | 213 | | | $ | 65 | |
| Accrued litigation settlements | 69 | | | — | |
| Accrued interest | 63 | | | — | |
| Accrued merger-related severance costs | 28 | | | — | |
| Accrued expenses | 146 | | | 40 | |
| Contingent consideration | 33 | | | 7 | |
| Other | 123 | | | 26 | |
| Total accrued expenses and other current liabilities | $ | 675 | | | $ | 138 | |
10. Debt
The Company's indebtedness consists of a financing facility, two securitization facilities, and outstanding secured, unsecured, and convertible senior notes, each described below. The Company was in compliance with all related covenants under these borrowing arrangements as of September 30, 2026. The following table summarizes these borrowing arrangements as of September 30, 2026 (in millions, except interest rates and expiration dates):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate | | Expiration Date | | Principal Amount | | Unamortized Fair Value Discount (Premium) and Debt Issuance Costs | | Net Amount |
Revolving Credit Facility (1) | | | November 2030 | | $ | — | | | * | | $ | — | |
| | | | | | | | | |
Long-term Debt: | | | | | | | | | |
9.75% Senior Secured Second Lien Notes | 9.75% | | April 2030 | | $ | 500 | | | $ | (37) | | | $ | 537 | |
7.00% Senior Secured Second Lien Notes | 7.00% | | April 2030 | | 640 | | | (4) | | | 644 | |
5.75% Senior Notes | 5.75% | | January 2029 | | 559 | | | 8 | | | 551 | |
5.25% Senior Notes | 5.25% | | April 2030 | | 449 | | | 17 | | | 432 | |
| | | | | | | | | |
0.25% Convertible Senior Notes | 0.25% | | April 2031 | | 1,000 | | | 23 | | | 977 | |
Total Long-term debt | | | | | $ | 3,148 | | | $ | 7 | | | $ | 3,141 | |
| | | | | | | | | |
Securitization Obligations: (2) | | | | | | | | | |
Concierge Facility | | | January 2028 | | $ | 24 | | | * | | $ | 24 | |
Apple Ridge Securitization | | | May 2027 | | 160 | | | * | | 160 | |
| Total Securitization obligations | | | | | $ | 184 | | | | | $ | 184 | |
*The debt issuance costs related to the Revolving Credit Facility and Securitization Obligations are classified as deferred financing assets within Other non-current assets in the condensed consolidated balance sheet. Unamortized debt issuance costs are amortized within Interest expense in the condensed consolidated statements of operations.
(1)See below under the header “Revolving Credit Facility” for additional information.
(2)See below under the header “Securitization Obligations” for additional information.
Maturities Table
As of September 30, 2026, the combined aggregate amount of future maturities for long-term debt are as follows (in millions):
| | | | | | | | |
| | Amount |
Remaining 2026 | | $ | — | |
| 2027 | | — | |
| 2028 | | — | |
| 2029 | | 559 | |
| 2030 | | 1,589 | |
2031 and thereafter | | 1,000 | |
Total future maturities | | $ | 3,148 | |
Revolving Credit Facility
In November 2025, the Company entered into a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”) with Morgan Stanley Senior Funding, Inc., as administrative agent and as collateral agent and a syndicate of other lenders. Under the Revolving Credit Facility, the Company obtained revolving commitments from lenders in an initial amount of $250 million. The lenders’ commitments under the Revolving Credit Facility automatically increased by $250 million to an aggregate amount of $500 million upon the completion of the Anywhere Merger in January 2026. The Revolving Credit Facility also included a letter of credit sublimit of $100 million which automatically increased to $170 million upon the completion of the Anywhere Merger. The Company’s obligations under the Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured by a first priority security interest in substantially all of the assets of the Company and the Company’s subsidiary guarantors, subject to customary exceptions.
Borrowings under the Revolving Credit Facility bear interest at Term SOFR plus an applicable rate between 1.50% and 2.25% per annum, based on a pricing grid in which the levels are set based on the Company’s Total Net Leverage Ratio (as defined in the underlying agreement). The Company is also obligated to pay other customary fees under the Revolving Credit Facility, including (i) a commitment fee to the lenders on amounts they have committed, which are unused, of between 0.175% and 0.35% per annum, based on a pricing grid in which the levels are set based on the Company’s Total Net Leverage Ratio, (ii) fees associated with the issuance of letters of credit, (iii) administrative agent fees, and (iv) upfront fees.
The maturity date of the Revolving Credit Facility is November 17, 2030. In the event there is an aggregate principal amount outstanding on certain of Anywhere’s second lien and unsecured notes that exceeds $50 million on the date that is 91 days prior to the respective final stated maturity dates of such notes, the Revolving Credit Facility is subject to an earlier springing maturity on such 91st day.
The Company has the option to repay the Company’s borrowings, and to permanently reduce the commitments in whole or in part, under the Revolving Credit Facility without premium or penalty. As of September 30, 2026, there were no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled $48 million. As of September 30, 2026, the Company had $452 million available to be drawn under its Revolving Credit Facility.
The Revolving Credit Facility contains customary representations, warranties, affirmative covenants, and negative covenants. The negative covenants restrict the Company’s and its restricted subsidiaries’ ability to, among other things, incur liens and indebtedness, make certain investments, declare and pay dividends, dispose of, transfer or sell assets, make stock repurchases, and consummate certain other matters, all subject to certain exceptions. The financial covenant under the Revolving Credit Facility requires that following the consummation of the Anywhere Merger, the Company maintains a Total Net Leverage Ratio level of no greater than 5.00 to 1.00, stepping down to 4.50 to 1.00 on December 31, 2027 and 4.25 to 1.00 on December 31, 2028 with no requirement to maintain a minimum Liquidity level or a minimum
Consolidated Total Revenue level.
Senior Secured Second Lien Notes
Following the Anywhere Merger, the 9.75% Senior Secured Second Lien Notes and the 7.00% Senior Secured Second Lien Notes (together, the “Secured Notes”) continued as obligations of the Anywhere issuers and are reflected in the Company’s condensed consolidated financial statements. The Secured Notes mature on April 15, 2030 and bear interest payable semiannually in arrears on April 15 and October 15 of each year. As of September 30, 2026, the principal outstanding under 9.75% Senior Secured Second Lien Notes and the 7.00% Senior Secured Second Lien Notes were $500 million and $640 million, respectively.
The Company may redeem all or a portion of the 9.75% Senior Secured Second Lien Notes or the 7.00% Senior Secured Second Lien Notes, as applicable, at the redemption prices set forth in the applicable indenture. Prior to April 15, 2027, the Company may only redeem the 9.75% Senior Secured Second Lien Notes at a make-whole redemption price calculated in accordance with the indenture. On and after April 15, 2027, the notes may be redeemed at the applicable call prices set forth in the indenture, beginning at 104.875% of the outstanding principal amount, plus accrued and unpaid interest.
The Secured Notes are (1) guaranteed on a senior secured, second priority basis by all material domestic subsidiaries that are guarantors under the Revolving Credit Facility; (2) guaranteed by Compass on a voluntary and unsecured senior subordinated basis; and (3) secured by substantially the same collateral as the existing first lien obligations under the Company's Revolving Credit Facility, but on a second priority basis.
The indentures governing the Secured Notes contain various negative covenants that limit the Company and its restricted subsidiaries’ ability, among other things, to incur or guarantee additional indebtedness, issue disqualified stock or preferred stock, pay dividends or make distributions to their stockholders, repurchase or redeem capital stock, make investments or acquisitions, incur restrictions on the ability of certain of their subsidiaries to pay dividends or to make other payments, enter into transactions with affiliates, create liens, merge or consolidate with other companies or transfer all or substantially all of their assets, transfer or sell assets, including capital stock of subsidiaries and prepay, redeem or repurchase debt that is subordinated in right of payment to the Secured Notes, all subject to certain exceptions.
Senior Unsecured Notes
Following the Anywhere Merger, the 5.75% Senior Notes and 5.25% Senior Notes (together, the “Unsecured Notes”) continued as obligations of the Anywhere issuers and are reflected in the Company's condensed consolidated financial statements. The 5.75% Senior Notes mature on January 15, 2029 with interest on such notes payable each year semiannually on January 15 and July 15. The 5.25% Senior Notes mature on April 15, 2030 with interest on such notes payable each year semiannually on April 15 and October 15. As of September 30, 2026, the principal outstanding under 5.75% Senior Notes and the 5.25% Senior Notes were $559 million and $449 million, respectively.
The Company may redeem all or a portion of the 5.75% Senior Notes or 5.25% Senior Notes, as applicable, at the redemption price set forth in the applicable indenture governing such notes. The Unsecured Notes are guaranteed on a general senior unsecured basis by Compass (on a voluntary basis) and all material domestic subsidiaries that are guarantors under the Revolving Credit Facility and the Company's outstanding debt securities.
The indentures governing the Unsecured Notes contain various negative covenants that limit the Company and its restricted subsidiaries’ ability, among other things, to incur or guarantee additional indebtedness, issue disqualified stock or preferred stock, pay dividends or make distributions to their stockholders, repurchase or redeem capital stock, make investments or acquisitions, incur restrictions on the ability of certain of their subsidiaries to pay dividends or to make other payments, enter into transactions with affiliates, create liens, merge or consolidate with other companies or transfer all or substantially all of their assets, transfer or sell assets, including capital stock of subsidiaries and prepay, redeem or repurchase debt that is subordinated in right of payment to the Unsecured Notes, all subject to certain exceptions.
0.25% Convertible Senior Notes
In connection with the Anywhere Merger, on January 9, 2026 the Company issued $1.0 billion in aggregate principal amount of 0.25% Convertible Senior Notes due 2031 (the “Convertible Notes”). The Convertible Notes will mature on April 15, 2031, unless earlier repurchased, converted or redeemed. The Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), at the Company’s option at any time, and from time to time, on or after April 20, 2029 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price. The initial conversion rate for the Convertible Notes is 62.5626 shares of Class A common stock per $1,000 principal amount
of Convertible Notes, which is equivalent to an initial conversion price of approximately $15.98 per share of Class A common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the indenture governing the notes. Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.
Additionally, the Company also entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to the Class A common stock upon any conversion of the Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions will initially be $23.68 per share of common stock, which represents a premium of 100% over the last reported sale price of the common stock on January 7, 2026, and is subject to certain customary adjustments under the terms of the Capped Call Transactions. The Company paid $97 million for the Capped Call Transactions, funded with proceeds from the Convertible Notes. The net cash proceeds received from the offering of the Convertible Notes were approximately $880 million after considering the $97 million cost of the Capped Call Transaction and $23 million of debt issuance costs. The Capped Call Transactions are equity-classified, are not remeasured each reporting period, and are recorded as a reduction to Additional paid-in capital in the condensed consolidated balance sheet.
Securitization Obligations
Concierge Facility
In July 2020, the Company entered into a Revolving Credit and Security Agreement (as amended, amended and restated, modified or supplemented from time to time, the “Concierge Facility”) with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $75 million revolving credit facility and is solely used to finance a portion of the Company’s Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge receivables and cash of the Compass Concierge Program.
Borrowings under the Concierge Facility bear interest at the term SOFR rate plus a margin of 2.50%. The two year commitment fee is 0.35% if the Concierge Facility is utilized greater than 50% and 0.50% if the Concierge Facility is utilized less than 50%. On August 1, 2025, the revolving period under the Concierge Facility was extended to July 31, 2027. The interest rate on the drawn down balance of the Concierge Facility was 6.54% as of September 30, 2026. Pursuant to the Concierge Facility, the principal amount, if any, is payable in full in January 2028, unless earlier terminated or extended.
The Company has the option to repay the borrowings under the Concierge Facility without premium or penalty prior to maturity. The Concierge Facility contains customary affirmative and negative covenants. Additionally, in the event that the Company fails to comply with certain financial measures tied to liquidity and leverage or other specified requirements, the lenders may cause the commitments under the Concierge Facility to automatically be reduced to zero and require the Company to repay any outstanding loans under the Concierge Facility. In April 2026, the Concierge Facility was amended to align the leverage-related financial measure under the Concierge Facility with the Total Net Leverage Ratio financial covenant applicable under the Revolving Credit Facility.
The Concierge Facility includes customary events of default that include, among other things, nonpayment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, bankruptcy and insolvency events, material judgments and change of control. The occurrence of an event of default could result in the acceleration of the obligations and/or the increase in the applicable interest rate under the Concierge Facility.
Apple Ridge Funding LLC
The Company, through certain subsidiaries, including certain consolidated special purpose entities, maintains a relocation securitization program (the “Apple Ridge Securitization”) to securitize relocation receivables and related assets. Borrowings under the Apple Ridge facility currently bear interest, depending on the lender, at either the CP Rate (which represents the variable cost of commercial paper issued by the lenders to fund the facility) or SOFR plus a margin of 0.1%. Additionally, a program fee of 1.80% and an unused fee of 0.90% are incurred. The one year renewal fee is 0.15%. The securitization obligations represent floating rate debt for which the interest rate on the drawn down balance of the Apple Ridge facility was 5.95% as of September 30, 2026.
In May 2026, the Company amended and extended the existing Apple Ridge Securitization program through May 28, 2027 in the amount of $180 million. The securitization program includes a seasonal increase provision which allows for a temporary increase to $200 million of borrowing capacity from May 29, 2026 to October 15, 2026 only, at which time it reverts back to $180 million of borrowing capacity for the remainder of the term.
As of September 30, 2026, the Company had $200 million of borrowing capacity under the Apple Ridge Securitization program with $160 million being utilized, leaving $40 million of available capacity subject to maintaining sufficient relocation related assets to collateralize the securitization obligation.
Assets under the Apple Ridge Securitization program are generated from advancing funds on behalf of clients of the Company's relocation operations in order to facilitate the relocation of their employees. Assets of these special purpose entities are not available to pay the Company’s general obligations. Under the Apple Ridge Securitization program, provided no termination or amortization event has occurred, any new receivables generated under the designated relocation management agreements are sold into the securitization program and as new eligible relocation management agreements are entered into, the new agreements are designated to the program.
Certain of the funds that the Company receives from relocation receivables and related assets are required to be utilized to repay securitization obligations. These obligations are collateralized by $220 million of underlying relocation receivables and other related relocation assets at September 30, 2026. Substantially all relocation related assets are realized in less than twelve months from the transaction date. Accordingly, all of the Company's securitization obligations are classified as current in the accompanying condensed consolidated balance sheets. As a result of the Anywhere Merger, the Company acquired $8 million of restricted cash, which serves as part of the collateral for the securitization obligations described above and is included in Other current assets on the condensed consolidated balance sheet. As of September 30, 2026, restricted cash related to these collateralized assets totaled $5 million. Changes in restricted cash during the period are reflected in operating activities on the condensed consolidated statements of cash flows.
Interest incurred in connection with borrowings under the facility amounted to $3 million and $7 million for the three and nine months ended September 30, 2026, respectively. This interest expense is recorded within Revenue in the accompanying condensed consolidated statements of operations as related borrowings are utilized to fund the Company's relocation operations where interest is generally earned on such assets.
The Apple Ridge securitization program has restrictive covenants and trigger events, the occurrence of which could restrict the Company's ability to access new or existing funding under this facility or result in termination of the facility.
11. Commitments and Contingencies
Legal Proceedings
The Company is currently involved in, and may be involved in, disputes, legal proceedings, claims, and regulatory and governmental inquiries and investigations, and has received subpoenas and requests for documents and information, in connection with, among other things, antitrust and anti-competition claims. Further, the Company is currently involved in, and may be involved in, commercial disputes, labor and employment claims, intellectual property disputes, consumer complaints, and matters related to regulatory compliance. The Company does not expect any material financial loss or business implications related to these matters. However, the outcomes of the Company’s regulatory investigations and legal proceedings are inherently unpredictable and subject to substantial uncertainties. Certain claims, including RESPA, antitrust, and TCPA matters, may involve joint and several liability or significant, potentially trebled damages. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the Company’s business taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Legal costs related to the defense of loss contingencies are expensed as incurred.
Claims or regulatory actions against the Company, whether meritorious or not, could have an adverse impact on the Company due to legal costs, diversion of management resources and other elements. Except as identified with respect to the matters below, the Company does not believe that the outcome of any individual existing legal or regulatory proceeding
to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.
The Company and its subsidiaries, inclusive of those subsidiaries acquired as a part of the Anywhere Merger, have been named as defendants in lawsuits that allege, among other things, violations of Section 1 of the Sherman Act, 15 U.S.C. § 1 or other antitrust laws, as set forth below (the “Antitrust Lawsuits”).
Real Estate Commission Sell-Side Antitrust Litigation
Anywhere was formerly known as Realogy Holdings Corp. and is named in the following three class actions covering sellers of homes utilizing a broker during the class period that challenge residential real estate industry rules and practices that require an offer of compensation and payment of buyer-broker commissions and certain alleged associated practices: (1) Burnett, et al. v. National Association of Realtors, et al., No. 4:19-CV-00332 (W.D. Mo.) (“Burnett”), filed on April 29, 2019, (2) Moehrl, et al. v. National Association of Realtors, et al., No. 1:19-CV-01610 (N.D. Ill.) (“Moehrl”), filed on March 6, 2019, and (3) Nosalek, et al. v. MLS Property Information Network, Inc., et al., No. 1:20-CV-12244 (D. Mass.) (“Nosalek”), filed on December 17, 2022.
In October 2023, Anywhere agreed to a settlement, on a nationwide basis, of all claims asserted or that could have been asserted against Anywhere in the Burnett, Moehrl and Nosalek cases, including claims asserted on behalf of home sellers in similar matters (the “Anywhere Settlement”) and the court granted final approval of the Anywhere Settlement on May 9, 2024. The final approval has been appealed by several parties, including a plaintiff class member from the Batton I buy-side case (described below), specifically claiming that the release in the Anywhere Settlement should not release any buy-side claims that sellers may also have. On September 15, 2026, the Eighth Circuit Court of Appeals affirmed the grant of final approval of the Anywhere Settlement.
The Anywhere Settlement releases Anywhere, including all of its subsidiary company-owned brokerages and franchise-affiliated brokerages, and their affiliated real estate professionals from all claims that were or could have been asserted by all persons who sold a home that was listed on a multiple listing service anywhere in the United States where a commission was paid to any brokerage in connection with the sale of the home in the relevant class period. The Anywhere Settlement is not an admission of liability, nor does it concede or validate any of the claims asserted against Anywhere.
Under the terms of the nationwide Anywhere Settlement, which was entered into prior to the closing of the Anywhere Merger, Anywhere agreed to injunctive relief (including practice changes) as well as monetary relief of $84 million, of which $30 million has been paid and the remaining $54 million will be due within 21 business days after all appellate rights are exhausted. While the timing of this payment is uncertain, the Company currently expects the payment to occur no earlier than the first quarter of 2027.
Four putative class action lawsuits, captioned Gibson, et al. v. National Association of Realtors, et al., No. 4:23-cv-00788-FJG (W.D. Mo.) (“Gibson”), filed on October 31, 2023, Grace v. National Association of Realtors, et al., No. 3:23-cv-06352 (N.D. Cal.) (“Grace”), filed on December 8, 2023, Fierro, et al. v. National Association of Realtors, et al., Case No. 2:24-cv-00449 (C.D. Cal.) (“Fierro”), filed on January 17, 2024, and Whaley v. Arizona Association of Realtors, Case No. 2:24-cv-00105 (D. Nev.) (“Whaley”), filed on January 15, 2024 name the Company as a defendant and allege, among other things, that certain trade associations, including the National Association of Realtors, multiple listing services, and real estate brokerages engaged in a continuing contract, combination, or conspiracy to unreasonably restrain interstate trade and commerce in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 by entering into a continuing agreement to require sellers of residential property to make inflated payments to brokers representing buyers. Umpa, et al. v. National Association of Realtors, et al., 4:23-cv-00945 (W.D. Mo.) (“Umpa”), filed on December 27, 2023, was consolidated into the Gibson matter on April 23, 2024 (Umpa hereafter referred to singularly as Gibson). Boykin v. National Association of Realtors, et al., No. 2:24-cv-00340 (D. Nev.) (“Boykin”), filed on February 16, 2024, was terminated and consolidated into the Whaley matter on March 20, 2024. The plaintiffs in Gibson allege a nationwide scope, while the Grace and Fierro matters are limited in scope to Northern California and Southern California, respectively and the Whaley matter is limited in scope to Nevada.
Two putative class action lawsuits, March v. Real Estate Board of New York, et al., No. 1:23-cv-09995 (S.D.N.Y.) (“March”), filed on November 13, 2023, and Friedman v. Real Estate Board of New York, et al., Case No. 1:23-cv-09601 (S.D.N.Y.) (“Friedman”), filed on January 18, 2024, name the Company as a defendant and allege, among other things, that the Real Estate Board of New York, and a number of real estate brokerages engaged in a continuing contract, combination, or conspiracy to unreasonably restrain interstate trade and commerce in violation of Section 1 of the Sherman Act, 15
U.S.C. § 1 by entering into a continuing agreement to require sellers of residential property to make inflated payments to brokers representing buyers. The Friedman and March matters also allege violations of the Donnelly Act, N.Y. Gen. Bus. § 340, and the March matter further seeks injunctive relief pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26. The Friedman and March matters are limited in scope to the New York City boroughs of Brooklyn, and Manhattan, respectively.
On March 21, 2024, the Company entered into a settlement agreement to resolve Gibson on a nationwide basis (the “Compass Settlement”). The Compass Settlement resolves all claims in these cases and similar claims in other lawsuits alleging claims on behalf of sellers on a nationwide basis against the Company, including all of its subsidiary company-owned brokerages and franchise-affiliated brokerages, and their affiliated agents (collectively, the “Claims”) and releases them from the Claims. Under the Compass Settlement, the Company agreed to pay $58 million and make certain changes to its business practices. The Company’s motion for final approval of the Compass Settlement was granted on October 31, 2024. The final approval ruling was appealed by certain class members that objected to the Compass Settlement, including but not limited to plaintiffs in the March and Friedman matters, referenced above, and the Batton II matter referenced below. The Eighth Circuit Court of Appeals affirmed the grant of final approval of the Compass Settlement on September 1, 2026. The March and Friedman cases were dismissed with prejudice as to the Company and its subsidiaries subsequent to the Eighth Circuit's affirmance. Grace, Fierro, and Whaley have not been dismissed as to the Company. No further amounts are due under the Compass Settlement.
The Company does not expect the terms of the Compass Settlement, the Anywhere Settlement, or the process of moving to enforce the settlements nationwide to have a material impact on its future operations.
In addition, since late October 2023, dozens of copycat additional lawsuits with similar or related claims have been filed against various real estate brokerages, the National Association of Realtors, MLSs, and/or state and local Realtor associations, less than a third of which name the Company, its subsidiaries or franchisees. In those cases, plaintiffs have generally either agreed to dismiss or stay the actions against the Company, its subsidiaries or franchisees pending the conclusion of the appeals of the trial court's grant of final approval of the Compass and Anywhere Settlements, including the putative class action lawsuits of QJ Team, LLC, et al. v. Texas Association of Realtors, Inc., et al., No. 4:23-cv-01013 (E.D. Tx.) (“QJ Team”), filed on November 13, 2023 and Peiffer v. Latter & Blum Holding, LLC, et al., Case No. 2:24-cv-00557 (E.D. La.) (“Peiffer”), filed on March 5, 2024, each of which the Company formerly presented as separately captioned matters in the Commitments and Contingencies footnote.
Real Estate Commission Buy-Side Antitrust Litigation
Separately, a putative nationwide class action on behalf of home buyers (instead of sellers) captioned Batton, et al. v. The National Association of Realtors, et al., No. 1:21-CV-00430 (N.D. Ill.) (“Batton I”), which names Anywhere, was filed on January 25, 2021, in which the plaintiffs take issue with certain policies of the National Association of Realtors, including those related to buyer-broker compensation at issue in the Moehrl, Burnett and Nosalek matters, but claim the alleged conspiracy has harmed buyers (instead of sellers), and seek a permanent injunction enjoining the National Association of Realtors from establishing in the future the same or similar rules, policies, or practices as those challenged in the action as well as an award of damages and/or restitution, interest, and reasonable attorneys’ fees and expenses. The only claims remaining outstanding are state law claims. The final approval of the Anywhere Settlement has limited the size of the Batton I case because the settling plaintiffs are releasing claims of the type alleged in Batton I. As noted above, the named plaintiffs in the Batton I case have filed an appeal of the final approval of the Anywhere Settlement, objecting to the release of buy-side claims in that settlement. On November 13, 2025, the court struck the class certification motion filed by the Batton I plaintiffs and stayed all class certification proceedings pending resolution of the appeal of the Anywhere Settlement (though fact discovery would continue). As described in the next paragraph, developments in a separate, related buy‑side action, Tuccori v. At World Properties, et al., have implications for resolution of the claims asserted against Anywhere in Batton I.
Tuccori v. At World Properties, et al., (N.D. Ill.), No. 1:24-CV-00150 (“Tuccori”), is a case that consolidated several purported class actions filed by home buyers. On October 15, 2025, the court in Tuccori granted preliminary approval of a nationwide settlement entered by several real estate brokerages related to the home buyer claims (“Tuccori Settlement”). The Tuccori Settlement, as preliminarily approved by the court on October 15, 2025, included an opt-in procedure under which other companies subject to home buyer claims could opt into the Tuccori Settlement, subject to preliminary and final court approval of such an opt-in settlement. On February 22, 2026, Anywhere opted into the Tuccori Settlement via a nationwide Opt-In Settlement Agreement (“Anywhere Opt-In Settlement” with Anywhere being an “Opt-In Settlor”). On February 23, 2026, the Tuccori plaintiffs filed a motion for preliminary approval of the Anywhere Opt-In Settlement and
several other opt-in settlements by other real estate brokerages. Anywhere agreed to pay $10 million under the Anywhere Opt-In Settlement (which was properly reserved at December 31, 2025), and paid $1 million of this obligation in March 2026. The Anywhere Opt-In Settlement received preliminarily court approval on March 6, 2026 and, if finally approved by the court and sustained on any appeal, will release Anywhere and all of its respective past, present, and future direct and indirect parents (including holding companies), subsidiaries, related entities and affiliates, associates (all as defined in SEC Rule 12b-2 promulgated pursuant to the Securities Exchange Act of 1934), predecessors, and successors, and all of their respective franchisees, and sub-franchisors from any and all state and federal claims regardless of the cause of action arising from or related to conduct that was or could have been alleged in the Tuccori Case or against Opt-In Settlor in the Batton Case (as described in the prior paragraph) based on any or all of the same factual predicates as those claims, including but not limited to claims based on antitrust laws, consumer protection or other state laws, and/or anticompetitive conduct relating to the commissions negotiated, offered, obtained, or paid to brokerages, or the impact of the foregoing on the purchase price, in connection with the purchase or sale of residential real estate. Certain Batton I plaintiffs have lodged challenges to the Anywhere Opt-In Settlement, both before the Batton I Court and before the Tuccori Court, including appeals of rulings adverse to their challenges. By order dated April 16, 2026, the Batton I Court stayed all discovery and struck the pending discovery deadline pending resolution of the issues surrounding the Anywhere Opt-In Settlement in Tuccori. Subsequently, by order dated May 29, 2026, the Batton I Court stayed that entire case after the Company and other defendants received preliminary approval of settlements they entered in Tuccori. A final approval hearing for the Tuccori settlements (including the Compass Tuccori settlement set forth below) was held on November 2, 2026. The court will issue a written opinion at some point in the future.
Batton, et al. v. Compass, Inc., et al., No. 1:23-cv-15618 (N.D. Ill.) (“Batton II”), filed on November 2, 2023, names Compass and seven other brokerages as defendants. The allegations in Batton II are substantially similar to those contained in Batton I. Compass and the defendants in the Batton II matter filed a motion to dismiss the amended complaint on June 21, 2024, which the court denied on March 24, 2026. In April 2026, Compass opted into the Tuccori Settlement via the nationwide Opt-In Settlement Agreement (the “Compass Opt-In Settlement”). The Compass Opt-In Settlement amount is approximately $7 million. The Tuccori Court granted preliminary approval of the Compass Opt-In Settlement on May 26, 2026 and we paid $1 million of this obligation in June 2026. On May 29, 2026, as a result of preliminary approval of the Compass Opt-In Settlement in Tuccori, the Batton II Court stayed that entire case.
Assuming final court approval of each of the Anywhere and Compass Opt-In Settlements, we currently expect to pay the remaining settlement amounts no earlier than the fourth quarter of 2026 and more likely in 2027.
McFall v. Canadian Real Estate Association, et al., Federal Court, Canada, Court File No. T-119-24 is a putative class action, filed on January 18, 2024, in which plaintiff alleges that Coldwell Banker Canada, amongst other brokers, franchisors, Regional Real Estate Boards and the Canadian Real Estate Board conspired to fix the price of buyer brokerage services in violation of civil and criminal statutes. On March 14, 2024, the court entered an order functionally staying the matter pending further order of the court. The Company believes the court will reexamine this order upon conclusion of the appeal in a previously filed matter, called Sunderland, involving similar allegations but different parties. On October 14, 2026, the court ruled on the Sunderland appeal, finding that the claims against brokerages and associations could proceed, but claims against franchisors could not.
Other Antitrust Litigation
Homie Technology v. National Association of Realtors, et al., No. 2:24CV00616 (D. Utah) (“Homie”), filed on August 22, 2024, names the National Association of Realtors, Anywhere, several other real estate brokerages and franchisors and an MLS, seeking damages and injunctive relief, alleging that the defendants had conspired to exclude Homie and other new market entrants from the market for real estate brokerage services. The alleged conspiracy includes creating a market structure that facilitates boycotts of new entrants, including through the implementation and enforcement of the rules of the National Association of Realtors governing the operation of MLSs, which Homie claims to be exclusionary. Homie asserts violations of federal and state antitrust laws along with a common law claim of economic harm. Anywhere’s motion to dismiss was granted and the action was dismissed with prejudice by the court on July 15, 2025. Homie filed a notice of appeal of the dismissal on August 7, 2025. The order dismissing the case was affirmed on appeal on August 11, 2026.
Telephone Consumer Protection Act Litigation
In Bumpus, et al. v. Realogy Holdings Corp., et al., No. 3:19-cv-03309 (N.D. Cal.) (“Bumpus”), filed on June 11, 2019, plaintiffs allege that real estate professionals affiliated with Anywhere Advisors LLC violated the Telephone Consumer Protection Act of 1991 (TCPA) using dialers provided by Mojo Dialing Solutions, LLC and others. Plaintiffs seek relief on
behalf of a National Do Not Call Registry class, an Internal Do Not Call class, and an Artificial or Prerecorded Message class. In January 2025, Anywhere entered into a settlement of the case pursuant to which it will pay $20 million, subject to final approval by the court, which was granted on March 18, 2026. The Company assumed the remaining $19 million owed under the settlement as a liability in connection with the Anywhere Merger and made this final payment during the three months ended June 30, 2026.
Securities Litigation
On October 7, 2026, a putative class action captioned Magloire v. Compass, Inc., et al., No. 1:26-cv-08885, was filed in the U.S. District Court for the Southern District of New York against the Company and certain individual defendants, including current and former officers and directors of the Company. The complaint asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 on behalf of former Anywhere stockholders who acquired the Company's common stock in connection with the January 2026 Anywhere Merger, alleging that the registration statement and prospectus for the Merger contained materially false and misleading statements and omissions regarding the regulatory review process and related risks. The plaintiff seeks unspecified monetary damages, equitable relief, including rescission or disgorgement, and attorney's fees and costs.
During the nine months ended September 30, 2026, the Company recognized an expense of $7 million within General and administrative expense in the condensed consolidated statements of operations in connection with the Antitrust Lawsuits.
Letter of Credit Agreements
The Company has irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities. As of September 30, 2026 and December 31, 2025, the Company was contingently liable for $48 million and $31 million, respectively, under these letters of credit. The letters of credit were collateralized by the Revolving Credit Facility.
Escrow and Trust Deposits
As a service to its home buyers and sellers, the Company administers escrow and trust deposits, which represent undistributed amounts for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250,000. The escrow and trust deposits totaled approximately $1.1 billion and $300 million as of September 30, 2026 and December 31, 2025, respectively. The increase from December 31, 2025 is primarily driven by the $688 million of escrow and trust deposits relating to the Anywhere business. These deposits are not assets of the Company and therefore are excluded from the accompanying condensed consolidated balance sheets. However, the Company remains contingently liable for the disposition of these deposits.
12. Preferred Stock and Common Stock
Undesignated Preferred Stock
In April 2021, the Company adopted a restated certificate of incorporation which provides for authorized undesignated preferred stock to 25.0 million shares with a $0.00001 par value per share. As of September 30, 2026 and December 31, 2025, there are no shares of the Company’s preferred stock issued and outstanding.
Common Stock
In February 2021, the Company approved the establishment of Class C common stock and an agreement with the Company’s CEO to exchange his Class A common stock for Class C common stock. Any Class A common stock issued to the Company’s CEO from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock. Each share of Class C common stock is entitled to twenty votes per share and will be convertible at any time into one share of Class A common stock and will automatically convert into Class A common stock under certain “sunset” provisions. Other than certain permitted transfers for estate planning purposes, upon a transfer of Class C common stock, the Class C common stock will convert into Class A common stock.
In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12.5 billion shares of Class A common stock, 1.25 billion shares of Class B common stock and 100 million shares of Class C common stock. Each class has par value of $0.00001.
The following tables reflect the authorized, issued and outstanding shares for each of the classes of common stock as of September 30, 2026 and December 31, 2025:
| | | | | | | | | | | | | | | | | |
| September 30, 2026 |
| Shares
Authorized | | Shares
Issued | | Shares
Outstanding |
| Class A common stock | 12,500,000,000 | | | 755,353,585 | | | 755,353,585 | |
| Class B common stock | 1,250,000,000 | | | — | | | — | |
| Class C common stock | 100,000,000 | | | 10,122,433 | | | 10,122,433 | |
| Total | 13,850,000,000 | | | 765,476,018 | | | 765,476,018 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Shares
Authorized | | Shares
Issued | | Shares
Outstanding |
| Class A common stock | 12,500,000,000 | | | 553,356,990 | | | 553,356,990 | |
| Class B common stock | 1,250,000,000 | | | — | | | — | |
| Class C common stock | 100,000,000 | | | 10,122,433 | | | 10,122,433 | |
| Total | 13,850,000,000 | | | 563,479,423 | | | 563,479,423 | |
Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are not entitled to vote. Holders of Class C common stock are entitled to twenty votes per share.
Each share of Class C common stock is convertible at any time at the option of the holder into one share of Class A common stock. Each share of Class C common stock will automatically convert into a share of Class A common stock upon sale or transfer, except for certain permitted transfers.
13. Stock-Based Compensation
2021 Equity Incentive Plan
Effective January 1, 2026, the number of shares of Class A common stock available for future grants was increased by an additional 28.2 million shares as a result of the annual increase provision allowed under 2021 Equity Incentive Plan, as amended (the “2021 Plan”).
In connection with the Anywhere Merger, the Realogy Holdings Corp. Amended and Restated 2012 Long-Term Incentive Plan (the “Former Anywhere Plan”), the Anywhere Real Estate Inc. Third Amended and Restated 2018 Long-Term Incentive Plan (the “Anywhere Plan”) and the Realogy Holdings Corp. Non-Plan Inducement Stock Option Agreement (the “Inducement Stock Option Agreement”), as well as certain equity awards that were granted and outstanding under the Former Anywhere Plan, the Anywhere Plan and Inducement Stock Option Agreement were assumed by the Company and converted into equity awards in respect of 14.2 million shares of Class A common stock. In addition, 9.8 million shares remaining available for future issuance under the Anywhere Plan were assumed by the Company and added to the number of shares of the Class A common stock available for issuance under 2021 Plan (the “Added Shares”). During the period from January 9, 2026 and March 31, 2026, certain of these Added Shares were issued, and 0.5 million of the Added Shares remain available for issuance as of September 30, 2026.
As of September 30, 2026, there were 77.0 million shares available for future grants under the 2021 Plan, inclusive of the remaining Added Shares.
2021 Employee Stock Purchase Plan
Effective January 1, 2026, the authorized shares increased by 5.5 million shares as a result of the annual increase provision allowed under the 2021 Employee Stock Purchase Plan (the “ESPP”). As of September 30, 2026, 22.6 million shares of Class A common stock remain available for grant under the ESPP. During the nine months ended September 30, 2026, the Company issued 0.4 million shares of Class A common stock under the ESPP.
Stock Options
A summary of stock option activity is presented below (in millions, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of
Options | | Weighted Average
Exercise Price | | Weighted Average
Remaining
Contract Term
(in years) | | Aggregate Intrinsic Value (1) |
Balance as of December 31, 2025 | 28,559,349 | | | $ | 6.31 | | | 3.6 | | $ | 130 | |
| Replacement awards assumed in connection with the Anywhere Merger | 1,875,225 | | | 14.84 | | | | | |
| Exercised | (5,376,371) | | | 4.70 | | | | | |
| Forfeited | (1,984,220) | | | 13.82 | | | | | |
Balance as of September 30, 2026 | 23,073,983 | | | $ | 6.73 | | | 3.1 | | $ | 62 | |
Exercisable and vested at September 30, 2026 | 22,992,296 | | | $ | 6.73 | | | 3.1 | | $ | 62 | |
(1)The aggregate intrinsic values have been calculated using the Company’s closing stock prices of $8.88 and $10.57 as of September 30, 2026 and December 31, 2025, respectively.
During the nine months ended September 30, 2026 and 2025, the intrinsic value of options exercised was $36 million and $15 million, respectively.
Restricted Stock Units
A summary of RSU activity is presented below: | | | | | | | | | | | |
| Number of Awards | | Weighted Average Grant Date Fair Value |
Balance as of December 31, 2025 | 48,620,509 | | | $ | 7.06 | |
Granted (1) | 19,498,181 | | | 8.75 | |
| Replacement awards assumed in connection with the Anywhere Merger | 12,355,843 | | | 12.26 | |
Vested and converted to common stock (2) | (32,182,275) | | | 9.14 | |
| Forfeited | (4,970,599) | | | 7.06 | |
Balance as of September 30, 2026 | 43,321,659 | | | $ | 7.76 | |
(1)Included within the 19.5 million RSUs granted during the nine months ended September 30, 2026 are 5.0 million RSUs granted during the second quarter of 2026 resulting from the Company's modification of certain outstanding cash awards held by legacy Anywhere employees. As a result of this modification, $20 million of liabilities were reclassified to Additional paid-in capital on the modification date.
(2)During the nine months ended September 30, 2026, the Company net settled certain of the RSUs that vested and converted to common stock through which it withheld an aggregate of 6.9 million shares of Class A common stock to satisfy $83 million of tax withholding obligations on behalf of the Company’s employees.
Stock-Based Compensation Expense
Total stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 is as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Commissions and other related expenses | $ | 1 | | | $ | — | | | $ | 2 | | | $ | — | |
| Sales and marketing | 3 | | | 9 | | | 12 | | | 25 | |
| Operations and support | 8 | | | 11 | | | 26 | | | 26 | |
| Technology and development | 13 | | | 28 | | | 45 | | | 66 | |
| General and administrative | 11 | | | 11 | | | 36 | | | 28 | |
| Anywhere Merger transaction and integration expenses | — | | | — | | | 64 | | | — | |
| Total stock-based compensation expense | $ | 36 | | | $ | 59 | | | $ | 185 | | | $ | 145 | |
As of September 30, 2026, unrecognized stock-based compensation expense totaled $264 million and is expected to be recognized over a weighted-average period of 3.0 years.
The Company has not recognized any tax benefits from stock-based compensation as a result of the full valuation allowance maintained on its stock-based compensation related deferred tax assets.
14. Income Taxes
The Company recognized $4 million and $400 million of income tax benefit for the three and nine months ended September 30, 2026, respectively. Benefits for both periods primarily resulted from the reduction of valuation allowance on certain deferred tax assets related to the establishment of deferred tax liabilities created in connection with the Conversions and the Anywhere Merger. These deferred tax liabilities can be used to realize certain deferred tax assets against which the Company had previously recorded a full valuation allowance. Refer to Note 3 — “Acquisitions” for more information. In comparison, the Company recognized no income tax benefit for the three months ended September 30, 2025, and a $3 million income tax benefit for the nine months ended September 30, 2025.
The U.S. is the Company’s only material tax jurisdiction. The Company is generally no longer subject to U.S. federal examination by the Internal Revenue Service (“IRS”) for years before 2015. The IRS and state taxing authorities can subject the Company to audit dating back to 2012 when the Company begins to utilize its net operating loss carryforwards.
15. Net Income (Loss) Per Share Attributable to Compass, Inc.
The Company computes net income (loss) per share under the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock, Class B common stock, and Class C common stock are substantially identical, other than voting rights. Accordingly, the net income (loss) per share attributable to Compass, Inc. will be the same for Class A common stock, Class B common stock, and Class C common stock on an individual or combined basis.
The following table sets forth the computation of basic and diluted net income (loss) per share attributable to Compass, Inc. (in millions, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Basic net income (loss) per share: | | | | | | | |
| Numerator: | | | | | | | |
| Net income (loss) attributable to Compass, Inc. | $ | 62 | | | $ | (4) | | | $ | 176 | | | $ | (16) | |
| Denominator: | | | | | | | |
Weighted-average shares used in computing net income (loss) per share attributable to Compass, Inc., basic (1) | 768,656,546 | | | 565,895,221 | | | 753,816,272 | | | 558,840,800 | |
| Net income (loss) per share attributable to Compass, Inc., basic | $ | 0.08 | | | $ | (0.01) | | | $ | 0.23 | | | $ | (0.03) | |
| | | | | | | |
| Diluted net income (loss) per share: | | | | | | | |
| Numerator: | | | | | | | |
| Net income (loss) attributable to Compass, Inc. | $ | 62 | | | $ | (4) | | | $ | 176 | | | $ | (16) | |
Add: Interest expense on the 0.25% Convertible Senior Notes | 2 | | | — | | | 6 | | | — | |
| Net income (loss) used in computing diluted net income per share of common stock | $ | 64 | | | $ | (4) | | | $ | 182 | | | $ | (16) | |
| Denominator: | | | | | | | |
| Number of shares used in basic calculation | 768,656,546 | | | 565,895,221 | | | 753,816,272 | | | 558,840,800 | |
| Weighted-average effect of dilutive securities: | | | | | | | |
| Stock options | 10,423,864 | | | — | | | 9,587,428 | | | — | |
| RSUs | 20,876,541 | | | — | | | 18,526,070 | | | — | |
| Employee Stock Purchase Plan | 28,426 | | | — | | | 28,248 | | | — | |
| | | | | | | |
Shares issuable upon conversion of the 0.25% Convertible Senior Notes due 2031 | 62,562,600 | | | — | | | 60,940,607 | | | — | |
| | | | | | | |
| Weighted-average number of shares outstanding used to compute net income (loss) per share attributable to Compass, Inc., diluted | 862,547,977 | | | 565,895,221 | | | 842,898,625 | | | 558,840,800 | |
| Net income (loss) per share attributable to Compass, Inc., diluted | $ | 0.07 | | | $ | (0.01) | | | $ | 0.22 | | | $ | (0.03) | |
(1)For the three and nine months ended September 30, 2025, the weighted-average shares used in computing net income (loss) per share attributable to Compass, Inc., basic includes 38.5 million shares related to the CIRE Share Consideration (see Note 3 — “Acquisitions”). This amount represented the minimum number of shares to be issued in connection with the acquisition of Christie's International Real Estate.
The Company applies the if-converted method to determine the dilutive effect of its 0.25% Convertible Senior Notes (see Note 10 — “Debt”). Under this method, after-tax interest expense associated with the Convertible Notes is added back to net income in the numerator, and the shares issuable upon assumed conversion are included in the denominator, provided the effect is dilutive.
For the three and nine months ended September 30, 2026, application of the if-converted method resulted in diluted earnings per share. Accordingly, the 0.25% Convertible Senior Notes are reflected in the diluted earnings per share calculation presented above.
In connection with the issuance of the 0.25% Convertible Senior Notes, the Company entered into capped call transactions intended to reduce potential dilution to the Company's Class A common stock upon conversion. The capped call transactions are not reflected in diluted earnings per share because their effect would be anti-dilutive, even though they are expected to reduce actual share dilution upon conversion.
The following participating securities were excluded from the computation of diluted net income (loss) per share attributable to Compass, Inc. for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2026 | | 2025 | | 2026 | | 2025 |
| Outstanding stock options | 1,237,580 | | | 30,071,474 | | | 1,237,580 | | | 30,071,474 | |
| Outstanding RSUs | 844,645 | | | 53,211,734 | | | 844,645 | | | 53,211,734 | |
| Shares subject to the Employee Stock Purchase Plan | 108,837 | | | 257,037 | | | 108,837 | | | 257,037 | |
| | | | | | | |
| Unvested common stock | — | | | 28,974 | | | — | | | 28,974 | |
| Incremental common stock to be issued in connection with the CIRE Share Consideration | — | | | 743,451 | | | — | | | 743,451 | |
| | | | | | | |
| Total | 2,191,062 | | | 84,312,670 | | | 2,191,062 | | | 84,312,670 | |
16. Restructuring Activities
The Company previously undertook a restructuring plan to better align its organizational structure with its long-term strategy, drive cost efficiencies, and progress toward profitability and positive free cash flow. The plan included workforce reductions, which were completed in prior periods, and actions to reduce occupancy costs. Costs incurred in the current periods are largely lease-related and consist of (i) termination costs for leases the Company exited from the restructuring through the closing of the Anywhere Merger and (ii) ongoing costs for office space Anywhere had vacated or terminated before the Anywhere Merger, which the Company assumed at closing.
These costs are presented within Restructuring costs in the condensed consolidated statements of operations. Total restructuring costs for the three and nine months ended September 30, 2026 were $4 million and $12 million, respectively, and $2 million and $14 million for the three and nine months ended September 30, 2025, respectively.
The following table summarizes the estimated timing of the Company's future lease and lease-related payments, net of amounts contractually subleased, related to restructuring activities, inclusive of those assumed from Anywhere, for lease termination costs as of September 30, 2026 (in millions):
| | | | | | | | |
| | Payment Due by Period |
| Remaining 2026 | | $ | 6 | |
| 2027 | | 18 | |
| 2028 | | 15 | |
| 2029 | | 15 | |
| Thereafter | | 3 | |
| Total | | $ | 57 | |
17. Segment Information
The reportable segments presented represent those for which the Company maintains separate financial information regularly provided to and reviewed by its chief operating decision maker (“CODM”) for performance assessment and resource allocation. The Company's CODM is the Company's Chief Executive Officer.
Effective January 9, 2026 with the Anywhere Merger, the Company realigned its operating segments according to how the CODM will now allocate resources and assess performance. Each of the operating segments conducts distinct business activities from which it earns revenues and incurs expenses: the Brokerage segment generates revenues primarily from real estate commissions earned upon transaction close; the Franchise segment generates royalties and marketing fees primarily under long-term franchise agreements, including from the brands operating within the Brokerage segment. These intercompany revenues are eliminated in consolidation and are not reflected in the financial information presented below; the Integrated Services segment generates revenues from (i) title, escrow, settlement, and related services associated with real estate transactions and (ii) relocation services (provided by Cartus) to corporate and individual clients through service-based arrangements. The Integrated Services segment also provides mortgage services through its 49% owned joint ventures, OriginPoint and Guaranteed Rate Affinity. Based on these factors, the Company has combined certain of its operating segments, which consist of businesses that provide similar services and are operated in a similar manner, and operates in three reportable segments:
•Brokerage;
•Franchise; and
•Integrated Services, which includes title and escrow, relocation services (provided by Cartus), and mortgage services (provided by OriginPoint and Guaranteed Rate Affinity).
Substantially all long-lived assets and revenue are based in the United States.
The CODM evaluates segment performance based on Segment revenue and Segment Adjusted EBITDA (as defined below) using it to guide key operating decisions, including budget allocation across the significant expense categories included in operating expenses within the condensed consolidated statements of operations. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.
Segment Adjusted EBITDA represents net income (loss) attributable to Compass, Inc. adjusted for depreciation and amortization, investment income, interest expense, stock-based compensation expense, income taxes, and other items. For the periods presented, other items consisted of (i) restructuring charges associated with lease termination and severance costs, (ii) litigation charges in connection with the Antitrust Lawsuits, (iii) transaction and integration expenses associated with the Anywhere Merger, and (iv) other acquisition-related expenses.
Set forth in the tables below are Segment revenue and Segment Adjusted EBITDA and a reconciliation to Net income (loss) attributable to Compass, Inc. for the three and nine months ended September 30, 2026 and 2025 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2026 |
| Brokerage | | Franchise | | Integrated Services | | Total |
| Segment revenue | $ | 3,578 | | | $ | 122 | | | $ | 197 | | | $ | 3,897 | |
| | | | | | | |
Less (1): | | | | | | | |
| Commissions and other related expenses | 2,920 | | | — | | | — | | | |
| Sales and marketing | 88 | | | 10 | | | 6 | | | |
| Operations and support | 237 | | | 26 | | | 150 | | | |
| Technology and development | 9 | | | 4 | | | 2 | | | |
| General and administrative | 6 | | | — | | | 2 | | | |
| Equity in income of unconsolidated entities | (2) | | | — | | | (4) | | | |
| Net income attributable to noncontrolling interests | — | | | — | | | 1 | | | |
| | | | | | | |
| Segment Adjusted EBITDA | $ | 320 | | | $ | 82 | | | $ | 40 | | | $ | 442 | |
| | | | | | | |
| Reconciliation of Segment Adjusted EBITDA to Net income attributable to Compass, Inc.: |
Unallocated corporate expenses (2) | | | | | | | $ | (136) | |
| | | | | | | |
| Stock-based compensation | | | | | | | (36) | |
| Depreciation and amortization | | | | | | | (145) | |
| Restructuring costs | | | | | | | (4) | |
Anywhere Merger transaction and integration expenses (3) | | (28) | |
| | | | | | | |
| Other acquisition-related expenses | | | | | | | (1) | |
| Investment income | | | | | | | 7 | |
| Interest expense | | | | | | | (41) | |
| Income tax benefit | | | | | | | 4 | |
Net income attributable to Compass, Inc. | | $ | 62 | |
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)Unallocated corporate expenses represent costs managed at the corporate level that are not allocated to the reporting segments. For the three months ended September 30, 2026, these costs are reflected in the following line items within the condensed consolidated statements of operations: $4 million in Operations and support, $79 million in Technology and development, and $53 million in General and administrative.
(3)Includes transaction and integration-related expenses incurred in connection with the Anywhere Merger. Refer to Note 3 — “Acquisitions” for more information.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, 2025 |
| Brokerage | | Franchise | | Integrated Services | | Total |
| Segment revenue | $ | 1,802 | | | $ | 8 | | | $ | 36 | | | $ | 1,846 | |
| | | | | | | |
Less (1): | | | | | | | |
| Commissions and other related expenses | 1,502 | | | — | | | — | | | |
| Sales and marketing | 48 | | | — | | | 2 | | | |
| Operations and support | 106 | | | 3 | | | 25 | | | |
| Technology and development | 3 | | | 1 | | | 1 | | | |
| General and administrative | 3 | | | 1 | | | 1 | | | |
| Equity in income of unconsolidated entities | — | | | — | | | (2) | | | |
| | | | | | | |
| | | | | | | |
| Segment Adjusted EBITDA | $ | 140 | | | $ | 3 | | | $ | 9 | | | $ | 152 | |
| | | | | | | |
| Reconciliation of Segment Adjusted EBITDA to Net loss attributable to Compass, Inc.: |
Unallocated corporate expenses (2) | | | | | | | $ | (58) | |
| | | | | | | |
| Stock-based compensation | | | | | | | (59) | |
| Depreciation and amortization | | | | | | | (28) | |
| Restructuring costs | | | | | | | (2) | |
Anywhere Merger transaction and integration expenses (3) | | (8) | |
| Other acquisition-related expenses | | (1) | |
| Investment income | | | | | | | 2 | |
| Interest expense | | | | | | | (2) | |
| | | | | | | |
| Net loss attributable to Compass, Inc. | $ | (4) | |
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)Unallocated corporate expenses represent costs managed at the corporate level that are not allocated to the reporting segments. For the three months ended September 30, 2025, these costs are reflected in the following line items within the condensed consolidated statements of operations: $34 million in Technology and development and $24 million in General and administrative.
(3)Includes transaction and integration-related expenses incurred in connection with the Anywhere Merger. Refer to Note 3 — “Acquisitions” for more information.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2026 |
| Brokerage | | Franchise | | Integrated Services | | Total |
Segment revenue | $ | 10,005 | | | $ | 347 | | | $ | 555 | | | $ | 10,907 | |
| | | | | | | |
Less (1): | | | | | | | |
Commissions and other related expenses | 8,181 | | | — | | | — | | | |
Sales and marketing | 255 | | | 27 | | | 18 | | | |
| Operations and support | 690 | | | 89 | | | 432 | | | |
Technology and development | 24 | | | 15 | | | 6 | | | |
| General and administrative | 15 | | | 1 | | | 10 | | | |
Equity in income of unconsolidated entities | (4) | | | — | | | (17) | | | |
| Net income attributable to noncontrolling interests | — | | | — | | | 1 | | | |
| | | | | | | |
| Segment Adjusted EBITDA | $ | 844 | | | $ | 215 | | | $ | 105 | | | $ | 1,164 | |
| | | | | | | |
Reconciliation of Segment Adjusted EBITDA to Net income attributable to Compass, Inc.: | | |
Unallocated corporate expenses (2) | | | | | | | $ | (434) | |
| | | | | | | |
| Stock-based compensation | | | | | | | (121) | |
| Depreciation and amortization | | | | | | | (461) | |
| Restructuring costs | | | | | | | (12) | |
Anywhere Merger transaction and integration expenses (3) | | (245) | |
| Litigation charge | | | | | | | (7) | |
| Other acquisition-related expenses | | | | | | | (4) | |
| Investment income | | | | | | | 15 | |
| Interest expense | | | | | | | (119) | |
| Income tax benefit | | | | | | | 400 | |
Net income attributable to Compass, Inc. | | $ | 176 | |
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)Unallocated corporate expenses represent costs managed at the corporate level that are not allocated to the reporting segments. For the nine months ended September 30, 2026, these costs are reflected in the following line items within the condensed consolidated statements of operations: $12 million in Operations and support, $245 million in Technology and development, and $177 million in General and administrative.
(3)Includes transaction and integration-related expenses incurred in connection with the Anywhere Merger. Refer to Note 3 — “Acquisitions” for more information.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2025 |
| Brokerage | | Franchise | | Integrated Services | | Total |
Segment revenue | $ | 5,143 | | | $ | 22 | | | $ | 97 | | | $ | 5,262 | |
| | | | | | | |
Less (1): | | | | | | | |
Commissions and other related expenses | 4,293 | | | — | | | — | | | |
Sales and marketing | 147 | | | 2 | | | 4 | | | |
| Operations and support | 320 | | | 9 | | | 69 | | | |
Technology and development | 10 | | | 2 | | | 2 | | | |
| General and administrative | 7 | | | 1 | | | 2 | | | |
Equity in income of unconsolidated entities | — | | | — | | | (5) | | | |
| | | | | | | |
| | | | | | | |
| Segment Adjusted EBITDA | $ | 366 | | | $ | 8 | | | $ | 25 | | | $ | 399 | |
| | | | | | | |
Reconciliation of Segment Adjusted EBITDA to Net loss attributable to Compass, Inc.: | | |
Unallocated corporate expenses (2) | | | | | | | $ | (164) | |
| | | | | | | |
| Stock-based compensation | | | | | | | (145) | |
| Depreciation and amortization | | | | | | | (86) | |
| Restructuring costs | | | | | | | (14) | |
Anywhere Merger transaction and integration expenses (3) | | (8) | |
| Other acquisition-related expenses | | | | | | | 2 | |
| Investment income | | | | | | | 4 | |
| Interest expense | | | | | | | (7) | |
| Income tax benefit | | | | | | | 3 | |
Net loss attributable to Compass, Inc. | $ | (16) | |
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)Unallocated corporate expenses represent costs managed at the corporate level that are not allocated to the reporting segments. For the nine months ended September 30, 2025, these costs are reflected in the following line items within the condensed consolidated statements of operations: $1 million in Operations and support, $100 million in Technology and development, and $63 million in General and administrative.
(3)Includes transaction and integration-related expenses incurred in connection with the Anywhere Merger. Refer to Note 3 — “Acquisitions” for more information.
