What changed in this filing

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Item 1A. Risk Factors

2025-02-25 compared with 2024-02-28 · 182 added, 163 removed, 467 unchanged (42% of the section changed)

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A description of the risks and uncertainties associated with our business is set forth below.

The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, financial condition and results of operations.

You should carefully consider the risks and uncertainties described below, as well as the other information in this Annual Report, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below, or of additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Our Business and Operations

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insufficient or excessive home inventory levels;

increasing mortgage rates and down payment requirements or constraints on the availability of mortgage financing;

high mortgage rates and down payment requirements or constraints on the availability of mortgage financing;

low levels of consumer confidence in the economy or the residential real estate market;

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instability of financial institutions;

legislative or regulatory changes;

legislative, regulatory or industry changes;

high levels of foreclosure activity;

the inability or unwillingness of consumers to enter into sale transactions;

a decrease in the affordability of homes including the impact of rising mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation;

a decrease in the affordability of homes including the impact of high mortgage rates, home price appreciation and wage stagnation or wage increases that do not keep pace with inflation;

and decreasing home ownership rates, declining demand for real estate and changing social attitudes toward home ownership.

As our revenue is primarily driven by sales commissions and transaction fees, any slowdown or decrease in the total number of residential real estate sale transactions executed by our agents could adversely affect our business, financial condition and results of operations.

Additionally, any decrease in the number of transactions our title and escrow business closes and the number of mortgages OriginPoint originates, could further impact our business, financial condition and results of operations.

As our revenue is primarily driven by sales commissions and transaction fees, any slowdown or decrease in the total number of residential real estate sale transactions executed by agents at our owned-brokerage and our affiliates could adversely affect our business, financial condition and results of operations.

Additionally, any decrease in the number of transactions our title and escrow business closes and the number of mortgages our mortgage business originates, could further impact our business, financial condition and results of operations.

Monetary policies of the federal government and its agencies may have an adverse impact on our business, financial condition and results of operations .

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and impacts the real estate market through its effect on mortgage interest rates.

The Federal Reserve Board took aggressive actions aimed at controlling inflation in 2022 and 2023, including raising the interest rate and reducing its holdings of mortgage-backed securities.

Rising interest rates in 2022 and 2023 have contributed to rising mortgage interest rates, which in turn contributed to a decline in residential real estate home sale transaction volume and inventory constraints.

While the Federal Reserve Board has indicated that it was shifting its policy toward pausing additional interest rate increases and potentially lowering interest rates in 2024 as inflation declines, there is no guarantee that it will not shift its focus back to increasing interest rates or lower interest rate at a speed that we anticipate or at all.

Changes in the Federal Reserve Board’s policies are beyond our control and are difficult to predict and could negatively impact the residential real estate market, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Rising interest rates have contributed to a decline in residential real estate home sale transaction volume and title and escrow and mortgage activity, which has had an adverse effect on our business, financial condition and results of operations.

Rising interest rates have contributed to a decline in residential real estate home sale transaction volume, which has had an adverse effect on our business, financial condition and results of operations.

As mortgage interest rates rise, potential home sellers are more likely to choose to stay with their lower mortgage rate rather than sell their home and pay a higher mortgage interest rate with the purchase of another home, or prefer to rent rather than purchase a home.

Additionally, the overall affordability of homes generally decreases in the high mortgage interest rates environment.

Both of these trends have contributed to inventory constraints and a decline in home sale transaction volume in the recent years.

If inventory constraints remain and home sale transaction volume continues to decline, due to the mortgage interest rates or otherwise, we expect such decline to continue to have an adverse effect on our business, financial condition and results of operations.

A decline in home sale transaction volume also has a negative impact on the title and escrow activities, which could have an adverse effect on our business, financial condition and results of operations.

Rising interest rates have also had an adverse effect on the mortgage origination business of our mortgage joint venture.

As interest rates rise, mortgage interest rates rise as well, reducing demand for purchase mortgages and making refinancing generally a smaller portion of the mortgage loan market.

Reduced demand for purchase mortgages and refinancing generally results in an increase in competition among loan originators, which has, and is likely to continue to have, a negative impact on revenue volume and gross profit margin for our mortgage joint venture.

Ongoing industry antitrust class action litigation (including the Antitrust Lawsuits filed against us) or any related regulatory activities, could result in meaningful industry-wide changes and could have a materially adverse effect on our business, operations, financial condition, and results of operations.

The ongoing industry antitrust class action litigation, as well as the Antitrust Lawsuits filed against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report (including any injunctive relief, appeals or settlements), either alone or in combination with related regulatory or governmental actions, or any resulting changes to competitive dynamics or consumer preferences, could result in meaningful industry-wide changes, including changes to the broker commission structure and meaningful decreases in the average broker commission rate (including the average buy-side commission rate).

The Federal Reserve Board took aggressive actions aimed at controlling inflation in 2022 and 2023, including raising the federal funds rate and reducing its holdings of mortgage-backed securities.

Rising interest rates in 2022 and 2023 contributed to higher mortgage interest rates, which in turn contributed to a decline in residential real estate home sale transaction volume and inventory constraints.

While the Federal Reserve Board shifted its policy in 2024 with three interest rate cuts that altogether shaved a full percentage point off the federal funds rate, the housing market remained under pressure as high mortgage rates and economic volatility continued to shape the landscape.

The Federal Reserve Board’s summary of economic projections suggests even fewer rate cuts in 2025 than in 2024, and it is also possible that the Federal Reserve Board may hold interest rates steady or may even increase rates if inflation persists.

It is also possible that mortgage rates and the long end of the interest rate curve could remain elevated in spite of lower federal funds rates due in part to the high level of treasury securities expected to be issued to fund federal deficits and higher interest rate expenses.

Changes in the Federal Reserve Board’s policies and other macroeconomic factors affecting mortgage rates are beyond our control, difficult to predict, and

could negatively impact the residential real estate market, which in turn could have a material adverse effect on our business, financial condition and results of operations.

High mortgage rates have contributed to a decline in residential real estate home sale transaction volume and title and escrow and mortgage activity, which has had an adverse effect on our business, financial condition and results of operations .

High mortgage rates have contributed to a decline in residential real estate home sale transaction volume, which has had an adverse effect on our business, financial condition and results of operations.

As mortgage rates remain high, potential home sellers are more likely to choose to stay with their lower mortgage rates rather than sell their home and pay a higher mortgage rate with the purchase of another home, or prefer to rent rather than purchase a home.

Additionally, the overall affordability of homes generally decreases in a high mortgage rate environment.

Both of these trends have contributed to inventory constraints and a decline in home sale transaction volume in recent years.

Although inventory has increased recently, affordability and high mortgage rates continue to constrain home sale transaction volume, which we expect to have an adverse effect on our business, financial condition and results of operations.

A decline in home sale transaction volume also has a negative impact on title and escrow activities, which has had and could continue to have an adverse effect on our business, financial condition and results of operations.

High mortgage rates have also had an adverse effect on our mortgage business.

As mortgage rates remain high, reduced demand for purchase mortgages and refinancing generally results in an increase in competition among loan originators, which has had, and is likely to continue to have, a negative impact on revenue volume and gross profit margin for our mortgage business, which in turn has had and could continue to have an adverse effect on our business, financial condition and results of operations.

Ongoing industry antitrust class action litigation (including the Antitrust Lawsuits filed against us) or any related regulatory activities could result in additional meaningful industry-wide changes and the recent changes and/or any additional meaningful changes could have a materially adverse effect on our business, operations, financial condition and results of operations .

The ongoing industry antitrust class action litigation, as well as the Antitrust Lawsuits filed against us (as described in more detail in Note 11 to our consolidated financial statements included elsewhere in this Annual Report (including any injunctive relief, appeals or settlements), either alone or in combination with related regulatory or governmental actions, or any resulting changes to competitive dynamics or consumer preferences, has resulted in certain industry-wide changes and could result in additional meaningful industry-wide changes, including changes to the broker commission structure and meaningful decreases in the average broker commission rate (including the average buy-side commission rate).

Such changes could have a materially adverse effect on our business, operations, financial condition and results of operations.

There can be no assurances as to whether the DOJ or FTC, their state counterparts, state or federal courts, or other governmental body will determine that any industry practices or developments have an anti-competitive effect on the industry or are otherwise proscribed.

Any such determination could result in industry investigations, enforcement actions, changes in legislation, regulations, interpretations or regulatory guidance or other legislative or regulatory action or other actions, any of which could have the potential to result in additional limitations or restrictions on our business, cause material disruption to our business, result in judgments, settlements, penalties or fines (which may be material), or otherwise have a direct or indirect materially adverse effect on our business, financial condition and results of operations.

Any determination by the DOJ or FTC, their state counterparts, state or federal courts, or other governmental bodies that any industry practices have anti-competitive effects could lead to industry investigations, enforcement actions, changes in legislation, regulations, interpretations or regulatory guidance or other legislative or regulatory action or other actions, any of which could potentially result in additional limitations or restrictions on our business, cause material disruption to our business, result in judgments, settlements, penalties or fines (which may be material), or otherwise have a direct or indirect materially adverse effect on our business, financial condition and results of operations.

Any decrease in our gross commission income or the percentage of commissions that we collect may harm our business, financial condition and results of operations .

Our business model depends upon our agents’ success in generating gross commission income, which we collect and from which we pay them net commissions.

Real estate commission rates vary somewhat by market, and although historical rates have been relatively consistent over time across markets, there can be no assurance that prevailing market practice will not

change in a given market or across the industry.

Customary commission rates could change due to market forces locally or industry-wide and due to regulatory or legal changes in such markets, including as a result of litigation or enforcement actions.

We cannot predict the outcome of any new investigations or enforcement actions, but any such actions may result in industry-wide regulations, which can cause commission rates to decrease.

Any decrease in commission rates may adversely impact our business, financial condition, and results of operations.

In addition, we collect fees from our agents for use of our platform, including our technology suite.

There can be no assurance that we will be able to maintain the percentage of commission income or fees we collect from our agents.

If industry conditions change, such that other platforms offer similar technologies to ours at a lower price or for free, we may be forced to reduce the percentage of commissions we collect from our agents, and our business, financial condition, and results of operations may be adversely impacted.

Declining home inventory levels may result in insufficient supply, which could negatively impact home sale transaction growth.

Home inventory levels have been declining in certain markets and price points in recent years, which has caused more homeowners to retain their homes for longer periods of time, driving a negative impact on the volume of home sale transactions closed by our brokers and agents.

This decline has been caused by pressures outside our control, including slow or accelerated new housing construction, macroeconomic conditions, and real estate industry models that purchase homes for long-term rental or corporate use.

The continuing decline in home inventory levels could have a material adverse effect on our business and profitability.

The ongoing industry antitrust class action litigation reinforced the fact that commission rates are negotiable.

Additionally, the recent industry-wide practice changes could result in changes to customary commission rates.

Any decrease in commission rates could adversely impact our business, financial condition, and results of operations.

In addition, we collect fees from agents at our owned-brokerage and from our affiliates for use of our technology offerings and other services.

If industry conditions change, such that other platforms offer similar technologies to ours at a lower price or for free, or the services we provide become less valuable, we may be forced to lower our fees, and our business, financial condition, and results of operations may be adversely impacted.

Low home inventory levels may result in insufficient supply, which could negatively impact home sale transaction growth .

Home inventory levels have been low in certain markets and price points in recent years, which has caused more homeowners to retain their homes for longer periods of time, driving a negative impact on the volume of home sale transactions closed by agents at our owned-brokerage and our affiliates.

This lack of supply has been caused by pressures outside our control, including slow new housing construction, macroeconomic conditions, and real estate industry models that purchase homes for long-term rental or corporate use.

Continued low inventory levels have had and could continue to have a material adverse effect on our business, financial condition and results of operations.

We must carefully manage our expense structure and a failure to do so could have a material adverse effect on our business .

The real estate market has experienced an increase in interest rates followed by a material decrease in the number of real estate transactions.

The real estate market has experienced high interest rates followed by a material decrease in the number of real estate transactions.

We must conservatively manage our cash and expenses in light of these and other negative changes in market conditions.

To date, we have done so through reductions in force, changes to our spending approval processes, adjustments to our sales incentives and sales teams, and otherwise by pivoting our focus from growth to profitability and cash flow.

Although we expect to continue to make future investments in the development and expansion of our business, we may also in the future undertake further initiatives to restructure our operations to improve operational efficiency.

Although we expect to continue to make future investments in the development and expansion of our business, we may also undertake further initiatives to restructure our operations to improve operational efficiency.

Gaining additional efficiencies may become increasingly difficult over time.

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changes in real estate market conditions;

expansion into new markets for which we typically incur more significant losses immediately following entry;

expansion into new markets for which we typically incur significant losses immediately following entry;

increased competition;

increased costs to attract and retain agents, to hire additional personnel to support our overall growth, for research and development, and for sales and marketing;

increased costs to attract and retain agents at our owned-brokerage;

increased costs related to the expansion of our affiliate business;

increased costs to hire additional personnel to support our overall growth, for research and development, and for sales and marketing;

changes to the customary commission rates;

changes in our fee structure or rates;

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While overall the U.S.

real estate market could be performing well, a downturn in a geographic area where we have a material presence could result in a decline in our gross commission income and could have a material adverse effect on our operating results.

Additionally, a material portion of our real estate transactions take place in high-end markets.

Any downturn in high-end markets could result in a decline in our gross commission income and could have a material adverse effect on our operating results.

Further, if there is a downturn in high-end markets, our agents may shift to transactions involving middle and lower range market prices, which, absent an increase in the number of transactions, could result in a decline in our gross commission income.

If we fail to continuously innovate, improve and expand our platform to create value for our agents and our agents’ clients, our business, financial condition and results of operations could be adversely affected.

Our success depends on our ability to continuously innovate and improve our platform to provide value to our agents and their clients.

As a result, we have invested significant resources, and plan to continue to invest, though to a lesser degree, additional resources, in research and development to improve and maintain our platform and support our technology infrastructure, which allows us to provide an expanded suite of technology offerings that we believe differentiate us from our competitors.

There can be no guarantee that we can continue to launch new products and services in a timely manner, or at all, and even if we do, they might not be utilized by our agents at the rate we expect.

While we believe our investments help our agents succeed, there can be no guarantee that we will retain our agents across the markets we serve, nor that our investments will drive increased productivity for our agents.

real estate market could be performing well, a downturn in a geographic area where we have a material presence could result in a decline in our revenue and could have a material adverse effect on our operating results.

Additionally, a material portion of our real estate transactions takes place in high-end markets.

Any downturn in high-end markets could result in a decline in our revenue and could have a material adverse effect on our operating results.

Further, if there is a downturn in high-end markets, agents at our owned-brokerage and our affiliates may shift to transactions involving middle and lower range market prices, which, absent a sufficient increase in the number of transactions, could result in a decline in our revenue and could have a material adverse effect on our operating results.

If we fail to continuously innovate, improve and expand our technology offerings to create value for agents at our owned-brokerage and our affiliates and their respective clients, our business, financial condition and results of operations could be adversely affected .

Our success depends on our ability to continuously innovate and improve our technology offerings, including our proprietary technology platform, to provide value to agents at our owned-brokerage and our affiliates and their respective clients.

As a result, we have invested significant resources, and plan to continue to invest, though to a lesser degree, additional resources, in research and development to improve and maintain our technology offerings, including our proprietary technology platform, and support our technology infrastructure, which allows us to provide an expanded suite of technology offerings that we believe differentiate us from our competitors.

There can be no guarantee that we can continue to launch new products and services in a timely manner, or at all, and even if we do, they might not be utilized by agents at our owned-brokerage or our affiliates at the rate we expect.

While we believe our investments help agents at our owned-brokerage and our affiliates succeed, there can be no guarantee that we will retain agents at our owned-brokerage

and our affiliates across the markets we serve, nor that our investments will drive increased productivity for agents at our owned-brokerage or our affiliates.

Additionally, at times, we expand our technology offerings by acquiring value-add real estate technology companies.

While we think these strategic acquisitions expand our capabilities into critical components of the transaction, our agents may not value these additions and may not utilize them at the rate we expect.

Our continued growth depends on our ability to attract highly-qualified agents in each of the markets we serve and, once they are on our platform, to retain them and to help them expand their businesses by utilizing our platform and technology offerings.

If we fail to identify and invest in our platform and expand our technology offerings via acquisitions in the way that creates value for our agents and our agents’ clients, we may fail to attract new agents, retain current agents or increase agents’ productivity through utilization of our platform, which could adversely affect our business, financial condition and results of operations.

Our efforts to expand our operations, including our brokerage and integrated services businesses, and to offer additional integrated services may not be successful.

We have grown our brokerage business rapidly since our inception.

We plan to continue our expansion of the brokerage business;

While we think these strategic acquisitions expand our capabilities into critical components of the transaction, agents at our owned-brokerage and our affiliates may not value these additions and may not utilize them at the rate we expect.

Our continued growth depends on our ability to attract highly-qualified agents at our owned-brokerage and expand our network of affiliates, to retain them and to help them expand their businesses by utilizing our technology offerings.

If we do not expand our technology offerings in the way that creates value for agents at our owned-brokerage and our affiliates, it could result in our inability to attract new agents at our owned-brokerage, expand our network of affiliates, retain current agents at our owned-brokerage and renew agreements with our current affiliates, which could adversely affect our business, financial condition and results of operations.

Our efforts to expand our operations, including our owned-brokerage, our affiliate business and integrated services, and to offer additional integrated services may not be successful .

We have grown our owned-brokerage business rapidly since our inception and we recently added an affiliate business.

We plan to continue our expansion of our owned-brokerage business and our affiliate business;

however, there is no guarantee that we will be successful or will expand at the rate we anticipate.

In addition, in 2018, we entered into the integrated services market and have since expanded our integrated services offerings to include title and escrow and mortgage origination services in certain markets.

We think that the synergies between these integrated services and our brokerage business increase transparency and deliver a more integrated closing process for our agents’ clients and thus, provides additional value to our agents.

Additionally, we continue to expand our integrated services, which include title and escrow and mortgage.

We think that the synergies between these integrated services and our owned-brokerage increase transparency and deliver a more integrated closing process for the clients of our agents at our owned-brokerage.

However, currently, our integrated services are available only in certain markets.

If we are unsuccessful in expanding these services into other markets, then we may not realize the expected benefits (including anticipated revenue), which could adversely affect our business, financial condition and results of operations.

Similarly, if our agents do not recommend our integrated services to our agents’ clients, then our revenue from integrated services will not grow as quickly as we expect.

While we plan to continue to expand our brokerage and integrated services businesses to other offerings, there is no guarantee that we will do so or be successful, and even if we do, the expansions might be at a slower pace than we anticipate.

We may not realize the expected benefits from our mortgage joint venture.

We may not realize the expected benefits from OriginPoint, our mortgage joint venture, which will depend, in part, on the successful partnership between us and Guaranteed Rate and the successful day-to-day operation of the business by OriginPoint’s management.

The services which Guaranteed Rate is engaged to provide to OriginPoint may deteriorate and cause OriginPoint to make alternative arrangements.

Further, in the event of a disagreement with Guaranteed Rate, we may not be able to resolve such disagreement in our favor, which could have a material adverse effect on our interest in or the business of the joint venture.

In addition, improper actions by OriginPoint or Guaranteed Rate may lead to direct claims against us based on theories of vicarious liability, negligence, joint operations and joint employer liability, which, if determined adversely, could increase costs, negatively impact our reputation and subject us to liability for their actions.

Also, because OriginPoint is a mortgage origination company, it is subject to many of the same factors that affect our real estate brokerage and title and escrow services, including:

Similarly, if our agents do not recommend our integrated services to their clients, then our revenue from integrated services will not grow as quickly as we expect.

While we plan to continue to expand our integrated services to other offerings, there is no guarantee that we will do so or be successful, and even if we do, the expansions might be at a slower pace than we anticipate.

We may not realize the expected benefits from our mortgage business .

We may not realize the expected benefits from our mortgage business, which will depend, in part, on the successful partnership between us and our joint venture partner and the successful day-to-day operation of the business.

The services which our joint venture partner is engaged to provide to the mortgage business may deteriorate and cause us to make alternative arrangements.

Further, in the event of disagreements with our joint venture partner, we may not be able to resolve such disagreements in our favor, which could have a material adverse effect on our mortgage business.

In addition, improper actions taking place at our mortgage business may lead to direct claims against us based on theories of vicarious liability, negligence, joint operations and joint employer liability, which, if determined adversely, could increase costs, negatively impact our reputation and subject us to liability for their actions.

Also, our mortgage business is subject to many of the same factors that affect our real estate brokerage and title and escrow services, including:

regulatory changes;

changes in mortgage underwriting standards;

increases in mortgage interest rates;

high mortgage rates;

changes in real estate market conditions;

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and changes in economic conditions.

Any of the foregoing could have an adverse impact on OriginPoint’s results of operations and financial condition, which could result in us not being able to realize the expected benefits from the joint venture.

Any of the foregoing could have an adverse impact on the results of operations and financial condition of our mortgage business, which could result in us not being able to realize the expected benefits from this business.

We operate in highly competitive markets and we may be unable to compete successfully against competitors .

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We believe that our ability to compete depends upon many factors, including:

our ability to attract and retain agents;

our ability to attract and retain agents at our owned-brokerage;

our ability to expand our affiliate business;

the timing and market acceptance of products and services offered by us or our competitors;

the attractiveness of our integrated services for agents

and our agents’ clients;

the attractiveness of our integrated services for agents and their clients;

our ability to attract top talent to support our business model;

and our brand strength relative to our competitors.

Our business model depends on our ability to continue to attract agents and our agents’ clients to our platform, and to enhance their engagement in a cost-effective manner.

We face competition nationally and in each of our markets from traditional real estate brokerage firms, some of which operate nationally and others that are limited to a specific region or regions, from real estate technology companies, including a growing number of Internet-based brokerages and others who operate with a variety of business models, and from new entrants, particularly smaller companies offering point solutions.

Some of our competitors could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and access to additional capital, more product and service offerings, and higher risk tolerances or different risk assessments.

If we are not able to continue to attract agents and our agents’ clients to our platform, our business, financial condition and results of operations could be adversely affected.

Our ability to recruit agents depends on the strength of our reputation, and adverse media coverage could harm our business.

We believe that we have developed a strong reputation for helping agents succeed on the basis of the technological sophistication of our platform and our ability to offer a wide range of high-quality services.

General awareness and the perceived quality and differentiation of our platform are important aspects of our efforts to attract and retain agents.

Our business model depends on our ability to continue to attract agents at our owned-brokerage and to enhance their engagement in a cost-effective manner, as well as expand our network of affiliates.

We face competition nationally, in select international markets and in each of our regional markets from traditional real estate brokerage firms, some of which operate nationally and others that are limited to a specific domestic or international region or regions;

from real estate technology companies, including a growing number of Internet-based brokerages and others who operate with a variety of business models;

and from new entrants, particularly smaller companies offering point solutions.

Some of our competitors

could have significant competitive advantages, including better name recognition, greater resources, lower cost of funds and access to additional capital, more product and service offerings, and higher risk tolerances or different risk assessments.

If we are not able to continue to attract agents at our owned-brokerage and expand our network of affiliates, our business, financial condition and results of operations could be adversely affected.

Our ability to recruit agents at our owned-brokerage and expand our network of affiliates depends on the strength of our reputation and reputation of our brands .

We believe that we have developed a strong reputation for helping agents and affiliates succeed on the basis of the technological sophistication of our technology offerings and our ability to offer a wide range of high-quality services.

General awareness and the perceived quality and differentiation of our technology offerings, including our Compass platform, are important aspects of our efforts to attract and retain agents at our owned-brokerage and expand our network of affiliates.

In addition, our actions and growth are frequently reported in national and regional trade publications and other media, and media coverage of our business can be critical, and may not be fair or accurate.

Our reputation may be harmed due to adverse media coverage related to our actions, the actions of our agents, or other events, which may cause our ability to attract and retain agents to suffer.

If we are unable to maintain or enhance agent awareness of our business, or if our reputation is damaged in a given market or nationally, our business, financial condition, and results of operations could be adversely affected.

Our reputation may be harmed due to adverse media coverage related to our actions, the actions of agents at our owned-brokerage and our affiliates, or other events, which may cause our ability to attract and retain agents and expand our network of affiliates to suffer.

We rely on agents at our owned-brokerage to protect and maintain the quality of the Compass brand, as well as on CMW, who founded, owns and licenses the Christie's International Real Estate brand to us, and our affiliates and their agents to protect and maintain the quality of the Christie's International Real Estate brand.

While we try to ensure that our brands' quality is maintained by agents at our owned-brokerage, as well as CMW and our affiliates and their agents, there is no guarantee that they will not take action that may hurt the quality and/or value of the brands and/or our reputation.

If we are unable to maintain or enhance agent awareness of our business, or if our reputation and/or brands' quality is damaged in a given market, nationally or internationally, our business, financial condition, and results of operations could be adversely affected.

We have experienced rapid growth in the past, which may not be indicative of our future growth.

Additionally, given our recent focus on our expense structure and cost savings efforts, we may not be able to re-accelerate our business growth, which could have an adverse effect on our business, financial condition and results of operations.

Additionally, given our continued focus on our expense structure and cost savings efforts, we may not be able to continue to grow our business as fast or at all, which could have an adverse effect on our business, financial condition and results of operations .

We experienced rapid growth for several years since our founding in 2012 but in recent years, due to market conditions, our decision to conservatively manage our expense structure and focus on cost savings, as well as other factors, our rate of growth has slowed.

We may also make other decisions, such as more conservatively managing our expense structure, that could further slow our growth.

We may continue to make decisions, such as more conservatively managing our expense structure, that could further slow our growth.

In the future, we may not be able to grow as fast as we had in the past or at all.

If we experience rapid growth again, given our recent focus on our expense structure and cost savings efforts, we may not be able to scale our business as quickly as we need to in order to take advantage of all the growth opportunities available to us and meet all of the demands of our new agents and their clients.

Any failure of or delay in scaling our business timely and efficiently could cause us to miss out on future opportunities.

Any failure of or delay in scaling our business timely and efficiently could cause us to miss out on future opportunities, or to cede such opportunities to competitors, reducing our market share.

Additionally, to support growth in the future, we must continue to improve our management resources and our operational and financial controls and systems, which may increase our expenses more than anticipated and result in a more complex business.

We use cash to satisfy payroll tax withholding obligations that arise in connection with the monthly net settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity.

We currently use cash to satisfy payroll tax withholding obligations that arise in connection with the monthly net settlements of RSU awards granted to our employees, which may have an adverse effect on our financial condition and liquidity.

If we instead choose to implement a “sell-to-cover” settlement method in the future, additional shares will be issued and sold in the market at settlement to cover payroll tax withholding obligations, which would result in dilution to our stockholders .

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Our current settlement practice is to net settle vested RSUs, meaning that we withhold the equivalent number of RSUs that would otherwise be issued as shares of our Class A common stock in lieu of the amount required to satisfy payroll tax withholding obligations on behalf of our employees by remitting the appropriate taxes to the relevant tax authorities.

We refer to this as “net settlement.” We currently, and plan to continue to, net settle vested RSUs granted to our employees on a monthly basis, which, depending upon the market value of shares of our Class A common stock underlying the RSUs, may result in a significant use of our cash and may have an adverse effect on our financial condition and liquidity.

In the future, we may implement a “sell-to-cover” settlement method to satisfy payroll tax withholding obligations for our employees, under which shares of our Class A common stock with a market value equivalent to or greater than the tax withholding amounts would be automatically sold by the employees holding RSUs upon settlement to satisfy their payroll

tax withholding obligations, and the cash proceeds from such sales will be remitted by us to the relevant tax authorities.

We refer to this as “net settlement.” If we continue to net settle vested RSUs granted to our employees on a monthly basis, depending upon the market value of shares of our Class A common stock underlying the RSUs, it may result in a significant use of our cash and may have an adverse effect on our financial condition and liquidity.

Such sales would not result in our use of additional cash to satisfy the payroll tax withholding obligations for RSUs, but would result in greater dilution to our stockholders and increase costs to our employees with RSU awards than the net settlement.

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changes in real estate market conditions;

our ability to attract and retain agents;

our ability to continuously innovate, improve, and expand our platform;

changes in interest rates or mortgage underwriting standards;

our ability to attract and retain agents at our owned-brokerage;

our ability to expand our affiliate business;

our ability to continuously innovate, improve, and expand our technology offerings, including our proprietary platform;

high mortgage rates;

changes in mortgage underwriting standards;

the actions of our competitors;

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increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive;

changes in the legislative or regulatory environment;

changes in the legislative, regulatory and industry environment;

system failures or outages;

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the application of new or changing financial accounting standards or practices;

and changes in regional or national business or macroeconomic conditions.

and changes in regional, national or international business or macroeconomic conditions.

Because our results of operations are tied to certain key business metrics and non-GAAP financial measures that have fluctuated in the past and are likely to fluctuate in the future, our historical performance, including from recent quarters or years, may not be a meaningful indicator of future performance and period-to-period comparisons may not be meaningful.

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To attract and retain key personnel, we incur significant costs, including salaries and benefits and equity incentives.

Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively.

Actions by our agents or employees could adversely affect our reputation and subject us to liability.

Our success depends on the performance of our agents and employees.

Although our agents are independent contractors, if they were to provide lower quality services to our agents’ clients, our image and reputation could be adversely affected.

In addition, if our agents make fraudulent claims about properties they show, their transactions lead to allegations of errors or omissions, they violate certain regulations, including employment laws applicable to the management of their own employees, or they engage in self-dealing or do not disclose conflicts of interest to our agents’ clients, we could be subject to litigation and regulatory claims which, if adversely determined, could adversely affect our business, financial condition and results of operations.

Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively, and the inability to sufficiently attract and retain required personnel could have a material adverse effect on our results of operations and business.

Actions by agents at our owned-brokerage or our affiliates, or by our employees, could adversely affect our reputation and subject us to liability .

Our success depends on the performance of agents at our owned-brokerage, employees, and affiliates.

Although our agents are independent contractors, if they were to provide lower quality services to their clients, our image and reputation could be adversely affected.

In addition, if agents at our owned-brokerage make fraudulent claims about properties they show, their transactions lead to allegations of errors or omissions, they violate certain regulations, including employment laws applicable to the management of their own employees, or they engage in self-dealing or do not disclose conflicts of interest to their clients, we could be subject to litigation and regulatory claims which, if adversely determined, could adversely affect our business, financial condition and results of operations.

Further, we do not exercise control over the day-to-day operations of our affiliates and they operate independently from us.

If our affiliates do not operate their businesses in

accordance with our or industry standards, it could adversely impact our reputation.

Similarly, we are subject to risks of loss or reputational harm in the event that any of our employees violate applicable laws.

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These policies provide coverage for real property to lenders and buyers.

The title underwriter is typically liable for the payment of claims under title policies, but we may be subject to liability and losses if we are negligent.

The title underwriter is typically liable for the payment of claims under title policies, but we may be subject to liability and losses if there are errors or omissions on our part.

Some of our title companies and our escrow company also provide escrow and closing services.

These services facilitate the transfer of ownership of real property.

may be subject to liability and losses arising from the provision of these services.

We may be subject to liability and losses arising from the provision of these services.

For example, we may be subject to liability and losses if we improperly handle consumer or other third-party funds.

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We sometimes engage in acquisitions of brokerage businesses to provide us with greater access to a given market.

At times, we may also look to acquisitions to provide us with additional technology to further enhance our platform and accelerate our ability to offer new products or to expand our integrated services offerings.

At times, we may also look to acquisitions to provide us with additional technology to further enhance our technology offerings and accelerate our ability to offer new products or to expand our integrated services offerings.

These strategic acquisitions could be material to our financial condition and results of operations, but there can be no guarantee that they will result in the intended benefits to our business, and we may not successfully evaluate or utilize the acquired agents, businesses, products, or technology, or accurately forecast the financial impact of a strategic acquisition.

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We continue to make investments of resources to support our acquisitions, which we expect will result in significant ongoing operating expenses and may divert resources and management attention from other areas of our business.

Our failure to successfully integrate the companies we acquire and address risks or other problems encountered in connection with our past or future strategic acquisitions could cause us to fail to realize the anticipated benefits of such strategic acquisitions, incur unanticipated liabilities, and harm our business, financial condition, and results of operations.

Our failure to successfully integrate the companies we acquire and address risks or other problems encountered in connection with our past or future strategic acquisitions could cause us to fail to realize the anticipated benefits of such strategic acquisitions, including anticipated synergies and cost savings, incur unanticipated liabilities, and harm our business, financial condition, and results of operations.

In addition, strategic acquisitions may require us to issue additional equity securities, spend a substantial portion of our available cash, or incur debt or liabilities, amortize expenses related to intangible assets, or incur write-offs of goodwill, which could adversely affect our business, financial condition, and results of operations and could result in dilution to our stockholders.

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Underwriting standards could be changed or tightened as a result of changes in regulations, including those enacted to increase guarantee fees of federally-insured mortgages.

More stringent mortgage underwriting standards could adversely affect the ability and willingness of prospective buyers to finance home purchases or to sell their existing homes in order to purchase new homes, which may decrease the number of real estate transactions that our agents execute and that our title and escrow businesses close, and may decrease the number of mortgages that OriginPoint originates.

Any of these impacts would adversely affect our business, financial condition, and results of operations.

We may not be able to maintain or establish relationships with MLSs and third-party listing providers, which could limit the information we are able to provide to our agents and our agents’ clients .

Our ability to attract agents to our platform and to appeal to our agents’ clients depends upon providing a robust number of listings.

Our ability to attract agents at our owned-brokerage and to appeal to their clients depends upon our ability to provide a robust number of listings.

To provide these listings in our services, in addition to the information provided by our agents, we maintain relationships with MLSs and other third-party listing providers.

Certain of our agreements with real estate listing providers are short-term agreements that may be terminated with limited notice.

The loss of our existing relationships with these parties, changes to our rights to use listing data, or an inability to continue to add new listing providers may cause our listing data to omit information important to our agents or our agents’ clients.

Additionally, if the MLSs cease to be the

predominant source of listing data, we might not be able to provide comprehensive listing data to our agents and their clients.

Additionally, if the MLSs cease to be the predominant source of listing data, we might not be able to provide comprehensive listing data to our agents and their clients.

Any of these events could negatively impact our reputation and agent and client confidence in the listing data we provide and reduce our ability to attract and retain agents, which could harm our business, financial condition, and results of operations.

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◦ the failure or significant disruption of our operations from various causes, such as human error, computer malware, ransomware, insecure software and systems, zero-day vulnerabilities, threats to or disruption of third-party service providers who provide critical services, or other events related to our critical information technologies and systems;

• the increasing level and sophistication of cybersecurity attacks, such as distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering (including phishing attempts or the creation of copycat websites), or other unlawful tactics aimed at compromising the systems and data of our agents and our agents’ clients (including through systems not directly controlled by us, such as those maintained by our agents and third-party service providers);

• the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our agents and our agents’ clients), the transmission of computer malware, or the diversion of sale transaction closing funds.

◦ the increasing level and sophistication of cybersecurity attacks, such as distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering (including phishing attempts or the creation of copycat websites), or other unlawful tactics aimed at compromising the systems and data of our agents and their clients (including through systems not directly controlled by us, such as those maintained by our agents and third-party service providers);

◦ the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our agents and their clients), the transmission of computer malware, or the diversion of sale transaction closing funds.

Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to information technology systems via viruses, ransomware, and other malicious software, to phishing or advanced and targeted attempts to breach systems launched by individuals, organizations, or sponsored nation state actors.

These attacks may be directed at our business, employees, agents, third-party service providers, and our agents’ clients.

These attacks may be directed at our business, employees, agents, affiliates, third-party service providers, and our agents’ clients.

An attack, threat, or breach of one system can impact one or more other systems.

In the ordinary course of our business, we and our third-party service providers, our employees, agents, and agent’s clients may collect, store, and transmit sensitive data, including our proprietary business information and intellectual property and that of our agents and our agents’ clients as well as personal information, sensitive financial information, and other confidential information.

In the ordinary course of our business, we and our third-party service providers, our employees, agents, affiliates and our agents’ clients may collect, store, and transmit sensitive data, including our proprietary business information and intellectual property and that of our agents and their clients as well as personal information, sensitive financial information, and other confidential information.

Our agents’ use of our platform to access and store data presents us with uncertainties and risks, as they may accidentally or deliberately cause private information to be transmitted through unsecure channels, which may lead to breaches or other leaks of such information.

Additionally, we increasingly rely on third-party service providers that provide data processing, data storage, and critical infrastructure services, including cloud solution providers.

The secure processing, maintenance, and transmission of this information are critical to our operations and, with respect to information collected and stored by our third-party service providers, we are reliant upon their security procedures, controls, and adherence to our agreements.

The secure processing, maintenance, and transmission of this information is critical to our operations and, with respect to information collected and stored by our third-party service providers, we are reliant upon their security procedures, controls, and adherence to our agreements.

A breach or attack affecting one of our third-party service providers or partners could adversely impact our business, our client’s business, and our reputation even if we do not control the service that is attacked.

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In common with others in our industry, we manage and hold confidential personal information in the operation of our platform.

Accordingly, we have been and continue to be subject to a range of cyber-attacks, such as the creation of Compass or agent copycat websites, and email and text-based phishing attacks on our agents and our agents’ clients.

Accordingly, we have been and continue to be subject to a range of cyber-

attacks, such as the creation of Compass or agent copycat websites, and email and text-based phishing attacks on agents at our owned-brokerage and their clients, as well as our affiliates and their agents.

We have enhanced our security measures and continue to invest in these measures to mitigate the risk of new and similar attacks in the future.

However, there can be no assurance that our enhanced security measures, which are also partially dependent upon the security practices of our agents, our agents’ clients, and participants will timely detect or prevent other cyber-attacks in the future.

However, there can be no assurance that our enhanced security measures, which are also partially dependent upon the security practices of our agents and their clients, and participants will timely detect or prevent other cyber-attacks in the future.

Cyber-attacks could give rise to the loss of significant amounts of data and other sensitive information and possibly disable our information technology systems which are used to service our agents.

Such threats may be beyond our control as our employees and agents and our agents’ clients and other third-party service providers may use e-mail, computers, smartphones, and other devices and systems that are outside of our security control environment.

Such threats may be beyond our control as our employees and agents at our owned-brokerage and their clients, as well as our affiliates and their agents, and other third-party service providers may use e-mail, computers, smartphones, and other devices and systems that are outside of our security control environment.

In addition, real estate transactions involve the transmission of funds by the buyers and sellers of real estate and consumers or other service providers selected by the consumer that may be the subject of direct cyber-attacks that result in the fraudulent diversion of funds, notwithstanding efforts we have taken to educate consumers with respect to these risks.

In addition, cybersecurity threat actors have attempted, and may attempt in the future, to conduct fraudulent activity by engaging with our agents or our agents’ clients, including in our title insurance and escrow business.

In addition, cybersecurity threat actors have attempted, and may attempt in the future, to conduct fraudulent activity by engaging with agents at our owned-brokerage or their clients, as well as our affiliates and their agents and clients.

We make a large number of wire transfers in connection with loan and real estate closings and process sensitive personal data in connection with these transactions.

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Machine learning and AI technology present various operational, compliance and reputational risks and if any such risks were to materialize, our business and results of operations may be adversely affected .

We have integrated machine learning and AI in a number of tools and features available on our platform that our agents use in their daily activities.

We have integrated machine learning and AI in a number of tools and features available on our platform that our agents and affiliates use in their daily activities.

For example, our “Likely to Sell” feature uses machine learning to recommend contacts to our agents with the highest likelihood of selling their homes within the next 12 months, and certain of our marketing tools use AI to help our agents write social media and marketing content, including, but not limited to, property descriptions and emails to their clients.

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Given that machine learning and AI is a new and rapidly developing technology that is in its early stages of business use, it presents a number of operational, compliance and reputational risks.

AI algorithms are currently known to sometimes produce unexpected results and behave in unpredictable ways (e.g., “hallucinatory behavior”) that can generate irrelevant, nonsensical, deficient or factually incorrect content and results, which may result in reputational harm to us and our agents and be damaging to our “Compass” brand.

Additionally, content, analyses or recommendations that are based on machine learning and AI might be found to be biased, discriminatory or harmful, might present ethical concerns and might violate current and future laws and regulations.

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If any of the operational, compliance or reputational risks were to materialize, our business and results of operations may be adversely affected.

We plan to expand into international markets, which will expose us to significant risks.

A component of our future growth strategy involves the further expansion of our operations and establishment of an agent base internationally.

Through our affiliate business, we have expanded, and may continue to expand in the future, into international markets, which will expose us to significant risks .

A component of our growth strategy involves the further expansion of our operations and establishment of an agent and affiliate base internationally.

We are continuing to adapt and develop strategies to address international markets, but there is no guarantee that such efforts will have the desired effect.

For example, we may need to establish relationships with new partners or acquire businesses in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute on our expansion plans.

Although we maintain limited operations in India, none of our agents are located outside of the U.S.

and we currently do not engage in any non-U.S.

real property transactions, except for de-minimis transactions through partnerships with local non-U.S.

We expect that our international activities will grow in the future as we pursue opportunities in international markets, which may require significant dedication of management attention and will require significant upfront investment.

For example, we have established relationships with new partners, and may need to establish additional relationships with third parties or acquire businesses in order to expand into certain countries, and if we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute on our expansion plans.

We maintain limited operations in India, the United Kingdom, France and Hong Kong.

We expect that our international activities will continue to grow in the future as we pursue opportunities in international markets, which may require significant dedication of management attention and will require significant upfront investment.

Our current and future international business and operations involve a variety of risks, including the need to adapt and localize our platform for specific countries;

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new, evolving, and more stringent regulations relating to privacy and data security and the unauthorized use of, or access to, commercial and personal information, particularly in Europe and Canada;

adverse changes to political and economic climates of foreign countries, or in their relations with the U.S.;

difficulties in managing a business in new markets with diverse cultures, languages, customs, legal systems, alternative dispute systems, and regulatory systems;

increased travel, real estate, infrastructure, and legal compliance costs associated with international operations;

and regulations, adverse tax burdens, and foreign exchange controls that could make it difficult to repatriate earnings and cash.

If we invest substantial time and resources to establish international operations and are unable to do so successfully or in a timely manner, our business, financial condition, and results of operations may be adversely impacted.

fluctuations in foreign currency exchange rates;

regulations, adverse tax burdens, and foreign exchange controls that could make it difficult to repatriate earnings and cash;

and increased costs and difficulty associated with overseeing affiliates operating outside of the U.S.

If we invest substantial time and resources to grow our international operations and are unable to do so successfully or in a timely manner, our business, financial condition, and results of operations may be adversely impacted.

Our management team is required to evaluate the effectiveness of our internal control over financial reporting.

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When evaluating our internal control over financial reporting, we may identify material weaknesses during the year that we may not be able to remediate by year-end.

For example, in connection with the preparation of our consolidated financial statements for 2021 and prior years, we identified material weaknesses in our internal control over financial reporting.

While those material weaknesses have been remediated as of December 31, 2023, we may again identify material weaknesses in our internal control over financial reporting in the future.

If we identify material weaknesses in our internal control over financial reporting in the future, are unable to comply with the requirements of Section 404 in a timely manner, or assert that our internal control over financial reporting is ineffective, or if our independent registered public accounting firm expresses an opinion that our internal control over financial reporting is ineffective, investors may lose confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we could become subject to investigations by the SEC, or other regulatory authorities, which could require additional management attention and which could adversely affect our business.

If we identify material weaknesses in our internal control over financial reporting in the future, are unable to comply with the requirements of Section 404 in a timely manner, or assert that our internal control over financial reporting is ineffective, or if our independent registered public accounting firm expresses an opinion that our internal control over financial reporting is ineffective, investors may lose confidence in the accuracy and completeness of our financial reports, which could cause the price of our Class A common stock to decline, and we could become subject to litigation or investigations by the SEC, or other regulatory authorities, which could require additional management attention and which could adversely affect our business.

In addition, our internal control over financial reporting will not prevent or detect all errors and fraud.

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Our Revolving Credit and Security Agreement with Barclays Bank PLC (the “Concierge Facility”) and our Revolving Credit and Guaranty Agreement with Barclays Bank PLC (the “Revolving Credit Facility”) contain, and any future agreement relating to additional indebtedness which we may enter into may contain, various financial covenants.

The Concierge Facility, which is secured by, and can be used to borrow against, eligible receivables and cash related to part of our Compass Concierge Program, and our Revolving Credit Facility, which is secured by substantially all the assets of us and our subsidiary guarantors, contains customary representations, warranties, affirmative covenants, such as financial statement reporting requirements, negative covenants, and financial covenants applicable to us and our restricted subsidiaries.

The Concierge Facility, which is secured by, and can be used to borrow against, eligible receivables and cash related to part of our Compass Concierge Program, and our Revolving Credit Facility, which is secured by substantially all of our assets and our subsidiary guarantors, contain customary representations, warranties, affirmative covenants, such as financial statement reporting requirements, negative covenants, and financial covenants applicable to us and our restricted subsidiaries.

The negative covenants include restrictions that, among other things, restrict our and our subsidiaries’ ability 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.

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Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes, such as research tax credits to offset future taxable income.

We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes.

We have not performed an analysis to determine whether our past issuances of stock

and other changes in our stock ownership may have resulted in one or more ownership changes.

If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of our IPO or future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code.

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While these numbers are based on what we believe to be reasonable calculations for the applicable period of measurement, there are inherent challenges in measuring such information.

In addition, our measure of certain metrics may differ from estimates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology and as a result our results of operations may not be comparable to our competitors.

Changes in accounting standards, subjective assumptions and estimates used by management related to complex accounting matters could have an adverse effect on our business, financial condition, and results of operations.

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Our platform is highly complex and the software and code underlying our platform is interconnected and may contain undetected errors, bugs, or vulnerabilities, some of which may only be discovered after the code or software has been released.

We regularly release or update software code, which may result in more frequent introduction of errors, bugs, or vulnerabilities into the software underlying our platform, potentially impacting the agent’s and their client’s experience on our platform.

Additionally, due to the interoperative nature of the software and the systems underlying our platform, modifications to certain parts of our code, including changes to our mobile application, website, systems, or third-party application programming interfaces on which our platform rely, could have an unintended impact on other sections of our software or system, which may result in errors, bugs, or vulnerabilities to our platform.

We regularly release or update software code, which may result in more frequent introduction of errors, bugs, or vulnerabilities into the software underlying our platform, potentially impacting agents' and their clients' experience on the Compass platform.

Additionally, due to the interoperative nature of the software and the systems underlying our platform, modifications to certain parts of our code, including changes to our mobile application, website, systems, or third-party application programming interfaces on which our platform rely, or resulting from integration of acquired technologies, could have an unintended impact on other sections of our software or system, which may result in errors, bugs, or vulnerabilities to our platform.

Any errors, bugs, or vulnerabilities discovered in our code after release could result in damage to our reputation, loss of our agents or our agents’ clients, loss of revenue or liability for damages, any of which could adversely affect our growth prospects and our business, financial condition, and results of operations.

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In addition, many of our employees continue to work remotely, which may adversely affect our efficiency and morale.

Certain employees may not agree with return to office initiatives and as a result may seek employment elsewhere.

Certain employees have not agreed with return to office initiatives and as a result have sought employment elsewhere.

In addition, we have at times undertaken workforce reductions to better align our operations with our strategic priorities, to manage our cost structure, or in connection with acquisitions.

For example, in response to macroeconomic conditions impacting our industry, we took certain cost-saving measures, such as reductions of our workforce in June and September 2022 and January 2023.

Although we took deliberate actions to provide impacted employees with equitable separation packages and transition services, there can be no assurance that these actions will not adversely affect employee morale,

our culture, and our ability to attract and retain employees.

If we are not able to maintain our culture, our business, financial condition and results of operations could be adversely affected.

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There are numerous federal and state laws, as well as regulations and industry guidelines, regarding privacy and the storing, use, processing, sharing, and disclosure and protection of personal information, which are continually evolving, subject to differing interpretations, and may be inconsistent between state and federal governments and across countries or conflict with other rules.

Additionally, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices, and the internet, may be applicable to our business, such as the TCPA (as implemented by the Telemarketing Sales Rule), the CAN-SPAM Act, and similar state consumer protection laws.

We seek to comply with industry standards, applicable laws, and legal obligations concerning data security protection, and are subject to the terms of our own privacy policies and privacy-related obligations to third parties.

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Numerous states have enacted, or are in the process of enacting, state level data privacy laws and regulations aimed at creating and enhancing individual privacy rights by governing the collection, use, sharing, disclosure, selling, and retention of state residents’ personal information.

The continued proliferation of privacy laws in the jurisdictions in which we operate is likely to result in a disparate array of privacy rules with unaligned or conflicting provisions, accountability requirements, individual rights, and enforcement powers, which may require us to further modify our data processing practices and policies, and may subject us to increased regulatory scrutiny and business costs, and lead to unintended confusion among our agents’ and our agent’s clients.

practices and policies, and may subject us to increased regulatory scrutiny and business costs, and lead to unintended confusion among our agents’ and our agents’ clients.

Our agents operate as independent contractors and are responsible for their own data privacy compliance.

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Natural disasters and catastrophic events may disrupt real estate markets and could adversely affect our business, financial condition and results of operations .

Natural disasters or other catastrophic events, such as fires, hurricanes, earthquakes, windstorms, tornados, floods, power loss, telecommunications failure, cyber-attacks, war, civil unrest, terrorist attacks, or pandemics or epidemics may cause damage or disruption to our operations, real estate commerce, and the global economy, and thus, could adversely affect our business, financial condition and results of operations.

business, financial condition and results of operations.

In particular, the COVID-19 pandemic and the reactions of governments, markets, and the general public to the COVID-19 pandemic, caused a number of consequences for our business and results of operations.

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As we grow our business, the need for business continuity planning and disaster recovery plans will increase in significance.

If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster,

and successfully execute on those plans in the event of a disaster or emergency, our business could be adversely affected and our reputation could be harmed.

If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business could be adversely affected and our reputation could be harmed.

Risks Related to Our Legal and Regulatory Environment

We are periodically subject to claims, lawsuits, government investigations, and other proceedings that may adversely affect our business, financial condition, and results of operations .

We may be subject to claims, lawsuits, arbitration proceedings, government investigations, and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability, consumer complaints, personal injury, wrongful death, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions), securities laws, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, integrated services business lines, securities issuances or business practices.

We may be subject to claims, lawsuits, arbitration proceedings, government investigations, and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti-discrimination, commercial disputes, competition, professional liability, consumer complaints, personal injury, wrongful death, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer brokers' offers of commissions and other listing and marketing practices), securities laws, and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, integrated services business lines, securities issuances or business practices.

We may also be subject to disputes between us and our employees and agents, which are primarily governed by mandatory arbitration provisions, and become involved in disputes between agents where we are not a proper party.

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Further, if legal standards for classification of our agents as independent contractors change or appear to be changing, it may be necessary to modify the compensation structure for our agents, including by paying additional compensation and benefits or reimbursing expenses.

We face claims from time to time alleging misclassification of status and it could be determined that the independent contractor classification is inapplicable to some or any of our agents.

We face claims from time to time alleging misclassification of status and it could be determined

that the independent contractor classification is inapplicable to some or any of our agents.

We could also incur substantial costs, penalties and damages due to any such future challenges by current or former professionals to our classification or compensation practices, including with respect to their status as exempt or non-exempt employees.

Finally, we could be subject to classification and other claims from employees of our independent contractors, whose employment practices we do not control.

Any of these outcomes could result in substantial costs to us, significantly impair our financial condition and our ability to conduct our business as currently contemplated, damage our reputation, and impair our ability to attract agents.

In addition, we work with international staffing organizations that hire contractors in various jurisdictions who are subject to various local laws, including labor and employment laws, that differ from those in the United States.

We may be subject

to claims as a result of the staffing agencies’ practices, which are outside our control or direction.

We may be subject to claims as a result of the staffing agencies’ practices, which are outside our control or direction.

We may also be subject to claims that these contractors are employees of Compass, subjecting us to corporate tax and other liabilities.

We are subject to a variety of federal and state laws, many of which are unsettled and still developing, and certain of our businesses are highly regulated.

We are subject to a variety of federal, state and international laws, many of which are unsettled and still developing, and certain of our businesses are highly regulated.

Any failure to comply with such regulations or any changes in such regulations could adversely affect our business .

Our real estate brokerage business, our title and escrow business, our mortgage joint venture, OriginPoint, and the businesses of our agents must comply with a variety of local, state, and federal laws, such as RESPA, the Fair Housing Act, the Dodd-Frank Act, the Exchange Act, GLBA, and federal advertising and other laws, as well as some comparable state statutes and rules of trade organizations such as NAR and local MLSs.

Our real estate brokerage business, our title and escrow business, our mortgage business and the businesses of our agents are subject to a variety of local, state, federal and international laws, such as RESPA, the Fair Housing Act, the Dodd-Frank Act, the Exchange Act, GLBA, and federal advertising and other laws, as well as some comparable state statutes and rules of trade organizations such as NAR and local MLSs.

RESPA and comparable state statutes prohibit providing or receiving payments, or other things of value, for the referral of business to settlement service providers in connection with the closing of certain real estate transactions.

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The GLBA's requirements include certain disclosures related to collection of information and sharing practices and implementation of a cybersecurity program that adequately protects the collected information.

Moreover, under the U.S.

franchise law, we are subject to federal regulations enforced by the FTC governing franchise offers and sales, as well as various regulations in states in which we operate, which may impose additional registration and

disclosure requirements.

Furthermore, our ability to terminate or refuse renewal/transfer of franchise agreements may be restricted by state-specific “franchise relationship” or “business opportunity” laws.

Compliance with, and monitoring of, the foregoing laws and regulations is complicated and costly and may inhibit our ability to innovate or grow.

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domestic bribery laws, and other anti-corruption and anti-money laundering laws in the countries in which we conduct business.

Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or

indirectly, improper payments or benefits to recipients in the public or private sector.

If we engage in international sales and business with partners and third-party intermediaries to market our products, we may be required to obtain additional permits, licenses, and other regulatory approvals.

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We may be subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls .

If we expand our brokerage business to international markets, our platform may become subject to U.S.

If we further expand our brokerage business to international markets, our platform may become subject to U.S.

export controls, including the U.S.

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Risks Related to Our Intellectual Property

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.

Our trade secrets, trademarks, copyrights and other intellectual property rights are important assets, and litigation to defend intellectual property can be expensive and lengthy.

Our intellectual property rights are valuable to us, and any inability to protect them could reduce the value of our products, services, and brand .

Our trade secrets, trademarks, copyrights and other intellectual property rights are important assets to us, and litigation to defend intellectual property can be expensive and lengthy.

Various factors may pose a threat to our intellectual property rights, as well as to our platform and technology offerings.

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In addition to registered intellectual property rights such as trademark registrations, we rely on non-registered proprietary information and technology, such as trade secrets, confidential information, know-how, and technical information.

To protect our proprietary information and technology, we rely in part on agreements with our employees, investors,

independent contractors, vendors and other third parties that place restrictions on the use and disclosure of this intellectual property.

To protect our proprietary information and technology, we rely in part on agreements with our employees, investors, independent contractors, vendors and other third parties that place restrictions on the use and disclosure of this intellectual property.

These agreements may be breached, or this intellectual property, including trade secrets, may otherwise be disclosed or become known to our competitors, which could cause us to lose any competitive advantage resulting from this intellectual property.

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Efforts to enforce or protect proprietary rights may be ineffective and could result in substantial costs and diversion of resources, which could harm our business and results of operations.

We do not own the Christie's International Real Estate brand and rely on our exclusive license right under the License Agreement, which allows us to franchise and/or license the brand to our affiliates.

CMW, the licensor under the License Agreement, has the right to terminate our license if certain conditions occur prior to the termination date.

Additionally, any disagreements or complications in our relationship with CMW, difficulties in the affiliate business or changes in the licensing strategy could disrupt and/or negatively impact our affiliate business and may result in termination of the License Agreement prior to the termination date.

While currently, our affiliate business represents a small portion of our revenue and the loss of the license is unlikely to have a material adverse effect on our business and results of operations, as we expand that line of business in the future, any early termination of the License Agreement may have a material adverse effect on our business and results of operations.

Our platform, its features, and technology offerings may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from providing our products and services .

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If we are unable to obtain necessary licenses from third parties, we may be forced to acquire or develop alternate technology, which may require significant time and effort and may be of lower quality or performance standards and/or may be prohibited by contract from developing competing products.

We have been, and may be, subject to claims that we have infringed the copyrights, trademarks, or other intellectual property rights of a third party.

We have been, and may be, subject to claims that we or our agents have infringed the copyrights, trademarks, or other intellectual property rights of a third party.

Any intellectual property-related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and divert management resources and attention.

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As a result, Mr.

Reffkin is able to determine and may significantly influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our restated certificate of incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction.

This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and might ultimately affect the market price of our Class A common stock.

Reffkin is able to influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our restated certificate of incorporation and amended and restated bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction.

As a stockholder, Mr.

Reffkin is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally, and this concentrated voting power may have the effect of delaying, preventing, or

deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company, and might ultimately affect the market price of our Class A common stock.

Future transfers by the holders of Class C common stock will generally result in those shares automatically converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or other transfers by Mr.

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Technology and real estate stocks historically have experienced high levels of volatility.

Accordingly, the trading price of our Class A common stock may fluctuate substantially, due to factors including:

Accordingly, the trading price of our Class A common stock has historically and may in the future fluctuate substantially, due to factors including:

loss of investor confidence in, or significant volatility in the market price and trading volume of, technology companies in general and of companies in the real estate technology industry in particular;

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In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company.

Any securities class action litigation could adversely affect our business, financial condition and results of operations.

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline .

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authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

allow only our chief executive officer, chairperson of our board of directors, or a majority of our board of directors are authorized to call a special meeting of stockholders;

allow only our chief executive officer, chairperson of our board of directors, or a majority of our board of directors to call a special meeting of stockholders;

prohibit cumulative voting;

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prohibit stockholder action by written consent, requiring all stockholder actions to be taken at a meeting of our stockholders;

expressly authorize the

board of directors to make, alter, or repeal our bylaws;

expressly authorize the board of directors to make, alter, or repeal our bylaws;

and establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

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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 1A. Risk Factors