Fathom Holdings’ Earnings Call: Growth Amid Challenges

Fathom Holdings Inc ((FTHM)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Fathom Holdings Inc. presented a mixed sentiment, highlighting strong revenue growth and successful cost-cutting measures, alongside challenges in the technology segment and market conditions. While the company showed promising expansion in agent count and ancillary businesses, consistent net losses and market challenges tempered the overall positive outlook. The launch of the Elevate program, however, holds potential for future profitability.

Strong Revenue Growth

Fathom Holdings reported a significant increase in total revenue, rising 32.1% to $93.1 million compared to $70.5 million in the same period last year. This growth exceeded analysts’ expectations by approximately 12%, marking a notable achievement for the company.

Brokerage Revenue Increase

The brokerage division experienced a substantial revenue increase of nearly 36%, reaching $88.9 million, up from $65.4 million last year. This surge was driven by a 26% rise in real estate transactions, totaling approximately 9,715 closings.

Agent Count Growth

Fathom Holdings saw a significant increase in its agent count, entering the quarter with approximately 14,715 licensed agents. This represents a 22.8% growth over the first quarter of 2024, indicating strong recruitment and retention efforts.

Launch of Elevate Program

The newly launched Elevate program has shown early promise, with over 120 agents signing up in the first four weeks. The program is expected to significantly increase gross profit per transaction and EBITDA per transaction, with plans to onboard around 100 new agents per month by the fourth quarter.

Cost-Cutting Success

The company successfully reduced expenses by approximately $750,000 per quarter, contributing to a reduction in GAAP net loss. These cost-cutting measures are positioning Fathom Holdings to achieve adjusted EBITDA profitability in the second quarter.

Growth in Ancillary Businesses

Fathom Holdings reported growth in its ancillary businesses, with title revenue increasing 43% to $1 million and mortgage revenue rising 13% to $2.6 million for the first quarter of 2025.

Consistent Net Loss

Despite the positive revenue growth, Fathom Holdings reported a GAAP net loss of $5.6 million for the first quarter of 2025, slightly less than the $5.9 million loss in the first quarter of 2024. This consistent net loss remains a challenge for the company.

Technology Segment Revenue Decline

The technology segment faced difficulties, with third-party revenues decreasing to $600,000 in Q1 2025 compared to $800,000 in Q1 2024. This decline highlights ongoing challenges in this area of the business.

Market Challenges

Fathom Holdings continues to face market challenges, including elevated mortgage rates and shifting market conditions. Housing prices have experienced modest declines in some regions, adding pressure to the company’s operations.

Forward-Looking Guidance

Looking ahead, Fathom Holdings is optimistic about achieving adjusted EBITDA profitability in the second quarter, thanks to its cost-cutting initiatives and the promising start of the Elevate program. The company plans to continue expanding its agent base and enhancing profitability per transaction, aiming for sustained growth in the coming quarters.

In conclusion, Fathom Holdings’ earnings call reflected a cautiously optimistic outlook, with strong revenue growth and strategic initiatives like the Elevate program offering potential for future profitability. However, consistent net losses and market challenges remain areas of concern. Investors and stakeholders will be keenly watching how the company navigates these challenges while capitalizing on its growth opportunities.