End-to-end real estate services platform Fathom said investments in future growth drove a $3.4 million Q3 net loss, despite double-digit growth in revenue, real estate transactions and agent count.

End-to-end real estate services platform Fathom Holdings Inc. reported double-digit growth in revenue, real estate transactions, and agent count in the third quarter, with quarterly revenue at company swelling to $100.9 million.

For the three months ending Sept. 30, revenue was up 81 percent from a year ago. With agent count at Fathom Realty up 50 percent from a year ago, the company’s brokerage arm completed 11,498 real estate transactions, up 42 percent from a year ago. The company said ongoing investments in future growth drove a $3.4 million net loss during the quarter.

“Since going public last year, we have substantially increased revenue, significantly expanded our agent network, improved agent retention, entered new geographic markets and completed strategic acquisitions that added new services and further solidified our market position,” Fathom founder and CEO Josh Harley said in a statement.

“Adding new services, including our new, fully-owned mortgage, title, insurance and lead generation businesses, gives us even more firepower,” Harley said. “We believe we are moving in a very positive direction. Fathom has delivered impressive performance to date, and we are confident about what we believe to be an incredible path ahead of us, with our business model structured to drive increasing revenue, and profitability as well.”

Shares in Fathom, which were in the red most of Wednesday, rose in the last 15 minutes of trading to close at $26.99, up 3.5 percent from the day’s low. Over the last year, the company’s shares have traded for as little as $19.57 and as much as $56.81.

Fathom integrates residential brokerage, mortgage, title, insurance and software-as-a-service (SaaS) offerings to brokerages and real estate agents, through brands including Fathom Realty, intelliAgent, and Verus Title.

Fathom Realty operates on a fee-based model where agents pay a $500 annual fee, plus a $450 transaction fee on each of their first 12 transactions in a year. After hitting that $5,400 annual cap, agents pay a fee of $99 per transaction for the rest of the year.

After expanding real estate brokerage operations into Minnesota and New Mexico. Fathom Realty now operates in 34 states and the District of Columbia.

Since a July 2020 initial public offering, Fathom has made a number of acquisitions, including home search and CRM company Naberly Solutions, and market data and technology platform LiveBy. Fathom’s acquisition of E4:9 Holdings added Encompass Lending Group, Dagley Insurance Agency, and Real Results to the company’s stable of brands.

Fathom, which posted a $2.1 million net loss in the second quarter, said its cash and cash equivalents have shrunk from $28.6 million at the end of last year to $8.8 million as of Sept. 30, 2021. The decline “primarily reflects completed acquisitions,” the company said.

“Our focus going forward on achieving positive cash flow from operations should enable us to continue growing our existing businesses,” said Fathom President and CFO Marco Fregenal in a statement.

In the last three months of the year, Fathom expects to bring in revenue in the range of $82 million to $84 million, and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of a $1.9 million to $2.1 million loss. Next year, Fathom is forecasting revenue will total $410 to $420 million, and adjusted EBITDA will be in the range of a loss of $1 million to breakeven.

In a recent Inman guest column looking back at Fathom’s first year as a public company, Harley said Fathom’s acquisitions of LiveBy and Naberly were geared toward rolling out a national, brand-agnostic, home search portal.

In September, Fathom launched “LiveBy Local,” a suite of hyperlocal products incorporating LiveBy’s geographical boundaries and millions of community data points to help agents boost website engagement, inform and attract consumers, and nurture leads.

Email Matt Carter

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