COMP filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 

 Index to Consolidated Financial Statements 

 Page

 Reports of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 

 71
 
 Consolidated Balance Sheets as of December 31, 2021 and 2020 

 72
 
 Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 

 73
 
 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019 

 74
 
 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019 

 75
 
 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 

 76
 
 Notes to Consolidated Financial Statements 

 77
 
 70 

 Table of Contents 
 Report of Independent Registered Public Accounting Firm 

 To the Board of Directors and Stockholders of Compass, Inc. 

 Opinion on the Financial Statements 

 We have audited the accompanying consolidated balance sheets of Compass, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive loss, of convertible preferred stock and stockholders’ equity (deficit), and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2021 appearing under Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. 

 Basis for Opinion 

 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

 We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. 

 Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 

 Critical Audit Matters 

 The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 

 Revenue Recognition - Commissions Revenue 

 As described in Note 2 to the consolidated financial statements, the Company generates revenue by assisting home sellers and buyers in listing, marketing, selling and finding homes. The Company holds the real estate brokerage license that is necessary under relevant state laws and regulations to provide brokerage services and, therefore, controls those services that are necessary to legally transfer real estate between home sellers and buyers. Management concluded that its brokerage revenue 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. Revenue is recognized upon the closing of a real estate transaction (i.e., purchase or sale of a home) since 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. The Company operates exclusively in the United States and generated revenue of $6,421 million for the year ended December 31, 2021, of which a significant portion was related to commissions from home sellers and buyers. 

 The principal considerations for our determination that performing procedures relating to revenue recognition - commissions revenue is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to revenue recognition. As disclosed by management, material weaknesses existed related to the Company’s control environment, which impacted this matter. 

 Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, evaluating the recognition of commissions revenue for a selection of revenue transactions by obtaining and inspecting customer contracts and related closing documentation, recalculating the commissions rate, and vouching to cash receipts as applicable. 

 /s/ PricewaterhouseCoopers LLP 

 New York , New York 

 February 28, 2022 

 We have served as the Company’s auditor since 2014. 

 71 

 Table of Contents 
 Compass, Inc. 

 Consolidated Balance Sheets 

 (In millions, except share and pe r
 share data)

 December 31,
2021

 December 31,
2020

 Assets

 Current Assets

 Cash and cash equivalents

 $ 
 618.3 
 
 $ 
 440.1 
 
 Accounts receivable, net of allowance of $ 7.1 and $ 8.1 , respectively

 48.5 
 
 54.8 
 
 Compass Concierge receivables, net of allowance of $ 17.3 and $ 17.2 , respectively

 32.9 
 
 49.5 
 
 Other current assets

 94.9 
 
 54.9 
 
 Total current assets

 794.6 
 
 599.3 
 
 Property and equipment, net

 157.4 
 
 141.7 
 
 Operating lease right-of-use

 assets
 
 484.7 
 
 426.6 
 
 Intangible assets, net

 127.2 
 
 45.6 
 
 Goodwill

 188.3 
 
 119.8 
 
 Other non-current
 assets
 
 48.4 
 
 32.1 
 
 Total assets

 $ 
 1,800.6 
 
 $ 
 1,365.1 
 
 Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

 Current liabilities

 Accounts payable

 $ 
 34.6 
 
 $ 
 36.6 
 
 Commissions payable

 63.9 
 
 62.0 
 
 Accrued expenses and other current liabilities

 240.9 
 
 106.8 
 
 Current lease liabilities

 81.5 
 
 68.1 
 
 Concierge credit facility

 16.2 
 
 8.4 
 
 Total current liabilities

 437.1 
 
 281.9 
 
 Non-current
 lease liabilities
 
 483.0 
 
 435.9 
 
 Other non-current
 liabilities
 
 32.9 
 
 23.5 
 
 Total liabilities

 953.0 
 
 741.3 
 
 Commitments and contingencies (Note 1 1
)
 
 Convertible preferred stock, $ 0.00001 par value, 0 and 246,430,170 shares authorized at December 31, 2021 and 
2020, respectively; 0 and 237,047,550 shares issued and outstanding at December 31, 2021 and 2020, respectively

 — 
 
 1,486.7 
 
 Stockholders’ equity (deficit)

 Common stock, $ 0.00001 par value, 13,850,000,000 and 700,754,910 shares authorized at December 31, 2021 and 
2020, respectively; 409,267,751 and 125,221,900 shares issued at December 31, 2021 and 2020, respectively; 
 409,267,751 and 122,971,900 shares outstanding at December 31, 2021 and 2020, respectively

 — 
 
 — 
 
 Additional paid-in
 capital
 
 2,438.8 
 
 238.0 
 
 Accumulated deficit

 ( 1,595.0 
 ) 
 
 ( 1,100.9 
 ) 

 Total Compass, Inc. stockholders’ equity (deficit)

 843.8 
 
 ( 862.9 
 ) 

 Non-controlling
 interest
 
 3.8 
 
 — 
 
 Total stockholders’ equity (deficit)

 847.6 
 
 ( 862.9 
 ) 

 Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

 $ 
 1,800.6 
 
 $ 
 1,365.1 
 
 The accompanying footnotes are an integral part of these consolidated financial statements. 

 72 

 Table of Contents 
 Compass, Inc. 

 Consolidated Statements of Operations 

 (

 In millions, except share and per share data

 ) 

 Year Ended December 31,

 2021

 2020

 2019

 Revenue

 $ 
 6,421.0 
 
 $ 
 3,720.8 
 
 $ 
 2,386.0 
 
 Operating expenses:

 Commissions and other related expense

 5,310.5 
 
 3,056.9 
 
 1,935.6 
 
 Sales and marketing

 510.4 
 
 407.9 
 
 382.8 
 
 Operations and support

 374.9 
 
 225.1 
 
 204.8 
 
 Research and development

 365.3 
 
 146.3 
 
 131.3 
 
 General and administrative

 288.5 
 
 106.7 
 
 92.4 
 
 Depreciation and amortization

 64.4 
 
 51.2 
 
 40.9 
 
 Total operating expenses

 6,914.0 
 
 3,994.1 
 
 2,787.8 
 
 Loss from operations

 ( 493.0 
 ) 
 
 ( 273.3 
 ) 
 
 ( 401.8 
 ) 

 Investment income, net

 0.1 
 
 2.0 
 
 12.9 
 
 Interest expense

 ( 2.4 
 ) 
 
 ( 0.6 
 ) 
 
 — 
 
 Loss before income taxes and equity in loss

 ( 495.3 
 ) 
 
 ( 271.9 
 ) 
 
 ( 388.9 
 ) 

 Benefit from income taxes

 2.5 
 
 1.7 
 
 0.9 
 
 Equity in loss of unconsolidated entity

 ( 1.3 
 ) 
 
 — 
 
 — 
 
 Net loss

 $ 
 ( 494.1 
 ) 
 
 $ 
 ( 270.2 
 ) 
 
 $ 
 ( 388.0 
 ) 

 Net loss per share attributable to common stockholders, basic and diluted

 $ 
 ( 1.51 
 ) 
 
 $ 
 ( 2.46 
 ) 
 
 $ 
 ( 3.64 
 ) 

 Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

 326,336,128 
 
 109,954,760 
 
 106,529,880 
 
 The accompanying footnotes are an integral part of these consolidated financial statements. 

 7 3

 Table of Contents 
 
 Compass, Inc. 

 Consolidated Statements of Comprehensive Loss 

 (In millions) 

 Year Ended December 31,

 2021

 2020

 2019

 Net loss

 $ 
 ( 494.1 
 ) 
 
 $ 
 ( 270.2 
 ) 
 
 $ 
 ( 388.0 
 ) 

 Other comprehensive (loss) income:

 Unrealized (loss) gain on investments

 — 
 
 ( 0.1 
 ) 
 
 0.4 
 
 Comprehensive loss

 $
 
 ( 494.1 
 ) 
 
 $
 
 ( 270.3 
 ) 
 
 $
 
 ( 387.6 
 ) 
 
 The accompanying footnotes are an integral part of these consolidated financial statements. 

 7 4

 Table of Contents 
 
 Compass, Inc. 

 Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) 

 (In millions, except share amounts) 

 Convertible
 Preferred 
Stock

 Common Stock

 Additional Paid-in

Capital

 Accumulated Other
Comprehensive
(Loss) Income

 Accumulated
Deficit

 Total Compass, Inc.
Stockholders’
Equity (Deficit)

 Non-controlling

Interest

 Total
Stockholders’
Equity (Deficit)

 Shares

 Amount

 Shares

 Amount

 Balances at 
December 31, 2018

 224,058,550 
 
 $ 
 1,182.4 
 
 104,177,280 
 
 $ 
 — 
 
 $ 
 98.3 
 
 $ 
 ( 0.3 
 ) 
 
 $ 
 ( 437.1 
 ) 
 
 $ 
 ( 339.1 
 ) 
 
 $ 
 — 
 
 $ 
 ( 339.1 
 ) 

 Net loss

 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 388.0 
 ) 
 
 ( 388.0 
 ) 
 
 — 
 
 ( 388.0 
 ) 

 Unrealized gain 
on investments

 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 0.4 
 
 — 
 
 0.4 
 
 — 
 
 0.4 
 
 Issuance of 
Series G 
convertible
 preferred 
stock, net of 
issuance costs

 22,306,800 
 
 343.3 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Issuance of 
shares in 
connection 
with 
acquisitions

 — 
 
 — 
 
 40,990 
 
 — 
 
 0.1 
 
 — 
 
 — 
 
 0.1 
 
 — 
 
 0.1 
 
 Exercise of stock 
options

 — 
 
 — 
 
 5,075,790 
 
 — 
 
 7.6 
 
 — 
 
 — 
 
 7.6 
 
 — 
 
 7.6 
 
 Stock-based 
compensation

 — 
 
 — 
 
 — 
 
 — 
 
 37.4 
 
 — 
 
 — 
 
 37.4 
 
 — 
 
 37.4 
 
 Balances at 
December 31, 2019

 246,365,350 
 
 $ 
 1,525.7 
 
 109,294,060 
 
 $ 
 — 
 
 $ 
 143.4 
 
 $ 
 0.1 
 
 $ 
 ( 825.1 
 ) 
 
 $ 
 ( 681.6 
 ) 
 
 $ 
 — 
 
 $ 
 ( 681.6 
 ) 

 Cumulative 
change in
 accounting 
principle 
(ASU 
 2016-13)

 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 ( 5.6 
 ) 
 
 $ 
 ( 5.6 
 ) 
 
 $ 
 — 
 
 $ 
 ( 5.6 
 ) 

 Net loss

 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 270.2 
 ) 
 
 ( 270.2 
 ) 
 
 — 
 
 ( 270.2 
 ) 

 Unrealized loss
 
on investments

 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 0.1 
 ) 
 
 — 
 
 ( 0.1 
 ) 
 
 — 
 
 ( 0.1 
 ) 

 Issuance of 
Series G 
convertible 
preferred 
stock, net of 
issuance costs

 64,820 
 
 1.0 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Conversion of 
Series D 
convertible 
preferred stock

 ( 9,382,620 
 ) 
 
 ( 40.0 
 ) 
 
 9,382,620 
 
 — 
 
 40.0 
 
 — 
 
 — 
 
 40.0 
 
 — 
 
 40.0 
 
 Issuance of 
shares in 
connection 
with 
acquisitions

 — 
 
 — 
 
 401,310 
 
 — 
 
 1.2 
 
 — 
 
 — 
 
 1.2 
 
 — 
 
 1.2 
 
 Exercise of stock 
options

 — 
 
 — 
 
 2,710,680 
 
 — 
 
 9.6 
 
 — 
 
 — 
 
 9.6 
 
 — 
 
 9.6 
 
 Early exercise of
 stock options

 — 
 
 — 
 
 1,183,230 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 Vesting of early 
exercised stock
 options

 — 
 
 — 
 
 — 
 
 — 
 
 0.6 
 
 — 
 
 — 
 
 0.6 
 
 — 
 
 0.6 
 
 Stock-based 
compensation

 — 
 
 — 
 
 — 
 
 — 
 
 43.2 
 
 — 
 
 — 
 
 43.2 
 
 — 
 
 43.2 
 
 Balances at 
December 31, 2020

 237,047,550 
 
 $ 
 1,486.7 
 
 122,971,900 
 
 $ 
 — 
 
 $ 
 238.0 
 
 $ 
 — 
 
 $ 
 ( 1,100.9 
 ) 
 
 $ 
 ( 862.9 
 ) 
 
 $ 
 — 
 
 $ 
 ( 862.9 
 ) 

 Net loss

 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 ( 494.1 
 ) 
 
 $ 
 ( 494.1 
 ) 
 
 $ 
 — 
 
 $ 
 ( 494.1 
 ) 

 Acquisition
 related 
non-controlling 
interest

 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 3.8 
 
 3.8 
 
 Conversion of 
Series D
 convertible 
preferred stock

 ( 15,920,450 
 ) 
 
 ( 67.6 
 ) 
 
 15,920,450 
 
 — 
 
 67.6 
 
 — 
 
 — 
 
 67.6 
 
 — 
 
 67.6 
 
 Conversion of 
convertible 
preferred stock
 to common 
stock in 
connection 
with the initial 
public offering

 ( 221,127,100 
 ) 
 
 ( 1,419.1 
 ) 
 
 223,033,725 
 
 — 
 
 1,419.1 
 
 — 
 
 — 
 
 1,419.1 
 
 — 
 
 1,419.1 
 
 Issuance of 
common stock 
in connection 
with the initial 
public offering,
 net of issuance
 costs

 — 
 
 — 
 
 26,296,438 
 
 — 
 
 438.7 
 
 — 
 
 — 
 
 438.7 
 
 — 
 
 438.7 
 
 Issuance of
 shares in 
connection 
with 
acquisitions

 — 

 — 

 855,740 

 — 

 10.1 

 — 

 — 

 10.1 

 — 

 10.1 

 Issuance of 
common stock 
upon exercise 
of stock
 options

 — 
 
 — 
 
 9,318,012 
 
 — 
 
 21.3 
 
 — 
 
 — 
 
 21.3 
 
 — 
 
 21.3 
 
 Issuance of 
common stock 
upon 
settlement 
of RSUs, net 
of taxes 
withheld

 — 
 
 — 
 
 10,871,486 
 
 — 
 
 ( 62.4 
 
 ) 
 
 — 
 
 — 
 
 ( 62.4 
 ) 
 
 — 
 
 ( 62.4 
 ) 

 Vesting of early 
exercised stock 
options

 — 
 
 — 
 
 — 
 
 — 
 
 5.0 
 
 — 
 
 — 
 
 5.0 
 
 — 
 
 5.0 
 
 Stock-based 
compensation

 — 
 
 — 
 
 — 
 
 — 
 
 301.4 
 
 — 
 
 — 
 
 301.4 
 
 — 
 
 301.4 
 
 Balances at 
December 31, 2021

 — 
 
 $ 
 — 
 
 409,267,751 
 
 $ 
 — 
 
 $ 
 2,438.8 
 
 $ 
 — 
 
 $ 
 ( 1,595.0 
 ) 
 
 $ 
 843.8 
 
 $ 
 3.8 
 
 $ 
 847.6 
 
 The accompanying footnotes are an integral part of these consolidated financial statements. 

 75

 Table of Contents 
 
 Compass, Inc. 

 Consolidated Statements of Cash Flows 

 (In millions)

 Year Ended December 31,

 2021

 2020

 2019

 Operating Activities

 Net loss

 $ 
 ( 494.1 
 ) 
 
 $ 
 ( 270.2 
 ) 
 
 $ 
 ( 388.0 
 ) 

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

 Depreciation and amortization

 64.4 
 
 51.2 
 
 40.9 
 
 Stock-based compensation

 386.3 
 
 43.2 
 
 37.4 
 
 Equity in loss of unconsolidated entity

 1.3 

 — 
 
 — 
 
 Change in acquisition related contingent consideration

 ( 4.7 
 ) 
 
 8.9 
 
 ( 9.9 
 ) 

 Bad debt expense

 8.9 
 
 16.0 
 
 6.8 
 
 Amortization of debt issuance costs

 1.1 
 
 0.3 
 
 — 
 
 Changes in operating assets and liabilities:

 Accounts receivable

 8.5 
 
 ( 16.3 
 ) 
 
 ( 18.2 
 ) 

 Compass Concierge receivables

 9.4 
 
 16.6 
 
 ( 84.8 
 ) 

 Other current assets

 ( 40.0 
 ) 
 
 19.4 
 
 ( 45.0 
 ) 

 Other non-current
 assets
 
 ( 11.8 
 ) 
 
 ( 4.9 
 ) 
 
 6.3 
 
 Operating lease right-of-use

 assets and operating lease liabilities
 
 2.4 
 
 34.6 
 
 21.8 
 
 Accounts payable

 ( 3.3 
 ) 
 
 ( 6.5 
 ) 
 
 9.2 
 
 Commissions payable

 ( 0.3 
 ) 
 
 29.1 
 
 21.6 
 
 Accrued expenses and other liabilities

 43.3 
 
 20.5 
 
 24.9 
 
 Net cash used in operating activities

 ( 28.6 
 ) 
 
 ( 58.1 
 ) 
 
 ( 377.0 
 ) 

 Investing Activities

 Purchases of marketable securities

 — 
 
 — 
 
 ( 70.7 
 ) 

 Proceeds from sales and maturities of marketable securities

 — 
 
 55.5 
 
 572.9 
 
 Investment in unconsolidated entity

 ( 5.0 

 )
 
 — 
 
 — 
 
 Capital expenditures

 ( 50.1 
 ) 
 
 ( 43.3 
 ) 
 
 ( 74.1 
 ) 

 Payments for acquisitions, net of cash acquired

 ( 137.4 
 ) 
 
 ( 25.6 
 ) 
 
 ( 38.2 
 ) 

 Net cash (used in) provided by investing activities

 ( 192.5 
 ) 
 
 ( 13.4 
 ) 
 
 389.9 
 
 Financing Activities

 Proceeds from issuance of convertible preferred stock, net of issuance costs

 — 
 
 1.0 
 
 343.3 
 
 Proceeds from exercise and early exercise of stock options

 26.9 
 
 15.9 
 
 7.6 
 
 Taxes paid related to net share settlement of equity awards
 
 ( 62.4 
 ) 
 
 — 
 
 — 
 
 Proceeds from drawdowns on Concierge credit facility

 39.5 
 
 11.4 
 
 — 
 
 Repayments of drawdowns on Concierge credit facility

 ( 31.7 
 ) 
 
 ( 3.0 
 ) 
 
 — 
 
 Payments of contingent consideration related to acquisitions

 ( 10.7 
 ) 
 
 ( 3.2 
 ) 
 
 ( 0.7 
 ) 

 Payments of debt issuance costs for credit facilities

 ( 1.9 
 ) 
 
 ( 1.3 

 )
 
 — 
 
 Payment of deferred offering costs

 — 
 
 ( 0.9 
 ) 
 
 — 
 
 Proceeds from issuance of common stock upon initial public offering, net of offering costs

 439.6 
 
 — 
 
 — 
 
 Net cash provided by financing activities

 399.3 
 
 19.9 
 
 350.2 
 
 Net increase (decrease) in cash and cash equivalents

 178.2 
 
 ( 51.6 
 ) 
 
 363.1 
 
 Cash and cash equivalents at beginning of period

 440.1 
 
 491.7 
 
 128.6 
 
 Cash and cash equivalents at end of period

 $ 
 618.3 
 
 $ 
 440.1 
 
 $ 
 491.7 
 
 Supplemental disclosures of cash flow information:

 Cash paid for interest

 $ 
 1.3 
 
 $ 
 0.2 
 
 $ 
 — 
 
 Supplemental non-cash
 information:

 Issuance of common stock for acquisitions

 $ 
 10.1 
 
 $ 
 1.2 
 
 $ 
 0.1 
 
 Conversion of convertible preferred stock in connection with initial public offering

 $ 
 1,419.1 
 
 $ 
 — 
 
 $ 
 — 
 
 Conversion of Series D convertible preferred stock

 $ 
 67.6 
 
 $ 
 40.0 
 
 $ 
 — 
 
 The accompanying footnotes are an integral part of these consolidated financial statements. 

 76

 Table of Contents 
 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 1.

 Business 

 Description of the Business 

 Compass, Inc. (the “Company”) was incorporated in Delaware on 
 October 4, 2012 under the name Urban Compass, Inc. On January 
8 , 
2021 , the board of directors approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc.

 The Company provides an end-to-end

 platform that empowers its residential real estate agents 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 Compass agents and their clients. 
 The Company’s agents are independent contractors who affiliate their real estate licenses with the Company, operating their businesses on the Company’s platform and under the Compass brand. The Company generates revenue from clients through its agents by assisting home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, like title and escrow services, which comprise a smaller portion of the Company’s revenue to date. The Company currently generates substantially all of its revenue from commissions paid by clients at the time that a home is transacted. 

 Stock Split 

 In March 2021, the Company’s board of directors and the stockholders of the Company approved a ten -for-one

 forward stock split of the Company’s common stock and convertible preferred stock (collectively, the “Capital Stock”), which became effective on March 19, 2021. The authorized number of each class and series of Capital Stock was proportionally increased in accordance with the ten-for-one

 stock split and the par value of each class of Capital Stock was adjusted from $ 0.0001 to $ 0.00001 as a result of this forward stock split. All common stock, convertible preferred stock, stock options, restricted stock units (“RSUs”) and per share information presented within these consolidated financial statements have been adjusted to reflect this forward stock split on a retroactive basis for all periods presented. 
 Initial Public Offering 

 On April 6, 2021, the Company completed its initial public offering (“IPO”) and the Company’s Class A common stock began trading on the New York Stock Exchange on April 1, 2021 under the symbol “COMP”. In connection with the IPO, the Company issued and sold 26,296,438 shares of its common stock at a public offering price of $ 18.00 per share. The Company received aggregate proceeds of $ 438.7 million from the IPO, net of the underwriting discount and offering costs of approximately $ 11.0 million (of which $ 0.9 million were paid in 2020). Offering costs, including the legal, accounting, printing and other IPO-related
 costs have been recorded in Additional paid-in
 capital against the proceeds from the offering. During April 2021, also in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of common stock and the Company reclassified $ 1.4 billion of convertible preferred stock to Additional paid-in-capital.

 7 7

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 2.

 Summary of Significant Accounting Policies 

 Basis of Presentation 

 The 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 consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all controlled subsidiaries. The consolidated statements of operations include the results of entities acquired from the date of each respective acquisition. 

 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. 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 consolidated financial statements in conformity with U.S. 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 consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) valuation of the Company’s common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) fair value of contingent consideration arrangements in connection with business combinations, (iv) incremental borrowing rate used for the Company’s operating lease, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. The Company determines its estimates and judgments 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. 

 There are many uncertainties regarding the ongoing coronavirus (“COVID-19”)
 pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact the Company’s operations and its customers for an indefinite period of time. The extent and duration of the ongoing COVID-19
 pandemic over the longer term and the extent to which it will impact the global economy, U.S. residential market and the Company’s financial condition, results of operations, or cash flows remain uncertain and depend on future developments that are highly uncertain and difficult to predict. Such developments include, but are not limited to, the emergence of new variants, severity and transmission rate of the virus, the duration and extent of the spread of the virus (including new variants), the timing, availability, and effectiveness of vaccines (including booster shots) and the vaccination rates, the prevalence of local, regional and national restrictions and regulatory orders in response to the ongoing COVID-19 pandemic and the extent and effectiveness of containment actions taken, as well as the impact of these and other factors on residential real estate values, real estate transaction behavior in general, and on the Company’s business in particular. The Company will continue to assess the impacts of the ongoing COVID-19
 pandemic and will adjust its operations as necessary.

 Segment 

 Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has one operating and reportable segment. Substantially all long-lived assets are located in the United States and substantially all revenue is attributed to sellers and buyers based in the United States. 

 Net Loss Per Share Attributable to Common Stockholders 

 The Company follows the two-class method
 when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method
 determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method
 requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Prior to conversion in connection with the IPO, the Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in the Company’s losses. 
 
 7 8

 Table of Contents 
 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. 

 Foreign Currency 

 The Company established its first foreign subsidiary in India in 2020. The functional currency of the entity is U.S. dollars. Transactions denominated in currencies other than the functional currency are remeasured to the functional currency at the exchange rate on the transaction date. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured at period-end using
 the period-end exchange
 rate. Realized and unrealized gains and losses from foreign exchange were immaterial for the years ended December 31, 2021 and 2020. 

 Cash and Cash Equivalents 

 The Company considers all investments with an original maturity date at the time of purchase of three months or less to be cash and cash equivalents. Cash equivalents consist primarily of money market funds. The Company’s accounts, at times, may exceed federally insured limits.

 Accounts Receivable and Allowance for Credit Losses

 Accounts receivable is stated as the amount billed, net of an estimated allowance for credit losses (“ACL”). The Company’s ACL is adjusted periodically and is based on management’s consideration of the age and nature of the past due accounts as well as specific payment issues. Changes in the Company’s estimate to the ACL is recorded through bad debt expense and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. The following table summarizes the activity of the ACL for Accounts receivable (in millions): 

 December 31,

 2021

 2020

 Opening balance

 $ 
 8.1 
 
 $ 
 2.7 
 
 Allowances

 1.7 
 
 6.9 
 
 Net write-offs and other

 ( 2.7 
 ) 
 
 ( 1.5 
 ) 

 Closing balance

 $ 
 7.1 
 
 $ 
 8.1 
 
 8 1

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements

 Prepaid Incentives 

 Other current assets and Other non-current assets
 in the consolidated balance sheets include prepaid incentives that represent cash payments made to certain agents as an incentive to associate their license with the Company. The prepaid incentives have a related service period requirement which provides for the repayment of such amounts if the agent disassociates from the Company prior to the completion of the specified service period. The value of these prepaid incentives are amortized within Sales and marketing expense in the consolidated statements of operations over the underlying service periods. 

 Property and Equipment, net 

 Property and equipment is reported at cost net of any accumulated depreciation and is depreciated using the straight-line method over the useful lives of the related assets. Expenditures for maintenance, repair and renewals of minor items are charged to expense as incurred. Major improvements are capitalized. 

 The Company capitalizes costs associated with developing software systems that are in the application development stage. Software development costs that are incurred in the preliminary project stage and post-implementation stage are expensed as incurred. 

 The useful lives of property and equipment are as follows:

 Description

 Useful Life

 Leasehold improvements 
 
 Lesser of estimated useful life or remaining lease term 

 Office furniture and equipment 
 
 Five years 

 Computer software and internally-developed software 
 
 Three years 

 Computer equipment 
 
 Three years 
 
 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. After the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred. 

 Intangible Assets 

 Intangible assets resulting from the acquisition of entities are accounted for using the acquisition method based on management’s estimate of the fair value of assets received. Intangible assets are finite lived and mainly consist of customer relationships, workforce and acquired technology and are amortized over their respective estimated useful lives. The useful lives were determined by estimating future cash flows generated by the acquired intangible assets. The Company amortizes these intangible assets on a straight-line basis over their estimated useful lives within the Company’s operating expenses.

 Impairment of Long-Lived Assets 

 Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or asset groups (collectively “asset groups”) may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset groups’ carrying amount may not be recoverable. Recoverability of asset groups to be held and used is measured first by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset group. If such asset groups were considered to be impaired, an impairment loss would be recognized when the carrying amount of the asset exceeds the fair value of the asset. 

 No impairment losses for long-lived assets have been recognized in any of the periods presented.

 80

 Table of Contents 
 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 Goodwill 

 Goodwill represents the excess of the cost of an acquired business over the fair value of the assets acquired at the date of acquisition. Goodwill is not subject to amortization but is subject to impairment testing on an annual basis, as of October 1, or whenever events and circumstances indicate that the carrying value of the reporting unit may be in excess of the reporting unit’s fair value. The Company has one reporting unit and tests goodwill for impairment at the reporting unit level. As part of the goodwill impairment test, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If, as a result of its qualitative assessment, it is more-likely-than-not that
 the fair value of the Company’s reporting unit is less than its carrying amount, a two-step impairment
 test is required. 
 If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting unit continues to exceed its fair value, the implied fair value of the reporting unit’s goodwill is calculated and an impairment loss equal to the excess is recorded. The Company has no t
 recorded any impairments related to goodwill as of December 31, 2021. 

 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 financing or operating. The Company does not have any finance leases. 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 Company’s operating leases generally do not provide an implicit rate, 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 operating 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. 

 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. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. 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. 
 Operating leases are presented separately as operating lease right-of-use assets

 and operating lease liabilities, current and non-current, in
 the accompanying consolidated balance sheets. 
 Revenue Recognition 

 The Company generates revenue by assisting home sellers and buyers in listing, marketing, selling and finding homes. The Company holds the real estate brokerage license that is necessary under relevant state laws and regulations to provide brokerage services and therefore controls those services that are necessary to legally transfer real estate between home sellers and buyers. 

 Although the Company’s agents are independent contractors, they cannot execute a real estate transaction without a brokerage license, which the Company possesses. The Company has the only contractual relationship for the sale or exchange of real estate with its clients. Accordingly, the Company is the principal in its transactions with home buyers and sellers. As principal, the Company recognizes revenue in the gross amount of consideration to which the Company expects to receive in exchange for those services.

 8 1

 Table of Contents 

 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The Company concluded that its brokerage revenue 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. Revenue is recognized upon the closing of a real estate transaction (i.e. purchase or sale of a home) since 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. The Company operates exclusively in the United States and generates substantially all of its revenue from commissions from home sellers and buyers. In addition to commission revenue, the Company generates revenue through adjacent services related to the home transaction such as title and escrow services which comprised an immaterial amount of the consolidated revenue for the years ended December 31, 2021, 2020 and 2019.

 Management evaluated and determined that no disaggregation of revenue is necessary or appropriate. 

 As the Company generally bills for its services at the time of revenue recognition, the Company does not have material deferred revenue or contract asset balances. In addition, the Company does not capitalize commissions paid to agents as incremental contract costs as there are no future benefits associated with the expenses. 

 Commissions and Other Related Expense 

 Commissions and other related expense primarily consist of commissions paid to the Company’s agents, who are independent contractors to the Company, upon the closing of a real estate transaction (i.e., purchase or sale of a home), as well as stock-based compensation expense related to the Company’s Agent Equity Program (see Note 2 — “Summary of Significant Accounting Policies — Stock-Based Compensation”) and fees paid to external brokerages for client referrals, which are recognized and paid upon the closing of a real estate transaction. 

 The Company also charges resource fees to affiliated agents. These fees are either transaction based, where amounts are collected at the closing of a brokerage transaction, or in the form of periodic fixed fees over a defined period of time. Fees charged to affiliated agents are recognized as a reduction to Commissions and other related expense as the reimbursements do not constitute a form of revenue nor do they constitute a reimbursement for a specific, incremental, identifiable cost for the Company. 

 Sales and Marketing 

 Sales and marketing expense consists primarily of marketing and advertising expenses, compensation and other personnel-related costs for employees supporting sales, marketing, expansion and related functions, occupancy-related costs for the Company’s regional offices, agent acquisition incentives and costs related to administering the Compass Concierge Program, including associated bad debt expenses. Advertising expense primarily includes the cost of marketing activities such as print advertising, online advertising and promotional items, which are expensed as incurred. Advertising costs were $ 118.1 million, $ 101.1 million and $ 103.9 million for the years ended December 31, 2021, 202 0
 and 2019, respectively. 
Compensation costs includes salaries, taxes, benefits, bonuses and stock-based compensation.
 Operations and Support 

 Operations and support expenses include compensation and other personnel related expenses for employees supporting agents, third-party consulting and professional services costs, fair value adjustments to contingent consideration for the Company’s acquisitions and other related expenses. 

 Research and Development 

 Research and development expense consists primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, data licenses and other related expenses. 

 General and Administrative 

 General and administrative expense primarily consists of compensation costs for executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for the Company’s New York headquarters and other offices supporting administrative functions, professional services fees, insurance expenses and talent acquisition expenses. 

 Depreciation and Amortization 

 Depreciation and amortization expense primarily consists of depreciation and amortization of the Company’s property and equipment, capitalized software and acquired intangible assets.

 8 2

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 Interest Expense 

 Interest expense consists primarily of expense related to the interest, commitment fees and amortization of debt issuance costs associated with the Company’s revolving credit facility and concierge credit facility. See Note 9 — “Debt.” 

 Income Taxes 

 The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to settle. The effect on deferred tax assets and liabilities resulting from a change in tax rates is recognized as income or expense in the period that includes the enactment date. Deferred tax assets and liabilities are classified as non-current in
 accordance with Accounting Standard Update (“ASU”) No. 2015-17. Valuation
 allowances are established against deferred tax assets if it is more likely than not that they will not be realized. 

 The Company recognizes tax benefits from uncertain tax positions only if the Company believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company continuously reviews issues raised in connection with ongoing examinations and open tax years to evaluate the adequacy of its tax liabilities. The Company’s policy is to adjust these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on its financial condition and operating results. The provision for income taxes includes the effects of any reserves that management identifies. 

 Fair Value Measurements 

 Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants on the measurement date. The accounting standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

 Level 1
 
 Unadjusted quoted prices in active markets for identical assets or liabilities.
 
 Level 2
 
 Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
 
 Level 3
 
 Unobservable inputs that are supported by little or no market activity, requiring the Company to develop its own assumptions.
 
 The carrying amount of the Company’s financial instruments including Cash and cash equivalents, Accounts receivable, Compass Concierge receivables, Accounts payable and Commissions payable approximate their respective fair values because of their short maturities. As of December 31, 2021 and 2020, the carrying amount of the Company’s debt facilities approximates fair value as the stated interest rate approximates market rates currently available to the Company. 

 See Note 5 — “Fair Value of Financial Assets and Liabilities,” for more information on the fair value of financial assets and liabilities. 

 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. The Company recognizes forfeitures as they occur. 
 
 8 3

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 For stock options, which the Company issues to employees and affiliated agents, the Company generally estimates the fair value using the Black- Scholes option pricing model, which requires the input of subjective assumptions, including (1) the fair value of common stock, (2) the expected stock price volatility, (3) the expected term of the award, (4) the risk-free interest rate and (5) expected dividends. 

 The Company also issues RSUs to employees and affiliated agents. In addition to the issuance of RSUs to agents as equity compensation for the provision of services, the Company offers RSUs to affiliated agents through its Agent Equity Program. The Agent Equity Program offers affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs. RSUs issued in connection with the Agent Equity Program are granted at the beginning of the year following the calendar year in which the commissions were earned and are subject to the terms and conditions of the 2012 Stock Incentive Plan and the 2021 Equity Incentive Plan, as applicable. 

 The Company’s RSUs granted prior to December 2020 generally vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years , except for the RSUs associated with the 2020 Agent Equity Program which vested immediately on the date of issuance. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, generally defined as a change in control or the effective date of the registration statement for the Company’s IPO. The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will begin to be recognized as expense when both the required service-based vesting condition and the liquidity event-based vesting condition has been achieved using the accelerated attribution method. The liquidity event-based vesting requirement was met on March 31, 2021, the effective date of the Company’s registration statement, see Note 1—“

 Business—Initial Public Offering.” 

 Beginning in December 2020, the Company began issuing RSUs that vest upon the satisfaction of only a service-based vesting condition that is generally ranging from four to five years . The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense on a straight-line basis as the required service-based vesting condition is satisfied. Any vested RSUs that require only a service-based vesting condition will convert to common stock following vesting and their prescribed delayed settlement periods. 

 For RSUs to be granted in connection with the 2021 Agent Equity Program, the Company determines the value of the stock-based compensation expense at the time the underlying commission is earned and begins to recognize the associated expense on a straight-line basis over the requisite service periods beginning on the closing date of the underlying real estate commission transactions. The stock-based compensation expense is recorded as a liability and will be reclassified to additional paid-in
 capital at the end of the vesting period when the underlying RSUs are issued. 

 On a limited basis, the Company has issued stock options and RSUs that contain service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange. Such awards are valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met. 

 Recently Adopted Accounting Pronouncements 

 In June 2016, the FASB issued ASU 2016-13,
 Financial Instruments — Credit Losses (Topic 326)

, which modifies the measurement of credit losses on financial instruments. This standard requires the use of an expected loss impairment model for instruments measured at amortized cost based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This guidance is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2020 on a modified retrospective basis which
 resulted in a $ 5.6 million increase in the Company’s overall allowance for credit losses related to the Company’s Compass Concierge receivables, with a corresponding increase to the Company’s accumulated deficit. 
 In August 2018, the FASB issued ASU 2018-13,
 Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement

. The guidance eliminates, amends and adds certain disclosure requirements for fair value measurements. The new standard is effective for all public entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this standard as of January 1, 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements. 
 In August 2018, the FASB issued ASU No. 2018-15,
 Intangibles — Goodwill and Other — 

 Internal-Use

 Software (Subtopic

 350-40):

 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)

. The guidance on the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement 
that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software
 (and hosting arrangements that include an internal-use software
 license). The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within that fiscal year and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption and early adoption is permitted. The Company adopted this standard prospectively as of January 1, 2020, and the adoption did not have a material impact on the Company’s consolidated financial statements. 

 8 4

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 In November 2019, the FASB issued ASU No. 2019-08,
 Compensation — Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements — Share-Based Consideration Payable to a Customer

. The ASU simplifies and increases comparability of accounting for nonemployee stock-based payments, specifically those made to customers. Under the new guidance, such awards will be accounted for as a reduction of the transaction price in revenue, but should be measured and classified following the stock compensation guidance in ASC 718, Compensation — Stock Compensation

. The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and can be applied retrospectively or on a modified retrospective basis through a cumulative-effect adjustment to retained earnings upon adoption. The Company adopted this standard on a modified retrospective basis as of January 1, 2020, and the adoption did not have an impact on the Company’s consolidated financial statements. 

 In December 2019, the FASB issued ASU No. 2019-12,
 Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

. The ASU is part of the FASB’s simplification initiative; and it is expected to reduce cost and complexity related to accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes

 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in
 the tax basis of goodwill. The new standard will become effective for public companies with fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted this guidance on January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

 New Accounting Pronouncements 

 In March 2020, the FASB issued ASU 2020-04,
 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance was issued on March 12, 2020 and may be applied prospectively through December 31, 2022. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. 
 In October 2021, the FASB issued ASU 2021-08,
 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. 

The guidance amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendment is effective for public companies with fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendment should be applied prospectively to business combinations occurring on or after the effective date. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
 
 3.

 Business Combinations and Asset Acquisitions 

 Assets acquired and liabilities assumed in business combinations are recognized at their acquisition date fair values. Determination of the fair values of assets and liabilities acquired requires estimates and the use of valuation techniques when market values are not readily available. The results of operations of businesses acquired by the Company have been included in the consolidated statements of operations since their respective dates of acquisition. Goodwill generated from all business 
 combinations 

 completed was primarily attributable to expected synergies from future growth and potential monetization opportunities. 

 2021 Acquisitions 

 During the year ended December 31, 2021, the Company completed several business acquisitions including the acquisition of 100 % of the ownership interests in KVS Title, LLC, a title insurance and escrow settlement services company, Glide Labs, Inc., a real estate technology company, Randall Family of Companies, a group of Southern Coastal New England residential real-estate brokerage entities, three
 additional small real estate brokerages and three additional small title insurance and escrow settlement services companies. The purpose of these acquisitions was to expand the Company’s title and escrow offerings, to grow the Company’s transaction management tools included in its end-to-end

 real estate platform, and to expand its existing brokerage business in key domestic markets.

 8 5

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 During 2021, the Company completed two 
 asset acquisitions of smaller residential real estate brokerages in connection with ongoing agent recruitment efforts in key domestic markets. The consideration for these two acquisitions comprised 

 $ 13.2 million in cash, net of cash acquired ,
 $ 5.8 
 million in the Company’s Class A common stock and up to 

 $ 3.4 

 million of additional cash that may be paid contingent on certain earnings-based targets being met. During the year ended December 31, 2021, the Company recorded net assets of 

 $ 23.9 
 million primarily comprised of customer relationships. Such amounts are also included in the tables below.

 Total Consideration of Business Combinations and Asset Acquisitions 

 The following table summarizes the aggregate fair value of the components of the purchase consideration, as of the respective dates of each of the business combinations and asset acquisitions (in millions): 

 Cash paid at closing

 $ 
 148.6 
 
 Class A common stock issued

 5.8 
 
 Cash to be paid after closing

 21.8 
 
 Contingent consideration 

 5.6 
 
 Non-controlling interest

 3.8 

 $

 185.6 

 The following table summarizes the preliminary allocations of the purchase price for the business combinations and asset acquisitions (in millions): 

 Cash and cash equivalents

 $ 
 11.2 
 
 Other current assets

 4.1 
 
 Property and equipment

 2.5 
 
 Goodwill (1)

 68.5 
 
 Operating lease right-of-use

 assets
 
 12.8 
 
 In t
angible assets (2)

 Acquired Technology

 5.5 
 
 Customer
 relationships

 90.7 
 
 Trademarks

 11.3 
 
 Total assets

 $ 
 
 206.6 
 
 Total liabilities

 $ 
 ( 21.0 
 ) 

 Net assets

 $ 
 185.6 
 
 (1)

 Approximately $ 22.9 million of the goodwill is deductible for tax purposes. The amount of 
 tax-deductible

 goodwill may increase in the future to approximately $ 52.1 
million dependent on the payment of certain holdbacks and acquisition related compensation arrangements. These amounts are not expected to have an impact on the income tax provision while the Company maintains a full valuation allowance on its domestic deferred tax assets. 

 (2)

 The identified intangible assets have a useful life 
 of 2 - 9 years.

 The Company has recorded the preliminary purchase price allocation as of the acquisition dates and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the respective 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 consolidated statements of operations. 

 Pro forma revenue and earnings for 2021 acquisitions have not been presented because they do not have a material impact to the Company’s consolidated revenue and results of operations, either individually or in the aggregate. 

 2020 Acquisitions 

 Modus Technologies, Inc. 

 On October

 9, 2020, the Company completed the acquisition of 100 % of the outstanding shares of Modus Technologies, Inc., a title and escrow company that provides an internally developed title and escrow technology platform to agents, home sellers and buyers. The purpose of the acquisition was to expand its title and escrow service offerings and technology capabilities.

 8 6

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements

 The consideration for the purchase of Modus Technologies, Inc. included a contingent consideration arrangement, payable over three years and based on the attainment of transaction-based targets as defined by the purchase agreement. The maximum amount of contingent consideration that could be earned was
 $ 70.0 million, payable in a combination of $ 50.0 million in cash and $ 20.0 million in the Company’s Class A common stock. The Company recorded the contingent consideration liability at its fair value of $ 20.0 million 

 and will continue to adjust the contingent consideration liability at each reporting date to its then fair value, with any changes recorded through Operations and support in the accompanying consolidated statements of operations. See “Note 5 — Fair Value of Financial Assets and Liabilities” for further discussion of inputs used to determine the fair value of contingent consideration. A portion of this contingent consideration is subjected to forfeiture dependent on certain employees providing future service to the Company and will be accounted for as compensation expense over the required service periods. See “Other Acquisition Related Compensation” below. As of December 31, 2021, the remaining unpaid contingent consideration is $ 11.0 million and will be paid primarily in 2022 and 2023.

 Other 

 During 2020, the Company completed several asset acquisitions. These transactions included the acquisition of smaller residential real estate brokerages in connection with ongoing agent recruitment efforts in key domestic markets. The consideration for these acquisitions was paid entirely in cash. 

 The following table summarizes the aggregate fair value of the components of the purchase consideration, as of the respective dates of each of the acquisitions (in millions): 

 Modus
 Technologies,
 Inc.

 Other

 Cash paid at closing

 $ 
 27.7 
 
 $ 
 0.9 
 
 Cash to be paid after closing

 2.0 
 
 — 
 
 Contingent consideration (payable in the form of cash and Class A common stock)

 20.0 
 
 — 
 
 $ 
 49.7 
 
 $ 
 0.9 
 
 The following table summarizes the allocations of the purchase price (in millions): 

 Modus
 Technologies,
 Inc.

 Other

 Cash and cash equivalents

 $ 
 3.0 
 
 $ 
 — 
 
 Other current assets

 0.1 
 
 — 
 
 Property and equipment

 0.5 
 
 — 
 
 Goodwill (1)

 38.4 
 
 — 
 
 Operating lease right-of-use assets

 4.1 
 
 — 
 
 Intangible assets (2)

:
 
 Acquired technology

 6.3 
 
 — 
 
 Customer
 relationships

 1.3 
 
 0.9 
 
 Trademarks

 1.7 
 
 — 
 
 Total assets

 $ 
 55.4 
 
 $ 
 0.9 
 
 Total liabilities

 $ 
 ( 5.7 
 ) 
 
 $ 
 — 
 
 Net assets

 $ 
 49.7 
 
 $ 
 0.9 
 
 (1)

 The goodwill is non-tax deductible.
 
 (2)

 The identified intangible assets have a useful life of 3 - 6 years.
 
 Pro forma revenue and earnings for 2020 acquisitions have not been presented because they do not have a material impact to the Company’s consolidated revenue and results of operations, either individually or in aggregate. 

 8 7

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements

 2019 Acquisitions 

 Contactually, Inc. 

 In February 2019, the Company completed the acquisition of 100 % of the outstanding shares of Contactually, Inc. (“Contactually”), a technology company that provides an internally developed cloud-based Customer Relationship Management (“CRM”) platform tailored to the real estate industry. The Company acquired Contactually primarily for its CRM expertise and engineering employees to assist in the development of the Company’s own proprietary CRM software platform. 

 Other 

 During 2019, the Company completed the acquisition of several residential real estate brokerages in connection with ongoing agent recruitment efforts in key domestic markets. The consideration for these acquisitions includes contingent consideration arrangements, payable over a period of up to 6 years and are based on the attainment of profitability targets as defined by the purchase agreements. The maximum amount that can be earned is $ 13.1 million, payable in cash. The Company recorded the contingent consideration at its fair value of $ 7.4 million and will continue to adjust the contingent consideration liabilities at each reporting date to its then fair value, with any changes recorded to Operations and support in the accompanying consolidated statements of operations. 

 The following table summarizes the aggregate fair value of the components of the purchase consideration, as of the respective dates of each of the acquisitions (in millions): 

 Contactually,
 Inc.

 Other

 Cash paid at closing

 $ 
 24.5 
 
 $ 
 14.6 
 
 Elimination of pre-existing relationships

 1.6 
 
 — 
 
 Contingent consideration (payable in the form of cash)

 — 
 
 7.4 
 
 $ 
 26.1 
 
 $ 
 22.0 
 
 The following table summarizes the allocation of the purchase price (in millions):

 Contactually,
Inc.

 Other

 Cash and cash equivalents
 
 $
 
 1.0 
 
 $
 
 2.8 
 
 Other current assets
 
 1.0 
 
 0.4 
 
 Property and equipment
 
 — 
 
 6.7 
 
 Goodwill (1)

 21.3 
 
 6.2 
 
 Operating lease right-of-use assets

 1.8 
 
 33.7 
 
 Intangible assets (2)

:
 
 Acquired technology
 
 5.7 
 
 — 
 
 Customer relationships
 
 — 
 
 6.5 
 
 Trademarks
 
 — 
 
 0.6 
 
 Other non-current assets

 0.3 
 
 1.1 
 
 Total assets
 
 $ 
 31.1 
 
 $ 
 58.0 
 
 Total liabilities
 
 $ 
 ( 5.0 
 ) 
 
 $ 
 ( 36.0 
 ) 

 Net assets
 
 $ 
 26.1 
 
 $ 
 22.0 
 
 (1)

 The goodwill is non-tax deductible.
 
 (2)

 The identified intangible assets have a useful life of 2 - 9 years.
 
 Pro forma revenue and earnings for 2019 acquisitions have not been presented because they do not have a material impact to the Company’s consolidated revenue and results of operations, either individually or in aggregate. 

 8 8

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 Contingent Consideration 

 Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired businesses in the event that certain targets and milestones are met. Approximately $ 11.0 million of the obligations as of December 31, 2021 are fixed in value. As of December 31, 2021, the undiscounted maximum payment under these arrangements was $ 24.4 million. Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions): 

 Year Ended December 31,

 2021

 2020

 2019

 Opening balance

 $ 
 39.8 
 
 $ 
 
 16.4 
 
 $ 
 
 19.6 
 
 Acquisitions

 5.6 
 
 20.0 
 
 7.4 
 
 Fair value (gains) losses included in net loss

 ( 4.7 
 ) 
 
 8.9 
 
 ( 9.9 
 ) 

 Payments

 ( 16.3 
 ) 
 
 ( 5.5 
 ) 
 
 ( 0.7 
 ) 

 Closing balance

 $ 
 24.4 
 
 $ 
 39.8 
 
 $ 
 16.4 
 
 Other Acquisition Related Compensation 

 In connection with the Company’s acquisitions, a portion of the cash and equity
 consideration amounts paid or to be paid to the selling shareholders are subject to clawback and forfeiture dependent on certain employees and agents providing continued service to the Company. Accordingly, this consideration is accounted for as compensation for future services and the Company recognizes the expenses over the underlying retention periods. As of December 31, 2021, the Company expects to pay an additional $ 60.5 million in future cash consideration to sellers in connection with these arrangements. For the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 28.6 million, $
 4.2 million and $ 7.1 million in compensation expense within Operations and support in the accompanying consolidated statement s
 of operations related to these arrangements. 

 Similarly, the Company granted 277,776 , 221,390 and 21,080 shares of common stock to sellers in accordance with arrangements where receipt of the shares were contingent on certain employees and agents providing continued service to the Company in the years ended December 31, 2021, 2020 and 2019. Accordingly, these share-based payments will be accounted for as stock-based compensation expense over the underlying retention periods. For the years ended December 31, 2021 and 2019, the Company recognized $ 1.1 million and $ 0.6 million in stock-based compensation expense within Operations and support in the accompanying consolidated statement of operations related to these arrangements. There was no stock-based compensation expense related to these compensation arrangements recognized during the year ended December 31, 2020. 

 4. Joint Venture 

 In July 2021, the Company and Guaranteed Rate, Inc. (“Guaranteed Rate”) formed a joint venture, OriginPoint, LLC (“OriginPoint”), a new mortgage origination company. OriginPoint was formed for the purpose of conducting a mortgage origination and lending business and providing related services for the Company’s real estate brokerage clients, as well as the clients of any other brokerage in the context of a new purchase or other customers not working with a brokerage in the context of a refinancing, in order to make loans available to a broad consumer audience. OriginPoint will originate, process, underwrite, close and/or fund mortgage loans for sale, transfer and assignment to investors and eligible wholesale lenders, including affiliates, or effect any other secondary market transactions related to such mortgage loans. OriginPoint began originating mortgages in December 2021. 

 OriginPoint is owned 49.9 % by the Company, and 50.1 % by Guaranteed Rate. The Company and Guaranteed Rate each contributed capital of $ 5.0 million when OriginPoint was formed in July 2021 and have not contributed any additional capital through December 31, 2021. The Company is accounting for OriginPoint as an equity method investment and will record its equity earnings or losses related to OriginPoint within Equity in loss of unconsolidated entity 
in the statement of operations. 

 The Company’s investment in OriginPoint had a balance of $ 3.7 
 million at December 31, 2021 and is included within Other
 non-current
 assets on the accompanying consolidated balance sheet. The Company recorded equity losses of $ 1.3 
 million during the year ended December 31, 2021. No dividends were received by the Company during the year ended December 31, 2021.

 OriginPoint has established and maintains its own warehouse lines of credit, and it funds its own mortgage loan transactions from these independent sources. The warehouse lines maintained by OriginPoint are collaterized by the underlying mortgages available for sale and are non-recourse to Compass. 

 5. Fair Value of Financial Assets and Liabilities 

 The Company’s cash and cash equivalents of 

 $ 618.3 million and $ 440.1 million as of December 31, 2021 and 2020, respectively, are held in cash and money market funds which are classified as Level 1 within the fair value hierarchy because they are valued using quoted prices in active markets. These are the Company’s only Level 1 financial instruments. The Company does not hold any Level 2 financial instruments. The Company’s 
contingent consideration liabilities of $ 24.4 million and $ 39.8 million as of December 31, 2021 and 2020, respectively, are the Company’s only Level 
3 financial instruments.

 8 9

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 There were

 no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

 Level 3 Financial Liabilities 

 The Company’s Level 3 financial liabilities relate to contingent consideration for acquisitions. Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired entities in the event that certain targets and milestones are met. As of December 31, 2021, the undiscounted maximum payment under these arrangements was $ 24.4 million which is expected to be paid over a period of up to 4 years. The primary method the Company used to estimate the fair value of the contingent consideration was a Monte Carlo simulation, which is based on significant inputs, such as forecasted future results of the acquired businesses, which are not observable in the market, discount rates and earnings volatility measures. The changes in the fair value of Level 3 financial liabilities are included within Operations and support in the accompanying consolidated statement s
 of operations (see Note 3 — “Business Combinations and Asset Acquisitions”). 

 The following tables present quantitative information regarding the significant unobservable inputs utilized by the Company to measure its Level 3 liabilities, consisting of different contingent consideration agreements, at fair value on a recurring basis: 

 Year Ended December 31,

 2021

 2020

 2019

 Discount rate

 0.0 % - 2.0 %
 
 0.0 % - 2.0 %
 
 0.0 % - 4.0 %
 
 Weighted average discount rate

 0.5 % 
 
 1.3 % 
 
 3.3 % 

 Earnings volatility

 0.0 % - 15.0 %
 
 0.0 % - 18.0 %
 
 0.0 % - 45.0 %
 
 Weighted average earnings volatility

 3.3 % 
 
 6.9 % 
 
 12.0 % 
 
 The following tables present the balances of contingent consideration as presented in the consolidated balance sheets (in millions): 

 December 31,

 2021

 2020

 Accrued expenses and other current liabilities

 $
 
 12.9 
 
 $
 
 19.1 
 
 Other non-current
 liabilities

 11.5 
 
 20.7 
 
 Total contingent consideration

 $
 
 24.4 
 
 $
 
 39.8 
 
 6. Property and Equipment, Net 

 Property and equipment, net consisted of the following (in millions): 

 December 31,

 2021

 2020

 Leasehold improvements

 $ 
 158.2 
 
 $ 
 144.1 
 
 Office furniture and equipment

 31.9 
 
 29.0 
 
 Computer software and internally-developed software

 28.1 
 
 23.8 
 
 Computer equipment

 24.2 
 
 22.0 
 
 242.4 
 
 218.9 
 
 Less: accumulated depreciation

 ( 85.0 
 ) 
 
 ( 77.2 
 ) 

 Property and equipment, net

 $ 
 157.4 
 
 $ 
 141.7 
 
 The Company recorded depreciation expense related to property and equipment of $ 38.5 million, $ 34.4 million and $ 24.3 million for the years ended December 31, 2021, 2020 and 2019, respectively which includes $ 6.0 
million, $ 4.8 million and $ 4.0 million, respectively, related to capitalized internally–developed software. 

 The Company capitalized internally-developed software costs of $ 15.7 
million and $ 5.2 million during the years ended December 31, 2021 and 2020, respectively.

 90

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 7. Goodwill and Intangible Assets, Net 

 The following table summarizes the changes in the carrying amount of goodwill (in millions):

 Amount

 Balance at December 31, 2019

 $ 
 81.4 
 
 Acquisitions

 38.4 
 
 Balance at December 31, 2020

 $ 
 119.8 
 
 Acquisitions

 68.5 
 
 Balance at December 31, 2021

 $ 
 188.3 
 
 The following table 
 summarizes the carrying amounts and accumulated amortization of intangible assets (in millions, except weighted-average remaining useful life): 

 December 31, 2021

 Useful Life

 Gross Carrying
Amount

 Accumulated
Amorization

 Net Value

 Weighted
Average
Remaining
Useful Life
(Years)

 Finite-lived intangible assets:

 Customer
 relationships

 2 - 9 years
 
 $ 
 150.4 
 
 $ 
 ( 42.9 
 ) 
 
 $ 
 107.5 
 
 4.3 
 
 Acquired technology

 2 - 5 
years 
 
 17.5 
 
 ( 9.0 
 ) 
 
 8.5 
 
 3.2 
 
 Trademarks

 2 - 9 
years 
 
 13.6 
 
 ( 2.7 
 ) 
 
 10.9 
 
 5.4 
 
 Indefinite-lived intangible assets :

 Domain name

 0.3 
 
 — 
 
 0.3 
 
 n/a 
 
 Total

 $ 
 181.8 
 
 $ 
 ( 54.6 
 ) 
 
 $ 
 127.2 
 
 December 31, 2020

 Useful Life

 Gross Carrying
Amount

 Accumulated
Amorization

 Net Value

 Weighted
Average
Remaining
Useful Life
(Years)

 Finite-lived intangible assets:

 Customer
 relationships

 3 - 9 years
 
 $ 
 59.7 
 
 $ 
 ( 22.4 
 ) 
 
 $ 
 37.3 
 
 4.4 
 
 Workforce

 2 years 
 
 9.7 
 
 ( 9.7 
 ) 
 
 — 
 
 — 
 
 Acquired technology

 2 - 3 
 years 
 
 12.0 
 
 ( 5.7 
 ) 
 
 6.3 
 
 2.6 
 
 Trademarks

 2 - 3 
 years 
 
 2.3 
 
 ( 0.6 
 ) 
 
 1.7 
 
 2.7 
 
 Indefinite-lived intangible assets :

 Domain name

 0.3 
 
 — 
 
 0.3 
 
 n/a 
 
 Total

 $ 
 84.0 
 
 $ 
 ( 38.4 
 ) 
 
 $ 
 45.6 
 
 Amortization 

 expense was $
 25.9 million, $
 16.8 million and $
 16.6 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

 9 1

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 Estimated future amortization expense for finite-lived intangible assets as of December 31, 2021 is as follows (in millions): 

 2022

 $ 
 32.7 
 
 2023

 31.2 
 
 2024

 26.8 
 
 2025

 21.2 
 
 2026

 9.8 
 
 Thereafter

 5.2 
 
 Total

 $ 
 126.9 
 
 8. Other Current Assets and Accrued Expenses and Other Current Liabilities 

 Other current assets consisted of the following (in millions):

 December 31,

 2021

 2020

 Prepaid 

Agent Incentives

 $ 
 52.7 
 
 $ 
 29.2 
 
 Other

 42.2 
 
 25.7 
 
 Other current assets

 $ 
 94.9 
 
 $ 
 54.9 
 
 Accrued expenses and other current liabilities consisted of the following (in millions): 

 December 31,

 2021

 2020

 Agent equity program

 $ 
 84.8 
 
 $ 
 — 
 
 Accrued compensation

 67.4 
 
 46.5 
 
 Accrued other acquisition related compensation, current

 23.6 
 
 1.3 
 
 Contingent consideration, current

 12.9 
 
 19.1 
 
 Other

 52.2 
 
 39.9 
 
 Accrued expenses and other current liabilities

 $ 
 240.9 
 
 $ 
 106.8 
 
 9. Debt 

 Concierge Credit Facility

 In July 2020, the Company entered into a Revolving Credit and Security Agreement (the “Concierge Facility”) with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $ 75.0 million revolving credit facility and is solely used to finance, in part, the Company’s Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. Prior to July 29, 2021 borrowings under the Concierge Facility accrued interest at rates equal to the adjusted London interbank offered rate (“LIBOR”) plus a margin of 3.00 % as adjusted, or an alternate rate of interest upon the occurrence of certain changes in LIBOR. Additionally, prior to July 29, 2021, the Company was required to pay an annual commitment fee of 0.50 % on a quarterly basis based on the unused portion of the Concierge Facility irrespective of the Company’s utilization rate. On July 29, 2021, the Company amended and restated the Concierge Facility (the “A&R Concierge Facility”), extending the revolving period for another twelve months, lowering the interest rate to LIBOR plus a margin of 1.85 %, which may be adjusted, and lowering the annual commitment fee to 0.35 % if the Concierge Facility is utilized greater than 50% (the annual commitment fee remained the same, at 0.50 %, if the Concierge Facility is utilized less than 50%). Pursuant to the A&R Concierge Facility, the principal amount, if any, is payable in full in January 2023 , unless earlier terminated or extended. The interest rate on the Concierge Facility was 3.23 % as of December 31, 2021. 

 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 covenants, such as financial statement reporting requirements, as well as covenants that restrict its ability to, among other things, incur additional indebtedness, sell certain receivables, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. Additionally, in the event that the Company fails to comply with certain financial covenants that require the Company to meet certain liquidity-based measures, the commitments under the Concierge Facility will automatically be reduced to zero and the Company will be required to repay any outstanding loans under the Concierge Facility. As of December 31, 2021, the Company was in compliance with the covenants under the Concierge Facility. 

 9 2

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The Company incurred debt issuance costs of $ 0.5 million and 

 $
 1.3 
 million during the year s
 ended December 31, 2021 and 2020, respectively, in connection with the Concierge Facility, which are included in Other current assets and Other non-current
 assets, net of accumulated amortization, in the consolidated balance sheets. The unamortized debt issuance costs will be amortized within Interest expense in the consolidated statements of operations over the remaining term on a straight-line basis. 

 Revolving Credit Facility 

 In March 
2021 , the Company entered into a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”) with several lenders and issuing banks and Barclays Bank PLC, as administrative agent and as collateral agent. The Revolving Credit Facility provides for a $
 350.0 million revolving credit facility, which may be increased by the greater of $
 250.0 million and 
 18.5 % of the Company’s consolidated total assets, plus such additional amount so long as the Company’s total net leverage ratio does not exceed 
 4.50 :
1.00 on a pro forma basis as of the most recent test period, subject to the terms of the Revolving Credit Facility. The Revolving Credit Facility also includes a letter of credit sublimit which is the lesser of (i) $
 125.0 million and (ii) the aggregate unused amount of the revolving commitments then in effect under the Revolving Credit Facility. 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 Company’s assets and the Company’s subsidiary guarantors.

 Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the base rate plus a margin of 0.50 % or (ii) a floating rate per annum equal to the rate at which dollar deposits are offered in the London interbank market plus a margin of 1.50 %. In the Revolving Credit Facility, the base rate is defined as the highest of (a) the prime rate as quoted by The Wall Street Journal, (b) the federal funds effective rate plus 0.50 %, (c) the rate at which dollar deposits are offered in the London interbank market for a one-month
 interest period plus 1.00 % and (d) 1.00 %. During an event of default under the Revolving Credit Facility, the applicable interest rates are increased by 2.0 % per annum. 
 The Company is also obligated to pay other customary fees for a credit facility of this size and type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175 % per annum and fees associated with letters of credit. The principal amount, if any, is payable in full in March 2026 , unless earlier terminated or extended. 

 The Company has the option to repay the Company’s borrowings, and to permanently reduce the loan commitments whole or in part, under the Revolving Credit Facility without premium or penalty prior to maturity. As of December 31, 2021, there were no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $ 30.3 million. 

 The Revolving Credit Facility contains customary representations, warranties, financial covenants applicable to
 the Company and to the Company’s restricted subsidiaries, affirmative covenants, such as financial statement reporting requirements, and negative covenant which restrict its ability, among other things, to incur liens and indebtedness, make certain investments, declare dividends, dispose of, transfer or sell assets, make stock repurchases and consummate certain other matters, all subject to certain exceptions. The financial covenants require that the Company maintain certain liquidity-based measures and total revenue requirements. As of December 31, 2021, the Company was in compliance with the covenants under the Revolving Credit Facility. 

 The Revolving Credit 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, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility. 

 The Company incurred debt issuance costs of $ 1.4 million in connection with the Revolving Credit Facility, which are included in Other current assets and Other non-current
 assets in the consolidated balance sheet. The unamortized debt issuance costs will be amortized within Interest expense in the consolidated statements of operations over the remaining term on a straight-line basis. 

 9 3

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 10. Leases 

 The components of lease costs for operating leases for the years ended December 31, 2021, 2020 and 2019 was as follows (in millions): 

 Year Ended 
December 31,

 2021

 2020

 2019

 Operating lease costs

 $ 
 102.3 
 
 $ 
 93.1 
 
 $ 
 80.6 
 
 Short-term lease costs

 7.2 
 
 5.7 
 
 16.6 
 
 Sublease income

 ( 3.2 
 ) 
 
 ( 3.4 
 ) 
 
 ( 2.2 
 ) 

 Variable lease costs

 29.0 
 
 26.4 
 
 25.7 
 
 Total

 $ 
 135.3 
 
 $ 
 121.8 
 
 $ 
 120.7 
 
 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 consolidated financial statements. 

 For the years ended December 31, 2021, 2020 and 2019, the Company recognized lease costs, net of sublease income, of $ 124.3 million, $ 110.2 million and $ 109.1 million, respectively, in Sales and marketing expenses 

 and 

$ 11.0 million, $ 11.6 million and $ 11.6 million, respectively, in General and administrative expenses in the consolidated statement s
 of operations. 

 Supplemental cash flow information related to leases was as follows (in millions): 

 Year Ended December 31,

 2021

 2020

 2019

 Cash paid for amounts included in the measurement of operating lease liabilities:

 Operating cash flows used in operating leases

 $

 106.3 

 $

 92.0 

 $

 53.3 

 Supplemental disclosure of non-cash
 leasing activities:

 ROU assets obtained in exchange for new operating lease liabilities
 
 137.1 
 
 66.3 
 
 193.5 
 
 The following table represents the weighted-average remaining lease term and discount rate for the Company’s operating leases: 

 December 31,

 2021

 2020

 Weighted average remaining lease term (years)

 6.7 
 
 7.3 
 
 Weighted average discount rate

 4.2 
 % 
 
 4.7 
 % 
 
 Future undiscounted lease payments for the Company’s operating lease liabilities are as follows as of December 31, 2021 (in millions): 

 2022

 $ 
 103.8 
 
 2023

 108.2 
 
 2024

 98.3 
 
 2025

 84.4 
 
 2026

 72.8 
 
 Thereafter

 187.8 
 
 Total future lease payments

 655.3 
 
 Less: imputed interest

 90.8 
 
 Present value of lease liabilities

 $ 
 564.5 
 
 As of December 31, 2021, the Company had additional operating leases that have not yet commenced with future undiscounted lease payments of approximately $ 82.0 million. 

 9 4

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 11. Commitments and Contingencies 

 Legal Proceedings 

 From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. 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. 

 Avi Dorfman v. Robert Reffkin and Urban Compass, Inc. 

 In July 2014, Avi Dorfman (“Dorfman”) and RentJolt, Inc. (“RentJolt”) (collectively, “Plaintiffs”) filed suit against the Company and Robert Reffkin (“Defendants”), seeking compensation for certain services, trade secrets and other contributions allegedly provided in the formation of the Company. During the year ended December 31, 2021, the matter was settled and the Company recognized an expense of

 $ 21.3 

 million within General and administrative expense in the accompanying consolidated statements of operations. 

 Realogy Holdings Corp., et al v. Urban Compass, Inc. and Compass Inc. 

 In July 2019, Realogy Holdings Corp., NRT New York LLC (“Corcoran”) and many of its related entities (collectively, “Plaintiffs”) filed a complaint against the Company in the New York Supreme Court. The complaint alleges various violations of New York and California state law related to claims of unfair competition and seeks unspecified damages. The Company filed a Motion to Dismiss in September 2019. In September 2019, Plaintiffs filed an amended complaint, removing one claim and adding a claim for defamation. In November 2019, the Company moved to compel arbitration related to claims asserted by Corcoran and moved to dismiss all of the counts. In June 2020, the Court denied the motion to dismiss and denied the motion to compel arbitration as moot, granting Plaintiffs leave to amend the complaint as to claims asserted by Corcoran without prejudice to Defendants’ ability to move to compel or dismiss the Second Amended Complaint. 

 On July 3, 2020, Plaintiffs filed their Second Amended Complaint. On December 18, 2020, the Court denied the Company’s motion to compel arbitration on Plaintiffs’ second amended complaint without prejudice. Defendants’ Answer to the Second Amended Complaint and Counterclaims were filed on January 28, 2021. Additionally, the Company filed its appeal of the lower Court’s denial of the Company’s motion to dismiss and motion to compel arbitration on February 1, 2021. On June 1, 2021, the First Department affirmed the lower Court’s denial of the Company’s motion to compel arbitration. Discovery is proceeding, with an end date set for October 3, 2022. The Company is unable to predict the outcome of this action or to reasonably estimate the possible loss or range of loss, if any, arising from the claims asserted therein. 

 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 December 31, 2021 and 2020, the Company was contingently liable for $ 54.5 million and $ 50.7 million, respectively, under these letters of credit. As of December 31, 2021, $ 30.3 million and $ 24.2 million of these letters of credit were collateralized by the Company’s Revolving Credit Facility and cash and cash equivalents, respectively. As of December 31, 2020, all letters of credit were collateralized by the Company’s cash and cash equivalents. 

 Escrow and Trust Deposits 

 As a service to its home buyers and home seller clients, the Company administers escrow and trust deposits which represent undistributed amounts for

 the settlement of real estate transactions. The escrow and trust deposits totaled $ 172.1 million and $ 46.1 million, respectively ,
 as of December 31, 2021 and 2020. These deposits are not assets of the Company and therefore are excluded from the accompanying consolidated balance sheets. However, the Company remains contingently liable for the disposition of these deposits.

 12. Preferred Stock and Common Stock 

 Convertible Preferred Stock 

 In 2019, the Company issued 22,306,800 shares of Series G convertible preferred stock for proceeds of $ 343.3 million, net of $ 0.8 million issuance costs. 

 9 5

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 In 2020, the Company amended its certificate of incorporation and changed the authorized shares of Series G convertible preferred stock to 22,371,620 and issued an additional 64,820 shares of Series G convertible preferred stock for proceeds of $ 1.0 million. 

 In 2020, 9,382,620 shares of Series D convertible preferred stock were converted into an equal number of shares of Class A common stock at the election of the holder resulting in the reclassification of $ 40.0 million in carrying value from Convertible preferred stock to Common stock and Additional paid-in capital.
 
 The Company’s convertible preferred stock authorized, issued and outstanding, the aggregate liquidation preferences, including dividends that would be due if and when declared by the board of directors we re

 as follows as of December 31, 2020 (in millions, except share and per share amounts): 

 December 31, 2020

 Series of Convertible
Preferred Stock

 Year Issued

 Shares
Authorized

 Shares
Issued and
Outstanding

 Issuance Price/
Liquidation Price
(Per Share)

 Aggregate
Liquidation
Value

 Carrying Value
(Net of
Issuance Costs)

 Series A

 2013 
 
 54,811,930 
 
 54,811,930 
 
 $ 
 1.0000 
 
 $ 
 54.8 
 
 $ 
 54.7 
 
 Series B

 2014-2015 
 
 18,133,240 
 
 18,133,240 
 
 2.0766 
 
 37.7 
 
 37.5 
 
 Series C

 2015-2016 
 
 13,580,260 
 
 13,580,260 
 
 4.0500 
 
 55.0 
 
 54.8 
 
 Series D

 2016-2017 
 
 25,303,070 
 
 15,920,450 
 
 4.2632 
 
 67.9 
 
 67.6 
 
 Series E

 2017-2018 
 
 78,543,890 
 
 78,543,890 
 
 6.7478 
 
 530.0 
 
 529.0 
 
 Series F

 2018 
 
 33,686,160 
 
 33,686,160 
 
 11.8570 
 
 399.4 
 
 398.8 
 
 Series G

 2019-2020 
 
 22,371,620 
 
 22,371,620 
 
 15.4269 
 
 345.1 
 
 344.3 
 
 246,430,170 
 
 237,047,550 
 
 $ 
 1,489.9 
 
 $ 
 1,486.7 
 
 In March 2021, the holders of 15,920,450 shares of the Company’s Series D convertible preferred stock elected to convert such shares into an equal number of shares of Class A common stock. 

 During April 2021, in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223,033,725 shares of Class A common stock and the Company reclassified $ 1.4 billion of Convertible preferred stock to Additional paid-in-capital.

 As of December 31, 2021, the Company had no convertible preferred stock outstanding.

 Undesignated Preferred Stock

 In April 2021, the Company adopted a restated certificate of incorporation which provides for authorized undesignated preferred stock to 25,000,000 . As of December 31, 2021, 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. On March 31, 2021, in connection with the effectiveness of the registration statement for the Company’s IPO, 15,244,490 shares of Class A common stock held by the Company’s founder and 
 CEO were automatically exchanged for an equivalent

 number of shares of Class C common stock. In addition, 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 12,500,000,000 shares of Class A common stock, 1,250,000,000 shares of Class B common stock and 100,000,000 shares of Class C common stock. Each class has par value of $0.00001.

 On July 1, 2021, the board of directors of the Company approved the conversion of all outstanding shares of the Company’s Class B common stock into the same number of shares of the Company’s Class A common stock effective on that date. 

 As of December 31, 2020, the Company had 2,250,000 shares of Class A common stock issued and held as treasury stock which were subsequently retired on July 1, 2021 . 

 9 6

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The followings tables reflect the authorized, issued and outstanding shares for each of the common share classes as of December 31, 2021 and 2020: 

 December 31, 2021

 Shares
Authorized

 Shares

 Issued

 Shares
Outstanding

 Class A common stock

 12,500,000,000 
 
 391,912,514 
 
 391,912,514 
 
 Class B common stock

 1,250,000,000 
 
 — 
 
 — 
 
 Class C common stock

 100,000,000 
 
 17,355,237 
 
 17,355,237 
 
 Total

 13,850,000,000 
 
 409,267,751 
 
 409,267,751 
 
 December 31, 2020

 Shares
Authorized

 Shares

 Issued

 Shares
Outstanding

 Class A common stock

 530,136,050 
 
 118,549,390 
 
 116,299,390 
 
 Class B common stock

 170,618,860 
 
 6,672,510 
 
 6,672,510 
 
 Total

 700,754,910 
 
 125,221,900 
 
 122,971,900 
 
 The rights of common stock are as follows: 

 Voting 

 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. 

 Dividends 

 When and if declared by the Company’s board of directors, holders of Class A and Class B common stock are entitled in proportion to the number of shares of common stock that would be held by each such holder if all shares of convertible preferred stock were converted to common stock. No dividends have been declared since inception. 

 Liquidation 

 The liquidation rights of the holders of Class A and Class B common stock are subject to and qualified by the rights and preferences of the holders of convertible preferred stock. 

 Conversion 

 Each share of Class A common stock may be converted to one share of Class B common stock at the option of the holder. Each share of Class B common stock may be converted to one share of Class A common stock only upon the following events: 

 •
 
 the Company’s sale of its common stock pursuant to an effective registration statement; 

 •
 
 any transfer of such share to a holder of convertible preferred stock; and 

 •
 
 the approval of such conversion by the board of directors; such conversion shall be deemed to have been made immediately prior to the closing date of the public offering. 

 Each share of Class C common stock is convertible at any time of 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.

 9 7

 Table of Contents 

 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 13. Stock-Based Compensation

 2012 Stock Incentive Plan 

 In October 2012, the Company adopted the 2012 Stock Incentive Plan
 (as amended, the “2012 Plan”). Under the 2012 Plan, employees and non-employees can
 be granted options on common stock, RSUs and other stock-based awards, including awards earned in connection with the Agent Equity Program. Generally, these awards are based on stock agreements with

 ten-year 
 contractional
 terms for stock options and up to a ten-year 
 contractual terms for RSUs, subject to board approval .

 2021 Equity Incentive Plan 

 In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Equity Incentive Plan (the “2021 Plan”), with an initial pool of

 29,666,480 
 shares of common stock available for granting stock-based awards plus any reserved shares of common stock not issued or subject to outstanding awards granted under the Company’s 2012 Plan. In addition, on January 1 st 
of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the 2021 Plan shall be increased automatically by the number of shares equal to five percent 

 ( 5 %) 
 of the total number of outstanding shares of common stock and shares of preferred stock of the Company’s outstanding (on an as converted to common stock basis) on the immediately preceding December 31 st
, although the Company’s board of directors or one of its committees may reduce the amount of such increase in any particular year. The 2021 Plan became effective on March 30, 2021 and as of that date, the Company ceased granting new awards under the 2012 Plan and all remaining shares available under the 2012 Plan were transferred to the 2021 Plan. As of December 31, 2021, there were

 26,196,697 
 shares available for future grants under the 2021 Plan, inclusive of those shares transferred from the 2012 Plan. Effective January 1, 2022 the shares available for future grants were increased by an additional 20,457,795 shares as a result of the annual increase provision described above. 

 2021 Employee Stock Purchase Plan 

 In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP authorizes the issuance of 

 7,416,620 
 shares of common stock to purchase rights granted to the Company’s employees or to employees of its designated affiliates. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the ESPP shall be increased automatically by the number of shares equal to one percent
 ( 1 %) 
 of the total number of outstanding shares of common stock on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of the increase in any particular year. No more than

 150,000,000 
 shares of common stock may be issued over the term of the ESPP, subject to certain exceptions set forth in the ESPP. Effective January 1, 2022 the shares available for issuance under the ESPP were increased by an additional

 3,918,007 
 shares as a 
 result of the annual provision described 

 above. As

 of the date of this filing, no shares have been issued
 under the ESPP. 

 Stock Options 

 Stock options vest over a prescribed service period generally lasting 

 four years . Upon the exercise of any stock options, the Company issues shares to the award holder from the pool of authorized but unissued common stock.

 The fair value of each stock option award is estimated on the grant date using the Black-Scholes option pricing model with the exception of certain stock options that have market-based vesting conditions which are valued using a Monte Carlo simulation. The inputs used below are subjective and require significant judgement to determine. 

 Year Ended December 31,

 2021

 2020

 2019

 Expected term (in years)

 6.3 
 
 7.0 
 
 5.9 
 
 Risk-free interest rate

 0.9 
 % 
 
 0.8 
 % 
 
 2.3 
 % 

 Expected volatility

 49.3 
 % 
 
 45.1 
 % 
 
 45.0 
 % 

 Dividend rate

 — 
 % 
 
 — 
 % 
 
 — 
 % 

 Fair value of common stock (range for the period)

 $

 8.80 - $ 18.00 

 $

 6.65 - $ 23.44 

 $

 5.16 - $ 6.44 

 Weighted average grant date fair value of options granted

 $ 
 8.68 

 $ 
 5.67 
 
 $ 
 2.62 
 
 9 8

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements

 Each of these inputs is subjective and generally requires significant judgment. 

 Expected Term

 — The expected term represents the period that the stock-based awards are expected to be outstanding. The Company uses the simplified method to calculate the expected term due to insufficient historical experience, which assumes a ratable rate of exercise over the contractual term. 
 Risk-Free Interest Rate

 — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S.
 Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term. 
 Expected Volatility

 — As a result of the lack of historical and implied volatility data of the Company’s common stock prior to the IPO, the expected stock price volatility has been estimated based on the historical volatilities of a specified group of companies in its industry for a period equal to the expected life of the option. The Company selected companies with comparable characteristics to it, including enterprise value, risk profiles, and position within the industry and with historical share price information sufficient to meet the expected term of the stock options. The historical volatility data has been computed using the daily closing prices for the selected companies. 

 Dividend Rate

 — The expected dividend rate is zero as the Company has not declared or paid any cash dividends and does not anticipate to do so in the foreseeable future. 
 Fair Value of Common Stock

 — Prior to the IPO, the fair value of the shares of common stock underlying stock options and RSUs were historically determined by the board of directors as there was no public market for the common stock. The board of directors determined the fair value of the Company’s common stock by considering a number of objective and subjective factors including: the valuation of comparable companies, sales of convertible preferred stock to unrelated third parties, the Company’s operating and financial performance, secondary transactions involving the Company’s common stock, the lack of liquidity of common stock and general and industry specific economic outlook, amongst other factors. 
 A summary of stock option activity under the 20 12
 
Plan, including 1,061,250 stock options that were granted outside of the 20 12
 
Plan in 2019, is 
 presented below (in millions, except share and per share amounts): 

 Number of Shares

 Weighted
 Average
 Exercise
 Price

 Weighted
 Average
 Remaining
 Contract Term

 (in years)

 Aggregate
 Intrinsic
 Value

 Balance as of December 31, 2020

 62,827,150 
 
 $ 
 4.55 
 
 7.8 
 
 $ 
 1,208.0 
 
 Granted

 3,375,940 
 
 13.89 
 
 Exercised

 ( 9,318,462 
 ) 
 
 2.89 
 
 Forfeited

 ( 2,359,089 
 ) 
 
 6.87 
 
 Balance as of December 31, 2021

 54,525,539 
 
 $ 
 5.30 
 
 7.1 

 $ 
 221.3 
 
 Excercisable and vested at December 31, 2021
 
 34,618,347 
 
 $ 
 4.02 
 
 6.3 

 $ 
 176.6 
 
 During the years ended December 31, 2021, 2020 and 2019, the intrinsic value of options exercised was $ 124.1 million, $ 9.8 million and $ 19.1 million, respectively. 

 Stock-based compensation recognized during the years ended December 31, 2021, 2020 and 2019 associated with stock options was $ 46.5 million, $ 31.9 million and $ 35.4 million, respectively. As of December 31, 2021, unrecognized compensation costs totaled $ 113.1 million and are expected to be recognized over a weighted-average period of 3.3 years.

 In June 2020
 , the Company granted 1,620,540 stock options with service, performance and market-based vesting conditions to an executive employee. These conditions include stock price targets to be met after the listing of the Company’s stock on a public exchange. 

 For the year ended December 31, 2021, total compensation costs of $ 1.5 million related to these options was recognized. 
 As of December 31
 , 2021
 , total compensation costs of $ 3.5 

 million related to these options has not yet been recognized.
 The remaining 
 expense
 is 
expected to be satisfied over a period of 3.9 years.

 Early Exercise of Stock Options 

 A majority of the stock options granted under the 2012 Plan provide option holders the right to elect to exercise unvested options in exchange for restricted common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service until the stock options are fully vested at the lesser of the original issuance price or the fair value the Company’s common stock. 

 9 9

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 During the year ended December 31, 2021, 918,590 stock options were early exercised for total proceeds of $ 5.6 million. As of December 31, 2021, 1,068,300 shares of common stock received by holders from an early exercise were subject to repurchase. The cash proceeds received for unvested shares of common stock recorded within Accrued expenses and other current liabilities and Other non-current
 liabilities in the consolidated balance sheet was $ 3.2 million and $ 3.0 million, respectively, as of December 31, 2021. Amounts recorded are transferred into Common stock and Additional paid-in
 capital within the consolidated balance sheets as the shares vest. 

 Restricted Stock Units 

 A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:

 Number of Shares

 Weighted
 Average
 Grant Date
 Fair Value

 Balance as of December 31, 2020 

 32,556,160 
 
 $
 
 6.75 
 
 Granted

 41,969,138 
 
 13.30 
 
 Vested and converted to common stock

 ( 15,779,232 
 
 ) 
 
 10.21 
 
 Forfeited

 ( 4,228,136 
 
 ) 
 
 13.20 
 
 Balance as of December 31, 2021

 54,517,930 
 
 $
 
 10.29 
 
 During the year ended December 31, 2021 ,
 the fair value of restricted stock units that vested and converted to common stock was $ 203.5 million . 

 There were no units vested and converted to common stock during the years ended December 31, 2020 and 2019. During 2021, the Company net settled all RSUs through which it issued an aggregate of

 10,871,486 

 shares of Class A common stock and withheld an aggregate of 
 4,907,746 

 shares of Class A common stock to satisfy $ 62.4 million of tax withholding obligations on behalf of the Company’s employees. 

 As of December 31, 2021, all 
unvested RSUs had total compensation costs of $ 479.4 million not yet recognized and is expected to be recognized over a weighted-average period of 3.2 years.

 For the year ended December 31, 2021, the Company recognized stock-based compensation expense and an associated liability of $ 84.8 million in connection with RSUs earned as a part of the 2021 Agent Equity Program. The associated liability is recorded within Accrued expenses and other current liabilities in the consolidated balance sheet. In February 2022, the Company issued 13,624,457 RSUs to affiliated agents in connection with the 2021 Agent Equity Program. 

 During the years
 ended December 31, 2021 and 2020, the Company granted 8,611,810 and 8,611,810 RSUs, respectively, to an executive employee. These awards
 include service, performance and market-based vesting conditions. These conditions include stock price targets to be met after the listing of the Company’s stock on a public exchange. 
 For the year ended December 31, 2021, total compensation costs of $ 25.0 million related to these awards was recognized.

As of December 31, 2021, total
 compensation costs related to these RSUs of $ 75.2 million has 

 not yet been recognized.

 The remaining expense
 is expected to be satisfied
 over a period of 3.3 years. These awards were valued using a Monte Carlo simulation. 

 Other Stock-Based Awards 

 In July 2018, the Company issued 1,680,340 shares of Class A common stock with a grant date fair value of $ 2.66 per share to an executive employee. These shares are subject to a four-year vesting period in which the employee must continue to provide services to the Company. The fair value of these shares was measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense over the service period of the award. For the years ended December 31, 2021, 2020 and 2019, the Company recognized stock-based compensation expense of $ 1.2 million, $ 1.1 million and $ 1.1 million, respectively, related to this award. 

 For the years ended December 31, 2021, 2020 and 2019, the Company recorded approximately $ 2.2 million, $ 8.0 million and $ 0.6 million, respectively, in compensation expense for stock-based awards outside the 20 12
 
Plan. For the year ended December 31, 2020, $ 8.0 million of these expenses related to compensation expenses incurred in connection with the sale of shares to investors by certain Company employees and non-employee service
 providers in excess of the fair value of the shares sold. There were no expenses incurred in connection with the sale of shares to investors by certain Company employees and non-employee
 service providers in excess of the fair value of shares for the years

 ended December 31, 
 2021 and 

 2019. 
 
 100

 Table of Contents 
 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 Stock-Based Compensation Expense
 
 Total stock-based compensation expense included in the consolidated statement of operations is as follows (in millions): 

 Year Ended December 31,

 2021

 2020

 2019

 Commissions and other related expense

 $ 
 128.7 
 
 $ 
 5.7 
 
 $ 
 16.1 
 
 Sales and marketing

 38.4 
 
 16.0 
 
 11.1 
 
 Operations and support

 16.9 
 
 3.5 
 
 2.4 
 
 Research and development

 92.7 
 
 1.4 
 
 2.8 
 
 General and administrative

 109.6 
 
 16.6 
 
 5.0 
 
 Total stock-based compensation expense

 $ 
 
 386.3 
 
 $ 
 
 43.2 
 
 $ 
 
 37.4 
 
 The increase in stock-based compensation expense in 2021 as compared to 2020 and 2019 was almost entirely the result of the required accounting treatment for RSUs which differed before and after the March 31, 2021 effective date of the Company’s IPO. The RSUs outstanding prior to the IPO contained a liquidity-event based vesting condition, in addition to a time-based vesting condition. The liquidity-event based vesting condition did not allow for the recognition of stock based-compensation expense until this condition was satisfied at the time of the IPO. The Company recognized a one-time
 acceleration of stock-based compensation expense of $ 148.5 million in connection with the IPO when this liquidity-event based vesting condition was satisfied on March 31, 2021 and recognized additional stock-based compensation expense subsequent to the IPO over the periods that the time-based vesting conditions are satisfied.
 Stock-based compensation expense for the year ended December 31, 2021 includes the following amounts related to a one-time
 acceleration of stock-based compensation expense in connection with the IPO (in millions): 

 IPO Related
Expense

 Commissions and other related expense

 $ 
 41.7 
 
 Sales and marketing

 1.8 
 
 Operations and support

 3.1 
 
 Research and development

 46.9 
 
 General and administrative

 55.0 
 
 Total stock-based compensation expense

 $ 
 148.5 
 
 The Company has not recognized any tax benefits from stock-based compensation as a result of the full valuation allowance maintained on its deferred tax assets.

 14. Income Taxes 

 The Company’s loss before income taxes consisted of (in millions): 

 Year Ended December 31,

 2021

 2020

 2019

 United States

 $ 
 ( 496.5 

 )
 
 $ 
 ( 272.4 
 ) 
 
 $ 
 ( 388.9 
 ) 

 International

 ( 0.1 

 )
 
 0.5 
 
 — 
 
 Total

 $ 
 ( 496.6 

 )
 
 $ 
 
 ( 271.9 
 ) 
 
 $ 
 
 ( 388.9 
 ) 

 For the year ended December 31

 , 2021, the loss before income
 taxes of $ 496.6 million includes $ 1.3 

 million of losses from the Company’s equity investment in OriginPoint. The OriginPoint business operates in the United States.

 10 1

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The components of the Company’s income tax benefit (provision) consisted of (in millions): 

 Year Ended December 31,

 2021

 2020

 2019

 Current:

 Federal

 $ 
 — 

 $ 
 0.8 
 
 $ 
 — 
 
 State

 — 

 — 
 
 — 
 
 Foreign

 ( 1.2 

 )
 
 ( 0.2 
 ) 
 
 — 
 
 Total current

 ( 1.2 

 )
 
 0.6 
 
 — 
 
 Deferred:

 Federal

 2.1 

 0.3 
 
 1.0 
 
 State

 0.4 

 0.6 
 
 ( 0.1 
 ) 

 Foreign

 1.2 

 0.2 
 
 — 
 
 Total deferred

 3.7 

 1.1 
 
 0.9 
 
 Total benefit from income taxes

 $ 
 2.5 

 $ 
 1.7 
 
 $ 
 
 0.9 
 
 The Company had an income tax benefit for
 the years ended December 31, 2021, 2020 and 2019, 
 resulting
 from a partial reduction in the valuation allowance related to the carryover tax basis in deferred tax liabilities from acquisitions and current taxes in India that is 
fully offset with future AMT tax credits. 

 The effective income tax rate differed from the statutory federal income tax 

 rate as follows: 

 Year Ended December 31,

 2021

 2020

 2019

 Tax at federal statutory rate

 21.0 
 % 
 
 21.0 
 % 
 
 21.0 
 % 

 State taxes, net of federal effect

 8.8 
 % 
 
 4.0 
 % 
 
 7.7 
 % 

 Change in valuation allowance

 ( 34.2 
 ) %
 
 ( 23.4 
 )% 
 
 ( 28.6 
 )% 

 Stock-based compensation
 
 7.9 
 % 
 
 0.0 
 % 
 
 0.8 
 % 

 Non-deductible executive compensation
 
 ( 2.8 
 )% 
 
 0.0 
 % 
 
 0.0 
 % 

 Non-deductible
 expenses
 
 0.1 
 % 
 
 ( 2.1 
 )% 
 
 ( 0.6 
 )% 

 Other

 ( 0.3 
 ) %
 
 1.1 
 % 
 
 ( 0.1 
 )% 

 Benefit from
 income taxes

 0.5 
 % 
 
 0.6 
 % 
 
 0.2 
 % 

 The components of net deferred taxes arising from temporary differences were as follows (in millions): 

 December 31,

 2021

 2020

 Deferred tax assets:

 Nondeductible accruals

 $ 
 15.0 

 $ 
 7.8 
 
 Stock-based compensation

 66.7 

 20.0 
 
 Lease liabilities

 157.9 

 144.6 
 
 Net operating loss carryforward

 331.1 

 240.4 
 
 Allowance for credit losses

 7.2 

 7.3 
 
 Accrued compensation

 32.5 

 18.6 
 
 Other

 3.4 

 1.4 
 
 Total deferred tax assets

 613.8 

 440.1 
 
 Deferred tax liabilities:

 Operating lease right-of-use

 assets
 
 ( 132.8 

 ) 

 ( 119.9 
 ) 

 Intangible assets
 
 ( 1.7 

 ) 

 ( 6.1 
 ) 

 Property and equipment

 ( 29.5 

 ) 

 ( 26.4 
 ) 

 Total deferred tax liabilities

 ( 164.0 

 ) 

 ( 152.4 
 ) 

 Less: valuation allowance

 (4 48
.4 
 )

 ( 287.5 
 ) 

 Net deferred tax assets

 $ 
 1.4 
 
 $ 
 0.2 
 
 10 2

 Table of Contents 

 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The Company is subject to income taxes in the United States and India. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating losses and tax credit carryforwards. 

 As of December 31, 2021 and 2020, the Company’s deferred tax assets were primarily the result of U.S. federal and state net operating losses, operating lease obligations, stock-based compensation and compensation and other expense related accruals. A full valuation allowance was maintained against its U.S. gross deferred tax asset balances as of December 31, 2021 and 2020. As of each reporting date, the Company considers new evidence, both positive and negative, that could impact the Company’s view with regard to future realization of deferred tax assets. As of December 31, 2021 and 2020, the Company continued to maintain that the realization of its deferred tax assets has not achieved a more-likely-than-not threshold
 primarily due to the evidence that the Company continued to maintain three-year cumulative pre-tax book
 losses. As of December 31, 2021, the valuation allowance was in the amount of approximately 
 $ 448.4 million, an increase of $ 160.9 million from December 31, 2020, which includes the impact of acquisition activity. 

 As of December 31, 2021 and 2020, the Company had approximately $ 1.2 
 billion

 and $ 882.5 million of gross federal net operating losses, respectively. Of those amounts, $ 151.7 million will begin to expire in 2032 and 
 $ 1 billion

 have an unlimited carryforward with utilization limited at 80 % of taxable income. Such amounts may be subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, as a result of various ownership change rules. 

 As of December 31, 2021 and 2020, the Company had approximately $ 1.2 
 billion

 and $ 870.7 million of state net operating losses, respectively, that will begin to expire in 2029. 

 The Company had

 no uncertain tax positions as of
 
December 31, 2021, 2020 and 2019

 . The Company does not anticipate a significant increase or decrease in the uncertain tax positions in the next twelve months after the reporting period. It is the Company’s policy to record interest and penalties related to uncertain tax positions as a component of the provision for income taxes. No amounts of interest or penalties were recognized in the consolidated financial statements for the years ended December 31, 2021, 2020 and 2019. 

 The Company has obtained an income tax holiday in India ,
 which expires in 2024 . This incentive is conditional on meeting certain direct investment thresholds. If the Company fails to satisfy the conditions, the Company may be required to refund previously realized benefits. The Company does not expect these amounts to be material to the Company’s consolidated financial statements. 

 The number of years with open tax audits varies depending upon the tax jurisdiction. The Company is generally no longer subject to 
 U.S. federal 

 examination by the Internal Revenue Service (“IRS”) for years before 201 5
. 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. Compass Concierge Receivables and Allowance for Credit Losses 

 In 2018, the Company launched the Compass Concierge Program for home sellers who have engaged Compass as their exclusive listing agent. The initial program is based on a services model (“Concierge Classic”) provided by Compass Concierge, LLC (“Compass Concierge”), which includes items such as consultation on suggested cosmetic updates or modifications to a specific property or guidance on securing licensed contractors or vendors to perform non-structural property
 improvements. The Concierge Classic program provides for the payment of the up-front costs
 of specified home improvement services provided by unrelated vendors. 

 In 2019, the Compass Concierge Program was expanded to include a loan program underwritten by an independent third-party lender (the “Lender”) through a commercial arrangement with Compass Concierge (“Concierge Capital”). Under the Concierge Capital program, the Lender originates and services unsecured consumer loans to home sellers following its independent underwriting process pursuant to program-level criteria provided by the Company. Pursuant to the Company’s agreement with the Lender, the consumer loans are unsecured, interest-free and have no associated fees except for late fees that the Lender may charge in its sole discretion. The Company has no right or obligation with respect to any individual consumer loan originated by the Lender. Under the agreement, the Company has repayment rights against the Lender in connection with a corporate loan. 

 Payment to Compass Concierge for these services under the Concierge Classic model or repayment of the loan funds under the Concierge Capital model is due upon the earlier of a successful home sale, the termination of the listing agreement or one year from the date in which costs were originally funded. Compass Concierge receivables (“Concierge Receivables”) are stated at the amount advanced to the home sellers, net of an estimated ACL in the accompanying consolidated balance sheet. For the years ended December 31, 2021 and 2020, the Company did not recognize any revenue or earn any fees from the Compass Concierge Program. The Company incurs service fees payable to the Lender and incurs bad debt expense in connection with the Compass Concierge Program. 

 10 3

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The Company manages its credit risk by establishing a comprehensive credit policy for the approval of new loans, while monitoring and reviewing the performance of its existing Concierge Receivables. Factors considered include but not limited to: 

 •
 
 No negative liens or judgements on the property; 

 •
 
 Seller’s available equity on the property; 

 •
 
 Loan to listing price ratio; 

 •
 
 FICO score (only for Concierge Capital program); and 

 •
 
 Macroeconomic conditions. 

 Credit Quality 

 The Company monitors credit quality by evaluating various attributes and utilizes such information in its evaluation of the appropriateness of the ACL. Based on the Company’s experience, the key credit quality indicator is whether the underlying properties associated with the Concierge Receivables will be sold or not. Concierge Receivables associated with properties that are eventually sold have a lower credit risk than those that are associated with properties that are not sold. As of December 31, 2021 and 2020, the amount of outstanding Concierge Receivables related to unsold properties was approximately 96 % and 93 %, respectively. For Concierge Receivables where repayments have not been triggered (i.e., earlier of (i) sale of the property, (ii) termination of a listing agreement or (iii) 12 months from the date costs were originally funded), the Company establishes an estimate as to the percentage of underlying properties that will be sold based on historical data. This estimate is updated as of the end of each reporting period. 

 Allowance for Credit Losses 

 The Company maintains an ACL for the expected credit losses over the contractual life of the Concierge Receivables. The amount of ACL is based on ongoing, quarterly assessments performed by management. Historical loss experience is generally the starting point when the Company estimates the expected credit losses. The Company then considers whether (i) current conditions, such as the impact of COVID-19 and
 related economic uncertainty surrounding the pandemic, (ii) future economic conditions and (iii) any potential changes in the Compass Concierge Program that are reasonable and supportable would impact its ACL. The following table summarizes the activity of the ACL for Concierge Receivables as of December 31, 2021 and 2020 (in millions): 

 December 31,

 2021

 2020

 Opening balance

 $
 
 17.2 
 
 $
 
 4.7 
 
 Adoption of ASU 2016-03

 — 
 
 5.6 
 
 Allowances

 7.2 
 
 9.1 
 
 Net write-offs and other

 ( 7.1 
 
 ) 
 
 ( 2.2 
 
 ) 
 
 Closing balance

 $
 
 17.3 
 
 $
 
 17.2 
 
 Aging Status 

 The Company generally considers Concierge Receivables to be past due after being outstanding for over 30 days after the initial billing. Changes in the Company’s estimate to the ACL is recorded through bad debt expense as Sales and marketing expense in the consolidated statements of operations and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. The following tables present the aging analysis of Concierge Receivables as of December 31, 2021 and 2020 (in millions): 

 31-90 days

 Over 90 days

 Total Past Due

 Current

 Total

 December 31, 2021

 $
 
 0.9 
 
 $
 
 8.3 
 
 $
 
 9.2 
 
 $
 
 41.0 
 
 $
 
 50.2 
 
 December 31, 2020

 $
 
 5.5 
 
 $
 
 10.8 
 
 $
 
 16.3 
 
 $
 
 50.4 
 
 $
 
 66.7 
 
 16. Net Loss Per Share Attributable to Common Stockholders 

 The Company computes net loss per share under the two-class
 method required for multiple classes of common stock and participating securities (convertible preferred stock). 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 loss per share attributable to common stockholders will be the same for Class A common stock, Class B common stock and Class C common stock on an individual or combined basis.

 10 4

 Table of Contents 
 Compass, Inc. 

 Notes to Consolidated Financial Statements 

 The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in millions, except share and per share amounts): 

 Year Ended December 31,

 2021

 2020

 2019

 Numerator:

 Net loss attributable to common stockholders

 $ 
 ( 494.1 
 ) 
 
 $ 
 ( 270.2 
 ) 
 
 $ 
 ( 388.0 
 ) 

 Denominator:

 Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
 
 326,336,128 
 
 109,954,760 
 
 106,529,880 
 
 Net loss per share attributable to common stockholders, basic and diluted

 $ 
 ( 1.51 
 ) 
 
 $ 
 ( 2.46 
 ) 
 
 $ 
 ( 3.64 
 ) 

 The following participating securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis):
 
 Year Ended December 31,

 2021

 2020

 2019

 Convertible preferred stock

 — 
 
 238,954,050 
 
 248,271,850 
 
 Outstanding stock options

 54,525,539 
 
 62,827,150 
 
 43,776,850 
 
 Outstanding RSUs

 54,517,930 
 
 32,556,160 
 
 5,297,200 
 
 Unvested early exercised options

 1,068,300 
 
 1,075,710 
 
 — 
 
 Unvested common stock

 391,092 
 
 640,320 
 
 1,097,880 
 
 Total

 110,502,861 
 
 336,053,390 
 
 298,443,780 
 
 1 7
. Restructuring Activities and COVID-19 Update

 Beginning in March 2020, the onset of the COVID-19
 pandemic resulted in a negative impact on the Company’s business in the second quarter of 2020 due to shelter-in-place

 and stay-at-home

 restrictions (in certain of the Company’s markets) which prohibited or reduced in-person
 residential real estate showings and the related impact on customer demand and housing inventory, as well as deteriorating economic conditions, such as increased unemployment rates. In light of the uncertain and rapidly evolving situation relating to COVID-19,
 the Company took a range of measures to address the uncertainties related to the COVID-19
 pandemic including, but not limited to, reducing the size of its workforce, terminating certain lease obligations and reducing certain discretionary expenses during the first half of 2020. As a result of these cost-saving measures, the Company reduced its workforce by approximately 15 %. Although the demand in the Company’s services had recovered starting in the second half of 2020, the duration of the pandemic and any impacts on consumer behavior are unknown, and the amount of that demand which will persist after the reversal of the stay-at-home

 orders is unknown. Additionally, the pandemic’s impacts on the overall economy and credit markets could significantly impact the Company’s estimates of fair value, which could affect the carrying amount of certain assets and liabilities. As of December 31, 2021, the impacts of the pandemic have not significantly impacted the carrying amount of the Company’s assets and liabilities. 

 The expenses resulting from these cost-saving measures were included in the consolidated statement of operations for the year ended December 31, 2020, as follows (in millions): 

 December 31, 2020

 Severance

 Lease
 Termination

 Total

 Sales and marketing

 $ 
 1.5 
 
 $ 
 4.3 
 
 $ 
 5.8 
 
 Operations and support

 2.9 
 
 — 
 
 2.9 
 
 Research and development

 0.7 
 
 — 
 
 0.7 
 
 General and administrative

 0.9 
 
 — 
 
 0.9 
 
 Total

 $ 
 6.0 
 
 $ 
 4.3 
 
 $ 
 10.3 
 
 During the year ended December 31, 2019, the Company incurred $ 1.7 million in facility-related costs associated with the early termination of certain of the Company’s office leases in Sales and marketing in the accompanying consolidated statement of operations. 

 The Company did not recognize any restructuring expenses during the year ended December 31, 2021. As of December 31, 2021 and 2020, the Company did no t have any material remaining liabilities related to restructuring costs. 

 10 5

 Table of Contents 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 

 None.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Compass, Inc. 10-K

Item 8. Financial Statements and Supplementary Data
