Fathom (FTHM) Q2 2024 earnings summary

Executive summary

• Introduced new agent commission plans (Fathom Max and Fathom Share) and a revenue share program in 2024 to drive agent recruitment, retention, and sustainable growth.

• Achieved positive adjusted EBITDA in Q2 2024, with all major business segments (real estate, mortgage, title) also positive.

• Sold insurance business (Dagley Insurance Agency) in May 2024 for $15 million, strengthening the balance sheet and resulting in a $3 million gain.

• Strategic focus on agent growth, aiming to restore 30% agent growth within two to three quarters, supported by strong interest from agents and brokerages.

• Real estate agent network grew 12% year-over-year to 12,224 as of June 30, 2024.

Financial highlights

• Q2 2024 revenue was $89.2 million, down 11% year-over-year, mainly due to fewer transactions and a shift toward lease transactions.

• Gross profit decreased 8.6% to $8.5 million, but gross profit margin (excluding insurance) improved to 9% from 8% last year.

• Adjusted EBITDA was $0.2 million in Q2 2024, marking the first positive quarter since Q2 2023.

• GAAP net loss improved to $1.3 million ($0.07/share) from $4.3 million ($0.27/share) in Q2 2023, aided by the insurance business sale.

• Cash and cash equivalents at June 30, 2024, were $10.4 million, up from $7.4 million at year-end 2023, with $7 million receivable from the insurance sale over the next 24 months.

Outlook and guidance

• No formal guidance for Q3 2024 due to the recent launch of new revenue share models and their uncertain near-term impact; management will reassess in Q4 2024.

• Expects margin improvements over the next year, with more significant impact from new plans anticipated in Q1 2025 and beyond.

• Management expects cost reduction initiatives, new agent fee structure, and revenue share program to support profitable growth and provide sufficient funding for at least the next 12 months.