Fathom projects agent count to surpass 300 in Elevate program by year-end while advancing recurring revenue initiatives

Earnings Call Insights: Fathom Holdings (FTHM) Q2 2025

MANAGEMENT VIEW

* Marco Fregenal, CEO, highlighted "36% revenue growth, 25% transaction growth and 23% increase in agent count" for the second quarter, emphasizing the return to adjusted EBITDA profitability as a milestone reflecting the company's "lean, scalable and diversified business." Fregenal underscored the success of Elevate, the agent concierge program, citing its contribution to agent productivity, satisfaction, and high-margin recurring revenue. He stated, "Elevate agents averaging 8 transactions per year with a strong lead generation that produced over 1,700 leads in July alone. We expect this to grow to 10,000 leads per month by December."
* The CEO noted, "Transactions from Elevate generate roughly 4x the gross profit and 5x the adjusted EBITDA of our standard brokers transactions positioning Fathom for sustained agent growth and enhance long-term profitability." Fregenal also announced a new partnership with Sovereign Realty Partners, licensing the IntelliAgent platform and Elevate, as well as granting access to Encompass Lending and Verus Title Services. He described this as a model that "can be replicated with hundreds of independent brokers nationwide, reducing cost driving productivity and unlocking recurring high-margin revenue."
* Fregenal detailed the acquisition of My Home Group, which established a strong presence in Arizona, bringing "more than 80 years in combined commercial and residential expertise" to the company. He also pointed to industry recognition for agent satisfaction, mentioning a monthly churn rate of less than 1.6%.
* Daniel Weinmann, VP of Finance, reported, "For the second quarter of 2025, total revenue was $121.4 million [36.1%] increase year-over-year compared to $89.2 million for the second quarter of 2024." Weinmann explained, "Gross profit margin decreased to 7.7% from 8.5%, primarily due to competitive pricing pressure, higher commission splits to attract and retain agents and increase transaction-related costs which offset the benefit of higher transaction volumes."

OUTLOOK

* Management expects the Elevate program to reach 10,000 leads per month by December and to exceed 300 fully on-boarded agents by year-end. Fregenal stated, "We remain on track to exceed 300 fully on-boarded agents by the end of the year." He also anticipates several key partnerships and the launch of Elevate 4 Teams in the coming months, aiming to extend benefits to top-producing teams and brokerages. The company is focused on scaling Elevate, expanding agent count, and increasing the share of ancillary services in the revenue mix.
* The outlook for the broader real estate market is described as a "modest recovery in transaction volume during the winter and months into next year," with Fathom positioned to "grow faster than the broader market and deliver continued growth and profitability through the balance of year and into 2026."

FINANCIAL RESULTS

* Total revenue for Q2 2025 was $121.4 million, with brokerage segment revenue at $116 million, supported by the My Home Group acquisition and organic growth. Gross profit for Q2 2025 increased by $1.3 million over the previous quarter, and adjusted EBITDA improved by $1.5 million, signaling better operating leverage. Gross profit margin declined to 7.7% from 8.5% due to pricing and commission pressures.
* The mortgage segment generated $3.3 million in revenue, while Verus Title revenue rose to $1.5 million. Technology third-party revenue was $600,000. GAAP net loss was ($3.6 million) or ($0.13) per share. Adjusted EBITDA was $29,000 for the quarter.
* The company ended the quarter with $4.9 million in cash, including $3 million from the insurance business sale and full repayment of a $3.5 million note. No share repurchases occurred in the first half of 2025.

Q&A

* There were no analyst questions or exchanges during the call, as the operator announced, "It appears we have no questions."

SENTIMENT ANALYSIS

* With no analyst questions, no direct analyst sentiment was expressed on the call.
* Management's tone was confident and optimistic, as reflected in statements like, "We believe this momentum positions us to sustainable growth, positive adjusted EBITDA growth and revenue growth for the remaining of the year."
* Compared to the previous quarter, management's sentiment shifted from cautious optimism to stronger confidence due to achieving adjusted EBITDA profitability and visible traction in strategic initiatives.

QUARTER-OVER-QUARTER COMPARISON

* The second quarter saw a return to adjusted EBITDA profitability, building on the prior quarter's forecast of reaching this milestone. Revenue growth accelerated to 36% versus 32.1% in Q1. The Elevate program progressed from a soft launch to full-scale implementation with clear enrollment targets and early recurring revenue metrics.
* Strategic focus intensified on expanding agent count, operational efficiency, and leveraging ancillary services for margin improvement. The previous quarter emphasized cost discipline and initial Elevate traction; this quarter highlighted concrete results and partnerships. Management tone was more assertive, reflecting greater confidence in sustained momentum.
* Analysts' engagement decreased, with no questions in Q2 compared to active participation in Q1.

RISKS AND CONCERNS

* Management acknowledged ongoing macroeconomic challenges, citing "affordability pressures driven by elevated interest rates and high home prices."
* Gross profit margin pressure from "competitive pricing pressure, higher commission splits to attract and retain agents and increase transaction-related costs" was noted as a headwind.
* The mortgage business faced declining revenue due to "lower origination volumes resulting from persistently high interest rates."
* The company is closely managing its balance sheet in light of real estate market conditions, with cost control and strategic investments highlighted as mitigation strategies.

FINAL TAKEAWAY

Fathom Holdings reported strong revenue and transaction growth in Q2 2025, marked by a return to adjusted EBITDA profitability and robust expansion of its Elevate program. Management signaled increased momentum through partnerships, strategic acquisitions, and recurring revenue initiatives, targeting over 300 agents in Elevate by year-end. While macroeconomic and margin pressures remain, the company sees itself well-positioned to capitalize on a modest market recovery, emphasizing disciplined execution and a growing ancillary services platform to drive future profitability.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/fthm/earnings/transcripts]

MORE ON FATHOM HOLDINGS

* Fathom Holdings Inc. (FTHM) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4812860-fathom-holdings-inc-fthm-q2-2025-earnings-call-transcript]
* UMH Properties, NETSTREIT to leave Russell Microcap Index [https://seekingalpha.com/news/4452987-umh-properties-netstreit-to-leave-russell-microcap-index]
* Seeking Alpha’s Quant Rating on Fathom Holdings [https://seekingalpha.com/symbol/FTHM/ratings/quant-ratings]
* Historical earnings data for Fathom Holdings [https://seekingalpha.com/symbol/FTHM/earnings]
* Financial information for Fathom Holdings [https://seekingalpha.com/symbol/FTHM/income-statement]