CARY, N.C. - Fathom Holdings Inc. (NASDAQ: FTHM), a national real estate services platform, has secured $5 million in funding through the issuance of senior secured convertible promissory notes to a key shareholder and the company's board chairman. The notes, due to mature on October 1, 2026, will bear interest based on the Secured Overnight Financing Rate plus 4%, with a minimum rate of 8%.
The capital raised is earmarked for accelerating the growth of the company's agent network and transaction volume. Fathom's CEO, Marco Fregenal, expressed that the investment underscores shareholder confidence in the company's strategic direction and the appeal of its revenue share model.
The convertible notes have a conversion price set at $4.25 per share, which is an 85% premium over Fathom's common stock price as of Thursday. Interest payments on the notes are scheduled to begin on October 1, 2025.
The securities sold in this private placement have not been registered under the Securities Act of 1933 and are subject to market conditions and other factors. Fathom Holdings Inc., which combines residential brokerage, mortgage, title, and software services for the real estate industry, operates under several brands including Fathom Realty and Verus Title.
This funding move comes with the usual caveats of forward-looking statements, acknowledging risks such as liquidity concerns and the need for additional capital, the challenges of integrating acquisitions, and broader economic factors that could affect the company's performance.
The information in this article is based on a press release statement from Fathom Holdings Inc.
"In other recent news, Fathom Holdings Inc. reported a decrease in total revenue for the second quarter of 2024, despite a 12% increase in its real estate agent network and significant growth in its mortgage business. The company also introduced two new commission plans, Fathom Max and Fathom Share, aimed at enhancing agent recruitment and retention. Fathom Holdings has agreed to pay $2.95 million to settle a lawsuit involving the National Association of Realtors, with the payments scheduled over the next two years. The company maintains that this settlement is not an admission of liability or wrongdoing.
In addition, Fathom Holdings announced a significant amendment to its 2019 Omnibus Stock Incentive Plan, increasing the share reserve by 1.6 million shares. This move is seen as a strategic step to potentially reward and motivate employees, directors, and consultants. The company also announced plans to reassess financial guidance in Q4 2024 due to new revenue share models, aiming for sustainable growth and increased profitability. These are some of the recent developments in Fathom Holdings' business operations."
InvestingPro Insights
In the wake of Fathom Holdings Inc. (NASDAQ: FTHM) securing $5 million in funding, it's important to consider the company's financial health and market performance. With a market capitalization of $48.11 million, Fathom Holdings is navigating through a challenging period, as indicated by the InvestingPro Data showing a negative revenue growth of -12.09% over the last twelve months as of Q2 2024. This contraction underscores the importance of the recent capital infusion aimed at expanding the agent network and transaction volume.
While the company's growth strategies are in focus, the InvestingPro Tips reveal that analysts have revised their earnings downwards for the upcoming period, which investors should note as they weigh the potential impact on future performance. Additionally, with a current P/E ratio of -1.98, the market reflects skepticism about the company's immediate profitability, aligning with the analysts' outlook that the company will not be profitable this year.
On the positive side, the company's liquid assets exceed short-term obligations, which may provide some financial flexibility in the near term. However, with the stock experiencing significant volatility, as evidenced by a one-week price total return of -16.33%, investors may need to brace for potential short-term fluctuations in share price.
For those looking for more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/FTHM, which can provide further guidance on Fathom Holdings' financial metrics and market prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.