Fathom Realty, a cloud-based, 100 percent commission brokerage, officially filed its S-1 document with the Securities and Exchange Commission (SEC) last week, intending to list its common stock on the Nasdaq exchange. The filing, which was first reported by The Real Deal, also revealed the company is looking to raise $14 million in a planned offering.
The company first announced its intention to go public in March 2019, at a meeting with its agents. CEO Joshua Harley told Inman at the time that he believed taking the company public would allow it to accelerate growth and innovation. Fathom Realty also offers agent equity as compensation and for hitting certain incentives.
“As we’ve disclosed publicly, Fathom focuses on its agents because we think that focus and those agents drive our business and our success,” Harley told Inman, when reached by email on Thursday. “A part of our unique agent focus is our program to grant equity to our agents as compensation and incentive to perform. Being public allows us to do that more efficiently and allows agents to reap the rewards of their equity awards.”
Fathom’s S-1 filing revealed the company’s losses are widening, as it continues to grow. In 2017, Fathom Realty posted a net loss of $343,000, which grew to $1.5 million in 2018. Through the first nine months of 2019, the company posted a net loss of $2.6 million.
Despite the losses growing, revenue is up at the firm, which reported $78 million in revenue for the first nine months of 2019, slightly more than the total amount of revenue it pulled in during the entirety of 2018.
“We have what we believe is a robust business model that provides a positive return to us quickly on each agent we add,” Harley told Inman, when asked if his company will focus on profitability, or continue focusing on growth, after the IPO.
“Generally accepted accounting principles (GAAP) profitability is impacted, however, by how fast we grow and by accounting nuances like the non-cash stock-based compensation expense we have to recognize,” Harley added. “We are very focused on our financial results and driving value for stockholders as we make strategic decisions about how fast to try to grow vs. slowing growth in order to become profitable sooner.”
Fathom Realty is a virtual brokerage, where agents don’t need to work out of a brick and mortar office space, like another publicly-traded competitor, eXp Realty. But Fathom Realty operates on a transaction fee model, where agents pay a transaction fee — which changes depending on the number of transactions they close — and a yearly fee. The company’s website has a “commission calculator,” where agents can see how much commission they would keep.
At Fathom Realty, agents pay the brokerage a fee of $450 per transaction for the first 12 transactions in a year. After that, agents pay a fee of just $99 per transaction and a yearly $500 transaction fee.
The company operates in 75 cities or regions and in 24 states and had an agent count of approximately 3,629 agents as of September 20, 2019, according to the filing. Agents at Fathom Realty closed more than 13,000 transactions in 2018. Fathom Realty ranked 61st in sales volume of all brokerages on the Swanepoel Mega 1000 and 38th in transaction sides according to the Real Trends 500, both of which considered 2018 sales numbers.
The filing also highlights the company’s proprietary technology platform, IntelliAgent, which the company says is, “designed to provide a suite of brokerage and agent level tools, technology, business processes, business intelligence and reporting, training, and marketing, along with a marketplace for add-on services and third-party technology.”
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