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Fathom Holdings Inc. (FTHM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 24% year over year to $91.7M, driven by 26% brokerage growth and stronger ancillary services; GAAP net loss improved to $(6.2)M and diluted EPS to $(0.29) versus $(0.50) in Q4 2023 .
  • Adjusted EBITDA remained negative at $(2.9)M; management attributed the miss to late‑Q4 mortgage rate spike and ~$1.3M one‑time expenses, but reiterated a path to EBITDA positive by Q2 2025 .
  • My Home Group (MHG) acquisition closed Nov 1 and is expected to add ~$110M of 2025 revenue; agent licenses grew 21% to ~14,300 and transactions rose 22% to 9,903 in Q4 .
  • Guidance was withheld for Q1 2025; prior quarter (Q3) guidance for Q4 2024 was also withheld as Fathom assessed impacts from new commission plans, implying estimates uncertainty as a near‑term stock‑narrative driver .

What Went Well and What Went Wrong

What Went Well

  • Revenue up 24% YoY with brokerage +26% YoY; ancillary momentum with title +92% YoY and technology +38% YoY supporting mix and gross profit gains .
  • Core gross profit (ex‑Dagley Insurance) up 59% YoY; G&A reduced to $8.4M (9.2% of revenue) vs $10.1M (13.6%) a year ago, reflecting cost discipline .
  • Strategic expansion: MHG acquisition to drive ~$110M 2025 revenue and expand presence in AZ/WA; agent licenses +21% YoY to ~14,300, transactions +22% YoY to 9,903 .
  • Management quote: “We see meaningful improvement ahead and are encouraged about our prospects of reaching EBITDA positive in Q2 of 2025…” .

What Went Wrong

  • Adjusted EBITDA remained negative at $(2.9)M, unchanged YoY; management cited late‑Q4 mortgage rate spike and ~$1.3M one‑time expenses as headwinds to reaching EBITDA positive in Q4 .
  • Litigation expenses persisted; Q4 included litigation contingency ($55K) and the 2024 P&L reflects $2.95M NAR settlement accruals hitting operating expense, weighing on profitability .
  • Mortgage EBITDA stayed negative (Q4 mortgage EBITDA loss ~$0.7M), and title EBITDA loss widened to ~$0.3M, indicating attach growth still in ramp with profitability lagging .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$89.2 $83.7 $91.7
Diluted EPS ($USD)$(0.07) $(0.40) $(0.29)
Adjusted EBITDA ($USD Millions)$0.189 $(1.445) $(2.899)
Gross Profit Margin % (ex‑insurance)9% 9% 7.2%

Segment revenue breakdown ($USD Millions):

SegmentQ2 2024Q3 2024Q4 2024
Real Estate Brokerage$83.1 $78.6 $87.7
Mortgage$3.7 $2.9 $2.0
Technology$1.1 $1.1 $1.1
Corporate & Other$1.3 $1.1 $0.9
Total$89.2 $83.7 $91.7

KPIs and operating metrics:

KPIQ2 2024Q3 2024Q4 2024
Transactions (units)10,137 9,331 9,903
Agent Licenses (period‑end)~12,224 ~12,383 ~14,300
G&A Expense ($USD Millions)$8.9 $8.7 $8.4
Marketing Expense ($USD Millions)$0.76 $0.77 $1.90
Technology & Development ($USD Millions)$1.91 $2.04 $1.79

Note on press release vs call commentary: Title revenue YoY increase is disclosed as +92% in the press release (to $1.3M from $0.7M), while management remarks referenced +80% to +86% in the call, reflecting slight variations/rounding in verbal commentary .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company outlook (Revenue/EBITDA)Q4 2024None providedGuidance withheldMaintained withheld
Company outlook (Revenue/EBITDA)Q1 2025None providedGuidance withheld; reassess for Q2 2025Maintained withheld
Adjusted EBITDA timingQ2 2025No prior timing targetTargeting EBITDA positive in Q2 2025New outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Commission plans (Fathom Max/Share)Launched in Aug; aim to return to 25–30% agent growth ~5% of new agents joined Share; impact expected to ramp in Q1–Q3 2025 Adoption early, building; recruitment/retention focus continues
Macro/interest ratesHigh rates depressed transactions; Q2 EBITDA briefly positive Late‑Q4 rate spike hurt EBITDA; early 2025 rates easing; potential 2H volume tailwind Headwind easing into spring; potential demand recovery
Litigation/NAR settlement$2.95M settlement accrual booked; EBITDA impacted in Q3 Litigation contingency $55K in Q4; accrual reflected on balance sheet Charges recognized; ongoing legal costs but smaller in Q4
Acquisitions/expansionAnnounced MHG acquisition to expand AZ footprint MHG closed; expected ~$110M 2025 revenue contribution Integration supports scale and ancillary cross‑sell
Ancillary services attachAncillary revenue growth offset brokerage softness; +44% in Q3 Title +92% YoY, mortgage +11% YoY in Q4; attach rate initiatives (Ambassador program) Positive mix shift; margin accretive over time
CFO transition—CFO departure; CEO serving as interim CFO; process to hire underway Temporary transition; no expected operational disruption

Management Commentary

  • “We expect 2025 to remain challenging… encouraged about our prospects of reaching EBITDA positive in Q2 of 2025, driven by increased revenues from our acquisition of My Home Group… and anticipated cost reductions of over $2 million on an annualized basis” — Marco Fregenal, CEO .
  • “In this competitive market, Fathom stands out having one of the lowest direct cost per transaction at just $264 per transaction, while many of our peers averaged $1,200 or $1,800 per transaction” .
  • “Our mortgage… saw a revenue increase of 11.1% to $2 million… Verus Title revenue reached $1.3 million… While adjusted EBITDA remains in a loss position… we are seeing strong demand” .

Q&A Highlights

  • Analyst focus on commission plans’ impact: Management said ~5% of new agents chose Fathom Share with most on Fathom Max; Q4 revenue impact limited, with ramp expected in Q1–Q3 2025; turnover concentrated among zero/low‑producing agents .
  • Ancillary adoption programs: Management highlighted the Ambassador program and a forthcoming pilot to increase title/mortgage attach, expecting ancillary growth to outpace brokerage and drive gross profit improvement toward EBITDA positivity by Q2 2025 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue was unavailable at the time of analysis due to data access limitations. As a result, beat/miss vs consensus cannot be determined. Values retrieved from S&P Global were unavailable at query time.

Key Takeaways for Investors

  • Q4 showed strong top‑line recovery (+24% YoY) and improved EPS, but EBITDA remained negative due to late‑Q4 rate spike and one‑time costs; watch near‑term rates and seasonal volume for EBITDA trajectory into Q2 .
  • Scale and mix are improving: MHG adds expected ~$110M 2025 revenue; agent base reached ~14,300 and transactions rose 22% YoY, supporting volume leverage .
  • Ancillary services are a key margin lever: title +92% YoY, mortgage +11% YoY in Q4 with programs to raise attach rates; expect continued gross profit lift even if brokerage volume is uneven .
  • Cost discipline visible: G&A down to 9.2% of revenue in Q4 vs 13.6% prior year; annualized ~$2M cost reductions targeted, underpinning the EBITDA positive aspiration .
  • Legal overhang moderated: $2.95M NAR settlement accrual recognized in 2024, with smaller litigation contingency in Q4, reducing a key 2024 drag on earnings .
  • Guidance posture cautious: Q1 2025 guidance withheld, which may sustain estimates uncertainty; the Q2 2025 EBITDA positive target remains the near‑term narrative catalyst .
  • Tactical positioning: Near‑term, sentiment will hinge on Q1 attach rate progress and early spring demand; medium‑term, integration of MHG and ancillary cross‑sell should expand gross margin dollars even before full EBITDA normalization .