Fathom Holdings Inc (FTHM) Q1 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Challenges
Brokerage Revenue: $88.9 million, up 36% from the previous year.
Gross Profit: $8.1 million, a 13% increase year over year.
Agent Count: Approximately 14,750, a 22.8% increase over Q1 2024.
Real Estate Transactions: 9,715, a 26.1% increase compared to Q1 2024.
Mortgage Revenue: $2.6 million, a 13% increase from Q1 2024.
Title Revenue: $1 million, a 43% increase from Q1 2024.
GAAP Net Loss: $5.6 million or $0.24 per share, compared to a loss of $5.9 million or $0.31 per share in Q1 2024.
Adjusted EBITDA Loss: $1.5 million, unchanged from Q1 2024.
Cash Position: $8 million at the end of the quarter.
Warning! GuruFocus has detected 6 Warning Signs with FTHM.
Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Fathom Holdings Inc (NASDAQ:FTHM) reported a 32.1% increase in total revenue for Q1 2025, reaching $93.1 million, exceeding analysts' expectations by 12%.
Brokerage revenue climbed nearly 36% to $88.9 million, driven by increased transaction volume and agent count.
The company successfully reduced expenses by approximately $750,000 per quarter, contributing to a more efficient and scalable business model.
The new Elevate program, designed to enhance agent productivity and profitability, has already attracted over 120 agents since its soft launch.
Fathom Holdings Inc (NASDAQ:FTHM) expects to achieve adjusted EBITDA profitability in the second quarter of 2025, marking a significant milestone in its financial performance.
Despite revenue growth, Fathom Holdings Inc (NASDAQ:FTHM) reported a GAAP net loss of $5.6 million for Q1 2025, though this was an improvement from the previous year's loss.
The company's technology segment saw a decrease in third-party revenues, dropping to $600,000 in Q1 2025 from $800,000 in Q1 2024.
The mortgage business reported an adjusted EBITDA loss of $400,000, although this was an improvement from the previous year's loss.
Verus Title, part of Fathom's title business, reported an adjusted EBITDA loss of $400,000 for Q1 2025, an increase from the previous year's loss.
The company faces ongoing economic headwinds, including elevated mortgage rates and global economic uncertainty, which could impact future performance.
Q: Can you elaborate on how the Elevate program enhances profitability on both gross profit and adjusted EBITDA per transaction compared to traditional programs? Also, what is the onboarding pipeline for agents into Elevate? A: Marco Fregenal, CEO, explained that Elevate charges a 20% commission split, and due to the efficiencies of the intelliAgent platform, they expect gross profit margins to grow by 3x to 4x compared to traditional margins. The program had a soft launch four weeks ago, with 120 agents already signed up. They aim to onboard about 100 new agents per month by the end of the year, with a careful approach to growth due to the program's complexity.
Q: Outside of My Home Group, have there been discussions with other agent teams to join Fathom, and has the launch of Elevate accelerated these discussions? A: Marco Fregenal confirmed that the launch of Elevate has led to more conversations with brokerages and technology partners. They anticipate more partnerships and potential licensing agreements for Elevate in the coming months, with announcements expected within the next six months.
Q: What impact do you expect Elevate to have on ancillary businesses? A: Marco Fregenal noted that Elevate could positively impact ancillary businesses by building closer relationships with participating agents. This could enhance margins, increase agent retention, and contribute to a more diverse revenue stream.
Q: How has the market shift from a seller's market to a more balanced market affected Fathom's operations? A: Marco Fregenal mentioned that while mortgage rates remain elevated, they are stabilizing, and housing inventory is increasing. This shift has led to price reductions and longer market times, but Fathom is well-positioned to benefit from any market improvements due to their lean cost structure and value proposition.
Q: Can you provide more details on the financial performance of the brokerage and ancillary businesses? A: Daniel Weinmann, VP of Finance, reported that brokerage revenue increased by 36% to $88.9 million, with a 26.1% increase in transactions. Mortgage revenue rose by 13% to $2.6 million, and title revenue increased by 43% to $1 million. These results were driven by strategic growth and cost-cutting initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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