10-Q 1 comp-20220930.htm 10-Q comp-20220930
false2022Q30001563190--12-31P1Y2000015631902022-01-012022-09-3000015631902022-11-02xbrli:shares00015631902022-09-30iso4217:USD00015631902021-12-31iso4217:USDxbrli:shares00015631902022-07-012022-09-3000015631902021-07-012021-09-3000015631902021-01-012021-09-300001563190us-gaap:CommonStockMember2022-06-300001563190us-gaap:AdditionalPaidInCapitalMember2022-06-300001563190us-gaap:RetainedEarningsMember2022-06-300001563190us-gaap:ParentMember2022-06-300001563190us-gaap:NoncontrollingInterestMember2022-06-3000015631902022-06-300001563190us-gaap:RetainedEarningsMember2022-07-012022-09-300001563190us-gaap:ParentMember2022-07-012022-09-300001563190us-gaap:NoncontrollingInterestMember2022-07-012022-09-300001563190us-gaap:CommonStockMember2022-07-012022-09-300001563190us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001563190us-gaap:CommonStockMember2022-09-300001563190us-gaap:AdditionalPaidInCapitalMember2022-09-300001563190us-gaap:RetainedEarningsMember2022-09-300001563190us-gaap:ParentMember2022-09-300001563190us-gaap:NoncontrollingInterestMember2022-09-300001563190us-gaap:CommonStockMember2021-06-300001563190us-gaap:AdditionalPaidInCapitalMember2021-06-300001563190us-gaap:RetainedEarningsMember2021-06-300001563190us-gaap:ParentMember2021-06-300001563190us-gaap:NoncontrollingInterestMember2021-06-3000015631902021-06-300001563190us-gaap:RetainedEarningsMember2021-07-012021-09-300001563190us-gaap:ParentMember2021-07-012021-09-300001563190us-gaap:NoncontrollingInterestMember2021-07-012021-09-300001563190us-gaap:CommonStockMember2021-07-012021-09-300001563190us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001563190us-gaap:CommonStockMember2021-09-300001563190us-gaap:AdditionalPaidInCapitalMember2021-09-300001563190us-gaap:RetainedEarningsMember2021-09-300001563190us-gaap:ParentMember2021-09-300001563190us-gaap:NoncontrollingInterestMember2021-09-3000015631902021-09-300001563190us-gaap:CommonStockMember2021-12-310001563190us-gaap:AdditionalPaidInCapitalMember2021-12-310001563190us-gaap:RetainedEarningsMember2021-12-310001563190us-gaap:ParentMember2021-12-310001563190us-gaap:NoncontrollingInterestMember2021-12-310001563190us-gaap:RetainedEarningsMember2022-01-012022-09-300001563190us-gaap:ParentMember2022-01-012022-09-300001563190us-gaap:NoncontrollingInterestMember2022-01-012022-09-300001563190us-gaap:CommonStockMember2022-01-012022-09-300001563190us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001563190us-gaap:CommonStockMembercomp:A2021AgentEquityProgramMember2022-01-012022-09-300001563190us-gaap:AdditionalPaidInCapitalMembercomp:A2021AgentEquityProgramMember2022-01-012022-09-300001563190comp:A2021AgentEquityProgramMemberus-gaap:ParentMember2022-01-012022-09-300001563190comp:A2021AgentEquityProgramMember2022-01-012022-09-300001563190us-gaap:PreferredStockMemberus-gaap:ConvertiblePreferredStockMember2020-12-310001563190us-gaap:CommonStockMember2020-12-310001563190us-gaap:AdditionalPaidInCapitalMember2020-12-310001563190us-gaap:RetainedEarningsMember2020-12-310001563190us-gaap:ParentMember2020-12-310001563190us-gaap:NoncontrollingInterestMember2020-12-3100015631902020-12-310001563190us-gaap:RetainedEarningsMember2021-01-012021-09-300001563190us-gaap:ParentMember2021-01-012021-09-300001563190us-gaap:NoncontrollingInterestMember2021-01-012021-09-300001563190us-gaap:CommonStockMember2021-01-012021-09-300001563190us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001563190us-gaap:PreferredStockMemberus-gaap:ConvertiblePreferredStockMember2021-01-012021-09-300001563190us-gaap:PreferredStockMemberus-gaap:ConvertiblePreferredStockMember2021-09-300001563190us-gaap:IPOMember2021-04-012021-04-010001563190us-gaap:IPOMember2021-04-010001563190us-gaap:IPOMember2020-12-3100015631902021-04-012021-04-300001563190us-gaap:AdditionalPaidInCapitalMember2021-04-012021-04-300001563190comp:IpoRelatedExpenseMember2021-03-312021-03-310001563190us-gaap:RevolvingCreditFacilityMember2022-09-300001563190srt:ScenarioForecastMembersrt:MinimumMember2023-01-012023-12-310001563190srt:ScenarioForecastMembersrt:MaximumMember2023-01-012023-12-310001563190us-gaap:RestrictedStockUnitsRSUMember2020-11-302020-11-300001563190srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190comp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-09-30xbrli:pure0001563190comp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-01-012022-09-300001563190us-gaap:CommonClassAMembercomp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-01-012022-09-300001563190us-gaap:CustomerRelationshipsMembercomp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-09-300001563190comp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMemberus-gaap:TrademarksMember2022-09-300001563190srt:MinimumMembercomp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-01-012022-09-300001563190srt:MaximumMembercomp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-01-012022-09-300001563190srt:ScenarioForecastMembercomp:TitleInsuranceAndEscrowSettlementServicesCompanyAndRealEstateBrokerageMember2022-12-310001563190comp:CashAndMoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-09-300001563190comp:CashAndMoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2021-12-310001563190us-gaap:FairValueInputsLevel3Member2022-09-300001563190us-gaap:FairValueInputsLevel3Member2021-12-310001563190comp:ConciergeRevolvingCreditFacilityMember2020-07-310001563190comp:ConciergeRevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-07-292021-07-290001563190comp:ConciergeFacilityUsedGreaterThanFiftyPercentMembercomp:ConciergeRevolvingCreditFacilityMember2021-07-292021-07-290001563190comp:ConciergeRevolvingCreditFacilityMembercomp:ConciergeFacilityUsedLessThanFiftyPercentMember2021-07-292021-07-290001563190us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembercomp:SecondConciergeRevolvingCreditFacilityMember2022-08-052022-08-050001563190comp:ConciergeRevolvingCreditFacilityMember2022-09-300001563190comp:ConciergeRevolvingCreditFacilityMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMember2021-03-310001563190us-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLiborSwapRateMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMember2022-01-012022-09-300001563190us-gaap:RevolvingCreditFacilityMembercomp:DebtDefaultInterestRateMember2022-01-012022-09-300001563190us-gaap:LetterOfCreditMember2022-09-300001563190srt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2022-09-300001563190srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembercomp:FourFiscalQuartersOf2022Member2022-01-012022-09-300001563190srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembercomp:FourFiscalQuartersOf2023Member2022-01-012022-09-300001563190srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembercomp:FourFiscalQuartersThereafter2023Member2022-01-012022-09-300001563190us-gaap:OtherCurrentAssetsMemberus-gaap:RevolvingCreditFacilityMember2022-01-012022-09-300001563190comp:RealogyHoldingsCorpEtAlVUrbanCompassIncAndCompassIncMember2022-07-012022-09-300001563190us-gaap:RevolvingCreditFacilityMember2022-09-300001563190us-gaap:CashAndCashEquivalentsMember2022-09-300001563190us-gaap:RevolvingCreditFacilityMember2021-12-310001563190us-gaap:CashAndCashEquivalentsMember2021-12-310001563190comp:UndesignatedPreferredStockMembercomp:RestatedCertificateOfIncorporationMember2021-04-300001563190us-gaap:CommonClassCMember2021-03-312021-03-310001563190us-gaap:CommonClassCMember2021-02-282021-02-280001563190us-gaap:CommonClassAMembercomp:RestatedCertificateOfIncorporationMember2021-04-300001563190us-gaap:CommonClassBMembercomp:RestatedCertificateOfIncorporationMember2021-04-300001563190us-gaap:CommonClassCMembercomp:RestatedCertificateOfIncorporationMember2021-04-3000015631902021-01-012021-12-31comp:stockClass0001563190us-gaap:CommonClassAMember2022-09-300001563190us-gaap:CommonClassBMember2022-09-300001563190us-gaap:CommonClassCMember2022-09-300001563190us-gaap:CommonClassAMember2021-12-310001563190us-gaap:CommonClassBMember2021-12-310001563190us-gaap:CommonClassCMember2021-12-31comp:vote0001563190comp:TwoThousandAndTwelveStockIncentivePlanMemberus-gaap:EmployeeStockOptionMember2022-01-012022-09-300001563190comp:TwoThousandAndTwelveStockIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190comp:TwoThousandAndTwentyOneEquityIncentivePlanMember2021-02-280001563190comp:TwoThousandAndTwentyOneEquityIncentivePlanMemberus-gaap:EmployeeStockMember2021-02-282021-02-2800015631902022-01-010001563190comp:TwoThousandAndTwentyOneEquityIncentivePlanMember2022-09-300001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2021-02-282021-02-280001563190srt:MaximumMemberus-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2021-02-280001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2021-02-280001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-01-012022-01-010001563190us-gaap:CommonClassAMemberus-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-09-300001563190us-gaap:CommonClassAMemberus-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2021-02-282021-02-280001563190us-gaap:CommonClassAMemberus-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-01-012022-09-300001563190us-gaap:CommonClassAMemberus-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-07-012022-09-300001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-07-012022-09-300001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-01-012022-09-300001563190us-gaap:EmployeeStockMembercomp:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2022-09-300001563190comp:OutsideOf2012PlanMember2019-01-012019-12-310001563190comp:AccruedExpensesAndOtherCurrentLiabilitiesMember2022-01-012022-09-300001563190us-gaap:OtherCurrentLiabilitiesMember2022-01-012022-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2021-12-310001563190us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2022-09-300001563190us-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190us-gaap:RestrictedStockUnitsRSUMembercomp:ServiceBasedAndPerformanceBasedMember2022-09-300001563190us-gaap:CommonClassAMemberus-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190us-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-01-012022-09-300001563190us-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2022-01-012022-09-300001563190us-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMembercomp:ShareBasedPaymentArrangementTrancheFourMember2022-01-012022-09-300001563190comp:ShareBasedPaymentArrangementTrancheFiveMemberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190us-gaap:CommonClassAMembercomp:ShareBasedPaymentArrangementTrancheSixMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190comp:ShareBasedPaymentArrangementTrancheSevenMemberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190comp:A2021AgentEquityProgramMember2022-01-012022-03-310001563190comp:A2021AgentEquityProgramMember2021-01-012021-12-310001563190us-gaap:CommonClassAMembercomp:A2021AgentEquityProgramMemberus-gaap:RestrictedStockUnitsRSUMember2022-02-012022-02-280001563190comp:A2021AgentEquityProgramMemberus-gaap:RestrictedStockUnitsRSUMember2021-12-310001563190us-gaap:RestrictedStockUnitsRSUMembercomp:A2022AgentEquityProgramMember2022-09-300001563190comp:CommissionAndOtherRelatedExpensesMember2022-07-012022-09-300001563190comp:CommissionAndOtherRelatedExpensesMember2021-07-012021-09-300001563190comp:CommissionAndOtherRelatedExpensesMember2022-01-012022-09-300001563190comp:CommissionAndOtherRelatedExpensesMember2021-01-012021-09-300001563190us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001563190us-gaap:SellingAndMarketingExpenseMember2021-07-012021-09-300001563190us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001563190us-gaap:SellingAndMarketingExpenseMember2021-01-012021-09-300001563190comp:OperationsAndSupportMember2022-07-012022-09-300001563190comp:OperationsAndSupportMember2021-07-012021-09-300001563190comp:OperationsAndSupportMember2022-01-012022-09-300001563190comp:OperationsAndSupportMember2021-01-012021-09-300001563190us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001563190us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001563190us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001563190us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001563190us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001563190us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001563190us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001563190us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001563190comp:IpoBasedRestrictedStockUnitsMember2021-04-012021-06-300001563190comp:CommissionAndOtherRelatedExpensesMembercomp:IpoRelatedExpenseMember2021-01-012021-09-300001563190us-gaap:SellingAndMarketingExpenseMembercomp:IpoRelatedExpenseMember2021-01-012021-09-300001563190comp:OperationsAndSupportMembercomp:IpoRelatedExpenseMember2021-01-012021-09-300001563190comp:IpoRelatedExpenseMemberus-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001563190us-gaap:GeneralAndAdministrativeExpenseMembercomp:IpoRelatedExpenseMember2021-01-012021-09-300001563190comp:IpoRelatedExpenseMember2021-01-012021-09-300001563190us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001563190us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001563190us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001563190us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2021-07-012021-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001563190us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001563190us-gaap:EmployeeStockMember2022-07-012022-09-300001563190us-gaap:EmployeeStockMember2021-07-012021-09-300001563190us-gaap:EmployeeStockMember2022-01-012022-09-300001563190us-gaap:EmployeeStockMember2021-01-012021-09-300001563190comp:UnvestedEarlyExercisedOptionsMember2022-07-012022-09-300001563190comp:UnvestedEarlyExercisedOptionsMember2021-07-012021-09-300001563190comp:UnvestedEarlyExercisedOptionsMember2022-01-012022-09-300001563190comp:UnvestedEarlyExercisedOptionsMember2021-01-012021-09-300001563190comp:UnvestedCommonStockMember2022-07-012022-09-300001563190comp:UnvestedCommonStockMember2021-07-012021-09-300001563190comp:UnvestedCommonStockMember2022-01-012022-09-300001563190comp:UnvestedCommonStockMember2021-01-012021-09-300001563190us-gaap:FinancialAssetNotPastDueMember2022-09-300001563190comp:FinancingReceivablesOverdueUpToThirtyOneDaysAndLessThanNinetyDaysMember2022-09-300001563190us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-09-300001563190us-gaap:RestructuringChargesMember2022-07-012022-09-300001563190us-gaap:RestructuringChargesMember2022-01-012022-09-300001563190comp:DepreciationAndAmortizationMember2022-07-012022-09-300001563190comp:DepreciationAndAmortizationMember2022-01-012022-09-300001563190us-gaap:EmployeeSeveranceMember2022-07-012022-09-300001563190us-gaap:EmployeeSeveranceMember2022-01-012022-09-300001563190comp:LeaseTerminationCostsMember2022-07-012022-09-300001563190comp:LeaseTerminationCostsMember2022-01-012022-09-300001563190comp:AcceleratedAmortizationOfIntangibleAssetsMember2022-07-012022-09-300001563190comp:AcceleratedAmortizationOfIntangibleAssetsMember2022-01-012022-09-300001563190comp:WriteDownOfFixedAssetsMember2022-07-012022-09-300001563190comp:WriteDownOfFixedAssetsMember2022-01-012022-09-300001563190us-gaap:OtherRestructuringMember2022-07-012022-09-300001563190us-gaap:OtherRestructuringMember2022-01-012022-09-300001563190comp:UnpaidSeveranceCostsMembercomp:Q22022StrategicActionsMember2022-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________________
FORM 10-Q
___________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 001-40291
___________________________
COMPASS, INC.
(Exact Name of Registrant as Specified in its Charter)
___________________________
Delaware
30-0751604
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
90 Fifth Avenue, 3rd Floor
New York, New York
10011
(Address of Principal Executive Offices)(Zip Code)
(212) 913-9058
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
___________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Class A Common Stock, $0.00001 par value per shareCOMPThe New York Stock Exchange
___________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of November 2, 2022, there were 435,473,094 shares of the registrant’s common stock outstanding.


Compass, Inc.
Table of Contents
Page
2

Unless otherwise expressly stated or the context otherwise requires, references in this Quarterly Report on Form 10-Q, which we refer to as this Quarterly Report, to “Compass,” “Company,” “our,” “us,” and “we” and similar references refer to Compass, Inc. and its consolidated subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
Investors and others should note that we may announce material business and financial information to our investors using our investor relations page on our website (www.compass.com), filings we make with the Securities and Exchange Commission, or the SEC, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates and other matters. It is possible that the information we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.
From time to time, we intend to announce material information to the public through filings with the SEC, the investor relations page on our website (www.compass.com), press releases, public conference calls, public webcasts, our Twitter feed (@Compass), our Facebook page, our LinkedIn page, our Instagram account, our YouTube channel, and Robert Reffkin’s Twitter feed (@RobReffkin) and Robert Reffkin’s Instagram account (@robreffkin). We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website. Further, corporate governance information, including our governance guidelines, board committee charters and code of ethics, is also available on our investor relations page on our website under the heading “Governance.”
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
The information contained on, or that can be accessed through, the website referenced in this Quarterly Report is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements within the meaning of the federal securities laws. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations are forward-looking statements. Words such as “believes,” “may,” “will,” “estimates,” “potential,” “continues,” “anticipates,” “intends,” “expects,” “could,” “would,” “projects,” “plans,” “targets,” and variations of such words and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our revenue, rate of growth, operating expenses including changes in sales and marketing, research and development, and general and administrative expenses (including any components of the foregoing), and our ability to achieve or sustain profitability in the future;
any changes in macroeconomic conditions in U.S. and globally (e.g., inflation), geopolitical events (e.g., conflict in Ukraine) and any changes in U.S. residential real estate, title insurance, escrow services and residential mortgage origination services market conditions (e.g., changes in monetary policies, increases in mortgage interest rates, continued limited inventory, slowed consumer demand, reduced home affordability and declines in price appreciation and home prices);
any future impact of the ongoing COVID-19 pandemic;
our business plan and our ability to effectively manage our expenses or grow our revenue;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
our ability to drive ongoing usage of our platform by agents;
our market opportunity;
our ability to expand into new domestic and international markets;
3

our ability to successfully develop and market our adjacent services, including with respect to any joint ventures or acquisitions;
our ability to grow revenue from adjacent services at our anticipated rate;
our expectations regarding anticipated benefits from our mortgage business and our mortgage joint venture with Guaranteed Rate;
our ability to attract and retain agents and expand their businesses;
beliefs and objectives for future operations;
the timing and market acceptance of our products and services for our agents and their clients;
the effects of seasonal and cyclical trends on our results of operations;
our expectations concerning relationships with third parties;
our ability to maintain, protect, and enhance our intellectual property;
the effects of increased competition in our markets and our ability to compete effectively;
our ability, and ability of our joint ventures, to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the U.S. and, if and as applicable, internationally; and
economic and industry trends, growth forecasts, or trend analysis.
We have based these forward-looking statements largely on our current expectations and projections as of the date of this filing about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022, which we refer to as our 2021 Form 10-K. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, our 2021 Form 10-K and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and circumstances discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. In addition, the forward-looking statements in this Quarterly Report are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements for any reason after the date of this Quarterly Report or to conform statements to actual results or revised expectations, except as required by law.
You should read this Quarterly Report and the documents that we reference herein and have filed with the SEC as exhibits to this Quarterly Report with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
4

PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Compass, Inc.
Condensed Consolidated Balance Sheets
(In millions, except share and per share data, unaudited)
September 30, 2022December 31, 2021
Assets
Current Assets
Cash and cash equivalents$354.9 $618.3 
Accounts receivable, net of allowance of $8.0 and $7.1, respectively
34.2 48.5 
Compass Concierge receivables, net of allowance of $15.6 and $17.3, respectively
60.2 32.9 
Other current assets92.5 94.9 
Total current assets541.8 794.6 
Property and equipment, net196.7 157.4 
Operating lease right-of-use assets490.1 484.7 
Intangible assets, net107.7 127.2 
Goodwill198.5 188.3 
Other non-current assets54.3 48.4 
Total assets$1,589.1 $1,800.6 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$44.7 $34.6 
Commissions payable66.1 63.9 
Accrued expenses and other current liabilities204.9 240.9 
Current lease liabilities91.7 81.5 
Concierge credit facility36.5 16.2 
Total current liabilities443.9 437.1 
Non-current lease liabilities494.3 483.0 
Other non-current liabilities9.3 32.9 
Total liabilities947.5 953.0 
Commitments and contingencies (Note 6)  
Stockholders’ equity  
Common stock, $0.00001 par value, 13,850,000,000 shares authorized at September 30, 2022 and December 31, 2021; 434,068,619 shares issued and outstanding at September 30, 2022; 409,267,751 shares issued and outstanding at December 31, 2021
  
Additional paid-in capital2,676.3 2,438.8 
Accumulated deficit(2,038.4)(1,595.0)
Total Compass, Inc. stockholders’ equity637.9 843.8 
Non-controlling interest3.7 3.8 
Total stockholders' equity641.6 847.6 
Total liabilities and stockholders’ equity$1,589.1 $1,800.6 
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
5

Compass, Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share data, unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue$1,493.7 $1,743.6 $4,910.8 $4,808.9 
Operating expenses:
Commissions and other related expense1,218.0 1,430.6 4,017.3 3,963.2 
Sales and marketing144.4 130.6 444.3 366.2 
Operations and support95.1 97.0 308.9 263.7 
Research and development81.5 89.7 296.9 259.8 
General and administrative56.5 79.5 167.0 231.8 
Restructuring costs29.0  47.9  
Depreciation and amortization21.0 16.7 65.1 45.1 
Total operating expenses1,645.5 1,844.1 5,347.4 5,129.8 
Loss from operations(151.8)(100.5)(436.6)(320.9)
Investment income, net1.1 0.1 1.5 0.1 
Interest expense(0.9)(0.7)(2.3)(1.8)
Loss before income taxes and equity in loss of unconsolidated entity(151.6)(101.1)(437.4)(322.6)
Benefit from income taxes 1.3 1.4 3.3 
Equity in loss of unconsolidated entity(2.5) (7.5) 
Net loss(154.1)(99.8)(443.5)(319.3)
Net (income) loss attributable to non-controlling interests(0.1) 0.1  
Net loss attributable to Compass, Inc.$(154.2)$(99.8)$(443.4)$(319.3)
Net loss per share attributable to Compass, Inc., basic and diluted$(0.36)$(0.25)$(1.04)$(1.06)
Weighted-average shares used in computing net loss per share attributable to Compass, Inc., basic and diluted432,459,739 392,979,596 425,338,530 300,303,624 
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
6

Compass, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
(In millions, except share amounts, unaudited)
Convertible Preferred Stock Common StockAdditional
 Paid-in
 Capital
Accumulated
 Deficit
Total Compass, Inc. Stockholders’ EquityNon-controlling InterestTotal Stockholders’ Equity
Shares Amount SharesAmount
For the three months ended September 30, 2022:
     
Balances at June 30, 2022— $— 429,957,017 $— $2,636.4 $(1,884.2)$752.2 $3.6 $755.8 
Net loss— — — — — (154.2)(154.2)0.1 (154.1)
Issuance of common stock in connection with acquisitions — — 211,400 — 1.2 — 1.2 — 1.2 
Issuance of common stock upon exercise of stock options— — 417,056 — 0.9 — 0.9 — 0.9 
Issuance of common stock upon settlement of RSUs, net of taxes withheld— — 2,904,225 — (5.7)— (5.7)— (5.7)
Vesting of early exercised stock options— — — — 3.1 — 3.1 — 3.1 
Issuance of common stock under the Employee Stock Purchase Plan— — 578,921 — 2.3 — 2.3 — 2.3 
Stock-based compensation— — — — 38.1 — 38.1 — 38.1 
Balances at September 30, 2022
— $— 434,068,619 $— $2,676.3 $(2,038.4)$637.9 $3.7 $641.6 
For the three months ended September 30, 2021:
     
Balances at June 30, 2021— $— 394,419,967 $— $2,395.9 $(1,320.4)$1,075.5 $ $1,075.5 
Net loss— — — — — (99.8)(99.8)(0.3)(100.1)
Capital contribution from non-controlling interest— — — — — — — 5.0 5.0 
Issuance of common stock upon exercise and early exercise of stock options— — 4,662,596 — 2.9 — 2.9 — 2.9 
Vesting of early exercised stock options— — — — 1.3 — 1.3 — 1.3 
Stock-based compensation— — — — 45.3 — 45.3 — 45.3 
Balances at September 30, 2021
— $— 399,082,563 $— $2,445.4 $(1,420.2)$1,025.2 $4.7 $1,029.9 
The accompanying footnotes are an integral part of these condensed consolidated financial statements.




7

Compass, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity
(In millions, except share amounts, unaudited)
Convertible Preferred Stock
Common StockAdditional
 Paid-in
 Capital
Accumulated
 Deficit
Total Compass, Inc. Stockholders’ EquityNon-controlling InterestTotal Stockholders’ Equity
Shares
Amount
SharesAmount
For the nine months ended September 30, 2022:
Balances at December 31, 2021— $— 409,267,751 $— $2,438.8 $(1,595.0)$843.8 $3.8 $847.6 
Net loss— — — — (443.4)(443.4)(0.1)(443.5)
Issuance of common stock in connection with acquisitions— — 335,252 — 2.0 — 2.0 — 2.0 
Issuance of common stock upon exercise of stock options— — 3,949,244 — 8.6 — 8.6 — 8.6 
Issuance of common stock upon settlement of RSUs, net of taxes withheld— — 6,328,555 — (19.5)— (19.5)— (19.5)
Vesting of early exercised stock options— — — — 5.3 — 5.3 — 5.3 
Issuance of common stock in connection with the 2021 Agent Equity Program— — 13,608,896 — 100.0 — 100.0 — 100.0 
Issuance of common stock under the Employee Stock Purchase Plan— — 578,921 — 2.3 — 2.3 — 2.3 
Stock-based compensation— — — — 138.8 — 138.8 — 138.8 
Balances at September 30, 2022— $— 434,068,619 $— $2,676.3 $(2,038.4)$637.9 $3.7 $641.6 
For the nine months ended September 30, 2021:
Balances at December 31, 2020237,047,550 $1,486.7 122,971,900 $— $238.0 $(1,100.9)$(862.9)$ $(862.9)
Net loss— — — — — (319.3)(319.3)(0.3)(319.6)
Capital contribution from non-controlling interest— — — — — — — 5.0 5.0 
Issuance of common stock in connection with acquisitions— — 855,740 — 10.1 — 10.1 — 10.1 
Conversion of Series D convertible preferred stock(15,920,450)(67.6)15,920,450 — 67.6 — 67.6 — 67.6 
Conversion of convertible preferred stock in connection with the initial public offering(221,127,100)(1,419.1)223,033,725 — 1,419.1 — 1,419.1 — 1,419.1 
Issuance of common stock in connection with the initial public offering, net of offering costs— — 26,296,438 — 438.7 — 438.7 — 438.7 
Issuance of common stock upon exercise and early exercise of stock options— — 10,004,310 — 14.1 — 14.1 — 14.1 
Vesting of early exercised stock options— — — — 3.8 — 3.8 — 3.8 
Stock-based compensation— — — — 254.0 — 254.0 — 254.0 
Balances at September 30, 2021 $ 399,082,563 $— $2,445.4 $(1,420.2)$1,025.2 $4.7 $1,029.9 
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
8

Compass, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions, unaudited)
 Nine Months Ended September 30,
 20222021
Operating Activities  
Net loss$(443.5)$(319.3)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:  
Depreciation and amortization65.1 45.1 
Stock-based compensation173.1 292.9 
Equity in loss of unconsolidated entity7.5  
Change in acquisition related contingent consideration(1.9)(4.4)
Bad debt expense5.2 8.9 
Amortization of debt issuance costs0.7 0.9 
Changes in operating assets and liabilities:  
Accounts receivable11.1 1.6 
Compass Concierge receivables(29.1)(7.1)
Other current assets1.8 (29.6)
Other non-current assets1.9 (13.4)
Operating lease right-of-use assets and operating lease liabilities5.8 1.6 
Accounts payable5.9 (2.4)
Commissions payable2.2 8.8 
Accrued expenses and other liabilities20.3 64.7 
Net cash (used in) provided by operating activities(173.9)48.3 
Investing Activities  
Investment in unconsolidated entity(15.0) 
Capital expenditures(56.9)(33.6)
Payments for acquisitions, net of cash acquired(15.0)(127.3)
Net cash used in investing activities(86.9)(160.9)
Financing Activities  
Proceeds from exercise and early exercise of stock options8.6 19.1 
Proceeds from issuance of common stock under Employee Stock Purchase Plan2.3  
Taxes paid related to net share settlement of equity awards(19.5) 
Proceeds from drawdowns on Concierge credit facility47.0 29.6 
Repayments of drawdowns on Concierge credit facility(26.7)(19.3)
Payments related to acquisitions, including contingent consideration
(13.9)(8.2)
Payments of debt issuance costs for credit facilities(0.4)(1.9)
Proceeds from capital contribution of non-controlling interest 5.0 
Proceeds from issuance of common stock upon initial public offering, net of offering costs 439.6 
Net cash (used in) provided by financing activities(2.6)463.9 
Net (decrease) increase in cash and cash equivalents(263.4)351.3 
Cash and cash equivalents at beginning of period618.3 440.1 
Cash and cash equivalents at end of period$354.9 $791.4 
Supplemental disclosures of cash flow information:  
Cash paid for interest$1.5 $0.7 
Supplemental non-cash information:  
Issuance of common stock for acquisitions$2.0 $10.1 
Conversion of convertible preferred stock in connection with initial public offering$ $1,419.1 
Conversion of Series D convertible preferred stock$ $67.6 
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
9

Compass, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1.    Business and Basis of Presentation
Description of the Business
Compass, Inc. (the “Company”) was incorporated in Delaware on October 4, 2012 under the name Urban Compass, Inc. On January 8, 2021, the board of directors approved a change to the Company’s name from Urban Compass, Inc. to Compass, Inc.
The Company provides an end-to-end platform that empowers its residential real estate agents to deliver exceptional service to seller and buyer clients. The Company’s platform includes an integrated suite of cloud-based software for customer relationship management, marketing, client service and other critical functionality, all custom-built for the real estate industry, which enables the Company’s core brokerage services. The platform also uses proprietary data, analytics, artificial intelligence, and machine learning to deliver high value recommendations and outcomes for Compass agents and their clients.
The Company’s agents are independent contractors who affiliate their real estate licenses with the Company, operating their businesses on the Company’s platform and under the Compass brand. The Company generates revenue from clients through its agents by assisting home sellers and buyers in listing, marketing, selling and finding homes as well as through the provision of services adjacent to the transaction, like title and escrow services, which comprise a smaller portion of the Company’s revenue to date. The Company currently generates substantially all of its revenue from commissions paid by clients at the time that a home is transacted.
Initial Public Offering
On April 6, 2021, the Company completed its initial public offering (“IPO”) and the Company’s Class A common stock began trading on the New York Stock Exchange on April 1, 2021 under the symbol “COMP”. In connection with the IPO, the Company issued and sold 26.3 million shares of its common stock at a public offering price of $18.00 per share. The Company received aggregate proceeds of $438.7 million from the IPO, net of the underwriting discount and offering costs of approximately $11.0 million (of which $0.9 million were paid in 2020). Offering costs, including the legal, accounting, printing and other IPO-related costs have been recorded in Additional paid-in capital against the proceeds from the offering. During April 2021, also in connection with the IPO, all series of the Company’s convertible preferred stock then outstanding were converted into 223.0 million shares of common stock and the Company reclassified $1.4 billion of Convertible preferred stock to Additional paid-in-capital.
On March 31, 2021, in connection with the effectiveness of the Company’s IPO registration statement, the Company recognized $148.5 million in stock-based compensation expense for (i) certain RSUs that contained both service-based and liquidity event-based vesting conditions as the liquidity event-based vesting condition was satisfied upon effectiveness of the registration statement and (ii) certain stock options and RSU awards with service, performance and market-based vesting conditions that include stock price targets to be met after the listing of the Company’s stock on a public exchange.
Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of all controlled subsidiaries. The condensed consolidated statements of operations include the results of entities acquired from the date of each respective acquisition. Interests held by third parties in consolidated subsidiaries are presented as non-controlling interests, which represents the non-controlling stockholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries. For entities where the Company does not have a controlling interest (financial or operating), the investments in such entities are accounted for using the equity method. The Company applies the equity method of accounting when it has the ability to exercise significant influence over the operating and financial policies of an investee. The Company measures all other investments at fair value with changes in fair value recognized in net income or in the case that an equity
10

investment does not have readily determinable fair values, at cost minus impairment (if any) plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.
The unaudited interim condensed consolidated financial statements and related disclosures have been prepared by management on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary for a fair statement of the interim periods presented.
The results of the interim periods presented are not necessarily indicative of the results expected for the full year. Certain information and notes normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted under the SEC’s rules and regulations. Accordingly, the unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2021, included in the 2021 Form 10-K.

Liquidity

Since inception, the Company has primarily generated negative cash flows from operations and has primarily financed operations from net proceeds from the issuance of convertible preferred stock and common stock. In addition, a number of macroeconomic conditions, including rising inflation and rapidly rising mortgage interest rates, have contributed to a slowdown in the U.S. residential real estate market, which has had an adverse impact on the Company’s business and may continue to adversely impact the Company’s business in the future.
The Company has a Revolving Credit Facility, which it can draw upon provided it maintains continued compliance with certain financial and non-financial covenants. As of September 30, 2022, the Company had $318.2 million available to be drawn under the Revolving Credit Facility and was in compliance with each of the financial and non-financial covenants. See Note 5 — "Debt" for further details.
During the nine months ended September 30, 2022, the Company announced various restructuring actions to improve the alignment between the Company’s organizational structure and its long-term business strategy, drive cost efficiencies enabled by the Company’s technology and other competitive advantages and continue to drive toward profitability and positive free cash flow. The actions are expected to reduce the Company's annual cash operating expense levels to between $1.05 billion to $1.15 billion for the year ended December 31, 2023. This target expense level excludes Commission and other related expense, Depreciation and amortization and stock-based compensation expense. See Note 12 — "Restructuring Activities" for further details.
As of September 30, 2022 and December 31, 2021, the Company held cash and cash equivalents of approximately $354.9 million and $618.3 million, respectively. The Company believes that it will have sufficient liquidity from cash on hand, its Revolving Credit Facility, and future operations to sustain its business operations for the next twelve months and beyond.
2.    Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting periods covered by the condensed consolidated financial statements and accompanying notes. These judgments, estimates and assumptions are used for, but not limited to (i) valuation of the Company’s common stock and stock awards, (ii) fair value of acquired intangible assets and goodwill, (iii) fair value of contingent consideration arrangements in connection with business combinations, (iv) incremental borrowing rate used for the Company’s operating leases, (v) useful lives of long-lived assets, (vi) impairment of intangible assets and goodwill, (vii) allowance for Compass Concierge receivables and (viii) income taxes and certain deferred tax assets. The Company determines its estimates and judgments based on historical experience and on various other assumptions that it believes are reasonable under the circumstances. However, actual results could differ from these estimates and these differences may be material.
Business Combinations
Business combinations are accounted for under the acquisition method of accounting. This method requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over
11

the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date. After the measurement period, any subsequent adjustments are reflected in the condensed consolidated statements of operations. Acquisition costs, consisting primarily of third-party legal and consulting fees, are expensed as incurred.
Stock-Based Compensation
The Company issues stock-based awards to employees, affiliated agents, service providers and board members. The Company measures compensation expense for all stock-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense is generally recognized on a straight-line basis over the service period based on the vesting requirements. The Company recognizes forfeitures as they occur.
For stock options, the Company generally estimates the fair value using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the fair value of common stock, (ii) the expected stock price volatility, (iii) the expected term of the award, (iv) the risk-free interest rate and (v) expected dividends.
In addition to the issuance of RSUs to affiliated agents as compensation for the provision of services, the Company offers RSUs to agents through its Agent Equity Program. The Agent Equity Program offers affiliated agents the ability to elect to have a portion of their commissions earned during a calendar year to be paid in the form of RSUs. RSUs issued in connection with the Agent Equity Program are granted at the beginning of the year following the calendar year in which the commissions were earned and are subject to the terms and conditions of the 2012 Stock Incentive Plan and the 2021 Equity Incentive Plan, as applicable.
RSUs granted prior to December 2020 generally vest based upon the satisfaction of both a service-based condition and a liquidity event-based condition. The service-based vesting condition for these awards is generally satisfied over four years, except for the RSUs granted since 2020 associated with the Agent Equity Program, which vested immediately on the date of grant. The liquidity event-based vesting condition is satisfied on the occurrence of a qualifying event, generally defined as a change in control or the effective date of the registration statement for the Company’s IPO. The fair value of these RSUs was measured based on the fair value of the Company’s common stock on the grant date and began to be recognized as expense when both the required service-based vesting condition and the liquidity event-based vesting condition had been achieved using the accelerated attribution method. The liquidity event-based vesting requirement was met on March 31, 2021, the effective date of the Company’s registration statement, see Note 1—“Business and Basis of Presentation—Initial Public Offering.”
Beginning in December 2020, the Company began granting RSUs that vest upon the satisfaction of only a service-based vesting condition that generally ranges from one to five years. The fair value of these RSUs is measured based on the fair value of the Company’s common stock on the grant date and will be recognized as expense on a straight-line basis as the required service-based vesting condition is satisfied.
For RSUs to be granted in connection with the Agent Equity Program, the Company determines the value of the stock-based compensation expense at the time the underlying commission is earned and begins to recognize the associated expense on a straight-line basis over the requisite service periods beginning on the closing date of the underlying real estate commission transactions. The stock-based compensation expense is recorded as a liability and will be reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs are granted. RSUs granted in connection with the Agent Equity Program are granted in the first quarter of the calendar year following the year in which the underlying commissions were earned.
On a limited basis, the Company has issued stock options and RSUs that contain service-based, performance-based and market-based vesting conditions that include stock price targets to be met. Such awards are valued using a Monte Carlo simulation and the underlying expense will be recognized as the associated vesting conditions are met.
12

New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The guidance amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendment is effective for public companies with fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendment should be applied prospectively to business combinations occurring on or after the effective date. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures, which requires enhanced disclosure of certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty while eliminating certain current recognition and measurement accounting guidance. This ASU also requires the disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this standard is currently being evaluated and is not expected to have a material impact on the Company’s consolidated financial statements.
3.    Acquisitions
During the nine months ended September 30, 2022, the Company completed the acquisition of 100% of the ownership interests in a title insurance and escrow settlement services company and acquired the assets of a small real estate brokerage. The purpose of these acquisitions was to expand the Company’s title and escrow offerings and to expand its existing brokerage business in key domestic markets. The Company has accounted for these acquisitions as business combinations.

Total Consideration

The total consideration for acquisitions completed during the nine months ended September 30, 2022 comprised $12.1 million of cash, net of cash acquired, $0.8 million in Class A common stock of the Company and up to $3.6 million of additional cash that may be paid contingent on certain earnings-based targets being met through 2029. Future cash payments were recorded as Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheets.

The fair value of the assets acquired and the liabilities assumed primarily resulted in the recognition of: customer relationships of $8.1 million; trademark intangible assets of $1.1 million; $1.0 million of other current and non-current assets; and $2.5 million of current and non-current liabilities. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill of $8.8 million. Acquired intangible assets are being amortized over their estimated useful lives of approximately 3 to 5 years.

None of the goodwill recorded during the nine months ended September 30, 2022 is deductible for tax purposes. The amount of tax-deductible goodwill may increase in the future to approximately $2.6 million dependent on the payment of certain holdbacks and acquisition-related compensation arrangements. These amounts are not expected to have an impact on the income tax provision while the Company maintains a full valuation allowance on its U.S. deferred tax assets.

The Company has recorded the preliminary purchase price allocation as of the acquisition dates and expects to finalize its analysis within the measurement period (up to one year from the acquisition date) of the respective transaction. Any adjustments during the measurement period would have a corresponding offset to goodwill. Upon conclusion of the
13

measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the consolidated statements of operations.

Pro forma revenue and earnings for 2022 acquisitions have not been presented because they are not material to the Company’s consolidated revenue and results of operations, either individually or in the aggregate.
Contingent Consideration
Contingent consideration represents obligations of the Company to transfer cash and common stock to the sellers of certain acquired businesses in the event that certain targets and milestones are met. Approximately $4.7 million of the obligations as of September 30, 2022 are fixed in value. As of September 30, 2022, the undiscounted maximum payment under these arrangements was $15.5 million. Changes in contingent consideration measured at fair value on a recurring basis were as follows (in millions):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Opening balance$21.7 $33.0 $24.4 $39.8 
Acquisitions 0.7 3.6 5.4 
Payments and issuances(4.6)(2.7)(10.6)(13.7)
Fair value gains included in net loss(1.6)(3.9)(1.9)(4.4)
Closing balance$15.5 $27.1 $15.5 $27.1 
Other Acquisition Related Compensation
In connection with the Company’s acquisitions, certain amounts paid or to be paid to selling shareholders are subject to clawback and forfeiture dependent on certain employees and agents providing continued service to the Company. These retention-based payments are accounted for as compensation for future services and the Company recognizes the expenses over the service period. As of September 30, 2022, the Company expects to pay up to an additional $37.2 million in future compensation to such selling shareholders in connection with these arrangements. For the three months ended September 30, 2022 and 2021, the Company recognized $3.2 million and $7.5 million, respectively, and for the nine months ended September 30, 2022 and 2021, the Company recognized $14.6 million and $18.9 million, respectively, in compensation expense within Operations and support in the condensed consolidated statements of operations related to these arrangements.
4.    Fair Value of Financial Assets and Liabilities
The Company’s cash and cash equivalents of $354.9 million and $618.3 million as of September 30, 2022 and December 31, 2021, respectively, are held in cash and money market funds, which are classified as Level 1 within the fair value hierarchy because they are valued using quoted prices in active markets. These are the Company’s only Level 1 financial instruments. The Company does not hold any Level 2 financial instruments. The Company’s contingent consideration liabilities of $15.5 million and $24.4 million as of September 30, 2022 and December 31, 2021, respectively, are the Company’s only Level 3 financial instruments.
See Note 3 – “Acquisitions” for changes in contingent consideration for the three and nine months ended September 30, 2022 and 2021. The following table presents the balances of contingent consideration as presented in the condensed consolidated balance sheets (in millions):
 September 30, 2022December 31, 2021
Accrued expenses and other current liabilities$9.5 $12.9 
Other non-current liabilities6.0 11.5 
Total contingent consideration$15.5 $24.4 
There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.
14

Level 3 Financial Liabilities
The Company’s Level 3 financial liabilities relate to acquisition-related contingent consideration arrangements. Contingent consideration represents obligations of the Company to transfer cash to the sellers of certain acquired entities in the event that certain targets and milestones are met. The Company estimated the fair value of the contingent consideration using a variety of inputs, the most significant of which were the forecasted future results of the acquired businesses, not observable in the market. The impact of changes in these assumptions are not expected to result in material changes to the fair value of the Level 3 financial liabilities. Changes in the fair value of Level 3 financial liabilities are included within Operations and support in the condensed consolidated statements of operations (see Note 3 – “Acquisitions”).
5.    Debt
Concierge Credit Facility

In July 2020, the Company entered into a Revolving Credit and Security Agreement (the “Concierge Facility”) with Barclays Bank PLC, as administrative agent, and the several lenders party thereto. The Concierge Facility provides for a $75.0 million revolving credit facility and is solely used to finance, in part, the Company’s Compass Concierge Program. The Concierge Facility is secured primarily by the Concierge Receivables and cash of the Compass Concierge Program. On July 29, 2021, the Company amended and restated the Concierge Facility (the “A&R Concierge Facility”) to among other things, extend the revolving period to July 28, 2022, lower the interest rate to LIBOR plus a margin of 1.85%, which may be adjusted, and lower the annual commitment fee to 0.35% if the A&R Concierge Facility is utilized greater than 50% (the annual commitment fee remained the same, at 0.50%, if the Concierge Facility is utilized less than 50%). On August 5, 2022, the Company further amended and restated the Concierge Facility (the “Second A&R Concierge Facility”) to among other things extend the revolving period to August 4, 2023, replace the LIBOR benchmark with Term SOFR plus a credit adjustment spread of 0.11448% and make certain other technical adjustments. The applicable margin on the Second A&R Concierge Facility increased from 1.85% to 2.35%. The annual commitment fee as described in the preceding sentences remained the same. The interest rate on the Concierge Facility was 5.95% as of September 30, 2022. Pursuant to the Second A&R Concierge Facility, the principal amount, if any, is payable in full in February 2024, unless earlier terminated or extended.
The Company has the option to repay the borrowings under the Second A&R Concierge Facility without premium or penalty prior to maturity. The Second A&R Concierge Facility contains customary affirmative covenants, such as financial statement reporting requirements, as well as covenants that restrict its ability to, among other things, incur additional indebtedness, sell certain receivables, declare dividends or make certain distributions, and undergo a merger or consolidation or certain other transactions. Additionally, in the event that the Company fails to comply with certain financial covenants that require the Company to meet certain liquidity-based measures, the commitments under the Second A&R Concierge Facility will automatically be reduced to zero and the Company will be required to repay any outstanding loans under the Second A&R Concierge Facility. As of September 30, 2022, the Company was in compliance with the covenants under the Second A&R Concierge Facility.
Revolving Credit Facility
In March 2021, the Company entered into a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility”) with Barclays Bank PLC, as administrative agent and as collateral agent, and certain other lenders. The Revolving Credit Facility provides for a $350.0 million revolving credit facility, subject to the terms and conditions of the Revolving Credit Facility. The Revolving Credit Facility also includes a letter of credit sublimit, which is the lesser of (i) $125.0 million and (ii) the aggregate unused amount of the revolving commitments then in effect under the Revolving Credit Facility. The Company’s obligations under the Revolving Credit Facility are guaranteed by certain of the Company’s subsidiaries and are secured by a first priority security interest in substantially all of the assets of the Company and the Company’s subsidiary guarantors.
Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (i) a floating rate per annum equal to the base rate plus a margin of 0.50% or (ii) a floating rate per annum equal to the rate at which dollar deposits are offered in the London interbank market plus a margin of 1.50%. The base rate is equal to the highest of (a) the prime rate as quoted by The Wall Street Journal, (b) the federal funds effective rate plus 0.50%, (c) the rate at which dollar deposits are offered in the London interbank market for a one-month interest period plus 1.00% and (d) 1.00%. During an event of default under the Revolving Credit Facility, the applicable interest rates are increased by 2.0% per annum.
The Company is also obligated to pay other customary fees for a credit facility of this type, including a commitment fee on a quarterly basis based on amounts committed but unused under the Revolving Credit Facility of 0.175% per annum, fees
15

associated with letters of credit and administrative and arrangement fees. The principal amount, if any, is payable in full on March 4, 2026, unless earlier terminated or extended.
The Company has the option to repay the Company’s borrowings, and to permanently reduce the loan commitments in whole or in part, under the Revolving Credit Facility without premium or penalty prior to maturity. As of September 30, 2022, there were no borrowings outstanding under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility totaled approximately $31.8 million.

The Revolving Credit Facility contains customary representations, warranties, financial covenants applicable to the Company and to the Company’s restricted subsidiaries, affirmative covenants, such as financial statement reporting requirements, and negative covenants which restrict their ability, among other things, 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. The financial covenants require that (i) the Company maintains liquidity of at least $150.0 million as of the last day of each fiscal quarter and each date of a credit extension and (ii) the Company’s consolidated total revenue as of the last day of each fiscal quarter be equal to or greater than the specified amount corresponding to such period. The minimum required consolidated revenue threshold for the trailing four fiscal quarters is $2,418.0 million during 2022, $3,799.0 million during 2023 and $4,668.0 million thereafter. As of September 30, 2022, the Company was in compliance with the financial covenants under the Revolving Credit Facility.
The Revolving Credit Facility includes customary events of default that include, among other things, nonpayment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA events. The occurrence of an event of default could result in the acceleration of the obligations under the Revolving Credit Facility.
6.    Commitments and Contingencies
Legal Proceedings
From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the ordinary course of business. When the Company determines that a loss is both probable and reasonably estimable, a liability is recorded and disclosed if the amount is material to the Company’s business, taken as a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability, but instead discloses the nature and the amount of the claim and an estimate of the loss or range of loss, if such an estimate can reasonably be made. Legal costs related to the defense of loss contingencies are expensed as incurred.
Claims or regulatory actions against the Company, whether meritorious or not, could have an adverse impact on the Company due to legal costs, diversion of management resources and other elements. Except as identified with respect to the matters below, the Company does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business in each case, taken as a whole.
Realogy Holdings Corp., et al v. Urban Compass, Inc. and Compass Inc.
In July 2019, Realogy Holdings Corp., NRT New York LLC (“Corcoran”) and many of its related entities (collectively, “Plaintiffs”) filed a complaint against the Company in the New York Supreme Court (the "Court"). The complaint alleges various violations of New York and California state law related to claims of unfair competition and seeks unspecified damages. The Company filed a Motion to Dismiss in September 2019. In September 2019, Plaintiffs filed an amended complaint, removing one claim and adding a claim for defamation. In November 2019, the Company moved to compel arbitration related to claims asserted by Corcoran and moved to dismiss all of the counts. In June 2020, the Court denied the motion to dismiss and denied the motion to compel arbitration as moot, granting Plaintiffs leave to amend the complaint as to claims asserted by Corcoran without prejudice to the Defendants' ability to move to compel or dismiss the second amended complaint.

On July 3, 2020, Plaintiffs filed their second amended complaint. On December 18, 2020, the Court denied the Company’s motion to compel arbitration on Plaintiffs’ second amended complaint without prejudice. Defendants’ answer to the second amended complaint and counterclaims were filed on January 28, 2021. Additionally, the Company filed its appeal of the lower Court’s denial of the Company’s motion to dismiss and motion to compel arbitration on February 1, 2021. On June 1, 2021, the First Department affirmed the lower Court’s denial of the Company’s motion to compel arbitration. On September 28, 2022, the Company and Plaintiffs executed an agreement to resolve the matter. During the three months
16

ended September 30, 2022, the Company recognized an expense of $10.5 million within General and administrative expense in the accompanying consolidated statements of operations in connection with this matter.

Letter of Credit Agreements
The Company has irrevocable letters of credit with various financial institutions, primarily related to security deposits for leased facilities. As of September 30, 2022 and December 31, 2021, the Company was contingently liable for $49.2 million and $54.5 million, respectively, under these letters of credit. As of September 30, 2022, $31.8 million and $17.4 million of these letters of credit were collateralized by the Revolving Credit Facility and cash and cash equivalents, respectively. As of December 31, 2021, $30.3 million and $24.2 million of these letters of credit were collateralized by the Revolving Credit Facility and cash and cash equivalents, respectively.

Escrow and Trust Deposits
As a service to its home buyers and sellers, the Company administers escrow and trust deposits, which represent undistributed amounts for the settlement of real estate transactions. The escrow and trust deposits totaled $186.1 million and $172.1 million as of September 30, 2022 and December 31, 2021, respectively. These deposits are not assets of the Company and therefore are excluded from the accompanying condensed consolidated balance sheets. However, the Company remains contingently liable for the disposition of these deposits.
7.    Preferred Stock and Common Stock
Undesignated Preferred Stock
In April 2021, the Company adopted a restated certificate of incorporation, which authorizes the Company to issue up to 25.0 million shares of undesignated preferred stock with a $0.00001 par value per share. As of September 30, 2022, there are no shares of the Company’s preferred stock issued and outstanding.
Common Stock
In February 2021, the Company approved the establishment of Class C common stock and an agreement with the Company’s Chief Executive Officer to exchange his Class A common stock for Class C common stock. On March 31, 2021, in connection with the effectiveness of the registration statement for the Company’s IPO, 15.2 million shares of Class A common stock held by the Company’s Chief Executive Officer were automatically exchanged for an equivalent number of shares of Class C common stock. In addition, any Class A common stock issued to the Company’s Chief Executive Officer from RSU awards granted prior to February 2021 are able to be exchanged for Class C common stock. Each share of Class C common stock is entitled to twenty votes per share and will be convertible at any time into one share of Class A common stock and will automatically convert into Class A common stock under certain “sunset” provisions. Other than certain permitted transfers for estate planning purposes, upon a transfer of Class C common stock, the Class C common stock will automatically convert into Class A common stock.
In April 2021, the Company adopted a restated certificate of incorporation and changed its authorized capital stock to consist of 12,500.0 million shares of Class A common stock, 1,250.0 million shares of Class B common stock and 100.0 million shares of Class C common stock. As of September 30, 2022 and December 31, 2021, the Company has three classes of common stock: Class A common stock, Class B common stock and Class C common stock. Each class has par value of $0.00001.
The following tables reflect the authorized, issued and outstanding shares for each of the classes of common stock as of September 30, 2022 and December 31, 2021:
 September 30, 2022
 Shares
Authorized
Shares
 Issued
Shares
 Outstanding
Class A common stock12,500,000,000 416,054,008 416,054,008 
Class B common stock1,250,000,000   
Class C common stock100,000,000 18,014,611 18,014,611 
Total13,850,000,000 434,068,619 434,068,619 
17

 December 31, 2021
 Shares
Authorized
Shares
Issued
Shares
 Outstanding
Class A common stock12,500,000,000 391,912,514 391,912,514 
Class B common stock1,250,000,000   
Class C common stock100,000,000 17,355,237 17,355,237 
Total13,850,000,000 409,267,751 409,267,751 
Holders of Class A common stock are entitled to one vote per share. Holders of Class B common stock are not entitled to vote. Holders of Class C common stock are entitled to twenty votes per share.
Each share of Class C common stock is convertible at any time at the option of the holder into one share of Class A common stock. Each share of Class C common stock will automatically convert into a share of Class A common stock upon sale or transfer, except for certain permitted transfers.
On July 1, 2021, the board of directors of the Company approved the conversion of all outstanding shares of the Company’s Class B common stock into the same number of shares of the Company’s Class A common stock effective on that date.
8.    Stock-Based Compensation
2012 Stock Incentive Plan
In October 2012, the Company adopted the 2012 Stock Incentive Plan (the “2012 Plan”). Under the 2012 Plan, employees and non-employees could be granted stock options, RSUs and other stock-based awards, including awards earned in connection with the Agent Equity Program. Generally, these awards were based on stock agreements with a maximum ten-year term for stock options and a maximum seven-year term for RSUs, subject to board approval.
2021 Equity Incentive Plan
In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Equity Incentive Plan (the “2021 Plan”), with an initial pool of 29.7 million shares of common stock available for granting stock-based awards plus any reserved shares of common stock not issued or subject to outstanding awards granted under the 2012 Plan. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the 2021 Plan shall be increased automatically by the number of shares equal to 5% of the total number of outstanding shares of common stock and outstanding shares of preferred stock (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of such increase in any particular year. The 2021 Plan became effective on March 30, 2021 and as of that date, the Company ceased granting new awards under the 2012 Plan and all remaining shares available under the 2012 Plan were transferred to the 2021 Plan. Effective January 1, 2022, the shares available for future grants were increased by an additional 20.5 million shares as a result of the annual increase provision described above. As of September 30, 2022, there were 37.9 million shares available for future grants under the 2021 Plan, inclusive of those shares transferred from the 2012 Plan.
2021 Employee Stock Purchase Plan
In February 2021, the Company’s board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”), which authorized purchase rights to the Company’s employees or to employees of its designated affiliates. In addition, on January 1st of each year beginning in 2022 and continuing through 2031, the aggregate number of shares of common stock authorized for issuance under the ESPP shall be increased automatically by the number of shares equal to 1% of the total number of outstanding shares of common stock and outstanding shares of preferred stock (on an as converted to common stock basis) on the immediately preceding December 31st, although the Company’s board of directors or one of its committees may reduce the amount of the increase in any particular year. No more than 150.0 million shares of common stock may be issued over the term of the ESPP, subject to certain exceptions set forth in the ESPP. The ESPP initially authorized the issuance of 7.4 million shares of common stock and effective January 1, 2022, the authorized shares increased by 3.9 million shares as a result of the annual increase provision described above. As of September 30, 2022, 10.7 million shares of Class A common stock remain available for grant under the ESPP.
18

The ESPP permits employees to purchase shares of the Company’s Class A common stock through payroll deductions accumulated during six-month offering periods up to a maximum value of $12,500 per offering period. The offering periods begin each February and August, or such other period determined by the Compensation Committee. On each purchase date, eligible employees may purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s Class A common stock on the first trading day of the offering period, or (2) the fair market value of the Company’s Class A common stock on the purchase date, as defined in the ESPP. During the three and nine months ended September 30, 2022, the Company issued 0.6 million shares of Class A common stock under the ESPP.
The Company recognized $0.7 million and $1.7 million of stock-based compensation expense related to the ESPP during the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, $0.7 million has been withheld on behalf of employees for a future purchase under the ESPP.
Stock Options
A summary of stock option activity under the 2012 Plan and the 2021 Plan, including 1.1 million stock options that were granted outside of the 2012 Plan in 2019, is presented below (in millions, except share and per share amounts):
 Number of
Options
Weighted Average
Exercise Price
Weighted Average
Remaining
Contract Term
(in years)
Aggregate Intrinsic Value (1)
Balance as of December 31, 2021
54,525,539 $5.30 7.1$221.3 
Granted324,128 5.00 
Exercised(3,949,244)2.15 
Forfeited(3,347,152)6.89 
Balance as of September 30, 2022
47,553,271 $5.45 6.2$8.5 
Exercisable and vested at September 30, 2022
35,623,436 $4.59 5.6$8.5 
(1)The aggregate intrinsic values have been calculated using the Company’s closing stock prices of $2.32 and $9.09 as of September 30, 2022 and December 31, 2021, respectively.
During the nine months ended September 30, 2022 and 2021, the intrinsic value of options exercised was $20.1 million and $97.6 million, respectively.
Early Exercise of Stock Options
A majority of the stock options granted under the 2012 Plan originally provided option holders the right to elect to exercise unvested options in exchange for restricted common stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s termination of service until the stock options are fully vested at the lesser of the original issuance price or the fair value of the Company’s common stock.
As of September 30, 2022, 0.1 million shares of common stock received by holders from an early exercise were subject to repurchase. The cash proceeds received for unvested shares of common stock recorded within Accrued expenses and other current liabilities and Other non-current liabilities in the condensed consolidated balance sheets was $0.6 million and $0.2 million, respectively, as of September 30, 2022. Amounts recorded are transferred into Common stock and Additional paid-in capital within the condensed consolidated balance sheets as the shares vest. During the nine months ended September 30, 2022, no stock options were early exercised.
19

Restricted Stock Units
A summary of RSU activity under the 2012 Plan and the 2021 Plan is presented below:
 Number of AwardsWeighted Average
 Grant Date Fair
 Value
Balance as of December 31, 2021
54,517,930 $10.29 
Granted32,008,264 7.09 
Vested and converted to common stock (1)
(23,234,043)9.05 
Forfeited(16,935,124)11.26 
Balance as of September 30, 2022
46,357,027 $8.35 
(1)During the nine months ended September 30, 2022, the Company net settled all RSUs through which it issued an aggregate of 23.2 million shares of Class A common stock and withheld an aggregate of 3.3 million shares of Class A common stock to satisfy $19.5 million of tax withholding obligations on behalf of the Company’s employees.
Included in the table above are 17.2 million RSUs that only vest upon the satisfaction of both (i) a service-based vesting condition and (ii) the achievement of performance-based vesting conditions that remain outstanding as of September 30, 2022. The performance-based vesting conditions provide that 12.5% of the shares subject to the RSUs will vest subject to the achievement of a market price per share of $23.14 of the Company's Class A common stock. An additional 12.5% of the shares subject to the RSUs will vest upon the achievement of a market price per share of the Company's Class A common stock at each of 200%, 250%, 300%, 350%, 400%, 450% and 500% of the reference price.
Agent Equity Program
In connection with the 2021 Agent Equity Program, the Company recognized a total of $100.0 million in stock-based compensation expense of which $84.8 million was recognized during the year ended December 31, 2021 and $15.2 million was recognized during the nine months ended September 30, 2022. In February 2022, the Company granted 13.6 million RSUs, which immediately vested and converted to Class A common stock in connection with the 2021 Agent Equity Program. Prior to the issuance of the underlying RSUs, the stock-based compensation expense associated with these awards was recorded as a liability and $100.0 million was ultimately reclassified to Additional paid-in capital at the end of the vesting period when the underlying RSUs were granted.
For the nine months ended September 30, 2022, the Company recognized stock-based compensation expense and an associated liability of $19.4 million in connection with RSUs to be granted as a part of the 2022 Agent Equity Program. The associated liability is recorded within Accrued expenses and other current liabilities in the condensed consolidated balance sheets.
Stock-Based Compensation Expense
Total stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 is as follows (in millions):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Commissions and other related expense$12.7 $26.3 $36.1 $82.6 
Sales and marketing10.8 10.3 32.7 27.9 
Operations and support3.9 4.5 12.3 12.3 
Research and development9.4 13.2 45.2 76.2