PR Newswire | Aug 18, 2020 04:05PM EDT

Quarter

08/18 15:05 CDT

Fathom Holdings Inc. Reports 39% Year-Over-Year Revenue Growth for 2020 Second Quarter CARY, N.C., Aug. 18, 2020

CARY, N.C., Aug. 18, 2020 /PRNewswire/ --Fathom Holdings Inc.(Nasdaq: FTHM), a holding company that primarily operates through its wholly owned subsidiary, Fathom Realty, LLC, a national, cloud-based, technology-driven, residential real estate brokerage, today announced financial results for the 2020 second quarter and year-to-date period ended June 30, 2020.

Second Quarter Financial Results

Revenue for the 2020 second quarter increased 39% to $38.7 million, from $27.8 million for the prior-year period. During the quarter, despite the emergence of the COVID-19 pandemic, Fathom completed 5,848 real estate transactions, an increase of 31% from 4,461 transactions during the same period last year. Average revenue per transaction increased 6% to $6,615 from $6,230 for last year's second quarter. Fathom's real estate agent network grew to 4,554 agents as of June 30, 2020, up 39% from 3,275 a year ago.

GAAP net income for the 2020 second quarter rose to $161,000, or $0.02 per diluted share, compared with a net loss of $1.0 million, or a loss of $0.11 per share, for the second quarter of last year. Adjusted EBITDA, a non-GAAP measure, totaled approximately $329,000 for the 2020 second quarter, versus an adjusted EBITDA loss of approximately $361,000 in the same period last year. Fathomis providing adjusted EBITDA, a non-GAAP financial measure, because it provides additional information for monitoring the Company's performance. A table providing a reconciliation of adjusted EBITDA to its most comparable GAAP measure, as well as an explanation of this non-GAAP measure, is included in the tables at the end of this press release.

"With 39% revenue growth, Fathom posted the highest revenue increase among all publicly traded residential real estate brokerages this quarter. Even more impressive, that growth occurred before our IPO, and during an unforeseen pandemic. Our results reflect Fathom's steadfast commitment to serving our agents and our communities, with revenue growth being driven by an expanding agent network, a focus on increasing agent productivity, improving market conditions, and continued rising home prices, despite the pandemic," said Fathom CEO Joshua Harley. "While many companies were scrambling to shift their businesses to operate virtually due to COVID-19, we've been fortunate because we were already operating virtually. I have confidence in knowing that Fathom was built to withstand a black swan event like this.

"Fathom is a different kind of residential real estate brokerage, and as a virtual company built on our proprietary technology platform, was founded to be a market disrupter. Our ability to provide agents with a better commission structure helps them generate higher income and gives them the ability to invest in growing their businesses, while helping Fathom deliver increasing value to our stakeholders."

First Half Financial Results

Total revenue for the first half of 2020 increased 47% to $67.5 million, from $45.9 million for the corresponding period of 2019. GAAP net income for the first six months of 2020 was $118,000, or $0.01 per diluted share, compared with a net loss of $2.5 million, or a loss of $0.26 per share, for the first six months of 2019. Adjusted EBITDA totaled $465,000, versus an adjusted EBITDA loss of $883,000 in the year-ago period.

The Company had cash and cash equivalents of $1.5 million at June 30, 2020, up from $579,000 at December 31, 2019. On August 4, 2020, Fathom completed an initial public offering of its common stock, which resulted in the issuance and sale of approximately 3.4 million shares at a public offering price of $10.00 per share, providing net proceeds to the Company of $31.3 million.

"Significant growth was generated in all of our key financial and operational metrics, and our recently completed IPO improved the Company's balance sheet, providing us with the resources to drive future, sustainable growth," added Fathom President and CFO Marco Fregenal. "With a strong residential real estate market and a proven, scalable business model, we are excited to continue our mission of transforming the real estate industry."

Fiscal 2020 Second Quarter Financial Results Conference Call

Date: Tuesday, August 18, 2020

Time: 2 p.m. PDT/5 p.m. EDT

Phone: 877-270-2148 (domestic); 412-902-6510 (international)

Replay: Accessible through August 25, 2020; 877-344-7529 (domestic);

412-317-0088 (international); replay access code 10147253

Webcast: Accessible at www.FathomRealty.com; archive available for approximately one year

About Fathom Holdings Inc.

Fathom Holdings Inc. is the parent company of Fathom Realty Holdings, LLC, a national, virtual, full-service real estate brokerage that leverages proprietary cloud-based software called IntelliAgent to operate a Platform as a Service model (PaaS) for the residential real estate industry. Fathom offers real estate professionals 100% commission, small flat-fee transaction costs, support, technology, and training, all powered by best in class operational efficiencies. For more information visit www.fathomrealty.com.

Cautionary Note Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such "forward-looking statements" include, but are not limited to, adding new capabilities and the ability to reduce costs and drive sustainable growth. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of the Company, including: risks associated with the COVID pandemic; competition; management of growth; the costs and distractions of operating as a public company; and the others set forth in the Risk Factors section of the Company's registration statement for its initial public offering filed with the SEC, copies of which are available on the SEC's website at www.sec.gov, along with other Company filings made with the SEC made from time to time. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Relations Contacts:

Roger Pondel/Laurie BermanPondelWilkinson Inc.investorrelations@fathomrealty.com(310) 279-5980

Marco FregenalPresident and CFOFathom Holdings Inc.investorrelations@fathomrealty.com (888) 455-6040

(Financial tables follow)

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended June 30, Six months ended June 30,

2020 2019 2020 2019

Revenue $ 38,688,744 $ 27,792,313 $ 67,527,575 $ 45,927,039

Cost of revenue 36,356,779 26,026,425 63,044,034 42,879,197

Gross profit 2,331,965 1,765,888 4,483,541 3,047,842

General and 2,009,277 2,743,398 3,939,353 5,405,443administrative

Marketing 138,231 46,187 368,664 103,949

Total operating 2,147,508 2,789,585 4,308,017 5,509,392expenses

Income (loss) from 184,457 (1,023,697) 175,524 (2,461,550)operations

Other expense(income), net

Interest expense, net 32,659 27,061 65,497 54,431

Other income, net (10,000) - (10,000) -

Other expense 22,659 27,061 55,497 54,431(income), net

Income (loss) fromoperations before 161,798 (1,050,758) 120,027 (2,515,981)income taxes

Income tax (expense) (1,000) 12,000 (2,000) 7,980benefit

Net income (loss) $ 160,798 $ (1,038,758) $ 118,027 $ (2,508,001)

Net income (loss) pershare

Basic $ 0.02 $ (0.11) $ 0.01 $ (0.26)

Diluted $ 0.02 $ (0.11) $ 0.01 $ (0.26)

Weighted averagecommon sharesoutstanding

Basic 9,996,775 9,779,753 9,996,939 9,745,574

Diluted 10,030,025 9,779,753 10,016,269 9,745,574

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2020 December 31, 2019

ASSETS (Unaudited)

Current assets:

Cash and cash equivalents $ 1,490,278 $ 579,416

Accounts receivable 1,203,947 304,769

Agent annual fees receivable, net of allowance 769,899 356,131for doubtful accounts of $449,076 and $349,420

Due from affiliates 1,476 2,561

Prepaid and other current assets 398,010 411,202

Total current assets 3,863,610 1,654,079

Property and equipment, net 99,391 105,972

Capitalized software, net 644,421 464,842

Lease right of use assets 213,501 265,140

Total assets $ 4,820,923 $ 2,490,033

LIABILITIES AND STOCKHOLDERS DEFICIT

Current liabilities:

Accounts payable and accrued liabilities $ 4,346,927 $ 2,806,228

Due to affiliates 23,087 23,658

Loan payable - current portion 17,244 17,095

Notes payable - current portion 135,349 -

Lease liability - current portion 63,767 89,566

Total current liabilities 4,586,374 2,936,547

Loan payable, net of current portion 26,433 35,093

Notes payable, net of current portion 818,232 500,000

Lease liability, net of current portion 152,814 177,578

Total liabilities 5,583,853 3,649,218

Commitments and contingencies

Stockholders' Deficit

Common stock, $0.00 par value, 100,000,000authorized and 10,210,571 and 10,211,658 - -issued and outstanding as of June 30, 2020 andDecember 31, 2019

Treasury Stock, at cost, 5,683 and 0 shares as (30,000) -of June 30, 2020 and December 31, 2019

Additional paid-in capital 5,296,610 4,988,382

Accumulated deficit (6,029,540) (6,147,567)

Total stockholders' deficit (762,930) (1,159,185)

Total liabilities and stockholders' equity $ 4,820,923 $ 2,490,033

FATHOM HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended June 30,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 118,027 $ (2,508,001)

Adjustments to reconcile net income (loss) to netcash provided by (used in) operating activities:

Depreciation and amortization 63,771 23,633

Bad debt expense 99,656 81,694

Share based compensation 225,214 1,555,124

Change in operating assets and liabilities:

Accounts receivable (899,178) 784,693

Agent annual fees receivable (513,424) (388,122)

Due from affiliates 1,085 188,621

Prepaid and other assets 13,192 10,641

Accounts payable and accrued liabilities 1,540,699 (198,592)

Operating lease right of use assets 51,639 42,674

Operating lease liabilities (50,563) (41,735)

Due to affiliates (571) 1

Net cash provided by (used in) operating 649,547 (449,369)activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment (9,369) (11,137)

Purchase of capitalized software (227,400) (136,600)

Net cash used in investing activities (236,769) (147,737)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on loan payable (8,511) (8,364)

Proceeds from issuance of common stock 83,014 576,000

Purchase of treasury stock (30,000) -

Proceeds from note payable 453,581 -

Net cash provided by financing 498,084 567,636activities

Net increase (decrease) in cash and cash equivalents 910,862 (29,470)

Cash and cash equivalents at beginning of period 579,416 1,008,538

Cash and cash equivalents at end of period $ 1,490,278 $ 979,068

Supplemental disclosure of cash and non-cashtransactions:

Cash paid for interest $ 65,560 $ 54,500

Income taxes paid $ 2,261 $ 12,505

Right of use assets obtained in exchange for lease $ - $ 261,814liabilities

FATHOM HOLDINGS INC.

RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES

(Unaudited)

Three months ended June Six months ended June 30, 30,

2020 2019 2020 2019

Net income (loss) $ 160,798 $ (1,038,758) $ 118,027 $ (2,508,001)

Other expense (net) 22,659 27,061 55,497 54,431

Income tax expense (benefit) 1,000 (12,000) 2,000 (7,980)

Depreciation & amortization 44,496 17,611 63,771 23,633

Restricted stock award 97,862 633,217 201,020 1,543,309compensation expense

Stock option compensation 2,631 11,815 24,194 11,815expense

Adjusted EBITDA $ 329,446 $ (361,054) $ 464,509 $ (882,793)

Note about Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company uses Adjusted EBITDA, a non-GAAP financial measure, to understand and evaluate its core operating performance. This non-GAAP financial measure, which may be different than similarly titled measures used by other companies, is presented to enhance investors' overall understanding of the Company's financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Fathom defines Adjusted EBITDA as net income (loss), excluding other expense, net, income tax expense (benefit), depreciation and amortization, and share-based compensation expense, including restricted stock and stock options.

Fathom believes that Adjusted EBITDA provides useful information about the Company's financial performance, enhances the overall understanding of its past performance and future prospects, and allows for greater transparency with respect to a key metric used by management for financial and operational decision-making. The Company believes that Adjusted EBITDA helps identify underlying trends in its business that otherwise could be masked by the effect of the expenses excluded in Adjusted EBITDA. In particular, Fathom believes the exclusion of share-based compensation expense related to restricted stock awards and stock options provides a useful supplemental measure in evaluating the performance of its operations and provides better transparency into its results of operations.

Adjusted EBITDA is being presented to assist investors in seeing the Company's financial performance through the eyes of management, and because it believes this measure provides an additional tool for investors to use in comparing Fathom's core financial performance over multiple periods with other companies in its industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared with net income (loss), the closest comparable GAAP measure, including:

* Adjusted EBITDA excludes share-based compensation expense related to restricted stock awards and stock options, which have been, and will continue to be for the foreseeable future, significant recurring expenses in the Company's business and an important part of its compensation strategy; and * Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation and amortization of property and equipment and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.

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SOURCE Fathom Realty