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ALTISOURCE PORTFOLIO SOLUTIONS S.A. (ASPS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered double-digit growth: Service revenue $40.8M (+11% YoY), Adjusted EBITDA $5.4M (+23% YoY), and diluted EPS $1.48, primarily driven by business growth, lower interest expense from new debt, and an $18.5M tax benefit from reversing certain India tax reserves .
  • Segments continued to ramp: Servicer & Real Estate service revenue $32.0M (Adj. EBITDA $12.0M) and Origination service revenue $8.8M (Adj. EBITDA $0.9M); the weighted pipelines and sales wins suggest continued momentum .
  • No updated FY2025 guidance was provided this quarter; management’s prior targets (Service revenue $165–$185M; Adjusted EBITDA $18–$23M) from March remain the reference points .
  • Balance sheet/structure catalysts: 1-for-8 share consolidation effective May 28, 2025; quarter-end cash $30.0M and net debt $142.2M; ongoing interest expense reductions from the debt exchange support earnings power and liquidity .

What Went Well and What Went Wrong

  • What Went Well

    • “We are pleased with our second quarter performance… we grew Service revenue, Adjusted EBITDA, pre- and post-tax GAAP earnings and GAAP earnings per share compared to the second quarter of last year,” highlighting operational execution despite low delinquencies .
    • Segment growth with wins: Servicer & Real Estate revenue +10% YoY to $32.0M; Origination revenue +13% YoY to $8.8M; pipelines and wins (e.g., $1.1M S&R and $3.3M Origination annualized wins in Q2) point to continued traction .
    • Lower interest expense from the new debt structure and strong cash position underpin improving GAAP results; income before tax improved to $0.2M vs. a $(7.6)M loss a year ago .

  • What Went Wrong

    • Corporate Adjusted EBITDA loss was slightly higher YoY in Q2 (−$7.5M vs. −$7.2M), reflecting modest pressure from non-operating items (e.g., FX) .
    • Operating cash flow was negative for the quarter (−$0.3M), with a question raised on working capital build; management noted activities were “normal,” but net cash from operations YTD remained negative .
    • Servicer & Real Estate segment margin ticked down on mix, with higher growth in lower-margin renovation impacting margin (37.4% vs. 38.1% YoY) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Service Revenue ($USD Millions)$38.5 $40.9 $40.8
Total Revenue ($USD Millions)$41.0 $43.4 $43.3
Gross Profit ($USD Millions)$12.4 $13.3 $13.0
Income from Operations ($USD Millions)$0.6 $3.2 $3.2
Adjusted EBITDA ($USD Millions)$4.7 $5.3 $5.4
Net Income (Loss) Attributable to Altisource ($USD Millions)$(8.8) $(5.3) $16.6
Diluted EPS ($USD)$(0.31) $(0.09) $1.48
Gross Margin (% of Service Revenue)N/A33% 32%
Adjusted EBITDA Margin (% of Service Revenue)N/A13% 13%

Notes: Q2 net income includes an $18.5M tax benefit tied to reversal of certain India reserves; Q2 also includes $3.5M of debt exchange transaction expenses . EPS comparability vs. prior periods is affected by the 1-for-8 share consolidation effective May 28, 2025 .

Segment Breakdown

Segment MetricQ1 2025Q2 2025
Servicer & Real Estate – Service Revenue ($USD Millions)$32.9 $32.0
Servicer & Real Estate – Adjusted EBITDA ($USD Millions)$12.0 $12.0
Servicer & Real Estate – Adj. EBITDA Margin (%)36.5% 37.4%
Origination – Service Revenue ($USD Millions)$8.0 $8.8
Origination – Adjusted EBITDA ($USD Millions)$0.5 $0.9

KPIs and Operating Context

KPIQ1 2025Q2 2025
Sales Wins – Servicer & Real Estate (annualized stabilized service revenue)$4.7M $1.1M
Sales Wins – Origination (annualized stabilized service revenue)$4.7M $3.3M
Weighted Avg Sales Pipeline – Company (estimated potential stabilized service revenue)$34–$42M $36–$44M
Weighted Pipeline – Servicer & Real Estate$26.1M $25.3M
Weighted Pipeline – Origination$11.9M $14.7M
Industry Foreclosure Initiations YoY+25% (3 months ended Mar 31) +22% (5 months ended May 31)
Industry Foreclosure Sales YoY−2% (3 months ended Mar 31) +3% (5 months ended May 31)
Industry Origination Volume YoY−1% (Q1) +14% (H1, 2% purchase, +58% refi)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Service Revenue ($USD Millions)FY 2025$165–$185 Not updated in Q2 materials Maintained
Adjusted EBITDA ($USD Millions)FY 2025$18–$23 Not updated in Q2 materials Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Balance sheet and interest expenseDebt exchange cut annual cash interest to ~$13.4M; restructuring improved leverage and removed 2025 refi risk .Lower interest expense supported GAAP improvements; ended quarter with $30M cash .Stable improvement; full run-rate benefit in Q2 onward .
Renovation and Granite businessesStrong ramp and wins; renovation and Lenders One credit products each at ~$1M/month; focus to more than double by year-end .Renovation ramp cited as a key growth driver; segment margin mix impact noted .Positive momentum; mix dilutes margin but grows earnings .
Lenders One / OriginationQ1: +3% revenue; wins/pipeline despite tough market .Q2: +13% revenue; $3.3M annualized wins; pipeline $14.7M .Improving demand and monetization .
Hubzu expansionPlans: commercial auctions and non-distressed residential auctions soft launch .Continued focus on marketplace; Equator adds AI-driven capabilities to SaaS platforms (related tech expansion) .Product expansion continues .
Regulatory/macro (FHA/VA/student loans/tariffs)VA moratorium ended; FHA delinquency at risk; HUD guideline changes may reduce repeated loss-mit attempts; macro risks (tariffs, student loans) .Delinquencies still near lows; starts/sales modestly up; positioned to benefit if defaults rise .Watchlist; potential cyclical tailwind if conditions worsen .

Management Commentary

  • “Service revenue growth primarily reflects the ramp of the renovation business and growth in the Lenders One and foreclosure trustee businesses.”
  • “We are focusing our efforts on accelerating the growth of those businesses that we believe have tailwinds… Should loan delinquencies, foreclosure starts and foreclosure sales increase, we believe we are well positioned to also benefit.”
  • Five near-term growth engines: renovation, Granite Construction Risk Management, Lenders One, Hubzu Marketplace, and foreclosure trustee—with progress not dependent on a recovery in foreclosure or origination volumes .

Q&A Highlights

  • Working capital and operating cash flow: Analyst flagged a working capital build; management characterized quarter activity as “normal” without unusual items, while cash from operations was slightly negative in Q2 .
  • Limited Q&A otherwise; management reiterated confidence in pipelines and earnings trajectory.

Estimates Context

  • S&P Global consensus estimates for EPS and revenue were not available for ASPS for Q2 2025; therefore results cannot be framed as beats/misses versus consensus. Values retrieved from S&P Global.*
  • Actuals used for comparatives are from company filings and press releases: Q2 2025 service revenue $40.8M, revenue $43.3M, diluted EPS $1.48 .

Key Takeaways for Investors

  • Mix-driven growth: Renovation and Lenders One are scaling, lifting service revenue and Adjusted EBITDA while modestly pressuring margins—expect continued top-line traction with disciplined SG&A .
  • Structural interest savings: The debt exchange meaningfully reduces annual interest expense and supports a path to sustained GAAP profitability and operating cash generation .
  • Optionality to defaults: With delinquencies near lows, incremental upticks in defaults/start/sales would provide countercyclical upside to the larger Servicer & Real Estate businesses .
  • Near-term catalysts: Continued sales wins, pipeline conversion, and product expansion (Hubzu, Granite, Equator’s AI-enabled SaaS) can drive revenue diversification and resilience .
  • EPS comparability caution: Reverse split (1-for-8) impacts per-share metrics; interpret sequential EPS with share count context .
  • Guidance: No Q2 update; FY2025 targets (Service revenue $165–$185M; Adjusted EBITDA $18–$23M) remain the frame of reference—monitor conversion of pipelines to validate trajectory .
  • Liquidity: Quarter-end cash of $30.0M and net debt $142.2M provide runway; watch quarterly operating cash flow normalization as working capital cycles .

Additional Relevant Press Releases

  • Reverse stock split mechanics and warrant impacts disclosed (exercise rate/effective price changes, minimum warrant exercises for whole shares) .
  • Equator customer additions and AI-driven capabilities highlight continued tech investment in SaaS platforms supporting broader asset management workflows .