Kalani Reelitz : Yeah. Sure. Thanks a lot. A few things. I think, we definitely are targeting 850 for 2024 and I think as you mentioned consistently, we want to make sure we are working to drive even more efficiency just to maintain that level in 2025. We think there’s just a kind of a tremendous value if we are able to do that. I think as we think about where we’re going, we’re going to contribute – continue to drive operating efficiency. I think, one of the things over the last year and a half is we’ve created a real operating discipline across the company to really drive out efficiency and cost savings. We will continue to look to take advantage of our platform and scale. We’ll continue to focus on low cost labor to drive our cost to service down, we will continue to look at extracting savings from vendors.
And so, we’ll just continue to drive that operating discipline. So we can allow our cost base to flex with both the market, but also just to make sure one of the things we continue to learn, where we can be more efficient and I think not only to react to the market, but also just to allow ourselves to continue to drive more value, more EBITDA, more cash flow. We won’t stop making sure we are servicing our agents with the best service, but also the most efficiently.
Soham Bhonsle: I guess, just a quick follow-up, then move from 900 to 850. Like what’s the Delta? What’s the biggest Delta that’s getting you there?
Kalani Reelitz : Yes. So, a few things. One, I think we continue to look at our operating models. So we continue to look at kind of how we lower the cost per transaction. We do that through just our operating models. Some of the low cost labor continue to think we have tremendous opportunities with vendors, especially now with the market fits. And so, a lot of the same actions we’ve taken will continue to drive, we continue to learn more and more. We’ll continue to push on those.
Soham Bhonsle: All right. Great guys. Thanks a lot.
Operator: Our next question comes from the line of Bernie McTernan with Needham and Company. Please go ahead.
Bernie McTernan: Great. Thanks for taking the questions. Maybe just to start, revenue guidance for 4Q flat to up just given the macro. Can you talk about some of the moving pieces? And then maybe how the brokerage acquisitions impacts revenue growth in the fourth quarter?
Robert Reffkin : Maybe I’ll just give just some high level context on what we see in the market and I let Kalani go into more detail. I think, we have modestly less inventory. So 4% less inventory than we did a year ago and is already recorded in inventory, but it’s not getting worse. So that week-over-week is really following last year now. In terms of price and price is still higher than a year ago. And then it’s recently at all time high and in terms of demand, demand at 8% mortgage rates, definitely slowed down. And I would say, it is almost instead of being more buyers and sellers almost felt like to, for the first time in many, many months, it was as many buy and sells. So it’s almost a balanced market, although a depressed one.
I think it was the mortgage rates going down 70 basis points over the last week. It’s a very, very good thing for Compass and for the market. There’s a lot of evidence out there that consumers respond more to the change in the mortgage rates, more than the absolute number. And so, 8%, at this moment in time is almost a great marketing, is almost great marketing to buyers. Let’s say 7.4% is very attractive. And so, hopefully, things as stay around these levels, but the good news is the fall market is not falling off a cliff. And, we are seeing in contract listing over the recent weeks either at or above the prior weeks at the same levels of the prior weeks – prior year. And we’re all holding tight. I hope that the mortgage rate outlook is reasonable.
So with that, Kalani, maybe a bit more detail on Q4.
Kalani Reelitz : Yeah, the only thing I’d add is, just to remind the equation, right? I think market first, which as Robert said is this slightly down? But obviously lapping Q4 last of year, which was historically low. Added to that, agent adds which, which as you heard Greg mentioned we continue to add agents into the list from there will be additive and then obviously our M&A, we won’t – we haven’t provided formal guidance on the lift there. But those are the three big kind of components to the equation.
Bernie McTernan: Understood. And then, just on the agent adds, just any color in terms of how organic agent adds are tracking versus, the acquired ones from brokerages, I guess asking the same question in a different way if I could?
Robert Reffkin : Yeah, it’s a good question, Bernie. So, agent adds organically in Q3 were actually almost identical to what we did in Q2. And I’d just remind you and everybody on the call about the way that we report. Our average, principal agent count is calculated by taking the end of month average for each month in the quarter and then just dividing by three and so, at the end of month total rather for each month and then dividing by three. And we closed the Realty Austin and DPP deals in September. So those – the impact of those on our average principal agent count is to lead a little bit because it’s really only a third of the actual total principal agents that they have are going to be reflected in Q3. But we had a strong quarter from an agent recruiting perspective in Q3, normally Q2 is our best agent recruiting quarter.
It’s historically been that. But this year, we saw Q3 be almost identical slightly above Q2 on an organic basis. And then, you’ll see in Q4, the full impact of the two acquisitions flow through in the numbers and so we are expecting to see healthy growth in Q4, as well.
