Q2 2024 Altisource Portfolio Solutions SA Earnings Call
Good day and thank you for standing by. Welcome to the Altisource Portfolio Solutions second quarter 2024 earnings call.
Operator: 2nd Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star-one-one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Please go ahead.
Operator: 2nd quarter, 2024, Ernie's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.
Speaker Change: At this time, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.
Operator: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
Operator: Please be advised that today's conference is being recorded.
Speaker Change: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Please go ahead.
Operator: I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Please go ahead.
Michelle Esterman: Thank you, Operator. We first want to remind you that the Ernie's release, Form 10-Q, and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful.
Michelle D. Esterman: 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.altisource.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 to differ. Financial projections and scenarios are expressly qualified as forward-looking statements and, as with other forward-looking statements, should not be unduly relied upon.
Michelle D. Esterman: 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.altisource.com.
Speaker Change: 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.
Michelle Esterman: Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Financial projections and scenarios are expressly qualified as forward-looking statements, and as with other forward-looking statements, should not be unduly relied upon. In addition to the usual uncertainty associated with forward-looking statements, the continuing impacts of government and service responses to the COVID-19 pandemic, governmental fiscal policies, and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate. As well as the potential impact on our resource.
Speaker Change: Financial projections and scenarios are expressly qualified as forward-looking statements, and as with other forward-looking statements, should not be unduly relied upon.
Michelle D. Esterman: In addition to the usual uncertainty associated with forward-looking statements, the continuing impacts of government and servicer responses to the COVID-19 pandemic, governmental fiscal policies, and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate, as well as the potential impact on Altisource. Please review the forward-looking statements sections in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-K, describing some factors that may lead to different results.
Speaker Change: In addition to the usual uncertainty associated with forward-looking statements,
Speaker Change: The continuing impacts of government and servicer responses to the COVID-19 pandemic, governmental fiscal policies, and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate, as well as the potential impact on Altisource.
Michelle Esterman: Please review the forward-looking statements sections in the company's Ernie's release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-Q describing some factors that may lead to different results.
Speaker Change: Please review the forward-looking statements sections in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-K , describing some factors that may lead to different results.
Michelle Esterman: We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events.
Michelle D. Esterman: We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein 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 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 Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill.
Speaker Change: We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events.
Michelle Esterman: During this call, we will present both GAP and non-GAP 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.
Speaker Change: 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.
Bill Shepro: Joining me for today's call is Bill Shepro, our chairman and chief executive officer.
Speaker Change: Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I'll now turn the call over to Bill.
Bill Shepro: I'll now turn the call over to Bill. Thanks for showing Good morning. I'll begin on slide four. We had a strong second quarter and believe we were on track to achieve our 2024 guidance of 13-32% service revenue growth over 2023, an adjusted EBITDA between $17.5 million and $22.5 million in 2024. For the quarter, we generated $36.9 million in service revenue and $4.4 million of adjusted EBITDA and modestly increased cash to $29.7 million. We also went live and began to receive referrals from a renovation business customer and three foreclosure trustee customers. Our financial results reflect our strong sales wins, price increases, referral volume growth, and lower cost base in what continues to be an incredibly difficult environment of close to historically low mortgage delinquency rates and low origination volume.
William B. Shepro: Thanks, Michelle, and good morning. I'll begin on slide 4. We had a strong 2nd quarter and believe we're on track to achieve our 2024 guidance of 13 to 32% service revenue growth in 2023 and adjusted EBIT of between 17 and a half million and 22 and a half million dollars in 2024. For the quarter, we generated $36.9 million in service revenue and $4.4 million of adjusted EBITDA and modestly increased cash to $29.7 million. We also went live and began to receive referrals from a renovation business customer and three foreclosure trustee customers.
William B. Shepro: Thanks, Michelle, and good morning. I'll begin on slide 4.
William B. Shepro: We had a strong second quarter and believe we are on track to achieve our 2024 guidance of 13 to 32% service revenue growth over 2023 and adjusted EBITDA between $17.5 million and $22.5 million in 2024.
William B. Shepro: For the quarter, we generated $36.9 million in service revenue and $4.4 million of adjusted EBITDA and modestly increased cash to $29.7 million.
William B. Shepro: We also went live and began to receive referrals from a renovation business customer and three foreclosure trustee customers.
William B. Shepro: Our financial results reflect our strong sales wins, price increases, referral volume growth, and lower cost base in what continues to be an incredibly difficult environment of close to historically low mortgage delinquency rates and low origination volumes. Service revenue in our servicer and real estate segment grew by 16% compared to the same quarter in 2023 in a market that had approximately 7% fewer foreclosure starts and 13% fewer foreclosure sales. Service revenue and the origination segment declined by 5% compared to the same quarter in 2023, outperforming the 13% decline in total. Mortgage Origination Volume.
William B. Shepro: Our financial results reflect our strong sales wins, price increases, referral volume growth, and lower cost base in what continues to be an incredibly difficult environment of close to historically low mortgage delinquency rates and low origination volume.
Bill Shepro: Service revenue and our service revenue and real-state segment grew by 16% compared to the same quarter in 2023 in a market that had approximately 7% fewer foreclosure starts and 13% fewer foreclosure sales. Service revenue in our origination segment declined by 5 percent compared to the same quarter in 2023, outperforming the 13 percent decline in total market mortgage origination volume. It's better than the second quarter of last year. Adjust the EBITDA margins improved to 11.9 percent in the second quarter of 2024 compared to negative 10.5 percent in the second quarter of 23. The improvement in service revenue adjusted EBITDA and adjusted EBITDA margins compared to last year was driven by sales wins, price increases for certain services, stronger default referrals, business segment margin expansion, and lower corporate costs.
William B. Shepro: Service revenue in our servicer and real estate segment grew by 16% compared to the same quarter in 2023 in a market that had approximately 7% fewer foreclosure starts and 13% fewer foreclosure sales.
William B. Shepro: Service revenue and origination segment declined by 5% compared to the same quarter in 2023, outperforming the 13% decline in total.
William B. Shepro: Mark at mortgage origination volume.
William B. Shepro: Slide 5 provides additional information on our total company financial performance. As you can see, the trends are positive, service revenue was 11% higher, and adjusted EBITDA was $7.9 million better than the second quarter of last year. Adjusted EBITDA margins improved to 11.9 percent in the second quarter of 2024, compared to negative 10.5 percent in the second quarter of 2023. The improvement in service revenue, adjusted EBITDA, and adjusted EBITDA margins compared to last year was driven by sales wins, price increases for certain services, stronger default referrals, business segment margin expansion, and lower corporate costs.
William B. Shepro: Slide 5 provides additional information on our total company financial performance. As you can see, the trends are positive. Service revenue was 11% higher and adjusted EBITDA was $7.9 million better than the second quarter of last year.
William B. Shepro: Adjusted EBITDA margins improved to 11.9% in the 2nd quarter of 2024, compared to negative 10.5% in the 2nd quarter of 2023.
William B. Shepro: The improvement in service revenue, adjusted EBITDA, and adjusted EBITDA margins compared to last year was driven by sales wins, price increases for certain services, stronger default referrals, business segment margin expansion, and lower corporate costs.
William B. Shepro: Adjusted EBITDA and adjusted EBITDA margins declined modestly compared to the first quarter due to approximately $600,000 of first-quarter net non-recurring benefits comprised of 1.2 million dollars of benefits in the corporate segment and $600,000 of costs in the service or real estate segments. Excluding these net non-recurring first quarter benefits, second quarter adjusted EBITDA and adjusted EBITDA margins improved compared to the first quarter.
Bill Shepro: Adjusted EBITDA and adjusted EBITDA margins declined modestly compared to the first quarter due to approximately $600,000 of first quarter net non-recurring benefits comprised of $1.2 million of benefits in the corporate segment and $600,000 of costs in the service or in real estate segment. Excluding these net non-recurring first quarter benefits, second quarter adjusted EBITDA and adjusted EBITDA margins improved compared to the first quarter. For the third and fourth quarters, we anticipate strong service revenue and adjusted EBITDA growth over 2023 as we ramp sales wins in our more efficient and lower cost base. Slide 6 provides additional information on our service or in real estate segment.
William B. Shepro: Adjusted EBITDA and adjusted EBITDA margins declined modestly compared to the first quarter due to approximately $600,000 of first quarter net non-recurring benefits.
William B. Shepro: comprised of $1.2 million of benefits in the corporate segment and $600,000 of costs in the service or in real estate segment.
William B. Shepro: Excluding these net non-recurring first quarter benefits, second quarter adjusted EBITDA and adjusted EBITDA margins improved compared to the first quarter.
William B. Shepro: For the third and fourth quarters, we anticipate strong service revenue and adjusted EBITDA growth over 2023 as we ramp sales wins and are more efficient and lower cost-based. Slide 6 provides additional information on our servicer and real estate segment. Second quarter 2024 service revenue in this segment was 16% higher than the second quarter of 2023 and flat to last quarter. We continue to experience growth in certain higher-margin businesses that support the earlier stage of the default process.
William B. Shepro: For the third and fourth quarters, we anticipate strong service revenue and adjusted EBITDA growth over 2023 as we ramp sales wins in our more efficient and lower cost base.
William B. Shepro: Slide 6 provides additional information on our servicer and real estate segment. Second quarter 2024 service revenue in this segment was 16% higher than the second quarter of 2023 and flat to last quarter.
Bill Shepro: Second quarter of 2024 service revenue in this segment was 16 percent higher than the second quarter of 2023 and flat to last quarter. We continue to experience growth in certain higher-margin businesses that support the earlier stage of the default process. Adjusted EBITDA of $11.1 million was 50 percent higher than the second quarter of 2023 and 6 percent higher than the first quarter of this year. Adjusted EBITDA margins were 38.1 percent in the second quarter of 24 compared to 29.5 percent in the second quarter of 2023 and 35.8 percent last quarter. The improvement compared to the second quarter of last year reflects revenue growth and efficiency initiatives.
William B. Shepro: We continue to experience growth in certain higher-margin businesses that support the earlier stage of the default process.
William B. Shepro: Adjusted EBITDA of $11.1 million was 50% higher than the second quarter of 2023 and 6% higher than the first quarter of this year. Adjusted EBITDA margins were 38.1% in the second quarter of 2024 compared to 29.5% in the second quarter of 2023 and 35.8% last quarter.
William B. Shepro: Adjusted EBITDA of $11.1 million was 50% higher than the second quarter of 2023 and 6% higher than the first quarter of this year.
William B. Shepro: Adjusted EBITDA margins were 38.1% in the second quarter of 24 compared to 29.5% in the second quarter of 2023 and 35.8% last quarter.
William B. Shepro: The improvement compared to the second quarter of last year reflects revenue growth and efficiency initiatives. The improvement compared to the first quarter of this year reflects business unit efficiency initiatives, as well as the $600,000 of non-recurring expenses in the first quarter that I just discussed. Slide 7 provides a summary of our servicer and real estate sales wins and pipeline. For the quarter, we won new business that we estimate will generate $15.3 million in annual revenue once fully ramped over the next couple of years.
William B. Shepro: The improvement compared to the second quarter of last year reflects revenue growth and efficiency initiatives.
Bill Shepro: The improvement compared to the first quarter of this year reflects business unit efficiency initiatives, as well as the $600,000 of non-recurring expenses in the first quarter that I just discussed. Slide 7 provides a summary of our service or in real estate sales wins and pipeline. For the quarter, we won new business that we estimate will generate $15.3 million in annual revenue once fully ramped over the next couple of years. In the second quarter, we signed three agreements to provide foreclosure trustee services. This is in addition to the market share expansion of trustee business or the customer that we won in the first quarter.
William B. Shepro: The improvement compared to the first quarter of this year reflects business unit efficiency initiatives, as well as the $600,000 of non-recurring expenses in the first quarter that I just discussed.
William B. Shepro: Slide 7 provides a summary of our servicer and real estate sales wins and pipeline.
William B. Shepro: For the quarter, we won new business that we estimate will generate $15.3 million in annual revenue, once fully ramped over the next couple of years.
William B. Shepro: In the second quarter, we signed three agreements to provide foreclosure trustee services. This is in addition to the market share expansion of trustee business with a customer that we won in the first quarter. We completed the onboarding process for these three trustee customers and are ramping referrals.
William B. Shepro: In the second quarter, we signed three agreements to provide foreclosure trustee services.
William B. Shepro: This is in addition to the market share expansion of trustee business with a customer that we won in the first quarter.
Bill Shepro: We completed the onboarding process of these three trustee customers and are ramping referrals. We anticipate that these wins will support service revenue and EBIT of growth. We also made progress ramping our renovation services for one of the largest owners of RIO assets in the U.S. Since the program went live in late April, we have received over 35 renovation referrals, which we estimate will generate average revenue of close to $100,000 per property. We anticipate referral volume revenue and earnings from this customer will ramp as the year progresses. We ended the quarter with a segment weighted average sales pipeline of $20.3 million of annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond.
William B. Shepro: We completed the onboarding process of these three trustee customers and are ramping referrals.
William B. Shepro: We anticipate that these wins will support service revenue and EBITDA growth. We also made progress ramping our renovation services for one of the largest owners of REO assets in the U.S. Since the program went live in late April, we have received over 35 renovation referrals, which we estimate will generate average revenue of close to $100,000 per property.
William B. Shepro: We anticipate that these wins will support service revenue and EBITDA growth.
William B. Shepro: We also made progress ramping our renovation services for one of the largest owners of REO assets in the U.S.
William B. Shepro: Since the program went live in late April , we have received over 35 renovation referrals, which we estimate will generate average revenue of close to $100,000 per property.
William B. Shepro: We anticipate referral volume, revenue, and earnings from this customer will ramp as the year progresses. We ended the quarter with a segment-weighted average sales pipeline of $20.3 million of annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond. The decline in the sales pipeline compared to last quarter primarily reflects the significant sales wins I just discussed and the addition of earlier stage opportunities to the pipeline, which have a lower assigned win probability.
William B. Shepro: We anticipate referral volume, revenue, and earnings from this customer will ramp as the year progresses.
William B. Shepro: We ended the quarter with a segment-weighted average sales pipeline of $20.3 million of annual revenue on a stabilized basis.
William B. Shepro: most of which we forecast will impact 2025 and beyond.
Bill Shepro: To decline in the sales pipeline compared to last quarter primarily reflects the significant sales wins I just discussed and the addition of earlier stage opportunities to the pipeline, which have a lower assigned win probability.
William B. Shepro: The decline in the sales pipeline compared to last quarter primarily reflects the significant sales wins I just discussed and the addition of earlier stage opportunities to the pipeline, which have a lower assigned win probability.
Bill Shepro: Turning to the macroeconomic environment and sliding, as we have discussed in the past, there continue to be early signs of consumer financial stress. Consumer savings has declined, credit card debt is near a record high, and early stage delinquencies are rising. Additionally, home affordability, which is highly correlated to home prices, remains low. Despite the significant increase in interest rates in the last two years, we believe home prices remain high largely because the inventory of homes for sale is very low. This appears to be changing. According to the National Association of Realtors, the inventory of existing homes for sale in May 2024 was 18.5% higher than May of last year, and seasonally adjusted existing home sales were 2.8% lower.
William B. Shepro: Turning to the macroeconomic environment on slide 8. As we have discussed in the past, there continues to be early signs of consumer financial stress. Consumer savings have declined, credit card debt is near a record high, and early stage delinquencies are rising. Additionally, home affordability, which is highly correlated to home prices, remains low.
William B. Shepro: Turning to the macroeconomic environment in slide 8.
William B. Shepro: As we have discussed in the past, there continues to be early signs of consumer financial stress.
William B. Shepro: Consumer savings has declined, credit card debt is near a record high, and early-stage delinquencies are rising.
William B. Shepro: Additionally, home affordability, which is highly correlated to home prices, remains low.
William B. Shepro: Despite this significant increase in interest rates in the last two years, we believe home prices remain high largely because the inventory of homes for sale is very low. However, this appears to be changing. According to the National Association of Realtors, the inventory of existing homes for sale in May 2024 was 18.5% higher than May of last year, and seasonally adjusted existing home sales were 2.8% lower. As inventory grows, home prices in certain markets may decline as the supply-demand dynamics normalize.
William B. Shepro: Despite this significant increase in interest rates in the last two years, we believe home prices remain high, largely because the inventory of homes for sale is very low.
William B. Shepro: This appears to be changing.
Speaker Change: According to the National Association of Realtors, the inventory of existing homes for sale in May 2024 was 18.5% higher than May of last year, and seasonally adjusted existing home sales were 2.8% lower.
Bill Shepro: As inventory grows, home prices in certain markets may decline as the supplied demand dynamics normalize. Should this happen, stress consumers that have low down payment mortgages or loans that were originated over the last couple of years may no longer have equity in their homes and will therefore have fewer options to address loan defaults. This could increase foreclosure initiations and drive foreclosure conversion rates to more normal levels. Moving to our origination segment in slide 9, we are pleased that adjusted EBITDA improved by $1.8 million compared to the second quarter of last year, despite a 5% decline in service revenue and a 13% decline in industry-wide residential origination volume for the same period.
Speaker Change: As inventory grows, home prices in certain markets may decline as the supply-demand dynamics normalize.
William B. Shepro: Should this happen, stressed consumers that have low down payment mortgages or loans that were originated over the last couple of years may no longer have equity in their homes and will therefore have fewer options to address loan default. This could increase foreclosure initiations and drive foreclosure conversion rates to more normal levels. Moving to our origination segment on slide 9, we are pleased that Adjusted EVDA improved by $1.8 million compared to the second quarter of last year, despite a 5% decline in service revenue and a 13% decline in industry-wide residential origination volume for the same period. Adjusted EBITDA was flat to the first quarter on similar service revenue. Adjusted EBITDA improved over last year from cost savings and efficiency initiatives.
William B. Shepro: Should this happen, stressed consumers that have low down payment mortgages or loans that were originated over the last couple of years may no longer have equity in their homes and will therefore have fewer options to address loan defaults.
William B. Shepro: This could increase foreclosure initiations and drive foreclosure conversion rates to more normal levels.
William B. Shepro: As you can see on the slide, the origination segments, gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins all improved relative to the prior year. Slide 10 provides a summary of our Origination Segment sales wins and pipeline. On an annualized, stabilized basis, we won an estimated $1.5 million in new business in the second quarter. Our weighted average sales pipeline at the end of the quarter was $14.7 million.
Speaker Change: Moving to our origination segment in slide 9, we are pleased that Adjusted EBITDA improved by $1.8 million compared to the second quarter of last year, despite a 5% decline in service revenue and a 13% decline in industry-wide residential origination volume for the same period.
Bill Shepro: Adjusted EBITDA was flat to the first quarter on similar service revenue. Adjusted EBITDA improved over last year from cost savings and efficiency initiatives. As you can see on the slide, the origination segments gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins all improved relative to prior year. Slide 10 provides a summary of our origination. On an annualized stabilized basis, we won an estimated $1.5 million in new business in the second quarter. Our weighted average sales pipeline at the end of the quarter was $14.7 million. We continue to focus on rolling out new solutions to help our Lenders 1 members make more money.
William B. Shepro: Adjusted EBITDA was flat to the first quarter on similar service revenue.
William B. Shepro: adjusted EBITDA improved over last year from cost savings and efficiency initiatives.
William B. Shepro: As you can see on the slide, the origination segments, gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins all improved relative to prior year.
William B. Shepro: Slide 10 provides a summary of our origination segment sales wins and pipeline. On an annualized stabilized basis we want an estimated 1.5 million dollars in new business in the second quarter.
William B. Shepro: Our weighted average sales pipeline at the end of the quarter was $14.7 million.
William B. Shepro: We continue to focus on rolling out new solutions to help our Lenders1 members make more money. We believe the regular launch of new solutions to Lenders1 members, combined with greater adoption of our existing solutions, will strengthen our value proposition for Lenders1 members and support further revenue and earnings growth in our origination segment. During the second quarter, we signed agreements with our first homeowner's insurance customer, and we have a pipeline of 35-member processes.
William B. Shepro: We continue to focus on rolling out new solutions to help our Lenders1 members make more money.
Bill Shepro: We believe the regular launch of new solutions to Lenders 1 members, combined with greater adoption of our existing solutions, will strengthen our value proposition for Lenders 1 members and support further revenue and earnings growth in our origination segment. During the second quarter, we signed agreements with our first homeowners insurance customer and have a pipeline of 35 member prospects. We believe that the homeowners insurance program can improve the long closing process for our members and their borrowers and establish an attractive revenue annuity for AltaSource as policies are issued, the majority of which we believe will be renewed.
William B. Shepro: We believe the regular launch of new solutions to Lenders1 members, combined with greater adoption of our existing solutions, will strengthen our value proposition for Lenders1 members and support further revenue and earnings growth in our origination segment.
William B. Shepro: During the second quarter, we signed agreements with our first homeowner's insurance customer.
William B. Shepro: And have a pipeline of 35 member prospects.
William B. Shepro: We believe that the Homeowners Insurance Program can improve the loan closing process for our members and their borrowers and establish an attractive revenue annuity for Altisource as policies are issued, the majority of which we believe will be renewed.
William B. Shepro: We believe that the Homeowners Insurance Program can improve the loan closing process for our members.
William B. Shepro: and their borrowers, and establish an attractive revenue annuity for Altisource as policies are issued, the majority of which we believe will be renewed.
Bill Shepro: Turning to our corporate segment in slide 11, we are maintaining strong cost discipline. Second quarter, corporate adjusted even a loss of $7.2 million was $2.4 million or 25 percent better than the second quarter of 2023, and $900,000 worst than the first quarter of this year. The first quarter 2024 results included an estimated $1.2 million of net non-recurring benefits. Absent these benefits, second quarter 2024 adjusted EBITDA loss in corporate modestly improved compared to the first quarter 2024. The lower adjusted EBITDA loss compared to last year reflects our cost savings and efficiency initiatives. Moving to slide 12, in summary, I'm pleased with our second quarter and first half of the year performance and believe we are on track to achieve our 2024 guidance of 13-32 percent service revenue growth over 2023 and adjusted EBITDA between $17.5 and $22.5 million in 2024.
William B. Shepro: Turning to our corporate segment, in slide 11, we are maintaining strong cost discipline. Second quarter corporate adjusted E-VITL loss of $7.2 million was $2.4 million, or 25% better than the second quarter of 2023 and $900,000 worse than the first quarter of this year. The first quarter 2024 results included an estimated $1.2 million of net nonrecurring benefits. Absent these benefits, the second quarter 2024 adjusted EBITDA loss in corporate was modestly improved compared to the first quarter 2024. The lower adjusted EBITDA loss compared to last year reflects our cost savings and efficiency initiatives. Moving to slide 12.
William B. Shepro: Turning to our corporate segment in slide 11, we are maintaining strong cost discipline.
Speaker Change: Second quarter corporate adjusted E-bill loss of $7.2 million was $2.4 million, or 25% better than the second quarter of 2023, and $900,000 worse than the first quarter of this year.
William B. Shepro: The first quarter 2024 results included an estimated $1.2 million of net non-recurring benefits.
William B. Shepro: Absent these benefits, second quarter 2024 adjusted EBITDA loss in corporate modestly improved compared to the first quarter 2024.
William B. Shepro: The lower adjusted EBITDA loss compared to last year reflects our cost savings and efficiency initiatives.
Operator: In summary, I'm pleased with our second quarter and first half of the year performance and believe we are on track to achieve our 2024 guidance of 13 to 32 percent service revenue growth in 2023 and adjusted EBITDA between $17.5 and $22.5 million in 2024. We continue to win new business and are making good progress ramping sales wins on a much lower cost base in a historically difficult market. As a result, service revenue for the first six months of this year is $3.5 million, or 5% higher than the same period last year, and adjusted EBITDA is $11 million higher, despite the decline in foreclosure starts, foreclosure sales, and mortgage origination volume over the same period.
William B. Shepro: Moving to slide 12.
William B. Shepro: In summary, I'm pleased with our second quarter and first half of the year performance and believe we are on track to achieve our 2024 guidance.
William B. Shepro: of 13 to 32 percent service revenue growth over 2023 and adjusted EBITDA between $17.5 and $22.5 million in 2024.
Bill Shepro: We continue to win new business and are making good progress ramping sales wins on a much lower cost base in a historically difficult market. As a result, service revenue for the first six months of this year is $3.5 million or 5 percent higher than the same period last year, and adjusted EBITDA is $11 million higher despite the decline in foreclosure starts, foreclosure sales, and mortgage origination volume over the same period. If we achieve the midpoint of our adjusted EBITDA guidance, we will have grown adjusted EBITDA by approximately $52 million over three years. As we ramped new business, we are cautiously optimistic that we will exit the year at a $30 million plus adjusted EBITDA run rate.
William B. Shepro: We continue to win new business and are making good progress ramping sales wins on a much lower cost base in a historically difficult market.
William B. Shepro: As a result, service revenue for the first six months of this year is $3.5 million, or 5% higher than the same period last year.
William B. Shepro: and Adjusted EBITDA is $11 million higher despite the decline in foreclosure starts.
William B. Shepro: foreclosure sales, and mortgage origination volume over the same period.
Operator: If we achieve the midpoint of our adjusted EBITDA guidance, we will have grown adjusted EBITDA by approximately $52 million over three years. As we ramp new business, we are cautiously optimistic that we will exit the year at a $30 million plus adjusted EBITDA run rate. I'll now open up the call for questions. Operator. Thank you.
William B. Shepro: If we achieve the midpoint of our adjusted EBITDA guidance, we will have grown adjusted EBITDA by approximately $52 million over three years.
William B. Shepro: As we ramp new business, we are cautiously optimistic that we will exit the year at a $30 million plus adjusted EBITDA run rate.
Bill Shepro: I'll now open up the call for questions. Operator? Thank you.
Speaker Change: I'll now open up the call for questions.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Raj Sharma with Be Riley. Please go ahead. Hi.
Operator: At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster.
William B. Shepro: Operator.
Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Operator: Our first question comes from Raj Sharma with B. Riley.
Raj Sharma: Please go ahead. Hi. Thank you for taking my questions.
Speaker Change: Our first question comes from Raj Sharma with B. Reilly. Please go ahead.
Rajiv Sharma: Hi, thank you for taking my questions. Is this, could you talk about how service revenue is growing 16% with fewer foreclosure starts and fewer foreclosure sales? How much of that is, you know, price increases and also if you could talk about the, excuse me, if you could talk about the, the incremental new revenue from the pre and early foreclosure process.
Rajiv Sharma: Hi, thank you for taking my questions. If you could talk about how is service revenue growing 16% with fewer foreclosure starts and fewer foreclosure sales?
Raj Sharma: If you could talk about how is service revenue growing 16% with fewer foreclosure starts and fewer foreclosure sales, how much of that is, you know, price increases.
Rajiv Sharma: How much of that is, you know, price increases, and also if you could talk about the, excuse me, if you could talk about the incrementally new revenue from the pre and the early foreclosure process.
Raj Sharma: And also if you could talk about the, excuse me, if you could talk about the, the incrementally new revenue from the pre and the early foreclosure process.
Bill Shepro: Hey, Raj, Phil Shepro here. Good morning. So I think that the couple of things are taking place in the service or in real estate segment. Michelle, you could jump in as well. I think one component of it is some price increases in our field services and valuation of business, which is contributing to the growth. Two, if you remember, in the second quarter of last year in California, one of our customers had some holds on foreclosures; those have been released. And so, from a comparability perspective, we don't, we don't have that issue this year in the second quarter.
William B. Shepro: Hey Raj, Bill Shepro here. That was a warning.
Rajiv Sharma: Hey Raj, Bill Shepro here. Have a good morning.
William B. Shepro: So I think that a couple of things are taking place in the servicer and real estate segments. Michelle, you could jump in as well. I think one component of it is some price increases in our field services and valuation of business, which is contributing to the growth. Two, if you remember in the second quarter of last year in California, one of our customers had some holds on foreclosures. Those have been released, and so from a comparability perspective, we don't have that issue this year in the second quarter.
Speaker Change: So I think a couple things are taking place in the service or in real estate segment, Michelle, you could jump in as well. I think one component of it is some price increases in our field services and valuation of business, which is contributing to the growth.
Speaker Change: Two, if you remember in the second quarter of last year in California,
Speaker Change: One of our customers had some holds on foreclosures. Those have been released.
Michelle D. Esterman: And so, from a comparability perspective,
William B. Shepro: Third, we're winning new business, and we're adding business to our earlier stage processes, and that includes primarily the foreclosure trustee business, where we've started receiving referrals from three new clients, two of which we think could be meaningful, and one still will be exciting new business but more modest. And then, finally, although it's in the early innings, we launched the renovation business in the second quarter. I think it only contributed about $200,000 or so to revenue in the second quarter.
Speaker Change: We don't have that issue this year in the second quarter. Third is we're winning new business.
Bill Shepro: Third is we're winning new business, and we're adding on the earlier state to we're adding business to our earlier stage processes. And that includes primarily the foreclosure trustee business, where we've started receiving referrals from three new clients, two of which we think could be meaningful, and one still will be, you know, it's exciting new business, but more, more modest. And then finally, although it's in the early innings, we launched the renovation business in the second quarter. I think it only contributed about $200,000 or so to revenue in the second quarter, but that's ramping very nicely.
Speaker Change: and we're adding business to our earlier stage processes, and that includes primarily the foreclosure trustee business, where we've started receiving referrals from three new clients.
William B. Shepro: Two of which we think could be meaningful and one still will be, you know, it's an exciting new business but more modest.
William B. Shepro: And then finally, although it's in the early innings.
William B. Shepro: We launched the renovation business in the second quarter. I think it only contributed about $200,000 or so.
William B. Shepro: But that's ramping very nicely. I think as of a week ago or so, we had received 35 referrals. I think we're now up to north of 40 referrals from this customer. And so that business is ramping nicely, and we're very optimistic that that can be a very meaningful contributor.
William B. Shepro: to revenue in the second quarter, but that's ramping very nicely. I think as of a week ago or so, we had received 35 referrals. I think we're now up to north of 40 referrals from this customer. And so that business is ramping nicely and we're very optimistic that that can be a very meaningful contributor as we go forward.
Raj Sharma: I think, as a week ago or so, we've received 35 referrals. I think we're now up to north of 40 referrals from this customer. And so that business is ramping nicely, more very optimistic that that can be a very meaningful contributor as we go forward. Right. Thank you. Thank you for that.
William B. Shepro: Right. Thank you. Thank you for that. And then, then can you give a sort of an estimate on the margins on the pre and the earlier part of this the foreclosure process versus your usual service or business? Yes, sure.
Raj Sharma: And then, can you give a sort of an estimate on the margins on the pre in the earlier part of the foreclosure process versus your usual service or business.
Speaker Change: Thank you, thank you for that, and then can you give a sort of an overview of what you
Speaker Change: estimate on the margins on the pre and the earlier part of this the foreclosure process versus your usual service or business? Yes sure look a lot depends on the product but the trustee business
Bill Shepro: Yes, sure. Look, a lot depends on the product, but the trustee business, because of our global operations, is a very high margin business inside the business unit. You know, think, you know, north of 50% in the title business, that's more probably Michelle one in the 30s. Yes, even a margin level, the field services business is typically made to high teams, margin business, and that also can take place earlier in the process. And so the margins can can be reasonably attractive, not necessarily as attractive as the margins inside of hubs you at the very end of the process, but they're still pretty.
William B. Shepro: Yes, sure. Look, a lot depends on the product, but the trustee business, because of our global operations, is a very high-margin business inside the business unit. You know, I think, you know, north of 50%. In the title business, that's more probably, Michelle, what, in the 30s?
Speaker Change: because of our global operations is a very high margin business inside the business unit, you know, I think, you know, north of 50%. In the title business that's more
Speaker Change: probably, Michelle, what, in the 30s? Yes. Even at a margin level. The field services business is typically mid to high teens margin business and then that also can take place earlier in the process.
Michelle D. Esterman: Yes, the EBITDA margin level. The field services business is typically a mid- to high-teens margin business, and that also can take place earlier in the process. And so, the margins can be reasonably attractive, not necessarily as attractive as the margins inside of HUBZoo at the very end of the process, but they're still pretty strong.
Speaker Change: And so the margins can be reasonably attractive, not necessarily as attractive as the margins inside of HUBZoo at the very end of the process, but they're still pretty strong.
Raj Sharma: All right. That's very helpful.
Michelle D. Esterman: All right.
William B. Shepro: All right. That's very helpful. And then I wanted to understand your confidence level in the, how confident are you in the pre- and the earlier foreclosure process to continue, you know, through this year and next? Is this a structural new addition to the revenue base, or is it sort of, you know, until the actual foreclosures pick up.
Raj Sharma: And then, you know, I want to understand your confidence level on how confident are you and the pre and the earlier foreclosure process to continue through this year and next. Is this a structural new addition to the revenue base or is it sort, you know, until the foreclosure is picked up. Yeah. So, Raj, I think, you know, if you look at the reporting that comes from ICE or Black Knight, the link once rates are still low, you know, very low, both 90 plus and early stage. The link once he's early stage, a link once he did take up in the second quarter.
Speaker Change: That's very helpful, and then, you know, I wanted to understand your confidence level on the
Speaker Change: how confident are you in the pre and the earlier foreclosure process to continue you know through this year and next? Is this a structural new addition to the revenue base or is it sort of
Speaker Change: you know, until the actual foreclosures pick up.
William B. Shepro: Yeah. So, Raj, I think, you know, if you look at the reporting that comes from ICE or Black Knight, delinquency rates are still low, very low, both 90-plus and early-stage delinquencies. Early-stage delinquencies did tick up in the second quarter, but it's unclear if that was just a timing question as to what day was the last day of the month. So, they did tick up. We'll see if it's a trend or not, but generally speaking, delinquency rates remain very low.
Speaker Change: Yeah, so Raj, I think, you know, if you look at the reporting that comes from ICE or Black Knight...
Speaker Change: Delinquency rates are still low, you know, very low, both 90-plus and early-stage delinquencies. Early-stage delinquencies did tick up in the second quarter.
Bill Shepro: But it's unclear if that was just a timing question as to what they were in the last day of the month. So, they did take up; we'll see if it's a trend or not. But generally speaking, the link once he rates remain very low. And so, we want to focus on the earlier stage processes, just because foreclosure initiations, while they're still down, you know, almost 30 percent from where they were pre-pandemic. They're up quite a bit from during the pandemic. And so, that's an area we want to continue to focus on and work to grab a market share.
Speaker Change: But it's unclear if that was just a timing question as to what day was the last day of the month. So they did tick off. We'll see if it's a trend or not.
William B. Shepro: And so, we want to focus on the earlier-stage processes just because foreclosure initiations, while they're still down, you know, almost 30 percent from where they were pre-pandemic, they're up quite a bit from during the pandemic. And so, that's an area we want to continue to focus on and work to grab market share. And then we're also expanding some work we're doing in the foreclosure trustee business with an existing customer. We added, I think, six new states with them, and we've also started providing services on their reverse mortgage portfolio in the trust.
Speaker Change: But generally speaking, delinquency rates remain very low. And so we want to focus on the earlier stage processes just because foreclosure initiations, while they're still down, you know, almost 30% from where they were pre-pandemic, they're up quite a bit.
Speaker Change: from during the pandemic, and so that's an area we want to continue to focus on and work to grab market share.
Bill Shepro: And then we're also expanding some work we're doing in the foreclosure trustee business with an existing customer. We added, I think, six new states with them. And we've also started up providing services on their reverse mortgage portfolio in the trustee space. So, I think that represents some growth for us. But all in all, I think the link once he markets been fairly muted; that may change.
Speaker Change: And then we're also expanding some work we're doing in the foreclosure trustee business with an existing customer. We added, I think, six new states with them, and we've also started providing services on their reverse mortgage portfolio in the trustee space. So we think that represents some growth for us.
William B. Shepro: So we think that represents some growth. But all in all, I think the delinquency market's been fairly muted. That may change. I mean, Michelle, during my prepared remarks, we mentioned what's going on with home inventory. And I think in May, homes for sale were up 18% compared to the prior year, and sales were down a couple of percent. So that's pretty interesting.
Speaker Change: [inaudible]
Bill Shepro: I mean, Michelle, during my prepare of remarks, we mentioned what's going on home inventory. And I think it may; homes for sale were up 18 percent compared to the prior year. And sales were down a couple of percent. So, that's pretty interesting. So, to peer, there's a bit, more homes are available for sale and due to the bit as spreads, the less homes are selling. That could be typically that's a precursor to home prices coming down, like we've already seen in markets like Austin. And I think if that happens, you're going to see some of the more recent cohorts of originations, particularly those with very high loan-to-value.
Speaker Change: Homes for sale were up 18% compared to the prior year, and sales were down a couple of percent.
William B. Shepro: So it appears there's a bit more homes available for sale, and due to the bid-ask spreads, fewer homes are selling. Typically, that's a precursor to home prices coming down, like we've already seen in markets like Austin. And I think if that happens, you're going to see some of the more recent cohorts of originations, particularly those with very high loan-to-value, and also those loans. Even if they had more equity, that equity was after a massive run-up in home prices that may not continue or even come down. That's where I think there's some risk for higher delinquencies, and that could be, perhaps, you know, the first year of the job that starts.
Speaker Change: So that's pretty interesting. So it appears there's a bit, more homes are available for sale.
Speaker Change: and due to the bid-ask spreads, less homes are selling. That could be typically that's a precursor to home prices coming down like we've already seen in markets like Austin.
Speaker Change: And I think if that happens, you're going to see some of the more recent cohorts of originations, particularly those with very high loan-to-value and also those loans, even if they had more equity.
Raj Sharma: And also those loans, even if they had more equity, that equity was after a massive run-up in home prices that may, you know, may not continue or even come down. That's where I think there's some risk for higher delinquencies. And that could be perhaps the first shoe to drop that starts to benefit us. All right. Thank you.
Speaker Change: That equity was after a massive run up in home prices that may not continue or even come down. That's where I think there's some risk for higher delinquencies. And that could be perhaps, you know, the first year of the job that starts to benefit us.
William B. Shepro: Right. Thank you. And then just lastly, on the big win in Q2, you know, of the $15.3 million, the annual, that's the annual estimate for the next year or two. Could you talk about that WIN, and is that related to the renovation services at all? Sure. That's getting done.
Raj Sharma: And it's just lastly on the big win in Q2, you know, of the 15.3 million, the annual. That's the annual estimates for the next year or two. Could you talk about that win? And is that related to the renovation services at all? That's getting, did I hear it correctly, getting $100,000 a property for? Yeah, roughly, I think we're just shy of $100,000 in renovation costs on the referrals that we've received so far, where we've submitted bids and had them approved by the customer. So that's sort of the ticket price, if you will, or the total renovation cost that will be booked as revenue as we complete the renovations.
Speaker Change: All right, thank you. And then just lastly, on the big win in Q2, you know, of the $15.3 million, the annual, that's the annual estimate for the next year or two.
Speaker Change: Could you talk about that WIN and is that related to the renovation services?
Speaker Change: at all? Sure. That's getting, did I hear it correctly? You're getting what, $100,000 a property for
William B. Shepro: Yeah, roughly, I think we're just shy of $100,000 in renovation costs on the referrals that we've received so far, where we've submitted bids and had them approved by the customers. So, that's sort of the ticket price, if you will, or the total renovation cost that will be booked as revenue as we complete the renovation. And so I think, look, I like to look at our wins, you know, our larger wins in aggregate, Raj.
Speaker Change: Yeah, roughly, I think we're just shy of $100,000 in renovation costs on the referrals that we've received so far where we've submitted bids and had them approved by the customer. So that's sort of the ticket price, if you will, or the total renovation cost.
Speaker Change: that will be booked as revenue as we complete the renovations.
Bill Shepro: And so I think, look, I like to look at our wins, our larger wins in aggregate, rush. So if you look in the fourth quarter, we won this very large renovation opportunity in the first and second quarter. I think in the second quarter we won these three trustee clients, and all three are now sending referrals. We think in aggregate; if you were to look at the sales scenario slide, I think it's in the appendix. We've included that again this quarter. You'll see that between those three wins, Michelle, what's roughly, you're looking at 70, 80 million of revenues; my recollection.
Speaker Change: And so I think, look, I like to look at our wins, you know, our larger wins in aggregate, Raj. So if you look in the fourth quarter, we won this very large renovation opportunity. In the first and second quarter, I think in the second quarter, we won.
William B. Shepro: So if you look at the fourth quarter, we won this very large renovation opportunity in the first and second quarter. I think in the second quarter, we won these three trustee clients, and all three are now sending referrals. You know, we think, you know, in aggregate, if you were to look at the sales scenario slide, I think it's in the appendix, we've included that again this quarter. You'll see that between those three wins, Michelle, what's roughly what you're looking at, Seventy, eighty million dollars in revenue, if my recollection is right.
Speaker Change: These three trustee clients and all three are now sending referrals.
Speaker Change: You know, we think, you know, in aggregate, if you were to look at the sales scenario slide, I think it's in the appendix. We've included that again this quarter. You'll see that between those three wins, Michelle, what's roughly, you're looking at
Michelle D. Esterman: Seventy, eighty million of revenue is my recollection.
Bill Shepro: 88 is what we have in the deck. Yes, so we're estimating from those wins and several others on the origination side, but those would be the four largest wins, as well as the expansion of trustee work with an existing customer into new states. Raj, we feel good about building up to that level of revenue from those sales wins. In fact, there's an opportunity for us to look; if we're optimistic, there's an opportunity we could outperform it. If that renovation business were to turn into 100 files a month, at $100,000 a month, you're looking at 10 million of revenue a month, and we're not including anywhere near those levels in the forecast.
Michelle D. Esterman: 88 is what we have in the deck. Yes, so we're estimating from those wins and several others on the origination side, but those would be the four largest wins, as well as the expansion of trustee work with an existing customer into new states. Raj, you know, we feel good about building up to that level of revenue from those sales wins. In fact, there's an opportunity for us to, you know, look, if we're optimistic, there's an opportunity we could outperform it. If that renovation business were to turn into, you know, 100 files a month at $100,000 a month, you're looking at, you know, 10 million in revenue a month. And we're not including anywhere near those levels in the forecast, but I think there's an opportunity for us to certainly achieve what we've been
Speaker Change: 88 is what we have in the deck. Yes, so we're estimating from those wins and several others on the origination side, but those would be the four largest wins, as well as the expansion of trustee work with an existing customer into new states.
Speaker Change: Raj, you know, we feel good about...
Rajiv Sharma: building up to that level of revenue from those sales wins. And in fact, there's an opportunity for us to, you know, look, if we're optimistic, there's an opportunity we could outperform it if that renovation business were to turn into.
Speaker Change: you know, 100 files a month at $100,000 a month, you're looking, you know, $10 million of revenue a month. And we're not including anywhere near those levels in the forecast, but I think there's an opportunity for us to certainly achieve what we've included in the appendix of the slide deck.
Raj Sharma: But I think there's an opportunity for us to certainly achieve what we've included in the appendix of the slide deck. Today's slide deck. Got it. Thank you. I'll end there with my questions and take it offline. Thank you again for answering my questions.
Rajiv Sharma: in the appendix of the slide deck, today's slide deck. Got it. Got it. Thank you.
Rajiv Sharma: Got it. Got it. Thank you. I'll end there with my questions and take it offline. Thank you again for answering my questions. Thanks, Raj.
Speaker Change: Today's slide deck.
Speaker Change: Got it, thank you. I'll end there with my questions and take it offline. Thank you again for answering my questions. Thanks Raj.
Bill Shepro: Thanks for us. Thank you.
Speaker Change: Thank you.
Rajiv Sharma: Our next question comes from my condo with FNBO Northman. Please go ahead. Hey guys, thank you. Bill, I think you mentioned 35 homeowners insurance in relation to that program. Are you taking any risk with the homeowners insurance policies, or are you just kind of an agent? If you could explain that.
Operator: Our next question comes from Mike Grondahl with FNBL Northland. Please go ahead.
Speaker Change: Our next question comes from Mike Grondahl with FNBL Northland. Please go ahead.
Michael John Grondahl: Hey guys, thank you. Hey Bill, I'm the... I think you mentioned 35 homeowners insurance in relation to that program. Are you taking any risk with the homeowners insurance policies, or are you just kind of an agent? If you could explain that. Sure.
Michael John Grondahl: Hey, guys. Thank you.
Michael John Grondahl: Hey Bill, on the, I think you mentioned 35 homeowners insurance
Speaker Change: in relation to that program.
Michael John Grondahl: Are you taking any risk with the homeowner's insurance policies, or are you just kind of an agent? If you could explain that.
Bill Shepro: Sure. So we launched with an insured tech partner called Policygenius, a homeowners insurance program where we're acting; we're both just acting as agents. So we're licensed as an insurance agent essentially across the country, as is Policygenius. And under the program, as members join the program and our loan officers are meeting with borrowers, we're getting lead referrals to provide homeowners insurance to those customers, and we're trying to simplify and reduce the friction in getting that homeowners insurance policy. And so, through our partner or through Policygenius, we can provide multiple offers of homeowners insurance to the consumer, and then we're essentially earning a commission; that commission.
William B. Shepro: Sure. So we launched, with an InsurTech partner called PolicyGenius, a homeowner's insurance program where we're both just acting as agents. So we're licensed as an insurance agent essentially across the country, as is PolicyGenius. And under the program, as members join the program and their loan officers are meeting with borrowers, we're getting lead referrals to provide homeowners insurance to those customers, and we're trying to simplify and reduce the friction in getting that homeowners insurance policy.
Speaker Change: Sure. So we launched with an InsurTech partner called PolicyGenius.
Speaker Change: a homeowner's insurance program where we're acting, we're both just acting as agents. So we're licensed as an insurance agent essentially across the country as is PolicyGenius.
Speaker Change: and under the program, as members...
Speaker Change: join the program and their loan officers are meeting with borrowers, we're getting lead referrals to provide homeowners insurance to those customers, and we're trying to simplify and reduce the friction in getting that homeowners insurance policy.
William B. Shepro: And so through our partner, PolicyGenius, we can provide multiple offers of homeowners insurance to the consumer, and then we're essentially earning a commission. That commission, I think, these are really rough numbers, but roughly half of the commission comes to us, half to our partner, and then that's what's changed just modestly in the second, for homeowner insurance renewals in the future, and we got it okay, and so we're not the short answer is we're not taking any.
Speaker Change: And so through our partner, through PolicyGenius, we can provide multiple offers of homeowner's insurance to the consumer, and then we're essentially earning a commission.
Bill Shepro: I think these are really rough numbers, but roughly half of the commission comes to us as half to our partner, and then that's what's changed just modestly in the second for homeowner insurance renewals in the future.
Speaker Change: That commission, I think, these are really rough numbers, but roughly half of the commission comes to us, half to our partner, and then that splits change just modestly in the second, you know, for homeowner insurance renewals in the future.
Bill Shepro: And so we're not the short answers; we're not taking any risk. We have 35 persons. That's right. We have 35 members or lenders that are right now evaluating the program. We already have one signed up and are now we're receiving referrals, and we're optimistic. You know, we've got an attractive pipeline and we look forward to closing with some of these deals. What I like about this business is it's not just the commission you were in the first year, as the homeowners insurance policies renew, and I think the industry data is around 85 plus percent renew.
Speaker Change: And so we're not, the short answer is we're not taking any risk. Right, you're not taking that risk. We have 35 perspectives.
William B. Shepro: We have 35 perspectives. That's right.
William B. Shepro: We have 35 members or lenders that are right now evaluating the program. We already have one signed up, and we are now receiving referrals. And we're optimistic, you know; we've got an attractive pipeline, and we look forward to closing some of these deals. What I like about this business is it's not just the commission you earn the first year; as the homeowner's insurance policies renew, and I think the industry data is around 85 plus percent renew, we continue to earn a commission as those policies get renewed. And at the same time, what's very important to us is that we're actually making the closing process more frictionless for our members.
Speaker Change: That's right. We have 35 members or lenders that are right now evaluating the program. We already have one signed up and are now receiving referrals.
Michael John Grondahl: Yeah, you're leveraged. Sure. You know, on this newer renovation business, $100,000 per month. Can you just explain what you're doing there? I'm a little naive, but is that the actual renovation work, or what are you doing to earn the $100,000? Sure. Yeah, of course.
Speaker Change: And we're optimistic, you know, we've got an attractive pipeline and we look forward to closing some of these deals. What I like about this business is
Speaker Change: It's not just the commission you earn the first year, as the homeowners insurance policies renew, and I think the industry data is around 85 plus percent renew, we continue to earn a commission as those policies get renewed.
Rajiv Sharma: We continue to earn a commission as those policies get renewed, and at the same time, what's very important to us is we're actually making the closing process more frictionless for our members. Got it. Yeah, you're leveraging that seed at the table for sure.
Speaker Change: And at the same time, what's very important to us is we're actually making the closing process more frictionless for our members.
Speaker Change: Got it. Yeah, you're leveraging that seat at the table for sure. You know, on this newer renovation business...
Bill Shepro: You know on this newer renovation business 100,000 per can you just explain what you're doing there. I'm a little naive, but is that the actual renovation work, or what are you doing to earn the hundred dollars? Sure. Yeah, of course. So, so basically we're we're hired by this customer. That's one of the larger owners of Ofario. And by the way, we hope to expand this to real estate investors and single-family rental investors over time, particularly as that market starts to come back. But basically, what we're doing is we go out to the property. We evaluate the condition all based upon business rules given to us by the client.
Speaker Change: $100,000 per
Speaker Change: Can you just explain what you're doing there? I'm a little naive, but is that the actual renovation work?
William B. Shepro: So basically, we're hired by this customer that's one of the larger owners of Aureo. And by the way, we hope to expand this to real estate investors and single-family rental investors over time, particularly as that market starts to come back. But basically, what we're doing is we go out to the property, we evaluate the condition, all based upon business rules given to us by the client. We determine, based on their business rules, what work needs to be done.
Speaker Change: What are you doing to earn the $100,000? Sure, yeah, of course.
Speaker Change: So, basically, we're hired by this customer that's one of the larger owners of REO, and by the way, we hope to expand this to real estate investors.
Speaker Change: single family rental investors over time, particularly as that market starts to come back. But basically, what we're doing is we go out to the property, we evaluate the condition, all based upon business rules given to us by the client.
Bill Shepro: We determine, based on their business rules, what work needs to be done. And we've got some pretty sophisticated tools to do this analysis and bid work. The client basically tells us what the prices that they pay for the services. We submit the bid. If the client says yes, we basically are managing the renovation work through a contractor network that actually is doing the work with our oversight. And then we make the difference between what we're paid and what we pay the contractors. Got it, less some internal cost. Sure, sure, great.
Speaker Change: We determine, based on their business rules, what work needs to be done. And we've got some pretty sophisticated tools to do this analysis and bid work.
William B. Shepro: And we've got some pretty sophisticated tools to do this analysis and bid work. The client basically tells us what the price is that they will pay for the services. We submit the bid. If the client says yes, we basically are managing the renovation work through a contractor network that actually is doing the work with our oversight. And then we make the difference between what we're paid and what we pay.
Speaker Change: The client basically tells us what the price is that they pay for the services. We submit the bid. If the client says yes, we basically are managing the renovation work through a contractor network.
Speaker Change: that actually is doing the work with our oversight and then we make the difference between what we're paid and what we pay the contract.
William B. Shepro: less some internal cost.
Speaker Change: Tractors.
Speaker Change: Got it.
Speaker Change: less some internal costs.
Michael John Grondahl: Sure, sure. Great. And then, maybe it's too early, but any initial thoughts on 25, you know, just sort of assuming the world stays round? How are you thinking about 25 at this point?
Bill Shepro: And then maybe it's too early, but any initial thoughts on 25, you know, just sort of assuming the world stays round. How are you thinking about 25 at this point? Yes, so look, we put some couple of scenarios in the back of the second quarter earnings slides presentation. And we and we show what we think revenue and EBITDA would look like as we fully ramp the sales that we've already won. And by the way, that doesn't include; that does not include our sales pipeline. All that would be incremental to both the scenarios we've included in the presentation.
Speaker Change: Sure, sure, great.
Speaker Change: And then, you know, maybe it's too early.
Speaker Change: But any initial thoughts on 25?
Speaker Change: You know, just sort of assuming the world stays round.
Speaker Change: How are you thinking about 25?
William B. Shepro: Yes, so we put in a couple of scenarios in the back of the second quarter earnings slides presentation, and we show what we think revenue and EBITDA would look like as we fully ramp the sales that we've already won. And by the way, that does not include our sales pipeline. All that would be incremental to both those scenarios we've included in the presentation. And I think we also talked about on the call that we're cautiously optimistic we can exit this year or end this year with a $30 million run rate EBITDA.
Speaker Change: at this point.
Speaker Change: Yeah, so look, we put a couple of scenarios in the back of the second quarter earnings slides presentation, and we show what we think revenue in EBITDA would look like as we fully ramp the sales that we've already won.
Speaker Change: And by the way, that doesn't include, that does not include.
Speaker Change: Our sales pipeline, all that would be incremental to both those scenarios we've included.
Bill Shepro: And I think we also talked about on the call that we're cautiously optimistic we can exit this year or end this year with a $30 million run rate EBITDA. And so, of course, you know, there's some puts and takes. We've included some customer attrition or turn in our sales scenario to try to be reasonable in our approach. But I think that's where how we're thinking about the business right now, but we're not putting out any guidance at this point there.
Speaker Change: in the presentation. And I think we also talked about on the call that we're cautiously optimistic we can exit this year or end this year with a $30 million run rate EBITDA. And so of course, you know, there's some puts and takes. We've included some.
William B. Shepro: And so, of course, you know, there's some puts and takes. We've included some customer attrition or churn in our sales scenario to try to be reasonable in our approach. But I think that's how we're thinking about the business right now. But we're not putting out any guidance at this point. OK. Hey, thanks.
Speaker Change: customer attrition or churn in our sales scenario to try to be reasonable in our approach. But I think that's where how we're thinking about the business right now, but we're not putting out any guidance at this point.
Michael John Grondahl: Fair enough. Fair enough. Okay. Hey, thank you.
Operator: Thank you. I'm showing no further questions at this time.
Speaker Change: Fair enough, fair enough. Okay. Hey, thank you.
Speaker Change: Thanks, Mike.
Operator: Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Bill Shepro for closing remarks. Great. Thank you, Operator.
Bill Shepro: I now like to turn it back to Bill Shepro for closing remarks. Great. Thank you, operator. We're very happy with our second quarter financial performance and believe we're well positioned for this year and beyond.
Speaker Change: Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Bill Shepro for closing remarks. Great. Thank you, Operator. We're very happy with our second quarter financial performance and believe we're well positioned for this year and beyond. Thanks for joining today's call.
William B. Shepro: Great. Thank you, Operator. We're very happy with our second quarter financial performance and believe we're well positioned for this year and beyond. Thanks for joining us on today's call.
Bill Shepro: Thanks for joining today's call.
Operator: Thank you for your participation in today's conference.
Operator: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Operator: This concludes the program.
Speaker Change: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Operator: You may now disconnect. Thank you.
Speaker Change: www.ottobock.com www.ottobock.com
Speaker Change: And I'm going to do a quick little bit of a background on the question of the the the the the the the the the the the the the the the the the the the the the the the the the
Unnamed: Michael Grondahl, Michelle Esterman, Rajiv Sharma Michael Grondahl, Michelle Esterman, Rajiv Sharma, Altisource Portfolio Solutions Michelle Esterman, Rajiv Sharma, Altisource Portfolio Solutions Michael Grondahl, William Shepro, Altisource Portfolio Solutions Michael Grondahl, William Shepro, Altisource Portfolio Solutions
Speaker Change: [inaudible]
Speaker Change: www.ottobock.com