Compass, Inc. (COMP) Earnings Call Transcript & Summary

All right. Good evening, and welcome to the final session of day 2 of the UBS TMT conference. My name is Lloyd Walmsley. I lead the Internet research team here at UBS, and I'm really excited to have Compass here presenting. We've got Robert Reffkin, CEO and Founder; and Kristen Ankerbrandt, the CFO. Thank you guys for joining. It's great to have you here.

Thank you.

Thank you, Lloyd. Glad to be here.

All right. Well, I'll start off just kind of at a high level. You guys have been public about 8 months now. Can you give us a bit of info on what surprised you the most and how it's different kind of running a public company versus a private company? Maybe start with you, Robert. And feel free to jump in Kristen.

Yes. Look, as a public company, you -- how we can control we can control, focus on what we could control, which is beating and raising as we've done for the last 3 quarters. And we're proud of the results that we've had, and we're going to continue to focus on beating and raising. In terms of the day-to-day stock price, yes, that's obviously something that employees and stakeholders look at, which is something that can be a distraction. But as a company, again, we're just focused on outperforming in the core business. We're hiring more agents, having industry-leading retention, driving agent productivity and increasing the capacity for adjacent services and continue to expand in a more efficient manner over time and lower the cost to serve. That's really where our mind share is.

Yes. And when you think about Compass longer term, what are a couple of parts of the story you think are most critical that investors don't understand well or appreciate today about the business?

Yes. I'd say the area where people I don't feel fully appreciate is the capacity for a technology platform to drive industry-differentiated attach of proven agent productivity tools on one hand and adjacent services on another. And that without a platform that integrates all of their workflow -- agent workflow into a platform, you're not able to fully do that, and so on the agent productivity tool standpoint. What Compass is, is we're a company that's hired top agents for across the country. We're #1 now in New York, in D.C., in San Francisco, in L.A., in San Diego, in Houston, in Denver, in Boulder, in Boston, and we're #2 in over now 30 different cities. As we hire these agents, we obsess about anything that they've done to increase productivity, grow their business at a -- in a more efficient manner. And then we rebuild the best of those into 1 platform that makes it easier for all agents to adopt. Because the average agent of the country has to use 9 different systems to do their job, which means 9 different logins, 9 different user names, 9 different companies, 9 different user experiences, 9 different credit card -- inputting your credit card 9 different times. While Compass, when you integrate and built it in-house, it's one. And that reduces the login wall effectively of adoption of proven things like CRM, digital ads, staging services to grow their business. So they give you some data points. CRM, on average, 30% of the country are active users of CRM. At Compass, it's 85%. For digital ads, 39% of agents in the country use digital ads, at Compass it's 40%. For staging, on average, a small percentage of agents do staging, the estimates are out there from the single-digits to 20%, while at Compass it's 43%. And in all these cases, we were able to do so because we made it simple and easy for them to adopt with 1 application, 1 system for these different products and services. And the same can be done for mortgage, title and adjacent services, which we're launching across the country now.

I think you largely answered my next question, but I'll ask it anyway in case there's more to add. But what other big differentiating factors would you flag for Compass versus other real estate brokerages or prop-tech companies that you're sometimes compared to?

Yes, the differentiating -- what's differentiating is financial results and KPIs at the end of the day. And so what are the results of the platform that is described on the financials, on our KPIs? We have industry-leading agent retention. We have -- last 2 quarters have been highest quarters of agent retention in the last 2 years. While last quarter, we also increased our margin by 180 basis points. So we're charging more with higher retention because the platform is creating value. We have a proven track record of growing our agents' businesses, that's what they pay for. And 2 numbers I'd focus on would be 3x and 19%. 3x is the increase in our agents' transaction volume, excluding the impact of price year-to-date versus the market. So the average Compass agent grew their business 37% while the market year-to-date grew at 3% -- I mean, sorry, 13%. 19% is the agent growth between year 1 and year 2 of our agents on average for the 3 different years of cohorts before the pre-pandemic boom. And now that was, again, excluding the impact of price, just on a transaction basis, and the market during that period declined 1% on average each year. And so those are 2 examples of our proven track record of driving agent productivity, impact on retention. Of our agents that left in the last year, only 5% of them were top quartile users of our technology and 85% were bottom quartile users of technology. So it drives retention, it drives agent growth and then also lowers the cost to serve, as we are increasingly focused on bringing down the cost to serve agents in that the people cost and the technology cost to serve our agents using software.

So when we think about the core business, you've been launching markets really, really rapidly, faster than we had expected at the time of the IPO. When we think about the pace of launches, what is driving that velocity?

Yes. So we accelerated our pace of launches this year relative to our historical average. And the reason why is really to be opportunistic in the great reshuffling of people moving across the country. Our agents told us last year, my clients in California are moving to Hawaii and moving to Texas. My clients in New York are moving to Greenwich, Connecticut and Florida and these different submarkets, and obviously, Raleigh, and Denver, and Boulder, and Charlotte and many other cities. And so we expanded to a bunch of markets to be able to service our agents' referral needs and capitalize on the momentum around the country and movement. I do think that next year's launches will be closer to the historical average. This is really to be opportunistic in this period of time.

Yes. The historical average is generally 2 to 3 markets per quarter or 8 to 10 markets per year. So that's really the steady state. That's what we expect to see next year.

Okay. And then speaking of that kind of great reshuffling. Do you think that there is still a lot of that on the come, people make these decisions over longer timeframes as we get more clarity into how big businesses is allowing remote work? Do you think there's still kind of an elevated kind of demand coming for broader moving activity?

Yes, no, look -- absolutely. The -- this year, around 6 million homes will have traded. In the -- and at the peak -- the recent peak was in 2008, was 7 million, right? So yes, there's been a lot of movement, but not that much on a historical basis. It feels like a lot, but inventory has actually been a constraint to the demand that's out there. In every one of our markets, we have low inventory and multiple offers because of strong demand, and we don't see that changing at any point soon. It's going to keep prices strong, but it's also going to keep -- it's going to continue to make it harder to find the right dream home for you. But if you're selling, it's a great time to sell. Call it -- interested to become an agent, happy to. But the -- in terms of reshuffling, well, I say that the biggest drivers are, first and foremost, work flexibility. The fact -- the concept that you can spend 2 months of the summer working from anywhere, you know Wall Street, all those managing directors, they are in the Hamptons all summer. All the analysts, they didn't have that capacity, now anyone can do that. And so this is -- we're doing it -- there's a permanent shift in demand for second homes, permanent, because you can use them more. It's not just something that's a couple of weeks of a year and limited to the most senior people or retirees. And so that demand is here to stay. And then I'd say it's not just the second -- the definition of a second home has expanded. It's not just obviously Hamptons and Miami, it's now Raleigh. Raleigh is a second home market. Nashville is a second home market. Live in New York City for x amount of the year then go to Raleigh or Boulder or Charlotte the rest of the year. And so that's another reason for demand -- for the second home demand. But then there's also people that are moving permanently to different markets that are lower cost of living, are closer to family in a way that they just weren't able to before. So that is really driven by work flexibility, and work flexibility is here to stay. You know the big companies that all said they were going to launch -- my gosh, it's been -- how many delays that we had. I think it was first this time last year, then it was September and then it was supposed to be January. January has been pushed back again, lot of the big tech companies, and that really has an impact for hundreds and hundred thousands of people.

Yes. It's hard to imagine and to be really going back to anything like it was after 2 years of working like this. And like you said, so many delays. It feels like we're settling in different routines.

Yes, a lot of these people want flexibility. It's the -- at the end of the day, they say the consumer always wins. Look, at the end of the day, the employees are consumers. And that there isn't a good enough rationale to drive -- you have to come back to office for the entire population, particularly when you think about product and engineering and technology companies.

Yes, yes. So back to your kind of new market launches. When you look at some of these newer markets and compare them to older markets in terms of velocity of launch, cost to acquire agents, growth in market share. Like how do the performance of newer markets look relative to older ones?

Yes. Kristen, how about you take this one?

Yes, sure. So listen, we've launched Compass in tens of markets at this point. We've got 67 markets under the Compass brand today. And we are getting better and better, more efficient at launching those markets. So there was a time back in the early days of Compass, where we had to educate people on what Compass was and our value proposition. And today, when we're going into a new market, agents are generally much more familiar with Compass. This is still a very regional business. So we always want to make sure that those agents understand and appreciate that we have a long-term commitment to the market because we're asking them to take a big risk in moving their business over to Compass. But I think the value proposition has gotten more clear. So we're able to launch markets faster, able to ingest data feeds faster, able to have people on the ground faster and able to bring agents onto our platform even faster than we were even just a few years ago. And it's been great to see. It's really translated into a really attractive profile for new market launches. So in our second quarter earnings call and our shareholder letter, we outlined some of the economics that we see for our 2018 cohorts. And what we see is within the first 2 to 3 years of launch, we generally are able to achieve double-digit market share and we're able to get to market level profitability in the mid-single digits. And even since 2018, we've continued to launch a number of markets. I think you talked about even earlier on this call the fact that we've launched 23 markets year-to-date in 2020. And what that is, is really opening up incremental TAM for us that will allow us to continue to grow, continue to grab share nationally and where we can get to profitability faster over time.

Yes. It's impressive. You've done that while beating on EBITDA as well. It's remarkable, I guess. And I guess related to that, as you've entered smaller markets with lower ASPs for transaction values, how does the model translate at all differently with kind of some of these smaller markets relative to your original bigger markets?

Yes. Let me share 2 areas where it translates into both. It's actually easier in smaller markets than bigger markets. One is that we have -- the agents in lower price point markets, small markets tend to be lower price points, they have to sell more homes to make a living than agents in high price point markets. I think [indiscernible] you sell 3 homes -- 2 homes to make a living, 1 home to make a living. But in a low price point market, you need to sell many. And the reason that the results of that is that agents in the lower price point markets actually are stronger users of technology than higher price point markets because you need efficiency, you need time, you generally have more of a team structure that's more complicated. And workflow through scalable systems of software success matter more. And so it's actually easier for us to launch in those markets and drive adoption of our tools than in the highest price point markets. The second is, right now, there's -- in this great reshuffling, there is a big shift from bigger cities like you know obviously to smaller markets, and that makes it also easier because when you go to a market, you can say, hey, look, you know how many people are moving from -- let's just take, Raleigh, you know how many people are moving from New York right now to Raleigh. We're the #1 company brokerage in New York. And so think about all these people we're going to help bring to your market, and you can get all those referrals. And so those are 2 of the key benefits that we see, which help impact the financials, both on the retention and customer acquisition cost basis.

Really interesting. So I guess drilling in a little bit deeper, the current pace of agent productivity has been extraordinary. Wondering how sustainable is this over the longer term. And when we think about what things you can do to continue to drive that?

As mentioned earlier, our agents are growing their business 3x faster the market year-to-date, 37% versus 13%, and the 19% agent productivity growth from year 1 to year 2 of our 3-year cohort of some market that was declining 1% a year on average over that period. Another way to look at it is the average agent at Compass did 12.8 transactions a year in 2019, 16.7 transactions a year in 2020, and they're going to do around 20 transactions per year in '21. In long term, we see that number going above 25. And there's a lot more that can be done to increase that productivity in terms of tools and adoption. Some of the examples of the tools that drive the most business are CRM and marketing center. Every agent uses CRM and full usage with full potential. Their business is their sphere of influence. It's -- we call it a repeat and referral business. If every one of your clients has an agent that you never worked. With the 300 clients, whenever they're going to buy or sell a home, they think of you or whenever they have a friend who wants to buy or sell a home, they think of you and refer to you. Then you'll have more business than you can handle because it's repeat and referral. A CRM is required to maximize that. So image that at the top quartile users of CRM at Compass grow their business 2x faster than the bottom quartile. Then the marketing center is a tool that we created. It gives every agent the power of being a professional designer in the palm of their hand for digital advertising, for social, print and digital newsletters. And so this is -- for the top quartile users of marketing center, they grow their business 5x faster than the bottom quartile. The reason why is if you are -- that is the method to stay top of mind with your sphere of influence. Like CRM, it tells you when you should do what, right? It's very important, but you still got to do it. In marketing center, it is what you're actually doing. It's getting in front of them. And so if we can be the company that can best help agents stay top of mind and relevant in their sphere, then they can grow so much more. And adoption of Compass, yes, it's improving quarter-after-quarter year-after-year, but there's so much more potential that if every -- if you can bring every agent to the top quartile, the growth that we'll see from that would be truly outstanding.

Shifting gears a little bit. At the time of the IPO, you guys talked about potential for expanding internationally. Is there any real movement around that as a way to potentially grow your TAM?

Yes. Look, there's -- obviously, international is exciting for everyone. It will probably start with the English-speaking countries, London, Canada, Australia, et cetera, and then beyond. But the opportunity in the U.S. is just so, so wide that we're still keeping the focus on the U.S. And when I say that the opportunity, let's take $100 billion of commissions, and then on top of that $140 million of adjacent services between mortgage, title, home insurance and mortgage income security, the listing of marketing, which include digital ads and more, and then some direct client costs. And so that is a huge bucket of opportunity where there isn't a company today that is even attempting to build the platform where all of that can flow through. Because right now, it's all happening offline. And what I mean by that is attritional brokerage firm because they haven't done the hard work of building a place -- internal place where agents search, building their own CRM, building their own transaction management where all the forms, easing in tourism files are, building their own marketing center, building their own digital apps, building their own market insights, their own listing insights and their own CMAs, home valuations, I could go on and on, because they haven't done the hard work to build that in-house. The workflow of the agent is off the platform. They don't know. So take a newspaper. A newspaper because they don't know -- the person that's looking at the engagement, and they don't know what's happening. It's put in the back of the newspaper a bunch of random ads and saying I hope they like these ads. But Google, they know exactly what's happening. If I'm searching a movie, let's take Spiderman that's coming up. By the way, I couldn't spider -- I don't know which Spiderman, they don't know. There's a lot of Spidermans. They don't know exactly which one. They don't know where I am, which movie theater. They know what time is right now, so probably the right time, they know what I've looked at in the past and they can refer me exactly what I want at the right time. The reason we're able to get above average industry attach -- things like digital ads from 19% to 40% is because we know when the listing is created. We know when there's a price status change in listing, which says, hey, do you want a digital ad. Their credit card is already there. We already -- we have their listing, so we can just create the list -- we can create the digital ad at one click. They don't have to like get photos, give it to a third party, pay them and ask to create digital ads, all on platform. And so that's how we're driving this above-average attach of these agent productivity tools. I'm very excited to do the same on adjacent services.

Great segue. Let's talk adjacent services. So Title & Escrow is your oldest adjacency. Step back a bit, walk us through the history of T&E and where you are now, what you have left to do in terms of market expansion, product, et cetera.

So we have -- a year ago, we were just -- escrow in 1 submarket. Now we have T&E in approximately 10 markets. And we've launched the majority of them through small tuck-in acquisitions because there's a lot of license issues that, that helps move faster through. And then we're adding organically on top of that. We're covering almost 50% of our geographies now. But that said, we don't have enough people to actually cover all the transactions and geographies, but we started to build them out further. Our attach in -- the oldest one is in the 40s, based off relative -- in the relative market, and it's in the 30s in one of the other newer ones as well. So that's where we've been able to -- we believe we're going to able to get attach above industry average where the industry average is closer to 30s. And on the mortgage side, we launched yesterday, our first mortgage operation in LA...

Congrats.

Thank you. And next month we're launching in Colorado. And then we're going to launch more month-by-month and month. And by the end of next year, we should be in virtually the vast majority of our markets, and we're really excited about that.

Well, that's exciting. Congrats. So my next question was, you had talked about originating your first one this quarter. How do you marry kind of the mortgage with the core transaction business? Walk us through how we might see that as a consumer using a Compass agent.

Yes. So there, again, some of the advantages that you have here at platform. Let's say you're a boutique brokerage, no one ever searches your site. And then here's an opportunity -- then if you put on your site on every listing page your mortgage company, it's not going to help you because no one's looking there. We have real consumer traffic on our sites, and we're going to put on every listing page. Do you want to -- if you want a preapproval, go to -- we call it OriginPoint mortgage. We have -- we're -- in the same way we're able to drive above-average industry attach of concierges through marketing. We're going to do the same thing on mortgage, so let me just walk through that. In every listing presentation, we have a page on Compass Concierge, the staging offering. In every digital newsletter, you have the opportunity to have Compass Concierge, where you can put in your e-signatures. We can put it -- we have digital ads for Compass Concierge as well as brochures and postcards and much more. We can do all -- for all those different areas, we can also put in 4 different mortgage if you want a preapproval. And so we're able to market -- basically give agents the opportunity to market to their clients, a reason hey you want to work with me because I have access to these great things. Then we can market to the agent at the right time when in their business tracker they have a new buyer that goes from nurturing to actively searching. At that point, hey, do you want to send them information about OriginPoint mortgage. So that, again, is the benefit of being on the platform, not just in distribution of the message, but also the exact point to offer the distribution of the message. The last thing that I would say is you're able to reduce the time to execute workflow because it's on platform. The example I gave maybe in digital ads, if I want a digital ad, as we talked about before, a mom's agent, she was not in Compass, she would not even know where to start. Would she go on Facebook and just Google like how to do digital ad, call someone and ask them how to do digital ad, it's like where would she go. And then she has like these photos and has to write description and send it to who. Again, at Compass, it's 1 click. It says, do you want to send to your CRM or to the ZIP Code -- CRM contacts or to the ZIP Code, where [indiscernible] it's all the same thing. All the photos there, one click, like are there, sends out, what days you want to go out, how much you want to spend, done. So in the same way when it comes to title and mortgage, say, title, right now I need -- if I'm not at -- in the traditional world, I have to get the listing information, the client information, connect to the title officer and then send an e-mail and say, "Hey, I want to connect you, here's what the opportunity is right now." All that could be done with a click of a button because if you're on the platform, we know to find information because it's in their CRM. We know the list of information they're looking at because that's in business tracker and tied to the listing database. And we know the title officer that you worked with last time to push -- click 1 button, it is done. So -- an ability to drive the attach on making things faster and simpler as well.

Another question on mortgage. I think when you all operate at the high end, I'm guessing a lot of the transactions are financed by buyers who have worked with the private wealth area of a bank and get like big discounts for having assets at a bank. How do you guys compete on price and mortgage? Is that -- are you able to maybe leverage lower customer acquisition costs to give better rates, like you able to get competitive? Or is that -- am I wrong that at that price point...

No, no, you're right, my friend. And so look, Guaranteed Rate has a partnership with a bank that gives them the ability to bring -- to offer clients a 0.25 basis point reduction on rate for [ $500 ] deposits and another 0.25 point reduction in rate for another [ $500 ] deposits, which makes them competitive with the big banks that are doing that.

Yes, yes. Okay. And then I guess outside of mortgage and JV, you've got T&E progressing nicely. Are there other -- what are the most exciting other adjacent services that you guys are bringing in or plan to bring into the bundle?

Yes, there are traditional and untraditional. Traditional would be home insurance, which I hope to launch in the second half of next year. There's home warranty, there's home security. Not all of these things mean that they're -- that we are building them in-house. There is owned, let's say title, there's a JV opportunity, which is we're doing mortgage. Then there's just referral, pay just for referring, which we have put in home security. Then there's nontraditional. Digital ads is an example where something that -- I don't know of a brokerage firm that's monetizing digital ads. At Compass, we are. There is 3D Matterport -- we -- you can schedule through Compass. And when they do that, we get -- we monetize as well as client gifting programs. At the end of every year and at their home anniversary, agents send client gifts to stay top of mind, that leads to more repeat referral business. We monetize that as well. And so those are some examples of nontraditional. But the buckets would be, what is the agent spend, what is the listing marketing spend, and what is the client spend. Client spend, mortgage title, listing marketing, digital ads, 3D Matterport, agent spend, client gifting programs, leads, and much more. Those are the 3 buckets.

Yes. One of the things we've noticed in some geographies is just seeing more Compass brands on rentals. Is that a meaningful business for you? Is that a growth area? What are we kind of noticing there?

Yes. So we've been in rentals for a while with New York City, and a lot of the luxury markets tend to rent out their homes. We -- the strategy of Compass isn't as much sales versus rentals. It's more of what are the best agents, where is the money, where is this $100 billion of commissions in rental sales in -- and you started off in every market with the best agents and then you move more towards an average distribution of agents in each market. And so that's really more of the focus than rentals versus sales. But business begets more business, client -- renters become buyers. And so we definitely want to serve everyone here at Compass.

Yes, yes. You guys have used kind of a lot of organic, a lot of M&A in the past. Like what -- are there interesting opportunities right now? Are valuations attractive? How do you think about organic versus inorganic growth?

Kristen, how about you answer this one?

Sure. We've historically -- I mean, we've obviously been very successful in bringing agents onto our platform, really proud of that. And if you look at our agent count at the end of 2018, it was about 20,000 agents. Today, we have over 25,000 agents on our platform. And the vast, vast, vast majority of those agents came to our platform organically. We've got an enterprise sales team that is tasked with -- they're coming from places like LinkedIn, where they've been selling software to enterprise or other businesses. And we bring them over to our platform and have them be the vehicles for essentially getting the value proposition for Compass out to agents. And we've had the opportunity the same way we've expanded where we've refined our expansion model. We've continued to refine our recruitment model, and we're getting more and more efficient at that. And that's getting even easier the better our platform becomes. So that's really our focus when we're looking to grow the business. From time to time, we will look to bring a large group of agents on via M&A. It's rare that we do that. But sometimes we do, do that. We look at it as sort of an extension of our existing sales motion. But like I said, that comprises a very small piece of our overall agent base. And we don't have any targets that we are actively engaged with or looking at now. And we're really focused on just making sure we execute on our plan. And the way that we do that, first and foremost, is by organically bringing agents onto our platform and helping them grow their transactions that they execute on our platform.

Yes. And just one thing to highlight in terms of customer acquisition. I think there's a narrative out there that we're -- the agents come here and get splits that are worse than -- worse for the company than the industry. In Q3 and Q4 year-to-date, over 60% of the agents that came to Compass are paying more than their previous firm. I think it's important to put on the record. And the -- and so we're -- that number is improving year-over-year as well.

Yes. I mean, look, given how much value you're bringing to agents driving their business at much faster growth rates in the industry, is there an opportunity to be premium priced and to increase that over the next several years?

Look, in New York City, our oldest market, where our weighted average split is in the 30s, right? So we are a premium. I think people don't see us as premium more because of the narrative than the actual math of the numbers. And when you go into a market, those first agents are getting unique incentives relative to -- as you expand over time. So there's a huge tailwind of margin behind us, both from those incentives winding down, which the incentives right now are on average closer to a year than 2 years. And secondly, going further down market where the margin is better.

I think you can see that in the -- when you look at commissions and other as a percentage of revenue, if you look at our improvements year-over-year, in Q1, we delivered 80 basis point improvement year-over-year. In Q2, that number was 100 basis points. In Q3, it was 180 basis points. And certainly, 1 driver there has been the pricing power that we have in the market and our ability to really be able to reflect the value that we're delivering for our agents and the price.

Okay. Okay. And then just some bigger picture things. There has been the DOJ investigating the NAR and trying to bring more clarity to buyer commissions. Do you all think that the agent, kind of buy-side and sell-side commissions eventually get unbundled? And if that happens, what happens to, I guess, the industry? And then what -- does it impact the higher end, maybe less than the lower end? How do you guys see all of that playing out?

We're watching the situation closely. The indications that I just read and see with is more around a focus of creating more transparency than structurally changing what is the way the market works. And I see transparency being good for everyone.

Okay. And then curious -- can't, not get your view on this one, but obviously, Zillow has had quite a change in tack and this iBuying business was -- has been a bit of a focus and now it's kind of -- at least 1 big player is unwinding it. What is your take on that? Is this the beginning of the end for iBuying? Do you all think that there's some interesting aspects of it? Definitely less exposed to where you guys operate, but curious to get your views on that.

Yes. Look, I think the takeaway for me is I'm glad when a lot of the other big brokerages started offering iBuying alternatives that we continue to just focus on keeping the main thing, the main thing, which is agent productivity. And that's why we have the results we have. I think a second takeaway for me is agents. The people have been betting against agents for decades. Decades, my mom is an agent, I know. And agents aren't going away. There were 90% of agent transactions 10 years ago, 20 years ago. They're going to be in 10 years from now, 20 years from now. By the way, agents actually matter more in this market than before. When inventory is so tight, who do you think has better access to inventories that's on the market, a website or an agent who can talk to all their clients saying what are you bringing on the market, right? Agents actually matter more now than ever before. And we're here to help agents realize their entrepreneur potential, and we're making them -- we're going to make them rock stars. We're going to make it clear to everyone like if you don't have a conversation, you're missing the market. If we never come as an agent, your home is going to sell in more time and with less money because they're not going to have the proven tools that create better results. And our agents are selling homes for less time and for more money. And so I think the takeaway for me is when there's all this noise around -- so much noise, so much energy from these other things that are not the core being the agent, just focus on the agent and let all this energy go there. And there's going to be a moment where the role is going to flip, and they're going to see like how agents are at the center of the transaction. They own the 100% of commissions -- the $100 billion of commissions, obviously. They're either directly or indirectly referring the vast majority of the $140 billion agent services. Who is the company that is best helping them realize their dreams, who is that -- who's investing? We are investing more in R&D to help them -- almost $300 million in R&D this year to -- when that's more than every other traditional brokerage firm -- at least I think, from what I can see, is more than every other traditional brokerage firm in country combined, right? And so the bet we're making is software is going to over time be the thing that helps them realize potential, and then agents will want to be here and stay here at a faster rate than any other company. And that will -- and then we will be able to continue to drive adjacent service attach and have a sustainable financial advantage relative to the incumbents on both the revenue line, revenue growth line, of course, on retention, on pricing and on adjacent services, i.e., revenue and profit per transaction because we can monetize more and more times through the platform, and that's our focus.

Robert, Kristen, any parting kind of words you would have for the investment community, anyone looking at Compass that we haven't discussed that are important things you want to get across?

And maybe one last thing. I've shared this before, but you can know the narrative is, oh, when agents are on contract, they are all going to leave. You look at our oldest market in New York City, where 85% of our agents are off the initial contract, where we're charging the most, again, in the 30s, where you have the best competition with the most market share relative to other competitors in the market. We've got the most wealth finance offers with both with new developments dangling in front of agents, say, "Hey, coming are new developments, which will transform your career." In that market, our retention is still in the mid-90s, right? And so I think that's -- and the same goes for our second oldest market in D.C., it's still in the mid-90s. And so I think people -- a lot of these narratives that we are over time going to share more numbers to let make the narrative. And so thank you for sharing the narratives with us, and we'll just continue knocking down.

All right. Well, look, Robert, Kristen, great to have you all. It's been great watching you guys perform. And at some point, the stock will follow. But it's great to have you guys, hopefully get you back in person in the future.

I love you said the future. You couldn't say next month or even next year, it's in the future, at some point...

Fingers crossed. Fingers crossed.

Yes. Fingers crossed.

All right. Well, it's great to have you, and we'll have you in person -- we'll have you. It will happen.

It will happen. I know what...

Sounds good. Thank you, Lloyd.

All right. Thanks.

Thank you.

Bye-bye.