Q1 2022 Fathom Holdings Inc Earnings Call
Good day and welcome to the SAP I'm Holdings first quarter 2022 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero. After today's presentation, there will be an opportunity to ask questions.
Can I ask a question you May press Star then one on a touchtone phone.
Your question. Please press Star then two.
Please note. This event is being recorded I would now like to turn the conference over to Roger upon that with Pond out welcome Tim. Please go ahead.
Thank you, Matt and welcome everyone to Fathom Holdings' 2022 first quarter conference call I'm, Roger PON, Dell with PON, Joe Wilkinson Fathoms Investor Relations firm.
It's my pleasure today to introduce the company's founder and Chief Executive Officer, Josh Harley and Fathoms, President and Chief Financial Officer, Michael Frechen, All before I turn things over to Josh I wanted to remind all listeners that today's call may include forward looking statements within the meaning of the private securities.
Litigation Reform Act of 1995, such forward looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the risk factors section of the company's latest Form 10-K, and subsequent to the form 10, Qs and other company filings.
Made with the SEC copies of which are available on the SEC's website.
At Www Dot FCC Dot Gov as a result of those forward looking statements actual results could differ materially.
And fathom undertakes no obligation to update any forward looking statements after today's call except as required by law. Please also note that during this call management will be discussing adjusted EBITDA, a non-GAAP financial measure as defined by SEC regulation G.
A reconciliation of this non-GAAP financial measure to the most recently comparable GAAP measure is included in today's press release, which is now posted on fathoms website and with that I will turn things over to Josh Harley Josh.
Thank you Raj and of course, thank you to everyone who is on todays call. Our entire team deeply appreciate your support and of course your faith in US before we review the significant business and financial progress Fathom has made since our last call I want to thank our agents and our employees for their unwavering hard work and success.
In moving us forward toward our vision and of course in helping us grow as a company quarter after quarter. Our results continue to demonstrate the power of a truly disruptive business model and I'm proud to be here sharing the reasons why we have and believe will continue to achieve significant growth, we're winning through innovation.
And by delivering real long term value to our agents our employees our clients and our shareholders now the latest real trends brokerage rankings that came out reported that fathom Realty is now the sixth largest independent real estate brokerage in America, and the 10th largest brokerage overall, which includes free.
<unk> over the last four years, we've jumped from the 16th spot to the 11th to the night and now the sixth largest and Theres no and that's by the way that's for very good reason why were Sky Rocketing up the chart, namely due to the fact that the value. We provide agents who joined fathom is unmatched by our peers.
I once heard someone state that an agent commission split really matters in the absence of value.
But what if all things were equal in regards to technology and resource support et cetera, then splits matter a lot and that's why I believe we're winning.
There's really nothing outside of empty offices that are peers can give their agents that we cannot and yet we can offer everything to our agents for a fraction of the cost in fact, the average agent who joins fathom saves between 12 to $15000 per year.
They are industry is seeing a softening and while they're stopping may prove to be a headwind for our peers. We believe that we can turn into a tailwind for us.
Or else or Adas going to recoup the lost income if they close fewer homes.
If an agent is about a 70 30 split and closed 20% fewer homes with <unk>.
Active moving over to Fathom will increase their take home income by around 9% now nobody's, suggesting the market will see a 20% dip and I was merely presenting a worst case scenario example.
But you can see how our model can be even more disruptive to our peers in a down market.
For the first quarter year over year, our revenue grew by 81, 4% our agent count grew by more than 49% and our transactions grew by over 47% importantly for the first fourth quarter in a row, our real estate business with adjusted EBITDA profitable.
Don't believe the any other public real estate brokerage can make that claim and with a long runway ahead of us we feel very confident in our business even in today's economic uncertainty.
Well, we're continuing to invest capital to enhance our foundation for sustained long term growth of our newer business lines. Those investment dollars are quickly, becoming a smaller percentage of our ongoing expenses. We believe that fathom is on track to continue strong revenue agent and transaction growth and with the strategic thoughtful investments, we're making each.
Our business lines, we look forward to also demonstrating profitability, which is a high priority for us.
Now a lot of companies sacrifice profitability for growth, but I'm proud to say that we do not have to operate that way. We believe we can achieve strong profits over time, while continuing to grow our business at high rates.
Our cash position is strong and we plan to continue to focus on achieving positive operational cash flow Marco our president and CFO does a great job and pressing the proverbial no button, keeping our keeping our spending in check.
March toward profitability. So our steadfast discipline allows us to be good stewards of the money with which you can trust us.
Despite the current state of the stock market and what some believed to be a headwind in the broad real estate sector. As I mentioned, we believe the fab and is on track to continue an impressive growth rates. While also achieving profitability quickly we look forward to proving it and I'd like to share with you how we'll achieve those goals since going public we've.
We have substantially increased revenue continued expansion of our agent network maintains strong agent retention, which we believe is the best in the industry and Theres, New geographic markets and completed strategic acquisitions designed to further solidify our market position and accelerate our path to profitability. That's a lot to accomplish in less than two.
Years of being public, but it demonstrates our focus our commitment and our ability to get things done now with the addition of our own in house mortgage title and insurance companies along with additional SaaS product offerings, we have the potential to significantly increase our revenue and importantly, our profitability per transaction.
We continue to integrate those operations into each of our markets.
Now as I mentioned earlier, we grew our agent count by more than 49% year over year, we believe a big part of that growth is because fathom continues to have one of the most attractive agent Commission plans and one of the most complete offerings in the industry.
When it when it comes to providing the greatest value to agents, we believe fathom wins hands down.
Best parts of our extraordinary agent growth is that our cost to acquire one agents during Q1 remained at approximately $990.
Making a breakeven on each agent less $1100, we earn on their very first sale.
I also want to point out that the average lifetime value of an agent is currently over $21000 on just the real estate side of the business.
The ratio of that lifetime value to our cost of acquisition is more than 21 X and that does not take into account. The revenue, we're generating from our mortgage title and insurance companies or potential revenue from leads that we can generate for our agents. We believe that fathom is in a unique position to maintain our strong <unk>.
Solid growth rate through 2022, even at a time when the broad real estate market is turbulent.
Haven't been proved to be a hedge against other real estate brokerages, whose revenue transactions in agent count could suffer from industry headwinds I want to spend just a minute on this point because I think it's critical to better understand us well.
The overall real estate industry outlook is not exactly ideal there are a few important things to remember first homes are still selling faster than what is typical in a normal market.
In April around 57% of homes were under contract with a two weeks at around 43% of homes under contract within one week. Additionally, around 55% of homes were sold for above listing price.
One more stat that I believe adds an additional level of confidence is the fact that rents are also rising at a high rate, which keeps homeownership attractive relative to renting.
I'm not suggesting that these metrics are not off their tops, but these comps were pretty high to begin with.
The biggest concern moving forward is really housing affordability like for April home prices were up 15% year over year. The 30 year fixed mortgage rate was up 67% of course inflection has not been kind to households across the country.
With all that said, there's still far more demand than inventory inventory still near historic lows and while some are beginning to be priced out of the market Theres still more demand in the market can satisfy.
On top of that interest rates are not that far off normal prior to 2010 seeing interest rates in the 5% to 7% range was the norm.
And another point I want to make here is that even if we as an industry see fewer homes sold throughout 2022 as compared to 2021, we filed them feel confident that our agents who are agent and transaction growth will outperform any decrease in the number of transactions for the industry as a whole.
While these market conditions are not good for the majority of real estate companies and as I mentioned earlier five offers real estate agents, who join us from other brokerages the ability to net more income than they did even in 2021, even if they sell fewer homes that could result in more agents, joining fathom, if or perhaps win the bid.
Again to feel the squeeze.
There are only two ways for a real estate agent a net more income.
Increased revenue by closing more sales, which is hard to do in a down market or decreased our expenses. We believe we can help agents do both and that truly distinguishing I truly distinguishing characteristic about fathom.
The vast majority of real estate agents their largest expense is not their marketing their largest expense is the splits they pay their brokerage with many paying more than $30000 per year in real estate Theres, an adage that suggest splits only matter in the absolute value I said that earlier, however, again, what if all things equal with fathom the egg.
As you can get all the technology training resources support they are used to getting it one of the legacy brands and yet save an average of $12000 or more per year and commissions paid to the brokerage in essence, and Asia could potentially close 20% funeral homes and yet more earn more income than it did the year before with.
The potential market shipped looming fathom is highly attractive.
Two increasing number of agents.
Fathom could also see greater market share per agent over time as our agents increased their total income on itself with more income per sale fathom agents have more money available to invest in marketing and broaden their businesses when agents with legacy brands are struggling to earn a real living due to the fewer sales and lower income.
That may create a need to pull back on our marketing spend in order to pay their bills.
Maybe just could potentially invest more in marketing than their peers, helping increase their market share and ultimately our market share as they sell more houses.
In fact, we're already seeing some of that that interest shown through our career site. We actively track our unique visitors and it showed that our career start experiencing 85% increase in visitors in Q1 as compared to the same quarter in 2021.
We believe that it's a strong indicator of future growth.
We believe that fathoms ability to track an ever increasing number of our real estate agents by providing them with greater income potential along with the technology training and support they need to grow their businesses is even more evident today, especially during these changing times.
Now the royalty recently grew its geographic reach with the addition of Montana and New Hampshire in Q1, we also expanded our Utah presence through the acquisition of IPO royalties 400, plus agents now we plan to open several more markets throughout 2020 to one more thing I should point out is the announcement we made.
December about raising our fees for fathom agents, which took effect in Q1, starting in January the annual fee for agents was raised 20% from $500 $600 per year and the transaction fees were raised 11% from $450 to $500 for the first 12 completed transactions were happy.
To report that these increases continue to have no impact on our agent retention or growth rate.
Most likely because our agents are still saving an average of around $12000 or more as compared with traditional split brands.
Oh, let's talk next about Intel agent and the advantage that our platform creates the opposite vantage being that it allows phablet to reduce cost per agent overtime, while measurably improving operational efficiencies.
Our proprietary technology platform allows us to significantly reduce our reliance on third party tech providers. In fact as of March were officially using all fathom built technology for our Realty operation, which includes agent brokerage websites CRM transaction management personal management more outside of financial reporting.
And social media products, there really isn't anything else that we're using outside of Intel agent for our Realty business.
<unk> gives us the power to control the full lifecycle of the homebuyer home seller, gaining a greater understanding of our data and how to use it to further improve our offerings, while ultimately generating leads for our agents plus we can we can now identify potential clients for our mortgage insurance and telco companies long before they're under contract.
As they raise their hands requesting more information.
Yeah.
Throughout 2021, we made significant investments in our mortgage title insurance operations and we continue to see very positive return on that investment in the form of improved attach rates and market share.
In Q1, we acquired cornerstone first financial in Washington D C.
Cornerstone brought a very unique marketing approach to encompass lending, which we plan to rollout across the country each of our markets where encompass has a foothold.
As you know our mortgage our mortgage title and insurance operations were all added through strategic acquisitions, and we are working diligently to integrate each business fully to ensure stronger attach rates. We also made several strategic real estate brokerage acquisitions in a very short period of time, we expect that any future acquisitions we.
Continue we consider will primarily be focused around opening new real estate markets or expanding our footprint in smaller current markets to hit critical mass faster. Each acquisition. We pursue is expected to be immediately accretive to our business as we continue on our path to profitability.
While acquisitions are not our primary growth strategy, we will use acquisition strategically as opportunities arise.
We've been actively looking to brokerages across the country and we'll share more of these opportunities as more of these opportunities turning to acquisitions and work overs.
In March we initiated a $10 million share repurchase plan. The plan was designed to qualify for the safe Harbor under SEC rule <unk> 18, so certain purchases under the plan were also designed to be to allow us to make repurchases during otherwise closed trading windows under our insider trading policy.
Clients with the SEC rule can be five one so as many of you know will tend to be 18 limits our purchases to a percentage of average daily trading volume. So as of the end of April 310000 shares in the amount of about $2 9 million were repurchased through the plan right now it's hard to think that there.
Any asset available for us to buy that has greater value to fathom and our shareholders than our own stock. So we remain committed to our buyback will be thoughtful in how we move forward.
Final points, and then I'll turn it over to Marco over the last four quarters, our real estate business Saddam Realty generative adjusted EBITDA positive results I mentioned that earlier, which we believe demonstrates that we're on the right path. We have strategically built an end to end integrated real estate brokerage service company offering real estate brokerage.
Mortgage title insurance and SaaS services, we continue to enhance our underlying proprietary technology. In addition to expanding our SaaS offerings and throughout the rest of 2022, we will continue to focus on strengthening our infrastructure and business integration as we seek to expand our footprint of our family of brands both.
<unk> and via acquisitions, our focus has been and will continue to be to execute on our long term vision.
Being among the top real estate brands in the country on our last call. We shared that assuming we reach between 100000 110000 transactions per year. We believe that we can generate adjusted EBITDA exceeding $40 million, while we're not prepared to provide a timeline yet for that transaction milestone. We are confident we can that we can.
We maintain the strong agent in transaction growth that we've achieved consistently for more than a decade now.
As I hope you can tell we believe fathom has a great future.
We are proud of what we've been able to achieve and remain incredibly excited about the years ahead with that I'll turn the call over to markets markets All yours.
Thank you Josh good afternoon, everyone I'll start with a detailed review of our first quarter results and will finish with our updated guidance for this year.
Fourth quarter revenues grew to 81, 4% year over year to $90 1 million compared with $49 6 million for last year's first quarter. The increase resulted from growth in real estate transactions increased and average revenue per real estate transaction and revenue contributions from our newly acquired businesses.
GAAP net loss for the quarter was $6 million or a loss of 37 per share compared with a loss of $3 $40 million or 25 cents per share for the 2021 first quarter.
The year over year, changing GAAP net loss resulted principally from investments in future growth operational and overhead cost related to acquired companies incremental costs due to our transition to a public company and increases in noncash stock compensation and noncash amortization of acquired intangible assets.
Adjusted EBITDA loss, a non-GAAP measure was $2 1 million versus adjusted EBITDA loss of 2 million for the first quarter of 2021.
And the 2022 first quarter G&A was $10 8 million or about 12% of revenue compared with $6 1 million or 12, 3% of revenue for the same period a year ago.
The increase in G&A in absolute terms was primarily attributed to recently completed acquisitions and increases in noncash stock compensation expense, we anticipated G&A expense will continue to increase on an absolute dollar basis going forward driven by acquisitions and costs related to scaling and integrating our business line.
However, as it did this quarter compared to last year G&A as a percentage of revenue is expected to decline or the long term as revenue increases.
Expenses related to marketing activities were $1 1 million versus 400 in 2000 and for the last year's first quarter, mostly driven by an increase in marketing activities related to new market openings and newly acquired company.
Next I'll spend some time reviewing our business unit results.
Our real estate Division continues to perform very well we finished the quarter with just over 9000 agents a 49% increase from the same period last year. We closed just over 10000 real estate transactions for the quarter, a 47% increase from last year's first quarter adjusted EBITDA in our real estate Division.
Was about 944000 building an adjusted EBITDA profit, we generated since Q2 of 2021.
Gross profit per transaction was over $535 for the period.
Our mortgage business generated revenues of $2 9 million at the end of 2022 first quarter slightly higher than what we generated in Q4 of 2021 adjusted EBITDA loss in the business of approximately 490000, Likewise is slightly higher than Q4 of 2021.
Moving to our technology segment revenues into 2022 first quarter totaled 644000, adjusted EBITDA for the quarter was a loss of 400000.
Our insurance entitled businesses have combined revenues of just over $2 5 million for the quarter slightly higher than Q4 2021, adjusted EBITDA for various our fiber business and was $54000 and adjusted EBITDA for Dagley insurance was just over $100000 for the quarter.
Given that Q1 is generally the lowest revenue quarter for the year due to industry seasonality. Our first quarter results were excellent and we remain very excited for the future.
We ended the quarter with a strong cash position of $30 5 million, which gives us plenty of runway to execute our strategy now, let's discuss the attach rate.
Bulk encompass lending in various title we rolled out several markets in the late summer of 2021. After nine short months, we continue to see attach rates that ranged from 5% to 6% as we look at the continued increase in file starts from fathom agents for both ferrous any purpose for Q1 of 2022, we believe that we will.
Exceed the 10% attach rates within 18 months of Arris and encompass opening any individual new market.
As Josh indicated earlier, we implemented a share repurchase plan and at the end of Q1 at the end of Q1 this year.
The end of April we repurchased 310140 shares portfolio amount of $2 9 million.
Now I'll finish with our guidance for the second quarter of 2022 as well as our updated guidance for the full year.
We are updating this guidance based on the positive trends, we continue to see an fathoms business.
For the second quarter of 2020 to Fathom expects total revenues to range between $110 million and $115 million with adjusted EBITDA in a range of a loss of 200000 to a positive adjusted EBITDA of 200000.
For the full year, we are increasing our revenue guidance to a range of $445 million to $455 million. Our adjusted EBITDA guidance range remains at a loss of 500000 to a positive adjusted EBITDA of 500000.
Now as a reminder, our guidance is forward looking which as Roger noted at the beginning of the call is subject to certain risks and uncertainties.
Before I turn the call back to Josh I'd like to say, how proud I am of our entire team and while we have accomplished this past quarter due to seasonality of this in the first quarter can be the most challenging quarter financially due to unusually lower number of transactions. However, we have outperforming every metric including agent growth transact.
<unk> growth and more importantly, we reduced our EBITDA loss significantly which sets the foundation for reaching profitable or just the EBITDA this year.
I believe that our team's vision and passion will allow us to continue revolutionizing the residential real estate industry now with that I'll give the mic back to Josh. So we can take your questions.
Thank you Mark and we believe the fathom is a clear visible and long runway with tremendous growth prospects no matter. What the market holds we believe that our model is positioned to win we have been working hard to deliver on our promise to grow fathom in an accelerated yet sustainable fashion for the long term. So thank you again for your trust and be part of our fathom families with that.
Operator, we're now ready to open the call to questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you're using a speakerphone please pick up your handset before pressing the keys.
At any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yeah.
Okay.
Yeah.
Our first question will come from Darren <unk> with Roth Capital Partners. Please go ahead.
Hey, guys. Thanks for taking my questions and a nice quarter. So a couple if I may 1st.
Kind of curious I know interest rates have been creeping up throughout the year I'm just kind of curious what are your general thoughts.
Or if you've seen any changes in your business.
In the second quarter to date.
And then I've got two more calls.
Yeah, Let me, let me address the first part of that and have Marco just the second part.
Today's sent me a chart showing that.
Buyer sentiment is down you know what how they feel about the market is today the lifetime to buy and it's pretty low right. Now however, what's interesting is that <unk>.
Buyer sentiment does not actually.
Connect with what we're actually seeing in the street. So as we talk to buyers in the street is our agents are talking to buyers were not really seeing a reduction in people raising their hands, saying I want to look for homes.
And I think when we asked them why don't you. If you don't feel that great about the market why are you still looking by home and there are reasons because.
You know that whole fear of loss, because I think it's going to keep prices keep going up and if I wait than the 400000 at home I'm looking for is not going to be for 'twenty or 430.
Yes, I don't let these interest rates, but.
I love the idea of buying the same home for 430 now so it's interesting to see how the.
Sentiment can be disconnected from what's actually happening in real life, but market you want address the second part about.
Now, we're actually seeing it affect our future.
Thank you Darren Thank you for your question.
We track file starts almost on a daily basis and up to April of this year, we have not seen a reduction in final starts now.
That does not mean that in may that would change, but Ford from January all the way to the end of April .
We have not seen we are still consistently have the same increase in potash starts.
We actually had last year and Q1 of last year as well. So that does not mean that you may change by the end of may, but thus far we have not seen.
A decrease in there.
That's helpful. Thanks.
That's two more so you raised.
Revenue for the full year by $20 million, if my math is right, but you kept them.
Your adjusted EBITDA range is the same.
Maybe just commentary around that context, just any kind of puts and takes on on costs.
Yeah.
So the reason for that is that we are seeing some compression in margins in the mortgage business.
And we don't know if those are going to continue to accelerate or they're gonna stay consistent so we did increase our.
Our revenue guidance for the year, but we want to be cautious.
Given that we're beginning to see some compression in the mortgage the mortgage business is still very small part of our business right and so, but we want to kind of hedge that and make sure that we are conservative in our adjusted EBITDA guidance.
We're very keen and making sure we make our numbers when we say we're going to make them that so that's the reason for that.
Great and then just last one for me.
Can you just talk about where you guys stand on regeneration and tend to have them decide which markets to roll that out to how fast.
So you can get kind of greater scale.
In your markets and kind of what impact that's having on other areas of their business like attach rates.
Mark Let me just kind of part of it and I'll. Let you address you know how we look at markets and how fast we are rolling out markets.
One of the things that we're being very careful about is that while lead generation has a great return on investment long term the initial upfront cost can be great.
And so we want to always be good stewards right now we are pushing for profitability and so we're trying to balance the two how fast we spend the dollars to generate the leads but knowing that the dollar I spent a day may convert that lead may convert nine months from now or 12 months from now and so we want to be very careful about how.
We do that so we're trying to be very thoughtful about how quickly rolled out.
If this was a different era.
Probably be rolling it out much much faster.
Right now, we're taking the time to really prove it out we've got a great team that works with the leads that come in and nurture those leads than they assign those leads to agents and we're seeing a lot more time Trey the agents working through scripts what works the best to get the highest conversion ratio. So in other words for every dollar reduced spend even though it may take nine months.
Or more to actually convert to a closing we want to make sure we convert a higher percentage of those leads into into closings. So we're very thoughtful about how we would do that but as far as markets I'll, let you address that market.
Sure.
So we generally our leads program is comprised of three different ways to generate needs. One is to just regular pay per click and as second is use our live by data and third is our Hispanic division. So again, we generated lead in three different ways. We're currently are in five or six markets across the country.
Markets like Las Vegas, Southern California, Houston, Atlanta, Charlotte and I believe Chicago now and so those are the markets that we're in as we continue to prove the financial results of the pilot then we'll go ahead and look into other markets. So we did increase from three to six.
And thus far continues to go out, but as Josh indicated there is a significant investment into regeneration that typically takes six to nine months due to prove itself until.
And so right now we're currently with six markets. We think we'll probably continue to six markets. The rest of the year prove our model.
And then probably increase that either later in the year or early next year.
Thanks, Ken.
Again, if you have a question. Please press Star then one our next question will come from Tom White with D. A Davidson. Please go ahead.
Good evening guys. Thanks for taking my questions, maybe just a follow up on.
On the topic of rising rates.
And sentiment and it sounds like the the transaction pipeline.
It looks fine.
Curious, whether youre seeing or whether you anticipate sort of any change in that.
The M&A M&A.
Pipeline and how youre thinking about that over the next.
Few quarters.
And then and then I had a follow up with you.
Certain opex fantastic question, so from an M&A standpoint thinking about brokerage is really a focus of our M&A is on real estate brokerages. There's two ways of doing it one is through acquisition and the other a walkover for those of you who don't know to walk over as a walkover would be a group of lets say 50 agents or 90 agents that instead of.
Acquiring their company and going through all the.
The auditing of their books and make sure that we basically.
We basically acquired the company or part of the group by moving them over moving all the licensing over the south of it makes it easier it's faster instead of taking 456 months to go through the whole process of the acquisition, sometimes you can get that done in 60 days or 90 days. So it cuts the time in house, it's faster.
And obviously it costs less because we don't have as many legal fees and auditing fees all the other fun stuff that go into it.
So.
Those are those are nice we like to focus more on the the work overs and so I think over time Youll see youll still see acquisitions that we make we're actively pursuing acquisitions. What's interesting, though is use of acquisitions pursue us as do the work overs very it's not as often that we're reaching out to people, saying Hey have you thought about selling we'd love to have you join our fathom fan.
It's usually the other way round, it's hey, I see you guys in the market I love, what you're doing we're struggling over here I'd love to be actually don't they never saying that they're struggling but we can see they are struggling.
But yeah, Hey, we'd love a part of the Fathom family, whereby we'd love to help it grow in this market.
It does look like and so we tend to be approached and so we're actually.
When we went public we start seeing a much higher percentage of people approaching us and as the marketing and the markets are softening, we saw even more I think more and more companies, especially small companies who are barely surviving are going to potentially die.
In a down market like this 86000 brokerage I think the number is actually higher now.
So a lot of these brokerages as mom and Pops with 30, 40, 50 agents and so and so they are struggling to pay the bills as it is and if theres a market downshift.
There is no way to pay the bills right there, they're dipping into savings to survive. So a lot of them would come to us as a potential work over.
And now we need more leadership anyways that person can come in and help maybe be a manager in the company.
Managing agents, we bring agents over so its a very attractive way to grow. So we look a lot of that we are still pursuing as I said acquisitions.
That over time, you'll continue to see more and more of these work overs and acquisitions.
Great. Thanks, Thanks for that maybe just one follow up on the buyback I realize you guys just announced the program I think in mid March.
But the balance sheet is healthy.
And I realize you've got a bunch of different kind.
Kind of growth investment opportunities in parts of the business, but just curious if you know what are your thoughts on maybe getting more aggressive on buying back stock, you're giving you know kind of what's happening with it.
Sure as far as the aggressive and we were we are kind of our hands are tied a little bit because of the qualified plan that we had.
Under the SEC rules, we can only sell so much per day, but we have no control over what was I'm sorry. So what was booked per day. So we had no control over it just happens when it happens.
<unk>.
Can we get more aggressive I don't honestly I don't answer that I think mark who might be able to speak to that better than I do I know that we created the plan. We said we wanted to be aggressive.
And.
Honestly I think we're if we look at what we're buying per day. We were we were doing just that as far as what we're allowed to do the problem is we don't have as much activity in our stock. So we're not selling I think our average about 70 to 80000 shares per day.
And so you're kind of limited there.
But yes, if we have the ability we'd love to be a little more aggressive on it especially right now while the stock is still incredibly desirable where it is right now we think it has incredible opportunity. So one of the things kind of go back to your first question is we've got we've got a pretty healthy balance sheet, and where do we best spend that dollar sorry is it better to buy back a share.
Or is it better to buy another agents like how do we grow and I think we can as the saying goes chew gum and walk at the same time I think we continue to be aggressive and buy back more stock as well as making acquisitions or work overs.
That's kind of what we're pursuing but there's probably not a day that goes by that Mark and I don't have a conversation sometimes with some of our board members as well about.
How do we how we best move forward and this avenue, where that out in this lane or that line and so what we're trying to be very thoughtful and making sure. We're always doing the best for our shareholders.
Tom I think one of the things that makes our position interesting is that you know given our guidance for Q2 to be adjusted EBITDA positive.
And then if we reach our adjusted EBITDA positive for the year it means that.
For Q2, three and four are all going to be adjusted EBITDA positive right and so it puts us in a very strong position there, we're not going to burn through our cash anymore.
And given our strong balance sheet. So we have a variety of the opportunities here too to look at not only our cash buyback continue to do that but also to look at all the interesting opportunities in the market as Josh mentioned earlier, we're beginning to see more and more.
Companies between 25, and 100 agents right and I think that's going to be one of the things that are going to sort of change the slope of the curve for a growth curve going forward is the number of these work overs. There we're going to see in the second half of this year and first half of next year I think that's one of the things that now the reason we raised capital at the end of last year is because it's a certain.
Extent, we anticipated somewhat that would be more company there'll be interested in doing that so I think when you put all that together I think it puts us in a very strong position we are.
Estimated to reaching adjusted EBITDA in Q2, we have a strong balance sheet and they put those things together it gave us the ability to go execute continue to grow at a significant pace and still look at continue to to buy back stock. So we.
We feel very very good about our position right now.
Great. Thank you guys.
Thank you again, if you have a question. Please press Star then one.
As there are no more questions. This concludes our question and answer session I would like to turn the conference back over to Josh Harley for any closing remarks.
Thank you so much appreciate it.
Thank you again for everyone. It's been on the call today and of course for your continued support we are extremely proud of all that we've accomplished will continue to work diligently towards achieving our objective of adding greater value to our company for the benefit of all our stakeholders and so with that have a wonderful week and may the fourth be with you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.