Q4 2024 Fathom Holdings Inc Earnings Call

Greetings and welcome.

Unknown Attendee: Welcome to the Fathom Holdings, Inc.

Welcome to the Fathom Holdings, Inc. Fourth quarter 2024 conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the call.

Unknown Attendee: 4th quarter 2024 conference. At this time, all participants are in a listen-only mode.

Unknown Attendee: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone key. Please note, this conference is being recorded.

Paul Kuntz: I will now turn the conference over to your host, Paul Kuntz. You may begin. Thank you and good afternoon.

Paul Koonce: Over to your host Paul Koonce, you may begin.

Paul Koonce: Thank you and good afternoon, welcome to <unk> Holdings fourth quarter and full year 2024 conference call joining us today is the company's CEO margaux pressure.

Paul Kuntz: Welcome to Fathom Holdings fourth quarter and full year 2024 conference call.

Paul Kuntz: Joining us today is the company's CEO, Marco Fregenal. Before I turn the call over to management, I want to remind 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 outlined in the risk factor section of the company's Form 10-K and other company filings made with the SEC, copies of which are available at the SEC's website at www.sec.gov. As a result of those forward-looking statements, actual results could differ materially.

Paul Koonce: Before I turn the call over to management I want to remind listeners that today's call may include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Paul Koonce: Forward looking statements are subject to numerous conditions, many of which are beyond the company's control, including those outlined in the risk factors section of the company's Form 10-K, and other company filings made with the SEC copies of which are available at the Sec's website at Www SEC Gov.

Paul Koonce: As a result of those forward looking statements actual results could differ materially 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 we will discuss adjusted EBITDA and non-GAAP financial measure as defined by SEC regulation G.

Paul Kuntz: Fathom undertakes no obligation to update any forward-looking statements after today's call, except as required by law.

Paul Kuntz: Please also note that during this call, we will discuss adjusted EBITDA, a non-GAAP financial measure as defined by SEC Regulation G. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release, which is now posted on Fathom's website.

Paul Koonce: A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release, which is now posted on <unk> website with that I will now turn the call over to President and CEO Mark O'brien. Please proceed.

Paul Kuntz: With that, I will now turn the call over to Fathom's CEO, Marco Fregenal. Please proceed. Thank you, Paul.

Mark O'brien: Thank you Paul Good afternoon, everyone and welcome to Fathom Holdings fourth quarter 2024 conference call.

Marco Fregenal: Good afternoon, everyone, and welcome to Fathom Holdings fourth quarter 2024 conference call. Thank you for joining us today. Before I go into the details of our performance, I want to acknowledge the remarkable commitment, adaptability, and resilience of our entire Fathom team, our agents, staff, and leadership. This past year has challenged all of us with the high mortgage rates, victim-buyer behavior, regulatory changes, and of course ongoing litigation. The broader market headwinds have certainly made it difficult for this year, for last year. However, I want to stress that we remain confident about our future. We believe 2025 will be a breakout year for Fathom and that we have laid out a strong foundation to help us push through the market volatility.

Mark O'brien: Thank you for joining us today before I go into the details of our performance I want to acknowledge the remarkable commitment adaptability and resilience of our entire fathom team our agents staff and leadership team.

Mark O'brien: This past year. It has challenges all of us with the high mortgage rates and.

Mark O'brien: In buyer behavior regulatory changes and of course ongoing litigation.

Mark O'brien: The broader market headwinds has certainly made it difficult for this year for last year.

Mark O'brien: However, I want to stress that we remain confident about our future. We believe 2025 will be a breakout year for fathom and that we have laid a strong foundation to help our sports through the market volatility.

Marco Fregenal: Let me start by reviewing our fourth quarter results for 2024. Our total revenue grew approximately 24%, reaching $91.7 million, up from $74.1 million in Q4 of 2023. Gross profit increased by 25%, growing from $5.3 million in Q4 of 2023 to $6.7 million this quarter. Excluding daily insurance, which we sold in May of 2024, gross profit rose 59% from $4.2 million to $6.7 million. Gap net loss for 2024 fourth quarter was $6.2 million or $0.29 per share, compared with a loss of $8.4 million or $0.50 per share for the 2023 fourth quarter. While we're pleased with the revenue gross profit growth, our EBITDA loss is not where we would like it to be.

Mark O'brien: Let me start by reviewing our fourth quarter results for 2024.

Mark O'brien: Our total revenue grew approximately 24%, reaching $91 7 million up from $74 1 million in Q4 of 2023.

Mark O'brien: Gross profit increased by 25% growing from $5 3 million in Q4 of 2023 to $6 7 million this quarter, excluding Dagley insurance, which we sold in May of 2024 gross profit rose, 59% from $4 2 million to $6 7 million.

GAAP net loss for 2020 for fourth quarter was $6 2 million or <unk> 29 per share compared with a loss of $8 40 million or 50 cents per share for the 2023 fourth quarter.

Mark O'brien: While we're pleased with our revenue and gross profit growth. Our EBITDA loss is not where we would like it to be adjusted EBITDA loss, a non-GAAP measure came in at $2 9 million for the fourth quarter of 2020 for matching the loss of $2 9 million from the same period in 2023 ryzen.

Marco Fregenal: Adjusted EBITDA loss and non-gap measure came in at $2.9 million for the fourth quarter of 2024, matching the loss of $2.9 million from the same period in 2023. Rising mortgage rates in the last quarter of 2024, combined with an approximately $1.3 million one-time expenses, kept us from moving into positive EBITDA territory. Despite these challenges, we remain dedicated to achieving sustainable positive adjusted EBITDA potentially as early as the second quarter of 2025.

Rising mortgage rates in the last quarter of 2024, combined with an approximately $1 3 million in one time expenses kept us from moving into positive EBITDA territory.

Mark O'brien: By these challenges we remain dedicated to achieving sustainable positive adjusted EBITDA potentially as early as the second quarter of 2025.

Marco Fregenal: Agent count increased by 21% from approximately 11,795 to approximately 14,300 agent licenses at year-end and transactions rose by 22% from 8,114 to 9,903, indicating our agent network still generating solid activity. Turning to the broader real estate market, we have noticed a slight decline in mortgage rates from their unexpected spike late last year. If rates stabilize or continue to drop, we think it will provide tailwind as we move into the spring buying season. In some markets, transactions in the first two months of 2025 are running at about 3% below comparable periods in 2024. While you anticipate rate change declines, we may help close the gap.

<unk> increased by 21% from approximately 11795, so approximately 14300 agent licenses at year end and transactions rose by 22% from 8142, 9983 indicated our agent network still generating solid activity.

Turning to the broader real estate market, we have noticed a slight declining mortgage rates from their unexpected spike late last year, if rates stabilize or continue to drop we think you will provide a tailwind as we move into the spring buying season.

Mark O'brien: In some markets transactions in the first two months of 2025 are running at about 3% below comparable periods in 2024, what do you anticipate rate change declines we may help close the gap.

Marco Fregenal: Price reductions on listings have ticked up slightly. About 33% of listings in March have had a price drop, compared to 30% last year. Actual home sale prices overall still see modest gains of 2 to 3 percent year over year. In some regions, however, prices are flat, which may help with affordability. Inventory has increased about 30% compared to a year ago, signaling a shift toward a more balanced or even buyer-friendly market in some areas. According to NARC's chief economist, if rates hold lower, the industry could see transactions in the second half of the year outpace last year by as much as 9 percent.

Mark O'brien: Price reductions on listings that ticked up slightly about 33% of listings in March haven't had a price drop compared to 30% last year.

Mark O'brien: Actual home sale prices overall, youll see modest gains of 2% to 3% year over year in some regions. However prices are flat, which may help with affordability.

Mark O'brien: Inventory has increased about 30% compared to a year ago.

Mark O'brien: A shift toward a more balanced or even buyer friendly market in some areas.

Speaker Change: According to <unk>, Chief economist if rates hold lower the industry could see transactions in the second half of the year outpaced last year by as much as 9%.

Marco Fregenal: In this competitive market, Fathom stands out having one of the lowest direct costs per transaction at just $264 per transaction, while many of our peers average $1,200 to $1,800 per transaction. This advantage enables us to stay lean, offer agents compelling value propositions, and continue investing in technology, training and support.

It is because it's competitive.

Mark O'brien: Mark at Fathom stands out having one of the lowest direct cost per transaction at just $264 per transaction, while many of our peers average 1200 or <unk> hundred dollars per transactions. These advantages enable us to stay Lee off our age is a compelling value proposition and continue investing in technology training and support.

Speaker Change: Sure.

Marco Fregenal: Looking ahead to 2025, we see three primary avenues for reaching EBITDA profitability. First, increased revenue from acquisitions. In November 2024, we acquired My Home Group, which will bring us about $110 million in revenue in 2025. We're also exploring additional acquisitions and walkovers of smaller brokerages. Second, is through higher gross profit. Our mortgage title and other ancillary services have been growing faster than our real estate revenue, enhancing cross-selling opportunities and strengthening our bottom line. And third is expense management through anticipated cost reductions of about $2 million on an annualized basis.

Speaker Change: Looking ahead to 2025, we see three primary avenues for reaching EBITDA profitability.

Speaker Change: First increased revenue from acquisitions in November 2024, we acquire on my home group, where she will bring us about $110 million revenue. In 2025. We are also exploring additional acquisitions and work overs of smaller brokerages decades is through a higher gross profit our mortgage title and other ancillary services have been growing.

Speaker Change: Faster than our real estate revenue enhancing cross selling opportunities as threatening our bottom line.

Speaker Change: And third with expense management through anticipated cost reductions of about $2 million on an annualized basis.

Marco Fregenal: Now let me now shift to our focus on ancillary businesses, where we have been increasing our attach rate and driving higher year-over-year revenue and gross profit. Our mortgage division in Compass Lending Group saw a revenue increase 11.1% to $2 million compared to $1.8 million in Q4 of 2023. While late-year mortgage rates spike, damping our initial expectations, we are confident in our roadmap for higher volume and better profitability going forward. In the fourth quarter, Encompass Lending reported EBITDA loss of $700,000 compared to an $800,000 loss in the same quarter last year. Now, for our title division, Veristytle, revenue reached $1.3 million, up from $700,000 last year, an 80% increase.

Speaker Change: Now, let me now shift to our focus on a ciliary businesses, where we had been increasing our attach rate and driving higher year over year revenue and gross profit.

Speaker Change: Our mortgage division encompass lending group saw a revenue increase of 11, 1% to 2 million compared to $1 8 million in Q4 of 2023.

Speaker Change: Why are you why late year mortgage rates Spike denting, our initial expectations. We are confident in our rolled back for higher volume and better profile of profitability going forward.

Speaker Change: In the fourth quarter encompass lending reported EBITDA loss of 700000 compared to an 800000 loss in the same quarter last year.

Now for our final decision there aside or revenue reached $1 3 million up from 700000 last year and 80% increase while adjusted EBITDA remains in a loss position in this business. We are seeing strong demand for our title services, especially as our agent network expense and.

Marco Fregenal: While Adjusted EBITDA remains in a lost position in this business, we are seeing strong demand for our title services, especially as our agent network expands. In the fourth quarter, Veristital reported an EBITDA loss of $300,000, or about 15% of related revenue, compared to a $200,000 loss, or almost 29% of related revenue in the same quarter last year.

Speaker Change: In the fourth quarter, various silo reported an EBITDA loss of 300000 or about 15% of related revenue compared to a 200000 loss or almost 29% or related revenue in the same quarter last year.

Marco Fregenal: Now in the in the effort to improve agent growth and retention, we rolled out our new revenue share model in Q3 of 2024. Today, about 5% of our new agents have joined the share program. In addition, we plan to soon launch a new program specifically designed to help agents close more business, with nearly 90% of all agents surveyed stating that they want more from their brokerage. We are confident this new program will have significant impact for agents looking to get more from their brokerage.

Speaker Change: Now in India, and the effort to improve Asian girl and mutation, we rolled out our new revenue share model in Q3 of 2024 today about 5% of our new agents have joined the share program in.

In addition, we plan to soon launch a new program specifically designed to help agents close more business with nearly 90% of all ages survey, stating that they want more from their brokerage. We are confident in this new program will have significant impact for ages looking to get more from their brokerages.

Marco Fregenal: As many of you know, Rock & Morgan recently announced that it's acquiring Redfin, demonstrating once again that consolidation remains a central theme in this industry. We expect to see more deals on the horizon. On our side, in November, we acquired my home group, which was an important addition to the Fathom team. We do plan to continue to pursue strategic opportunities to help us grow and solidify our position in key markets.

Speaker Change: As many of you know rocket mortgage recently announced it is acquire RSV demonstrating once again the consolidation remains a central theme in this industry, we expect to see more deals on the horizon on our site in November walk around my home group, which was an important addition to the fathom team.

Speaker Change: We do plan to continue to pursue strategic opportunities to help us grow and solidify our position in key markets.

Marco Fregenal: Before moving on, I want to address our CFO transition. We recently announced the departure of Joanne Zach, who made important contributions to our organization, and we certainly wish her all the best. As of now, I'll be serving as CFO for the next few months while our finance team continues its high level of performance under guidance of Vice President Daniel Wineman.

Speaker Change: Before moving on I want to address our CFO transition, we recently announced the departure of some lines that will make important contributions to the organization and we certainly wish her all the best.

Speaker Change: Now I'll be serving as CFO for the next few months, while our finance team continues its high level of performance and the guidance, our vice President Daniel widening we anticipate beginning a formal search process soon and in the meantime, we do expect we do not expect any disruption or a negative impact on our day to day final.

Marco Fregenal: We anticipate beginning a formal search process soon. And in the meantime, we do expect, we do not expect any disruption or negative impact on our day-to-day financial operations or strategic initiatives.

Speaker Change: Actual operational or strategic initiatives now.

Marco Fregenal: Now, let's review our financial results. Again, fourth quarter total revenue is $91.7 million, a 24% increase year-over-year, compared to $74.1 million for last year's fourth quarter. The increase in revenue is primarily due to a 26% increase in brokerage revenue, as well as increasing revenues from ancillary business. And for the 2024 year, total revenue decreased by approximately 3% to $335 million compared to $345 million in the prior year. Overall revenue was lower in 2024 compared to 2023 due to lower transaction volumes attributed to high home prices, high mortgage rates that made 2024 the worst year for home sales since 1995.

Speaker Change: Now, let's review our financial results again in fourth quarter total revenue was $91 7 million or 24% increase year over year compared to $74 1 million for last year's fourth quarter. The increase in revenues, primarily due to a 26 cents increasing brokers revenue as well as increasing revenues from a ciliary.

<unk> businesses.

Speaker Change: For the 2024 year total revenue decreased by approximately 3% to 335 million compared to 345 million in the prior year.

Speaker Change: Overall revenue was lower in 2024 compared to 23 due to lower transaction volumes attributed to high home prices and mortgage rates. They may 'twenty 'twenty four the worst year.

Speaker Change: For our homes sales since 1995.

Marco Fregenal: Our total gross profit percentage for the fourth quarter of 2024, excluding our sold insurance business, increased to 7.2% compared to 5.4% for the 2023 fourth quarter. For the 2024 year, excluding our sold insurance business, gross profit percentage increased to 8% compared to 7% for 2023. Technology and development expenses were approximately $1.8 million for the fourth quarter of 2024 compared to $1.7 million for the fourth quarter of 2023. For the 2024 year, technology and development expenses increased to $6.6 million compared to $6.3 million for 2023. The approximately increase of $0.3 million increase was primarily due to our continued investment in technology platforms. including the build out of our new revenue share program.

Speaker Change: Our total gross profit percentage for the fourth quarter 2024, excluding our sold insurance business increased to seven 2% compared to five 4% for the 2023 fourth quarter for the 2024 year, excluding our sold insurance business gross profit percentage increased to 8%.

Speaker Change: To 7% for 2023.

Speaker Change: Technology and development expenses were approximately $1 8 million for the fourth quarter of 2024 compared to $1 7 million for the fourth quarter of 2023.

Speaker Change: For the 2024 year technology and development expenses increased to $6 6 million compared to $6 3 million for 2023.

Speaker Change: Approximately increase of <unk> 3 million increase was primarily due to our continued investment in technology platforms.

Speaker Change: Including the build out of our new revenue share program.

Marco Fregenal: General administrative expenses total $8.4 million for the 2024 quarter, compared to $10 million for the fourth quarter in 2023. For the full year 2024, general administrative expenses decreased to $33.5 million, compared to $38.7 million for 2023. The decrease is primarily due to the absence of costs related to the sale of our insurance segment business, effective May 3rd of 2024, and cost-cutting initiatives. Marketing activities expenses total $1.9 million for the 2024 fourth quarter, compared with $0.9 million for the fourth quarter of 2023. For the 2024 year, marketing expenses increased to $5.8 million compared to $3.3 million for 2023.

Speaker Change: General and administrative expenses totaled $8 $40 million for the 'twenty 'twenty four for quarter compared to 10 million for the fourth quarter in 2023.

Speaker Change: For the full year 'twenty 'twenty, four general and administrative expenses decreased to $33 5 million compared to $38 7 million for 2023.

Speaker Change: Increase was primarily due to it.

Speaker Change: So the absence of costs related to the sale of our insurance segment business effective may three 2024 and cost cutting initiatives.

Speaker Change: Marketing activities expenses totaled $1 9 million for the 2020 for fourth quarter compared with <unk> 9 million for the fourth quarter of 2023.

Speaker Change: Well the 'twenty 'twenty four year marketing expenses increased to $5 8 million compared to $3 3 million for 2023. The increase is primarily due to increase your marketing investments for our own ciliary businesses.

Marco Fregenal: The increase is primarily due to increasing marketing investments for our ancillary business. Gap net loss for the fourth quarter of 2024 totaled $6.2 million or $0.29 per share compared with a loss of $8.3 million or $0.50 per share for the fourth quarter of 2023. The decrease in net loss is primarily due to our cost savings. kept that loss for the full 24 year. was $21.6 million, or a loss of $1.07 per share, compared with a gap net loss of $20.4 million, or a loss of $1.47 per share for the 2023 year. The decrease is primarily due to the absence of costs related to the sale of insurance segment business, effective May 3rd of 2024, and cost-cutting initiatives.

Speaker Change: GAAP net loss for the fourth quarter of 2024 totaled $6 2 million or 29 cents per share compared with a loss of $8 3 million or <unk> 50 per share for the fourth quarter of 2023.

The decrease in net loss was primarily due to our cost savings efforts.

Net loss for the full 24 here.

Speaker Change: Was $2 $21 6 million or a loss of $1.07 per share compared with a GAAP net loss of 20 40 million or a loss of $1 47 per share for the 2023 year. The decrease was primarily due to the absence of costs related to the self insurance segment business. In fact, they may 3rd of 'twenty 'twenty four and.

Speaker Change: Cost cutting initiatives.

Marco Fregenal: Adjusted EBITDA loss and a non-GAAP measure for Q4 2024 remain unchanged at $2.9 million compared to Q4 of 2023. For the full year 2024, Adjusted EBITDA loss is $5.7 million compared to Adjusted EBITDA loss of $4.1 million for 2023, due to lower brokerage revenues, lower margins on mortgages and higher expenses.

Speaker Change: Adjusted EBITDA loss.

Speaker Change: non-GAAP measure for Q4, 'twenty 'twenty four remain unchanged at <unk> 9 million compared to Q4 of 2023 for the full year 2024, adjusted EBITDA loss was $5 7 million compared to adjusted EBITDA loss of $4 1 million for 2023 due to lower brokerage revenues lower margins on mortgages and higher expenses.

Marco Fregenal: Now I'll spend some time reviewing our business segment results in more detail. Brokerage, we closed approximately 9,903 real estate transactions during the fourth quarter, an increase of 22% compared to 8,114 transactions during the fourth quarter of 2023. For the full year, we closed approximately 37,000 real estate transactions, about a 2.2% decrease relative to the prior year. We ended the fourth quarter with approximately 14,300 agent licenses, an increase of 21% compared to 11,795 agents at the end of the prior year. Revenue for the real estate division is approximately $87.7 million in the fourth quarter, compared to $69.4 million for the same period last year, which represents a 26% increase, primarily attributed to the additional my home group.

Speaker Change: Now I'll spend some time reviewing our business segment results in more detail brokerage, we closed approximately 9983 real estate transactions during the fourth quarter, an increase of 22% compared to 8114 transactions during the fourth quarter of 2023.

Speaker Change: The full year, we closed approximately 37000, we say transaction about a 2.2% decrease relative to the prior year.

Speaker Change: We ended the fourth quarter with approximately 14300 agent licenses and increase of 21% compared to 11795 agents at the end of the prior year.

Revenue for the rest of the divisions, approximately $87 7 million in the fourth quarter compared to $69 4 million for the same period last year, which represents a 26% increase primarily attributed to the addition of my home group.

Marco Fregenal: For the full year, revenue decreased by 3% to $315 million, compared to $325 million in 2023. The decreases were due to a challenging real estate market with high home prices and high mortgage rates. Gross profit margin for our real estate division improved to 5.3% from 4.2% for the fourth quarter of 2024, compared to the fourth quarter of 2023. For the full year, gross profit margin improved to 5.7% relative to 5.2% the prior year. This increase in margin was largely due to our increase in our agent's annual fee from $600 to $700 and implement our new high value property fee commencing in January 1st of 2024.

Speaker Change: For the full year revenue decreased by 3% to 351 315 million compared to 325 million in 2023. The decreases were due to a challenging we're gonna stay market with high home prices and higher mortgage rates.

Speaker Change: Gross profit margin for our real estate division improved to five 3% from four 2% for the fourth quarter of 2024 compared to the fourth quarter of 2023 for.

Speaker Change: For the full year gross profit margin improved to five 7% relative to five point to the prior year. This increase in margin was largely due to our increase in our agents annual fee from 600 to $700 and implement their new high value property feet commencing in January for 2024.

Marco Fregenal: Adjusted EBITDA loss in the real estate division was approximately $44,000 loss in Q4 of 2024 compared to adjusted EBITDA of $200,000 in Q4 of 2023. For the full year, adjusted EBITDA income was $3.2 million in 2024 compared to $5.6 million for full year 2023. This was largely due to decrease in transactions in the early part of 2024, to incremental internal charges from knowledge division of Fathom Realty for transaction management and CRM services provided. Our mortgage business generated revenues of $2 million in Q4 of 2024 compared to $1.4 million in Q4 of 2023. Mortgage adjusted EBITDA for Q4 2024 was a loss of $7.7 million compared to an adjusted EBITDA loss of $0.8 million for the same period last year.

Speaker Change: Adjusted EBITDA loss in the real estate Division was approximately $44000 loss in Q4 of 24 compared to adjusted EBITDA of 200000 in Q4 2023.

Speaker Change: Full year adjusted EBITDA and income was $3 2 million in 2024 compared to $5 6 million for full year 2023. This was largely due to a decrease in transactions and in the early part of 2024.

Speaker Change: Nice internal charges from Technology Division, our Fathom Realty for transaction management and CRM services provided.

Speaker Change: Our mortgage business generated revenues of $2 million in Q4 of 2024 compared to $1 4 million in Q4 of 2023 mortgage adjusted EBITDA for Q4, 2024 was a loss of $7 7 million compared to an adjusted EBITDA loss of <unk> 8 million for the same period last year with the two.

Marco Fregenal: For the 2024 year, revenue grew by 49.3% to $10.9 million compared to $7.3 million in the period prior. Adjusted EBITDA loss for 2024 improved to $1.5 million compared to $1.9 million adjusted EBITDA loss in 2023 due to continued strategic cost-cutting measures.

Speaker Change: 24 year revenue grew by 49, 3% to $10 9 million compared to $7 3 million in the period prior.

Speaker Change: Adjusted EBITDA loss for 2024 improved to $1 5 million compared to $1 9 million adjusted EBITDA loss in 2023 due to continued strategic cost cutting measures.

Marco Fregenal: Now, let's turn to Veristido. Veristido had revenues of $1.3 million for the fourth quarter of 2024, compared to $0.7 million for the fourth quarter of 2023, an increase of 86%. The increase in revenue was driven by organic growth and walkovers. Veristido adjusted EBITDA for the 2024 fourth quarter with a loss of $0.3 million, compared to an adjusted EBITDA loss of $0.2 million for the fourth quarter of 2023. For the full year 2024, revenue grew by 50% to $4.5 million, compared to $3 million in the previous prior year. Adjusted EBITDA loss for the 2024 improved to $500,000 compared to $600,000 adjusted EBITDA loss in 2023.

Speaker Change: Now, let's turn to various side or their side I had revenues of $1 3 million for the fourth quarter of 2024.

Speaker Change: Third $2 7 million for the fourth quarter of 2023, an increase of 86%.

Speaker Change: Increase in revenue was driven by organic growth and work overs very side of adjusted EBITDA for the 2020 for fourth quarter was a loss of <unk> 3 million compared to an adjusted EBITDA loss of point to for the fourth quarter of 2023.

Speaker Change: For the full year 2024 revenue grew by 50% to $4 5 million compared to 3 million, they're pretty good at prior year.

Adjusted EBITDA loss for the 2024 improved to $500000 compared to $600000 adjusted EBITDA loss in 2023.

Marco Fregenal: Moving to our technology segment, third-party revenues remain relative constant at $0.8 million in Q4 for 2024 and Q3 of 2023. Adjusted EBITDA for the fourth quarter of $0.2 million compared to an adjusted EBITDA loss of $0.5 million for the fourth quarter of 2023. For the full 2024 year, revenues stay relatively flat at $3 million compared to 2023. We are increasingly building enhancements to our technology platform to better serve our agents and drive revenue.

Speaker Change: Moving to our technology segment third party revenues remain relatively constant at point 8 million in Q4 for 2024 in Q3 of 2023 adjusted EBITDA for the fourth quarter, a point 2 million compared to an adjusted EBITDA loss of <unk> 5 million for the fourth quarter of 2023.

Speaker Change: For the full 2024 year revenue stayed relatively flat at 3 million compared to 2023, we are increasingly building enhancements of our technology platform to better serve our agents and drive revenues.

Marco Fregenal: We continue to clearly focus on our balance sheet, given the dynamic real estate market conditions. We ended the quarter with a cash position of $7.1 million, which includes $4.9 million net proceeds from a senior secret convertible promissory note issued in November. We did not purchase any shares in the fourth quarter under the stock repurchase plan.

Speaker Change: We continue to focus on our balance sheet, given the dynamic real estate market conditions. We ended the quarter with cash position of $7 1 million, which includes $4 9 million net proceeds from our senior secured convertible promissory notes issued in November we did not purchase any shares in the fourth quarter under the stock repurchase plan.

Marco Fregenal: On March 10, 2025, the company entered into a $3 million securities purchase agreement with certain investors, including two board members, Scott Flanders and Stephen Murray. The offering is expected to close on March 14, 2025, subject to customary closing conditions.

Speaker Change: <unk> 2025, the company entered into a $3 million securities purchase agreement with certain investors and including to a board member Scott Flanders and Steven Murray.

Speaker Change: Offering expected to close on March 14, 2025 subject to customary closing conditions.

Marco Fregenal: Now we know this past quarter was challenging, and while we were pleased by the increasing revenue and gross profit, we recognize that we have much work to do on the EBITDA front. However, we believe that we have a plan that is laid out that will help us achieve EBITDA by Q2 of this year. Our strategy for gold, our low cost per transaction, our expanding suite of ancillary services, our upcoming agent-focused program, and our continued focus on profitability should position us well in this ever-evolving market.

Speaker Change: Now we know this past quarter was challenging and why we were pleased by the increasing revenue and gross profit we recognize that we have much work to do in EBITDA from <unk>.

Speaker Change: However, we believe that we but we have a plan and they're laid out will help us achieve EBITDA by Q2 of this year.

Speaker Change: Our strategy for goals, our LOE cost per transaction, our expanding suite of him and ciliary services, our upcoming agent focused program and our continued focus on profitability should position us well in this ever evolving market with that operator, we are ready to take questions.

Unknown Attendee: With that, operator, we are ready to take questions. Thank you.

Speaker Change: Thank you at this time, we will be conducting a question and answer session.

Unknown Attendee: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment. Please while we poll for questions. Once again. Please press star one if you have a question or comment.

Darren Aftahi: The first question is from Darren. Aftahi with Roth Capital, please proceed. Hi Marco, how are you? Thanks for taking my questions.

Darrin: The first question is from Darrin.

Speaker Change: <unk> <unk> with Roth capital. Please proceed.

Speaker Change: Hi, Margaret how are you. Thanks for taking my questions I, just two if I may.

Marco Fregenal: I just too, if I may, can you talk a little bit about how MAX and shared commission plans have affected Agent Recruitment Retention since they launched and then just any measurable improvement from agent satisfaction retention. Hey there, good to hear from you. Thank you for your questions. So, it's a, we're about, from Fathom, yeah, really, if you think about a Fathom X, every new agent is joining Fathom X, right, or in Fathom Share. So, what we see is about 5% of our new agents joining Fathom Share, and 95% of our agents joining Fathom X. So, it's a little early to tell the impact.

Speaker Change: Can you talk a little bit about how Maxim and share Commission plans are there.

Speaker Change: H.

Agent recruitment retention since they launched and then just any measurable improvement.

Speaker Change: Let us back to where potential.

Speaker Change: Hey, there good to hear from you. Thank you for your questions. So it's it's a.

Speaker Change: We're buying it from fab, though.

Speaker Change: Yeah. It really if you think about our fathom axis every new agents, joining fathom X-ray and Pat I'm sure. So what we see is about 5% of our new agents, joining fathom share and 95% of our age enjoining fathom that so.

Speaker Change: It's a little worried to tell the impact so Q4, it didn't really have much impacting revenue from those because as long as I said is enjoying typically very few close transactions in Q4. They will start closing transactions in Q1. So we will begin to see the impact of the Asia Enjoining Fathom share in Q1 and of course, even more in Q2 and Q2 as well.

Marco Fregenal: So, Q4 didn't really have much impact in revenue from those, because as those agents join, typically, very few closed transactions in Q4, they will start closing transactions in Q1. So, we'll begin to see the impact of the agents joining Fathom Share in Q1, and of course, even more in Q2 and Q3 as we go forward. In terms of their retention, we are still seeing a little higher turnover, but 90% of our turnover is still on either zero production agents or agents that have very little production. So, not unlike most of other companies in the market, I think everyone is seeing turnover a little higher, but I think the turnover, the higher turnover is specifically focused on either zero producing agents or low producing agents.

Speaker Change: As we go forward.

Speaker Change: In terms of their of retention.

Speaker Change: We are still seeing a little higher turnover, but.

90% of our turnover still on either zero production agers or agents that had very little production. So.

Speaker Change: Not unlike most of the.

Speaker Change: Companies in the market.

Speaker Change: Thank everyone, who seem to turn it over a little higher but I think the terminal the higher turnover, specifically focus on either zero producing agents are low producing agents and.

Marco Fregenal: And we continue to have about a 90% of agents leaving Fathom doing zero in one transaction. So, that percentage hasn't changed, but definitely a higher number of low producing agents leaving the industry.

Speaker Change: And we continue to have about a 90% of agents, leaving fathom doing zero in one transaction, so that percent that hasnt changed but definitely a higher number of low producing agents, leaving the industry.

Darren Aftahi: That's helpful.

Speaker Change: That's helpful. Thanks, and just one more if I could.

Darren Aftahi: Thanks. There's one more if I could.

Marco Fregenal: Can you just talk about any strategic initiatives and programs that are being implemented or will be implemented in 25 to kind of help accelerate adoption on mortgage and title? And then any, are there any specific challenges outside of just broader market softness and interest rates that are kind of impacting adoption? So we have seen our mortgage, our ciliary business has really outperformed our real estate brokers growth, right? Now mortgage, not so much in Q4, but certainly for the year they have and title, I believe, again, in Q4 grew by 86%. So we believe that we're going to continue to have a higher growth rate in terms of mortgage and title in 2025.

Speaker Change: Can you just talk about any strategic initiatives and programs that are being implemented or will be implemented in 25, they're going to help accelerate.

Speaker Change: Adoption on our mortgage and title and then any are there any specific challenges outside of just broader market softness in interest rates that are kind of impacting adoption in that space.

Speaker Change: [laughter].

Speaker Change: So we have seen there are mortgage our ciliary business have really outperform our real estate brokers growth I'm a bolt.

Speaker Change: Now the mortgage not so much in Q4, but certainly for the year. They have an end title.

Speaker Change: I believe again in Q4, we grew by 86%. So we believe that we're going to continue to have.

Speaker Change: A higher growth rate in terms of mortgage entitled <unk> 2025, we're doing a lot of war Ah and one of the programs that we are running is called the ambassador program. We're already seeing some great results from that.

Marco Fregenal: We're doing a lot of work. One of the programs that we are running is called the Ambassador Program. We're already seeing some great results from that. We have a pilot program that it will soon be announced that we believe also have an increase in the rate of adoption in terms of mortgage and title, more specifically in title than mortgage. So we estimate that our growth rate next year in terms of mortgage growth and title growth is going to continue to outpace real estate brokers growth. And so, and as you know, this is going to significantly positively affect gross profit.

Speaker Change: We have a pilot program that it will soon be and announced that we believe also has a an increase in the rate of adoption turbos on mortgage entitled more specifically.

Speaker Change: Titled in the mortgage so we we estimate that our growth rate next year in terms of mortgage growth and tidal growth is going to continue to outpace our real estate brokers girl and so and as you know this is going to significantly.

Speaker Change: Positively affect gross profit and and that's one of the ways that we're going to do we expect to reach EBITDA positive in Q2.

Marco Fregenal: And that's one of the ways that we're going to, that we expect to reach even that positive in Q2.

Marco Fregenal: So those are the programs that we have implemented that are already running in 2024. And that's why we've seen that increase, especially for title. And again, we're going to continue to see that increase in 2025 and beyond.

Speaker Change: So so those are the programs that we have implemented that already running in 2024, and that's why we've seen that that increase especially for the title and again, where we're going to continue to see that increase in 2025 and beyond.

Speaker Change: Thanks.

Unknown Attendee: If there are any remaining questions, please indicate so by pressing star one on your touchtone phone. We have no further questions in queue.

Speaker Change: If there are any remaining questions. Please indicate so by pressing star one on your Touchtone phone.

Speaker Change: We have no further questions in queue I'd like to turn the floor back to management for any closing remarks.

Marco Fregenal: I'd like to turn the floor back to management for any closing remarks. Thank you all of you for joining our call today. We appreciate your time.

Speaker Change: Thank you all of you for joining our call today. We appreciate your time, we look forward to continue to update you as our progress in 2025 and as always I am available for individual meetings. So I hope you guys have a great day and thank you for joining.

Marco Fregenal: We look forward to continue to update you as our progress sent to 2025, and as always, I'm available for individual meetings. So I hope you guys have a great day and thank you for joining.

Unknown Attendee: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.