Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: What degree of a housing recovery is needed for Fathom Holdings to achieve positive free cash flow? A: Marco Fregenal, President and CEO, stated that the company is not relying on a housing recovery to achieve positive cash flow. Instead, they are focusing on increasing the number of agents through new revenue share programs. The goal is to grow the agent network, which will drive transaction growth and improve cash flow and EBITDA.
Q: Can you explain the motivation behind the new Fathom Share plan and its expected impact? A: Marco Fregenal explained that the Fathom Share plan was introduced in response to feedback from agents and small brokerages interested in a revenue share program. The plan offers flexibility and choice, allowing agents to switch between models annually. The expectation is that this will attract more agents, particularly those from traditional split models, and drive growth back to 30% agent growth.
Q: How do the new agent commission plans impact gross profit margins? A: Marco Fregenal noted that the new plans are expected to attract more agents and higher-producing agents, which will increase transactions per agent and improve gross profit margins. The combination of more agents and a percentage joining the 12% program will enhance gross profit margins and EBITDA over time.
Q: What is Fathom Holdings doing to navigate industry changes related to the NAR settlement? A: Marco Fregenal stated that Fathom is working on creating its own buyer agreements and training agents to comply with new rules. The company is collaborating with state brokers and legal teams to ensure adherence to MLS and Board regulations, acknowledging that there are still many moving parts to address.
Q: What is the expected timeline for the impact of the new revenue share models on margins? A: Marco Fregenal indicated that significant changes in gross profit margins and EBITDA are not expected in the next two quarters due to the time it takes for new agents to close transactions. The impact of the new plans is anticipated to be more evident starting in Q1 of next year, with margins potentially reaching the mid-teens over the next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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