CEO Marco Fregenal says fresh capital will help brokerage fast-track planned agent and transaction growth, with a focus on targeted walkovers and acquisitions.
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With $5 million in fresh funding in the bank, Fathom Realty says it’s ready to grow by acquiring rival brokerages and by persuading top performers at rival firms to “walk over.”
Parent company Fathom Holdings raised the money by issuing senior convertible notes to an existing investor who owns more than 5 percent of the company’s common stock, and to Scott Flanders, the chairman of the company’s board of directors.
The notes, which carry a minimum interest rate of 8 percent, can be converted into common stock for $4.25 a share until they mature on Oct. 1, 2026, the company said in a regulatory filing.
Shares in Fathom, which in the last year have traded for as little as $1.32 and as much as $4.42, gained 15 percent Friday to close at $2.64.
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Fathom — which on Sept. 16 announced it had agreed to pay $2.95 million and make changes outlined in the National Association of Realtors commission settlement agreement — reported a $1.3 million second quarter loss on Aug. 12.
But the company ended the quarter with $10.4 million in cash and cash equivalents, up from $7.4 million at the end of last year, with agent count surging by 12 percent from a year ago, to 12,224.
Earlier this month, Fathom introduced new agent commission plans that pay agents a percentage of the revenue generated by other agents they recruit. In announcing the new financing Friday, Fathom CEO Marco Fregenal said the influx of capital will accelerate the company’s growth plans.
Marco Fregenal
“This capital allows us to fast-track our plans for agent and transaction growth, focusing on targeted walkovers and acquisitions,” Fregenal said in a statement. “The demand for our revenue share model across both agent fee plans highlights our momentum, and this investment affirms our shareholders’ belief in our direction.”
Based in Cary, North Carolina, Fathom generates more than 90 percent of its revenue through its real estate brokerage business. But it’s also a provider of mortgages, title insurance and technology for agents.
Fregenal detailed the company’s long-term growth strategy and held one-to-one meetings with investors on Sept. 4 at the Gateway Conference in San Francisco.
He said the company’s real estate brokerage, Fathom Realty, plans to be operating in all 50 states by mid-2025.
“Probably the biggest states that we’re not in are New York and Pennsylvania, but Pennsylvania actually is open already,” he said. “New York will probably be open within the next 60 days. And then after that, we’ll cover the rest of the country. We’ll probably expand into Canada sometime next year as well.”
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