Despite clocking in a $5.5 million net loss in Q3, Fathom executives are choosing to hone in on the positive—large agent growth.
The company’s revenue came in at $93.5 million, a decrease of 16% from the $111.3 million seen in Q3 last year. Transactions were also down 14.7% year-over-year, coming in at 10,303. This continues the trend from last quarter—although at a lesser rate—when Fathom saw a $6 million loss.
On the other hand, the adjusted EBITDA loss was significantly smaller than previously seen. Adjusted EBITDA loss was at $253,000 compared with a loss of approximately $2.3 million from Q3 last year.
“During the third quarter, we witnessed continued pressure on transactions throughout the industry. In September, the residential real estate market changed rapidly as mortgage rates exceeded 7%, and we experienced an increase in cancellations,” said Fathom CEO Joshua Harley. “Despite this volatility, and the highest mortgage rates in 20 years, we were encouraged by performance in agent growth in a very difficult market environment.”
While most of the industry saw a 1.6% decrease in agent count, according to Fathom’s press release, the company saw a 13% growth. Fathom gained an impressive 11,333 licensed agents.
“We’re continuing to grow our agent network and 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 strong,” continued Harley. “By continuing to grow our agent base, we’re positioning Fathom for continued success once the industry rebounds.”
Fathom executives stated they are implementing its cost-reduction initiatives in Q4, and are “committed to achieving Adjusted EBITDA positive in Q1 2024 and going forward.”
“We remain focused on execution and are taking necessary steps to better position Fathom in the current environment and once the market recovers,” stated Fathom President and CFO Marco Fregenal. “We have continued to further right-size the Company’s expenses and implement management salary reductions for a combined expected savings of approximately $1.2 million per quarter. We believe we are positioned for profitable growth ahead where we can start to show the operating leverage in our businesses.”
Executives reiterated they believe the company “can generate Adjusted EBITDA exceeding $40 million per year at 100,000 to 110,000 transactions per year.” They are not providing guidance for Q4 amidst the market uncertainty.
“We do know that the industry will eventually recover, and Fathom is well positioned to continue growing marketshare regardless of when that happens,” concluded Harley.
For the full report, click here.