Fathom Holdings Inc. Q1 FY2025 earnings call

• Recognized the team's dedication amidst economic headwinds.
• Total revenue rose 32.1% to $93.1 million in Q1 2025, exceeding analysts' expectations.
• Brokers' revenue climbed nearly 36% to $88.9 million.
• Transactions increased by 26% to approximately 9,715 in Q1 2025.
• Gross profit improved to $8.1 million, up 13% year-over-year; excluding divested Dagley Insurance, gross profit growth was 34%.
• Elevate initiative: Soft launched 4 weeks ago with over 120 agents signed up; agents must have completed at least 4 transactions in past 12 months to qualify; aim to onboard ~100 new agents per month by Q4; developing extensions like Elevate for Teams and Elevate for Partners; early stage conversations with external organizations about licensing Elevate.
• Ancillary businesses: Mortgage revenue up 13% to $2.6 million; Title revenue up 43% to $1 million.

Brokerage Business:

• Closed approximately 9,715 real estate transactions in Q1 2025, a 26.1% increase from Q1 2024.
• Ended Q1 with approximately 14,715 agent licenses, a 22.8% increase from Q1 2024.
• Revenue for real estate division was $88.9 million in Q1 2025, up 36% from $65.4 million in Q1 2024.
• Gross profit margin for real estate division improved to 7.1% from 6.5% in Q1 2024.
• Adjusted EBITDA gain in real estate division was approximately $1.6 million in Q1 2025, an increase of $800,000 from Q1 2024.

Mortgage Business:

• Generated revenues of $2.6 million in Q1 2025, up 13% from $2.3 million in Q1 2024.
• Mortgage-adjusted EBITDA for Q1 2025 was a loss of $400,000, an improvement of $100,000 from Q1 2024.

Title Business:

• Had revenues of $1 million in Q1 2025, up 43% from $700,000 in Q1 2024.

Technology Segment:

• Third-party revenues decreased to $600,000 in Q1 2025 from $800,000 in Q1 2024.
• Adjusted EBITDA income for Q1 2025 was $50,000, an improvement from an adjusted EBITDA loss of $30,000 in Q1 2024.

• Expect to achieve adjusted EBITDA profitability in the second quarter.
• By the fourth quarter, aim to be onboarding around 100 new agents per month into the Elevate program.
• Developing targeted extensions of the Elevate program such as Elevate for Teams and Elevate for Partners.
• In early stage conversations with external organizations interested in licensing Elevate.

• Continued economic headwinds from elevated mortgage rates and shifting global economic uncertainty.

Q: Can you talk more in depth about how Elevate enhances profitability on both gross profit and adjusted EBITDA for transaction with Elevate versus traditional programs and about the cadence of the onboarding pipeline of agents and the positive impact on ancillary business?

A: Because we're charging 20% and because of the efficiencies of IntelliAgent, we are going to see a higher gross profit margin per transaction. Gross profit margins could grow by 3-4x compared to traditional. Launched internally 4 weeks ago with 120 agents signed up; starting next week will market externally; ultimate goal of end of year is onboarding about 100 agents per month; positive impact on ancillary business as the program expands.

Q: Outside of My Home Group, have you guys held discussions with similar sized agent teams to join Fathom and has any of that accelerated post the launch of Elevate?

A: Once we launched Elevate, had a lot more conversations with different brokerages, technology partners; potentially more walkovers into Q3; within next 6 months, expect announcements in terms of potential partnerships of companies wanting to partner with or license Elevate; significant interest from different companies in Elevate.