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Fathom Holdings Inc. (FTHM)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue accelerated 36.1% year over year to $121.4M, a clear beat versus S&P Global consensus of $117.3M; GAAP diluted EPS was a loss of $0.13, below the SPGI Primary EPS consensus of -$0.03, while Adjusted EBITDA turned slightly positive at $29K . Revenue/EPS estimates from S&P Global: $117.3M and -$0.03; actuals: $121.4M and -$0.096* (SPGI Primary EPS), GAAP diluted EPS: -$0.13 .
  • Mix and platform strategy progressed: Brokerage revenue +39.6% to $116.0M; Title revenue +88% to $1.5M; Elevate program onboarded 70 agents and is producing materially higher unit economics, with management highlighting 4x gross profit and 5x Adj. EBITDA per transaction versus standard brokerage .
  • Guidance remains withheld for Q3 2025 with management targeting reinstatement in Q4; company intends to remain Adjusted EBITDA positive going forward .
  • Strategic catalysts: Arizona market expansion via licensing intelliAgent and Elevate (Fathom Elite), repayment of $3.5M convertible note, and $3.0M cash received from the 2024 insurance divestiture, positioning the balance sheet and platform for cross‑sell growth .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line beat and mix shift: Total revenue +36.1% to $121.4M driven primarily by My Home Group acquisition and transactions +25.4%; brokerage revenue +39.6% to $116.0M .
  • Elevate program momentum and unit economics: 70 agents onboarded; management: “Elevate agents averaging eight transactions per year…transactions from Elevate generate roughly four times the gross profit and five times the adjusted EBITDA of our standard brokerage transaction” .
  • Title growth with June record: Title revenue +88% YoY to $1.5M; June produced record month; early cross‑sell traction across Elevate agents and mortgage/title .

What Went Wrong

  • EPS miss and GAAP loss widened YoY: GAAP net loss was $(3.6)M; diluted EPS $(0.13) vs SPGI Primary EPS consensus -$0.03, driven partly by a prior-year gain on sale of the insurance business that favored Q2 2024 comparatives .
  • Gross margin compression: Management noted gross profit margin fell to 7.7% from 8.5%, reflecting competitive pricing pressure and higher commission splits to attract/retain agents .
  • Ancillary segment profitability mixed: Mortgage revenue declined to $3.3M with segment Adj. EBITDA loss; Verus Title grew revenue ~90% but operated at an Adj. EBITDA loss due to growth investments .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$89.207 $91.741 $93.135 $121.423
GAAP Diluted EPS ($)$(0.07) $(0.29) $(0.24) $(0.13)
Adjusted EBITDA ($USD Millions)$0.189 $(2.899) $(1.474) $0.029
Gross Profit ($USD Millions)$7.5 (ex-insurance) $6.7 $8.1 $9.4 (ex-insurance)
Gross Margin (%)8.5% 7.2% (ex-insurance) 8.7% (ex-insurance) 7.7%

Segment revenue (quarterly):

Segment ($USD Millions)Q4 2024Q1 2025Q2 2025
Real Estate Brokerage$87.7 $88.9 $116.0
Mortgage$2.0 $2.6 $3.3
Technology$1.1 $1.1 $1.1
Corporate & other services$0.9 $0.5 $1.0
Total Revenue$91.7 $93.1 $121.4

KPIs:

KPIQ4 2024Q1 2025Q2 2025
Agent Licenses (approx.)14,300 14,715 14,981
Transactions (approx.)9,903 9,715 12,710
Elevate Agents Onboarded (cumulative)—Launched 70

Estimates vs Actuals (SPGI):

MetricQ2 2025 SPGI ConsensusQ2 2025 Actual
Revenue ($USD)$117,300,000*$121,423,000
Primary EPS ($)-0.03*-0.096* (SPGI Primary EPS); GAAP diluted EPS: -0.13
EBITDA ($USD)-192,000*-916,000* (SPGI EBITDA); Company Adjusted EBITDA: $29,000

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Revenue/Profitability OutlookQ3 2025Guidance suspended pending Strategy Committee (communicated in Q1) Guidance withheld; reassess/reinstate in Q4 2025 Maintained withheld
Adjusted EBITDA trajectoryNear-termExpected EBITDA positive in Q2 2025 Achieved slight Adj. EBITDA positive in Q2; aim to remain Adj. EBITDA positive Achieved/maintain

Other balance sheet items relevant to outlook:

  • Repaid $3.5M convertible note on April 7, 2025 .
  • Received $3.0M cash in Q2 related to 2024 insurance divestiture .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Elevate program and unit economicsQ1: Soft launch; ~120 signups, target 100/month by Q4; promise of 3–4x higher gross profit/transaction 70 agents fully enrolled; agents avg. 8 closings/year; management asserts ~4x gross profit and ~5x Adj. EBITDA per transaction vs standard Scaling; stronger evidence and metrics
intelliAgent licensing / platform expansionQ4: Roadmap to expand tech platform; revenue share program First licensing agreement in Arizona (Fathom Elite) with Sovereign Realty Partners; agents to access Encompass Lending and Verus Title New monetization channel; regional expansion
Ancillary services (Mortgage/Title)Q4: Mortgage +11% YoY; Title +86% YoY; EBITDA still negative but improving Title growth sustained; June record; growing Elevate attach; Mortgage pressured by rates; segment Adj. EBITDA losses persist Title momentum; mortgage mixed
Macro: rates, inventory, pricingQ4: Expect stabilization or decline in rates; inventory +30% YoY; potential 2H volume uplift Indicators of healthier market: higher active listings, longer DOM, more price reductions; potential modest recovery; rates outlook into 2026 Gradual improvement signals
Cost discipline and marginQ4: $2M annualized cost reductions; focus on EBITDA Gross margin compression to 7.7% due to competitive pricing and commission splits; continued cost control Ongoing cost focus; margin headwinds
Litigation/NAR settlementQ4: Accrued $2.95M across current/long-term for settlement; recognized $2.95M operating expense FY24 No new Q2 items; cautious language in forward-looking statements Stable; monitoring

Management Commentary

  • “The second quarter marked a clear step forward…we returned to adjusted EBITDA profitability…this momentum positions us to sustainable growth” — Marco Fregenal (CEO) .
  • “Elevate is more than a productivity tool…transactions from Elevate generate roughly four times the gross profit and five times the adjusted EBITDA of our standard brokerage transaction” — Marco Fregenal .
  • “Verus Title delivered a record-breaking month in June, and our Elevate concierge program is driving measurable gains in agent productivity and engagement” — FQ2 press release .
  • “We believe this [Arizona] model can be replicated with hundreds of independent brokerages nationwide…reducing costs, driving productivity, and unlocking recurring high margin revenue” — Marco Fregenal ; licensing agreement announced Aug. 11 .
  • “Gross profit margin decreased to 7.7% from 8.5%, primarily due to competitive pricing pressure, higher commission splits…and increased transaction-related costs” — Daniel Weinmann (VP Finance) .

Q&A Highlights

  • Q2 call had no analyst Q&A (operator indicated no questions), so guidance clarifications came via prepared remarks (Adj. EBITDA positive; guidance withheld for Q3, possible reinstatement in Q4) .
  • Prior quarter themes (for context): Elevate onboarding cadence and unit economics; ancillary adoption programs (ambassador, pilots) to boost mortgage/title attach; agent recruitment via Max/Share; turnover concentrated in low‑production agents .

Estimates Context

  • Q2 revenue beat: Actual $121.423M vs SPGI consensus $117.300M*; ~3.5% beat, likely driving upward revisions to near-term revenue trajectory .
  • EPS miss: SPGI Primary EPS actual -$0.096* vs consensus -$0.03*; GAAP diluted EPS: -$0.13. Margin compression and lack of the prior-year gain on sale weighed on EPS .
  • EBITDA miss (SPGI): Actual -$916K* vs consensus -$192K*; Company’s Adjusted EBITDA $29K positive, underscoring definitional differences between SPGI EBITDA and company’s non‑GAAP .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue trajectory improving with sequential acceleration and a Q2 beat; mix anchored by My Home Group and broader transaction growth, supportive of potential estimate upgrades on revenue .
  • Profitability inflection is nascent (Adj. EBITDA +$29K); margin headwinds (pricing/commission splits) and ancillary segment losses necessitate caution on EPS/EBITDA modeling near term .
  • Elevate and intelliAgent licensing can structurally lift unit economics and open platform monetization; watch onboarding pace (target scaling to 300+ agents in 2025) and Arizona rollout for incremental GP/EBITDA per transaction .
  • Title is a bright spot (record June, +88% YoY revenue) with capacity investments in place; expect operating leverage to improve as volumes scale through Elevate attach and agent walkovers .
  • Balance sheet flexibility improved (note repaid; cash from divestiture), but operating cash flow negative YTD; monitor working capital needs and mortgage warehouse lines utilization .
  • Guidance withheld until Q4; management intent to remain Adj. EBITDA positive is constructive, but lack of quantitative ranges keeps uncertainty high—model conservatively on margin recovery timelines .
  • Macro setup is gradually improving (inventory, DOM, price reductions); if rates ease into 2026, Fathom’s agent‑centric low cost model and platform cross‑sell could outgrow the market; positioning ahead of macro turns is key .