Fathom Holdings' Earnings Call: A Turning Point for This Real Estate Tech Play?

Investors in fathom holdings (NASDAQ: FTHM) are bracing for its first-quarter 2024 earnings conference call on Tuesday, May 13, 2025, at 5:00 p.m. ET. This call could mark a critical juncture for the real estate tech firm, which has struggled with profitability but is now aiming for a breakthrough in margin improvement and EBITDA positivity. Here’s what to watch for—and why this could be a “Cramer-esque” moment for the stock.

Key Metrics to Watch

1. Revenue Growth (or Decline):
   Fathom’s Q1 2024 revenue fell 9% year-over-year to $70.5 million, driven by a 10.6% drop in brokerage revenue amid high interest rates. Investors will scrutinize whether Q1 2025 revenue trends show stabilization or further decline. A rebound in real estate transactions (which fell 9.7% in Q1 2024) would be a bullish sign.

Ask Aime: Will Fathom's Q1 2025 earnings reveal profitability turnaround?

1. Gross Margin Expansion:
   Fathom’s gross margin jumped to 10.3% in Q1 2024, up from 8.7% in 2023, thanks to fee hikes like its $150 transaction fee cap and a $700 annual agent fee. Management will likely highlight whether these changes are sustaining margin growth.

2. Adjusted EBITDA Turnaround:
   Fathom’s Adjusted EBITDA loss of $1.5 million in Q1 2024 was flat year-over-year, but CEO Marco Fregenal has vowed to reach positive EBITDA by Q2 2025. A narrow profit—or a smaller loss—would be a major win.

The “Cramer Factor”: Strategic Moves and Risks

Fathom has made bold bets to turn the ship around:

• Agent Growth Machine: The firm’s network expanded 12.8% year-over-year to 11,986 licensed agents, despite industry-wide transaction declines. This growth, fueled by competitive commission plans like Fathom Max, could be a key talking point. Investors should ask: Can this momentum continue if interest rates stay high?

• Asset Sales for Liquidity: The $15 million sale of its Dagley Insurance Agency in 2024 provided cash to fuel agent recruitment and tech investments. However, cash reserves dipped to $5.68 million as of March 2024, raising concerns about funding future growth.

• Geographic Expansion: Fathom’s foray into Rhode Island and its Texas joint venture with Verus Title Elite aim to boost transaction volume. But can these moves offset the drag from high rates?

Red Flags to Monitor

• Interest Rate Headwinds: Fathom’s brokerage revenue is tied to real estate transactions, which cratered in 2022–2023 as rates surged. The Fed’s recent rate cuts may not be enough to revive demand quickly.

• Cost Discipline: While gross margins improved, operating expenses rose due to tech investments and leadership hires. A $2 million annual cost-cutting target is critical to hitting EBITDA goals.

• Litigation Overhang: A $2.95 million legal settlement from the Burnett v. NAR case (paid through 2026) remains a cash drain.

What’s the Bottom Line?

Fathom’s stock has been a rollercoaster—trading as low as $4.50 in 2023 and bouncing to $8.20 earlier this year on optimism around its restructuring. Here’s why this call matters:

• A Positive EBITDA print would validate Fathom’s strategy and could spark a “Cramer-style” rally, as investors bet on margin expansion and agent-driven growth.

• Missed targets, however, could reignite fears about its ability to compete in a slowing real estate market.

Final Takeaway

Fathom is a high-risk, high-reward play. It has the agent growth and cost-cutting tools to turn profitable but faces a real estate market still shackled by interest rates. Investors should listen closely for two things:
1. Whether Q1 2025 revenue held steady or rose, despite macro headwinds.
2. A clear path to $200K–$500K Adjusted EBITDA in Q2 2025, which would be a game-changer.

If Fathom nails these metrics, this could be a “Cramer Buy” moment. If not, brace for volatility. The real estate tech sector is crowded, but Fathom’s tech-driven model and agent army give it a fighting chance—if it can execute.

Final Verdict: Fathom’s call is a must-watch. If they hit their EBITDA targets, this stock could soar—but don’t underestimate the risks.