– Company Targets Achieving and Remaining
Adjusted EBITDA Positive Moving Forward–
CARY,
N.C., May 9, 2024 /PRNewswire/ -- Fathom
Holdings Inc. (Nasdaq: FTHM) ("Fathom" or the
"Company"), a national, technology-driven, end-to-end real
estate services platform integrating residential brokerage,
mortgage, title, and SaaS offerings for brokerages and agents,
today reported financial results for the first quarter ended
March 31, 2024.
"We made progress during the first quarter towards achieving our
2024 goals despite seasonality and broader industry challenges that
continue to impact our results," remarked Marco Fregenal, CEO of
Fathom. "Gross margin increased to 10.3% during the quarter, which
positions Fathom well to reaching positive EBITDA and operational
cash flow going forward. Moreover, the recent sale of Dagley
Insurance Agency marks a significant milestone in fortifying our
financial position and supporting our agent growth strategy. The
infusion of capital from this transaction equips us with vital
resources to tackle potential challenges with confidence and
deliver greater value for our shareholders through targeted growth
initiatives and the exploration of additional opportunities within
our core operations. Looking ahead, we believe we remain
well-positioned to attract high-quality agent teams and brokerages
as our agent value proposition remains compelling in the current
environment and our pipeline of opportunities remains robust."
First Quarter 2024 Financial Results
Fathom's real estate agent network grew 12.8% to approximately
11,986 agent licenses at March 31,
2024, up from approximately 10,628 agent licenses at
March 31, 2023.
Fathom closed 7,703 transactions for the 2024 first quarter, a
decrease of 9.7%, compared to 8,532 transactions for the 2023 first
quarter. Real estate transactions decreased primarily due to
continuation of high interest rates in the first quarter of
2024.
Fathom's total revenue decreased 9.0% for the 2024 first quarter
to $70.5 million, from $77.5 million for the 2023 first quarter. The
decrease in total revenue was comprised of a 10.6% decrease in
brokerage revenue largely attributable to the decline in brokerage
transactions previously noted, partially offset by a 17.1% increase
in Fathom's ancillary services revenue, particularly in Fathom's
mortgage business.
Gross profit for the 2024 first quarter increased approximately
7.0% to $7.2 million, from
$6.8 million for the 2023 first
quarter. Gross margin increased 160 basis points for the 2024 first
quarter to 10.3%, compared to 8.7% for the 2023 first
quarter. This increase was primarily due to our transaction
fee cap resetting at the beginning of the year to $150 on each of the first 15 of an agent's
brokerage transactions in addition to our increasing our agent's
annual fee from $600 to $700 and implementing our new High-Value Property
Fee commencing January 1, 2024.
Segment revenue for the 2024 first quarter, compared with the
2023 first quarter was as follows:
|
Revenue
|
|
Three months
ended
March 31,
|
|
(Revenue $ in
millions)
|
2024
|
|
2023
|
|
|
UNAUDITED
|
|
Real Estate
Brokerage
|
$
65.4
|
|
$
73.2
|
|
Mortgage
|
2.3
|
|
1.5
|
|
Technology
|
1.1
|
|
0.7
|
|
Corporate and other
services (a)
|
1.7
|
|
2.1
|
|
Total
revenue
|
$
70.5
|
|
$
77.5
|
|
|
|
(a)
|
Transactions between
segments are eliminated in consolidation. Such amounts are
eliminated through the Corporate and other services
line.
|
GAAP net loss for the 2024 first quarter was $5.9 million, or $0.31 per share, compared with a loss of
$5.7 million, or $0.36 per share, for the 2023 first quarter. This
was primarily due to an increase in technology and development and
general and administrative costs.
Technology and development expenses were approximately
$2.0 million for the 2024 first
quarter compared with $1.6 million
for the first quarter of 2023. The approximate $0.4 million increase was primarily due to
expansion of our Brazil
technological operations, higher data and outside service costs,
and to an approximate $0.1 million
increase in non-cash amortization of costs incurred related to the
development of our technology platform.
General and administrative expense totaled $9.6 million for the 2024 first quarter, or 13.6%
of revenue, compared with $9.3
million or 12.0% of revenue for the first quarter of 2023.
The dollar increase was primarily due to costs incurred to enhance
our offshore services team and regional leadership, partially
offset by a reduction in insurance costs.
Despite the decrease in the current first quarter revenues,
Adjusted EBITDA loss, a non-GAAP measure, was relatively constant
at $1.5 million in the 2024 first
quarter compared with an Adjusted EBITDA loss of approximately
$1.4 million for the 2023 first
quarter. Fathom is committed to achieving and remaining Adjusted
EBITDA positive moving forward.
Fathom provides Adjusted EBITDA, a non-GAAP financial
measure, because it offers additional information for monitoring
the Company's cash flow performance. A table providing a
reconciliation of Adjusted EBITDA to its most comparable GAAP
measure, as well as an explanation of, and important disclosures
about, this non-GAAP measure, is included in the tables at the end
of this press release.
Q1 2024 and Recent Highlights
- Fathom Realty expanded into Rhode
Island.
- Fathom Realty announced the promotions of DeJane Kerr to Senior Vice President of
Operations and Daniel Lang to
Regional Director.
- Established Verus Title Elite, a strategic joint venture with
individual teams and top producing agents of Fathom Realty
throughout Texas that is expected
to increase Verus's and thereby Fathom's revenue and
profitability.
- Commencing January 1, 2024, the
agent's annual fee which is charged on an agent's first transaction
of each anniversary year increased from $600 to $700. In
addition, we implemented a new fee on sales of properties for over
$600,000. This new 'High-Value
Property Fee' will consist of an additional $200 on properties priced between $600,000 and $999,999. Then, there will be an additional fee
of $250 charged for each $500,000 tier over a $1,000,000 property price.
- In May 2024, Fathom entered into
a purchase and sale agreement for the sale of Dagley Insurance
Agency to its founder, Nathan
Dagley. Pursuant to the agreement, the sale price of Dagley
Insurance Agency was $15 million in
cash, subject to certain purchase price adjustments, consisting of
(i) $8 million in cash paid at
closing, and (ii) $7 million in cash
paid in the next 24 months.
Guidance/Long-Term Targets
Without giving a timeline for reaching this target, the Company
reiterated that it believes it can generate Adjusted EBITDA
exceeding $40.0 million per year at
100,000 to 110,000 transactions per year.
For the second quarter of 2024, Fathom expects total revenue in
the range of $86 million –
$89 million, and Adjusted EBITDA
in the range of $200K –
$500K.
Conference Call
Fathom management will hold a conference call at 6:30 p.m. Eastern time (3:30 p.m. Pacific time) today to discuss its
financial results for the first quarter ended March 31, 2024.
Call Date: Thursday, May 9
2024
Time: 6:30 p.m. Eastern time (3:30 p.m. Pacific time)
U.S. dial-in: 833-685-0908
International dial-in: 412-317-5742
Please call the conference telephone number five minutes prior
to the start time. An operator will register your name and
organization.
A live audio webcast of the conference call will be available in
listen-only mode simultaneously and available via the investor
relations section of the Company's website
at www.FathomInc.com.
A telephone replay of the call will be available through
May 16, 2024.
U.S. replay dial-in: 877-344-7529
International replay dial-in: 412-317-0088
Replay ID: 9685963
About Fathom Holdings Inc.
Fathom Holdings Inc. is a national, technology-driven, real
estate services platform integrating residential brokerage,
mortgage, title, and SaaS offerings to brokerages and agents by
leveraging its proprietary cloud-based software, intelliAgent. The
Company's brands include Fathom Realty, Encompass Lending,
intelliAgent, LiveBy, Real Results, Verus Title, and Cornerstone.
For more information, visit www.FathomInc.com.
Cautionary Note Concerning Forward-Looking Statements
This press release contains "forward-looking statements" that
involve risks and uncertainties which we expect will or may occur
in the future and may impact our business, financial condition and
results of operations. Forward-looking statements are subject to
numerous conditions, many of which are beyond the control of the
Company, including: risks associated with general economic
conditions, including rising interest rates; its ability to
generate positive operational cash flow; risks associated with the
Company's ability to continue achieving significant growth; its
ability to continue its growth trajectory while achieving
profitability over time; risks related to ongoing and future
litigation; and other risks as set forth in the Risk Factors
section of the Company's most recent Form 10-K as filed with the
SEC and supplemented from time to time in other Company filings
made with the SEC. Copies of Fathom's Form 10-K and other SEC
filings are available on the SEC's website, www.sec.gov. The
Company undertakes no obligation to update these statements for
revisions or changes after the date of this release, except as
required by law.
Investor Contact:
Alex Kovtun and Matt Glover
Gateway Group, Inc.
949-574-3860
FTHM@gateway-grp.com
FATHOM HOLDINGS
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except
share data)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
|
|
UNAUDITED
|
Revenue
|
|
|
|
|
|
|
Gross commission
income
|
|
$
|
65,385
|
|
|
$
73,170
|
Other service
revenue
|
|
|
5,118
|
|
|
4,371
|
Total
revenue
|
|
|
70,503
|
|
|
77,541
|
Operating
expenses
|
|
|
|
|
|
|
Commission and other
agent-related costs
|
|
|
61,167
|
|
|
69,172
|
Operations and
support
|
|
|
2,109
|
|
|
1,614
|
Technology and
development
|
|
|
1,950
|
|
|
1,579
|
General and
administrative
|
|
|
9,602
|
|
|
9,312
|
Marketing
|
|
|
600
|
|
|
715
|
Depreciation and
amortization
|
|
|
728
|
|
|
695
|
Total operating
expenses
|
|
|
76,156
|
|
|
83,087
|
Loss from
operations
|
|
|
(5,653)
|
|
|
(5,546)
|
Other expense (income),
net
|
|
|
|
|
|
|
Interest expense
(income), net
|
|
|
105
|
|
|
(16)
|
Other nonoperating
expense, net
|
|
|
152
|
|
|
159
|
Other expense,
net
|
|
|
257
|
|
|
143
|
Loss before income
taxes
|
|
|
(5,910)
|
|
|
(5,689)
|
Income tax
expense (benefit)
|
|
|
17
|
|
|
12
|
Net loss
|
|
$
|
(5,927)
|
|
$
|
(5,701)
|
Net loss per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.31)
|
|
$
|
(0.36)
|
Diluted
|
|
$
|
(0.31)
|
|
$
|
(0.36)
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
19,178,474
|
|
|
16,011,068
|
Diluted
|
|
|
19,178,474
|
|
|
16,011,068
|
|
The accompanying notes
are an integral part of the condensed consolidated financial
statements.
|
FATHOM HOLDINGS
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in thousands, except
share data)
|
|
|
|
|
March
31,
|
|
|
December 31,
|
|
|
2024
|
|
2023
|
|
|
|
(UNAUDITED)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,682
|
|
$
|
7,399
|
Restricted
cash
|
|
|
280
|
|
|
141
|
Accounts
receivable
|
|
|
2,996
|
|
|
3,352
|
Mortgage loans held
for sale, at fair value
|
|
|
8,731
|
|
|
8,602
|
Prepaid and other
current assets
|
|
|
4,601
|
|
|
3,700
|
Total current
assets
|
|
|
22,290
|
|
|
23,194
|
Property and
equipment, net
|
|
|
2,224
|
|
|
2,340
|
Lease right of use
assets
|
|
|
4,997
|
|
|
4,150
|
Intangible assets,
net
|
|
|
23,080
|
|
|
23,909
|
Goodwill
|
|
|
25,607
|
|
|
25,607
|
Other
assets
|
|
|
50
|
|
|
58
|
Total
assets
|
|
$
|
78,248
|
|
$
|
79,258
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
3,830
|
|
$
|
3,396
|
Accrued and other
current liabilities
|
|
|
3,710
|
|
|
2,681
|
Warehouse lines of
credit
|
|
|
8,518
|
|
|
8,355
|
Lease liability -
current portion
|
|
|
1,507
|
|
|
1,504
|
Long-term debt -
current portion
|
|
|
246
|
|
|
416
|
Total current
liabilities
|
|
|
17,811
|
|
|
16,352
|
Lease liability, net
of current portion
|
|
|
4,630
|
|
|
3,824
|
Long-term debt, net of
current portion
|
|
|
3,490
|
|
|
3,467
|
Other long-term
liabilities
|
|
|
386
|
|
|
381
|
Total
liabilities
|
|
|
26,317
|
|
|
24,024
|
Commitments and
contingencies (Note 18)
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Common
stock (no par value, shares authorized, 100,000,000; shares issued
and outstanding,
|
|
|
|
|
|
20,838,420 and 20,671,515 as of
March 31, 2024 and December 31, 2023, respectively)
|
|
-
|
|
|
-
|
Additional paid-in
capital
|
|
|
129,444
|
|
|
126,820
|
Accumulated
deficit
|
|
|
(77,513)
|
|
|
(71,586)
|
Total
stockholders' equity
|
|
|
51,931
|
|
|
55,234
|
Total liabilities and
stockholders' equity
|
|
$
|
78,248
|
|
$
|
79,258
|
|
The accompanying notes
are an integral part of the condensed consolidated financial
statements.
|
FATHOM HOLDINGS
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in
thousands)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
$
(5,927)
|
|
$
(5,701)
|
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
1,480
|
|
1,357
|
|
Non-cash lease
expense
|
529
|
|
337
|
|
Gain on sale of
mortgages
|
(1,215)
|
|
(831)
|
|
Stock-based
compensation
|
2,652
|
|
2,820
|
|
Deferred income
taxes
|
5
|
|
—
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
356
|
|
(336)
|
|
Prepaid and other
current assets
|
(901)
|
|
202
|
|
Other
assets
|
8
|
|
(3)
|
|
Accounts
payable
|
434
|
|
644
|
|
Accrued and other
current liabilities
|
1,112
|
|
411
|
|
Operating lease
liabilities
|
(566)
|
|
(374)
|
|
Mortgage loans held
for sale
|
(49,598)
|
|
(37,179)
|
|
Proceeds from sale and
principal payments on mortgage loans held for sale
|
50,684
|
|
37,083
|
|
Net cash used in
operating activities
|
(947)
|
|
(1,570)
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property
and equipment
|
(1)
|
|
(9)
|
|
Purchase of intangible
assets
|
(534)
|
|
(579)
|
|
Net cash used in
investing activities
|
(535)
|
|
(588)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
(148)
|
|
(318)
|
|
Borrowings from
warehouse lines of credit
|
49,440
|
|
29,826
|
|
Deferred acquisition
consideration payments
|
(83)
|
|
—
|
|
Repayments on
warehouses lines of credit
|
(49,277)
|
|
(28,929)
|
|
Payment of offering
cost in connection with issuance of common stock in connection with
public offering
|
(28)
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
(96)
|
|
579
|
|
Net decrease in cash,
cash equivalents, and restricted cash
|
(1,578)
|
|
(1,579)
|
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
7,540
|
|
8,380
|
|
Cash, cash equivalents,
and restricted cash at end of period
|
$
5,962
|
|
$
6,801
|
|
Supplemental
disclosure of cash and non-cash transactions:
|
|
|
|
|
Cash paid for
interest
|
$
90
|
|
$
11
|
|
Right of use assets
obtained in exchange for new lease liabilities
|
1,284
|
|
4
|
|
Reconciliation of cash
and restricted cash:
|
|
|
|
|
Cash and cash
equivalents
|
$
5,682
|
|
$
6,723
|
|
Restricted
cash
|
280
|
|
78
|
|
Total cash, cash
equivalents, and restricted cash shown in statement of cash
flows
|
$
5,962
|
|
$
6,801
|
|
|
|
The accompanying notes
are an integral part of the condensed consolidated financial
statements.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(In
thousands)
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Net loss
|
$
(5,927)
|
|
$
(5,701)
|
Stock based
compensation
|
2,652
|
|
2,820
|
Depreciation and
amortization
|
1,480
|
|
1,357
|
Other expense,
net
|
257
|
|
143
|
Income tax
expense
|
17
|
|
12
|
Adjusted
EBITDA
|
$
(1,521)
|
|
$
(1,369)
|
Note about Non-GAAP Financial Measures
To supplement Fathom's consolidated financial statements, which
are prepared and presented in accordance with GAAP, the Company
uses Adjusted EBITDA, a non-GAAP financial measure, to understand
and evaluate our core operating performance. This non-GAAP
financial measure, which may be different than similarly titled
measures used by other companies, is presented to enhance
investors' overall understanding of our financial performance and
should not be considered a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP.
Fathom defines the non-GAAP financial measure of Adjusted EBITDA
as net income (loss), excluding other income and expense, income
taxes, depreciation and amortization, share-based compensation
expense, and transaction-related cost.
Fathom believes that Adjusted EBITDA provides useful information
about the Company's financial performance, enhances the overall
understanding of its past performance and future prospects, and
allows for greater transparency with respect to a key metric used
by Fathom's management for financial and operational
decision-making. Fathom believes that Adjusted EBITDA helps
identify underlying trends in its business that otherwise could be
masked by the effect of the expenses that the Company excludes in
Adjusted EBITDA. In particular, Fathom believes the exclusion of
share-based compensation expense and transaction-related costs
associated with the Company's acquisition activity, provides a
useful supplemental measure in evaluating the performance of its
operations and provides better transparency into its results of
operations. Adjusted EBITDA also excludes other income and expense,
net which primarily includes nonrecurring items, such as, minor
legal settlement claims, certain legal fees, severance costs,
professional fees related to investigating potential financing
opportunities, if applicable, and other non-cash items.
Fathom is presenting the non-GAAP measure of Adjusted EBITDA to
assist investors in seeing its financial performance through the
eyes of management, and because the Company believes this measure
provides an additional tool for investors to use in comparing
Fathom's core financial performance over multiple periods with
other companies in its industry.
Adjusted EBITDA should not be considered in isolation from, or
as a substitute for, financial information prepared in accordance
with GAAP. There are a number of limitations related to the use of
Adjusted EBITDA compared to net income (loss), the closest
comparable GAAP measure. Some of these limitations are that:
- Adjusted EBITDA excludes share-based compensation expense
related to restricted stock and restricted stock unit awards and
stock options, which have been, and will continue to be for the
foreseeable future, significant recurring expenses in Fathom's
business and an important part of its compensation strategy;
- Adjusted EBITDA excludes transaction-related costs primarily
consisting of professional fees and any other costs incurred
directly related to acquisition activity, which is an ongoing part
of Fathom's growth strategy and therefore likely to occur; and
- Adjusted EBITDA excludes certain recurring, non-cash charges
such as depreciation and amortization of property and equipment and
capitalized software, and acquisition related intangible asset
costs, however, the assets being depreciated and amortized may have
to be replaced in the future.
RECONCILIATION OF
GAAP TO NON-GAAP FORWARD LOOKING GUIDANCE
(UNAUDITED)
(In
thousands)
|
|
|
Three Months
Ended
June 30, 2024
|
|
Low
|
|
High
|
Net loss*
|
$
(4,520)
|
|
$
(4,730)
|
Stock based
compensation
|
2,800
|
|
3,100
|
Depreciation and
amortization
|
1,600
|
|
1,700
|
Other expense,
net*
|
300
|
|
400
|
Income tax expense
(benefit)*
|
20
|
|
30
|
Adjusted
EBITDA
|
$
200
|
|
$
500
|
|
*Excludes approximately
$2.2 million in estimated gain and $0.2 million in estimated tax
benefits resulting from the Company's disposition of Dagley
Insurance Agency effective May 3, 2023.
|
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SOURCE Fathom Realty