Fathom Holdings Inc. Q3 FY2024 earnings call

• Acquisition of My Home Group: It's a top Arizona-based broker with over 2,200 agents joining, making Fathom's total agents approximately 14,500. Expected to add ~$100 million in annual revenues in 2025. - Balance sheet strengthening: Sold Dagley Insurance Agency in May and completed a $5 million private placement of convertible note in September. - New commission plans: Launched Fathom Max and Fathom Share in August to boost agent recruitment and retention. - Real estate expansion: Fathom Realty opened operations in New York in 2024 and plans to expand to all 50 states by end of 2025. - Verus Title leadership: Appointed Monica Schroeder as President and Penelope Vockel as Chief Operating Officer to drive growth.

Third quarter total revenue was $83.7 million, a 10% decline year-over-year compared to $93.5 million in Q3 2023. The Real Estate division had revenue of approximately $78.6 million in Q3 2024, a 11% decline year-over-year due to a 9.5% decrease in transaction volume. Mortgage division revenue grew to $2.9 million in Q3 2024, a 52% increase year-over-year. Verus Title had revenues of $1.5 million in Q3 2024, a 71% increase year-over-year. The Real Estate division's gross profit margin improved to 5.7% from 5.1% in Q3 2023. Mortgage adjusted EBITDA loss was $319,000 in Q3 2024 compared to $219,000 in Q3 2023. Verus Title's adjusted EBITDA loss was $93,000 in Q3 2024 compared to a $23,000 loss in Q3 2023.

• The company elected to withhold guidance for the fourth quarter ending December 31, 2024, and plans to reassess and potentially reinstate guidance expectations in the first quarter of 2025. - Anticipates 25% agent growth in 2025 and believes it will lead to adjusted EBITDA profitability in 2025.

• Interest rate fluctuations could significantly impact real estate transactions and mortgage profitability. - Intense market competition and persistent affordability issues in the housing market. - Legal risks such as the settlement related to the Burnett v. National Association of Realtors et al. case.

Q: For the My Home Group acquisition, could you give more color on how it happened and future acquisition plans?

A: We were introduced to My Home Group by Remo, a real estate mergers and acquisition company. We are in discussions with other companies and are confident in achieving 25% agent growth in 2025 due to ongoing conversations and interest from brokerages.

Q: Talk about recruiting efforts, what's working and different from before, and how to help existing agents be productive?

A: The revenue share model is attracting agents. We'll launch programs in the next 60 - 90 days to help existing agents. October transactions are on par with last year, and My Home Group's addition will boost future transactions.

Q: Details on the payment for the acquisition and future acquisition payment structure?

A: The cash component of the My Home Group acquisition was minimal. Future acquisitions are expected to have a significant portion in stock, similar to the My Home Group deal.

Q: Comment on the impact of recent interest rate cuts?

A: It's too early to comment fully. We focus on growing the business to achieve 25% plus annual growth to ensure profitability despite interest rate fluctuations.