Tech-focused, full-service brokerage Fathom beat guidance on revenue this quarter, up 52% to take in $128.2 million, with big increases in its mortgage and tech business, though company executives also announced cost-cutting initiatives and joined a broader chorus across the industry in warning that there will likely be tough times ahead.
Agents and transactions were also up significantly, while still edging below year-over-year growth last quarter before interest rates, affordability issues and inflation began weighing on the housing market. Fathom CEO Josh Harley said the company is working to streamline through rising headwinds.
“While Fathom is not immune to this unprecedented market, and there possibly will be additional challenges to manage through, we strongly believe that the value we provide to our agents, our model and our execution will continue to drive growth into the future,” he said in a statement.
That includes seeking to reduce expenses by $750,000 per quarter through next year, according to Harley, which he called “a conservative approach to cost management.”
Transaction growth was up 32% year-over-year, while Fathom’s agent count increased 38%. In Q1 2022, the company saw a 47% bump in transactions and 49% net increase in agents. It also reported a net loss of $5.67 million (though with profitable adjusted EBITDA for its brokerage segment), and $19.51 million cash on hand.
The company also highlighted a recently launched “Veteran Division” meant to provide resources and opportunities for military vets and active duty service members.
The consensus among economists is that rising mortgage rates and a broader economic downturn will weigh heavily on the housing market likely through the rest of the year at least. Fathom president and CFO Marco Frengenal described an ongoing “disruption” to the industry, saying the company is reacting to that.
“We are committed to reducing costs to ensure Fathom’s ability to generate sustainable profits over the long-term. We believe Fathom has a long runway with solid growth prospects well into the future,” he said in a statement.
“Growth in our key metrics this quarter, even with less-than-ideal market conditions, reflects our ability to provide agents with the opportunity to keep significantly more of their hard-earned commission dollars,” Harley added. “We believe that competitive advantage should serve us well over the long-term.”
Following other large brokerages, Fathom adjusted its full-year 2022 outlook down, from $455 million in revenue on the high end to $435 million.
Jesse Williams is RISMedia’s senior editor. Email him your real estate news to jwilliams@rismedia.com.
