Fathom (FTHM) Q3 2024 earnings summary

Executive summary

• Completed acquisition of My Home Group, adding over 2,200 agents and expanding presence in Arizona and Washington, with an expected $100 million annual revenue contribution for 2025.

• Agent network grew 9% year-over-year to 12,383 as of September 30, 2024, with a focus on returning to 25%+ annual agent growth.

• Launched new commission plans (Fathom Max and Fathom Share) and a revenue share program to drive agent recruitment and retention.

• Achieved highest satisfaction rating among top 40 U.S. real estate companies, reflecting a strong agent-focused culture.

• Sale of Dagley Insurance Agency in May 2024, resulting in $7.8 million cash received at closing and $7 million in notes receivable.

Financial highlights

• Q3 2024 revenue was $83.7 million, down 10% year-over-year, mainly due to an 11% decline in brokerage revenue from fewer transactions.

• Adjusted EBITDA loss was $1.4 million, compared to a $0.3 million loss in Q3 2023.

• GAAP net loss for Q3 2024 was $8.1 million ($0.40 per share), up from $5.5 million ($0.34 per share) in Q3 2023, mainly due to a $2.95 million NAR litigation settlement expense.

• Gross profit margin (excluding insurance) increased to 9% from 7% year-over-year.

• Ended Q3 with $13.1 million in cash and cash equivalents.

Outlook and guidance

• Withheld Q4 2024 guidance due to interest rate uncertainty and pending impact of acquisitions and new revenue models; plans to reassess guidance in Q1 2025.

• Anticipates 25% agent growth and adjusted EBITDA profitability in 2025, driven by acquisitions and new commission plans.

• Management expects existing cash, increased agent fees, and growth from internal referrals to provide sufficient funding for at least one year.