Fathom Holdings Inc.

Good day and welcome to the Fathom Holdings first quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Roger Pondell with Pondell Wilkinson. Please go ahead.

Thank you, Matt, and welcome, everyone, to Fathom Holdings' 2022 first quarter conference call. I'm Roger Pondell with Pondell Wilkinson, Fathom's investor relations firm, and it is my pleasure today to introduce the company's founder and chief executive officer, Josh Harley, and Fathom's president and chief financial officer, Marco Freschanal. Before I turn things 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 those set forth in the risk factors section of the company's latest Form 10-K, and subsequent Form 10Qs 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 those forward-looking statements, actual results could 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, management 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 recently comparable GAAP measure is included in today's press release, which is now posted on Fathom's website. And with that, I will turn things over to Josh Harley. Josh?

Thank you, Roger, and of course, thank you to everyone who's on today's call. Our entire team deeply appreciate your support and, of course, your faith in us. Before we review the significant business and financial progress FABEN has made since our last call, I want to thank our agents and our employees for their unwavering hard work and success in moving us forward toward our vision and, of course, in helping us grow as a company. Quarter after quarter, our results continue to demonstrate the power of of our truly disruptive business model. And I'm proud to be here sharing the reasons why we have and believe we'll continue to achieve significant growth. We're winning through innovation and by delivering real long-term value to our agents, our employees, our clients, and our shareholders. Now, the latest real trends brokerage rankings that came out reported that Fathom Realty is now the sixth largest independent real estate brokerage in America and the 10th largest brokerage overall. which includes franchises. Over the last four years, we've jumped from the 16th spot to the 11th to the 9th, and now the sixth largest. And there's no, and that's, by the way, that's for a very good reason why we're skyrocketing up the chart, namely due to the fact that the value we provide agents who join Fathom is unmatched by our peers. I once heard someone state that an agent's commission split only matters in the absence of value. But what if all things were equal in regards to technology and resources, support, et cetera? Then splits matter a lot. And that's why I believe we're winning. There's really nothing outside of empty offices that our peers can give their agents that we cannot. And yet we can offer everything to our agents for a fraction of the cost. In fact, the average agent who joins Fathom saves between $12,000 to $15,000 per year. Today, our industry is seeing a softening. And while this softening may prove to be a headwind for our peers, we believe that we can turn it into a tailwind for us. Where else are agents going to recoup their lost income if they close fewer homes? If an agent is on a 70-30 split and closes 20% fewer homes, the simple act of moving over to Fathom will increase their take-home income by around 9%. Now, nobody's suggesting the market will see a 20% dip, and I was merely presenting a worst-case scenario example, but you can see how our model can be even more disruptive to our peers in a down market. For the first quarter, year over year, our revenue grew by 81.4%. Our agent count grew by more than 49%, and our transactions grew by over 47%. Importantly, for the fourth quarter in a row, our real estate business was adjusted to be a bit more profitable. I don't believe that any other public real estate brokers can make that claim. And with a long runway ahead of us, we feel very confident in our business, even in today's economic uncertainty. While we're continuing to invest capital to enhance our foundation for sustained long-term growth of our newer business lines, those investment dollars are quickly becoming a smaller percentage of our ongoing expenses. We believe that Fathom is on track to continue strong revenue, agent, and transaction growth, and with the strategic, thoughtful investments we're making in each of our business lines, we look forward to also demonstrating profitability, which is a high priority for us. Now, a lot of companies sacrifice profitability for growth, but I'm proud to say that we do not have to operate that way. We believe that we can achieve strong profits over time while continuing to grow our business at a high rate. Our cash position is strong, and we plan to continue to focus on achieving positive operational cash flow. Marco, our president and CFO, does a great job in pressing the proverbial no button, keeping our spending in check. Now, as we march toward profitability, so our steadfast discipline allows us to be good stewards of the money with which you can trust us. Despite the current state of the stock market and what some believe to be a headwind in the broad real estate sector, As I mentioned, we believe that FABMA is on track to continue an impressive growth rate while also achieving profitability quickly. We look forward to proving it, and I'd like to share with you how we'll achieve those goals. Now, since going public, we've We have substantially increased revenue, continued expansion of our agent network, maintained strong agent retention, which we believe is the best in the industry, entered new geographic markets, and completed strategic acquisitions designed to further solidify our market position and accelerate our path to profitability. That's a lot to accomplish in less than two years of being public, but it demonstrates our focus, our commitment, and our ability to get things done. Now, with the addition of our own in-house mortgage, title, and insurance companies, along with additional SaaS product offerings, we have the potential to significantly increase our revenue and, importantly, our profitability per transaction as we continue to integrate those operations into each of our markets. Now, as I mentioned earlier, we grew our agent count by more than 49% year over year. We believe a big part of that growth is because Fathom continues to have one of the most attractive and agent commission plans, and one of the most complete offerings in the industry. When it comes to providing the greatest value to agents, we believe Fathom wins, hands down. One of the best parts of our extraordinary agent growth is that our cost to acquire one agent during Q1 remained at approximately $990, making our break-even on each agent less than the $1,100 we earn on their very first sales. I also want to point out that the average lifetime value of an agent is currently over $21,000 on just the real estate side of the business. The ratio of that lifetime value to our cost of agent acquisition is more than 21X, and that does not take into account the revenue we're generating from our mortgage, title, and insurance companies or potential revenue from leads that we can generate for our agents. We believe that Fathom is in a unique position to maintain our solid and growth rate through 2022, even at a time when the broad real estate market is turbulent. Fathom can prove to be a hedge against other real estate brokerages whose revenue transactions and agent count could suffer from industry headwinds. I want to spend just a minute on this point because I think it's critical to better understand this. While the overall real estate industry outlook is not exactly ideal, there are a few important things to remember. First, homes are still selling faster than what is typical in a normal market. In April, around 57% of homes were under contract within two weeks, and around 43% of homes were under contract within one week. Additionally, around 55% of homes were sold for above listing price. One more step that I believe adds an additional level of confidence is the fact that rents are also rising at a high rate, which keeps homeownership attractive relative to rentings. I'm not suggesting that these metrics are not off their tops, but these tops were pretty high to begin with. The biggest concern moving forward is really housing affordability. For April, home prices were up 15% year over year. The 30-year fixed mortgage rate was up 67%. Of course, inflation has not been kind to households across the country. With all that said, there's still far more demand than inventory. inventory is still near historic lows. And while some are beginning to be priced out of the market, there's still more demand than the market can satisfy. On top of that, interest rates are not that far off normal. Prior to 2010, seeing interest rates in the 5% to 7% range was the norm. And another point I want to make here is that even if we, as an industry, see fewer homes sold throughout 2022 as compared to 2021, we, Fathom, feel confident that our agent and transaction growth will outperform any decrease in the number of transactions for the industry as a whole. While these market conditions are not good for the majority of real estate companies, and as I mentioned earlier, Fathom offers real estate agents who join us from other brokerages the ability to net more income than they did even in 2021, even if they sell fewer homes. That could result in more agents joining Fathom if, or perhaps when they begin to feel the squeeze. There are only two ways for a real estate agent to net more income. Increase their revenue by closing more sales, which is hard to do in a down market, or decrease their expenses. We believe that we can help agents do both, and that's a truly distinguishing characteristic about Fathom. For the vast majority of real estate agents, their largest expense is not their marketing. Their largest expense is the splits they pay their brokerage, with many paying more than $30,000 per year. In real estate, there's an adage that suggests splits only matter in the absence of value. I said that earlier. However, again, what if all things are equal? With Fathom, the agent can get all the technology, training, resources, supports they're used to getting at one of the legacy brands and yet save an average of $12,000 or more per year in commissions for what's paid to the brokerage. In essence... An agent could potentially close 20% for your homes and yet earn more income than they did the year before. With the potential market shift looming, Fathom is highly attractive to increasing number of agents. Fathom could also see greater market share per agent over time as our agents increase their total income on each sale. With more income per sale, Fathom agents have more money available to invest in marketing and growing their businesses. When agents with legacy brands are struggling to earn a real living due to the fewer sales and lower income, that may create a need to pull back on a marketing spend in order to pay their bills. Fathom agents could potentially invest more in marketing than their peers, helping increase their market share and ultimately our market share as they sell more houses. In fact, we're already seeing some of that interest show through our career sites. We actively track our unique visitors, and it showed that our career site experienced an 85% increase in visitors in Q1 as compared to the same quarter in 2021. We believe that it's a strong indicator of future growth. We believe that Fathom's ability to track an ever-increasing number of real estate agents by providing them with greater income potential along with the technology training and support they need to grow their businesses is even more evident today, especially during these changing times. Fathom Realty recently grew its geographic reach with the addition of Montana and New Hampshire in Q1. We also expanded our Utah presence through the acquisition of iPro Realty's 400 plus agents. Now we plan to open several more markets throughout 2022. One more thing I should point out is the announcement we made in December about raising our fees for Fathom agents, which took effect in Q1 starting in January. The annual fee for agents was raised 20% from $500 to $600 per year, and the transaction fees were raised 11% from $450 to $500 for the first 12 completed transactions. We're happy to report that these increases continue to have no impact on our agent retention or growth rate. most likely because our agents are still saving an average of around $12,000 or more as compared with traditional split brands. I want to talk next about IntelliAgent and the advantage that our platform creates. The obvious advantage being that it allows Fablin to reduce costs per agent over time while measurably improving operational efficiencies. Our proprietary technology platform allows us to significantly reduce our reliance on third-party tech providers. In fact, as of March, we're officially using all Fathom-built technology for our realty operation, which includes agent brokerage websites, CRM, transaction management, personal management, and more. Outside of financial reporting systems and social media products, there really isn't anything else that we're using outside of IntelliAgent for our realty business. IntelliAgent gives us the power to control the full lifecycle of of the home buyer and home seller, gaining a greater understanding of our data and how to use it to further improve our offerings while ultimately generating leads for our agents. Plus, we can now identify potential clients for our mortgage insurance and title companies long before they're under contract as they raise their hands requesting more information. Throughout 2021, we made significant investments in our mortgage title insurance operations, and we continue to see very positive return on that investment in the form of improved attach rate and market share. In Q1, we acquired Cornerstone First Financial in Washington, D.C. Cornerstone brought a very unique marketing approach to encompassed lending, which we plan to roll out across the country. Each of our markets were encompassed as a foothold. As you know, our mortgage title and insurance operations were all added through strategic acquisitions, and we're working diligently to integrate each business fully to ensure stronger attach rates. We also made several strategic real estate brokerage acquisitions in a very short period of time. We expect that any future acquisitions we continue, we consider will primarily be focused around opening new real estate markets or expanding our footprint in smaller current markets to hit critical mass faster. Each acquisition we pursue is expected to be immediately accrued to our business as we continue our path to profitability. While acquisitions are not our primary growth strategy, we will use acquisitions strategically as opportunities arise. We've been actively looking to brokerages across the country and will share more of these opportunities as more of these opportunities turn into acquisitions and walkovers. Now, in March, we initiated a $10 million share repurchase plan. The plan was designed to qualify for the safe harbor under SEC Rule 10B-18. So certain purchases under the plan were also designed to allow us to make repurchases during otherwise closed trading windows under our insider trading policy in compliance with the SEC Rule 10b-51. So as many of you know, Rule 10b-18 limits our purchases to a percentage of average daily trading volume. So as of the end of April, 310,000 shares in the amounts of about 2.9 million were repurchased through the plan. Right now, it's hard to think that there is any asset available for us to buy that is greater value to Fathom and our shareholders than our own stock. So we remain committed to our buyback and will be thoughtful in how we move forward. Final points, and then I'll turn it over to Marco. Over the last four quarters, our real estate business, Fathom Realty, generated just a bit of positive results. I mentioned that earlier, which we believe demonstrates that we're on the right path. We have strategically built an end-to-end integrated real estate brokerage service company offering real estate brokerage, mortgage, title, insurance, and SaaS services. We continue to enhance our underlying proprietary technology in addition to expanding our SaaS offerings. And throughout the rest of 2022, we'll continue to focus on strengthening our infrastructure and business integration as we seek to expand our footprint of our family of brands, both organically and via acquisitions. Our focus has been and will continue to be to execute our long-term vision of being among the top real estate brands in the country. On our last call, we shared that assuming we reach between 100,000 and 110,000 transactions per year, we believe that we can generate a justly but exceeding $40 million. While we're not prepared to provide a timeline yet for that transaction milestone, we are confident that we can maintain the strong agent and transaction growth that we've achieved consistently for more than a decade. Now, as I hope you can tell, we believe Fathom is a great future. We are proud of what we've been able to achieve and remain incredibly excited about the years ahead. With that, I'll turn the call over to Marcos. Marcos, it's all yours.

Thank you, Josh. Good afternoon, everyone. I'll start a detailed review of our first quarter results, and we'll finish with our updated guidance for this year. Fourth quarter revenues grew 81.4% year-over-year to $90.1 million compared with $49.6 million for last year's first quarter. The increase resulted from growth in real estate transactions, increased in average revenue per real estate transaction, and revenue contributions from our newly acquired businesses. Gap net loss for the quarter was $6 million for a loss of $0.37 per share, compared with a loss of $3.4 million, or $0.25 per share, for the 2021 first quarter. The year-over-year change in GAAP net loss resulted principally from investments in future growth, operational and overhead costs related to acquired companies, incremental costs due to our transition to a public company, and increases in non-cash stock compensation and non-cash amortization of acquired intangible assets. Adjusted EBITDA loss in non-GAAP measure was $2.1 million versus adjusted EBITDA loss of $2 million for the first quarter of 2021. In the 2022 first quarter, GNA was $10.8 million, or about 12% of revenue, compared with $6.1 million, or 12.3% of revenue, for the same period a year ago. The increase in GNA in absolute terms was primarily attributed to to recently completed acquisitions and increases in non-cash stock compensation expense. We anticipated the G&A expense will continue to increase on an absolute dollar basis going forward, driven by acquisitions and costs related to scaling and integrating our business line. However, as it did this quarter compared to last year, G&A's percentage of revenue is expected to decline over the long term as revenue increases. Expenses related to marketing activities were $1.1 million versus $402,000 for the last year's first quarter, mostly driven by an increase in marketing activities related to new market openings and newly acquired companies. Next, I'll spend some time reviewing our business unit results. Our real estate division continues to perform very well. We finished the quarter with just over 9,000 agents, a 49% increase from the same period last year, we closed just over 10,000 real estate transactions for the quarter, a 47% increase from last year's first quarter. Adjusted EBITDA in our real estate division was about 944,000, building an adjusted EBITDA profit that we've generated since Q2 of 2021. Gross profit per transaction was over $535 for the period. Our mortgage business generated revenues of $2.9 million, in the 2022 first quarter, slightly higher than what we generated in Q4 of 2021. The adjusted EBITDA loss in the business was approximately 490,000, likewise, slightly higher than Q4 of 2021. Moving to our technology segment, revenues in the 2022 first quarter totaled 644,000. Adjusted EBITDA for the quarter was a loss of 400,000. Our insurance and title businesses have combined revenues of just over $2.5 million for the quarter, slightly higher than Q4 2021. Adjusted EBITDA for Veris, our title business, was $54,000, and adjusted EBITDA for Daigle Insurance was just over $100,000 for the quarter. Given that Q1 is generally the lowest revenue quarter for the year due to industry seasonality, our first quarter results were excellent, and we remain very excited for the future. We ended the quarter with a strong cash position of $30.5 million, which gives us plenty of runaway to execute our strategy. Now let's discuss the attached rate. For both encompassed lending and various title, we rolled out several markets in the late summer of 2021. After nine short months, we continue to see attached rates that range from 5% to 6%. As we look at the continued increase in file starts from FADM agents to both various and encompassed for Q1 of 2022, We believe that we'll exceed the 10% of tax rates within 18 months of Veris and Encompass opening an individual new market. As Josh indicated earlier, we implemented a share repurchase plan at the end of Q1 this year. As of the end of April, we repurchased 310,114 shares for a total amount of $2.9 million. Now, I'll finish with our guidance for the second quarter of 2022, as well as our updated guidance for the full year. We are updating this guidance based on the positive trends we continue to see in Fathom's business. For the second quarter of 2022, Fathom expects total revenue to range between $110 million and $115 million, with adjusted EBITDA in the range of a loss of $200,000 to a positive adjusted EBITDA of $200,000. For the full year, we are increasing our revenue guidance to a range of $445 to $455 million. Our adjusted EBITDA guidance range remains at a loss of $500,000 to a positive adjusted EBITDA of $500,000. Now, as a reminder, guidance is forward-looking, which, as Rogers noted at the beginning of the call, is subject to certain risks and uncertainties. Before I turn the call back to Josh, I'd like to say how proud I am of our entire team and what we have accomplished this past quarter. Due to seasonality of this industry, the first quarter can be the most challenging quarter financially due to a usually lower number of transactions. However, we have outperformed in every metric, including agent growth, transaction growth, and more importantly, we reduced our EBITDA loss significantly, which sets the foundation for reaching profitable adjusted EBITDA this year. I believe that our team's vision and passion will allow us to continue revolutionizing the residential real estate industry. Now, with that, I'll give the mic back to Josh so we can take your question.

Thank you, Marco. We believe that Fathom is a clear, visible, and long runway with tremendous growth prospects. No matter what the market holds, we believe that our model is positioned to win. We've been working hard to deliver on our promise to grow Fathom in an accelerated yet sustainable fashion for the long term. Thank you again for your trust in being part of our Fathom family. So with that, operator, we're now ready to open the call to questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from Darren Aftahi with Roth Capital Partners. Please go ahead.

Hey, guys. Thanks for taking my questions. Nice quarter. So a couple if I may. First, I'm just kind of curious. I know interest rates have been creeping up throughout the year. I'm just kind of curious what your general thoughts are, if you've seen any changes in your business in the second quarter to date. Then I've got two more follow-ups.

Let me address the first part of that and have Marco address the second part. A friend today sent me a chart showing that buyer sentiment is down, how they feel about the market. Is today the right time to buy? And it's pretty low right now. However, what's interesting is that buyer sentiment does not actually connect with what we're actually seeing in the street. So as we talk to buyers in the street, as our agents are talking to buyers online, you know, we're not really seeing a reduction in people raising their hand saying, I want to look for homes. And I think when we ask them why, if you don't feel that great about the market, why are you still looking to buy a home? And their reason is because, you know, that whole fear of loss, because I think it's going to keep, you know, price will keep going up. And if I wait, then the $400,000 home I'm looking for is not going to be $420,000 or $430,000. You know, so yes, I don't love these interest rates, but, you know, I also love the idea of buying the same home for $430,000 now. So it's interesting that, you know, to see how You know, the sentiment can be disconnected from what's actually happening in real life. But, Mark, do you want to address the second part about how we're actually seeing it affect our future?

Yeah. Thank you, Darren. Thank you for your question. We track file starts almost on a daily basis, and up to April of this year, we have not seen a reduction in file starts. Now, that does not mean that, you know, in May that would change. But from January all the way to the end of April, we have not seen. We are still consistently having the same increase in file starts that we actually had last year and Q1 of last year as well. So that does not mean that it may change, you know, by the end of May. But thus far, we have not seen a decrease in that.

That's helpful. Thanks. Thanks. Two more. So you raised revenue for the full year by, I think, $20 million, if my math is right. But you kept your adjusted range the same. Maybe just a commentary around that context and just any kind of puts and takes on costs. Yeah.

So the reason for that is that we are seeing some compressions in margins in the mortgage business. and we don't know if those are going to continue to accelerate or they're going to stay consistent. So we did increase our revenue guidance for the year, but we want to be cautious given that we're beginning to see some compression in the mortgage business. Now, the mortgage business is still a very small part of our business, right? But we want to kind of hedge that and and make sure that we are conservative in our adjusting EBITDA guidance. We're very keen in making sure we make our numbers when we say we're going to make them that. So that's the reason for that.

Great. And then this last one for me. Can you just talk about where you guys stand on lead generation and kind of how do you decide – which markets to roll that out to and how fast you think you can get kind of greater scales in your markets and kind of what impact that's having on other areas of their business, like attach rates. Thanks.

Mark, let me address kind of part of it. I want you to address, you know, how we look at markets and how fast we're rolling out markets. One of the things that we're being very careful about is that while lead generation has a great return on investment long-term, the initial upfront cost can be great. And so, you know, we want to always be good stewards. Right now we are pushing for profitability. And so we're trying to balance the two. How fast do we spend the dollars to generate the leads? But knowing that the dollar I spend today may convert, that lead may convert, you know, nine months from now or 12 months from now. And so we want to be very careful about how we do that. So, you know, we're trying to be very thoughtful about how quickly we rolled out. You know, if this was a different era, we'd probably be rolling it out much, much faster. Right now we're taking the time to really prove it out. We've got a great team that works with the leads that come in. They nurture those leads. Then they assign those leads to agents. We're spending a lot more time training the agents, working through scripts, you know, what works the best to get the highest conversion ratio. So, in other words, for every dollar we do spend, even though it may take nine months or more to actually convert to a closing, we want to make sure we convert a higher percentage of those leads into it. into closings. So we're very thoughtful about how we do that. But as far as markets, I'll let you address that, Marco. Sure.

So we generally, our leads program is comprised of three different ways to generate leads. One is through just regular pay-per-click and ads. Second is using our live-by data. And third is our Hispanic division. So, again, we generate leads in three different ways. We are currently in five to six markets across the country. Markets like Las Vegas, Southern California, Houston, Atlanta, Charlotte, and I believe Chicago now. And so those are the markets that we're in. As we continue to prove the financial results of the pilot, then we'll go ahead and look into other markets. So we did increase from three to six, and, you know, thus far continues to go well. But as Josh indicated, there is a significant investment into lead generation that typically takes six to nine months to prove itself. And so right now we're currently with six markets. We think we'll probably continue the six markets for the rest of the year, improve our model, and then probably increase that either later in the year or early next year.

Thanks, guys.

Again, if you have a question, please press star then one. Our next question will come from Tom White with DA Davidson. Please go ahead.

Good evening, guys. Thanks for taking my questions. Maybe just a follow-up on the topic of rising rates and sentiment. It sounds like the transaction pipeline looks fine. I was curious whether you're seeing or whether you anticipate sort of any change in the M&A situation. pipeline and how you're thinking about that over the next few quarters? And then I had a follow-up or two.

Sure. That's a fantastic question. So from an M&A standpoint, you know, we're thinking about brokerages. Really the focus of our M&A is on real estate brokerages. There's two ways of doing it. One is through acquisition and the other is through a walkover. For those of you who don't know what a walkover is, a walkover would be a group of, let's say, 50 agents or 90 agents that that instead of acquiring their company and going through all the, you know, the auditing of their books and make sure all that, we basically, you know, we basically acquire the company or acquire the group by moving them over, moving all the licensing over to FAUDA. It makes it easier. It's faster instead of taking, you know, four, five, six months to go through the whole process of the acquisition. Sometimes we can get that done in 60 days or 90 days. So it cuts the time in half. It's faster. And it obviously costs less because we don't have as many legal fees and auditing fees and all the other fun stuff that go into it. So those are nice. You know, we like to focus more on the walkovers. And so I think over time you'll still see acquisitions that we make. We're actively pursuing acquisitions. What's interesting, though, is usually the acquisitions pursue us as do the walkovers. It's not as often that we're reaching out to people saying, hey, have you ever thought about selling? We'd love to have you join our Fathom family. It's usually... The other way around, it's, hey, I see you guys in the market. I love what you're doing. We're struggling over here. I'd love to be – actually, they never say that they're struggling, but we can see if they're struggling when we look at their numbers. But we'd love to be part of the Fathom family. We'd love to help you grow in this market. What could this look like? And so we tend to be approached. And so we're actually – when we went public, we started seeing a much higher percentage of people approaching us. And as the market starts softening, we saw even more. I think more and more companies, especially small companies who are barely surviving, are going to potentially die in a down market. Like there's 86,000 brokerages. I think the number is actually higher now. And so a lot of these brokerages, these mom and pops with 30, 40, 50 agents and so. And so they're struggling to pay the bills as it is. And if there's a market downshift, you know, then there's no way to pay the bills, right? They're dipping into savings to survive. So a lot of them would come to us as a potential walkover. And now, you know, we need more leadership anyways. That person can come in and help maybe be a manager in the company, you know, managing agents. We bring the agents over. So it's a very attractive way to grow. So we look at a lot of that. We are still pursuing, as I said, acquisitions. And I think that over time you'll continue to see more and more of these walkovers and acquisitions.

Great. Thanks for that. Maybe just one follow-up on the buyback. I realize you guys just announced the program, I think, in mid-March, but the balance sheet is healthy, and I realize you've got a bunch of different kind of growth investment opportunities in parts of the business, but just curious what are your thoughts on maybe getting more aggressive on buying back stock here, given kind of what's happening with it?

Sure. As far as being aggressive, and we were kind of, our hands were tied a little bit because of the qualified plan that we had. You know, under the SEC rule, we could only sell so much per day. In fact, we had no control over what was, I'm sorry, sold, what was bought per day. So we had no control over it. It just happened the way it happened. You know, can we get more aggressive? Honestly, I don't want to answer that. I think Marco might be able to speak to that a little better than I do. I know that when we created the plan, we said we wanted to be aggressive. And You know, honestly, I think if we look at what we're buying per day, we were doing just that as far as what we're allowed to do. The problem is we don't have as much activity in our stock, so we're not selling. I think our average is about 70,000 to 80,000 shares per day, and so you're kind of limited there. But, yes, if we have the ability, we'd love to be a little bit more aggressive on it, especially right now while the stock is still incredibly desirable where it is right now. We think it's an incredible opportunity. So one of the things, kind of go back to your first question, is, you know, we've got a pretty healthy balance sheet, and where do we best spend that dollars, right? Is it better to buy back a share, or is it better to buy another agent? Like, how do we grow? And I think we can, as the saying goes, chew grum and walk at the same time. I think we continue to be aggressive and buy back more stock, as well as make these acquisitions or walkovers. And so that's kind of what we're pursuing. But there's probably now data goes by that Marco and I don't have a conversation, sometimes with some of the board members as well, about, you know, How do we best move forward in this avenue or that avenue or this lane or that lane? And so we're trying to be very thoughtful and make sure we're always doing the best for our shareholders.

Tom, I think one of the things that makes our position interesting is that, you know, given our guidance for Q2 to be a justly bid out positive, and then if we reach our justly bid out positive for the year, it means that, you know, for Q2, 3, and 4 are all going to be a justly bid out positive, right? And so it puts us in a very strong position that we're not going to burn to cash anymore and give our strong balance sheet. So we have a variety of the opportunities here to look at not only a cash buyback, continue to do that, but also to look at all the interesting opportunities in the market. As Josh mentioned earlier, you know, we're beginning to see more and more companies between 25 and 100 agents, right? And I think that's going to be one of the things that are going to sort of change the slope of the curve for a growth curve going forward. is the number of these walkovers we're going to see in the second half of this year and first half of next year. I think that's one of the things that, you know, the reason we raised capital at the end of last year is because, to a certain extent, we anticipated somewhat there would be more companies that would be interested in doing this. So I think when you put all that together, I think it puts us in a very strong position. We are, you know, estimating the reaching adjusted EBITDA in Q2. We have a strong balance sheet. You know, you put those things together, it gives us the ability to go execute, continue to grow at a significant pace, and still look at continue to buy, buy stock. So, you know, we feel very good about our position right now.

Great. Thank you, guys.

Thank you.

Again, if you have a question, please press star then 1. As there are no more 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 so much, Alfred. Appreciate it. Thank you again for everyone who's been on the call today and, of course, for your continued support. We are extremely proud of all that we've accomplished and will continue to work diligently toward achieving our objective of adding greater value to our company for the benefit of all our stakeholders. And so with that, have a wonderful week, and may the 4th be with you.

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