Thank you, operator, and welcome, everyone, to the Fathom Holdings 2023 Second Quarter 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 Form 10-K for the year ended December 31, 2022, as well as our latest Form 10-Q 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, 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. So with that, I'll turn the call over to Fathom's Founder, Chairman and CEO, Josh Harley. Josh?

Thanks, Alex. Good afternoon, and welcome everyone to our second quarter 2023 earnings call. Our entire team really appreciates your support and encouragement throughout the quarter. We're pleased to report another strong quarter compared to the overall market and share the recent progress we've made in advancing our growth strategy. I want to start by thanking our Fathom family across each of our businesses for their hard work and dedication as we continue to navigate the real estate market. Their commitment to supporting our growth, our vision in serving others, and the communities we operate in is a testament to the Fathom culture. We recently had the honor of ringing the NASDAQ opening bell to celebrate our third anniversary of our public listing and our significant achievements to date. This milestone is a tribute to the collective effort and unwavering commitment that drives us forward and allows Fathom to adapt and thrive in a rapidly evolving residential real estate industry. We extend our heartfelt gratitude to every Fathom employee and agent who have poured their dedication, passion, and hard work into the journey and in shaping Fathom's success. I'd also like to briefly mention the addition of Steve Murray to our Board of Directors, which we announced a few weeks ago. Steve has become a great friend and brings invaluable experience in the residential brokerage industry to Fathom and should be a tremendous asset as we continue to disrupt the real estate market and execute our growth strategy. 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 during the quarter and what gives us confidence in our business going forward. While the second quarter remains challenging for residential real estate overall, we're encouraged by some recent signs of stabilization across our markets, along with the moderation in interest rates during the quarter. Consumers continue to adjust to higher mortgage rates. And while transactions across the industry were down, we remain encouraged by the trends we're seeing across our markets, and we believe we're well-positioned to continue growing market share regardless of what happens with interest rates. I'm sure you've all seen the talking heads state that with so many homeowners currently enjoying historically low interest rates, they have no plans to move anytime soon. However, what people plan to do under ideal personal circumstances and what they actually do in the real world are rarely the same thing. The fact is not everyone has the luxury of being rate-sensitive. Life happens. People get married or they have a family and need more space and, God forbid, sometimes they get divorced. People relocate for work or for family. There's always a need, and when that need arises, we'll be there. Our results this quarter continue to demonstrate the power of our truly disruptive business model and how we're able to succeed in a difficult market environment. During the second quarter, Fathom completed approximately 11,000 real estate transactions, which is down 16.7% from the prior year's second quarter of approximately 13,200. We feel good about this number compared to the overall market decline. Even then, as I mentioned, our decrease compares favorably to most of our peers and the entire U.S. residential real estate market. According to the National Association of Realtors, the U.S. residential real estate market saw overall transactions in the quarter decline 18.6% compared to Q2 of last year. As our transaction volume reflects, we continue to take market share from legacy brokerage firms despite the volatile environment and actually saw year-over-year transaction growth in several of our markets. We also increased our agent network 14% to approximately 10,930 agents at the end of the quarter, which compares very favorably to all but one of our public peers, especially when many of our peers saw a decline in agent count domestically. We feel optimistic as we continue to provide a compelling value proposition through innovation and an industry-leading commission model that continues to resonate well in this environment, and we believe that we will continue to do so going forward. We are excited to achieve our goal of adjusted EBITDA breakeven in Q2. During the second quarter, we continued to see the benefits from the cost reduction measures we implemented along with the improved performance across all of our divisions. In fact, we made tremendous progress in reducing our cash burn from over $5 million in Q4 of 2022 to less than $1 million this quarter. Importantly, we believe that these cost reductions were made without sacrificing our ability to grow. And in fact, we have allocated some of these savings to further strengthen our recruitment efforts and our technology platform. We're continuing to optimize our cost structure for the current environment and better position Fathom for improved operating leverage as the residential real estate market returns. We continue to be committed to maintaining adjusted EBITDA profitability going forward and ultimately achieving cash flow positive as well, although the latter may not be reached until Q3. We anticipate continued cash investments to fuel the growth in our mortgage division, our agent recruiting, and potential acquisitions. Let me now spend some time discussing our progress across the businesses. Fathom Realty has been one of the fastest-growing residential real estate brokerages in the U.S. for over a decade, and that growth does not happen by accident. We have an incredibly talented, dedicated team who truly live our guiding principles and support our unique culture every day. At Fathom, we'll continue to innovate and disrupt the residential real estate industry and believe that our best years are still ahead of us as we continue to grow our agent network and capture market share from legacy firms. Today, Fathom Realty operates in 37 states in the District of Columbia. We continue to expand our reach with a unique business model to the residential real estate market, as we offer agents all the tools, the technology, training, and resources and support our larger traditional peers do, but at an industry-leading flat fee commission split to agents. Our business model allows us to succeed irrespective of the market environment, and we believe we're well-positioned to attract an ever-increasing number of real estate agents during these unprecedented times when agents struggle to generate leads and close sales. We often hear agents say that they join to earn more commission, but they stay for the culture. Our unique low-cost and disruptive business model has allowed Fathom to attract high-quality agents and enjoy agent retention rates approximately twice the national average. Even though we charge a small fraction of what other brokerages charge their agents, we believe that all Realty businesses can be profitable with a smaller number of transactions than our peers. Our technology also remains a key point of differentiation, and we can generate long-term savings and ultimately charge our agents far less than others by owning it outright. We also license our proprietary technology to over 750 brokerages through a recurring revenue subscription model that drives incremental high-margin revenue while enhancing awareness of our brand within the industry. Let me now provide an update on our agent trends and steps we're taking to grow the Fathom network. Our cost to acquire one agent during Q2 remained low at approximately $980, making our breakeven on each agent still less than the $1,150 that we'll earn on their first sale. We also maintained strong retention rates, which are approximately twice the national average and remain exceptionally strong given the backdrop of agents leaving the industry. During the second quarter of 2023, our attrition rate averaged approximately 1.85% per month, which again compares favorably to the industry average of over 3%. More importantly, 80% of the agents who left Fathom did 0 or 1 sale per year. Based on historic trends, we anticipate that additional attrition in the coming year will continue to be primarily from low-producing agents. Our enhanced agent referral program called Free For Life and revised agent commission structure continue to show traction among our agents, and we're pleased to announce that we've continued to see a stronger agent referral rate. The Free For Life program is a testament to our commitment to fostering a supportive and rewarding environment for our agents, and this program is a true win-win. At Fathom Realty, we believe in empowering our agents to reach new heights of success by providing them with unrivaled opportunities and benefits. Once an agent achieves Free For Life status, they experience a dramatic transformation in their business potential at Fathom Realty and will never have to worry about paying transaction fees again while substantially enhancing their earning potential. Now remember, 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 downturn, or decrease their expenses. We can help agents do both in this environment. And this is why our agent referral program continues to have a positive impact on our recruiting efforts. We're also excited to announce our inaugural Fathom Serves Event in August, which illustrates how Fathom can unite and make a tangible difference in our local areas beyond real estate. The week-long event will allow agents and staff to give back to the local community through our favorite charitable organizations by choosing a service project that aligns with three of the company's guiding principles of service, support, and charity. We're committed to positively impacting the areas we serve and are excited to see what meaningful change we can make through our annual event. Lastly, let me briefly touch on our path to profitable growth. A lot of companies sacrifice profitability for growth. But I'm proud to say that we don't have to operate that way. We can do both. This quarter, we achieved adjusted EBITDA breakeven even in today's difficult market environment. We believe that 2023 will be a pivotal year for Fathom as we strive to turn the corner on profitability and really start to show the operating leverage in our business, which Marco will cover in his remarks. Our ancillary businesses have the potential to dramatically increase our revenue and profitability per transaction over time. And even in this tough market, we're continuing to see progress across those businesses, giving us increased confidence in our growth strategy. During the second quarter, we saw improved attach rates within our title and mortgage businesses as we continue to go deeper into the markets in which we operate. To close, we believe that we're well positioned to grow revenue, agents, and transactions through the remainder of 2023. 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 second-quarter 2023 results, and then we'll finish with a discussion on guidance. Second-quarter revenue declined by 22% year-over-year to $100.1 million compared with $128.2 million for last year's first quarter. This decrease was primarily attributed to a 16.7% decrease in transaction volume, along with a 6% decrease in the average home prices during the quarter. GAAP net loss for the second quarter was $4.3 million, or $0.27 per share, compared with a loss of $5.7 million, or $0.35 per share, for the 2022 second quarter. Adjusted EBITDA, a non-GAAP measure, was $458,000 in the second quarter versus an adjusted EBITDA loss of $2 million for the second quarter of 2022. The $2.4 million improvement in adjusted EBITDA this quarter was largely driven by a reduction in expenses and additional agent fees that went into effect in January. Notably, this improvement was achieved despite the 22% decrease in revenues this quarter compared to Q2 of 2022. One of the most important achievements this quarter is that approximately 70% of the increase in gross profit from Q1 flowed to the adjusted EBITDA line. This highlights the operational leverage our company has reached in this quarter. We believe that going forward, we will continue to drive a similar percentage of the increase in gross profit contribution to the bottom line. G&A expense was $10.2 million in the second quarter or 10.7% of revenue compared with $12.4 million or 10.1% of revenue for the same period a year ago. On a sequential basis, G&A improved from 12.4% of revenue to 10.7% of revenue. In total, our operational support, technology and development, and G&A expenses decreased by almost $1.3 million from $15 million in Q2 of 2022 to $13.7 million in Q2 of 2023. This reduction reflects the benefits of our expense reduction initiatives that commenced earlier this year. Expenses related to marketing activities were $927,000 for the quarter compared with $1.3 million for last year's second quarter. The decrease in marketing expenses related to leveraging internal resources and optimizing advertising expenditures. Now let me spend some time reviewing our business segment results in more detail. We closed approximately 11,000 real estate transactions in the quarter, a 16.7% decrease from last year's second quarter, but below the 18.6% reduction in the overall market. We ended Q2 with approximately 10,930 agents, which represents a 14.3% growth rate over Q2 of 2022, while the National Association of Realtors saw a membership decline of approximately 1.5%. Revenue for the real estate division was $94.6 million compared to $122 million for the same period last year. This is a decrease of 22%, of which about 6% is related to a decrease in the price of homes and 16% is attributed to a decrease in transactions. Adjusted EBITDA in the real estate division was approximately $2.5 million, an increase of $800,000 compared to adjusted EBITDA of $1.7 million in Q2 of 2022. The increase was achieved despite the 16.7% decrease in transactions this quarter compared to the same quarter last year and reflects our increase in fees and favorable impact of cost-cutting measures. Now that we've reached a breakeven adjusted EBITDA, we can begin to show the operating leverage of our business. Going forward, we estimate that 70% of the increase in gross profit will flow to the bottom line. Our mortgage business generated revenues of $2 million in the second quarter compared to $2.6 million in the prior year period. Mortgage adjusted EBITDA for Q2 was a loss of $240,000 compared to an adjusted EBITDA loss of $860,000 for the same period last year. Our team continues to identify opportunities to reduce expenses to rightsize our mortgage business going forward as well as increased revenues by recruiting additional loan officers. Our insurance business generated revenues of $1.7 million for the quarter compared to revenues of $1.6 million for the same period a year ago. This represents an increase of 6% in revenue. Adjusted EBITDA increased 348% from $107,000 in Q2 of 2022 to $480,000 in Q2 of 2023. This reflects the great work our DIA team has done under Nathan's leadership to significantly increase adjusted EBITDA this quarter. Verus Title generated revenues of $960,000 for the quarter compared to about $1 million in revenue for Q2 of 2022. Adjusted EBITDA was negative $25,000 compared to $22,000 of positive adjusted EBITDA in Q2 of 2022. The decrease in revenue and adjusted EBITDA is primarily due to the significant decrease in purchases and business due to higher interest rates. However, we continue to see an increase in the number of files starting from Fathom agents in North Carolina, Dallas, Utah, and Indiana markets, which we believe will improve adjusted EBITDA going forward. Moving to our technology segment. Revenues increased 20% to $792,000 compared to $656,000 for last year's second quarter. Adjusted EBITDA loss for the quarter increased by 28% from a loss of $325,000 in the second quarter of last year to a loss of $418,000 in the current quarter. Our team continues to increase its footprint across the country, reaching over 240 MLSs and 425 agents at the end of the quarter. LiveBy powers more than 40 million community pages with 125,000 neighborhood reports created. We continue to focus on our balance sheet given the dynamic real estate market conditions, and we have made tremendous progress on reducing our cash burn from over $5 million in Q4 of 2022 to less than $1 million this quarter. We ended the quarter with a cash position of $9.1 million. We believe our cash position and overall liquidity provide us with adequate runway to grow the business and execute our strategy through operating cash flow breakeven. We did not purchase any shares in the second quarter under the stock repurchase plan, and approximately $40 million remains under the authorization. Before turning the call back to Josh, let me briefly touch on guidance. Given the continued uncertainty in the macro environment, we're only providing guidance for the third quarter ending September 30, 2023. For the third quarter, we expect revenues in the range of $93 million to $95 million and adjusted EBITDA in the range of $200,000 to $350,000. As a reminder, guidance is forward-looking, which, as we noted in the beginning of the call, is subject to risks and uncertainties. I want to thank and congratulate the entire team in achieving positive adjusted EBITDA. Our entire team has worked very hard to achieve some important milestones in a very challenging economic period. With that, I'll turn the call back to Josh for closing remarks.

Thank you, Marco. Sometimes you have to delay a short-term victory in order to ultimately deliver long-term success and market domination. We remain dedicated to executing on our growth plans and doubling down where we can to bring the greatest long-term value to our employees, our agents, and of course, our shareholders. With that, operator, let's open up the call to questions.

This is Dillon on for Darren. First, on the agent acquisition side, I guess could you talk about what you might be seeing from agents given the housing environment? Are they sort of staying put as to not rock the boat and sort of get to a point where there's some more stabilization to sort of the supply and demand for them as agents? And then as sort of an adjacent question to that, like of the agents you did add in the quarter, I guess, how does their productivity compare to your base level variance?

Those are great questions. First, it's important to note that the market experienced a decline of 1.5%. However, our overall industry saw a 14% increase, which means we significantly outperformed the market, and we're pleased with our results. Still, it’s crucial to recognize that many agents have faced a considerable reduction in their personal business, ranging from 20% to 30%. This often leads to hesitation when they consider switching brokerages due to concerns about potential disruptions. Agents worry about missing out on business during the transition or about payment issues with their current broker, particularly if they have ongoing deals. We’ve heard this concern repeatedly, although it’s not the case for every situation. Many agents also fear that a move could lead to further declines in their business. There's some negative talk surrounding joining our company, driven by fear rather than facts. However, we continue to outperform the market in terms of growth compared to other companies, with only one other firm surpassing us in agent growth. We remain optimistic, as more agents are starting to make decisions, whether that means leaving the industry or joining us. Despite a slight dip in Q2, we're seeing an increasing number of agents choosing to come on board, which gives us confidence in our trajectory moving forward. Now, what was the second part of your question?

Just on the productivity side of the new agents added in the quarter versus your existing base.

No, we're not seeing a difference. We are noticing that new agents are closing fewer transactions than we are accustomed to, but this is not different from our current agents. If our agents are down by 20% or 30% individually, we are seeing many new agents closing significantly fewer transactions than usual. However, this trend reflects the overall market conditions. Unfortunately, this is the state of the industry and the market at present.

Got it. If I could ask one more, maybe for Marco. I appreciate the color on sort of the flow-through of gross profit on the real estate side of things that goes to the bottom line. I guess how much wiggle room is there in the OpEx side? Or are you sort of managing it to the point where the pretty tight guidance on EBITDA is sort of based upon your goals of staying adjusted EBITDA positive, but sort of managing it sort of right to the line as to stay positive, but I mean, still near breakeven? So I guess like how much actual?

Yes, that's a great question. The 70% figure applies company-wide and is not limited to the real estate division. We raised gross profit from Q1 to Q2 by approximately $2.5 million, with about 70% of that contributing to our overall performance. This applies to all divisions, including our mortgage company, which saw a reduction in EBITDA losses from Q1 to Q2. Therefore, this 70% is relevant across the board. As for the wiggle room you mentioned, we do have some; we’ve crossed the EBITDA threshold and have some leeway. It's not a situation we need to manage with extreme caution. We are still expanding our business and investing for growth without the need for stringent oversight. We continue to hire, having added about 15 loan officers last quarter, bringing our total to around 45, and we plan to hire more. We're operating consistently and, given that we believe we've passed a crucial turning point, we expect to keep contributing 70% of the gross profit increase to the bottom line moving forward.

This is Wyatt Swanson on for Tom. Congrats on achieving positive adjusted EBITDA. We're seeing some signs that the momentum you and some of the other cloud-based brokerages are enjoying is triggering a bit of a competitive response at some other larger brokerages with similar models to yours. So I mean, in terms of them having to sweeten the value proposition to their agents, Josh, curious to hear about how you think about needing to stay on par or ahead of some of the larger brokerages you're competing with when it comes to the overall appeal of your value proposition or financial package.

Can you give me a specific? Are you referring to other companies with the exact same commission model we have?

I'm referring to similar cloud-based brokerages.

Yes, when considering cloud-based brokerages compared to our public competitors, there are only two, and it's not a fair comparison. Although they are cloud-based, they still operate under a traditional model similar to legacy firms, using an 80-20, 85-15, or 70-30 commission split. This makes it difficult to compare directly. In terms of the brokerage's bottom line, there are differences, but our focus is on attracting agents. An agent at a firm with an 80-20 split still pays out 20% of their commission—$2,000 or $2,500 for one transaction—whereas they would pay us only $550 for the same transaction. This gives us a competitive edge in terms of monetary value. Additionally, we offer similar tools, technology, and training resources, and while I won't claim ours is better, they don't offer more than we do. Therefore, when everything else is equal, the commission aspect is where we excel, and I believe they cannot compete unless they fundamentally change their business model. Such changes would likely lead to significant instability in their claimed profitability. I'm confident about our position today and moving forward, and I don't think they can adjust to match our model without causing major turmoil.

Let me add a couple of more points. Among all public companies, we stand out with a very different model. However, there are many small companies similar to ours across the country. When examining our flat 100% commission model, it's important to look at the data, which shows that this is actually the fastest-growing model in terms of net agent growth among companies like ours. We are simply the only public entity of our kind. There is a strong interest from agents in joining companies like ours and other private firms. I believe that the 100% commission model will continue to expand significantly across the country and will eventually account for a substantial portion of the agent population. While there are various successful models out there, no single model fits all. Nevertheless, the flat model will keep growing without a doubt. We have observed that many regional or local firms similar to ours are experiencing rapid growth, although they don't receive the same level of attention since they are not public.

I think what you're seeing, the other cloud-based companies are growing exponentially, not necessarily because they're cloud-based or because they're similar to us, they're growing because they have a pitch that no one else has that MLM-type aspect of the business where you're profit-sharing or revenue-sharing. And so right now, it's exciting. But at some point, it becomes less and less exciting, especially as that business grows to a point where it kind of hits its plateau, there's really no more room for people on the bottom to benefit from that model. And so you're seeing one start to plateau and you're seeing the other one still hit its stride and doing fantastic, and we're cheering them on. It's fun to see. I think they've got a great CEO and a great team. But at the end of the day, that only lasts for so long. I think this model that we have at Fathom, long-term, will be the future of this industry, and I truly believe that. That's not lip service.

Could you speak to the gain on sale margins in the mortgage business? What you're seeing there? And if you have any outlook on that?

Sure. Great question. The situation is quite variable. If we look back to the third quarter of last year, it was likely the lowest point, as major banks that handle most mortgage transactions really squeezed the market. However, the scenario has changed significantly over recent quarters. Many banks are currently facing cash flow difficulties for various reasons. It's important to monitor the difference between the 10-year note and mortgage rates, as this gap has historically been about 150 to 200 basis points, but now it exceeds 300 to 350 basis points in some cases. As a result, banks are raising mortgage interest rates to control the volume of new mortgages, and some are also lowering payouts. This has led to noticeable compression in commissions from large banks handling mortgages. Companies like ours are adjusting compensation and other expenses accordingly. This situation can fluctuate monthly and quarterly, and we are learning how to navigate these changes. Our mortgage leadership has performed admirably, particularly when comparing the EBITDA loss in the second quarter to the first quarter. We've made considerable progress in reducing those losses and aim to reach breakeven in our mortgage operations within the next few quarters. There is indeed compression on commissions in the mortgage sector.

That's very helpful. And then are you guys seeing any noteworthy regional differences in terms of home sales and price change dynamics?

Yes. So historically, in this industry, every trend starts on the West Coast and moves from the West Coast to the East Coast. And we've seen this for the last 10 years, and there are so many trends. Certainly, the increase in prices two years ago; we've seen a much greater increase in prices of houses in the West Coast, markets like California, Utah, Idaho, Oregon, and Nevada. And so we saw those prices increasing more rapidly. We are now therefore seeing them decrease more rapidly. And so in those markets, we're seeing a greater decrease in prices than other markets. And the question, I guess, will be, will these reductions follow the normal trend that we've seen in the past that things start in the West Coast and then move across the country? Or this is really more related to the West Coast because the prices increased so much there, and they're going to just adjust. So the jury is still out on that. But we absolutely have seen greater decreases in the West Coast. Having said that, there are some pockets across the country that we're seeing some decreases, but they tend to be smaller pockets as opposed to a trend. The trend really is primarily in the West Coast, and that's where we're seeing the largest decrease in home prices.

Yes. Congratulations on getting breakeven here. Yes, I just have a few questions, just trying to understand your uniqueness here. First of all, can you touch upon your referral tiers? And how are they better than an MLM type of marketing? Why does that the referral peers not get impacted when you gained a lot of share in the market, assuming there's a lot of share in the market?

First of all, I wouldn't say it's better, but rather it's different. Throughout the year, we've had many investors ask why we don't operate like ABC and XYZ companies or follow an MLM model. The reality is we don't take a significant percentage of the commission to pursue that approach. Therefore, we needed to create something unique. While you're rewarded based on the performance of others in those models, our structure means you are rewarded for your direct efforts. I’ve seen many individuals transition from those companies and share experiences where they referred multiple people but earned little to no money due to the lack of productive agents within their network. In our case, however, your earnings are directly tied to your efforts – the harder you work, the greater your benefits become, regardless of the earnings associated with others' transactions. This setup ensures that you are not reliant on other agents for your financial gains. Instead, your ability to close business is crucial for your rewards, which ties back to actual savings. In many MLM scenarios, agents must refer anywhere from 8 to 12 others just to break even compared to what we offer from day one. Conversely, with us, if an agent refers four people to Fathom, they must meet a minimum transaction requirement to receive benefits. If each of those four closes an average of five transactions, that's 20 transactions for the company, and they are capped for life. Although they still owe their annual fee and transaction charges, it's still beneficial as they save money, while we gain numerous transactions. For the Free For Life model, agents need to refer eight agents to achieve true freedom from any fees, provided their referrals each complete five transactions. When you do the math, we sacrifice five transactions to generate 40, plus any annual fees, resulting in a significant win for both sides.

That's very helpful. Regarding the referral tiers, they are quite unique. How do you measure their effectiveness internally? Additionally, what percentage of new agent recruitment is attributed to referrals?

Yes. So we typically average between 35% and 40% of our agents coming in to Fathom are referring by other agents. Okay? Second, historically, agents who are referred by other agents, historically close a higher number of transactions than the average agent out there. And so when a Fathom agent refers a non-Fathom agent who joined the company, historically, that agent has a higher producing number of transactions. The reason for that will make sense, right? Typically, agents know other agents because they're closing business; they're working on the other side of the transaction. So that agent typically is more productive for us. And we have increased the number after we introduced a new program in October, November last year. Now we're up to about 40%. We used to be about 28% to 30%, and now we're increasing to 40%. And we think we can even get as high as 50% as we continue to market the program internally.

We had a quarter where we reached as high as 60%, even 65%. Clearly, when there's a benefit, agents become enthusiastic. We need to improve our efforts to maintain that enthusiasm. We’ve been collaborating with our directors to create activities and programs. Every time someone achieves Free For Life or capped for life status, we make sure to highlight that, encouraging others to also aim for it. Keeping them engaged and excited has brought significant benefits, and we are pleased with the results.

I understand. Regarding agent growth, your model is certainly appealing due to the 100% commission and the infrastructure you offer. Although your churn rate is lower than the industry average, it’s still around 1.8% per month, translating to approximately 20% annually. What growth rates do you anticipate? What kind of net growth should we expect from you moving forward, if you can share that information?

Yes. As Josh mentioned earlier, agents are still hesitant to make the move, which is understandable when you think about it. In the past 45 days, we've noticed that our onboarding process begins when an agent starts completing the necessary paperwork to transfer. Essentially, they're starting the process by indicating they want to join Fathom. This process can take anywhere from a day to two months. We've seen a significant increase in onboarding starts during the last 45 days. However, many agents are waiting to finalize additional transactions before they move because these transactions are crucial to them. Consequently, we are experiencing a longer delay than usual between when an agent begins the onboarding process and when they complete it. We are actively working on ways to expedite this process. The rise in onboarding starts is a positive indicator. Historically, prior to the drastic rise in interest rates, our company experienced annual growth of 35%. We anticipate that once the market stabilizes, likely sometime next year, we could see that same growth rate again, especially if interest rates decrease. While we don't expect them to drop to 3% again, if they fall to the low 6s or high 5s, we believe that segment of the market, where sellers are hesitant because they have a 3.5% interest rate, will become more active. Therefore, once the market returns to a more balanced state, we expect Fathom to achieve a growth rate of 30% to 35%, similar to what we have seen in the past.

And these are net of churn, right?

That is correct. Net of churn. That's correct.

Right. Got it. And then lastly, the transactions per agent ticked up. Are these just indicative of the market? Or is the percentage of more productive agents in your mix is going up? How should we...

Part of what we're seeing is that 80% of the agents who left us closed either zero or one sale per year. We experienced an increase in the loss of agents from about 1.5% to 1.8%, which is higher than what we typically see in the second quarter. Normally, these figures are more common in the first quarter when agents are settling their dues. However, those agents who left were completing very few transactions, so as they exit the business, our transactions per agent actually look better. It's important to note that we're also observing potential for significant growth. The market is challenging, yet we are still growing, which is not the case for many other companies. More people are reaching out to us, expressing interest in our company because they admire our story and are struggling with their own businesses. They're exploring acquisition or merger opportunities with us. This trend is increasing, indicating fantastic potential. Even if we don't acquire these companies, some will likely be acquired by others, or they may close down, forcing their agents to seek new opportunities, which often leads to agents scrambling to find new homes. We could benefit from either acquiring these businesses or from agents looking for a new place to work.

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 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. So with that, have a wonderful week. Thank you.

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