Fathom Holdings Inc.

Previous wording

In periods of economic growth, demand typically increases resulting in increasing home sales transactions and home sales prices. Similarly, a decline in economic growth, uncertainty surrounding interest rates and declining consumer confidence generally decreases demand. These are the trends we have been facing. Additionally, industry litigation, and regulations imposed by local, state, and federal government agencies can also negatively impact the housing markets in which we operate. Finally, national and global events, geopolitical instability, that impact economic conditions and financial markets, including interest rates, can adversely impact the housing market.

Current wording

In periods of economic growth, demand typically increases resulting in increasing home sales transactions and home sales prices. Similarly, a decline in economic growth, uncertainty surrounding interest rates and declining consumer confidence generally decreases demand. These are the trends we have been facing. Additionally, industry litigation, and regulations imposed by local, state, and federal government agencies can also negatively impact the housing markets in which we operate. Finally, national and global events, including geopolitical instability, can impact economic conditions and financial markets, including interest rates, which can adversely impact the housing market.

Previous wording

As of June 30, 2025 and June 30, 2024, we had approximately 14,981 and 12,224 agent licenses, respectively, representing growth of approximately 22.6%.

Current wording

As of September 30, 2025 and September 30, 2024, we had approximately 15,371 and 12,383 agent licenses, respectively, representing growth of approximately 24.1%.

Previous wording

The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer (CEO), who is responsible for evaluating the performance of the Company's operating segments and allocating resources. The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) that has available discrete financial information; and (iii) whose operating results are regularly reviewed by the CODM. The Company does not conduct business outside of the United States and no single customer accounts for more than 10% of total revenue in any reporting period.

Current wording

The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer (CEO), who is responsible for evaluating the performance of the Company's operating segments and allocating resources. The Company identifies an operating segment as a component: (i) that engages in business activities from which it may earn revenues and incur expenses; (ii) that has available discrete financial information; and (iii) whose operating results are regularly reviewed by the CODM. The Company does not conduct business outside of the United States and no single customer accounts for more than 10% of total revenue in any reporting period.

Previous wording

For the three months ended June 30, 2025, gross commission income increased by approximately $32.9 million, or 40%, as compared with the three months ended June 30, 2024. This increase was primarily attributable to a 25.4% increase in transaction volume; 12,710 real estate transactions during the three months ended June 30, 2025, compared to 10,137 transactions during the three months ended June 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the three months ended June 30, 2025, average revenue per transaction was $9,125, a 11.3% increase compared to $8,200 during the three months ended June 30, 2024, primarily attributable to a higher transaction value at My Home Group.

Current wording

For the three months ended September 30, 2025, gross commission income increased by approximately $30.7 million, or 39.0%, as compared with the three months ended September 30, 2024. This increase was primarily attributable to a 23.0% increase in transaction volume, with 11,479 real estate transactions during the three months ended September 30, 2025, compared to 9,331 transactions during the three months ended September 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the three months ended September 30, 2025, average revenue per transaction was $9,514, a 13.0% increase compared to $8,420 during the three months ended September 30, 2024, primarily attributable to a higher transaction value at My Home Group.

Previous wording

For the six months ended June 30, 2025, other service revenue decreased by approximately $1.5 million, or 13%, as compared with the six months ended June 30, 2024. This decrease is primarily attributable to the reduction of insurance revenue as a result of the sale of our insurance business in May 2024, offset by an increase in title service transaction volume, which were primarily attributable to organic growth and walkovers.

Current wording

For the three months ended September 30, 2025, other service revenue increased by approximately $0.9 million, or 18.0%, as compared with the three months ended September 30, 2024. This increase is primarily attributable to an increase in title service transaction volume, which was primarily attributable to organic growth and walkovers.

Previous wording

For the three months ended June 30, 2025, commission and service costs increased by approximately $31.0 million, or 38%, as compared with the three months ended June 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

Current wording

For the three months ended September 30, 2025, commission and service costs increased by approximately $28.9 million, or 37.6%, as compared with the three months ended September 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

Previous wording

For the six months ended June 30, 2025, total marketing expenses increased by approximately $0.2 million, or 9%, as compared with the six months ended June 30, 2024. The increase was primarily due to the Company's investment in growth.

Current wording

For the three months ended September 30, 2025, general and administrative expenses increased by approximately $0.2 million, or 2.4%, as compared with the three months ended September 30, 2024. The increase was primarily due to an increase in compensation expense related to the Company's investment in growth.

Previous wording

For the three months ended June 30, 2025, total technology and development expenses increased by approximately $0.3 million, or 18%, as compared with the three months ended June 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

Current wording

For the three months ended September 30, 2025, total technology and development expenses increased by approximately $0.1 million, or 6.8%, as compared with the three months ended September 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

Previous wording

For the six months ended June 30, 2025, depreciation and amortization expenses decreased by approximately $0.2 million, or 13%, as compared with the three months ended June 30, 2024. The decrease was due to the absence of amortization related to our insurance business that we sold in May 2024.

Current wording

For the three months ended September 30, 2025, depreciation and amortization expenses increased by approximately $0.1 million, or 23.8%, as compared with the three months ended September 30, 2024. The increase was mainly due to capitalized software development cost placed into service.

Previous wording

The Company recorded income tax (benefit) expense of approximately $0.06 million and $(0.01) million for the three months ended June 30, 2025 and 2024, respectively. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

Current wording

The Company recorded income tax (benefit) expense of approximately $0.02 million for each of the three months ended September 30, 2025 and 2024. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

Previous wording

For the six months ended June 30, 2025, gross commission income increased by approximately $56.3 million, or 38%, as compared with the six months ended June 30, 2024. This increase was primarily attributable to a 28.5% increase in transaction volume; 22,425 real estate transactions during the six months ended June 30, 2025, compared to 17,446 transactions during the six months ended June 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the six months ended June 30, 2025, average revenue per transaction was $9,135, a 7.3% increase compared to $8,513 during the six months ended June 30, 2024, primarily attributable to a higher transaction value at My Home Group.

Current wording

For the nine months ended September 30, 2025, gross commission income increased by approximately $87.0 million, or 38.3%, as compared with the nine months ended September 30, 2024. This increase was primarily attributable to a 24.8% increase in transaction volume; 33,904 real estate transactions during the nine months ended September 30, 2025, compared to 27,171 transactions during the nine months ended September 30, 2024. Our transaction volume increased primarily due to the addition of My Home Group in November 2024. During the nine months ended September 30, 2025, average revenue per transaction was $9,263, a 10.8% increase compared to $8,357 during the nine months ended September 30, 2024, primarily attributable to a higher transaction value at My Home Group.

Previous wording

For the three months ended June 30, 2025, other service revenue decreased by approximately $0.6 million, or 10%, as compared with the three months ended June 30, 2024. This decrease is primarily attributable to the reduction of insurance revenue as a result of our sale of the insurance business in May 2024, offset by an increase in title service transaction volume, which were primarily attributable to organic growth and walkovers.

Current wording

For the nine months ended September 30, 2025, other service revenue decreased by approximately $0.6 million, or 3.5%, as compared with the nine months ended September 30, 2024. This decrease is primarily attributable to the reduction of insurance revenue as a result of the sale of our insurance business in May 2024, offset by an increase in mortgage and title service transaction volume, which were primarily attributable to organic growth and walkovers.

Previous wording

For the six months ended June 30, 2025, commission and service costs increased by approximately $52.4 million, or 36%, as compared with the six months ended June 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

Current wording

For the nine months ended September 30, 2025, commission and service costs increased by approximately $81.3 million, or 36.7%, as compared with the nine months ended September 30, 2024. Commission and service costs primarily includes costs related to agent commissions, net of fees paid to us by our agents. These costs generally correlate with recognized revenues. As such, the increase in commission and service costs compared to the same period in 2024 was primarily attributable to an increase in agent commissions.

Previous wording

For the three months ended June 30, 2025, general and administrative expenses decreased by approximately $0.4 million, or 4%, as compared with the three months ended June 30, 2024. The decrease was primarily due to a $1.5 million decrease in stock compensation expense partially offset by an increase in compensation expense relative to the Company's investment in growth.

Current wording

For the nine months ended September 30, 2025, general and administrative expenses decreased by approximately $0.5 million, or 2.0%, as compared with the nine months ended September 30, 2024. The decrease was primarily due to a $4.1 million decrease in stock compensation expense partially offset by an increase in compensation expense related to the Company's investment in growth.

Previous wording

For the three months ended June 30, 2025, total marketing expenses increased by approximately $0.1 million, or 5%, as compared with the three months ended June 30, 2024. The increase was primarily due to the Company's investment in growth.

Current wording

For the nine months ended September 30, 2025, total marketing expenses decreased by approximately $0.1 million, or 3.7%, as compared with the nine months ended September 30, 2024. The decrease was primarily due to the Company's reduced reliance on external marketing agencies.

Previous wording

For the six months ended June 30, 2025, total technology and development expenses increased by approximately $0.6 million, or 20%, as compared with the six months ended June 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

Current wording

For the nine months ended September 30, 2025, total technology and development expenses increased by approximately $0.7 million, or 15.4%, as compared with the nine months ended September 30, 2024. The increase was primarily due to our ongoing investment in the intelliAgent platform and our LiveBy business.

Previous wording

For the three months ended June 30, 2025, depreciation and amortization expenses decreased by approximately $0.01 million, or 1%, as compared with the three months ended June 30, 2024. The decrease was due to the absence of amortization related to our insurance business that we sold in May 2024.

Current wording

For the nine months ended September 30, 2025, depreciation and amortization expenses decreased by approximately $0.1 million, or 3.5%, as compared with the nine months ended September 30, 2024. The decrease was due to the absence of amortization related to our insurance business that we sold in May 2024.

Previous wording

For the three months ended June 30, 2025, the Company did not recognize any gain on sale of business, compared to a gain of $3.0 million recognized during the three months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, the Company did not recognize any gain on sale of business, compared to a gain of $3.0 million recognized during the nine months ended September 30, 2024.

Previous wording

The Company recorded income tax expense of approximately $0.08 million and $0.01 million for the six months ended June 30, 2025 and 2024, respectively. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

Current wording

The Company recorded income tax expense of approximately $0.10 million and $0.03 million for the nine months ended September 30, 2025 and 2024, respectively. This tax expense is primarily the result of current state income tax liabilities and deferred tax expense related to deferred tax liabilities that cannot be fully offset by deferred tax assets.

Previous wording

To date, our principal sources of liquidity have been the net proceeds we received through public offerings and private sales of our common stock, the sale of one of our businesses, as well as proceeds from loans. As of June 30, 2025, our cash and cash equivalents (including restricted cash) totaled approximately $5.1 million, which represented a decrease of approximately $2.3 million compared to December 31, 2024. As of June 30, 2025, we had net working capital of approximately $5.7 million, which represented an increase of $0.1 million compared to December 31, 2024. As noted above, in May 2024 we sold our wholly-owned subsidiary Dagley Insurance Agency for approximately $15.0 million in cash, $7.4 million of which we received at closing. The Company received $4.0 million during the first six months of 2025 related to the sale of its insurance business, which was completed in May 2024. The Company expects to receive the remaining $3.0 million in May 2026. On April 7, 2025, the Company repaid its $3.5 million convertible note (the “2023 Note”) in full. In March 2025, the Company completed an offering of common stock (the "2025 Offering"), which resulted in the issuance and sale by the Company of 3,505,364 shares of common stock at an offering price of $0.68 per share and 832,639 shares of common stock at an offering price of $0.72 per share, generating gross proceeds of $3.0 million, of which the Company received total net proceeds of $2.9 million, after deducting underwriting discounts and other offering costs.

Current wording

To date, our principal sources of liquidity have been the net proceeds we received through public offerings and private sales of our common stock, the sale of one of our businesses, as well as proceeds from loans. As of September 30, 2025, our cash and cash equivalents (including restricted cash) totaled approximately $9.9 million, which represented an increase of approximately $2.5 million compared to December 31, 2024. As of September 30, 2025, we had net working capital of approximately $10.9 million, which represented an increase of $5.3 million compared to December 31, 2024. As noted above, in May 2024 we sold our wholly-owned subsidiary Dagley Insurance Agency for approximately $15.0 million in cash, $7.4 million of which we received at closing. The Company received $4.0 million during the first nine months of 2025 related to the sale of its insurance business, which was completed in May 2024. The Company expects to receive the remaining $3.0 million in May 2026. On April 7, 2025, the Company repaid its $3.5 million convertible note (the “2023 Note”) in full. In March 2025, the Company completed a public offering of common stock (the "March 2025 Offering"), which resulted in the issuance and sale by the Company of 3,505,364 shares of common stock at an offering price of $0.68 per share and 832,639 shares of common stock at an offering price of $0.72 per share, generating gross proceeds of $3.0 million, of which the Company received total net proceeds of $2.9 million, after deducting underwriting discounts and other offering costs. In September 2025, the Company completed a public offering of common stock (the "September 2025 Offering"), which resulted in the issuance and sale by the Company of 3,450,000 shares of common stock at an offering price of $2.00 per share, generating gross proceeds of $6.9 million, of which the Company received total net proceeds of $6.5 million, after deducting underwriting discounts and other offering costs.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2025 consisted of a net loss of $9.2 million, non-cash charges of $6.1 million, including $2.5 million of stock-based compensation expense and $2.9 million of depreciation and amortization, partially offset by $3.2 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $120.0 million in mortgage loan originations, partially offset by $115.0 million in proceeds from the sales and principal payments on mortgage loans held for sale.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2025 consisted of a net loss of $13.6 million, non-cash charges of $8.5 million, including $3.0 million of stock-based compensation expense and $4.4 million of depreciation and amortization, partially offset by $5.4 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $184.2 million in mortgage loan originations, partially offset by $185.3 million in proceeds from the sales and principal payments on mortgage loans held for sale. Accounts receivables increased $5.0 million, partially offset by a $4.6 million increase in accounts payable, primarily due timing difference for agent payments resulting from increased transaction volume and related revenue growth.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 consisted of a net loss of $7.2 million, a gain on sale of a business of $2.9 million, non-cash charges of $5.7 million, including $5.2 million of stock-based compensation expense and $2.8 million of depreciation and amortization, partially offset by $3.2 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $131.5 million in mortgage loan originations; partially offset by $132.8 million in proceeds from the sales and principal payments on mortgage loans held for sale, a decrease in operating lease liabilities of $1.0 million, as well as a $0.3 million increase in accrued and other current liabilities, and a $1.2 million decrease in prepaid and other current assets.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 consisted of a net loss of $15.3 million, a gain on sale of a business of $2.9 million, non-cash charges of $7.5 million, including $7.1 million of stock-based compensation expense and $4.0 million of depreciation and amortization, partially offset by $5.0 million in gains on the sales of mortgages. Changes in assets and liabilities were primarily driven by $192.2 million in mortgage loan originations; partially offset by $196.8 million in proceeds from the sales and principal payments on mortgage loans held for sale, and a $1.7 million increase in prepaid and other current assets as well as an aggregate increase of $3.1 million in accounts payable and accrued other current liabilities.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2025 primarily consisted of proceeds from the sale of Dagley Insurance Agency completed in May 2024 of $4.0 million, partially offset by the purchases of intangible assets related to technology development of $1.4 million.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2025 primarily consisted of proceeds from the sale of Dagley Insurance Agency completed in May 2024 of $4.0 million, partially offset by the purchases of intangible assets related to technology development of $2.1 million.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2024 primarily consisted of proceeds from the sale of Dagley Insurance Agency of $7.8 million, partially offset by the purchases of intangible assets related to technology development of $1.2 million

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2024 primarily consisted of proceeds from the sale of Dagley Insurance Agency of $7.8 million, partially offset by the purchases of intangible assets related to technology development of $2.2 million.

Previous wording

Net cash provided in financing activities for the six months ended June 30, 2025 consisted primarily of the $3.0 million in proceeds from the issuance of common stock in connection with a public offering and the change of $8.1 million on our warehouse lines of credit, and the repayment of a $3.5 million convertible note.

Current wording

Net cash provided in financing activities for the nine months ended September 30, 2025 consisted primarily of the $9.5 million in proceeds from the issuance of common stock in connection with a public offering and the change of $4.4 million on our warehouse lines of credit, and the repayment of a $3.5 million convertible note.

Previous wording

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Our Annual Report on Form 10-K for the year ended December 31, 2024 contains a discussion of our critical accounting estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes to these estimates during the six months ended June 30, 2025.

Current wording

The preparation of financial statements and related disclosures in conformity with GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Our Annual Report on Form 10-K for the year ended December 31, 2024 contains a discussion of our critical accounting estimates in the Management's Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes to these estimates during the nine months ended September 30, 2025.

Previous wording

In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Current wording

In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to not avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Previous wording

The Company is also considered a small reporting company ("SRC") as of June 30, 2025. Under the terms of the JOBS Act, a SRC has public float of less than $250 million or has less than $100 million in annual revenue and no public float or public float less than $700 million. Being a SRC allows the Company to include less extensive narrative disclosure than required of other reporting companies, particularly concerning executive compensation. Being a SRC also only requires providing audited financial statements for two fiscal years, in contrast to non-SRCs, which must provide audited financial statements for three fiscal years.

Current wording

The Company is also a smaller reporting company ("SRC") as of September 30, 2025. Under the terms of the JOBS Act, a SRC has public float of less than $250 million or has less than $100 million in annual revenue and no public float or public float less than $700 million. Being a SRC allows the Company to include less extensive narrative disclosure than required of other reporting companies, particularly concerning executive compensation. Being a SRC also only requires providing audited financial statements for two fiscal years, in contrast to non-SRCs, which must provide audited financial statements for three fiscal years.