Fathom Holdings Inc (FTHM) 2020 Q2 法說會逐字稿

Good afternoon and welcome to the Fathom Holdings second-quarter 2020 conference call.

(Operator Instructions).

Please note that this event is being recorded.

I would now like to turn the conference over to Roger Pondel, Investor Relations for Fathom Holdings.

Please go ahead, sir.

Thank you, operator, and welcome, everyone, to Fathom Holdings' very first investor conference call as a publicly traded company.

I am Roger Pondel with PondelWilkinson, Fathom's Investor Relations firm.

It is my pleasure today to introduce the Company's Founder and CEO, Josh Harley, and Fathom's President and Chief Financial Officer, Marco Fregenal.

Before I turn the call over to Josh, I want to remind all listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are subject to numerous conditions, many of which are beyond the Company's control, including adding new capabilities and the ability to reduce costs and drive sustainable growth, as well as those that are set forth in the Risk Factors section of the Company's registration statement for its initial public offering as was recently filed with the SEC and copies of which are available on the SEC's website at www.SEC.gov, along with other Company filings made with the SEC from time to time.

Fathom undertakes no obligation to update any of the forward-looking statements after today's call except as required by law.

Please also note that during today's call we will be discussing adjusted EBITDA, a non-GAAP financial measure as defined by SEC Regulation G. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure is included in today's press release which is posted on the Company's website.

And with all of that I am very happy to introduce Josh Harley.

Josh?

Thank you, Roger, and thank you everyone who has joined the call.

I actually see several names I recognize from our road show meetings, so thank you.

Thank you for placing your faith in Fathom, of course for your continued interest.

I want to start by thanking our agents and our employees for your continued dedication to truly serving and placing others first.

I can't stress enough the importance that this plays in the success of our business and, of course, in our Company's culture.

So, thank you for placing your trust in us and choosing to be part of our Fathom family.

We often hear our agents say that they joined Fathom to earn more commission, but they stay for the culture.

And I can't even begin to tell you how much that means to me.

I am pleased that we are able to conduct our call today rather than next month, especially since it has been just a little over two weeks since we completed our IPO.

And as you probably know, we actually had until September to file our first report.

I think it clearly shows that we have an amazing team of solid internal controls and technology that enables us to be ready so quickly.

So, a huge shout out to our team.

Now our first day of trading was actually July 31 when we priced 3.4 million shares at $10 per share on NASDAQ under the symbol FTHM.

We have come a long way from being a scrappy little bootstrap company.

I'm proud that we never had to raise PE or VC money.

Someone once told me that taking Fathom public would be the hardest thing we have ever done.

And I will be honest, I thought they were crazy.

I served eight years in the Marine Corps as an infantry Sergeant, so I think I know a thing or two about hard.

And after being through the process though, I can see why they'd make a comment like that.

But I have got an amazing CFO, accounting team controls, and an excellent team of partners who made the process easier.

In fact, I want to give a special thank you to our investment bankers at ROTH Capital.

They were absolutely awesome to work with.

Now today we have the pleasure of announcing our Q2 results and I love the fact that our first call can be reporting an outstanding quarter, especially in light of the craziness surrounding COVID-19 and, of course, the world.

As horrible as COVID is, it proved that our Company was built to defend against times like these.

Now for those of you who have seen the press release, you know that Fathom turned in an impressive performance on our top line and bottom lines.

At 39% growth in revenue, Fathom posted the highest revenue increase of all publicly traded residential real estate brokerages this quarter.

So, let's not forget that that growth took place before the IPO.

Our competition was already public and well-funded while we were still bootstrapping our business throughout Q2.

Now while we are proud of Fathom's performance for the first two quarters, I still feel the excitement clearly of the transition to becoming a publicly traded company.

There are many people and companies around the world who are feeling deep physical, emotional and economic pain because of the pandemic, and our hearts really do go out to all those who are affected.

At Fathom we put protocols in place and we are taking precautions recommended by health professionals very seriously.

We are doing what we can to assure the health and safety of our agents, employees, clients and the communities we serve.

Now many companies are reporting the negative effect that COVID-19 is having on their business.

And while most of our competitors are scrambling to figure out how to operate virtually, we were already operating that way.

That made the transition for us much easier.

COVID hit every real estate brokerage pretty hard in March and April and that was no different for us, but our structure allowed us to rebound quickly and take full advantage of the real estate market as it found its groove again.

Now before Marco reviews the numbers with you, I do want to take a moment to tell you a little bit about Fathom, why we are a different kind of real estate brokerage and why we believe that we are disruptive in this industry.

First, like most real estate companies, Fathom is a full service brokerage.

But unlike others, we actually leverage a software-based platform-as-a-service model and that is unique.

Our proprietary cloud-based technology is called IntelliAgent, which allows us to operate virtually while providing our agents with all of the major functions that they could otherwise get from traditional brick-and-mortar companies.

Now equally importantly is that it allows us to streamline and automate our operations and further reduce our costs.

That means we can charge a fraction of what other brokerages charge their agents.

Now something that is very unique about Fathom is that we offer a very small flat fee commission structure to our agents versus a large percentage split that our competitors charge their agents.

And thanks to our commission model, our agents are able to make more money and, more importantly, it allows them to reinvest that money back into their marketing and grow their sales.

This makes us highly attractive to agents.

In fact, we saw a 39% growth in agent count in Q2 year-over-year.

And by the way, this is with many agents across the country deciding to put their plans and their business on hold during March and April due to the uncertainty of how the pandemic would affect their business.

Now in that same time period, our cost to acquire one agent was only $825.

That means that our breakeven on each agent we hire is less than what we make on just their first sale.

I also want to point out the fact that our lifetime value of an agent is over $18,000 and our LTV to CAC, or lifetime value to the customer acquisition cost, is more than 20x.

Now as of the end of Q2, we had more than 4,500 agents in 24 states and 110 local markets and our long-term plan is ultimately to operate in all 50 states and in Canada as well.

I'm also proud to say that Fathom's agent retention is among the best in the industry.

Now I have been told by industry analysts that the average agent attrition rate for brokerages is over 36% annually.

Our agent attrition rate is only 17% annually.

That is less than half of the industry average.

Our virtual software driven model is highly scalable, which allows us to optimize our growth and provide a faster path to sustained profitability.

Plus by not having to worry about opening physical offices, we are able to expand to new markets quickly and at very low cost.

Our proprietary software also allows us to streamline and automate our operations, sales, accounting, reporting and even our compliance.

And by not having to -- or rather, by owning our own technology, we are able to limit the high cost associated with third-party tech.

So, this allows us to keep our tech budget from increasing as much with agent growth.

And over time, as we get bigger our cost per agent should actually go down.

It also means that we need to hire fewer personnel, which further improves our bottom line.

So, with that not so short opening, I'll -- it is my pleasure to introduce Fathom's President and Chief Financial Officer, Marco Fregenal.

Marco, it's all yours.

Thank you, Josh.

It's also my pleasure to welcome all of our new and prospective shareholders as well as analysts to our call.

We are so thrilled to be a public Company and you have our commitment that our entire team will do its best to deserve your support and make you proud to be a long-term shareholder.

We will communicate and be as transparent as possible with you along with this incredible journey.

Our goal with this and with future calls is to be relatively brief so we have more time to answer your questions.

So with that in mind, let me start -- let me highlight some of the numbers.

Revenues rose 39% in Q2 year-over-year from $27.8 million to $38.7 million.

This growth resulted mainly from the increase in transactions, the average revenue per transaction supported by rising home prices.

GAAP net income for the quarter rose to $161,000 or $0.02 per diluted share compared with a land loss of $1 million or a loss of $0.11 per share for the same period last year.

Adjusted EBITDA to non-GAAP totaled approximately $329,000 for the quarter versus an adjusted EBITDA loss of approximately $361,000 in the same period last year.

Operating expenses decreased by 23% to approximately $2.1 million compared to about $2.8 million in Q2 of 2019.

We've closed 5,848 real estate transactions in the quarter, an increase of 31% from the 4,461 transactions closed the same period last year.

Average revenue per transaction increased about 6% to $6,615 from $6,230 for last year's second quarter.

The average home price increased to just over $277,000 from $267,000.

Our agent network grew to about 4,550 agents, up 39% from 3,275 agents one year ago.

We have also seen an increase of about 155% in Fathom Careers' website registration as compared to Q2 of last year.

These registrations reflect an increased interest of agents inquiring about our Company and what we have to offer.

Now one thing that is important to understand regarding the residential real estate market is that it experiences a bell-shaped curve effect in terms of sales due to seasonality.

So, in a flat business, for example, Q1 and Q4 will always have a significantly lower number of sales than Q2 and Q3 of the same year.

When a business is growing at the rate that we are, however, the bell curve is turned up on its axis which can create the appearance that there is little or no growth between Q3 and Q4, when in reality that shows that we are in fact outgrowing the normal seasonal decrease.

During the Q2 period we started the quarter flat year-over-year due to the uncertainties surrounding COVID-19.

But then we exited the quarter with a very strong growth on a year-over-year basis.

So far in Q3 our business continues to see a strong year-over-year growth rate with minimal COVID-related disruption.

Now I can already hear the questions as whether or not we will be providing guidance.

As of right now we will not be providing guidance, which is in line with other public companies.

So, although we are seeing -- we are experiencing a strong real estate market and improvement in the US unemployment rate, along with a small decrease in the number of forbearances, there are still too many uncertainties related to the pandemic along with a host of unpredictable economic factors that still pose a high level of uncertainty for the balance of 2020.

Now we are very proud of our Q2 results, especially given the fact that this was accomplished pre-IPO and amid a pandemic.

Our entire team deserves praise for their hard work and dedication for making Fathom the amazing company it is.

And with that I will turn it back to Josh.

All right, thank you, Marco.

We have some great things going on for us both externally and internally.

The real estate market, as Marco mentioned, remains a strong despite the pandemic and interest rates are actually at historic lows.

And these rates are predicted to remain low for a long time.

With the proceeds from our IPO we plan on continuing to grow our agent base by growing deeper in the markets we are already in as well as expanding into new markets quickly.

We also are looking to grow through vertical integration, namely acquisition of ancillary businesses such as title and a mortgage company.

Another strong initiative for us thanks to our technology is to help our agents be more productive.

So, not just more agents but more productive agents.

And we can accomplish that by providing more tools that help them get in front of more buyers and sellers as well as reduce the amount of time required to manage the transaction process.

In time we also intend to generate real estate leads for our agents, which in turn will help Fathom further improve our agent revenue per agent and per transaction.

Now I think Marco wants me to get off the soapbox and keep the call brief, so -- to have more time to answer your questions.

So, let's open up the call to you.

Go ahead, operator.

(Operator Instructions).

Darren Aftahi, ROTH Capital Partners.

Hi, guys, congrats on the quarter and thanks for taking my questions.

A few if I may.

I think, Marco, you talked a little bit about trends in 2Q and how April was flat.

And I'm curious if you could maybe indulge us about maybe what run rate growth was maybe in the month of June and has that kind of continue into the third quarter thus far?

Thank you, Darren.

So, we definitely saw April was definitely a flat quarter -- a flat month.

And then we saw an increase in May and June.

But I think what happened in May and June really was that sort of catching up to the business that was supposed to close in April.

So, I think we have to be careful not to infer that what is happening in May and June is -- on a monthly basis is what is going to happen in future quarters, because basically it was a catch up of the lack of transactions in April.

So, I think a better indicator [is] just to look at the quarter itself and the totality of the results and then use that perhaps as an indicator for the future.

I think we have to be careful just looking at a month because it really was a catching up from the month of April that clearly -- and I think most of our competitors saw a very tough month, flat in most cases for some companies.

It was a negative month.

For us it was a flat month.

And so I just think we have to be careful and just look at the totality of the quarter.

We have to be careful we don't give the wrong impression about the future based on a much higher May and June.

And so, I think I will answer the question that way.

Fair enough.

You guys have made fairly good inroads in Texas, North Carolina and Maryland to date on a shoestring budget.

So, I'm curious, now that you are better capitalized, can you kind of talk about maybe the other 21 states you are in and perhaps future markets and states.

What is kind of your marketing strategy going forward specifically more for those states where perhaps you are not seeing a ton of penetration to date just given kind of [limited] about funds?

Yes, great question.

So a couple of things.

What we are seeing, the Company started in Texas and then North Carolina was our second state.

So, as we continue to broaden our business, we are seeing that Texas and North Carolina is decreasing as a percentage of the business.

So, for example, in Q1 that number was about 67%.

In Q2 that number now is down to about 63% or so.

And what that means that even -- we are still growing but it means that the rest of the country we are increasing our penetration.

One of the other things that we have found is that because our model and our very low cost, in terms of entering into a new market, that we have been very fortunate to enter into markets -- and also that the agent base has really welcomed us.

So, we are seeing a significant growth in market share at medium to small markets across the country.

For example, we are seeing things like in Fayetteville, North Carolina; Bentonville, Arkansas; Midland, Amarillo, a variety -- Columbia, South Carolina.

So, we are seeing that we are beginning to grow in those markets which tend to be smaller.

And I think that the great aspect of that is that agents are welcoming our model.

They are seeing the benefit of our model.

And I think as time goes by we are going to continue to increase our penetration in those markets.

And a result of that, you are going to see that Texas and North Carolina is a smaller percentage of totality of our business.

From a marketing standpoint, as we have indicated, we are -- we started a talent acquisition team.

We announced that earlier this year.

We will continue to add more talent to that.

We have great leadership in that team.

And so, we will continue to market more and certainly part of raising this capital was to increase our marketing so we can get our message to more and more agents.

We think that's the challenge is really getting our message in front of more and more agents.

And where we have been able to do that in a very tight budget we have seen great results.

And we are very excited about our ability to continue to increase our ability to market and help agents save money and grow their business.

I do want to add a little bit of color to what Marco shared -- is that when we are talking about recruiting, it's not a once and you are done.

The first time you share the Fathom story with a new agent, sometimes their first reaction is that sounds too good to be true, or I'm not interested because it's two different.

And then over time as we get in front of them more and more and they hear the story and they start to close the next transaction and they realize they are paying their brokers $3,600 when they could be paying us $450, then their mind really starts to get opened up and they're like, okay, now I want to hear more about it.

So, we can't just do a one and done.

We've got to be able to expand our marketing, get in front of them more often, like the more times they see the brand the more opportunities we have to capture them as agents.

So -- but I am excited about the opportunity.

Great.

A couple more for me.

So, Marco, your comments about smaller markets, so I'm just curious -- I think your other public competitors maybe are a little bit more focused on larger markets based on kind of average selling price of homes.

I'm just kind of curious over the near-term, what is your overall strategy of kind of being in larger versus smaller markets and what's kind of the relevant cost to enter those new markets?

So, honestly, we can go into any market.

I mean our cost is a few thousand dollars to enter into a new market.

And so, I think we mentioned that in our road show and that for us the challenge is also just finding great leadership.

Once we find great leadership in a specific market we will enter that market.

And so, -- but the other aspect is that what happens when we go into new -- a smaller market like Amarillo, Texas; Midland, Texas; Fayetteville, North Carolina where we have already gained significant market share, in some of these smaller markets we are already at 4%, 5%, 6% market share of transactions.

And part of the reason is because the local companies are even -- they are charging more than even an 80/20 split.

Some of these companies are 70/30, 60/40.

So, the value that Fathom brings is accentuated in smaller markets compared to bigger markets.

And I think the point you made is an interesting one.

There are -- some of our competitors don't want to play in the smaller markets because they need -- again, because they are getting a percentage of the commission, they want to go to markets where the average price of a house is a much higher number.

For us it doesn't matter.

We are charging a flat fee per transaction.

So, we are definitely seeing an increase in penetration in smaller markets.

That doesn't mean that we're not going to go after larger markets.

We continue to grow our market share in Dallas, in Raleigh and other cities across the country.

But we do have an advantage that we can go into smaller markets and gain market share fairly quickly, because our value is much more noticeable there for agents.

They understand it is much more significant, the savings for them.

And so, we are definitely going to take advantage of that where I think some of our competitors do not have that ability.

I just want to clarify that we are not saying that the small market is our focus; we are just saying that we have an even added advantage in those smaller markets.

We are going into -- we are already in Atlanta and other large markets.

So, large markets are a huge focus for us, but there is -- if you think about anywhere else, the more competition there is it drives prices down and commission splits down, whereas small markets don't have that kind of competition.

So, these brokers that have been there for 100 years are charging 50/50 splits and 60/40 splits because no one has ever come in to challenge them.

And a lot of these big brokers don't necessarily want to because they have got to open up an office in a small market whereas opening up an office in a big market would have five times more agents.

So, the profitability is [different].

And because some of our competitors have a high cost to enter a market, they have to pick and choose.

They have to try to identify the markets that they think they'll do better.

We have such a low cost to enter a market that we can be much more aggressive and ambitious in terms [about] the markets that we want to enter into.

And we think that that is a significant competitive advantage.

That's really helpful.

That kind of leads into my last one.

So, obviously, it's sort of interesting that you guys have gone public in the time of what the world is going through right now.

So, my last question I will hand the phone off.

So, with the backdrop obviously more toward of work from home and perhaps how permanent that really is, I'm just kind of curious how over the last three or four months agent reception has been or perhaps people that new your Company that were on that kind of career website, maybe on the fringe, how their perception of the Company has changed given more than just -- or the vast majority of the world is going to have to shift to a virtual model whether that's permanent or not is a larger topic of discussion.

But I'm just kind of curious on your thoughts there.

Thanks, guys.

Thank you.

That's actually a fantastic question.

So, for the longest time we used to hear people say you have to have an office, you have to have an office.

So, our biggest competitors would make that argument, you have to have an office.

And yet, our challenge of course right now in the middle of a pandemic, that's kind of hard to do.

But in a normal time even, just walk into any real estate office that has 200, 300 agents and you will see it's a ghost town.

So, agents were already starting to realize that they don't necessarily need to have the office.

And now, because the pandemic forced them to stay home and yet a lot of these agents are telling us they are closing more business than they ever have in the past, especially those who are willing to put in the time and energy to put themselves out there.

They are actually seeing some of their best years ever even during this pandemic.

And so, they're realizing that I can operate from home and I can operate very efficiently and effectively.

And by the way, one of our largest competitors actually put a statement out there that I thought was funny because that company was the one that always touted you have to have offices.

He sent a message out to all of his agents that said -- and I wish I could quote it exactly, but he basically said that, we have found something to be -- something to be true that we never thought was possible and that is the fact that agents are able to work from home.

And not only are they able to be more efficient, but they are happier as well -- or more productive but they are also happy as well.

So, one of our largest competitors who have offices all over the country is now saying that what we are doing virtually is actually very effective.

And agents tend to be more productive and happier working from home versus working from an office.

So, it was nice to hear that validation coming from them, so yes, thank you.

But at the end of the day agents are starting to recognize more and more that they have a choice, they have a choice of having that office through paying 70/30 splits or 60/40 splits or not having the office and having better splits.

And in Fathom's case one of the best splits available in the industry.

Great.

Thanks, guys.

Gregg Kidd, Pinnacle Family Office.

Hi, Josh and Marco.

Thank you very much for taking my questions.

Congratulations on reporting your first quarter as a public company.

Thank you.

Thank you, Gregg.

I love business models that offer a better service for players in your ecosystem.

And your business model is certainly better for agents because you are offering similar levels of support as other real estate brokerages.

But you are offering agents the opportunity to keep more of the money that they earn from each transaction.

I think you are 4.9 out of 5.0 Glassdoor rating reflects your agents' enthusiasm for your business model and your culture.

I am excited to see what kind of traction you can get attracting more agents to your platform.

Having said that, you only spent $1.4 million in agent recruiting in 2019.

Now that you have completed your IPO and you have raised $30 million approximately, how do you think about recruiting spend going forward?

I love that question.

Thank you, Gregg.

Yes, like you said, we only spent $1.4 million in agent recruiting in 2019.

As I'm sure you know, agent growth really fuels all of our other initiatives.

So, for Q2 we actually had to pull back a little on our spend but still grew by 39%.

The more agents we have, the more transactions we will close.

The more transactions we close, the more opportunities we have at bat once we have a mortgage company and a title company in place -- not to mention any other ancillary services that we've roll out in the future.

Now that we have the funds to increase our budget significantly, which potentially accelerates our agent growth, transaction growth and so on -- in other words, agent growth is a leading indicator for revenue growth.

And as we take growth is seriously, obviously, we were working with matches in the past.

Now we have a blowtorch with canisters of jet fuel sitting in reserve (laughter).

So, I am excited about what we can accomplish moving forward.

I can't wait to see what you light on fire (laughter).

And just another thought.

Congratulations on the really attractive LTV to CAC.

A 20x or north of 20x LTV to CAC is really exciting.

And I think as people understand that better it will probably bring some more questions as to why can't you spend even more than $1.4 million, because that is really productive spend.

So, a quick follow-up.

Attracting new agents is one thing, but being able to retain those agents is maybe equally as important.

And you talked to your attrition rates being about half of what the industry sees.

Maybe can you talk a little bit about why you think that's the case or why you are able to keep your agents, whereas the industry sees turnover significantly higher than what you experience?

Thank you, Gregg.

Great question.

So, as you mentioned, we believe our attrition rate is less than half the industry average.

We are extremely agent centric.

I think it's clear that our agents understand and appreciate the value and support we provide them.

You actually mentioned the Glassdoor rating.

That is kind of proof, right, that's not something we can go fake.

Those are anonymous reviews from our agents.

So, our unique commission structure is just one piece that gets us in the door because it puts more money in agents' pockets and allows them to invest more in growing their business.

But that's just a piece of it.

There is two main reasons -- if you think about it there's two main reasons that agents leave a brokerage.

One is that they are looking for a better commission deal.

And let's be honest, there are not many companies out there that can give their agents the level of value that we do.

And two, they don't feel connection to their local group of agents or they simply get to a point that they no longer feel served.

And with our focus on servant leadership, we work hard to build a strong culture and support and a sense of family in each of our markets which improves our retention.

And I mentioned this earlier, but I love it when I hear agents say that they came for the commission and they stay for the culture.

So that really plays a big role.

Agents have nowhere to go to get a better deal, number one.

And number two, if you just truly serve them and love them and take care of them they don't want to go.

So, I think we have done a really good job at kind of proving that that model works.

Thank you very much.

I have one more quick question.

Some investors are concerned about real estate agent commissions seeing pressure.

And how do you think about what happens to Fathom's business -- you touched on this a little bit -- if commissions continue to see downward pressure?

And how -- what do you think happens in your competitive landscape?

Okay, while I liked your other questions, I love this question, it's awesome (laughter).

So, I love this question because this is where Fathom really shines.

For agents, like any small business owner, there is only two ways to make more money, increase your revenue or decrease your costs.

The industry is definitely seeing a squeeze on agents' commissions.

It is what it is.

We have seen commissions for agents drop over time from 6% to closer to 5%.

And I am sure that we are going to continue to see the downward pressure over time.

Let me give you an example of the power that Fathom gives back to agents.

So, in this scenario imagine we have an agent who closes 10 homes per year and the average home price is $350,000.

Even if commissions dropped from 6% to 5%, an agent who joins Fathom would actually earn over 37% more commission than if they remained with the traditional brokerage charging 30%.

In fact they would actually on over 14% more income than they did the year before, before the average commissions dropped.

The best part is as these pressures occur it doesn't affect Fathom's profit margins.

Fathom takes the same flat fee whether the agent earns $10,000 or they earn $8,000, while our competition sees a large hit to the profit margins.

So, I believe that our model is probably the most insulated against potential commission headwinds and that gives us a serious long-term advantage because the question is not if, the question is when it happens.

So, if I am under -- just if I can try and make sure that I am understanding correctly, if an agent is selling a $400,000 house, or whatever price house, and generates $10,000 in commission today but commission -- sorry $10,000 in commission today on a 70/30 split with their brokerage they are going to pay $3,000 to their brokerage.

But if their commission dollars are squeezed lower from $10,000 to $8,000 they have to pay 30% split on that $8,000 that would be $2,400 versus $3,000.

So that brokerage is seeing their gross profit squeezed as well as their revenue squeezed, where on a -- as long as the commissions are a percentage based split.

But with Fathom's model, because you are charging flat dollar rate, that is not the case for you and your model isn't impacted?

I think you said it better than I did.

Absolutely.

That's exactly right.

Yes, that's exactly right.

And we have very little risk of that.

We are not affected by that.

And so, we are insulated from that decrease and that compression in commissions that is definitely coming.

As Josh indicated, it is really not if but when.

And so, our business model is insulated from that.

And that is one of the great benefits.

We also -- to add to that is we also built a company that -- it's very scalable, our model.

So, we can run our business and, as we have shown profitability at $450, we have built in the model with that revenue stream other companies -- they are going to all of a sudden have less revenue, they will have to adjust.

And as you know adjusting, once you get used to a certain revenue stream and having to adjust your expenses to less revenue is a very difficult thing.

And so, we already are built for that long-term compression of commissions that is coming, where other companies not only are going to see less revenue, but they are going to have a hard time adjusting their expenses to it.

And that is a significant competitive advantage.

There is actually -- I will add some more to that.

There is actually some companies out there that are trying to force that conversation, that commission has to be lower.

And then the other side, there is other companies who when that happens it hurts them really bad.

With Fathom -- they've got one side that's fighting against it, you've got another side that's fighting for it and so it's a very expensive story to tell -- you're trying to educate the population of why commissions should be lower.

With Fathom's model, it allows that transition to happen organically without harming us as a Company.

If the agents want to choose -- want to charge less they can charge less.

That is on them to make that decision.

You don't have a company that's forcing you to do it.

You don't have another company trying to force you not to do it.

So, our model allows that conversation and that transition to happen naturally over time and over the years.

Thank you very much and congratulations on the good quarter.

Thank you.

Thank you.

(Operator Instructions).

This concludes our question-and-answer session.

I would like to turn the conference back over to Mr. Harley for any closing remarks.

Please go ahead.

Thank you, operator.

And thank you again to everyone for joining us today and for your interest in Fathom.

We believe that the Company has a really bright future.

And hopefully by now you know that I am a fighter.

So, I pledge that we will work hard and work smart to earn and sustain your support and your respect.

We will never lose sight of the long-term goal of growing shareholder value, truly.

We look forward to being on the next call with you.

And so, stay safe and healthy and, again, thank you, everybody.

Thank you.

The conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect.