The company’s Q3 revenue clocked in at $83.7 million while net losses rose to $8.1 million as Fathom faced an uncertain market and dealt with expenses related to a $3 million NAR settlement contingency.
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Tech-driven real estate platform Fathom Holdings posted a 10 percent decline in revenue in the third quarter as it faced a sluggish market and adjustments tied to the sale of its insurance business, executives said Thursday during earnings.
Total revenue in the quarter fell to $83.7 million, down from $93.5 million a year earlier. The decline in year-over-year revenue was partially offset by a 44 percent increase in the company’s ancillary businesses and through the implementation of a high-value property fee, which brought in $0.4 million, executives said.
Fathom’s gross profit percentage rose to 5.7 percent, up from 5.1 percent a year earlier, with profits from ancillary businesses rising on an annual basis to 56 percent, up 10 percent from a year ago. GAAP net losses rose to $8.1 million — or $0.40 per share — from $5.5 million in the third quarter of 2023, data shows.
The growth in net loss was largely due to a $3 million NAR settlement contingency and related legal expenses, Fathom said.
“We’re pleased to report a quarter marked by continued progress and strategic advancements, even as the housing market continues to face challenges,” Fathom CEO Marco Fregenal said in a statement Thursday.
“We remain committed to advancing our strategic priorities, returning our company to 25 percent annual agent growth, and optimizing profitability and cash flow,” Fregenal added. “Our recent initiatives, including targeted investments in agent recruitment and the launch of new commission plans, are already fostering growth and positioning us for sustained success.”
Marco Fregenal
The company’s revenue decline is a continuation from the second quarter of this year, when Fathom posted an 11 percent decrease — to $89.2 million — despite an 11 percent uptick in mortgage and title revenue.
Fathom Realty grew to more than 12,000 agents in the second quarter, extending its agent count by 12 percent year over year despite a downturn in transactions due to high mortgage rates.
In that same quarter, Fathom saw transaction volume drop by 8 percent, reporting a net loss of $1.3 million — an improvement from last year’s $4.3 million loss due largely to the sale of its Dagley Insurance subsidiary.
To counter these market challenges, Fathom introduced new agent commission plans designed to boost earnings, recruitment and retention. The “Fathom Max” plan offers a reduced transaction fee with a $9,000 annual cap, while the “Fathom Share” plan includes a 12 percent commission split with a $12,000 cap, offering higher revenue share potential.
During the third quarter, the company has seen agent count rise 9 percent year over year, to 12,383 agents. Transactions fell 9 percent year over year, to 9,331 transactions, as agents continued to battle high home prices and uncertainty over mortgage rates.
Fathom acquired My Home Group, a team of over 2,000 agents, at the beginning of November, giving it a huge boost to its presence in Arizona and Washington.
The company also noted in earnings that its subsidiary, Fathom Realty, reached a settlement in the Burnett case as of September. Its settlement terms include a $500,000 payment into a settlement fund within five days of receiving approval from the court, a $500,000 payment by Oct. 1, 2025 and a $1.95 million payment by Oct. 1, 2026.
Additionally, Fathom borrowed $5 million from an existing shareholder, in the form of convertible notes, to help the company fast-track agent growth and transactions.
As of Sept. 30, Fathom Holdings had $13.1 million in cash and cash equivalents, up from $7.4 million at the end of 2023.
On Friday morning around 9:30 a.m. ET, Fathom’s stock was down by about 3.4 percent to $2.30 per share.