Real Estate

Fathom Realty has more agents, fewer sales than a year ago

CEO Marco Fragnell says the flat-fee brokerage is making progress toward achieving 2024 targets despite a $5.9 million Q1 net loss due to seasonal and broader industry challenges.

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Fathom Realty was able to pare its losses and grow to nearly 12,000 agents during the first quarter, even as a slowdown in the real estate market reduced transaction volume and revenue.

Flat Fee Brokerage’s agent network has grown by 13 per cent over the past year to 11,986 agents as of March 31. But Q1 transaction volume fell 10 percent to 7,703, according to parent company Fathom Holdings Inc. Reported Thursday.

Fewer transactions mean less revenue, despite some changes to the Cary, North Carolina-based brokerage’s fee structure. A 9 percent drop in first quarter revenue from a year earlier, to $70.5 million, contributed to Fathom’s $5.9 million net loss for the quarter.

This is an improvement from March 2023’s Q4 net loss of $8.4 million, but was higher than the $5.7 million net loss in Q1 2023.

“We made progress during the first quarter towards achieving our 2024 targets despite climate and broader industry challenges,” Fathom CEO Marco Fragnell said in a statement.

Fragnell, who took over as CEO for founder Josh Harley when he stepped down last fall for family reasons, said gross margin increased to 10.3 percent, giving Fathom positive operating cash. (Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)).

Fathom’s adjusted EBITDA loss was $1.5 million, and the company expects to post positive EBITDA of $200,000 to $500,000 in the second quarter on projected revenue of $86 million to $89 million.

Shares in FathomIt traded at a low of $1.36 and a high of $8.20 in the past year, rising a penny to $1.47 in after-hours trading after the earnings release.

Last year, Fathom increased 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.

A revised 2024 agent commission structure that took effect Jan. 1 adds a new high-value property fee on sales of properties over $600,000 and increases Fathom’s annual agent fee from $100 to $700. .

On Monday, Fathom Holdings announced it had sold its insurance subsidiary, Dagley Insurance, to founder Nathan Dagley for $15 million — $8 million at closing, with another $7 million to be paid over the next 24 months. .

Fragnel called the sale “an important milestone in strengthening our financial position and supporting our agent growth strategy. The capital infusion from this transaction gives us significant resources to confidently address potential challenges.” equips and delivers greater value for our shareholders through targeted growth initiatives and the pursuit of additional opportunities in our core operations.

Fathom Holdings generates more than 90 percent of its revenue through its real estate brokerage business but also provides mortgage, title insurance, insurance and technology for agents.

In April, Fathom Started a new joint venture, Verus Title Elite Texas LLC, with individual teams and highly productive Fathom agents throughout Texas. Fathom said it plans to have joint ventures in most of the 30 states where its Verus Title subsidiary operates by the end of 2025.

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