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Fathom Realty settles commission lawsuit for $2.95 million

Published 09/16/2024, 04:24 PM
FTHM
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CARY, N.C. - Fathom Realty, a subsidiary of Fathom Holdings Inc. (NASDAQ:FTHM), has agreed to pay $2.95 million to settle a lawsuit involving the National Association of Realtors. The settlement, announced today, resolves claims made in the litigation titled Burnett v. The National Association of Realtors., et al.


The real estate firm will distribute the settlement funds in three payments: an immediate $500,000 installment within five days of the court's formal approval, followed by two additional payments due by October 1st in 2025 and 2026, respectively.


Fathom Holdings, while maintaining the settlement amount is not significant in GAAP terms, has chosen to disclose the settlement details as a gesture of transparency. The company asserts it will be able to fulfill the payment obligations without jeopardizing its business operations.


As part of the agreement, Fathom Realty will also comply with rule changes mandated by the National Association of REALTORS. However, the company emphasizes that this settlement is not an admission of liability or wrongdoing. Fathom Holdings CEO Marco Fregenal stated, "Fathom never participated in any conspiracy to inflate commissions," attributing the decision to settle as a means to avoid further legal expenses and executive distractions.


Fathom Holdings Inc. operates a technology-driven real estate services platform that offers a suite of services including brokerage, mortgage, title, and software solutions to agents and brokerages. The settlement is expected to allow the company to continue focusing on its growth and service to clients without the overhang of ongoing litigation.


This news is based on a press release statement and has not been independently verified. The company has not provided additional comments on the potential financial impact of the settlement beyond the immediate payments. Fathom Holdings Inc. has previously indicated in its forward-looking statements that it faces various business risks, including liquidity risk and the need to effectively manage rapid expansion.


"In other recent news, Fathom Holdings Inc. has announced a significant amendment to its 2019 Omnibus Stock Incentive Plan. The amendment increases the share reserve by 1.6 million shares, bringing the total to 7,360,778 shares. This move is seen as a strategic step by Fathom Holdings to potentially reward and motivate employees, directors, and consultants.


In addition to the stock incentive plan expansion, the company reported a decrease in total revenue for the second quarter of 2024 but introduced two new commission plans, Fathom Max and Fathom Share, aimed at improving agent recruitment and retention. Despite the dip in revenue, the real estate agent network saw a 12% increase, and its mortgage business experienced significant growth.


Furthermore, Fathom Holdings' plans to reassess financial guidance in Q4 2024 due to new revenue share models have been noted. The company is aiming for sustainable growth and increased profitability through these new commission plans and ancillary businesses, striving for positive free cash flow and a 30% or higher agent growth rate. These are some of the recent developments in Fathom Holdings' business operations."


InvestingPro Insights


Fathom Holdings Inc. (NASDAQ:FTHM) has recently been in the spotlight due to its settlement with the National Association of Realtors. While the company continues to navigate through its financial obligations, insights from InvestingPro provide a deeper understanding of its current financial health and market performance.


InvestingPro Data highlights a market capitalization of $62.18 million, indicating the size of the company in the financial markets. Despite facing challenges, Fathom Holdings has managed to maintain a gross profit of $29.28 million over the last twelve months as of Q2 2024, with a gross profit margin of 8.95%. This suggests that while the company is managing to generate a profit from its revenues, it may be under pressure to improve its margins.


InvestingPro Tips reveal that Fathom Holdings is expected to see net income growth this year, which could signal a positive outlook for the company's profitability. However, the company is also noted to be quickly burning through cash, which aligns with the company's acknowledgment of liquidity risks in its forward-looking statements. Moreover, analysts have revised their earnings downwards for the upcoming period, which investors should consider when evaluating the company's future performance.


For investors seeking a more comprehensive analysis of Fathom Holdings Inc., InvestingPro provides additional tips that can offer further insights into the company's financial standing and market prospects. Currently, InvestingPro lists 17 additional tips for Fathom Holdings, available at https://www.investing.com/pro/FTHM.


The company's recent settlement, while not deemed significant in GAAP terms, is an important development that investors will be watching closely. As Fathom Holdings continues to focus on growth and managing its financial obligations, these InvestingPro insights provide valuable context for understanding its position in the market.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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