Compass delivered the strongest quarter and year in its history while simultaneously demonstrating merger execution that exceeded every external expectation. Revenue of $1.7B (+23% YoY) and Adjusted EBITDA of $58.3M (+249%) both beat the high end of guidance. Full-year 2025 revenue of approximately $7B surpassed the 2021 peak of $6.4B — achieved with existing home sales volumes roughly 50% below that peak's market. And then there was the Rocket/Redfin alliance.
Our 4-lens committee maintained all six signal labels but softened four of them within their existing bands, with confidence increasing on three. The thesis classification upgraded from price-above-value to price-at-value at $10.12 after hours — driven by the combination of improved execution evidence, a new competitive moat layer, and a 17.5% stock decline from the original assessment price of $12.27.
By the Numbers
The Synergy Story: From Unproven to Partially Demonstrated
This was the original analysis's weakest point. The Consolidation Calibrator calculated a 43x year-1 synergy premium — among the highest for any transformational deal — and three of four lenses flagged synergy targets as unprecedented with “no relevant precedent.”
Six-and-a-half weeks later, $175M has been actioned. CEO Robert Reffkin raised the Year 1 target from $150M to $250M and the 3-year target from $300M to $400M. A transformation office serves as the “single control tower.” The composition is encouraging: slightly over 50% is reduced CapEx from cutting Anywhere's technology capitalization (~$80M/year historically), with the remainder in OpEx from headcount and vendor consolidation.
Rocket/Redfin Alliance: First Evidence of Scale-Derived Advantage
Announced concurrently with earnings, the 3-year exclusive strategic alliance with Rocket/Redfin is the most significant competitive development since the merger itself. It was entirely absent from our February 8 analysis.
The deal delivers 1.2M high-intent leads over three years from Redfin.com and Rocket Mortgage. Compass listings (Coming Soons, Private Exclusives) get priority placement on Redfin with 60M monthly active users — with no days-on-market or price-drop history displayed. Agent names and brokerage affiliations are prominently displayed. And it's exclusive to Compass International Holdings' nine brands.
This directly addresses the Moat Mapper's core concern: agents are independent contractors with no contractual lock-in. The alliance creates incentive-based switching friction — leaving a Compass brand means forfeiting access to leads, favorable listing presentation, and mortgage incentives that no competitor can offer. Our committee upgraded switching costs from Weak-Moderate to Moderate and shifted the moat trajectory from “Uncertain” to “Cautiously Positive.”
Signal Confirmations
All six signals retained their labels with four softening within bands:
| Signal | Assessment | Change |
|---|---|---|
| ACCOUNTING_INTEGRITY | QUESTIONABLE | Unchanged — PPA pending May 2026 |
| CAPITAL_DEPLOYMENT | MIXED | Confidence ↑ (synergy pace) |
| FUNDING_FRAGILITY | STRETCHED | Mid-range (was upper boundary) |
| COMPETITIVE_POSITION | CONTESTED | Confidence ↑, trajectory positive |
| NARRATIVE_REALITY_GAP | DIVERGING | Mid-range (was high end) |
| EXPECTATIONS_PRICED | DEMANDING | Mid-range (was high end) |
The Myth Meter saw the most nuanced evolution. Synergy confidence upgraded from DIVERGING to PARTIALLY ALIGNED — the first sub-element to change in the original analysis. Scale advantage improved as the Rocket/Redfin deal provided the first evidence that 340,000 agents and 700,000+ listings generate advantages competitors cannot replicate. But tech identity remains DISCONNECTED: revenue is still 100% commission, AI produces $0 in technology licensing, and the CEO's expanded “trust and proprietary data” narrative is aspirational, not measured.
Forecast Market Updates
Our 9-model ensemble updated all eight active forecast markets. No markets were resolvable from this earnings event — all have resolution dates in H2 2026 or later.
| Market | Before | After | Shift |
|---|---|---|---|
| Year 1 Synergies >$100M | 55% | 82% | +27pp |
| Agent Retention >95% | 67% | 75% | +8pp |
| Goodwill Impairment <18mo | 13% | 11% | -2pp |
| Housing >10% Decline | 28% | 20% | -8pp |
| Zillow Trial Favorable | 20% | 20% | 0pp |
| Q1 Combined EBITDA >$150M | 30% | 5% | -25pp |
| H1 Net Leverage <4.0x | 40% | 10% | -30pp |
| SBC Annualized <$150M | 22% | 6% | -16pp |
The three large downward shifts (Q1 EBITDA, leverage, SBC) reflect expected outcomes from management's own guidance — not negative surprises. The Q1 EBITDA guidance of $15-35M makes the $150M threshold near-impossible. The CEO's SBC commitment of <$50M/quarter ($200M annualized) is above the $150M threshold. And no debt prepayment before April 2027 locks leverage above 4.0x for the near term.
The two large upward shifts (synergies, agent retention) reflect genuine positive surprises from the earnings data, making the thesis shift meaningful rather than mechanical.
What to Watch
Covenant headroom, combined EBITDA, purchase price allocation. The single most important data point remaining.
80% probability of unfavorable ruling. Rocket/Redfin creates alternative distribution but legal outcome still matters.
The real agent retention test. Early positive signals may not survive forced workflow changes.
CEO made explicit commitment. Failure to deliver would be a credibility concern.
Management guided $44M realized in Q4 from $175M actioned. If materially short, synergy credibility weakens.