Q2 2022 Altisource Portfolio Solutions SA Earnings Call
Ladies and gentlemen, thank you for standing by and walk through the <unk> second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you need to press star one on your telephone I would now like to turn the call over to your host Michelle <unk> Chief financial.
Sir you may begin.
Operator.
First want to remind you that the earnings release Form 10-Q, and quarterly slides are available on our website at www Dot <unk> Dot com. These provide additional information investors may find useful our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results.
Differ.
In addition to the usual uncertainty associated with forward looking statements. The continuing COVID-19, pandemic and carton current economic environment makes it extremely difficult to predict the future state of the economy and its potential impact on healthy first please.
Please review the forward looking statements section in the company's earnings release, and quarterly slides as well as the risk factors contained in our 2021 Form 10-K, which describe factors that may lead to different results. We undertake no obligation to update these statements financial scenarios and projections previously provided or provider you're in as a result of a change.
And circumstances, new information or future events.
During this call we will present, both GAAP and non-GAAP financial measures in our earnings release and quarterly slides you will find additional disclosures regarding the non-GAAP measures a reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.
Joining me for today's call is Bill <unk>, our chairman and Chief Executive Officer, I will now turn the call over to Bill.
Thanks Michelle.
And thank you for joining today's call I'm pleased with our second quarter results and performance beginning with slide four our servicer in real estate segment is benefiting from the restart of the default business with both sequential and year over year revenue and adjusted EBITDA growth.
Our origination segments year over year revenue decline was largely in line with the market wide decline in origination volume.
Despite the market decline, we grew our average weighted sales pipeline and the origination business to $32 million or 54% increase since last quarter as our lenders. One members are increasingly focused on buying our solutions, which are designed to help them reduce their costs.
We also continue to maintain cost discipline in corporate with costs down by 28% over the second quarter of 2021 from cost savings initiatives and the sale of the pointless business, partially offset by the assignment of sales and marketing employees to the business segments.
This performance puts us on a path to generate positive EBITDA and cash flow in 2023.
We ended the quarter was $71 million in cash as expected, we significantly reduced our cash burn compared to the first quarter. We believe our cash burn will further decline as the year progresses, and anticipate ending the year with between 60 and $65 million of cash with the estimate fluctuating up or down based on working capital.
And other factors are cash estimate includes the anticipated refund of approximately $5 8 million and U S taxes, and receipt of $3 5 million in escrow funds from the point of sale.
Turning to slides five and six and our service are in real estate segment.
As you can see on slide five compared to both the second quarter of 2021, and the first quarter of this year, we grew service revenue and adjusted EBITDA and improved our adjusted EBITDA margins are.
Our revenue growth reflects the continuing recovery of the default market. Following the September 2021 restart of foreclosures on pre pandemic delinquencies and the December 31st exploration of most of the remaining pandemic related borrower relief measures.
Adjusted EBITDA and margin improvements reflect our greater scale product mix and cost savings initiatives.
There are two items you should keep in mind first even though the default market is beginning to recover.
Quarter foreclosure initiations are still 47% below the same pre COVID-19 2019 period.
Second based on the typical timeline to complete a foreclosure and sell Oreo, we anticipate that our higher margin foreclosure and REO auction business, while not fully benefit from the recovery of the default market until the middle of 2023.
In addition to benefiting from tailwind from the restart of the default market. We are focused on growing our sales pipeline and are making good progress during the second quarter. We won and are in various stages of Onboarding new business with an estimated $8 4 million of annualized revenue on a stabilized basis.
In addition, our average weighted sales pipeline is currently $33 million on an annualized on a stabilized basis.
Looking out longer term, we believe our countercyclical default business could benefit from a deteriorating economic environment today mortgage delinquency rates are at near historical lows with rising interest rates and inflationary risks delinquency rates may rise driving more business to our servicer in real estate segment, we estimate.
To meet that for every 1% increase in 30 day delinquency rates the addressable market for our default services increases by $700 million.
Turning to slide seven and eight in our origination segment.
Following strong growth over the last couple of years, the origination market now faces challenges with the latest MBA forecast for 2022, reflecting origination volume to decline by 41%.
Our origination segment was not immune to the market impact with our second quarter year over year revenue decline largely in line with the origination market decline.
Diving, a little deeper into our second quarter results. The lenders one business outperformed the market as we gain traction with our solutions that are designed to help members save money.
This performance was offset by greater than overall market declines in some of our other origination businesses as customers transitioned work in house to retain their employees and a greater percentage of revenue in some of these businesses was derived from refinance this transactions, which declined faster than the market.
There is a silver lining over the last couple of years that has been very difficult for us to get originators to focus on our cost saving solutions, given their unprecedented origination volume and profitability.
With a decline in origination volume and margins originators have turned their attention to reducing costs and are increasingly looking to purchase lenders one solutions that help them do so.
As a result, we had a very strong quarter from a sales perspective, we want our and are in various stages of onboarding, an estimated $8 $7 million a year in new business on a stabilized basis and anticipate that we will begin to generate revenue from these wins in the third quarter.
We also increased our annualized weighted average weighted sales pipeline by 54% to $32 million on a stabilized basis.
Based on our sales progress new product launches and increasing product adoption. We believe that we will outperform the forecasted 41% decline in origination volume.
We continue to gain greater insight into how the sales pipeline and sales wins for our newer solutions translate into revenue and are developing programs to help accelerate these timelines.
We believe our origination business is well positioned for long term growth and to be a significant contributor to <unk> revenue and earnings.
To conclude we continue to execute on our strategic plan and are pleased with our second quarter results and our servicer and real estate business, we should benefit from the market tailwind and our strong sales pipeline and our origination business. We believe we are building an exciting and innovative business that we anticipate will benefit from sales wins new product launches.
And our prospects increased focus on cost savings.
As we continue to execute on our plan and win more business. We anticipate we will return to grow company.
Create substantial value for our stakeholders.
I will now open up the call for questions operator.
Ladies and gentlemen, if you have a question or comment. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile our Q&A roster.
Our next question from Mike Grondahl with Northland Capital Your line is open.
Thanks. This is Mike future, Mike Grondahl, maybe just first on sort of port closure timing and ramp.
Much geographical difference.
Versus previous cycles here.
Hey, Mike Good morning, No I don't think we're not seeing anything from it from a geographical perspective at least not that I'm aware of.
I think what we're seeing though is that while the market's recovering it still is 47% down in terms of new foreclosure initiations from where it was last year.
So I think we're still in the very early innings and as I mentioned some of our most attractive businesses won't benefit until the market not only recovers, but also stabilizes toward the middle of next year.
What is 7% lower than 19.
Right.
Thank you Michelle.
Got it and then just maybe on originations.
Fair to say that with the softer environment, there that there's an opportunity with.
Davidson competitors going back to take share there.
Yes, I think what we're seeing as we manage the lenders one cooperative and the members joined the cooperative. So that we can help them basically make more money get better execution on their loan sales and reduce costs over the last several years. They had so much volume.
They didn't need our help as much on getting better execution, because they could barely handle the volume they had and now in today's environment, though.
Over the last couple of years those members who aren't focused on cost savings. They are just focused on closing that very profitable origination business, where they have tremendous volume now what we're seeing is our members really care about saving money and we launched several new products in December and earlier last year, which helped the members save significant money on.
On the cost to manufacture alone and we've done a very good job building up that pipeline, we're still learning a lot about how long it takes to convert that pipeline into revenue, but the progress we're making in that business is very encouraging so far.
Thanks ill hop back in queue Okay.
Alright, Thanks, Mike.
One moment for our next question.
Our next question comes from Roman commodity with Credit Suisse. Your line is open.
Hi, good morning, Thanks for taking my call.
Wanted to get a better sense of your cash flow trajectory I guess.
You said that right.
About $70 million of cash to end the year.
Europe , it you'd have some money coming in from point of it.
Our federal tax refunds so.
Not for that it would've been by close to $20 million of cash burn. So help me understand kind of the cash flow trajectory for Q3, and Q4 and when do you expect it to breakeven from a cash standpoint.
Yes.
We think we will end the year with 60% to 65.
$1 million of of cash we brought that down just a little bit from what we were talking about last quarter and that includes our that assumes that we get paid the tax refund and the release of the Pointillist escrow.
<unk>.
We do now know that the Irs's processing one of our earlier tax returns. So we've got notice that we're going to get a portion of that money hopefully in the next month or two so we're feeling better about that in terms of the business itself. We believe that we're going to generate.
Positive EBITDA and cash flow in 2023.
A lot depends on the timing of how the default market recovers right now were being <unk>.
Fairly conservative in terms of how this market operates in.
To the extent that improves that could accelerate the timelines, but right now we're being conservative.
Can you give us a little more color on.
On a quarterly basis in 'twenty, three I mean, what any particular quarter that you think you'll be breakeven from a cash flow standpoint.
So we're not at this point remain we're not breaking out the numbers for next year.
But we do anticipate that the earnings will continue to improve as the year end.
The cash burn will continue to come down and reach positive as the year progresses next year got it.
And then one more question just on kind of in the core business I guess.
Closure starts are certainly picking up can you kind of comment on your share of those initiations.
Relative to what you were seeing pre COVID-19.
Yes, it's hard to tell and I listen to.
Mr. Cooper's call yesterday, and they talked about their market share in zone, they think theyre going to be at.
I think close to 40%.
We are about our.
Our inventory today is sitting at a third of their so if you sort of extrapolate.
That could give you a sense, perhaps of where our market share is I'm not sure how theyre calculating that I think what's really interesting remain as environmentally.
The default business is recovering and we've really found the right product market fit with our origination products that are gaining great traction and so.
You wouldn't have expected that in a market where origination volumes are declining.
A lot more interest in these products and so we're learning how long it takes to onboard them, but we're making tremendous progress and then on the default side clearly we're only at half 47% of where foreclosure initiations were in the second quarter of 2019 some of that.
<unk> related to the government federal government put a sort of mini moratorium if you will.
<unk>.
Michelle remind me I think it was April for two months.
Round GSE mortgages were there if the borrower was applying for one of these government programs.
The lenders had to hold off on the foreclosure, we suspect that that resulted in and more.
Servicers sort of scrubbing their portfolios and making sure there was none of that activity before they foreclosed so that could have impacted foreclosure starts.
Second quarter as well, we are seeing a pickup in <unk>.
In July of our REO, and foreclosure auction referrals compared compared to June or.
So we'll see.
But I think the point being.
It still is not even recover to where we were we're having tremendous benefit in that segment, even though it hasnt even recover to where we were in the same quarter in 2019 and in a deteriorating economic environment. It appears that we're experiencing.
The opportunities continued to improve for the default business.
Alright, Thanks Bill.
For me.
Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone one moment for our next question.
Our next question comes from Russia with B Riley Your line is open.
Thank you.
And for taking the questions.
So I just wanted to understand.
On Odyssey.
Marketplace.
E Comm in case, you didn't see a pick up on that.
<unk>.
New business pick up.
Until mid of next year.
Is that a change at all in what Youre seeing in the flow.
Had a few quarters ago kind of guided to a certain amount of service revenues from by the meeting.
Mid of next year I, just wanted to kind of get a sense of the cadence.
Yes.
So it starts now.
That's a good question Rajeev. So if you think about the foreclosure starts are roughly 47% of the pre pandemic.
19 numbers in the same quarter, if we if it is going to get back to those pre pandemic or close to those pre pandemic numbers, then that would push out the stabilization a little bit beyond the middle of.
23, but we certainly expect that all of these new foreclosures that had been initiated this year those will stabilize in the middle of 2023, if the volumes increase due to the market getting back to pre pandemic levels or because delinquency rates go up it would push out the time it takes to stabilize but of.
Of course, it would stabilize at an even higher.
Number.
The other thing I'd point out is in the second quarter.
2019, and Michelle correct me, if I'm wrong, how much how much <unk> revenue did we generate in hubs.
$8 million was it $28 million. So you compare that to the roughly $8 million. We did in the second quarter of this year and you could see or get a sense as to what the opportunity is for that business as the market recovers and as we stabilize.
Got it.
That's helpful and then on the regulation side just.
Okay.
Could you comment a little bit.
On the.
Metrics and they get a new.
Probable on Justice.
You had you had indicated earlier.
You should be you should be doing better originations business relative to the overall market, which is going to be a massive decline has anything changed in that or can you talk about the new product launches and how those are.
Okay.
Yes happy to so we launched several new products.
And the verification space and in the credit reporting Tri merge credit reporting space and those new products are gaining tremendous traction we're focused on our pipeline every couple of weeks and the timelines to onboard those customers and <unk>.
A large portion of the growth of our pipeline and the origination business is coming from those newer products, where we're able to save our customers a very significant amount of money.
What we're learning is how long it takes from when a customer we give a pricing analysis to our customer and our proposal how long it takes to go from yes to a contract being signed on.
<unk> on boarded and then get all of the customers branches.
Up to speed and fully integrated and ordering our services and so that's pushed out the timing a little bit also the origination volumes come down more forecast continued to deteriorate on the market origination volumes. So that's had some impact both those points being said, we still believe and I think you'll really start to.
See you will see a modest improvement we believe in the third quarter and you'll really start to see an improvement in our origination business in the fourth quarter relative to both the prior quarter sequentially as well as year over year.
That's what we're currently forecasting so I think it will start to show up in the numbers.
A little bit in the third quarter, but really start to show up we believe in the fourth quarter.
Got it got it great. Thank you I'll get back in thank you Brian . Thank you for your interest.
Interesting.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one star one on your telephone.
Again, Thats star one for question.
And im not showing any further questions at this time I will turn the call back to bill for any closing remarks.
Great. Thanks, operator, and thanks for joining the call. We appreciate your interest and support in the company.
Have a great day, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by and walked through the <unk> second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you need to press star one on your telephone I would now like to turn the call over to your host Michelle <unk> Chief Financial Officer, you may be.
Thank you operator, we first want to remind you that the earnings release Form 10-Q, and quarterly slides are available on our website at www Dot all resource Dotcom. These provide additional information investors may find useful.
Our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ in addition to the usual uncertainty associated with forward looking statements, they're continuing COVID-19, pandemic and carton current economic environment makes it extremely difficult to predict the future state of the economy and it.
Potential impact on the health insurers. Please review the forward looking statements section of the company's earnings release and quarterly slides as well as the risk factors contained in our 2021 Form 10-K, which describe factors that may lead to different results. We undertake no obligation to update these statements financial scenarios and projections previously provided you.
You're in as a result of a change in circumstances, new information or future events.
During this call we will present, both GAAP and non-GAAP financial measures in our earnings release and quarterly slides you will find additional disclosures regarding the non-GAAP measures a reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.
Joining me for today's call is Bill Shepherd, our chairman and Chief Executive Officer, I will now turn the call over to Bill.
Thanks, Michele good morning, and thank you for joining today's call I'm pleased with our second quarter results and performance beginning with slide four our servicer in real estate segment is benefiting from the restart of the default business with both sequential and year over year revenue and adjusted EBITDA growth.
Our origination segments year over year revenue decline was largely in line with the market wide decline in origination volume.
Despite the market decline, we grew our average weighted sales pipeline and the origination business to $32 million or.
54% increase since last quarter as our lenders one members are increasingly focused on buying our solutions, which are designed to help them reduce their costs.
We also continue to maintain cost discipline in corporate with costs down by 28% over the second quarter of 2021 from cost savings initiatives and the sale of the pointless business, partially offset by the assignment of sales and marketing employees to the business segments.
This performance puts us on a path to generate positive EBITDA and cash flow in 2023.
We ended the quarter with $71 million in cash as expected, we significantly reduced our cash burn compared to the first quarter. We believe our cash burn will further decline as the year progresses, and anticipate ending the year with between 60 and $65 million of cash with the estimate fluctuating up or down based on working capital.
And other factors are cash estimate includes the anticipated refund of approximately $5 8 million and U S taxes, and receipt of $3 5 million in escrow funds from the point of sale.
Turning to slides five and six in our servicer in real estate segment.
As you can see on slide five compared to both the second quarter of 2021, and the first quarter of this year, we grew service revenue and adjusted EBITDA and improved our adjusted EBITDA margins.
Our revenue growth reflects the continuing recovery of the default market. Following the September 2021, restart up foreclosures on pre pandemic delinquencies and the December 31st exploration of most of the remaining pandemic related borrower relief measures.
Adjusted EBITDA and margin improvements reflect our greater scale product mix and cost savings initiatives.
There are two items you should keep in mind first even though the default market is beginning to recover.
Quarter foreclosure initiations are still 47% below the same pre COVID-19 2019 period.
Second based on the typical timeline to complete a foreclosure and sell Oreo, we anticipate that our higher margin foreclosure and REO auction business, while not fully benefit from their coverage of the default market until the middle of 2023.
In addition to benefiting from tailwind from the restart of a default market. We are focused on growing our sales pipeline and are making good progress during the second quarter. We won and are in various stages of Onboarding new business with an estimated $8 4 million of annualized revenue on a stabilized basis.
In addition, our average weighted sales pipeline is currently $33 million on an annualized and stabilized basis.
Looking out longer term, we believe our countercyclical default business could benefit from a deteriorating economic environment today.
Today mortgage delinquency rates are at near historical lows with rising interest rates and inflationary risks delinquency rates may rise driving more business to our servicer in real estate segment.
We estimate that for every 1% increase in 30 day delinquency rates the addressable market for our default services increases by $700 million.
Turning to slide seven and eight in our origination segment.
Following strong growth over the last couple of years, the origination market now faces challenges with our latest MBA forecast for 2022, reflecting origination volume to decline by 41%.
Our origination segment was not immune to the market impact with our second quarter year over year revenue decline largely in line with the origination market decline.
Diving, a little deeper into our second quarter results. The lenders one business outperformed the market as we gained traction with our solutions that are designed to help members save money.
This performance was offset by greater than overall market declines in some of our other origination businesses.
As customers transitioned work in house to retain their employees and a greater percentage of revenue in some of these businesses was derived from refinanced transactions, which declined faster than the market.
There is a silver lining over the last couple of years that has been very difficult for us to get originators to focus on our cost saving solutions, given their unprecedented origination volume and profitability.
With a decline in origination volume and margins originators have turned their attention to reducing costs and are increasingly looking to purchase lenders one solutions that help them do so.
As a result, we had a very strong quarter from a sales perspective, we won and are in various stages of onboarding, an estimated $8 $7 million a year in new business on a stabilized basis and anticipate that we will begin to generate revenue from these wins in the third quarter.
We also increased our annualized weighted average weighted sales pipeline by 54% to $32 million on a stabilized basis.
Based on our sales progress new product launches and increasing product adoption. We believe that we will outperform the forecasted 41% decline in origination volume.
We continue to gain greater insight into how the sales pipeline and sales wins for our newer solutions translate into revenue and are developing programs to help accelerate these timelines.
We believe our origination business is well positioned for long term growth and to be a significant contributor to <unk> revenue and earnings.
To conclude we continue to execute on our strategic plan and are pleased with our second quarter results and our servicer and real estate business, we should benefit from the market tailwind and our strong sales pipeline and our origination business. We believe we are building an exciting and innovative business that we anticipate will benefit from sales wins new product launches.
And our prospects increased focus on cost savings as.
As we continue to execute on our plan and win more business. We anticipate we will return to a broke company and create substantial value for our stakeholders.
I will now open up the call for questions operator.
Ladies and gentlemen, if you have a question or comment. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile our Q&A roster.
Okay.
Question from Mike Grondahl with Northland Capital Your line is open.
Thanks. This is Mike future, Mike Grondahl, maybe just first on the sort of foreclosure timing and ramp.
Much geographical difference.
Versus previous cycles here.
Hey, Mike Good morning, No I don't think we're not seeing anything from from a geographical perspective at least not that I'm aware of.
I think what we're seeing though is that while the market's recovering it still is 47% down in terms of new foreclosure initiations from where it was last year and so I think we're still in the very early innings and as I mentioned some of our most attractive businesses won't benefit until the market not only recovers, but also stabilizes.
Towards the middle of next year.
What are you, 7% lower than 19.
That's right.
Thank you Michelle.
Got it and then just maybe on originations.
Fair to say that with the softer environment there that.
It's an opportunity with.
Davidson competitors pulling back and take share there.
Yes, I think what we're seeing as we manage the lenders one cooperative and the members joined the cooperative. So that we can help them basically make more money and get better execution on their loan sales and reduce costs over the last several years. They had so much volume.
They didn't need our help as much on getting better execution, because they could barely handle the volume they had and now in today's environment, though so.
So our with over the last couple of years those members who aren't focused on cost savings. They were just focused on closing that very profitable origination business, where they have tremendous volume now what we're seeing is our members really care about saving money and we launched several new products in December and earlier last year, which helped the members save significant money.
On the cost to manufacture alone and.
We've done a very good job building up that pipeline, we're still learning a lot about how long it takes to convert that pipeline into revenue, but the progress we're making in that business is very encouraging so far.
Thanks ill hop back in queue.
Alright, Thanks, Mike.
One moment for our next question.
Our next question comes from Rodman Kamali with credit Suisse. Your line is open.
Hi, good morning, Thanks for taking my call.
Wanted to get a better sense of your cash flow trajectory I guess.
You said that right now you're sitting at about $70 million of cash to end the year.
You also need to have money coming in complaint.
Federal tax refund so yes.
If not for that would have been probably close to $20 million of cash burn. So help me understand kind of the cash flow trajectory for Q3, and Q4 and when do you expect to be breakeven from a cash flow standpoint.
Yes.
We think we will end the year with 60% to 65.
$1 million of of cash we brought that down just a little bit from what were talking about last quarter and that includes our that assumes that we get paid the tax refund and the release of the Pointillist escrow and we.
We do now know that the Irs's processing one of our earlier tax returns. So we've got notice that we're going to get a portion of that money.
And the next month or two so we're feeling better about that in terms of the business itself.
We believe that we're going to generate a positive.
Positive EBITDA and cash flow in 2023.
A lot depends on the timing of how the default market recovers.
Now we're being.
Fairly conservative in terms of how this market operates.
In two weeks.
Extent that improves that could accelerate the timelines, but right now we're being conservative.
Can you give us a little more color on.
Quarterly basis in 'twenty, three I mean, with any particular quarter that you think you'll be breakeven from a cash flow standpoint.
So we're not at this point remain we're not breaking out the numbers for next year.
But we do anticipate that the earnings will continue to improve as the year end.
Cash burn will continue to come down and reach positive as the year progresses next year.
Got it and then one more question just on kind of in the core business I guess a foreclosure.
Foreclosure starts are certainly picking up.
Can you kind of comment on your share of those initiations.
Relative to what you were seeing pre COVID-19.
Yes.
Hard to tell and I listen to.
Mr. Cooper's call yesterday, and they talked about their market share in zone, they think theyre going to be at.
I think close to 40%.
We are about our.
Our inventory today is sitting at a third of their so if you sort of extrapolate.
That could give you a sense, perhaps of where our market share is I'm not sure how theyre calculating that I think what's really interesting remain as environmentally.
The default businesses recovering and we've really found the right product market fit with our origination products that are gaining great traction and so.
You wouldn't have expected that in a market where origination volumes are declining there is actually a lot more interest in these products and so we're learning how long it takes to onboard them, but we're making tremendous progress on that on the default side clearly, we're only at half 47% of where foreclosure initiations were in the second quarter of 2019.
Some of that.
<unk> related to the government federal government put a sort of mini moratorium if you will.
<unk>.
Michelle remind me I think it was April for two months.
Around GSE mortgages were there if the borrower was applying for one of these government programs.
The lenders had to hold off on the foreclosure, we suspect that that resulted in and more.
Servicers sort of scrubbing their portfolios and making sure there was none of that activity before they foreclosed. So that could have impacted foreclosure starts in the second quarter as well we are seeing a pickup in <unk> and.
In July of our REO, and foreclosure auction referrals compared compared to June or.
So so we will see.
Sure.
But I think the point being it.
It still is not even recover to where we were.
We're having tremendous benefit in that segment, even though it hasnt even recover to where we were in the same quarter in 2019.
And in a deteriorating economic environment like work it appears that we're experiencing.
The opportunities continued to improve for the default business.
Alright, Thanks Bill.
Thanks Rami.
Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone one moment for our next question.
Our next question comes from Russia with B Riley Your line is open.
Alright. Thank you thank.
Thank you for taking the questions.
So I just wanted to understand.
On Odyssey.
The marketplace I think.
E Com and you can see a pick up on that.
Yo Yo business pick up.
Until mid of next year.
Is that a change at all in what Youre seeing in the flow.
<unk>.
Had a few quarters ago kind of guided to a certain amount of service revenues from <unk>.
Next year I, just wanted to kind of get a sense of the cadence of.
Yes.
Hello, Keith starts now.
Thats a good question Rajeev. So if you think about the foreclosure starts are roughly 47% of the pre pandemic.
19 numbers in the same quarter, if we if it is going to get back to those pre pandemic or close to those pre pandemic numbers, then that would push out the stabilization a little bit.
In the middle of.
23, but we certainly expect that all of these new foreclosures that had been initiated this year those will stabilize in the middle of 2023, if the volumes increase due to the market getting back to pre pandemic levels or because the delinquency rate.
Let's go up it would push out the time it takes to stabilize but of course, it would stabilize at an even higher number.
The other thing I'd point out is in the second quarter.
2019, and Michelle correct me, if I'm wrong, how many how much in revenue do we generate and hubs.
$8 million was it $28 million. So you compare that to the roughly $8 million. We did in the second quarter of this year and you could see or get a sense as to what the opportunity is for that business as the market recovers and as we stabilize.
Got it.
Sure.
That's helpful and then on the regulation side.
Okay.
Could you comment a little bit on the <unk>.
On the.
Metrics and they get new product launches.
Hi.
Indicated earlier that you should be you should be doing better originations business relative to the overall market, which is going to be a massive decline has anything changed in that or can you talk about the new product launches and how those are.
Yes.
Happy to so we launched several new products in.
In the verification space.
And the credit reporting Tri merge credit reporting space.
And those new products are gaining tremendous traction we're focused on our pipeline every couple of weeks and the timelines to onboard those customers and.
A large portion of the growth of our pipeline and the origination business is coming from those newer products, where we're able to save our customers a very significant amount of money. What we're learning is how long it takes from when a customer we give a pricing analysis to our customer and our proposal how long it takes to go from yes to a contract being signed.
On <unk>.
<unk> on boarded and then get all of the customers branches.
Up to speed and fully integrated and ordering our services and so that has pushed out the timing a little bit off.
So the origination volumes come down more forecasts continued to deteriorate on the market origination volumes. So that's had some impact both those points being said, we still believe and I think you'll really start to see you will see a modest improvement we believe in the third quarter and you'll really start to see an improvement in our origination business.
In the fourth quarter relative to both the prior quarter sequentially as well as year over year.
That's what we're currently forecasting so I think it will start to show up in the numbers.
A little bit in the third quarter, but really start to show up we believe in the fourth quarter.
Got it got it great. Thank you I'll get back in thank you Brian .
Great answers.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one star one on your telephone.
Again, Thats star one for question.
And im not showing any further questions at this time I'd like to turn the call back to bill for any closing remarks.
Thanks, operator, and thanks for joining the call. We appreciate your interest and support in the company.
Have a great day, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.