Fathom Holdings Q3 2025 Call: Emerging Contradictions on IntelliAgent Licensing, Agent Attachment Rates and Expansion Strategy, and Growth and Scalability

Date of Call: None provided

Financials Results

• Revenue: $115.3M, up 37.7% YOY (vs $83.7M in Q3 2024)
• EPS: $0.15 loss per share (GAAP), improved from $0.40 loss per share in Q3 2024
• Gross Margin: 8.3%, consistent with prior year (8.3% in Q3 2024)

Guidance:

• Operational cash-flow breakeven expected by Q2 2026.
• Continue diversifying revenue, expand Elevate and STAR programs and strengthen mortgage/title attach rates.
• Accelerate IntelliAgent licensing to small brokerages (GTM acceleration beginning Q1 next year).
• Expect continued strong growth in mortgage and title (file starts >60% YoY entering Q4).

Business Commentary:

* Revenue and Agent Growth: - Fathom Holdings reported $115.3 million in total revenue for Q3 2025, marking a 37.7% increase year-over-year. - The growth was driven by a 39% increase in brokerage revenue, supported by the acquisition of My Home Group and the expansion of the agent base, which grew by 24.1% year-over-year to over 5,371 agents.

• Ancillary Business Success:
• Fathom's ancillary businesses, including mortgage, title, and technology, contributed significantly to the growth.

• The mortgage company reported a 20.7% revenue increase, and Verus Title achieved 28.6% revenue growth, while the technology segment saw an 18% increase in revenue.

• Profitability and EBITDA:

• The company achieved adjusted EBITDA profitability for the third consecutive quarter, with adjusted EBITDA reaching $6,000 in Q3 2025.

• This was driven by higher revenue, improved operating leverage, and disciplined cost management.

• Elevate Program and Strategic Initiatives:

• The Elevate program, an integral part of Fathom's growth strategy, is designed to improve agent productivity and profitability.
• Over 165 agents have been onboarded to the program, with another 45 agents in the pipeline, and it has already contributed to increased closed transactions and revenue per agent.

Sentiment Analysis:

Overall Tone: Positive

• "We delivered 37.7% year-over-year revenue growth," "another quarter of adjusted EBITDA profitability," management expects "operational cash flow breakeven by second quarter of 2026," and mortgage/title file starts are "up more than 60% compared to the same period last year."

Q&A:

• Question from Dillon Heslin (ROTH Capital Partners): To start on IntelliAgent licensing, you talked about 1,000 brokerages you identified, I think, could you sort of go into a bit more detail on your go-to-market strategy on that? How many are you potentially in talks with or have approached you?
  Response: Targeting ~18,000 small brokerages; already have relationships with several hundred plus ~200 via LiveBuy, will begin GTM with that initial ~300 and accelerate outreach in Q1 next year.

• Question from Dillon Heslin (ROTH Capital Partners): And just as a follow-up, could you comment on attach rates this quarter? And then with Start Real Estate, they seem to have quite high attach rates. What do you think is the possibility of keeping those attach rates as you take it into newer states and scale?
  Response: Start currently achieves >70% attach rate in Colorado, early expansions show similar rates; management expects to sustain >70% as they expand and anticipates overall attach-rate growth from Elevate and Verus next year.

Contradiction Point 1

Go-to-Market Strategy for IntelliAgent Licensing

It involves the strategy and approach for expanding IntelliAgent licensing, which is crucial for the company's growth and potential revenue.

Can you detail your go-to-market strategy for IntelliAgent licensing and how many brokerages you've approached? - Dillon Heslin

20251112-2025 Q3: The strategy involves leveraging existing relationships and marketing to all 18,000 potential brokerages. Discussions have already begun, and marketing efforts will accelerate in Q1 of next year. - Marco Fregenal(CEO)

Can you elaborate on your intelliAgent go-to-market strategy for the 18,000 brokerages you identified, including how many are currently in discussions or have contacted you? - Dillon Heslin

2025Q3: Our go-to-market strategy includes leveraging relationships with around 400 small brokers, which we have established over the years. This initial group will be approached first, followed by a wider marketing effort to the remaining 17,600 brokerages. - Marco Fregenal(CEO)

Contradiction Point 2

Agent Attachment Rate and Expansion Strategy

It involves the consistency of attachment rates and the approach to expansion into new states, which are crucial for revenue growth and market positioning.

Can you discuss Q2 attach rates and how they might be maintained or improved as Start Real Estate expands into new states? - Dillon Heslin

20251112-2025 Q3: The attach rate is expected to remain high, and expansion is planned for every state. - Marco Fregenal(CEO)

How do you expect the real estate market to perform for the remainder of the year, and how is Fathom positioned to capitalize on these conditions? - Analyst

2025Q2: Our agent-centric model, strategic partnerships, and expansion into new markets position Fathom for strong growth in the coming quarters. - Marco Fregenal(CEO)

Contradiction Point 3

Growth and Scalability

It highlights the company's ability to scale profitably and drive growth, which are critical for investor confidence and strategic planning.

Can you provide more details on your go-to-market strategy for IntelliAgent licensing and how many brokerages you've approached? - Dillon Heslin

20251112-2025 Q3: Our goal is to finish 2025 Q4 with 15,000 agents and 15,000 teams. - Marco Fregenal(CEO)

What were the key takeaways from Q2, and what's the outlook for the remainder of the year? - Analyst

2025Q2: We will continue to drive agent growth, with a clear path to profitability and sustainable growth in 2025 and beyond. - Marco Fregenal(CEO)