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Fathom Holdings Inc. (FTHM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue rose 37.7% year over year to $115.3M; gross profit increased 39.1% to $9.6M, and Adjusted EBITDA was positive ($0.006M), marking a second consecutive positive Adjusted EBITDA quarter .
  • GAAP net loss improved to $4.4M (EPS -$0.15) from $8.1M (EPS -$0.40) a year ago, aided by higher revenue and lower litigation contingency vs. prior-year quarter .
  • Management withheld Q4 2025 guidance and plans to reassess in Q1 2026; call commentary emphasized operating leverage, ancillary segment momentum, and licensing/partner initiatives (Elevate, START, ByOwner, Move Concierge) .
  • Versus Wall Street consensus (S&P Global), FTHM delivered a significant revenue beat ($115.3M actual vs $102.1M estimate*) and a normalized EPS beat (-$0.0607 actual vs -$0.10 estimate*); note GAAP EPS was -$0.15 . Values retrieved from S&P Global*.

What Went Well and What Went Wrong

What Went Well

  • Strong top-line momentum: revenue +37.7% YoY to $115.3M; gross profit +39.1% to $9.6M .
  • Ancillary businesses scaling: mortgage revenue +20.7% to $3.5M; title revenue +28.6% to $1.8M; technology revenue $1.3M, with new licensing contributions; management highlighted ancillary transactions’ 7–10x gross profit vs brokerage .
  • Strategic initiatives gaining traction: Elevate at 165+ onboarded agents (+45 pipeline) and Real Results launch; START acquisition and multi-state expansion; ByOwner and Move Concierge partnerships broaden demand funnel and client experience .

What Went Wrong

  • GAAP profitability still negative: Q3 net loss $4.4M; Adjusted EBITDA barely positive ($0.006M), indicating limited cushion; title segment EBITDA remained negative despite higher revenue .
  • Litigation contingency persisted: $2.0M recognized in Q3 2025, following $3.1M in Q3 2024; ongoing legal expenses remain a structural headwind .
  • Sequential softness: revenue declined vs Q2 ($115.3M vs $121.4M) and GAAP EPS worsened quarter over quarter (-$0.15 vs -$0.13), reflecting seasonality and market dynamics .

Financial Results

Sequential Performance (Q1 → Q2 → Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$93.1 $121.4 $115.3
Gross Profit ($USD Millions)$8.1 $9.4 $9.6
Net Loss ($USD Millions)$(5.6) $(3.6) $(4.357)
Diluted EPS ($USD)$(0.24) $(0.13) $(0.15)
Adjusted EBITDA ($USD Millions)$(1.474) $0.029 $0.006

Year-over-Year (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$83.7 $115.3
Gross Profit ($USD Millions)$6.9 $9.6
Net Loss ($USD Millions)$(8.121) $(4.357)
Diluted EPS ($USD)$(0.40) $(0.15)
Gross Margin (%)8.3% 8.3%

Versus S&P Global Consensus (Q3 2025)

MetricEstimateActual (S&P Normalized)Actual (Company GAAP)
Revenue ($USD)$102.12M*$115.313M*$115.313M
Primary EPS ($USD)$(0.10)*$(0.0607)*$(0.15)
EBITDA ($USD)$(2.343)M*$(0.555)M*Adjusted EBITDA $0.006M

Values retrieved from S&P Global*.

Segment Revenue – Trend

Segment ($USD Millions)Q1 2025Q2 2025Q3 2025
Real Estate Brokerage$88.9 $116.0 $109.2
Mortgage$2.6 $3.3 $3.5
Technology$1.1 $1.1 $1.3
Corporate & Other$0.5 $1.0 $1.3

KPIs

KPIQ1 2025Q2 2025Q3 2025
Agent Licenses~14,715 ~14,981 ~15,371
Transactions~9,715 ~12,710 ~11,479

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company Guidance (overall)Q1 2025Suspended while forecasting 2025 ——
Company Guidance (overall)Q2 2025Withheld Q3 2025 ——
Company Guidance (overall)Q3 2025—Withheld Q4 2025; reassess in Q1 2026 Maintained withholding

No specific revenue/margin/OpEx/tax guidance ranges were issued this quarter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Elevate programLaunched; target ramp to 100 agents/month by Q4; 70 onboarded by Q2 165+ onboarded; 45 pipeline; 5x gross profit per Elevate transaction; retention/productivity focus Accelerating adoption
IntelliAgent licensingFirst agreement with Sovereign Realty Partners in Aug; platform expansion strategy Licensing revenue began; 18,000 target brokerages; leveraging 300–400 existing relationships Early monetization, pipeline build
Ancillary momentum (Mortgage/Title)Title record month in June; cross-selling initiatives Mortgage +20.7% rev; Title +28.6% rev; file starts up >60% entering Q4 Strengthening
START Real EstateN/A in Q1; integration narrative building by Q2 Acquisition closed; expanding into UT/AZ/NV; ~70 agents; ~400 transactions; >70% attach rate Expansion underway
Macro (rates/affordability)Industry challenges persisted 10Y–30Y mortgage spread ~205 bps; potential rate declines; cautious on government shutdown impacts Improving affordability outlook
Legal/litigationOngoing NAR-related contingencies $2.0M litigation contingency recorded in Q3 Continuing headwind

Management Commentary

  • “We delivered 37.7% year-over-year revenue growth and achieved another quarter of Adjusted EBITDA profitability... Gross profit for the quarter increased by more than $2.7 million to over $9.6 million... over 50% of that increase in gross profit flowed directly to EBITDA.” .
  • “Our Mortgage company Encompass Lending increased revenues by 20.7% and achieved Adjusted EBITDA of about $160,000… Verus Title delivered 28.6% revenue growth while our technology segment posted an 18% increase.” .
  • “We estimate that there are more than 18,000 small to mid-sized brokerages that could substantially improve their financial performance by adopting IntelliAgent… We have relationships with 300 to 400 small brokers… will accelerate in Q1 of next year.” .
  • “START… on track to close roughly 400 transactions this year, delivering a 50% gross margin and a mortgage-attach rate of 70%… expansion is expected to generate over 1,500 additional transactions next year.” .

Q&A Highlights

  • IntelliAgent GTM: Management plans to leverage existing 300–400 small-broker relationships, plus LiveBy’s ~200 customers, to scale licensing to the ~18,000 targeted brokerages beginning in Q1’26 .
  • Attach rates: START’s attach rate >70% in Colorado and early Utah expansion; company expects to replicate process across states to sustain high attach rates; broader ELG (mortgage) and Verus Title attach rates targeted to rise .
  • Outlook: Management reiterated diversification, attach rates improvement, and platform licensing as drivers toward operational cash flow breakeven by Q2’26 .

Estimates Context

  • Revenue beat: $115.313M actual vs $102.12M estimate*; normalized EPS beat: -$0.0607 actual vs -$0.10 estimate*; EBITDA beat: -$0.555M actual vs -$2.343M estimate*. Note GAAP EPS was -$0.15, and company-reported Adjusted EBITDA was $0.006M . Values retrieved from S&P Global*.
  • Implications: Consensus likely needs to revise top-line higher to reflect brokerage additions and ancillary traction; EPS modeling should reconcile GAAP vs normalized and incorporate ongoing litigation contingency cadence .

Key Takeaways for Investors

  • Revenue momentum and operating leverage are improving, supported by My Home Group acquisition, ancillary growth, and Elevate/Real Results productivity tailwinds .
  • Ancillary segments (Mortgage, Title, Technology licensing) are becoming more material, with higher unit margins and expanding pipeline (file starts up >60% entering Q4) .
  • START acquisition adds a scalable, high-attachment (>70%) first-time buyer engine, with multi-state expansion already underway; expect incremental transactions and margin mix shift .
  • Legal contingencies remain a swing factor; despite YoY improvement, recurring litigation expense reduces earnings visibility and should be modeled conservatively .
  • Guidance remains withheld for Q4 2025; watch for reinstatement in Q1 2026 and updates on licensing deal flow and agent program scaling as catalysts .
  • Near term: Revenue beats versus consensus and ancillary momentum are positive trading catalysts; medium term: execution on licensing, attach-rate expansion, and cost discipline key to achieving sustained EBITDA and cash flow improvements .