What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-02-28 · 110 added, 119 removed, 197 unchanged (54% of the section changed)

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Our Business and Business Model

We are a technology-enabled brokerage that provides an end-to-end

platform of software, services, and support to empower our residential real estate agents to deliver exceptional service to seller and buyer clients.

Real estate agents are themselves business owners, and Compass agents grow their respective businesses faster than the industry, save time and reduce their business expenses, enhancing their profits over time.

Our 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 and enabling our core brokerage services.

We are a technology-enabled brokerage that provides an end-to-end platform of software, services, and support to empower our residential real estate agents to deliver exceptional service to seller and buyer clients.

Real estate agents are themselves business owners, and Compass agents utilize the platform to grow their respective businesses, save time and manage their businesses more effectively.

Our platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service, brokerage services and other critical functionalities, all custom-built for the real estate industry and enabling our 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.

Our business model is directly aligned with the success of our agents.

We attract agents to our brokerage and partner with them as independent contractors who affiliate their real estate licenses with us, operating their businesses on our platform and under our brand.

We currently generate substantially all of our revenue from commissions paid to us by agents’ clients once a home transaction is completed on our platform, which agents use to assist home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, such as title, escrow and mortgage.

While adjacent services comprise a small portion of our revenue to date, we are well-positioned to capture meaningful revenue from adjacent services as we continue to expand and diversify our offerings within the real estate ecosystem.

We attract agents to our brokerage and partner with them as independent contractors that affiliate their real estate licenses with us, operating their businesses on our platform and under our brand.

We currently generate substantially all of our revenue from commissions paid to us by our agents' clients at the time that a home is transacted on our platform, which agents use to assist home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, such as title, escrow and mortgage.

While adjacent services comprise a small portion of our revenue to date, we are well-positioned to capture meaningful revenue from adjacent services as we continue to diversify our offerings within the real estate ecosystem.

Through 2022, Compass agents have represented either sellers or buyers in more than 700,000 Total Transactions, totaling more than $780 billion in Gross Transaction Value.

With 5.6% (1)

With 4.6% 1 of the U.S.

market share in 2022, up from 4.5% in 2021, Compass remains the largest independent real estate brokerage by Gross Transaction Value.

In our top three MLS Cities by sales volume, our market share was approximately 27% as of December 31, 2021.

Of the large cities we serve that have a multiple listing service ("MLS Cities"), our market share in our top three MLS Cities by sales volume was approximately 28% as of December 31, 2022.

For the ten MLS Cities launched in 2018, our average market share has grown to approximately 12% as of December 31, 2022.

We believe there remains significant opportunity for us to grow our transactions by continuing to add agents to our platform, and grow their respective market shares.

For the definitions of Average Number of Principal Agents, Total Transactions and Gross Transactions Value, please refer to the section entitled “Key Business Metrics” included elsewhere in this Annual Report.

We believe there remains significant opportunity for us to grow our transactions by continuing to add agents to our platform and for our agents to grow their respective market shares even as we reduce our new agent recruiting incentives to zero.

For the definitions of Average Number of Principal Agents, Total Transactions and Gross Transaction Value, please refer to the section entitled “Key Business Metrics” included elsewhere in this Annual Report.

Our agent-first strategy and differentiated platform have delivered strong results for Compass agents and their clients in 2022:

our principal agents have grown their transaction count 2.7x faster than the average agent;

• our principal agents transact more than the average agent at 7.5 transactions per average principal agent versus the industry transactions per agent of 6.4;

• our principal agent retention rate continued to exceed 90% in 2022;

• our agents are strong advocates, giving Compass a Net Promoter Score of 65.5.

We calculate our TTM market share by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S.

existing home sales as reported by NAR.

1 We calculate our national market share by dividing our Gross Transaction Value, or the total dollar value of transactions closed by agents on our platform, by two times (to account for the sell-side and buy-side of each transaction) the aggregate dollar value of U.S.

existing home sales as reported by the NAR.

Additionally, higher usage of our platform contributed to enhanced agent economics, productivity and retention.

A cohort study of platform usage among our agents (2)

found that in 2021 the top 25% of agent teams who used the platform most:

A cohort study of platform usage among our agents 2 found that in 2022, the top 25% of agent teams who used the platform the most:

• represented 63% of all Compass transactions;

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• retained principal agents at an annual rate of 99% versus 91% for the bottom 25% of agent teams;

used the platform consistently – top multi-agent teams spent an average of 4 hours per day (assuming a five day work week) using the tools while single-agent teams used the platform more than 2 hours per day.

• used the platform consistently – top multi-agent teams spent an average of 4 hours and 18 minutes per day (assuming a five day work week) using the tools while single-agent teams used the platform more than 2 hours and 16 minutes per day.

Residential real estate is one of the largest industries in the world.

According to the National Association of Realtors (“NAR”), in 2021, 6.12 million homes were sold in the U.S., which is 12.8% higher than the average number of homes sold in 2015-2020.

According to NAR, in 2022, 5.03 million homes were sold in the U.S., which is 9% lower than the average number of homes sold per year in 2015 to 2021.

Housing is the single largest consumer expenditure in the U.S., and homes are often a substantial source of household wealth.

Selling and buying a home is one of the most significant financial events in an individual’s life and often one of the most complex, time consuming, and consequential.

Selling and buying a home is one of the most significant, and often one of the most complex, time consuming, and consequential financial events in an individual’s life.

Given the unique nature of each property, location, buyer, seller, negotiation, title and financing, a real estate agent’s role as the driver of the majority of the workflow is indispensable.

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Real estate agents are CEOs of their businesses, positioned at the center of a highly-specialized, multi-party workflow which involves complexity generally unseen by the buyer or seller.

Agents serve as the liaison between the client, the counterparty and many other stakeholders related to the transaction.

In addition to serving their clients directly, agents recommend, as appropriate, adjacent service providers from pre-sale to

Real estate agents are also at the center of a broad array of industries, including home construction, real estate brokerage, mortgage lending, title insurance and other adjacent services that drive a massive amount of economic spend – NAR estimates that the median residential real estate transaction leads to roughly $93,800 of economic impact.

Agents serve as the liaison among the client, the counterparty and many other stakeholders related to the transaction.

In addition to serving their clients directly, agents recommend, as appropriate, adjacent service providers from pre-sale to post-close.

Real estate agents are also at the center of a broad array of industries, including residential construction, real estate brokerage, mortgage lending, title insurance and other adjacent services that drive a massive amount of economic spend – NAR estimates that the average residential real estate transaction leads to roughly $503,100 of economic impact.

As the CEOs of businesses at the center of a massive ecosystem with a multitude of stakeholders, agents have a unique position of influence and enable a large market opportunity.

We believe the best agents are dynamic business owners, responsible for every function from attracting and retaining clients to managing finance and operations.

We believe the best agents are dynamic business owners, responsible for every function from attracting and retaining clients to managing finances and operations.

We believe these entrepreneurs are needlessly constrained by a plethora of disconnected technology solutions, manual processes and antiquated systems.

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These inefficiencies not only frustrate agents, but also limit their ability to effectively serve clients.

The data in this analysis represents teams accounting for approximately 75% of total company transactions in 2021.

The remaining quarter of transactions were excluded from the analysis because data was incomplete or unavailable, in part due to teams who came to us via acquisitions.

When measuring gross commission income growth, the analysis required that teams had been with Compass for at least 24 months in order to have a complete data set.

We believe that real estate agents are an underserved group of business owners, and by providing them with a seamless, end-to-end platform,

we can unlock enormous untapped economic potential.

We believe that real estate agents are an underserved group of business owners, and by providing them with a seamless, end-to-end platform, we can unlock enormous untapped economic potential.

2 The data in this analysis represents agent teams accounting for approximately 85% of total company transactions in 2022.

The remaining 15% of transactions were excluded from the analysis because data was incomplete or unavailable, in part due to agent teams who came to us via acquisitions within 24 months prior to December 31, 2022.

When measuring gross commission income growth, the analysis required that agent teams had been with Compass for at least 24 months in order to have a complete data set.

We have built an integrated software platform that helps agents operate with the sophisticated capabilities of a modern technology company and the personal attention and service of a dedicated advisor.

Using proprietary data, analytics, artificial intelligence and machine learning, our platform delivers a broad set of industry-specific capabilities for Compass agents and their clients.

Additionally, certain of our Glide tools, which include completion of various real estate forms, offer preparation as well as eSignature and collaboration capabilities, are offered to non-Compass

agents and their clients.

Additionally, certain of our Glide tools, which include completion of various real estate forms and offer preparation as well as eSignature and collaboration capabilities, are offered to non-Compass agents and their clients.

We are simplifying today’s complex, paper-driven, antiquated workflow to empower real estate agents to deliver an exceptional experience to every buyer and seller.

Our platform is tailored to the real estate industry and combines integrated software with, in certain markets, value-added services, such as title and escrow and mortgage origination.

We design our platform for simplicity and flexibility.

Given a significant amount of an agent’s time is spent away from their desk, our powerful iOS and Android mobile apps allow agents to take advantage of the full functionality of our platform, no matter where they are.

We designed our platform for simplicity and flexibility.

Given a significant amount of an agent’s time is spent away from their desk, our powerful iOS and Android mobile apps allow agents to take advantage of our platform, no matter where they are.

The efficiencies that agents gain from adoption of our technology give them the opportunity to spend more time with clients.

With beautifully designed, consumer-grade user interfaces and an integrated set of workflows backed by powerful AI-driven analytics

and insights, Compass provides our agents with a combination of ease-of-use and

comprehensive, enterprise-grade software.

With beautifully designed, consumer-grade user interfaces and an integrated set of workflows backed by powerful AI-driven analytics and insights, we provide our agents with a combination of ease-of-use and comprehensive, enterprise-grade software.

This type of integrated platform, at scale, is unique in the real estate industry.

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Our engineering development uses modern agile practices such as continuous integration and continuous delivery ("CI/CD").

We prioritize security and have detective, preventive, and automated corrective controls for network and web traffic, infrastructure auditing, software analysis, phishing prevention, email security gateway, secure remote gateways, software static code analysis, secure configuration management, and user access controls including two-factor authentication and endpoint management.

We continuously innovate and enhance our software platform with the goal of digitizing and automating all real estate workflows that empower agents to acquire and serve their clients.

In 2021, we launched 16 major products and over 100 major feature updates to existing products.

We have made, and plan to continue to make significant investments in research and development to improve and maintain our platform and to support our technology infrastructure.

We have also broadened our usage of user access controls, including two-factor authentication and endpoint management, to reduce the risk of security incidents.

We continue to innovate and enhance our software platform with the goal of digitizing and automating all real estate workflows that empower agents to acquire and serve their clients.

In 2022, we launched a series of new features across our agents’ workflow, including the ability to take a transaction from contract to payment via forms, offers, and e-signature functionality.

We have made significant investments in research and development to improve and maintain our platform and to support our technology infrastructure.

As we look forward, we will continue to scale our technological innovation through the lens of cash flow positivity.

See section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Comparison of the Years Ended December 31, 2022 and 2021 – Operating Expenses – Research and Development” for more information.

The caliber and pedigree of our technology leadership helps us attract and retain top-tier software

engineers and artificial intelligence talent globally.

We have a team of over 1,500 highly experienced product and engineering professionals based out of our innovation hubs in New York, Seattle, Washington, D.C.

and several cities in India, as well as other locations throughout the U.S.

The caliber and pedigree of our technology leadership helps us attract and retain top-tier technology talent globally.

We have a team of highly experienced product and engineering professionals based out of our innovation hubs in New York and Seattle, as well as other locations throughout the U.S.

and internationally.

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Through our Marketing Center, agents can market their own personal brands by creating marketing collateral – digital ads, videos, listing presentations, email newsletters, print advertising and signage – as well as execute marketing campaigns, with mere minutes of effort.

Our agents designed over a million different pieces of marketing content through our platform in 2021.

Our agents designed over two million different pieces of marketing content through our platform in 2022.

Advising Sellers

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We believe we provide agents with the solutions and data they need to effectively list and market properties and run the sale process more efficiently utilizing our tools.

For example, Compass Concierge is designed to increase the sale value of the home and decrease the time on market.

For example, Compass Concierge, which provides home sellers access to interest-free capital to front the cost of home improvement services, is designed to increase the sale value of the home and decrease the time on market.

Marketing Center provides agents a powerful suite of tools they can use to easily create tailored marketing materials and execute marketing campaigns for any listing, seamlessly connecting to a multimedia repository containing a listing description, photos and floorplan, across digital, social, email, video and print channels, helping them attract buyers.

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Our agents provide clients with access to comprehensive inventory, including private listings, help them understand local market dynamics, tour properties, prepare and close offers, and better manage the overall home buying process.

With Compass Collections, a curated visual workspace, Compass agents and clients can easily find and organize homes of interest and then tag and discuss specific properties through an integrated chat feature.

With Compass Collections, a curated visual workspace, Compass agents and their clients can easily find and organize homes of interest and then tag and discuss specific properties through an integrated chat feature.

With near real-time search alerts and notifications, clients can monitor new listings and gain an edge in securing properties of interest.

Once properties of interest are identified, our solutions enable agents to conduct virtual and in-person tours

Once properties of interest are identified, our solutions enable agents to conduct virtual and in-person tours for clients.

Using our CMA, agents can better understand the pricing dynamics of specific markets, neighborhoods and home features, ultimately providing informed advice regarding potential offers.

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Given the high percentage of repeat and referral business done by our agents, their future transaction pipeline exists within their sphere of influence.

The Compass CRM provides agents with an easy-to-use

interface that is both powerful and automated, enabling agents to cultivate their sphere, nurture and grow relationships and close more sales.

Our CRM leverages artificial intelligence to provide recommendations and insights, and integrates with other parts of our platform such as Marketing Center to create engaging content.

Our CRM provides agents with an easy-to-use interface that is both powerful and automated, enabling agents to cultivate their sphere, nurture and grow relationships and close more sales.

It also leverages artificial intelligence to provide recommendations and insights, and integrates with other parts of our platform such as Marketing Center to create engaging content.

• Business Tracker.

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• Marketing Content Creation and Management.

With a broad array of integrated features, elegant templates and design capabilities, our Marketing Center allows agents to rapidly create, advertise and promote their listings at scale through the channel of their choosing:

With a broad array of integrated features, elegant templates and design capabilities, our Marketing Center allows agents to rapidly create, advertise and

promote their listings at scale through the channel of their choosing:

digital, social, email, video, print or signage.

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Pricing a home is a complex and nuanced exercise.

Powered by AI, our CMA enhances our agents’ market expertise by making recommendations and synthesizing complex data so Compass agents can help clients build the optimal pricing strategy for their home based on comparable properties.

Client Prospecting Recommendations.

Our AI technology recommends specific clients in an agent’s contact database that are more likely to sell their home, based on various data points like neighborhood sales trends, length of ownership, local market appreciation, and other information.

Listing Video Creation.

Powered by AI, our CMA enhances our agents’ market expertise by making recommendations and synthesizing complex data so Compass agents can help their clients build the optimal pricing strategy for their homes based on comparable properties.

• AI-Driven Client Prospecting Recommendations.

• One-Click Listing Video Creation.

Video Generator allows agents to create short, customized, professional videos with added music and text using existing listing photos in seconds simply by entering an address that can be shared on the listing page or social media.

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• Listing Search and Saved Search Notifications.

Our proprietary search algorithm and database simplifies and enhances the ability for Compass agents to find homes best suited for clients’ needs.

Agents can set up very precise saved search alerts for clients to notify them of new listings that match their criteria in near real-time in the mobile app and in email.

Our proprietary search algorithm and database simplifies and enhances the ability for Compass agents to find homes best suited for their clients’ needs.

Agents can set up very precise saved search alerts for their clients to notify them of new listings that match their criteria in near real-time in the mobile app and in email.

• Agent-Client Collaborative Home Search.

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• Virtual Tours.

The platform’s easy-to-use virtual

tour feature combines home photo and video assets alongside a large multimedia repository to help agents conduct tours online.

Renovation Visualization.

The platform’s easy-to-use virtual tour feature combines home photo and video assets alongside a large multimedia repository to help agents conduct tours online.

• AI-Driven Renovation Visualization.

Agents often help advise sellers on renovations and other preparations for their home to ensure the best market price.

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• Open House Management.

The Compass platform provides several resources and mobile app functionality to manage open houses and tours across both in-person and

virtual formats, giving agents the ability to maintain a high level of service and follow up, in addition to growing their sphere of influence.

The Compass platform provides several resources and mobile app functionality to manage open houses and tours across both in-person and virtual formats, giving agents the ability to maintain a high level of service and follow up, in addition to growing their sphere of influence.

• Listing Analytics.

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To nurture our agent talent, our self-service Compass Academy program allows for shared learning from among the highest performing Compass agents.

As Compass agents and clients use the Compass platform to consolidate their activities for buying, selling, marketing and transacting real estate, they demonstrate high engagement with our platform.

As Compass agents and their clients use the Compass platform to consolidate their activities for buying, selling, marketing and transacting real estate, they demonstrate high engagement with our platform.

As we continue to build everything agents need in a single, integrated platform, we believe more great agents will continue to come to Compass.

As more great agents join us, our platform helps them provide great experiences to more buyer and seller clients.

As more great agents join us, we believe our platform will help them provide great experiences to more of their buyer and seller clients.

The ability to create great client experiences drives continued business for agents with repeat and referral clients.

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Beginning in 2020, we expanded our title and escrow offerings to provide our agents’ clients with a more integrated, service-oriented solution and, in 2021, we launched OriginPoint, our residential mortgage origination joint venture with Guaranteed Rate, to provide an integrated service-oriented mortgage offering to our agents’ clients.

In 2021, we acquired all or majority control of four title and escrow companies and as of December 31, 2021, our title and escrow services were available for approximately half of our agents’ transactions.

Additionally, as of December 31, 2021, OriginPoint was fully operational in Illinois and licensed in 11 other states.

In 2022, we acquired a title and escrow company and as of December 31, 2022, our title and escrow services were available for approximately half of our agents’ transactions.

Additionally, OriginPoint is fully operational in 15 states and Washington D.C.

and licensed in 18 other states.

The synergies between these adjacent services and our brokerage business increase transparency and deliver a more integrated closing process for agents and their clients.

Adjacent services represent a $132 billion addressable market in the U.S.

In 2022, we plan to rapidly expand our footprint in the two largest adjacent services markets – title and escrow services and mortgage origination.

Our prior expansion into adjacent services and our future plans reaffirm our commitment to span the full transaction cycle and create more monetization opportunities for our business.

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Title and Escrow Services

Our title, escrow and settlement services businesses provide – through a growing network of escrow and closing agents – full-service title, escrow and settlement (i.e., closing and escrow) services to agents’ clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans, all of which are required in order to close a transaction.

In many markets, clients typically look to their agents to direct them to the highest quality providers of these types of services after the purchase contract is signed.

In 2021, our title, escrow and settlement services businesses were involved in a number of transactions involving our agents and also saw significant business from non-Compass

brokerages, consumers, and outside sources.

We provide title, escrow and settlement services under a multitude of local brands.

Our title and escrow businesses provide – through a growing network of agents – full-service title and escrow/settlement services to real estate agents’ clients, real estate companies, and financial institutions relating to the closing of home purchases as well as the refinancing of home loans.

In many markets, clients typically look to their agents to refer them to the highest quality providers of these types of services after the purchase contract is signed.

In 2022, our title and escrow businesses were involved in a number of transactions involving our agents and also saw significant business from non-Compass brokerages, consumers, and outside sources.

We provide title and escrow/closing services under a multitude of local brands.

As of December 31, 2022, we operated five distinct, regional title agencies:

Modus Title, LLC, KVS Title, LLC, LegacyTexas Title, First Alliance Title CO, and CommonGround Abstract, LLC, as well as one standalone escrow business, Chartwell Escrow, Inc.

These businesses have a combined presence across nine states (Washington, California, Colorado, Florida, Texas, Maryland, Virginia, New Jersey, and Pennsylvania) and Washington, D.C.

In 2022, Compass plans to deepen our presence in our existing markets and further expand our title and escrow services to an additional number of markets.

KVS Title, LLC, LegacyTexas Title Co., First Alliance Title, LLC, CommonGround Abstract, LLC d/b/a SQS Square Settlements and Consumer's Title Company of California, Inc., as well as one standalone escrow business, Chartwell Escrow, Inc.

These businesses have a combined presence across seven states (California, Colorado, Texas, Maryland, Virginia, New Jersey, and Pennsylvania) and Washington, D.C.

In June 2022, we announced the wind-down of Modus Technologies, Inc, a wholly owned title and escrow software company, which was part of a broader plan to improve the alignment between our organizational structure and long-term business strategy, drive cost efficiencies and continue to drive toward profitability and positive free cash flow.

In 2023, we plan to deepen our presence in our existing markets.

Mortgage Joint Venture

In July 2021, we and Guaranteed Rate, which is one of the nation’s largest retail mortgage companies, by and through our respective subsidiaries, formed OriginPoint, a residential mortgage origination company, which commenced operations in Chicago, Illinois in December 2021.

OriginPoint is structured as a non-exclusive

joint venture, where we hold a 49.9% equity interest and certain governance rights related to the joint venture, including representation on the management committee.

OriginPoint originates mortgages for Compass agents’ 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 broader consumer audience.

OriginPoint is structured as a non-exclusive joint venture, where we hold a 49.9% equity interest and certain governance rights related to the joint venture, including representation on the management committee.

OriginPoint originates mortgages for Compass agents’ clients, as well as the clients of any other brokerage, among others, 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 broader consumer audience.

OriginPoint currently offers a growing product suite including:

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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.

As of February 28, 2022, OriginPoint has received license approval in 18 states with many other state applications currently pending.

By the end of 2022, OriginPoint aims to expand into the majority of our major markets.

The warehouse lines maintained by OriginPoint are collateralized by the underlying mortgages available for sale and are non-recourse to Compass.

As of December 31, 2022, OriginPoint has received license approval in 33 states.

Compass Concierge

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Home sellers can access funds to prepare their home for sale through Compass’ partnership with an independent third-party lender.

Through December 31, 2021, we had partnered with our agents and sellers on over 24,100 Compass Concierge projects totaling approximately $680 million with an average project size of $28,200.

In addition, in early 2023, we also initiated pilots with several alternative third-party

service providers to help our agents' clients prepare their homes for listing and sale.

Through December 31, 2022, we had partnered with our agents and sellers on Compass Concierge projects totaling approximately $978 million with an average project size of approximately $29,400.

Compass Concierge homes have accounted for over $42 billion in Gross Transaction Value for Compass.

The program has successfully unlocked incremental transactions for our agents, delivered higher sale prices and reduced selling times for seller clients and also helped us attract high-performing agents to our platform.

Human Capital Disclosure

The program has successfully unlocked incremental transactions for our agents, delivered higher sale prices and reduced selling times for our agents' seller clients and also helped us attract high-performing agents to our platform.

Human Capital Management

At Compass, we believe that our long-term success is based on attracting, developing and retaining a diverse group of employees who espouse our entrepreneurship principles which define our culture:

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Our employees and agents use our principles to help guide their work experience and align with our mission of helping everyone find their place in the world.

As of December 31, 2021, we had 4,775 employees and our product and engineering team consisted of approximately 1,500 highly experienced product and engineering professionals, including contractors, across our innovation hubs in New York, Seattle, Washington, DC and several cities in India as well as other locations through the US and internationally.

None of our employees are represented by a labor organization or are a party to a collective bargaining arrangement.

As of December 31, 2022, we had 3,191 employees across our innovation hubs in New York and Seattle, as well as other locations throughout the U.S.

and internationally.

None of our employees are represented by a labor organization or are party to a collective bargaining arrangement.

We offer market-competitive compensation and benefits to our employees.

We strive to offer a comprehensive benefit package and evaluate and supplement our benefits periodically.

Our benefits package includes base pay, bonus programs for selected roles, long-term equity grants, no-premium health, dental and vision insurance plans, fertility benefits, life and disability insurance benefits, paid time off (including vacation, a community service day, and paid parental leave), as well as other benefits, such as access to mental health resources, ability to participate in a broad-base 401K plan, and reimbursement for gym membership.

Our benefits package includes base pay, bonus programs for selected roles, long-term equity grants, health, dental and vision insurance plans, fertility benefits, life and disability insurance benefits, paid time off (including vacation, a community service day, and paid parental leave), as well as other benefits, such as access to mental health resources, and the ability to participate in a broad-base 401K plan.

The residential real estate and technology industries are highly competitive and fragmented.

We compete to attract and retain top talent across the agent community, engineers, and employees in all other functions in order to build the best real estate transaction platform in fulfilment of our mission.

Our business faces competition nationally and in each of the markets we serve from other technology companies and real estate brokerage firms, including a growing number of internet-based brokerages and others who operate with a variety of business models.

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• providing adjacent products associated with residential real estate transactions, such as title and escrow and mortgage origination.

Some companies may attempt to piece together various aspects of solutions that overlap with our offering, including:

Some companies may attempt to assemble various aspects of solutions that overlap with our offering, including:

• vertical SaaS technology companies;

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Real estate brokerage licensing laws vary widely from state to state.

Generally, all individuals and entities acting as real estate brokers or salespersons must be licensed in each state (including Washington, D.C.) where they operate.

Generally, all individuals and entities acting as real estate brokers or salespersons must be licensed in each state where they operate.

In all states, licensed agents must be affiliated with a broker of record, managing broker, designated broker or similar licensee (a “broker of record”) to engage in licensed real estate brokerage activities.

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Federal Regulation.

Several federal laws and regulations govern the real estate brokerage business, including federal fair housing laws (“FHA”) and the Real Estate Settlement Procedures Act (“RESPA”).

The FHA prohibits discrimination in the purchase or sale of homes and applies to real estate brokers and agents, among others.

The FHA prohibits expressing any preference or discrimination based on race, religion, sex, handicap, and certain other protected characteristics, and applies broadly to many forms of advertising and communications.

RESPA is a federal law intended to provide consumers with improved disclosures of settlement costs and reduce the costs of settlement services.

Several federal laws and regulations govern the real estate brokerage business, including federal Fair Housing Act and the Real Estate Settlement Procedures Act (“RESPA”).

The Fair Housing Act prohibits discrimination in the purchase or sale of homes and applies to real estate brokers and agents, among others.

The Fair Housing Act prohibits expressing any preference or discrimination based on race, religion, sex, disability, and certain other protected characteristics, and applies broadly to many forms of advertising and communications.

RESPA is a federal law intended to provide consumers with improved disclosures of settlement costs and to reduce the costs of settlement services (e.g., real estate brokerage services, mortgage loan origination, title insurance, escrow and closing services, etc.) by eliminating referral fees and kickbacks.

It applies to real estate brokerage services among other real estate settlement services.

See section entitled “ – Regulation of Settlement Services (RESPA and Related State Law)” below for additional details.

See the section entitled “ – Regulation of Settlement Services (RESPA and Related State Law)” below for additional details.

We may also be subject to the American with Disabilities Act.

Other Real Estate Industry Rules.

Aside from federal, state and local regulations, we are subject to a variety of rules promulgated by trade organizations including the NAR, state and local associations of REALTORS, and Multiple Listing Services (“MLSs”).

Generally, as members of these organizations, we are subject to their policies, bylaws, codes of ethics, and fees and rules, which govern our dealings with other members, the public, and clients as well as the manner in which we use and display the organization’s brand and services.

We have a dedicated team that works with a variety of stakeholders, including our brokers of record, to help manage and comply with these rules and policies.

Regulation of Settlement Services (RESPA and Related State Law)

RESPA is a federal law intended to provide consumers with improved disclosures of settlement costs and reduce the costs of settlement services (e.g., real estate brokerage services, mortgage loan origination, title insurance, escrow and closing services, etc.) by eliminating referral fees and kickbacks.

RESPA and other state anti-kickback statutes (state laws limiting or prohibiting cash rebates, gifts and other inducements to referrers of settlement services business and others) serve to regulate the payments which real estate brokers, title companies, mortgage bankers, mortgage brokers and other settlement service providers may receive or make in connection with the sales of residential real property and referral of settlement services business.

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State authorities also have certain RESPA enforcement rights.

RESPA compliance is of significant importance to us and across our affiliated businesses.

Regulation of the Title & Escrow Services Industry

Title insurance and escrow services typically require licensure and are heavily regulated industries, often through a state’s insurance regulator or other regulatory body.

RESPA compliance is of significant importance to us and our affiliated businesses.

Regulation of the Title & Escrow Industry

Title insurance and escrow/closing services typically require licensure and are heavily regulated, often through a state’s insurance regulator or other regulatory body.

In a number of states, insurance rates are either promulgated by the state directly or are required to be filed with each state by the agent or underwriter.

Some states also promulgate the split of title insurance premiums between the agent and underwriter.

As part of the licensing process, states may also require title agencies, escrow companies and title underwriters to meet certain minimum financial requirements for net worth and working capital.

As part of the licensing process, states may also mandate certain minimum financial requirements for net worth and working capital.

In some states, such as Texas, no person may acquire control, directly or indirectly, of a title company unless the person has provided required information to, and the acquisition is approved or not disapproved by, the relevant regulator.

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The mortgage industry is a heavily regulated industry and private mortgage lenders operating in the U.S.

are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which mortgage companies, including our mortgage joint venture, OriginPoint, can operate its loan origination and servicing businesses, the fees such companies may charge, and the collection, use, retention, protection, disclosure, transfer and other processing of personal information.

OriginPoint is required to be licensed in all relevant jurisdictions in which it operates and comply with the respective laws and regulations of each such jurisdiction, as well as with applicable judicial and administrative decisions.

The comprehensive body of federal, state, and local laws that OriginPoint is subject to is continually evolving and developing, including laws on advertising and privacy described in more detail in the section entitled “ – Cybersecurity and Data Privacy Regulations” below.

In addition, OriginPoint must also comply with a number of federal, state and local consumer protection laws including, among others, the Truth in Lending Act (“TILA”), RESPA, the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act (“FCRA”), the FHA, the Gramm-Leach-Bliley Act (“GLBA”), the Electronic Fund Transfer Act, and the Homeowners Protection Act, among others.

Under the Dodd-Frank Act, the CFPB is authorized to engage in rulemaking and examination activity with respect to consumer financial products and services (including mortgage finance) and the authority to enforce compliance with federal consumer financial laws, including TILA and RESPA.

The CFPB has issued a myriad of rules, including TILA-RESPA Integrated Disclosure rules, which impose significant obligations on OriginPoint.

are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which mortgage companies, including our mortgage joint venture, OriginPoint, can operate their loan origination and servicing businesses, the fees such companies may charge, and the collection, use, retention, protection, disclosure, transfer and other processing of personal information.

OriginPoint is required to be licensed in all relevant jurisdictions in which it operates and to comply with the respective laws and regulations of each such jurisdiction, as well as with applicable judicial and administrative decisions.

The comprehensive body of federal, state, and local laws to which OriginPoint is subject is continually evolving and developing, including laws on advertising and privacy described in more detail in the section entitled “ – Cybersecurity and Data Privacy Regulations” below.

In addition, OriginPoint must comply with a number of federal, state and local consumer protection laws including, among others, the Truth in Lending Act (“TILA”), RESPA, the Equal Credit Opportunity Act (“ECOA”), the Fair Credit Reporting Act (“FCRA”), the Fair Housing Act, the Gramm-Leach-Bliley Act (“GLBA”), the Electronic Fund Transfer Act, and the Homeowners Protection Act.

Under the Dodd-Frank Act, the CFPB is authorized to engage in rulemaking and examination activity with respect to consumer financial products and services (including mortgage finance) and to enforce compliance with federal consumer financial laws, including TILA and RESPA.

The CFPB has issued myriad rules, including TILA-RESPA Integrated Disclosure rules, which impose significant obligations on OriginPoint.

Antitrust and Competition Laws

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We (and independent sales agents affiliated with us) are also required to comply with state and local laws related to dual agency (such as where the same brokerage represents both the buyer and seller of a home) and increased regulation of dual agency representation may restrict or reduce the ability of impacted brokerages to participate in certain real estate transactions.

Antitrust litigation has been brought against other brokerages and real estate associations regarding the requirement to offer set buy–side commissions.

If these cases are successful, that could affect the amount of buy-side commissions we are required to offer on listings, and how much we are able to earn on transactions where our agents represent the buyer.

Cybersecurity and Data Privacy Regulations

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As a result, we are subject to increased regulatory scrutiny, additional contractual requirements, and an increase in compliance costs.

Some examples of the regulations we are required to comply with include without limitation, the California Consumer Privacy Act (“CCPA”), soon to be replaced with the California Privacy Rights Act (“CPRA”), which will take effect January 1, 2023, and other similar state regulations, the Gramm-Leach-Bliley Act (“GLBA”), which governs the disclosure and safeguarding of consumer financial information, and the Telephone Consumer Protection Act (“TCPA”), which restricts certain types of telemarketing calls and the use of auto-dialing systems and prerecorded messages and establishes a national Do-Not-Call

Some examples of the regulations we are required to comply with include without limitation, the California Consumer Privacy Act (“CCPA”), amended by the California Privacy Rights Act (“CPRA”), as well as the Virginia Consumer Data Protection Act ("VCDPA"), both of which took effect January 1, 2023, and other similar state regulations, portions of the GLBA, namely the Safeguards rule, which governs the disclosure and safeguarding of consumer financial information, and the Telephone Consumer Protection Act (“TCPA”), which restricts certain types of telemarketing calls and the use of auto-dialing systems and prerecorded messages and establishes a national Do-Not-Call registry.

Environmental Regulation

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Due to this, we are not materially impacted by any environmental regulations.

Other Real Estate Industry Rules.

We have a dedicated team that works with a variety of stakeholders, including our brokers of record, to help manage and comply with these rules and policies.

Intellectual Property

The protection of our technology and intellectual property is an important aspect of our business.

We rely upon a combination of trademarks, trade secrets, copyrights, patents, confidentiality procedures, contractual commitments, domain names, and other legal rights to establish and protect our intellectual property.

We rely upon a combination of trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, licenses, domain names, and other legal rights to establish and protect our intellectual property.

We generally enter into confidentiality agreements and invention or work product assignment agreements with our officers, employees, agents, contractors, and business partners to control access to, and clarify ownership of, our proprietary information.

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Additionally, we are the registered holder of a number of domain names, including “compass.com.”

As of December 31, 2021, we had one U.S.

patent application pending and one patent application pending under the patent cooperation treaty.

We continually review our development efforts to assess the existence and patentability of new intellectual property.

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Available Information

We make available free of charge on our investor relations page on our website ( www.compass.com

), filings we make with the Securities and Exchange Commission, or the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.

The SEC maintains an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically with the SEC.

From time to time, we intend to announce material information to the public also through the investor relations page on our website, press releases, public conference calls, public webcasts, and our Twitter feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s Twitter feed (@RobReffkin) and Robert Reffkin’s Instagram account (@robreffkin).

We make available free of charge on our investor relations page on our website, www.compass.com, filings we make with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our Proxy Statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after electronically filing such materials with, or furnishing them to, the SEC.

The SEC maintains a website, www.sec.gov, that contains reports, proxy and information statements and other information that we file electronically with the SEC.

We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates and other matters.

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Further, corporate governance information, including our governance guidelines, board committee charters and code of ethics, is also available on our investor relations website under the heading “Governance.”

The information contained on, or that can be accessed through, the website referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

The information contained on, or that can be accessed through, the website referenced in this Annual Report is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business