• Total Revenue: $83.7 million, a 10% decline from $93.5 million in Q3 2023.
• Adjusted EBITDA Loss: $1.4 million compared to a loss of $0.3 million in Q3 2023.
• Net Loss: $8.1 million or $0.40 per share, compared to a loss of $5.5 million or $0.34 per share in Q3 2023.
• Real Estate Transactions: 9,331 transactions, a decrease of approximately 9.5% from Q3 2023.
• Agent Network Growth: 9.3% increase to approximately 12,383 agents as of September 30, 2024.
• Mortgage Division Revenue: $2.9 million, a 52% increase from $1.9 million in Q3 2023.
• Title Division Revenue: $1.5 million, a 71% increase from $834,000 in Q3 2023.
• Cash Position: $13.4 million at the end of Q3 2024.
• Gross Profit Margin: Increased to 9% from 7% in Q3 2023.
• Technology and Development Expenses: Approximately $2 million, up from $1.7 million in Q3 2023.
• General Administrative Expense: $8.7 million, down from $9.8 million in Q3 2023.

• Warning! GuruFocus has detected 6 Warning Signs with FTHM.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fathom Holdings Inc (NASDAQ:FTHM) successfully acquired My Home Group, significantly expanding its national footprint and strengthening its presence in Arizona's real estate market.
• The acquisition is expected to add approximately $100 million in annual revenues in 2025, contributing to significant EBITDA growth.
• Fathom Holdings Inc (NASDAQ:FTHM) reported a 52% year-over-year increase in mortgage division revenues, reflecting strong growth momentum.
• The company's title division saw a 71% increase in revenue, demonstrating steady momentum and reinforcing its value proposition.
• Fathom Holdings Inc (NASDAQ:FTHM) launched new commission plans, Fathom X and Fathom Share, which have been positively received and are expected to boost recruitment and retention.

Negative Points

• Total revenue for the third quarter decreased by 10% year-over-year, primarily due to a decline in brokerage revenue and the absence of insurance business revenue.
• The company reported a GAAP net loss of $8.1 million for the third quarter, an increase from the $5.5 million loss in the same period last year.
• Real estate transactions decreased by 9% compared to the same quarter last year, attributed to higher home prices and mortgage interest rate uncertainty.
• Adjusted EBITDA loss increased to $1.4 million from $0.3 million in the third quarter of 2023, due to decreased brokerage revenue and increased costs in ancillary businesses.
• Fathom Holdings Inc (NASDAQ:FTHM) reached a nationwide settlement related to a legal case, requiring payments totaling $2.95 million over the next two years, impacting financial resources.

Q & A Highlights

Q: Could you provide more details on the My Home Group acquisition? Did you approach them, or did they approach you? Also, how does this acquisition fit into your overall strategy? A: We were introduced to My Home Group through a real estate mergers and acquisition company. The initial discussions evolved into a merger due to shared values and strategic alignment. My Home Group has higher productivity in terms of transactions per agent, which is beneficial for us. Since launching our revenue share program, we've seen increased interest from other companies, which supports our goal of 25% agent growth annually.

Q: What are you doing differently in your recruiting efforts, and how are you supporting existing agents to remain productive? A: We've seen increased interest in our unique revenue share model, which offers both a flat fee and a traditional split. We're educating prospective agents about this model. Additionally, we're launching new branding and marketing programs to help agents grow their business. Our focus on recruiting higher-producing agents is beginning to show results, as seen in our October transaction numbers.

Q: Can you discuss the financial terms of the My Home Group acquisition and how future acquisitions might be structured? A: For competitive reasons, we won't disclose the total payment details. However, the cash component was minimal, with the majority of the purchase price in stock, paid over a few years. This structure aligns with our strategy for future acquisitions, as we aim for minimal cash outlay and focus on long-term value creation.

Q: Is the anticipated 25% agent growth starting soon, and will future acquisitions follow a similar payment structure? A: Yes, with the My Home Group acquisition, we're close to achieving that growth this year. We expect to see increased agent count starting in Q1 2025. Future acquisitions will likely follow a similar structure, with a focus on stock-based payments to align interests.

Q: You mentioned the acquisition would add $100 million in revenue in 2025. Can you elaborate on the assumptions behind this projection? A: My Home Group has higher productivity and transaction values, particularly in the Arizona market, which is a hot market. Their higher transaction price and productivity per agent will positively impact our overall performance, contributing to the projected $100 million in revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.