Q3 2025 Altisource Portfolio Solutions SA Earnings Call
Speaker #1: Good day and thank you for standing by . Welcome to the ALTISOURCE PORTFOLIO SOLUTIONS S.A. Third Quarter 2020 Earnings Conference Call . At this time , all participants are in a listen only mode .
Speaker #1: After the speakers 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 .
Speaker #1: You will then hear an automated message advising that your hand is raised to withdraw your question , please press star one one . Again , please be advised that today's conference call is being recorded .
Speaker #1: I would now like to hand the conference over to your speaker today , Michelle Esterman Chief Financial Officer . Please go ahead .
Speaker #2: Thank you . Operator . We first want to remind you that the earnings release and quarterly slides are available on our website at WW .
Speaker #2: 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 .
Speaker #2: 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 2024 form 10-K and our 2025 form 10-q filings .
Speaker #2: These describe some factors that may lead to different results . We undertake no obligation to update statements . Financial scenarios and projections previously provided or provided herein .
Speaker #2: 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 .
Speaker #2: 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 #2: Joining me for today's call is Bill Shapiro , our chairman and chief Executive Officer . I'll now turn the call over to Bill .
Speaker #3: Thanks , Michelle . And good morning . I'll begin on slide four . We delivered solid third quarter performance . We grew service revenue and improved pre and post tax GAAP earnings .
Speaker #3: GAAP earnings per share and cash flow from operations compared to the third quarter of last year . This is largely from our focus on growing our businesses that have tailwinds , cost discipline and lower interest expense .
Speaker #3: Turning to slide five . Compared to the third quarter of last year , we grew total company service revenue by 4% to 39.7 million .
Speaker #3: Service revenue growth primarily reflects the ramp of the renovation business and growth in the lender's one foreclosure trustee , Granite Construction Risk Management and Field Services businesses .
Speaker #3: The business segments generated $10.9 million of adjusted EBITDA , representing modest growth compared to the third quarter of 2020 . For the corporate segments , adjusted EBITDA loss of 7.3 million was slightly higher than the third quarter of last year .
Speaker #3: Adjusted EBITDA was flat at 3.6 million , primarily from service revenue growth , offset by lower business segment margins from revenue mix . Moving to slide six .
Speaker #3: From a GAAP perspective , our loss before income taxes and noncontrolling interests improved by $6.8 million to a pre-tax loss of 1.7 million in the third quarter of 2025 , compared to a pre-tax loss of 8.5 million in the same quarter of last year .
Speaker #3: This was primarily driven by lower interest expense from the new debt for the quarter . We improved operating cash flow by $2.3 million compared to last year .
Speaker #3: We ended the quarter with $28.6 million in unrestricted cash. In addition to delivering solid financial performance, we are making progress diversifying our customer base and growing the businesses that we believe represent an outsized growth opportunity for Alxasaurus.
Speaker #3: These businesses , which are set forth on slide seven and eight , include renovation , granite construction , Risk management , lenders , One Hub Zoo Marketplace , foreclosure , Trustee Field Services , and title .
Speaker #3: On these slides , we provide a summary of the opportunities and the progress we are making with each . The success of these initiatives does not depend on an increase in foreclosure starts or sales , nor on a growing residential loan origination market .
Speaker #3: We believe these initiatives represent a strong growth engine for the company . Moving to slide nine , in our largely countercyclical servicer and real estate segment , third quarter 2025 service revenue of $31.2 million was 3% higher than the third quarter of 24 , primarily from the ramp of the renovation business and growth in the foreclosure Trustee Grant and Field services businesses , partially offset by fewer home sales in the marketplace .
Speaker #3: Business . Third quarter 2025 adjusted EBITDA of $10 million for the segment was $100,000 , or 1% higher than the third quarter of 24 adjusted EBITDA .
Speaker #3: Margins declined to 32.1% from 32.5% from revenue mix , with higher growth in the lower margin renovation business . Slide ten provides a summary of our servicer and real estate sales wins and pipeline for the third quarter , we won new business that we estimate will generate $3.2 million in annual service revenue on a stabilized basis over the next couple of years .
Speaker #3: We ended the quarter with a service and real estate segment . Estimated total weighted average sales pipeline of $24.4 million of annual service revenue on a stabilized basis .
Speaker #3: The pipeline includes a few very significant foreclosure auction and REO asset Management opportunities that we hope to close in the fourth quarter before turning to our origination segment .
Speaker #3: I'd like to discuss the status of the cooperative brokerage agreement between Altus and Rhythm , which I'll refer to as the CBA under the terms of the CBA , the agreement expired on August 31st at Rhythms discretion .
Speaker #3: Altus has continued to manage the REO and receive new referrals with limited exceptions . Despite the expiration of this agreement . Moving to our origination segment .
Speaker #3: And slide 11 , third quarter 2025 service revenue of $8.5 million was 9% higher than the third quarter of 2024 . Adjusted EBITDA of $900,000 was flat compared to the same quarter last year , and adjusted EBITDA margins declined to 10.3% from 11.7% .
Speaker #3: The increase in service revenue primarily reflects growth in the lender's one business , while the margin decline relates to product mix . Slide 12 provides a summary of our origination segment .
Speaker #3: Sales wins and pipeline. Our focus on helping lenders, one member save money and better compete, continues to drive substantial interest in our solutions on an annualized stabilized basis.
Speaker #3: We won an estimated $11.2 million in new sales in the third quarter , primarily in our lenders . One business on a fully stabilized basis , this new business would increase the origination segment's annualized third quarter service revenue by 33% .
Speaker #3: We have already onboarded most of these wins , and anticipate beginning to benefit from them in the fourth quarter . Our estimated weighted average sales pipeline at the end of the quarter was $13.4 million .
Speaker #3: We anticipate that our sales pipeline in recent sales wins will contribute to strong growth in our origination segment . Turning to our corporate segment and slide 13 .
Speaker #3: Third quarter 2025 corporate adjusted EBITDA loss of $7.3 million was $100,000 , higher than the third quarter of 2024 . We believe that we can maintain relatively stable corporate segment costs as revenue grows .
Speaker #3: Moving to slide 14 . In the business environment , starting with residential mortgage default market , 90 plus day mortgage delinquency rates remain near historic lows at 1.3% in August , despite the low delinquency rates .
Speaker #3: Foreclosure starts and sales are increasing . Foreclosure starts increased by 19% and foreclosure sales increased by 10% for the eight months ended August 2025 .
Speaker #3: Compared to the same period in 2024 . We believe the increase reflects rising FHA delinquency rates and a weakening real estate market . Borrowers may soon face additional pressure as the April FHA mortgage letter extends the time between loan modifications from every 18 months to every 24 months , beginning as early as October 1st .
Speaker #3: Turning to the real estate market , we believe the market is weakening as demonstrated by higher for sale inventory , extended sales timelines , and rising sale cancellation rates .
Speaker #3: As a result , we believe a lower percentage of homes are selling to third parties at the foreclosure auctions , driving higher REO inventory .
Speaker #3: This is supported by our own experience . Alto sources third quarter REO Asset Management referrals from Onodi and Rhythm were the highest since the second quarter of 2024 .
Speaker #3: For the origination market , mortgage Origination Unit volume increased by 17% for the nine months ended September 30th , 2025 , compared to the same period in 24 .
Speaker #3: With purchase origination volume declining by 4% and refinance volume increasing by 103% for the full year . The NBA is October 2025 . Forecast projects that there will be 5.4 million loans originated in 2025 .
Speaker #3: An 18% increase compared to 24 the NBA's full year projections reflect an 87% increase in refinance activity and a 2% decline in purchase activity .
Speaker #3: Turning to slide 15 . We are pleased with our third quarter results . More importantly , we are winning new business and have a strong sales pipeline while maintaining cost , discipline and significantly reducing corporate interest expense to support longer term growth .
Speaker #3: We are focusing our efforts on accelerating the growth of those businesses that we believe have tailwinds in what remains a close to historically low delinquency environment should loan delinquencies , foreclosure starts , and foreclosure sales increase ?
Speaker #3: We believe we are well positioned to also benefit from stronger revenue and adjusted EBITDA growth in our largest and most profitable countercyclical businesses .
Speaker #3: I'll now open up the call for questions . Operator .
Speaker #1: Certainly , as a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .
Speaker #1: To withdraw your question , please press star one one again . Please stand by while we compile our Q&A roster . And as a reminder to ask a question , please press star one one on your telephone .
Speaker #1: And I would now like to turn the call to Michelle for additional questions.
Speaker #2: So we received an email question . I'll read that on August 18th . The company announced some customer wins for the equator platform .
Speaker #2: Are these customer wins expected to translate to more inventory on the hub in the future?
Speaker #3: Yeah . Thanks , Michelle . So in August , we announced we won four new customers for the equator platform . Three of those customers are now live and loading properties , and one is in the process of implementing the equator system .
Speaker #3: As these customers load more assets , we should begin to generate revenue and then historically , we've had good success in cross-selling equator customers with with the hubs platform and other services , which we would hope to continue to do with , with some of these newer customers .
Speaker #3: Operators are any additional questions . ?
Speaker #1: Okay . As a reminder , please press star one one for any questions . And I am showing no further questions . I would now like to hand the call back to Bill for closing remarks .
Speaker #3: Great . Thank you . Operator . We're pleased with our third quarter performance and believe we are set up well for continued growth .
Speaker #3: Thanks for joining us today .