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ALTISOURCE PORTFOLIO SOLUTIONS S.A. (ASPS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered modest top-line growth with Service revenue at $39.7M (+4% y/y) and a materially improved GAAP diluted loss per share of $(0.22) versus $(2.61) y/y; Adjusted EBITDA was flat at $3.6M as mix (renovation ramp) compressed margins .
  • Sequentially, revenue and Adjusted EBITDA declined (Total revenue $41.9M vs. $43.3M; Adjusted EBITDA $3.6M vs. $5.4M) as business segment margins eased and Hubzu Marketplace saw fewer home sales; interest expense dropped sharply vs. last year on new debt .
  • New business wins totaled an estimated $14.4M in annual Service revenue on a stabilized basis; Origination contributed ~$11.2M and Servicer & Real Estate ~$3.2M, with a combined weighted pipeline of $33.6M–$42.0M .
  • No formal numerical guidance was provided; management expects Origination wins to begin benefiting Q4 and highlighted significant foreclosure auction/REO opportunities targeted for closure in Q4 .
  • Potential stock catalysts include sustained interest expense reductions from the February debt exchange and an S‑3 filed to register resale of lenders’ exchange shares (possible technical overhang) .

What Went Well and What Went Wrong

What Went Well

  • Interest expense reduction drove a $6.8M y/y improvement in loss before income taxes; CEO: “We grew Service revenue and improved pre‑ and post‑tax GAAP earnings… largely from… cost discipline and lower interest expense.”
  • Servicer & Real Estate segment posted Q3 service revenue of $31.2M (+3% y/y) and Adjusted EBITDA of $10.0M; management emphasized pipeline breadth across countercyclical businesses (Foreclosure Trustee, Granite CRM, Field Services, Title) .
  • Strong sales momentum: estimated $14.4M annualized wins company-wide; Origination wins of $11.2M could lift segment service revenue by ~33% on a stabilized basis and are largely onboarded for Q4 impact .

What Went Wrong

  • Mix headwind from renovation business compressed margins; Q3 Adjusted EBITDA margin fell to 9.1% from 9.5% y/y, and gross profit declined 6% y/y .
  • Hubzu Marketplace experienced fewer home sales, contributing to lower business segment margins; management cited revenue mix as the main drag .
  • Cash generation modest: Q3 operating cash flow was $0.718M; YTD operating cash flow negative amid working capital movements and debt-related items .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Service revenue ($USD Millions)$38.150 $40.787 $39.666
Total revenue ($USD Millions)$40.531 $43.288 $41.908
Gross profit ($USD Millions)$12.070 $13.027 $11.347
Income from operations ($USD Millions)$1.105 $3.231 $0.521
Adjusted EBITDA ($USD Millions)$3.624 $5.382 $3.621
Loss before income taxes ($USD Millions)$(8.493) $0.187 $(1.665)
Net (loss) income attributable to Altisource ($USD Millions)$(9.362) $16.582 $(2.396)
Diluted EPS ($USD)$(2.61) $1.48 $(0.22)
MarginQ3 2024Q2 2025Q3 2025
Gross profit / Service revenue (%)32% 32% 29%
Adjusted EBITDA / Service revenue (%)9% 13% 9%

Segment Breakdown

Segment MetricQ3 2024Q2 2025Q3 2025
Servicer & Real Estate Service revenue ($USD Millions)— (not disclosed)$32.0 $31.2
Servicer & Real Estate Adjusted EBITDA ($USD Millions)— (not disclosed)$12.0 $10.0
Servicer & Real Estate Adjusted EBITDA margin (%)32.5% 37.4% 32.1%
Origination Service revenue ($USD Millions)— (not disclosed)$8.8 $8.5
Origination Adjusted EBITDA ($USD Millions)— (not disclosed)$0.9 $0.9
Origination Adjusted EBITDA margin (%)11.7% — (not disclosed)10.3%
Business Segments Adjusted EBITDA ($USD Millions)$10.800 $12.851 $10.893

KPIs and Operating Indicators

KPIQ1 2025Q2 2025Q3 2025
New sales wins – Servicer & Real Estate ($USD Millions, annualized stabilized)$4.7 $1.1 $3.2
New sales wins – Origination ($USD Millions, annualized stabilized)$4.7 $3.3 $11.2
Weighted avg pipeline – Servicer & Real Estate ($USD Millions, annualized stabilized)$26.1 $25.3 $21.7–$27.1
Weighted avg pipeline – Origination ($USD Millions, annualized stabilized)$11.9 $14.7 $11.9–$14.8
Combined weighted pipeline ($USD Millions, annualized stabilized)$34–$42 $36–$44 $33.6–$42.0
Industry foreclosure initiations vs. prior year (%)+25% (3 months to Mar) +22% (5 months to May) +19% (8 months to Aug)
Industry foreclosure sales vs. prior year (%)−2% (3 months to Mar) +3% (5 months to May) +10% (8 months to Aug)
Mortgage origination unit volume vs. prior year (%)−1% (3 months to Mar) +27% (Q2) +17% (9 months to Sep)
Cash and cash equivalents ($USD Millions)$30.8 $30.0 $28.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS/margin guidanceFY/Q4 2025NoneNoneMaintained (no formal guidance)
Origination segment trajectoryQ4 2025N/AMost wins onboarded; expect benefits to begin in Q4 Qualitative positive
Servicer & Real Estate opportunitiesQ4 2025N/ACompany hopes to close significant foreclosure auction and REO asset management deals Qualitative positive

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Interest expense and debt exchangeQ1: new first lien loan and super senior facility materially cut interest; est. GAAP interest ~$9.5M annually Q3 interest expense down sharply y/y ($2.37M vs. $9.96M) Improving
Countercyclical businesses focusQ1/Q2: Emphasis on Renovation, Granite CRM, Lenders One, Trustee, Hubzu Continued focus; pipeline progress in foreclosure auction/REO; Renovation driving mix Steady execution
Regulatory environment (FHA/HUD)Q1: FHA delinquency rising; HUD extending modification intervals to 24 months Q3: FHA delinquency pressures and weakening real estate market; higher REO inventory Tightening/pressure
Origination market dynamicsQ2: +27% unit volume y/y; MBA 2025 loans +12% y/y Q3: +17% ytd units; MBA: 5.4M loans in 2025 (+18% y/y), refi +87% full-year Improving refi
Marketplace/Hubzu performanceQ2: Growth focus but margins impacted by mix Q3: Fewer Hubzu home sales; mix impact on margins Soft near term
Technology/AI initiatives (Equator)N/A in Q1/Q2 releases; platform evolution discussed Equator expanded with four new customers; continued investment incl. AI-driven capabilities Building pipeline

Management Commentary

  • CEO: “We delivered solid third quarter performance. We grew Service revenue and improved pre‑ and post‑tax GAAP earnings, GAAP EPS, and cash flow from operations compared to the third quarter of last year… focus on businesses with tailwinds, cost discipline and lower interest expense.”
  • CEO: “We are winning new business and have a strong sales pipeline… During the third quarter… we won new business that we estimate represents $14.4 million of annual Service revenue on a stabilized basis.”
  • CEO on segments: Servicer & Real Estate service revenue $31.2M (+3% y/y); Adjusted EBITDA $10.0M with margin decline to 32.1% from 32.5% due to renovation mix; Origination service revenue $8.5M (+9% y/y), Adjusted EBITDA $0.9M, margin to 10.3% from 11.7% .
  • CEO on environment: Foreclosure starts +19% and sales +10% y/y through Aug; real estate market weakening driving higher REO; mortgage origination units +17% ytd .

Q&A Highlights

  • Analyst email on Equator customer wins: Three of four new customers are already live; as they load assets, revenue should begin; Altisource aims to cross‑sell Equator customers into Hubzu and other services .
  • CBA with Rhythm: Agreement expired Aug 31, but ASPS continues to manage REO and receive referrals with limited exceptions, indicating operational continuity .

Estimates Context

MetricQ3 2025 ActualQ3 2025 ConsensusDelta
Revenue ($USD Millions)$41.908 Unavailable via S&P GlobalN/A
Diluted EPS ($USD)$(0.22) Unavailable via S&P GlobalN/A

Consensus coverage for ASPS was unavailable via S&P Global for Q3 2025 at time of analysis.

Key Takeaways for Investors

  • Interest expense reset and debt exchange mechanics are visibly reducing financial drag; y/y interest declined ~$7.6M in Q3, narrowing pretax loss and supporting future earnings leverage .
  • Sales momentum is accelerating (estimated $14.4M annualized wins), with Origination wins largely onboarded for Q4—near‑term revenue visibility improves despite macro volatility .
  • Mix headwinds from renovation are compressing margins; monitor Hubzu Marketplace volumes and segment mix for Adjusted EBITDA normalization .
  • Countercyclical Servicer & Real Estate remains the profit engine; if REO and default activity rise (FHA delinquency, HUD changes), segments are positioned for upside .
  • Liquidity is stable ($28.6M cash), but operating cash flow is modest; watch working capital and debt‑related cash items into Q4 .
  • Technical overhang risk from the Oct 28 S‑3 (resale registration of lenders’ exchange shares); potential supply may influence trading dynamics near term .
  • With no formal guidance, use pipeline disclosures and quarterly slides to triangulate trajectory; Q4 should show early benefits from Origination wins if onboarding proceeds as planned .