Fathom posted a $24 million annual loss during a Q4 and 2023 earnings call Thursday afternoon, with executives saying the brokerage’s transaction volume dropped less than the industry overall.
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Fathom Realty grew its agent network by more than 1,400 agents last year despite raising its agent transaction fees, and continues to make progress toward its goal of returning to profitability, brokerage executives said in reporting fourth-quarter and 2023 results Thursday.
In reporting an $8.4 million Q4 and $24 million 2023 net loss, the Cary, North Carolina-based flat fee brokerage was able to put a positive spin on the numbers. A 15 percent decline in transaction volume, to 38,139, was less than the industry average of 19 percent, and driven by rising interest rates and home prices.
Marco Fregenal
With Fathom also providing mortgage, title, insurance and technology, revenue dropped by 16.4 percent from a year ago, to $345.2 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss for 2023 totaled $4.1 million, down from $12.2 million the year before.
“While the residential real estate industry remains challenging, we firmly believe that our future remains bright and by continuing to grow our agent base and optimize our cost structure, we are positioning Fathom for continued success as the industry rebounds,” Fathom CEO Marco Fregenal said in a statement. “We believe we’ll continue to attract high quality agent teams and brokerages going forward as our agent value proposition remains compelling in the current environment and our pipeline of opportunities remains robust.”
However, Fathom said it would not be providing guidance on the quarters ahead, “due to the continued uncertainty of the timing of anticipated interest rate cuts and other macroeconomic factors, such as changes in inflation and its impact on homebuyers.”
Shares in Fathom, which in the last 12 months have traded for as little as $2.10 and as much as $8.20, fell 4 percent to $2.37 in after-hours trading following Thursday’s earnings release.
Fathom started off 2023 by raising its agent transaction fees by 10 percent, to $550 for the first 15 completed transactions. After the first 15 transactions, agents currently pay $150, up from $99 before the increase.
That didn’t stop Fathom’s real estate agent network from growing by 14 percent in 2023 to 11,795 agents, with agent count increasing by 462 agents in Q4 and 1,425 for the year.
In December, Fathom announced that it hoped to bring in another $3 million in revenue this year by raising agent fees for the second year in a row.
The revised 2024 agent commission structure that took effect Jan. 1 adds a new “high-value property fee” on sales of properties valued at more than $600,000, and raises Fathom’s annual agent fee by $100, to $700.
Fathom Holdings revenue by source, 2022 vs. 2023
Source: Fathom Holdings earnings reports.
While Fathom Realty’s parent company, Fathom Holdings, generates more than 90 percent of its revenue through its real estate brokerage business, it’s also a provider of mortgages, title insurance, insurance and technology for agents.
Earlier this week, Fathom Holdings announced its subsidiary, Verus Title Inc., has established a joint venture with individual teams and top-producing Fathom agents throughout Texas.
The joint venture, Verus Title Elite Texas LLC, will launch April 1, and Fathom plans to expand the new joint venture model to additional states this year. The goal is to have joint ventures in most of the 30 states where Verus Title operates by the end of 2025.
The joint venture will deliver a higher level of support to Fathom agents, Fregenal said, “and further increase our already growing attach rates in Texas.”
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