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Fathom Realty founder Josh Harley has stepped down as chairman and chief executive officer of parent company Fathom Holdings Inc., the company announced Monday, with longtime Chief Financial Officer Marco Fregenal stepping in as CEO and independent director Scott Flanders succeeding Harley as chairman.
Harley is stepping down “for family reasons,” after “a thoughtful succession planning process,” the company said in a press release — although Fregenal will “continue to serve as CFO until the board identifies a replacement,” with a global search for a new CFO not set to commence until next year.
“I am honored to take the helm at Fathom at this exciting time in the company’s evolution,” Fregenal said, in a statement. “My partnership with Josh, dating back to 2012, has been a privilege, and I’m excited to carry forward his legacy by further strengthening the substantial progress we’ve made so far. I look forward to continuing to work closely with Josh and our experienced senior leadership team and employees to ensure the long-term success of the business.”
Fregenal has served as Fathom’s CFO since 2012 and its president since 2018, and was appointed to the company’s board of directors in 2019. Flanders, a former CEO and board member at health insurance marketplace eHealth Inc., has served on Fathom’s board since August 2022. He also serves on the board of 890 Fifth Avenue Partners, a technology, media, sports and telecom special purpose acquisition company.
Fregenal told Inman Harley “has had significant family health issues he needs to attend to, and everyone felt the best thing was for him to step down and focus on those.”
Harley will continue to represent and speak on behalf of the company at public events and play an active role in Fathom’s recruiting, with a goal of growing agent count by 20 to 30 percent next year, he said.
“I’ve been running the day-to-day operations of the company for 12 years,” Fregenal said, and the transition will be “probably the smoothest you’ll ever see.”
“Today’s announcement represents the culmination of a thorough succession planning process, and we are confident Marco’s appointment ensures continuity of strategy, leadership and financial performance,” Flanders said, in a statement.
Flanders said Harley has been “instrumental in growing Fathom’s presence nationwide,” and that the company has “left the door open” for him to return to as chair and CEO “at some point in the future.”
Shares in Fathom Holdings, which in the last year have traded for as little as $2.58 and as much as $8.20, initially surged in light trading Monday after the announcement before giving up most of those gains but trading slightly above Friday’s close of $3.25.
Harley — a self-described serial entrepreneur and former U.S. Marine Corps hand-to-hand combat instructor — founded Fathom as a cloud-based, flat fee brokerage in 2010 and took the company public in a 2020 initial public offering.
Harley remains the company’s largest shareholder and will assume the role of “founder and chief evangelist, with a focus on accelerating Fathom’s agent growth, being the voice of Fathom to the industry, and further serving Fathom’s growing agent network to improve agent retention, agent referrals, and attach rate for Fathom’s ancillary businesses,” the company said.
Fathom Holding Inc., which IPO’d as an “emerging growth company” with reduced public company reporting requirements, raised an additional $32.7 million in a 2021 public stock offering as it pursued acquisitions to further its goal of providing end-to-end services including mortgage and title insurance, integrating services from brands including Fathom Realty, Dagley Insurance, Encompass Lending, intelliAgent, LiveBy, Real Results, Verus Title and Cornerstone First Financial.
While Fathom has been in the red since rising mortgage rates curtailed home sales for the real estate industry as a whole, it’s continued to add agents as the company pursues its goal of returning to profitability.
In April, Fathom notified investors that it had borrowed $3.5 million from an existing investor, saying the loan would provide it with more resources as it seeks “cash flow profitability” by the third quarter of this year.
In reporting a $5.5 million third-quarter loss on Nov. 8, Fathom said that while transactions were down 15 percent from a year ago, the company’s flat fee commission split model continues to attract agents, with the agent network count up by 13 percent from a year ago to 11,333 agents as of Sept. 30.
Fathom, which raised its agent transaction fees by 10 percent on Jan. 1 and rolled out a new agent referral program to boost recruiting, said last week that the company expects to achieve positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter of 2024.
“Founding and leading this remarkable company has been one of the most profound privileges of my life,” Harley said in a statement Monday. “My transition to my new role underscores our dedication to bolstering our agent growth initiatives. We remain steadfast in our belief that there is a substantial opportunity ahead of us to capture market share and position Fathom for accelerated growth.”
Editor’s note: This story has been updated with additional comments from Fathom CEO Marco Fregenal.
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