Fathom Holdings Inc (FTHM) 2022 Q4 法說會逐字稿

Good day, and welcome to the Fathom Holdings Fourth Quarter and Year-End 2022 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded. I'd like to turn the conference over to Alex Kovtun with Gateway Group. Please go ahead, sir.

Thank you, operator, and welcome, everyone, to the Fathom Holdings 2022 Fourth Quarter and Year-End Conference Call. I'm Alex Kovtun with Gateway Group, Fathom's Investor Relations firm.

Before I turn things over to the Fathom management team, I want to remind 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 those set forth in the Risk Factors section of the company's latest Form 10-Q and its upcoming Form 10-K and other company filings made with the SEC, copies of which are available on the SEC's website at www.sec.gov.

As a result of these forward-looking statements, actual results may differ materially. Fathom undertakes no obligation to update any forward-looking statements after today's call, except as required by law.

Please also note that during this call, we will be discussing adjusted EBITDA, which is 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 now posted on Fathom's website. With that, I'll turn the call over to Fathom's Founder, Chairman and CEO, Josh Harley. Josh?

Thank you, Alex. Good afternoon, and welcome, everyone, to our fourth quarter and full year 2022 earnings call. I want to start by thanking our agents and our employees across each of our businesses for their ongoing hard work and dedication during this challenging time for our industry.

Their commitment to supporting our growth, vision and serving others in the communities we operate in is a testament to the Fathom culture. Our agents have worked hard to continue to grow and thrive, even with all the market uncertainties. And we are proud of how they have adjusted and overcome this constantly shifting market.

As a testament to their success, Fathom Realty continued to climb in the latest RISMedia Power Broker Report. For 2022, Fathom Realty ranked 12th in sales volume, up from 16th in 2021, and we also ranked 10th in the total number of transactions in 2022.

Now before turning the call over to our President and CFO, Marco Fregenal, for a detailed review of our financial results, I'd like to touch on a few key highlights from our results and why we remain optimistic about the business and the year ahead, regardless of what happens in the housing market.

2022 was an extremely challenging year for residential real estate as rapidly increasing mortgage rates, combined with limited inventory, led to an all-time low in housing affordability and a double-digit decline in transactions in the U.S. industry-wide.

Although we felt this pressure within our business, we still managed to deliver solid financial results. For the full-year 2022, total revenue grew 25% as Fathom Realty continued to take market share from legacy brokerage firms despite the volatile environment.

Fathom completed approximately 44,700 real estate transactions in 2022, up approximately 14% compared to the prior year. Importantly, the double-digit percentage increase in transactions on our platform compares favorably to the entire U.S. residential real estate market, which, according to the National Associates of Realtors, (inaudible) overall transaction declined 18% in 2022.

We also increased our agent network to over 10,000 agents at the end of the year, which further validates that we're winning through innovation, and a truly disruptive business model continues to resonate among agents. Even with today's economic uncertainty and subdued real estate market conditions, we believe that Fathom has a long positive runway ahead of us.

So let's start first with our Realty business. During the last housing recession, specifically in 2010, I started Fathom as an asset-light technology-enabled business because I wanted to build a company that can endure all market environments, which is -- while empowering agents to realize their full potential.

Today, Fathom Realty operates in 37 states and the District of Columbia, and we anticipate entering all 50 states within the next 18 months. Our presence continues to grow across the country, and I believe that our opportunities and ability to serve agents are greater than they ever have been.

Fathom Realty is among the fastest-growing residential real estate brokerages in the United States. We are uniquely positioned to offer an industry-leading agent commission model without having to sacrifice the agent experience, which is especially important for agents who are price-sensitive during downturns in the industry. Our focus is not just on adding more agents but also helping our agents become more productive with the right training and technology to close more sales and ultimately earn more money.

Even though we charge a small fraction of what other brokerages charge their agents, our Realty business delivered 6 consecutive quarters of adjusted EBIT profitability prior to this last quarter where we saw an increased number of real estate transactions terminate.

On a positive note, existing home sales in the United States increased 14.5% in February, ending a 12-month streak of declines. While we are hopeful that trends continue to move in the right direction, we remain focused on what we can control, and we believe we are positioned to thrive both today and into the future.

The technology that powers our Realty operations remains a key point of differentiation that sometimes gets overlooked. As we've highlighted before, by owning our technology, we can generate long-term savings and ultimately charge our agents far less than others with a competitive agent commission structure while building a model to generate margins similar to or even better than our peers over time.

In addition, we license our proprietary technology to outside agents and brokerage through a recurring revenue subscription model, further increasing the long-term revenue potential for Fathom and the differentiation of our brand within the industry. Today, there are over 750 brokerages licensing our technology and data, touching over 450,000 agents.

Now let me touch on our agent trends and steps we're taking to grow the Fathom network. We focus to a great degree on serving our agents so that we attract and retain the best in the industry. When it comes to providing the greatest value to agents, we believe that Fathom wins hands down. When you combine our competitive agent commission structure, new agent referral program and the technology and training we offer to agents, we believe it's a very strong proposition that is resonating well in this environment.

Last quarter, we launched an enhanced agent referral program called FREE4Life and a revised agent commission structure. Both initiatives were well received, and our agents referral program continues to have a positive impact on our recruiting efforts. Even with the changes that we implemented on January 1 to the commission structure, agents will still save an average of well over $2,500 per sell versus the industry average commission split.

We're also excited about our new agent referral program, which we believe is the most attractive incentive in the industry as it's based solely on an individual agent's efforts. So while the market is in a downturn currently, we remain well positioned to attract agents, help grow their book of business and put more money in their pockets, especially in a time where inflation is placing pressure on their bank accounts.

We can make this claim, given our track record of supporting agents on our platform. Historically, the average agent who joins Fathom increases their sales transactions by 49% within 4 years of joining. And the average lifetime value of an agent is currently over $21,000 on just the real estate side of the business, demonstrating the power of our model.

Our cost to acquire 1 agent during Q4 remained low at approximately $1,000, making our breakeven on each agent less than the $1,150, which we'll earn back on their first sale. We also maintained our strong retention rates, which are approximately twice the national average, and remain exceptionally strong, given the backdrop of agents leading the industry over the last year.

During Q4 of 2022, our attrition rate averaged approximately 1.6% per month. More importantly, 90% of the agents who left Fathom, sold 4 homes or less per year. Given the current market conditions and historical examples, we do anticipate the industry attrition rate to increase as more agents struggle. We certainly will not be immune and may see an increase as well, but we believe will continue to be primarily from low-producing agents.

Now during 2022, we also launched several initiatives to bring together our agents, including our inaugural [Teams Think Tank] to discuss strategies for building and running successful real estate teams.

We also launched our Veteran division to provide specialized resources, support and opportunities for Fathom's current and former military service members as well as veteran homebuyers and sellers and those still in active duty. We've also received a lot of positive feedback from our [Chaplaincy] program, and we're exploring ways to expand it in ways to touch even more of our people. These are just a few of the examples of the many ways in which we support agents and our communities.

Now in spite of the market conditions, we remain optimistic about the year ahead and believe that Fathom as a whole is on track for revenue agent transaction growth in 2023. As we look ahead, we expect to turn the corner towards profitable growth in the coming quarters while starting to really show the operating leverage in our business. While our mortgage, title and insurance companies are relatively small today, they have the potential to dramatically increase revenue and profitability per transaction over time.

As we navigate the current challenging market, Fathom has continued to identify opportunities to optimize expenses across our business segments. We have already reduced expenses by approximately $3 million per quarter, which we should see the full benefit of in the first quarter of 2023. Importantly, we believe these cost reductions were made without sacrificing our ability to grow. Fathom was built to thrive in both good times and challenging times.

We remain focused to reaching total company adjusted EBITDA breakeven in the second quarter of 2023 and generating cash flow in the third quarter of 2023. Let me repeat that because I think it's important. We remain focused on reaching total company adjusted EBITDA breakeven in the second quarter of 2023 and generating cash flow positive in the third quarter of 2023, even in today's market environment. With that, I'd like to pass over to Marco for a financial update.

Thank you, Josh. I'll start with a detailed review of our fourth quarter and full-year 2022 results, and then I'll finish with the discussion on guidance. Fourth quarter revenue declined 12% year-over-year to $83.4 million compared with $95.5 million for last year's fourth quarter. For the full year, revenue increased 25% to $413 million compared to $330.2 million in the prior year. As we all know, the industry as a whole experienced a significant decrease in revenues in Q4 due to the full impact of the increase in interest rates during the latter part of the year.

GAAP net loss for the fourth quarter was $9.9 million compared with a loss of $3.6 million for the 2021 fourth quarter. For the full year, GAAP net loss was $27.6 million compared to a loss of $12.5 million in 2021. Adjusted EBITDA loss, a non-GAAP measure, was $5.9 million in the fourth quarter versus adjusted EBITDA loss of $2 million for the fourth quarter in 2021. For the full year, adjusted EBITDA loss was $12.2 million compared with a loss of $8.2 million in 2021.

GAAP expense was -- I'm sorry, G&A expense was $8.5 million for the quarter or 10.2% of revenue compared with $9.1 million or 9.5% of revenue for the same period a year ago. For the full year, G&A expense was $43.2 million or $10.4 million of revenue -- 10.4% of revenue compared to $32.7 million or 9.9% of revenue in 2021. On a sequential basis, G&A was reduced by $3 million from $11.5 million in the third quarter of 2022.

Our gross profit was $6.4 million in the fourth quarter, down from $9.3 million for the fourth quarter of 2021. Gross profit decreased to 7.7% of revenue in the fourth quarter compared to 9.8% for the same period a year ago. For the full year, gross profit grew to $49.7 million, which is about 9.9% of revenue, compared to $29.7 million or 9% of full revenue for 2021.

Expenses related to marketing activities were $1.3 million for the 2022 fourth quarter and $5.2 million for the full year. The increase in marketing expenses is related to the increase in recruiting activities, opening new markets and launching the ancillary businesses.

Now I'll spend some time to review our business segment results in more detail. As with all real estate companies, Q4 is a difficult quarter for our Real Estate division. We closed approximately 9,250 real estate transactions in the fourth quarter, a 14% decrease from last year's fourth quarter, while full year included approximately 44,700 real estate transactions, a 14% increase relative to the prior year.

Now to add some additional color to that, while we only saw an increase of 14%, the overall real estate market was down 16%. Revenue for the quarter was $79.5 million, and revenue for the full year was $390.6 million. Adjusted EBITDA in the Real Estate division was a loss of $1.3 million, making the first time in the last 7 quarters that we had a negative adjusted EBITDA. This was primarily due to the negative impact from the increase in real estate -- interest rates.

Our Mortgage business generated revenues of $1.3 million in the fourth quarter compared to $2.7 million in the prior-year period. The Mortgage adjusted EBITDA for Q4 was a negative $1.2 million. Our team has done a great deal of work in reducing expenses to rightsize the expenses for the Mortgage business, going forward. We have also done a great deal of work in launching new marketing programs to increase the attach rate and look forward to sharing those results in Q1.

DIA, our insurance business, generated revenues of $1.3 million in Q4 and a total of $6.1 million for the year, with adjusted EBITDA of negative $55,000 for the quarter and a positive adjusted EBITDA of $530,000 for the year. In Q4, we've seen an increase in the attach rate of our insurance business, exceeding 7% of Fathom's buy-side transactions in North Carolina and in Texas.

Verus Title had revenues of $614,000 for the quarter and $3.9 million for the year. The title adjusted EBITDA for the quarter was a negative $266,000 and a negative $218,000 for the full year. We have seen an increase in pilot starts in Q1, mostly related to an increase in the market activities as well as attach rate.

Now moving to our Technology segment. Revenues in the fourth quarter totaled $705,000, which is consistent with Q4 of 2021. Adjusted EBITDA loss for the quarter in our Technology segment was $350,000 compared with a loss of $225,000 in the fourth quarter of 2021. Our LiveBy team has significantly increased its footprint across the country to reach 400 MLSs and 450,000 agents. LiveBy powers more than 3.5 million community pages, with over 100,000 neighborhood reports created.

We continue to focus on our balance sheet and ended the quarter with a cash position of $8.3 million, which we believe provide us with the adequate runway to grow the business and execute our strategy through profitability, especially given that we're laser focused on our goal to reach adjusted EBITDA positive by Q2 of 2023. We did not purchase any shares in our fourth quarter under our stock repurchase plan, and approximately $4 million remains under the authorization.

Now before turning the call back to Josh, let me briefly touch on guidance. Given the uncertainty in the macro environment, we are only providing guidance for the first quarter ending March 31, 2023. For the first quarter, we expect revenues in the range of $75 million to $77 million and adjusted EBITDA loss in the range of $1.3 million to $1.5 million. As a reminder, guidance is forward-looking, which, as we noted in the beginning of the call, is subject to risks and uncertainties.

I would like to thank the entire team across all our companies. Q4 was a difficult quarter for everyone, and I could not be more grateful and proud of the leadership and hard work demonstrated by all our leaders and team members during these challenging times. With that, I'll turn the call back to Josh.

Thank you, Marco. Despite the volatility in markets, we remain focused on execution and getting to cash flow profitability in the third quarter of 2023. As we turn the corner on profitability, we believe that 2023 will be a pivotal year for Fathom. With that, operator, let's open the call for questions.

(Operator Instructions) Our first question will come from John Campbell with Stephens.

It's Jonathan Bass on for John Campbell. I've got a two-part question here, both in relation to the new agent commission model that was implemented on January 1. First is since the implementation of higher fees, have you guys seen any notable attrition due to the higher cost to agents?

And then on the flip side, what are you seeing on the new referral program? On the last earnings call, you mentioned September being the best referral month ever as a result of the CAP4Life testing. Is there any update you can give there?

Sure. As far as agent attrition goes, I can count on two hands the number of agents who reached out to me directly and to senior leadership about complaining about a fee increase. But we didn't really raise the fees very much. It's such a small amount that it didn't really affect a lot of agents. I mean, no one wants to see their fees go up, that's true. But compared to our peers who saw, I think, over the last several year period, their fees increase by $450 per transaction, we really raised our fees about $50 per transaction during that same time period.

So when you put things in perspective, I think most agents realize that yes, it stinks, but it's far better than the alternative. So I think we fared really well. I don't believe we saw an uptick in overall attrition due to that. Marco, do you want to touch on the question regarding the recruiting numbers, what we've seen in regards to the referral program?

Sure. Yes. So we continue to see an increase in recruiting due to that. I think that when we update Q1, we'll have a greater deal of visibility into the program. If you may recall for the program, agents need to recruit 4 agents and then -- or 8 agents, depending on which level they want to reach. So I think when we do our Q1 earnings call, we'll be able to shed more light on the program and how that's going.

Yes, I'd like to add a little bit more color to that because I think it's important to understand that this is one of those programs that just doesn't -- you can't flick a switch and all of a sudden, overnight, you see that the numbers double or triple because ultimately, it takes time for agents to start sharing with other agents across transactions.

So if an agents closes 10 transactions a year, they may get 1 or 2 opportunities every single month to share Fathom with another agent. And they may have to share several times in a row before that agent finally becomes receptive or that agent close a transaction, realize they just gave their broker $4,000 versus they could have given us $550. So it takes a little bit of time. But we can -- we're already starting to see some very positive momentum from that. So we feel very encouraged.

Okay. One more if I could. Is there anything you're hearing from agents anecdotally or otherwise about how the spring selling season is shaping up?

Yes. In fact, literally right before I got on this call, I was talking to one of our agents via Messenger. And she was very encouraged because she's been seeing a pickup on both listings, people finally getting off the fence and putting their home in the market as well as more buyers getting off the fence as well. I think it's gotten to a point where a lot of buyers are realizing that the 6%, 7% range, 6% to 7% range, it's probably here to stay for quite some time.

And they're -- even though it's not ideal for them, they're finally getting of the sense, saying, "Okay, I need to pull the trigger." A lot of them are waiting thinking, "Okay, we're going to drop back down to 4% or 3%," which none of us really believe is going to happen. So I think it's really a matter of just getting the right perspective and people realizing, "Okay, if this isn't going to change, we got to move." Even in the worst time period during the last housing recession, we really went down about 15% in the total number of homes.

The fact is people still need to buy and sell. There's never going to be a zero-sum, where just no one moves. But the fact is we saw -- I think I mentioned that on the call, that (inaudible) reported, we saw an uptick of 14% in the number of homes.

So we feel very positive. Our agents are starting to see some momentum as well. I try to talk to about 1 to 2 agents every single day. Some days, I get to talk to 3 agents every single day. And I'm just -- I'm seeing a lot of positive feedback and definitely some new energy from agents as the spring starts coming around.

(Operator Instructions) Our next question will come from [Ariya] Cole with Cole Capital.

Best of luck to all of you this year with all your efforts in innovating. Question number one, could you just kind of clarify for me regarding the iPro Realty Network, were the 435 agents that work in a network all brought on board in the December quarter or will the timing be different from that?

The iPro, they actually were brought in into Q1 of 2022, not the December quarter. They were -- the iPro acquisition, I believe, was February and the agents were brought in, in February and March of 2022 -- Q1 of 2022.

Got it. So the -- so as a result, your agent number at the end of the December quarter of 10,370...

Correct.

The growth there from September to December was all organic growth in terms of how the agent number grew?

That actually is correct, yes. The last acquisition we made is Q1 of 2022. There were some small walkovers throughout the year, but the Q4 growth was 100% organic growth, yes.

When we use the word walkover, we're usually referencing a small brokerage, sometimes with 15 agents, 20 agents, 5 agents or a large team that's coming over. So these aren't really necessarily acquisitions, but we -- just to make sure we clarify when we say walkover, they're kind of the industry term, but that's what it means.

Okay. And then regarding the Free4Life recruitment program, I'm trying to understand where you think agents at Fathom are going to be able to source the majority of agents they try to bring on board. What I'm alluding to is, they obviously come in contact with agents who are either buyers or -- on the other side of the transaction when they're selling a home. You also have agents that probably just happen to know in the local community where they work.

And so what I'm just trying to understand is in addition to those 2 sources, where will agents be finding other people who are prospects to be persuaded to join the Fathom family?

Well, I think you nailed the two most important ones, and that's relationships, prior relationships as well as the new relationships on the other side of transactions. By the way, the relation -- that new relationship on the other side of the transaction is probably the most important one because when you're at the transaction table and you're talking, sometimes they become friends. Sometimes they don't, right?

But sometimes, they become friends and you start talking about -- because both sides are usually in the same commission check, right? The commission rather paid to the brokerage is the same, typically, not always but typically. And you get the Fathom agent saying, "Hey, I used to be with the same company you're with now. And I remember on this, I would have probably paid them what, you're probably paying $4,000 or $3,000 as commission, I'm only paying $550." Or if they've capped, "I only paid $150." You should really think about it.

And it's like that eye-opening opening moment, the a-ha moment the agents have, like "Are you serious? That's what you really paid?" Because they hear it and they hear it and they hear it like we beat them over the head, but it's not real to them until it's real to them, right?

So that the money is actually coming out of their check and go into their broker, especially when the agents say, "Look, I don't have to give up anything, right?" It's not what the broker tells you. I keep -- I've got great support. I've got everything I need, all the tools, technology and everything else I need. So that tends to be the best conversation for getting agents over. Relationships is obviously important as well.

We found that oftentimes when an agent first comes over to Fathom, they're like the most excited because they're able to see that change. They come over to Fathom. That sometimes is a really good opportunity because they'll tell 5 or 10 other agents that they worked with at the other brokerage when they come over, saying, "Hey, I just went to Fathom. You should think about coming, too," especially now that we have this CAP4Life and Free4Life opportunity for them. So it's been great.

Now, one other source that I see a lot of agents, some agents get ultra-motivated, which we've seen with one of our competitors as well, and that's going to social media. And so they like to put up there, "Hey, they're part of these different real estate networks on Facebook and Instagram and other -- and all the other social media platforms." And they'll share their story.

If they don't ask us about -- anyone complains about the broker, [they'll] jump in and say, "Hey, you should think about that." Or they private message them. So social media has been a great source as well for anything that's outside of your relationships or outside of a business transaction.

Okay. And just two follow-up questions. Regarding the recruitment, what sort of other resources might Fathom provide to help, in essence, close the deal and bring on the new agent? Because what -- your Fathom agents, let's say, can have a situation where they're able to get someone very interested in learning more, but you don't make a change in your career instantaneously. People want to learn about your software platform, about other aspects of the job, how easy the switching costs are and other things.

And the question is, to what degree do your agents enlist some sort of corporate support to help persuade the prospect to actually go from just thinking about joining Fathom to actually doing it?

I love that question. This is the first time we've had that question. We've talked to hundreds of investors and potential investors. You're the first person that ever asked that, so thank you for that. That's a great question.

So yes, number one, I think our Fathom Careers website is probably the best resource. And so you have a lot of agents that will actually refer people, "Hey, check out the Fathom Careers website." But also, we've got a marketing center behind the wall and where our agents can go to get business cards, order business cards, order post cards, download marketing, buyer presentations, listing presentations.

But we also have a whole section on recruiting as well. And so if they want to go in there, they can print out or they can e-mail basically about Fathom, like here's the key benefits of joining Fathom, why Fathom is different. So we've got a lot of resources. The agents can -- I'm not a big fan of print, but they can print or they can share via e-mail or they can share via social media.

Some of the things that we have via social media might be sized differently to better fit social media platforms. So we provide a lot from corporate for them to be able to access. Now it's free access, right? So they can go in anytime they want. It's available. They don't have to reach out to us and ask us for something. But again, everyone can go to fathomcareers.com, and it has everything.

We're the only brokerage that I know of that literally lists everything. We list everyone our fees. There's not a single fee that we charge that's not listed on our Fathom Careers website. And yet in most companies, you can't figure out what their fees are. Those fees are hidden. So I think we're very unique in that. We're very transparent. We encourage everyone to look at those numbers.

Let me also add -- let me add one more thing. We also have, between local leaders, what we call our [district] directors and recruiters. We have a team of about [115] individuals, which are located throughout the country, which agents can call upon them to help sort of close the deal, if you will, okay? So there is a team of, again, our local district directors or our managing brokers and recruiters that can help an agent at any given time. And they often do get involved to help the agent get sort of like across the end line there. And so that's another thing that we provide across the country.

Marco raised a great point. And to add more color to that, when they do reach out, I've seen other companies like, okay, if you reach out to us and we have to get involved, we only give you half of the benefit. The agent still gets the full benefit. Even if we end up recruiting, even if our person is doing all the recruiting efforts, they still get the full benefit of that.

Got it. One last thing. You had an effort underway to be able to bring in leads for your agents internally. What's the status of that? And what sort of efforts are you making in 2023 to move that forward so that in the future, you'll actually be internally finding leads and selling them to your agents and participating on the back end on a home sale?

That's a fantastic question. I will tackle part of it and love for Marco to add some color as well. This is an area that we're continuing to move forward, albeit slower than we'd like. We talked about the fact that we cut a lot of costs. Unfortunately, some of those costs had to come from employees, and that's never an easy thing to do. These are people we love and care about. These people, we knew their families, and it's very hard to do, but the bulk majority that came from different initiatives trying to rightsize the business.

And that's one of the areas because with the lead gen side, that requires a very large upfront investment, although the return on investment, 18 months later, could be significant and we are really excited about that. During this time period as we're trying to make sure we're protecting people's jobs and not lay as many people off, protect the company, make sure we achieve adjusted EBITDA breakeven and cash flow positive, these are all main focuses for us.

And so we've had to put a little bit of back burner. But even with that, it's still alive, right? We're still putting an effort. We've got a great team that's generating leads for our insurance business. They are also generating leads for our Mortgage business. They're also generating leads for agents as well, not to the level we'd like. So I won't say we put it on hold, but we definitely put -- I'm not sure how to best put that, but we didn't...

Yes. We have become more strategic on our approach. And so we will be announcing sometime in the next few weeks our new program called Hometown Heroes, which is exclusive relationship with Hometown Heroes, which will provide leads to certain markets. So I think the best way to describe our approach right now is more strategic. And so we definitely have reduced the number of markets, but we'll continue to learn and build the program.

So over time then, we can accelerate the growth, right, into that. But I think the focus of being adjusted EBITDA positive is something that we currently focus on. And so the lead program has been decreased, but again, it's just more of an aspect of being strategic in our approach. And I think very soon, we'll announce a new program called Hometown Heroes that we're very excited about.

Thank you. We're very eager to get to the point of being adjusted EBITDA breakeven and cash flow positive because we're -- we want to move past the conversation with investors of, "Can you be truly cash flow positive? Or when can you be?" We're going to move past that conversation to, how thoughtful can we be? Like that's a much better conversation to have. And so that's really our focus right now.

(Operator Instructions) It appears there are no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Josh Harley for any closing remarks.

Thank you, thank you. Of course, thank you for joining our call today and for your interest in Fathom. For those of you who are Fathom shareholders, thank you for your trust. We will continue to work hard and look forward to sharing future updates with you. Have a wonderful week.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.