Fathom Holdings, which includes Fathom Realty, the tech-focused, full-service brokerage under its corporate umbrella, reported solid year-over-year financial results for 2022, even with the fourth quarter delivering negative numbers. In a March 22 earnings call, the company announced 25% annual revenue growth along with 14% transaction growth and 28% agent growth.
Total revenue in 2022 for the Cary, North Carolina-based company was $412.9 million, up from $330.2 million for 2021. Fathom’s real estate agent network grew 28% to approximately 10,370 agents at year-end 2022, up from approximately 8,100 at year-end 2021. Fathom completed approximately 44,700 real estate transactions in 2022 (approximately 9,250 of which were completed in Q4 2022), a 14% increase relative to the prior year.
However, Fathom experienced the same pullback most of the residential real estate industry did in Q4 2022. Total quarterly revenue decreased 12.7% to $83.4 million, from $95.5 million for 2021’s fourth quarter.
Fathom CEO Josh Harley delivered mostly upbeat comments during the call.
“Fathom delivered solid results in year-over-year revenue growth, agent growth and transaction growth, and despite the current difficult market conditions, we remain optimistic about the year ahead,” he said. “Our results validate our belief that our model offers the greatest value to agents in all market conditions. Even with today’s economic uncertainty and subdued real estate market conditions, we believe that Fathom has a long and positive runway ahead, and we expect to turn the corner towards profitable growth in the coming quarters while starting to really show the operating leverage in our business. We remain focused on reaching total company Adjusted EBITDA breakeven in the second quarter of 2023 and generating positive cash flow in the third quarter of 2023.”
Citing cost-cutting measures undertaken last year, Fathom President and CFO Marco Fregenal emphasized that they should provide a financial boost through the first half of this year.
“We continue to maintain a strong balance sheet that should facilitate our growing the business and executing our strategy through profitability,” he said. “As of December 31, 2022, we had reduced expenses by approximately $3 million per quarter. We should see the full benefit of these reductions in the first quarter of 2023. It is important to note that we believe these cost reductions were made without sacrificing our ability to continue growing our business. These reductions are far ahead of our initial plan to reduce expenses by $1.5 million per quarter.”
While Fathom Realty is by far the main driver of Fathom Holdings’ financials, its other companies, such as Dagley Insurance, Encompass Lending and intelliAgent, have the potential “to dramatically increase revenue ” in the future, noted Harley. But Fathom Realty’s performance was the focal point of the session.
“We believe that these cost-reduction initiatives, combined with the increase in agent transaction fees that became effective in January of this year, have positioned our business for profitable growth, and we remain on track to reach Adjusted EBITDA breakeven in the second quarter of 2023,” added Harley.