Real estate technology company Compass (NYSE: COMP) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 109% year on year to $4.31 billion. On top of that, next quarter’s revenue guidance ($3.95 billion at the midpoint) was surprisingly good and 5.6% above what analysts were expecting. Its GAAP profit of $0.11 per share was 21.4% below analysts’ consensus estimates.
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Compass (COMP) Q2 CY2026 Highlights:
- Revenue: $4.31 billion vs analyst estimates of $4.11 billion (109% year-on-year growth, 4.7% beat)
- EPS (GAAP): $0.11 vs analyst expectations of $0.14 (21.4% miss)
- Adjusted EBITDA: $363 million vs analyst estimates of $331.6 million (8.4% margin, 9.5% beat)
- Revenue Guidance for Q3 CY2026 is $3.95 billion at the midpoint, above analyst estimates of $3.74 billion
- EBITDA guidance for Q3 CY2026 is $290 million at the midpoint, above analyst estimates of $274.1 million
- Operating Margin: 2.9%, in line with the same quarter last year
- Free Cash Flow Margin: 4.2%, similar to the same quarter last year
- Transactions: up 79,984 year on year
- Market Capitalization: $8.78 billion
Company Overview
Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE: COMP) is a digital-first company operating a residential real estate brokerage in the United States.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Compass grew its sales at a 14% compounded annual growth rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the consumer discretionary sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Compass’s annualized revenue growth of 42.6% over the last two years is above its five-year trend, suggesting some bright spots. 
Compass also discloses its number of transactions, which reached 153,009 in the latest quarter. Over the last two years, Compass’s transactions averaged 42.8% year-on-year growth. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent. 
This quarter, Compass reported magnificent year-on-year revenue growth of 109%, and its $4.31 billion of revenue beat Wall Street’s estimates by 4.7%. Company management is currently guiding for a 114% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 38.3% over the next 12 months, a deceleration versus the last two years. Still, this projection is eye-popping given its scale and suggests the market sees success for its products and services.
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Operating Margin
Compass’s operating margin has shrunk over the last 12 months and averaged negative 2% over the last two years. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they’re spending loads of money to stay relevant, an unsustainable practice.
In Q2, Compass generated an operating margin profit margin of 2.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.
Compass’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q2, Compass reported EPS of $0.11, up from $0.07 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Compass’s full-year EPS to grow 408% from $0.06 to $0.30.
Key Takeaways from Compass’s Q2 Results
We were impressed by Compass’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. On the other hand, its EPS missed. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 11.9% to $13.45 immediately following the results.
Sure, Compass had a solid quarter, but if we look at the bigger picture, is this stock a buy? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
