Will Compass's annualized stock-based compensation decline to $150M or below by Q3 2026?

The core challenge is bridging from $60M/quarter (Q3 2025) to $37.5M/quarter by Q3 2026 — a 37.5% decline in roughly four quarters. While management frames 2025 SBC as a 'methodology catch-up,' the Anywhere merger fundamentally changes the SBC calculus. Legacy Anywhere equity programs, retention grants for key integration personnel, and the larger combined headcount all push SBC higher, not lower. FY2024 standalone Compass at $130M was below threshold, but that baseline is no longer relevant for the merged entity. The $100M long-term target explicitly contemplates a multi-year path, not a one-year correction.

There is a plausible path to YES if the methodology catch-up truly was a one-time spike concentrated in 2025, and if it reverses sharply in H1 2026 as the catch-up expense fully amortizes. The FY2024 baseline of $130M shows the underlying run rate was well below threshold. However, the Anywhere integration introduces a structural step-up in SBC that makes a return to $130M unlikely for the combined entity by Q3 2026. Even a partial normalization to $45-50M/quarter ($180-200M annualized) remains above the $150M threshold. The accounting integrity concern (SBC exceeding Adj. EBITDA) suggests the company uses equity compensation aggressively as a tool.

The NARRATIVE_REALITY_GAP rated as DIVERGING (high end) and ACCOUNTING_INTEGRITY rated as QUESTIONABLE are the most telling signals. When a company's SBC exceeds its Adjusted EBITDA, management has a demonstrated pattern of using equity as a primary compensation tool. This pattern is structural, not cyclical. The Anywhere merger approximately doubles Compass's agent and employee base, creating a proportional increase in equity compensation needs. Even if standalone Compass SBC were to normalize toward $100M, the combined entity would layer Anywhere's SBC on top. A realistic combined run rate is $180-250M, well above the $150M threshold. The resolution requires Q3 2026 specifically — giving only about four quarters for a combined entity restructuring of compensation to take effect.

The math is challenging: $60M/quarter needs to fall to $37.5M/quarter. Management's claim of 'methodology catch-up' provides a plausible mechanism for decline, since catch-up expenses are inherently non-recurring. However, the Anywhere acquisition is the critical confounding variable. Legacy equity programs from the acquired company plus retention grants for integration create an SBC headwind that likely persists through Q3 2026. The combined entity will almost certainly have higher SBC than standalone Compass did in FY2024. Probability weighted toward NO given the merger overhang.

The gap between current run rate ($240M annualized) and threshold ($150M) is $90M — a 37.5% reduction needed. Even if the methodology catch-up fully reverses (say $40M of the $60M quarterly is temporary), that brings the quarterly to ~$40-45M or $160-180M annualized — still above threshold. Add Anywhere's SBC obligations and the combined figure likely stays in the $200M+ range. The dilution being held at ~1% quarterly is somewhat encouraging but reflects share count management, not SBC expense reduction. Management's $100M target would represent extraordinary discipline for a recently-merged entity.

This prediction gives more weight to the possibility that the methodology catch-up was genuinely a one-time event and that management's aggressive targeting of $100M SBC could result in faster normalization than expected. If the catch-up explains the majority of the spike from $130M to $240M, a reversion to $140-160M is plausible for standalone operations. The Anywhere integration is the key uncertainty — if Anywhere's SBC was already declining pre-acquisition or if Compass restructures compensation quickly, the threshold is possible. But the balance of evidence still favors NO given the combined entity's larger scale.

Current $240M annualized SBC needs to drop 37.5% to $150M in four quarters. Anywhere merger adds SBC obligations. Even with methodology catch-up reversing, combined entity likely stays above $150M. Strong NO lean.

The combination of elevated current run rate ($240M), Anywhere merger SBC obligations, and the short timeline makes sub-$150M highly unlikely. ACCOUNTING_INTEGRITY rated QUESTIONABLE with SBC exceeding EBITDA signals structural reliance on equity compensation. Management's $100M target is aspirational for a combined entity this size.

FY2024 standalone was $130M which proves sub-$150M is achievable for Compass alone. But Q3 2025 spike and Anywhere merger change the equation. Even optimistic scenario with full catch-up reversal plus modest Anywhere SBC yields $160-180M range. Threshold is possible but improbable.