Will Compass's first combined quarterly EBITDA (Q1 2026) meet or exceed $150M on a pro forma basis?

Combined annualized EBITDA estimates range $600-875M. The low end ($600M/4 = $150M/quarter average) already implies Q1 would fall below $150M due to strong seasonality — Q1 is the trough quarter where Compass standalone was only $15.6M. Even with Compass growing to ~$25-35M and Anywhere contributing $60-80M net in Q1, the combined estimate of $85-115M falls meaningfully short. Only at the high end of the annual range ($875M) does Q1 approach $150M, and first-quarter integration friction makes the high end unlikely in Q1.

Bull case: Compass growth trajectory (+80% YoY in Q3) puts standalone Q1 at ~$28M; Anywhere franchise fees at 30-35% margins on ~$250M/quarter deliver $75-88M; combined with title/escrow could reach $130-150M if management defines Adj. EBITDA generously. Bear case: integration disruption causes agent attrition at both brands, Q1 housing market remains sluggish due to elevated rates, Anywhere's non-franchise revenue underperforms, and duplicative overhead absorbs synergies — yielding $70-100M combined. The bear case mechanisms are more concrete and the bull case requires everything going right simultaneously.

Multiple failure modes converge: agent defection during integration uncertainty at both legacy brands, Q1 2026 housing market weakness from elevated mortgage rates, Anywhere's franchise business in secular agent-count decline, $3.16B corporate debt creating interest expense burden, and first-quarter reporting complexity with partial-period effects. Management may also choose a conservative Adj. EBITDA definition for Q1 to set a low baseline and show improvement in future quarters. The 22x scale gap between Compass's only prior acquisition proof point and this merger amplifies execution risk.

The arithmetic is demanding: Compass Q1 at ~$25-30M plus Anywhere needs to contribute $120-125M in Q1 alone. Anywhere's franchise fees (~$81M at midpoint margins) are the strongest contributor, but title, escrow, and relocation revenues are highly seasonal and Q1 is the trough. At the midpoint of combined annual estimates (~$738M), Q1 at 18% of annual (seasonal weight) yields ~$133M — below the $150M threshold. Only the upper end of estimates gets there.

If combined EBITDA is truly at the $875M high end of estimates, Q1 at even 18% of annual = $158M, clearing $150M. At $750M midpoint, Q1 at 18% = $135M, missing. The key uncertainty is where in the $600-875M range the combined entity actually lands. Anywhere's franchise revenue being more contractual/recurring than Compass's transaction revenue provides some seasonal stability. Management will likely use a broad definition of Adj. EBITDA excluding integration costs, which helps. But this is still more likely to miss than hit in Q1 specifically.

First combined quarter reporting will be messy with pro forma adjustments that may or may not align with the market question's definition. Anywhere was struggling before acquisition — declining agent counts and revenue. Housing market in Q1 2026 faces continued affordability pressure from elevated rates. The $150M threshold appears specifically calibrated to be challenging for Q1, representing the floor of annualized combined estimates applied evenly across quarters without seasonal adjustment.

Q1 is the seasonal trough for real estate. Compass standalone was $15.6M in Q1 2025. Even doubling to ~$30M, that requires ~$120M from Anywhere in its weakest quarter. Franchise fees at $75-85M are solid but the remaining gap from title/escrow in Q1 is hard to fill. Achievable only at high end of estimates.

Anywhere franchise fees are recurring and deliver $75-85M in Q1. Add title/escrow for maybe $90-100M total Anywhere contribution. Compass at $25-30M. Total ~$115-130M — likely short of $150M. Integration overhead in first quarter adds drag. More likely to miss than hit.

Integration disruption, Q1 seasonality, wide uncertainty in combined EBITDA estimates, and $3.16B debt burden all point to this being a hard threshold to hit in the weakest quarter. First-quarter combined reporting adds complexity. The 4.4x pro forma leverage and FUNDING_FRAGILITY: STRETCHED rating reinforce downside risk.